MYLEX CORP, 424B1, 1995-09-21

MYLEX CORP
424B1, 1995-09-21
COMPUTER PERIPHERAL EQUIPMENT, NEC

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<PAGE>
PROSPECTUS

2,000,000 Shares
x

CORPORATION

Common Stock
--------------

All of the shares of Common Stock offered hereby are being sold by Mylex
Corporation. The Common Stock of the Company is traded on the Nasdaq National
Market under the symbol "MYLX." On September 20, 1995, the last reported sale
price of the Common Stock was $17.83 per share.

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

SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
RELEVANT TO AN INVESTMENT IN THE SHARES OF COMMON STOCK.

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

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

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS (1) COMPANY (2)
<S> <C> <C> <C>
Per Share.......................................... $17.50 $.92 $16.58
Total (3).......................................... $35,000,000 $1,840,000 $33,160,000
<FN>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting offering expenses payable by the Company estimated at
$400,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
an additional 300,000 shares of Common Stock solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions, and Proceeds to
Company will be $40,250,000, $2,116,000 and $38,134,000, respectively. See
"Underwriting."
</TABLE>

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

The shares of Common Stock offered by this Prospectus are offered by the
several Underwriters, subject to prior sale, when, as and if delivered to and
accepted by them, and subject to the right of the Underwriters to reject any
order in whole or in part. It is expected that certificates for the shares of
Common Stock will be available for delivery in New York, New York, on or about
September 26, 1995.

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

Needham & Company, Inc.

The date of this Prospectus is September 20, 1995
<PAGE>
x

THE MYLEX DAC 960PD
PCI-BASED RAID CONTROLLER

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

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMPANY'S
COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE EXCHANGE
ACT. SEE "UNDERWRITING."

The Mylex logo is a registered trademark of the Company. All other
trademarks or brand names appearing in this Prospectus are the property of their
respective holders.
<PAGE>
[LOGO]

RAID is available in several levels that differ in the ways
they break down data for storage and achieve fault tolerance. RAID
Level 0, for example, distributes data in stripes across the disk
drives in an array but does not calculate the parity values
necessary for fault tolerance. Level 1 achieves fault tolerance by
creating mirror images of all data and storing each image on a
different disk than the disk used to store the original. Because
Level 1 creates exact duplicates of all stored data, it uses
one-half of available storage capacity to achieve fault tolerance.
Level 5 distributes data in stripes, calculates parity values for
all stripes and distributes the parity values evenly across all
disks in the array. Because level 5 uses the equivalent of just one
drive in the disk array to store parity values, it increases usable
system storage capacities over levels achieved by RAID Level 1.
Level 3 dedicates one of the disks in the array to the storage of
parity values and employs the rest of the disks to read and write
information in parallel. Because Level 3 uses all drives in each
read and write operation, it can accommodate only one transaction
at a time. By allowing parallel data transfer, however, Level 3 is
the best choice for applications requiring access to large amounts
of information stored sequentially, such as multimedia or
video-on-demand.
<PAGE>
[LOGO]

TYPICAL COMMAND FLOW

1. The host issues a
command to the
controller to read (or
write) data from (or
to) a logical drive.
For a read command,
step 2 is skipped.

2. The i960 processor sets
up the host interface
device to transfer data
to the cache. Upon
completion, the host
interface device
notifies the i960.

3. For a read command, the
i960 processor
determines that the
data resides on
multiple disks and
instructs the SCSI I/O
processors (or "SIOPs")
to retrieve data from
the disk drives to the
cache. For a RAID 5
write command, the i960
processor determines
that some data may be
required from the SCSI
disks for parity
computation and
instructs the SIOPs to
retrieve this data.

4. The SIOPS transfer data from the
disks to the cache and notify the
i960 on completion. For a write
command, the i960 then computes
parity. For a read command, steps 5
and 6 are skipped.

5. The i960 instructs the SIOPs to transfer data and parity to the disk
drives.

6. The SIOPs transfer data from the cache to the disks and notify the i960
upon completion. The i960, in turn, notifies the host. This completes the
execution of a write command and step 7 is not needed.

7. The i960 sets up the host interface device to transfer data from the cache
to system memory. Upon completion, the host interface device notifies the
i960, which, in turn, notifies the host.
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION APPEARING ELSEWHERE OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS.

THE COMPANY

Mylex designs, manufactures and markets RAID controllers that provide high
performance, capacity enhancing fault tolerant storage and input/output
solutions for client/server computer networks. Mylex controllers integrate the
Company's proprietary ASICs, firmware and software with standard industry
components. More than twenty leading network file server and storage subsystem
OEMs, including IBM, Hewlett-Packard Company, Digital Equipment Corporation, and
NEC, have designed Mylex RAID controllers into their server and storage
subsystem products.

During the late 1980s and early 1990s, the Company's principal business
involved the production and sale of system boards (so-called "mother boards")
for personal computers. In the early 1990s, Mylex responded to changes in the
computer industry by undertaking a series of product development initiatives
designed to reposition the Company to address the storage and input/output, or
"I/O," challenges facing the emerging client/server computing environment. In
1992, the Company introduced its first RAID controller product into the personal
computer network market. Sales of RAID controller products have grown rapidly
since 1992, and represented over 90% of the Company's net sales during the first
half of 1995. The higher gross margins from this new product line are reflected
in the increase in the Company's overall gross margins from 13.6% in 1992 to
19.4% in 1993 to 35.5% in 1994 to 37.4% in the first half of 1995.

The trend toward client/server computing that began in the mid-1980s has
placed particular demands on network storage systems and related I/O functions.
The development of faster microprocessors and more robust computer bus
architectures in network systems has often outstripped the capabilities of data
storage and I/O technologies, leading to systems "bottlenecks." To alleviate or
avoid such bottlenecks, networks require continual improvements in stored data
retrieval speed. In addition, the development of more complex applications and
operating systems has created the need for increased network storage capacity.
Meanwhile, the mission critical, enterprise-wide nature of networked computing
often requires a high level of "fault tolerance," or the ability to preserve
data from loss and to provide uninterrupted system service even if an individual
data storage device fails. The emergence of data-intensive applications such as
multimedia and video-on-demand are further driving the demands for speed,
capacity and reliability in network storage devices.

Mylex RAID controllers enable increased speed, greater capacity, and a high
degree of fault tolerance in network storage and I/O functions. RAID, which
stands for redundant array of independent disks, is a method for distributing
data across several disk drives and allowing the server microprocessor to access
those drives simultaneously, thus increasing system storage I/O performance. In
addition, lost data on any drive can be recreated using special RAID algorithms,
thus ensuring the immediate availability of RAID protected data even in the
event of a disk drive failure. Mylex controllers support all major operating
systems and bus types, and the Company endeavors to rapidly develop products for
new bus, operating system, and platform standards as they are defined. RAID
controller products based on the recently introduced PCI bus standard
represented a majority of its disk array product sales in the second quarter of
1995. The Company believes that its proprietary software and firmware are a key
competitive advantage in the RAID controller market.

The Company's goal is to maintain its position as the leading supplier of
RAID controllers and to become a leader and standard setter in the broader
market for intelligent I/O solutions in the networked personal computer
marketplace. In pursuit of this goal, the Company has worked in cooperation with
Intel to develop an implementation of RAID for the system board which would
offer an extremely cost-effective RAID solution for users of personal computer
networks. The Company believes that this product, which is scheduled to be
introduced along with the Intel P6 processor in 1996, will substantially broaden
the potential market for its RAID solutions.

3
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.......... 2,000,000 shares
Common Stock to be outstanding after
the offering................................. 16,825,617 shares (1)
Use of proceeds.............................. General corporate purposes, including working
capital, and repayment of borrowings
Nasdaq National Market symbol................ MYLX
</TABLE>

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

<TABLE>
<CAPTION>
JUNE 30, 1995
DECEMBER 31, 1994 ------------------------
----------------- AS
ACTUAL ACTUAL ADJUSTED (2)
----------------- --------- -------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working Capital.................................................... $ 16,562 $ 22,352 $ 55,112
Total Assets....................................................... 27,358 38,949 $ 69,209
Shareholders' Equity............................................... 17,760 23,620 $ 56,380
<FN>
--------------------------
(1) Based on shares outstanding as of June 30, 1995. Does not include 2,407,000
shares of Common Stock reserved for issuance, as of June 30, 1995, under
the Company's stock option plans. On June 30, 1995, 563,000 shares of
Common Stock were issuable upon the exercise of outstanding options under
those plans.

(2) Adjusted to reflect the sale by the Company of 2,000,000 shares of Common
Stock offered hereby, at an offering price of $17.50 per share, and the
application of the estimated net proceeds therefrom. See "Use of Proceeds"
and "Capitalization."
</TABLE>

UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS PROSPECTUS ASSUMES THAT
THE UNDERWRITERS WILL NOT EXERCISE THEIR OVER-ALLOTMENT OPTION. SEE
"UNDERWRITING."

4
<PAGE>
RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING RISK
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING MYLEX CORPORATION (TOGETHER
WITH ITS SUBSIDIARIES, THE "COMPANY" OR "MYLEX") AND ITS BUSINESS BEFORE
PURCHASING THE SHARES OFFERED IN THIS PROSPECTUS.

DEPENDENCE ON RAID CONTROLLER PRODUCTS

Sales of the Company's RAID ("redundant array of independent disks")
controller products accounted for 81% of the Company's net sales in 1994 and 91%
of net sales in the first six months of 1995. RAID controller products are used
principally in personal computer network applications. The use of RAID
technology in the personal computer network market is relatively recent, and
there can be no assurance that another technology will not replace RAID in the
disk array controller marketplace or that there will be widespread acceptance or
continuing growth of the use of RAID products in general, or the Company's RAID
controllers in particular, in that market. Furthermore, even if the market
continues to grow, there can be no assurance that the Company will be able to
continue to market and sell its RAID controller products at the same rates, and
with the same gross margins, it has experienced to date. In addition, in order
to be able to compete successfully in the RAID controller market, the Company
will have to develop and market new RAID controller products. There can be no
assurance that the Company will be able to develop and introduce new RAID
controller products in a timely manner or that any such products will gain or
sustain market acceptance.

CUSTOMER CONCENTRATION

The Company's revenue depends on a customer base that is highly
concentrated. The Company's three largest customers, International Business
Machines ("IBM"), Digital Equipment Corporation ("DEC"), and Hewlett-Packard
Company ("HP"), collectively accounted for 53% of the Company's net sales in
1994. In the first six months of 1995, sales to IBM, DEC and HP collectively
accounted for 56% of the Company's net sales. Sales to IBM alone represented 31%
of the Company's net sales during the first six months of 1995. A limited number
of customers and customer orders have accounted for, and are likely to continue
to account for, a substantial portion of the Company's revenue in any period.
The Company has no long-term purchase commitments from its customers, and
customers generally may cancel their orders on 30-days notice. Accordingly,
there can be no assurance that orders from existing customers, including the
Company's principal customers, will continue at their historical levels, or that
the Company will be able to obtain orders from new customers. Loss of one or
more of the Company's current customers, particularly a principal customer, or
cancellation or rescheduling of orders already placed, could materially and
adversely affect the Company's business and operating results.

The Company's OEM customers have integrated the Company's RAID controller
products into their servers and storage subsystems. Any of these OEM customers
may choose to develop their own RAID controller products which could be
substituted for, and thus reduce or eliminate their purchases of, the Company's
RAID controller products. Most of the Company's OEM customers, and particularly
its principal customers, have extensive product development experience and
expertise, substantial financial resources and ongoing, substantial product
development activities. As a result, it is likely that those customers have been
and will be involved in RAID development programs on a continuing basis. Any
material reduction in purchases of a RAID controller product by any OEM
customers as a result of such customer developing its own competing product will
materially and adversely affect the Company's business and operating results.

COMPETITION

The markets for the Company's RAID controller products have been competitive
and are likely to become more competitive. Furthermore, there are numerous
companies with established reputations in the controller and personal computer
related markets, many of which have greater financial, manufacturing, and
marketing resources than those of the Company.

5
<PAGE>
Some OEMs (such as Compaq and Dell) have developed their own RAID
controllers. As noted, the customers historically accounting for the most
significant volumes of the Company's sales are major OEMs, any of which could
develop their own controllers at any time, rather than purchase such products
from the Company.

The Company's ability to compete successfully in either the RAID controller
market or the personal computer network market depends upon its ability to
continue to develop reliable products that obtain market acceptance and can be
sold at competitive prices while maintaining adequate gross margin levels. There
can be no assurance that the Company will be able to compete successfully in the
future in the market for such products or that other companies may not develop
products with greater performance or more favorable prices and thus reduce the
demand for the Company's products. Furthermore, as more companies enter the RAID
controller market, the Company expects to encounter price competition for such
products which could materially and adversely affect its gross margin.

NEW PRODUCTS AND TECHNOLOGICAL CHANGES

The markets for the Company's products are characterized by rapidly changing
technology, evolving industry standards and relatively short product life
cycles. The Company's ability to compete successfully will depend on its
ability, on a timely and cost-effective basis, to enhance its existing products
and to introduce new products, such as its new PCI and SCSI to SCSI disk array
product families, with features that meet changing customer requirements and
with competitive prices. There can be no assurance that the Company will be
successful in doing so. Delays in product enhancement and development or the
failure of the Company's new products or enhancements to gain market acceptance
could have an adverse effect on the Company's business and operating results.

Despite testing, new products may be affected by quality, reliability or
interoperability problems, which could result in returns, delays in collecting
accounts receivable, unexpected service or warranty expenses, reduced orders and
a decline in the Company's competitive position. In addition, there can be no
assurance that new products or technologies developed by others, or the
emergence of new industry standards, will not render the Company's products or
technologies noncompetitive or obsolete. For example, efforts by the Company's
OEM customers and other manufacturers to integrate additional functions into
system boards, to use chip sets that incorporate additional functionality, or to
design their own controllers and other devices rather than purchase the
Company's products could have a material adverse effect on the Company's
business and operating results.

All of the Company's RAID controller products are based on the Intel i960
processor. If another company develops a processor for RAID applications which
renders the i960 processor noncompetitive, whether as a result of cost,
specifications or other advantages of the new processor, or if Intel ceases to
produce the i960 processor or support the Company's efforts to develop products
based on the i960 processor, the Company will be forced to develop new products
based on another processor. Such development efforts will be costly, and there
can be no assurance that the Company will be able to timely complete such
development efforts or that such products, if developed, will have the same
degree of market acceptance or the same gross margin as the Company's present
RAID products.

POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS

The Company's quarterly operating results could vary significantly depending
on a number of factors, such as the timing of receipt and shipment of
significant orders, changes in the mix of the Company's sales to OEM customers,
distributors, value added resellers and other channels of distribution, the cost
and timing of new product releases and product enhancements by the Company and
its competitors, variations in the Company's product mix, market acceptance of
new or enhanced versions of the Company's products, changes in pricing and
promotion policies by the Company and its competitors and general economic
conditions. Quarterly sales depend on the volume and timing of orders received
during a quarter, which are difficult to forecast. At the same time, the
Company's expenses are based, in part, on its expectations as to customer demand
for its products. Mylex customers generally have the right to cancel orders on
30-day notice, and the cancellation of orders already placed could have an
adverse effect on the Company's operating results in any quarter. In

6
<PAGE>
addition, due to the timing of customer orders, the Company often ships products
representing in excess of a majority of its revenues for a quarter during the
last month of that quarter. This factor increases the risk of an unanticipated
fluctuation in quarterly net sales because, in the last month of the quarter,
the Company has limited opportunities to take corrective action in the event a
customer cancels, reschedules or otherwise delays a shipment or it appears that
the Company may be incapable of timely manufacturing all orders scheduled for
shipment in that month. Operating results falling below expectations in any
quarter could have an adverse effect on the market price of the Company's Common
Stock.

SUPPLIER AND COMPONENT DEPENDENCE

The Company depends heavily on its suppliers to provide materials on a
timely basis, at reasonable prices. Although many of the components for the
Company's products are available from numerous sources at competitive prices,
some of the most critically needed components, such as the i960 processor,
ASICs, and SCSI chips, are presently available to the Company from only one
source. Furthermore, because of high industry demand for many of those
components, their manufacturers may, from time to time, not be able to make
delivery on orders on a timely basis. In addition, manufacturers of components
on which the Company relies may choose, for numerous reasons, not to continue to
make those components, or the next generation of those components, available to
Mylex.

The Company and its competitors are currently experiencing a worldwide
shortage of DRAM SIMM memory modules and surface mount capacitors due to the
significant demand for such components. The Company is attempting to develop
different designs for its products which would allow it to avoid or reduce its
dependence on components for which there is a shortage. However, no assurance
can be given that the results of such design efforts will be timely or
effective.

The Company has no long-term supply contracts. There can be no assurance
that the Company will be able to obtain, on a timely basis, all the components
it requires. If the Company cannot obtain essential components as required, the
Company could be unable to meet demand for its products, thereby adversely
affecting its operating results and allowing competitors to gain market share.
In addition, scarcity of such components could result in cost increases and
adversely affect the Company's gross margin.

SUSTAINING AND MANAGING GROWTH

The Company is currently undergoing a period of rapid growth and there can
be no assurance that such growth can be sustained or managed successfully. This
expansion has resulted in a higher fixed cost structure which will require
increased revenue in order to maintain historical gross margin and operating
margins. There can be no assurance that the Company will obtain the increased
orders necessary to generate increased revenue sufficient to cover this higher
cost structure. Failure by the Company to manage growth successfully or have the
systems and capacities necessary to sustain its growth could materially and
adversely affect the Company's business and operating results.

INTERNATIONAL SALES AND OPERATIONS

Sales to customers outside the United States accounted for approximately 16%
of the Company's revenue in 1994 and 28% of its revenue in the first six months
of 1995, and the Company expects that international sales will continue to
represent a significant portion of the Company's revenue. International sales
pose certain risks not faced by companies that limit themselves to domestic
sales. Fluctuations in the value of foreign currencies relative to the U.S.
dollar, for example, could make the Company's products less price competitive
and, if the Company in the future denominates any of its sales in foreign
currencies, result in losses from foreign currency transactions. International
sales also could be adversely affected by factors beyond the Company's control,
including the imposition of government controls, export license requirements,
restrictions on technology exports, changes in tariffs and taxes and general
economic and political conditions. In some countries, the law does not protect
the Company's intellectual property rights to the same extent as the laws in the
United States.

7
<PAGE>
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant degree upon the continued
contributions of key personnel, many of whom would be difficult to replace and
are not subject to employment or noncompetition agreements. If any of these
employees were to leave the Company, the Company's business could be adversely
affected. The Company believes its future success will also depend, in large
part, upon its ability to attract and retain highly skilled engineering,
managerial, sales and marketing personnel. Competition for such personnel is
intense, and there can be no assurance that the Company will be successful in
attracting and retaining such personnel.

PROPRIETARY TECHNOLOGY CLAIMS
The Company does not presently hold any patents applicable to its RAID
controller products and relies on a combination of trade secret, copyright and
trademark laws and employee and third-party nondisclosure agreements to protect
its intellectual property rights. There can be no assurance that the steps taken
by the Company to protect its rights will be adequate to prevent
misappropriation of the Company's technology or to preclude competitors from
developing products with features similar to the Company's products.
Furthermore, there can be no assurance that, in the future, third-parties will
not assert infringement claims against the Company or with respect to its
products for which the Company has indemnified certain of its customers.
Asserting the Company's rights or defending against third-party claims could
involve substantial expense, thus materially and adversely affecting the
Company's results of operations. In the event a third party were successful in a
claim that one of the Company's products infringed its proprietary rights, the
Company may have to pay substantial damages or royalties, remove that product
from the marketplace or expend substantial amounts in order to modify the
product so that it no longer infringes such proprietary rights, any of which
could have an adverse effect on its business and results of operations. See
"Business -- Intellectual Property" and "Business -- Litigation."

LITIGATION
The Company is party to an arbitration proceeding initiated by American
Megatrends, Inc. ("AMI") in 1992. In the arbitration, AMI has alleged breach of
contract and other claims relating to an agreement under which AMI licensed
rights to the Company to use a basic input/output system for a 386 system board
that the Company ceased using in its products prior to the initiation of the
proceedings. AMI is seeking damages in an unspecified amount. The Company has
asserted certain defenses and counterclaims and intends to continue to defend
this action vigorously. It should be noted, however, that legal proceedings can
be unpredictable, no assurance can be given that the Company will prevail, and
an unfavorable outcome could have an adverse effect on the Company's business
and results of operations.

The former Chief Executive Officer of the Company, Dr. M.A. Chowdry, filed a
complaint against the Company and its outside directors in October 1994,
claiming breach of an employment agreement with the Company. The complaint
alleges compensatory and consequential damages of over $6 million (which would
vary based on the price of the Company's Common Stock) and unspecified punitive
damages. The Company believes it has meritorious defenses and intends to
vigorously defend this lawsuit. Nonetheless, given the unpredictable nature of
legal proceedings, no assurance can be given that the Company will prevail.

Although there can be no assurance given with respect to the results of
legal proceedings, based on information currently available to the Company, it
believes that it does not have potential liability with respect to these
proceedings that would have a material adverse effect on the Company. However,
the Company's costs of defending these proceedings have been substantial, will
fluctuate from quarter to quarter and are likely to increase. See "Business --
Litigation."

POSSIBLE VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock could be subject to wide
fluctuations in response to such factors as, among others, variations in the
Company's expected or actual results of operations, competitors' announcements
concerning products and operating results, and market conditions, which may be
unrelated to the Company's operating performance.

8
<PAGE>
USE OF PROCEEDS

The net proceeds to Mylex from the sale of 2,000,000 shares of Common Stock
offered by the Company are estimated to be approximately $32,760,000
($37,734,000 if the Underwriters exercise their over-allotment option in full),
based on the offering price of $17.50 per share and after deducting the
underwriting discount and estimated offering expenses payable by the Company.

Mylex intends to use the proceeds of this offering for general corporate
purposes, including working capital. Approximately $2,500,000 will be used to
pay down borrowings under the Company's bank line of credit. Advances under the
line bear interest at a floating rate equal to the bank's prime rate and the
line matures on May 15, 1996. The Company presently has no other specific plans
for any significant portion of the proceeds.

The Company may use a portion of the proceeds to acquire technologies,
products or businesses that complement the Company's current business, as such
opportunities may arise. Although the Company does consider such acquisitions,
from time to time, as a part of its normal business operations and planning, it
has no present commitments or agreements with respect to any such acquisitions.
Pending their use, the proceeds will be invested in short-term, United States
Government or investment grade interest-bearing securities.

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is traded on the National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq") under the symbol
"MYLX." The following table sets forth the range of high and low sales prices of
the Company's Common Stock for the periods indicated, as reported by the Nasdaq
National Market.

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
FISCAL 1993
First Quarter......................................... $6 1/4 $4 1/8
Second Quarter........................................ 5 1/2 3 1/2
Third Quarter......................................... 5 5/8 3 1/2
Fourth Quarter........................................ 7 3/4 4 3/4
FISCAL 1994
First Quarter......................................... 7 3/8 4 7/8
Second Quarter........................................ 5 3/4 3 5/8
Third Quarter......................................... 9 5/8 4 3/8
Fourth Quarter........................................ 11 3/4 7 3/4
FISCAL 1995
First Quarter......................................... 12 1/16 8 3/8
Second Quarter........................................ 13 3/8 10
Third Quarter (through September 20, 1995)............ 18 1/2 13 1/2
</TABLE>

On September 20, 1995, the last reported sale price for the Common Stock on
the Nasdaq National Market was $17.83 per share. As of June 30, 1995, there were
approximately 650 holders of record of the Common Stock.

DIVIDEND POLICY

To date, Mylex has not declared or paid cash dividends on its Common Stock.
The Company presently intends to retain all earnings for use in the operation
and development of its business and, therefore, does not expect to declare or
pay any cash dividends on its Common Stock in the foreseeable future.

9
<PAGE>
CAPITALIZATION

The following table sets forth (i) the actual capitalization of the Company
at June 30, 1995, and (ii) as adjusted to reflect the Company's sale of
2,000,000 shares of Common Stock pursuant to this offering and the Company's
receipt of the estimated net proceeds from this offering (based on the offering
price of $17.50 per share and after deducting the underwriting discount and
estimated offering expenses payable by the Company):

<TABLE>
<CAPTION>
JUNE 30, 1995
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS)

<S> <C> <C>
Line of credit payable to bank....................................... $ 2,500 $ --

Current portion of long-term capital lease obligations............... 359 359
--------- -----------
Long-term capital lease obligations.................................. 343 343
--------- -----------
Shareholders' equity
Common Stock, $.01 par value (25,000,000 shares authorized;
14,825,617 shares outstanding, 16,825,617 shares, as adjusted)
(1)............................................................... 148 168
Additional paid-in capital......................................... 14,627 47,367
Retained earnings.................................................. 8,845 8,845
--------- -----------
Total shareholders' equity....................................... $ 23,620 $ 56,380
--------- -----------
--------- -----------
Total liabilities and shareholders' equity........................... $ 38,949 $ 69,209
--------- -----------
--------- -----------
<FN>
------------------------

(1) Does not include 2,407,000 shares of Common Stock reserved for issuance
under the Company's stock option plans as of June 30, 1995. On that date,
563,000 shares of Common Stock were issuable upon exercise of outstanding
options.
</TABLE>

10
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA

The following selected historical financial data are qualified by reference
to, and should be read in conjunction with, the consolidated financial
statements, related notes and other financial information included elsewhere in
this Prospectus. The selected historical financial data set forth for each of
the five fiscal years ended December 31, 1994, are derived from the consolidated
financial statements of the Company included elsewhere in this Prospectus. The
selected historical financial data for and as of the six-month periods ended
June 30, 1994 and 1995, are unaudited, but in the opinion of management include
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of the Company's financial position and results of
operations as of and for such periods. The results of operations for the six
months ended June 30, 1995, may not be indicative of the results that may be
expected for the year ending December 31, 1995.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1990 1991 1992 1993 1994 1994 1995
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Net Sales............................. $ 47,867 $ 54,268 $ 48,769 $ 45,234 $ 62,513 $ 27,775 $ 39,216
Cost of Sales......................... 35,417 47,634 42,112 36,456 40,322 18,783 24,537
--------- --------- --------- --------- --------- --------- ---------
Gross Margin........................ 12,450 6,634 6,657 8,778 22,191 8,992 14,679
Operating Expenses:
Sales and Marketing................. 2,424 2,792 3,370 2,962 3,592 1,618 2,582
Research and Development............ 1,325 2,655 2,824 2,474 3,332 1,566 2,078
General and Administrative.......... 2,527 2,938 2,515 2,690 4,643 2,175 2,583
Provision for Uncollectible Accounts
Receivable(1)...................... 471 1,141 1,956 4,676 -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total Operating Expense........... 6,747 9,526 10,665 12,802 11,567 5,359 7,243
--------- --------- --------- --------- --------- --------- ---------
Operating Income (Loss)........... 5,703 (2,892) (4,008) (4,024) 10,624 3,633 7,436
Other Income (Expense), Net........... (11) (405) (453) (466) (563) (270) (117)
--------- --------- --------- --------- --------- --------- ---------
Income (Loss) Before Income Tax....... 5,692 (3,297) (4,461) (4,490) 10,061 3,363 7,319
Provision for Income Tax.............. 2,308 (1,092) (1,461) (46) 2,552 841 2,562
--------- --------- --------- --------- --------- --------- ---------
Net Income (Loss)..................... $ 3,384 $ (2,205) $ (3,000) $ (4,444) $ 7,509 $ 2,522 $ 4,757
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net Income (Loss) Per Share........... $ 0.28 $ (0.19) $ (0.25) $ (0.35) $ 0.51 $ 0.18 $ 0.30
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Weighted Average Common and Equivalent
Shares............................... 12,299 11,337 12,103 12,740 15,247 14,591 15,783

CONSOLIDATED BALANCE SHEET DATA:
Working Capital..................... $ 11,107 $ 8,405 $ 6,286 $ 3,461 $ 16,562 $ 7,198 $ 22,352
Total Assets........................ 25,929 22,433 23,694 14,640 27,358 21,315 38,949
Shareholders' Equity................ 11,420 10,060 7,963 4,664 17,760 8,489 23,620
<FN>
--------------------------
(1) Virtually all of the provision for 1993 and 1992 related to accounts
receivables from Northgate Computer Systems, Inc. and Tandon Computer,
respectively. See "Certain Relationships and Related Transactions" for a
description of certain matters related to Northgate.
</TABLE>

11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Mylex was incorporated in 1983. Until late 1993, the Company's principal
business was the development and sale of system boards (so-called "mother
boards") for personal computers. Virtually all of its sales of such products
were to OEMs and wholesale distributors in the personal computer market. In
1993, the Company began withdrawing from the system board business, due in part
to the intense price competition it experienced for those products and the
resulting pressures on gross margin. In 1992, the Company completed the
development of its first disk array controller product, which used RAID
technology, and introduced that product into the personal computer network
market. By 1994, the Company's RAID controller products had become its principal
products and its sales of system board products had become relatively
insignificant.

The Company's RAID controller customers are OEMs, system integrators, value
added resellers and computer distributors and dealers. The Company's revenue
from its RAID controller products represented 44%, 81% and 91% of its net sales
for 1993, 1994 and the first six months of 1995, respectively. Aggregate revenue
derived from sales of its products to its three principal OEMs, IBM, DEC and HP,
represented 28%, 53% and 56% of its net sales for 1993, 1994 and the first six
months of 1995, respectively, with revenue from IBM representing 31% of net
sales for the first six months of 1995. Revenue from foreign sales, including
foreign sales to United States OEMs, represented 21%, 16% and 28% of its net
sales for 1993, 1994 and the first six months of 1995, respectively. A limited
number of customers are likely to continue to account for a substantial portion
of the Company's revenue in any period, and the loss of a principal customer
could materially and adversely affect the Company's business and operating
results.

Due principally to the timing of customer orders, the Company often ships
products representing in excess of a majority of its revenue for a quarter
during the last month of that quarter. As a result, the risk of an unanticipated
fluctuation in quarterly net sales is increased because, by the last month of
the quarter, the Company has limited opportunities to take corrective action in
the event a customer cancels, reschedules or otherwise delays a shipment or it
appears that the Company is incapable of timely manufacturing all orders
scheduled for shipment in that month.

RESULTS OF OPERATIONS

The following table sets forth certain consolidated statement of operations
data as a percentage of net sales for the periods indicated.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- --------------
1992 1993 1994 1994 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net Sales............................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of Sales........................... 86.4 80.6 64.5 67.6 62.6
----- ----- ----- ----- -----
Gross Margin.......................... 13.6 19.4 35.5 32.4 37.4
Operating Expenses:
Sales and Marketing................... 6.9 6.5 5.8 5.8 6.6
Research and Development.............. 5.8 5.5 5.3 5.7 5.3
General and Administrative............ 5.2 6.0 7.4 7.8 6.6
Provision For Uncollectible Account
Receivable........................... 4.0 10.3 -- -- --
----- ----- ----- ----- -----
Total Operating Expense............. 21.9 28.3 18.5 19.3 18.5
----- ----- ----- ----- -----
Operating Income (Loss)............. (8.3) (8.9) 17.0 13.1 18.9
Other Income (Expense), Net............. (0.9) (1.0) (0.9) (1.0) (0.3)
----- ----- ----- ----- -----
Income (Loss) Before Income Tax......... (9.2) (9.9) 16.1 12.1 18.6
Provision for Income Tax................ (3.0) (0.1) 4.1 3.0 6.5
----- ----- ----- ----- -----
Net Income (Loss)....................... (6.2)% (9.8)% 12.0% 9.1% 12.1%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>

12
<PAGE>
SIX MONTHS ENDED JUNE 30, 1994 AND JUNE 30, 1995

NET SALES. Net sales for the six months ended June 30, 1995, increased 41%
to $39.2 million, compared to $27.8 million during the corresponding period of
1994. Sales increased primarily due to a 63% increase in shipments of the
Company's RAID controller products, particularly its PCI products, which more
than offset the decline in sales of the Company's system boards and other
peripheral products during the period.

GROSS MARGIN. Gross margin for the six months ended June 30, 1995, was
$14.7 million, or 37.4% of net sales, compared to $9.0 million, or 32.4% of net
sales, for the six months ended June 30, 1994. The increase in gross margins was
attributable to increased sales of the Company's higher margin RAID controller
products during the six months ended June 30, 1995, which more than offset the
declining margins of the Company's system boards during that period.

SALES AND MARKETING. Sales and marketing expenses for the six months ended
June 30, 1995, totaled $2.6 million, or 6.6% of net sales, compared to $1.6
million, or 5.8% of net sales, for the six months ended June 30, 1994. Increases
in sales and marketing expenditures resulted from increased staffing levels and
commission expenses, as well as increased advertising, promotional and travel
expenses.

RESEARCH AND DEVELOPMENT. Research and development expenses for the six
months ended June 30, 1995, totaled $2.1 million, or 5.3% of net sales, compared
to $1.6 million, or 5.7% of net sales, for the six months ended June 30, 1994.
Research and development expenses increased during the six months ending June
30, 1995, due to higher salaries and increased staff levels.

GENERAL AND ADMINISTRATIVE. General and administrative expenses for the six
months ended June 30, 1995, totaled $2.6 million, or 6.6% of net sales, compared
to $2.2 million, or 7.8% of net sales, for the six months ended June 30, 1994.
General and administrative expenses increased due to higher compensation and
benefit expenses as a result of increased staffing levels and bonus expenses.
Legal expenses also increased over those incurred during the same period in
1994.

INCOME TAXES. The Company's effective tax rate during the six months ended
June 30, 1995, was 35%, as compared to 25% in the corresponding period of the
prior year. The tax rate for the first six months of 1995 reflects the impact of
the reduction of previously available tax benefits.

FISCAL 1993 AND 1994

NET SALES. Net sales increased by 38% to $62.5 million in 1994 from $45.2
million in 1993. Sales of the Company's RAID controller products increased by
151% in 1994 over 1993 levels, reflecting the Company's design wins with its OEM
customers in late 1993 and 1994. The net sales growth in 1994 was attributable
to overall market growth and strong demand for the Company's RAID controller
products. Sales from RAID controller products represented 81% of total sales in
1994 compared to 44% in 1993.

GROSS MARGIN. The Company's gross margin was $22.2 million, or 35.5% of net
sales, in 1994, compared to $8.8 million, or 19.4% of sales, in 1993. The
increase was due to higher margin RAID controller products representing an
increased percentage of the product mix. Gross margin also increased because of
the replacement of several costly components on the controller boards with less
costly ASIC chips designed by the Company.

SALES AND MARKETING. Sales and marketing expenses were $3.6 million, or
5.8% of net sales, in 1994, compared to $3.0 million, or 6.5% of net sales, in
1993. The increase in sales and marketing expenses was primarily due to the
addition of employees to manage the increased volume and to higher commission,
advertising and travel related expenses.

13
<PAGE>
RESEARCH AND DEVELOPMENT. Expenditures for research and development were
$3.3 million, or 5.3% of net sales, in 1994, compared to $2.5 million, or 5.5%
of net sales, in 1993. Although research and development expenses increased by
35% from 1993 to 1994, these expenses, as a percentage of net sales, decreased
slightly between the periods due to the significant growth of net sales in 1994.
The growth in research and development expenses was primarily due to increased
technology development efforts related to intelligent input/output management
projects.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
to $4.6 million, or 7.4% of net sales, in 1994, compared to $2.7 million, or
6.0% of net sales, in 1993. The increase in general and administrative expenses
during 1994 was due to the addition of personnel to support the growth in the
Company's business and significantly increased legal expenses over those
incurred in 1993.

PROVISION FOR UNCOLLECTIBLE ACCOUNTS RECEIVABLE. The provision for
uncollectible accounts receivable decreased by $4.7 million in 1994. The Company
did not incur any bad debt expense during the year as accounts written off
during 1994 had been fully reserved as of December 31, 1993. The Company wrote
off $4.8 million of uncollectible accounts receivable during 1994, $4.6 million
of which was related to products shipped to Northgate Computer Systems, Inc
("Northgate"). The receivable from Northgate was fully reserved during 1993 due
to the deterioration of Northgate's financial condition. The receivable from
Northgate was written off during 1994 as a result of Northgate's filing for
bankruptcy, after an analysis of the assets remaining to satisfy the claims of
Northgate's secured and unsecured creditors.

INCOME TAXES. The Company's combined federal and state effective income tax
provision rate of 25% is less than the federal statutory rate of 34% primarily
due to a change in the beginning of the year valuation allowance for which no
benefit had been recognized.

FISCAL 1992 AND 1993

NET SALES. The Company's net sales for 1993 decreased by $3.6 million to
$45.2 million, compared to $48.8 million for 1992. Sales declined primarily due
to aggressive price competition leading to a reduction in both the selling
prices and unit volumes of the Company's system boards. Sales of the Company's
RAID controller products increased significantly during 1993 due to growing
industry acceptance of the Company's RAID disk array technology and product
family.

GROSS MARGIN. Gross margin for 1993 increased to $8.8 million, or 19.4% of
net sales, compared to $6.7 million, or 13.6% of net sales, for 1992. The
increase in gross margin in fiscal 1993 was due to the increased sales of higher
margin RAID controllers products, the sales of which more than offset the
declining margins of the Company's system boards. Sales of RAID controller
products accounted for 44.4% of net sales during 1993, compared to 2.4% of net
sales during 1992.

SALES AND MARKETING. Sales and marketing expenses were $3.0 million, or
6.5% of net sales, for 1993, compared to $3.4 million, or 6.9% of net sales, for
1992. The decrease in sales and marketing expenses was due to a reduction in the
number of sales and marketing personnel supporting the system board product line
and lower advertising expenses.

RESEARCH AND DEVELOPMENT. Research and development expenses were $2.5
million, or 5.5% of net sales, for 1993, compared to $2.8 million, or 5.8% of
net sales, for 1992. This decrease in research and development expenses was due
to the completion or termination of several projects during early 1993,
resulting in lower engineering consulting and prototype expenses.

GENERAL AND ADMINISTRATIVE. General and administrative expenses for 1993
totaled $2.7 million, or 6.0% of net sales, compared to $2.5 million, or 5.2% of
net sales, for 1992. This increase was primarily due to higher legal expenses
and director and officer liability insurance premiums. Those increases in
general and administrative expenses were only partially offset by reduced
compensation and benefit expenses, resulting from lower staffing levels during
1993, as compared to 1992.

14
<PAGE>
PROVISION FOR UNCOLLECTIBLE ACCOUNTS RECEIVABLE. The provision for
uncollectible accounts receivable increased from $2.0 million for 1992 to $4.7
million for 1993. The increase was due to the rapid deterioration during the
third quarter of 1993 in the financial condition of one of the Company's
customers, Northgate.

INCOME TAXES. The Company had a net operating loss for 1993. The financial
statements reflect a tax benefit of $46,100 for that year, as compared to a tax
benefit of $1.5 million for 1992. The Company had recorded substantially all of
the tax benefits available to it in years prior to 1993.

QUARTERLY INFORMATION

The following tables present selected quarterly consolidated financial
information for the periods indicated in both dollars and as a percentage of net
sales. The information derives from unaudited consolidated financial statements
that, in the opinion of management, reflect all normal recurring adjustments
necessary to fairly present the information. The results of operations for any
quarter do not necessarily indicate the results to be expected for any future
period.

<TABLE>
<CAPTION>
FISCAL 1994 FISCAL 1995
------------------------------------------------ ------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30,
1994 1994 1994 1994 1995 1995
----------- ----------- ----------- --------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Net Sales........................................ $ 13,642 $ 14,132 $ 16,119 $ 18,620 $ 17,085 $ 22,131
Cost of Sales.................................... 9,655 9,128 10,378 11,161 10,813 13,724
----------- ----------- ----------- --------- ----------- -----------
Gross Margin................................... 3,987 5,004 5,741 7,459 6,272 8,407
Operating Expense:
Sales and Marketing............................ 774 844 946 1,028 1,125 1,457
Research and Development....................... 735 830 814 953 957 1,121
General and Administrative..................... 875 1,300 1,014 1,454 973 1,610
----------- ----------- ----------- --------- ----------- -----------
Total Operating Expense...................... 2,384 2,974 2,774 3,435 3,055 4,188
----------- ----------- ----------- --------- ----------- -----------
Operating Income............................. 1,603 2,030 2,967 4,024 3,217 4,219
Other Income (Expense), Net...................... (151) (119) (119) (174) (78) (38)
----------- ----------- ----------- --------- ----------- -----------
Income Before Income Tax......................... 1,452 1,911 2,848 3,850 3,139 4,181
Provision for Income Tax......................... 363 478 712 999 1,099 1,463
----------- ----------- ----------- --------- ----------- -----------
Net Income....................................... $ 1,089 $ 1,433 $ 2,136 $ 2,851 $ 2,040 $ 2,718
----------- ----------- ----------- --------- ----------- -----------
----------- ----------- ----------- --------- ----------- -----------
Net Income Per Share............................. $ 0.07 $ 0.10 $ 0.14 $ 0.19 $ 0.13 $ 0.17
----------- ----------- ----------- --------- ----------- -----------
----------- ----------- ----------- --------- ----------- -----------
Weighted Average Common and Equivalent Shares.... 15,249 14,548 15,718 15,540 15,513 15,845
</TABLE>

<TABLE>
<CAPTION>
FISCAL 1994 FISCAL 1995
------------------------------------------------ ------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30,
1994 1994 1994 1994 1995 1995
----------- ----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Sales........................................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of Sales.................................... 70.8 64.6 64.4 59.9 63.3 62.0
----------- ----------- ----------- --------- ----------- -----------
Gross Margin................................... 29.2 35.4 35.6 40.1 36.7 38.0
Operating Expense:
Sales and Marketing............................ 5.7 6.0 5.9 5.5 6.6 6.6
Research and Development....................... 5.4 5.9 5.0 5.2 5.6 5.1
General and Administrative..................... 6.4 9.2 6.3 7.8 5.7 7.2
----------- ----------- ----------- --------- ----------- -----------
Total Operating Expense...................... 17.5 21.1 17.2 18.5 17.9 18.9
----------- ----------- ----------- --------- ----------- -----------
Operating Income............................. 11.7 14.3 18.4 21.6 18.8 19.1
Other Income (Expense), Net...................... (1.1) (0.8) (0.7) (0.9) (0.5) (0.2)
----------- ----------- ----------- --------- ----------- -----------
Income Before Income Tax......................... 10.6 13.5 17.7 20.7 18.3 18.9
Provision for Income Tax......................... 2.6 3.4 4.4 5.4 6.4 6.6
----------- ----------- ----------- --------- ----------- -----------
Net Income....................................... 8.0% 10.1% 13.3% 15.3% 11.9% 12.3%
----------- ----------- ----------- --------- ----------- -----------
----------- ----------- ----------- --------- ----------- -----------
</TABLE>

15
<PAGE>
The Company's results of operations over the six quarters ended June 30,
1995 reflect generally increasing net sales, excluding the first quarter of
1995. Net sales in the first quarter of 1995 were affected by the industry
transition from EISA bus based RAID controllers to the new PCI bus based RAID
controllers. Certain of the PCI server product introductions of the Company's
customers were delayed from the first to the second quarters of 1995, thereby
delaying some purchases of the Company's PCI RAID controllers until the second
quarter. Additionally, the Company's product mix shifted more towards RAID
controller products from the system board and other peripheral products. RAID
controller products sales represented 79% of the Company's net sales in each of
the first three quarters of 1994, rose to 84% of net sales in the fourth quarter
of 1994 and the first quarter of 1995 and rose again to 96% of net sales in the
second quarter of 1995.

Within the RAID product family, sales of disk array controllers by bus type
were as stated in the following table:

NET SALES OF DISK ARRAY PRODUCTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
Q1 94 Q2 94 Q3 94 Q4 94 Q1 95 Q2 95
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
EISA Disk Array....................... $ 3,243 $ 8,214 $ 10,157 $ 10,155 $ 5,295 $ 4,640
Micro Channel DA...................... 7,468 2,641 1,828 1,902 3,220 3,816
PCI DA................................ -- 275 564 3,015 5,029 10,985
SCSI DA............................... -- 41 226 637 810 1,790
----------- ----------- ----------- ----------- ----------- -----------
Total Disk Array...................... $ 10,711 $ 11,171 $ 12,775 $ 15,709 $ 14,354 $ 21,231
</TABLE>

PERCENTAGE OF NET SALES OF DISK ARRAY PRODUCTS

<TABLE>
<CAPTION>
Q1 94 Q2 94 Q3 94 Q4 94 Q1 95 Q2 95
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
EISA Disk Array.................... 30.3% 73.5% 79.5% 64.6% 36.9% 21.9%
Micro Channel DA................... 69.7 23.6 14.3 12.1 22.4 18.0
PCI DA............................. -- 2.5 4.4 19.2 35.0 51.7
SCSI DA............................ -- 0.4 1.8 4.1 5.7 8.4
-------- -------- -------- -------- -------- --------
Total Disk Array................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Disk Array % of Total Sales........ 78.5% 79.0% 79.3% 84.4% 84.0% 95.9%
</TABLE>

Gross margin percentage over the six quarters ranged from a low of 29% in
the first quarter of 1994 to a high of 40% in the fourth quarter of 1994, and
has generally increased due to the shift in product mix toward RAID controller
products. Gross margin was particularly high in the fourth quarter of 1994 due
to favorable channel and customer mix and better absorption of fixed costs due
to the increase in volume. Gross margin declined in the first quarter of 1995
from the previous quarter due primarily to a less favorable channel and customer
mix. RAID controller product sales through the alternate channels (distributors,
system integrators and VARs), which generally involve higher gross margins,
totaled approximately $7.0 million during 1994, and have increased each quarter
in 1995, totaling $7.5 million through the first six months. Gross margin was
negatively affected by rising prices of DRAM SIMM modules in the second quarter
of 1995.

Sales and marketing expenses increased over the six quarter period as the
Company increased its staffing levels to position itself to support increased
OEM sales volumes and to implement its strategy of selling RAID controller
products through distributors, systems integrators and VARs. Sales and marketing
expenses as a percent of sales have increased to 6.6% in each of the two
quarters in 1995, as compared to a range of 5.5% to 6.0% during 1994.

Research and development expenses increased over the six quarter period as
the Company implemented new technology projects related to the development of
RAID controllers for new bus types and subsequent generations of its RAID
controller products that are intended to provide

16
<PAGE>
enhanced performance and features. Research and development expenses have varied
as a percentage of sales during the six quarter period from a low of 5.0% in the
third quarter of 1994 to a high of 5.9% in the second quarter of 1994 primarily
due to changes in sales volumes, as well as variations in recruiting and
relocation expenses for newly hired engineers.

General and administrative expenses have fluctuated over the six quarter
period due to variations in legal expenses related primarily to the AMI
arbitration and the dispute with the Company's former CEO. Additionally, as
sales volumes have increased, additional employees have been hired to support
these higher volumes. As a percentage of sales, general and administrative
expenses have ranged from a low of 5.7% in the first quarter of 1995 to a high
of 9.2% in the second quarter of 1994.

The Company's effective income tax rate during each of the quarters in 1994
was 25%, and rose to 35% in the two quarters of 1995 as a result of a reduction
of previously available tax benefits.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 1995, the Company's working capital had increased to $22.4
million from $16.6 million at December 31, 1994. This increase in working
capital was due primarily to a $4.3 million growth in accounts receivable and an
$8.6 million rise in inventories, which offset a decrease in cash of $1.7
million and an increase in accounts payable of $5.9 million, for a net increase
in working capital of $5.7 million.

Cash balances decreased by $1.7 million from $3.9 million at December 31,
1994, to $2.2 million at June 30, 1995. Cash used by operating activities during
the first six months of 1995 totaled $1.9 million, and resulted from increases
in inventories and accounts receivable, only partially offset by an increase in
accounts payable. The Company used $400,000 in investing activities for the
purchase of capital equipment in the same period. Cash provided by financing
activities during the period totaled $700,000 and resulted from the exercise of
options and warrants to purchase Common Stock. The net change in cash and cash
equivalents during the first six months of 1995 totaled $1.7 million.

Net accounts receivable increased to $15.1 million at June 30, 1995,
compared to $10.8 million at December 31, 1994, an increase of $4.3 million.
Accounts receivable increased over the balance at the end of 1994 because a high
percentage of the second quarter sales took place in June, the last month of the
quarter, and thus the related accounts receivable were not collected until the
following quarter.

Inventory increased to $18.9 million at June 30, 1995, compared to $10.2
million at December 31, 1994. Inventory increased over the six month period as a
result of the Company's decisions to purchase additional components to support
generally higher sales levels, as well as to increase its minimum stock levels
of DRAM SIMM modules to a two month supply.

Accounts payable increased to $9.1 million at June 30, 1995, compared to
$3.2 million at December 31, 1994, an increase of $5.9 million. This increase
was due to the high percentage of inventory purchases made during the final
month of the quarter.

The Company's line of credit with Imperial Bank (the "Bank") expires May 15,
1996, bears interest at the Bank's prime rate and is secured by all of the
Company's assets. Borrowings are subject to an overall limit of $8.0 million.
Under the agreement, the Company must maintain average profitability of $500,000
after tax over each successive two quarter period and must meet a working
capital financial ratio.

The Company presently expects to finance near-term and long-term operations
and capital requirements through the net proceeds of this offering, cash
provided by continuing operations, existing cash balances, and borrowings under
bank lines of credit. The Company believes that such capital resources will meet
the Company's working capital needs through at least the end of fiscal 1996.

17
<PAGE>
BUSINESS

Mylex designs, manufactures and markets RAID controllers that provide high
performance, capacity enhancing fault tolerant storage and input/output, or
"I/O," solutions for client/server computer networks. Mylex controllers
integrate the Company's proprietary ASICs, firmware and software with standard
industry components. More than twenty leading network file server and storage
subsystem OEMs, including IBM, HP, DEC, and NEC, have designed Mylex RAID
controllers into their server and storage subsystem products.

INDUSTRY BACKGROUND

A major trend in computing environments called "client/server" networks
began in the mid-1980s. This trend was driven by the proliferation of personal
computers and the development of networking applications that distributed
computer power to the desktop. Client/server computing provides an alternative
to the highly centralized, relatively expensive mainframe and mini-computer
systems that connect many "dumb" terminals to a central processor and were the
mainstays of the computing world until this decade. A client/server network
consists of multiple desktop "client" computers with their own microprocessors
and memory and the ability to access files and applications stored on higher
performance "servers." Client/server networks offer certain cost, performance
and flexibility advantages over traditional mainframe and mini-computer systems.
As a result, client/ server computing has spread rapidly. Network server
shipments alone grew from $2.3 billion in sales in 1989 to $7.2 billion in sales
in 1994, according to International Data Corporation, which estimates that the
market for servers will grow at a compound annual rate in excess of 20% from
1994 to 1998.

A key component of client server networks is data storage and related data
access functions. These chores are typically handled by disk array subsystems,
which include disk drives, enclosures, controllers, and disk storage software.
The market for disk array subsystems for networked personal computers totaled
approximately $3.8 billion in 1994, according to the market research firm Disk
Trend, Inc., which also projects the market to grow to $10.0 billion in 1998.

The trend toward client/server computing has placed particular demands on
network storage systems and related I/O functions. The development of faster
microprocessors and more robust computer bus architectures in network systems
has often outstripped the capabilities of data storage and I/O technologies,
leading to system "bottlenecks." To alleviate or avoid such bottlenecks,
networks require continual improvements in stored data retrieval speed. In
addition, the development of more complex applications and operating systems has
created the need for increased network storage capacity. Meanwhile, the mission
critical, enterprise-wide nature of networked computing often requires a high
level of "fault tolerance," or the ability to preserve data from loss and to
provide uninterrupted system service even if an individual data storage device
fails. The emergence of data-intensive applications such as multimedia and
video-on-demand are further driving the demands for speed, capacity and
reliability in network storage devices.

THE RAID SOLUTION

A solution to the storage and I/O speed, capacity and reliability challenges
presented by network computing was first proposed by a team of researchers at
the University of California at Berkeley in a paper published in the late 1980s.
They called their solution "RAID," or redundant array of inexpensive disks (now
known in the industry as redundant array of independent disks). RAID is a way of
distributing data in stripes across several disk drives and allowing the
microprocessor to access those drives simultaneously, thus increasing system
storage I/O performance. In addition, the RAID configuration can provide a high
degree of fault tolerance because it continuously calculates and stores a unique
parity value, using exclusive/or logic, or "XOR," to accompany each data stripe.
Should any drive fail, the remaining drives in the system may use the parity
value to reconstruct the data on the failed drive, thus ensuring the immediate
availability of RAID protected data even in the event of a disk drive failure.

18
<PAGE>
RAID is available in several levels that differ in the ways they break down
data for storage and achieve fault tolerance. RAID Level 0, for example,
distributes data in stripes across the disk drives in an array but does not
calculate the parity values necessary for fault tolerance. Level 1 achieves
fault tolerance by creating mirror images of all data and storing each image on
a different disk than the disk used to store the original. Because Level 1
creates exact duplicates of all stored data, it uses one-half of available
storage capacity to achieve fault tolerance. Level 5 distributes data in
stripes, calculates parity values for all stripes and distributes the parity
values evenly across all disks in the array. Because level 5 uses the equivalent
of just one drive in the disk array to store parity values, it increases usable
system storage capacities over levels achieved by RAID Level 1. Level 3
dedicates one of the disks in the array to the storage of parity values and
employs the rest of the disks to read and write information in parallel. Because
Level 3 uses all drives to read and write information, it can accommodate only
one transaction at a time. By allowing parallel reads, however, Level 3 is the
best choice for applications requiring access to large amounts of information
stored sequentially, such as multimedia or video-on-demand.

The following table illustrates certain of the functions and benefits of the
different RAID levels:

[CHART]

19
<PAGE>
BENEFITS OF RAID

RAID technology can bring three key benefits to a networked computer system:

IMPROVED PERFORMANCE

Computers operate no faster than their slowest components. Currently
available disk drives often cannot keep pace with system demands and often
present a system bottleneck. RAID alleviates the bottleneck by distributing data
over many disk drives. By enabling the drives to operate concurrently, RAID
increases the speed with which users may read and write stored information and
enhances overall system performance. In addition, by managing the I/O function
for the storage system, a RAID controller frees the main processor to use its
processing power for other important network management and application tasks.

INCREASED CAPACITY

By allowing access to an array of independent disk drives, RAID enables
computer networks to have access to significantly higher storage capacities. To
create super-capacity storage systems, it is possible to link several
SCSI-to-SCSI RAID controllers to a single expansion slot, freeing other slots
for other peripherals.

FAULT TOLERANCE

Due to their electromechanical nature, disk drives typically suffer higher
failure rates than other system components. By providing data redundancy, RAID
preserves data when drives fail and allows system operators to replace failed
drives without shutting down their systems, providing a high level of fault
tolerance.

Mylex believes that RAID offers the following potential benefits in a number
of different network computer applications:
<TABLE>
<S> <C> <C>
RAID APPLICATIONS AND BENEFITS

INDUSTRY APPLICATION POTENTIAL BENEFITS
--------------------- -------------------------------- --------------------------------
<S> <C> <C>
Insurance Policy Holder Data Bases Fault Tolerance; Cost
Effectiveness
Market Research Survey Analyses Capacity; Cost Effectiveness
Manufacturing CAD CAM Data Fault Tolerance; Performance
Local Government Environmental Data Capacity; Cost Effectiveness
Newspapers Storage and Editing Capacity; Performance
Communications Systems Control, Internet, Sequential Performance; Fault
Dialogue, Movies, Commercials Tolerance
Software Products Data Bases; Source Code Fault Tolerance; Performance;
Libraries Capacity
Accounting Services Client Data Fault Tolerance
Oil Companies Exploration and Statistical Data Fault Tolerance; Capacity;
Performance
Brokerage Firms Trading Floor Transaction Data High I/O Levels; Fault
Tolerance; Capacity
Aeronautics Flight Simulation Programs Performance; Capacity
Telephone Companies Customer Site Voicemail Fault Tolerance; Capacity
Installations
</TABLE>

20
<PAGE>
The wide range of network applications that can benefit from RAID has led to
the rapid adoption of RAID by network server OEMs. Based on the Company's review
and related estimates of information about server shipments published by
International Data Corporation and information about RAID configurations
published by Disk Trend, the Company estimates that approximately 20% of servers
shipped in 1994 had RAID configurations and that, by 1997, approximately 30% of
servers shipped will have RAID configurations. OEMs shipping servers with RAID
include Compaq, IBM, DEC, HP, and NEC.

MYLEX'S ROLE IN THE RAID SOLUTION

Mylex designs, manufactures and markets RAID disk array controllers. More
than twenty of the leading network file server and storage subsystem OEMs,
including IBM, HP, DEC, and NEC, have designed Mylex controllers into their
server and storage subsystem products.

RAID controllers separate data into stripes for storage on multiple disks
and then reassemble data when the host computer requests it. For certain RAID
configurations that provide fault tolerance, the controller also must
continuously calculate the parity values necessary to reconstruct data lost when
drives fail. In addition to implementing RAID algorithms, Mylex's RAID
controllers also perform all SCSI storage device handling tasks, thus freeing
the host computer's central processor to perform other tasks.

Mylex has designed products to support the EISA, Micro Channel and PCI
computer bus architecture. Those busses evolved to increase the speed of the I/O
function. The original IBM AT system, for example, employed a computer bus
architecture known as Industry Standard Architecture, or "ISA," that had a
maximum data transfer speed of 8 megabytes per second, (or "MB/s.") After ISA,
an Extended Industry Standard Architecture, or "EISA," bus that allows the
transfer of data in bursts of up to 33 MB/s and an IBM proprietary Micro Channel
bus that allows the transfer of data in bursts of up to 40 MB/s were developed.
In early 1993, an industry consortium headed by Intel defined the Peripheral
Connect Interface, or "PCI," bus to increase maximum potential data transfer
speeds to bursts of 132 MB/s. The Company endeavors to bring its products
rapidly to market and believes that it was the first to introduce a RAID
controller for the PCI bus. Mylex also has developed SCSI to SCSI RAID
controllers that provide an interface between the server microprocessor and
peripherals for virtually any hardware platform.

21
<PAGE>
The architecture of Mylex RAID controller products includes a number of
features designed to increase the storage capacity and I/O speed of any given
system. Most servers use a SCSI interface to access tape and disk storage.
Although there are exceptions, most server network expansion slots are equipped
with just one SCSI channel. In a standard (or "narrow") configuration, a SCSI
channel can manage up to seven independent disk drives and achieve a data
transfer speed of 10 MB/s. So-called "wide-SCSI" can manage up to 15 independent
disk drives and achieve a data transfer rate of 20 MB/s. Mylex controllers have
the capability to include and address simultaneously up to five SCSI channels,
increasing the system's ability to address storage space and the speed of data
transfer through any expansion slot. It also is possible to link several Mylex
controllers to the same slot to achieve storage super-capacities.

In addition to offering multiple SCSI channels, each Mylex controller
includes a dynamic memory cache for the temporary storage of information being
written to or retrieved from the disk array.

THE DIAGRAMS ON THIS PAGE AND THE NEXT ILLUSTRATE HOW MYLEX'S CONTROLLERS
READ AND WRITE STORED DATA:

TYPICAL RAID CONTROLLER READ COMMAND FLOW

[CHART]

<TABLE>
<S> <C>
<FN>
------------------------
(1) The host instructs the controller to read data from a logical drive.
(2) The i960 processor determines that the data resides on multiple disks and
instructs the SCSI I/O processors, or "SIOPs," to retrieve data from the
disk drives in the array.
(3) The SIOPs transfer data from the disks to the memory cache and notify the
i960 upon completion.
(4) The i960 sets up the host interface device to transfer data from the memory
cache to system memory. Upon completion, the host interface device notifies
the i960, which in turn, notifies the host processor.
</TABLE>

22
<PAGE>
Depending on the product, the size of memory caches range from 2 to 64 MB. The
cache is not partitioned and allows the portion of the memory devoted to writing
to vary with demand. The cache assists Mylex products designed for use with the
PCI bus to achieve sustained data transfer rates of 29 MB/s in reading
sequential information from the disk array, and can burst data at the full 132
MB/s that the PCI bus can accomodate.

In addition to unique architecture, Mylex controllers incorporate
proprietary software and firmware, including algorithms that implement the
different RAID levels that Mylex products support, algorithms for data caching,
I/O device drivers and configuration administration and monitoring utilities
with graphical user interfaces. The software and the firmware work together to
detect disk drive failures or conditions likely to lead to disk drive failures
using the S.M.A.R.T. predictive failure analysis standard, as well as to monitor
certain performance factors.

TYPICAL RAID CONTROLLER WRITE COMMAND FLOW

[CHART]

<TABLE>
<S> <C>
<FN>
------------------------
(1) The host instructs the controller to write data to a logical drive.
(2) The i960 processor sets up the host interface device to transfer the data
to the cache. Upon completion, the host interface device notifies the i960.
(3) The i960 determines that some data may be required from the SCSI disks for
parity value computation and instructs the SIOPs to retrieve this data.
(4) The SIOPs transfer data from the disks to the cache and notify the i960
upon completion. The i960 then computes parity values.
(5) The i960 instructs the SIOPs to transfer data and parity values to the disk
drives.
(6) The SIOPs transfer data from the cache to the disks and notify the i960
upon completion. The i960, in turn, notifies the host.
</TABLE>

23
<PAGE>
COMPANY STRATEGY

MAINTAIN MARKET LEADERSHIP IN RAID SOLUTIONS

Mylex intends that its next generation of RAID controllers will continue to
support multiple system buses and include various design and functional
improvements at the high end of the RAID controller market, including the
capability to support levels of RAID and high data transfer speeds necessary for
video on demand and multimedia applications. Lower cost designs of the Company's
RAID controller products also should expand market opportunities for the Company
at the low end of the RAID controller market. For example, the Company has
recently developed a software suite that will allow the implementation of RAID
on the system board, which is intended to give it the opportunity to capture
market share at the low end of the RAID controller market.

LEVERAGE OEM AND INDUSTRY RELATIONSHIPS

Mylex has an installed base of RAID controllers in more than 140,000 servers
or storage subsystems distributed by its customers. The Company maintains a
dialogue with its OEM customers regarding the features and capabilities required
for the computer networks of tomorrow, thus facilitating the rapid
implementation of new technologies and standards in its products. For example,
as a result of those dialogues the Company obtained customer input that enabled
Mylex to include additional features in the design of its RAID controller
products based on the recently introduced PCI bus standard. These PCI-based
controllers have been designed into server or storage subsystem products of
virtually all of the Company's major OEM customers. The Company is also actively
engaged in the pursuit of available cooperative and co-development activities
with other industry leaders in the hardware, software, silicon and systems
business. For example, the Company's initiative to implement RAID on the system
board was a cooperative effort with Intel in which Mylex provided a design
reference specific to the Company's RAID solutions for Intel's forthcoming
i960*RP I/O processor. As part of this effort, the Company also developed a
software suite that makes it possible to implement RAID on the system board. In
June 1995, Mylex announced that it will offer this suite of RAID software and
firmware for use with the Intel processor, starting delivery with Intel's
initial shipments presently scheduled for the first half of 1996. As another
example of the Company's pro-active strategy, Mylex teamed with AT&T, IBM, Intel
and XPoint Technologies to form the BusBIOS Advisory Committee.

FOCUS ON SOFTWARE

Mylex believes its software and firmware are a key competitive advantage for
the Company in the RAID controller market. In addition to programs implementing
RAID algorithms, Mylex software includes I/O device drivers, and configuration
administration and monitoring utilities with a graphical user interface. The
Company also designed and markets an Array Enclosure Monitoring Interface
software program, or "AEMI," to monitor various characteristics of disk array
enclosures, including thermal thresholds, power supply status, and management of
replacement and "hot spare" drives.

Mylex believes its RAID on the system board technology, which is designed to
provide users of personal computer networks an extremely cost-effective method
of implementing RAID in their networks, will substantially broaden the potential
market for its RAID solutions. The Company plans to distribute RAID on the
system board through a two step process. First, it will make the hardware
technology available at no cost to OEMs who manufacture their own RAID hardware.
Mylex will then market separately the software suite needed to enable RAID to
work on the system board. As a result, the Company expects that the introduction
of RAID on the system board will lead to software sales representing an
increasing share of its business.

24
<PAGE>
CONSOLIDATE TECHNOLOGY

In addition to continuing development of RAID controller products, Mylex
will pursue the acquisition and development of technologies that complement its
intelligent I/O solutions in an effort to enlarge the Company's presence in the
storage management market for networked personal computers. The Company also
provides high performance Ethernet cards and has licensed rights to build the
PNA960, a peer-to-peer Ethernet Switch designed for the PCI bus. The Company
also has the capability to develop proprietary chip designs, as shown by its
in-house design of a bus master chip for its PCI-based RAID controller when an
alternative chip was not available in the marketplace. In addition to developing
RAID controller products, the Company is exploring alternatives for acquiring or
developing SCSI chip technology for incorporation in its products, as well as
certain other technologies involving the communication aspects of networking.

EXPAND ALTERNATE CHANNELS

Historically, Mylex has relied extensively on sales to major OEM customers.
While the Company expects OEM sales to continue to account for a large share of
its business, it also intends to expand sales of RAID controller products
through other channels of distribution, including leading distributors, systems
integrators, value added resellers and others. Since the beginning of 1994, the
Company has added six employees to its alternative channel sales group, opened
sales offices in the United Kingdom and Florida for overseas sales, and added 10
manufacturing representatives in the United States and Canada. The Company also
renewed its distribution agreements with several distributors, including Tech
Data, Merisel, Ingram Micro and Gates/Arrow, and entered into relationships with
additional distributors such as Avnet Corporation and Wyle Electronics. RAID
sales into alternate channels totaled approximately $7.0 million in 1994 and
$7.5 million in the first six months of 1995. Mylex intends to continue its
efforts to build ACS sales in the future.

EXPAND GLOBAL PRESENCE

Sales to customers outside the United States increased from approximately
16% of the Company's revenue in 1994 to 28% of its revenue in the first six
months of 1995. Since mid-1994, several overseas OEMs, including NEC, Fujitsu,
Toshiba and Siemens Nixdorf, have selected Mylex controllers for their server
product lines. In addition, several existing major OEM customers have changed
their previous practice of accepting shipment of all Mylex products
domestically, with the result that the Company now is exporting products to
those OEMs' affiliates overseas. Through the expansion of its sales and
marketing team and the expansion of alternate channel sales, the Company intends
to continue its efforts to penetrate international markets.

PRODUCTS

During the last half of 1993, the Company shifted its principal activity
from the supply of system board products to the manufacture of I/O devices and
storage management enhancing computer peripheral products. Mylex designs its
products to provide solutions for all popular operating systems, including
Novell Netware, Windows NT, SCO UNIX, Solaris, Unixware and Banyan. Mylex
products also work with all popular platforms. These include personal computer
platforms that use PCI, EISA, and Micro Channel bus architectures and
workstation platforms, including Sun Microsystems, Silicon Graphics and IBM
RS-6000 workstations that use the Company's SCSI to SCSI products. Since Mylex
introduced its first PCI compatible products in 1994, sales of PCI-based
controllers have increased from $275,000 in the second quarter of 1994 to almost
$11.0 million in the second quarter of 1995. See "Management's Discussion of
Financial Condition and Results of Operations -- Quarterly Information."

RAID CONTROLLERS

Each bus-based Mylex RAID controller includes a proprietary application
specific integrated circuit, or "ASIC," that serves as an interface with the
host computer, an Intel i960 RISC processor, up to five SCSI channels to manage
the transfer of data to and from the disk drives in the array and a dynamic
cache memory ranging in size from 2 to 64 MB, depending on the product, to
buffer the transfer of information to and from the disks. The controller also
includes Mylex firmware residing on an EEPROM that implements the RAID
algorithms and the algorithms necessary for the cache and supporting software,
including I/O drivers, configuration utilities and system monitoring programs.

25
<PAGE>
Mylex disk array controllers DAC960E, DAC960 Micro Channel, DAC960P and
DAC960PD provide high performance, fault tolerant data storage solutions for
EISA, Micro Channel and PCI bus platforms. The Mylex SCSI-to-SCSI disk array
controllers (DAC960S/SI/SE) bring the performance of RAID technology to
virtually any hardware platform without requiring special host software. The
Mylex disk array products are designed for both internal and external storage
options and are compatible with most commonly used operating systems. The
selling prices for Mylex RAID controllers range from approximately $400 to
approximately $3,000, depending on their features and sales volumes, and the
distribution channels through which they are sold. The following tables
summarize the Company's current principal RAID controller product offerings:
<TABLE>
<S> <C> <C> <C> <C>
MYLEX RAID CONTROLLERS

<CAPTION>
CUMULATIVE
UNITS
SHIPPED
FIRST THROUGH
PRODUCT MARKET SPECIFICATIONS(1) SHIPPED JUNE 30, 1995
---------- ----------------------------- ----------------------------- --------- -------------
<S> <C> <C> <C> <C>
DAC960P Mid range to high end 29MB/s sustained sequential Q2 1994 15,153
PCI-based file and database read
servers with heavy access performance
requirements 2500 I/Os per sec.
RAID levels 0, 1, 5 and 0+1
DAC960PD Mid range to high end 29MB/s sustained sequential Q4 1994 4,537
PCI-based file and database read
servers with heavy access performance
requirements 2500 I/Os per sec.
RAID levels 0, 1, 5 and 0+1
Ultra high density connectors
DAC960PL Small to mid range PCI-based 16MB/s sustained sequential Q1 1995 4,333
file and database servers read
with moderate access performance
requirements 2000 I/Os per sec.
RAID levels 0, 1, 5 and 0+1
DAC960 Mid range to high end Micro 13 to 20 MB/s sustained Q3 1992 47,317
Micro Channel-based file and sequential read performance
Channel database servers with heavy 1500 to 2500 I/Os per sec.
access requirements RAID levels 0, 1, 5
DAC960E Mid range to high end range 13MB/s sustained sequential Q2 1992 65,889
EISA-based file and database read
servers with heavy access performance
requirements 1500 I/Os per sec.
RAID levels 0, 1, 5 and 0+1
DAC960S High end servers and Host independent multiple Q3 1994 2,730
workstations with heavy host
access requirements capacity expandable to almost
unlimited storage
Fast and wide SCSI
DAC960SI High end servers and Host independent multiple Q4 1994 628
workstations with heavy host
access requirements capacity expandable to almost
unlimited storage
Fast and wide SCSI
<FN>
------------------------------
(1) I/Os describe the number of random read and write operations involving
small blocks of data.
</TABLE>

Products currently under development include new SCSI to SCSI controllers, a
controller optimized for multimedia and video imaging, controllers that will
provide for high speed serial interfaces to disk drives, a low-cost RAID
solution and a RAID implementation for the system board. There can be no
assurance that the Company will introduce its products under development. If
these products are introduced, there can be no assurance that they will gain
market acceptance or that their sales will produce adequate gross margins.

26
<PAGE>
NETWORK ENHANCEMENT PRODUCTS

In addition to RAID controllers, Mylex produces the PNA960, an internal peer
to peer Ethernet Switch designed for the PCI bus, under a license agreement that
the Company entered with XPoint Technologies in early 1995. The PNA960
incorporates an on board microprocessor which relieves the server processor of
additional task management and substantially increases the speed of data
transfer over the network. The distribution price of the PNA960 is $1,795. Mylex
also provides high performance Ethernet Network Cards. All network enhancement
products are compatible with major operating systems and platforms.

SYSTEM BOARDS

Historically, the industry has recognized Mylex as a supplier of high
quality, high performance system boards. While off-shore manufacturers now
dominate the low end of this business, a market remains in the high end server
and multi-processor applications. The Company continues to provide small
quantities of system boards and enclosures to system integrators and to OEMs
with annual sales under $150 million. Selling prices for the Company's system
boards currently generally range between $200 and $400. With the implementation
of system boards incorporating RAID design references, the Company will be in a
position to provide RAID-capable system boards.

SALES AND MARKETING

As of August 1, 1995, the Company employed 28 sales and sales support
personnel who devoted substantially all their time to marketing, sales, and
technical and customer support. The Company plans to increase the number of
sales and marketing employees during 1995 to support its expanding customer base
and product lines.

The Company sales and marketing plan is based on a two-tier strategy: sales
to OEMs of servers and storage subsystems, and sales into alternate channels
that include distributors, system integrators and value added resellers.

OEM SALES

Sales to IBM accounted for 22% of net sales in 1994 and 31% of net sales
during the first six months of 1995. Sales to the next two largest customers,
DEC and HP, accounted for an additional 17% and 14%, respectively, of net sales
in 1994 and 15% and 10%, respectively, in the first six months of 1995. The
Company expects a limited number of customers and customer orders to continue to
account for a substantial portion of the Company's revenue in any period.
Although there are OEM agreements in place that define the terms of sale and
support services with some of the Company's largest customers, these agreements
do not include specific quantity commitments and generally allow customers to
cancel any orders on 30 days notice. The Company generally sells products on a
purchase order basis. As a result, historical sales are not necessarily an
accurate indicator of future sales.

During the second half of 1994 and the first half of 1995, the Company has
marketed its disk array products to several additional OEMs, including NEC
Japan, Siemens Nixdorf, Storage Dimensions, Advanced Logic Research, Conner
Peripherals and Fujitsu, each of which accounted for more than $250,000 in sales
during the second quarter of 1995.

Most of the Company's OEM customers, and particularly its principal
customers, have extensive product development experience and expertise,
substantial financial resources and ongoing, substantial product development
activities. Any of these OEM customers may choose to develop their own products
which could be substituted for, and thus reduce or eliminate their purchases of,
the Company's products. Any material reduction in purchases of a controller
product by any OEM customer will materially and adversely affect the Company's
business and operating results.

The OEM sales process is complex, requiring interaction with several layers
of the OEM customer's organization and extensive technical exchanges, product
demonstrations and commercial

27
<PAGE>
negotiations. As a result, the Company's typical sales cycle is typically 4 to 6
months. OEM relationship commitments are generally made at a high level within
the customer's organization, and the sales process involves broad participation
across the Mylex organization, from the Chief Executive Officer to the engineers
who designed the product.

Sales to OEMs represented 69% of net sales during 1994 and 72% of net sales
in the first six months of 1995.

ALTERNATE CHANNEL SALES

The Company's alternate channel sales, or "ACS", group markets and
distributes the Company's products to system integrators, value added resellers
and commercial and industrial distributors (who also service major OEM customers
in some international markets) throughout the world. The ACS group also is
responsible for sales to OEM customers with less than $150 million in annual
sales. The Mylex ACS group also uses the services of manufacturer
representatives in the United States and Canada and employees at two remote
sales offices: one in the United Kingdom for sales activity in western Europe,
and one in Florida to serve an emerging Latin American market. Mylex administers
domestic sales and sales to eastern Europe and the Pacific Rim from its
headquarters in Fremont, California.

Mylex has distribution agreements with both commercial distributors,
including companies such as Tech Data, Merisel and Ingram Micro, and industrial
distributors, such as Avnet Corporation and Wyle Electronics. Mylex also has
agreements with various regional and specialty distributors, both domestic and
international. The Company also conducts extensive advertising in trade
publications, conducts various joint marketing activities with its distributors,
and sponsors exhibits at approximately 25 trade shows annually.

Alternate channel sales represented 31% of net sales during 1994 and 28% of
net sales in the first six months of 1995.

MANUFACTURING

Mylex organizes its manufacturing as a continuous flow process.
Manufacturing entails placing semiconductors and other electronic components on
printed circuit boards and soldering them in place through an automated process.
The Company accomplishes almost all manufacturing using Fuji Surface Mount
Technology equipment. This equipment automatically positions and attaches chips
and other components to circuit boards, increasing the speed and accuracy of the
manufacturing process.

The Company's manufacturing facility is located at its Fremont, California
headquarters. The Company manufactures approximately 60% of its products
in-house. For the remainder, the Company relies on selected local ISO 9000
certified subcontract manufacturers. Currently, the Company uses its outside
subcontractors for high-volume production activities, giving the Company the
flexibility to use its internal production capacity for new product
introductions to allow Mylex to bring those products to market at a rapid pace
and to meet unexpected short-term production demands. Despite its arrangements
with local subcontractors, however, there can be no assurance that the Company's
manufacturing resources always will be adequate to meet product demand.

Mylex performs quality control and inspection procedures throughout the
production process to ensure that products meet industry standards. Mylex
subjects all products, including those manufactured by subcontractors, to 100%
in circuit and functional testing at Mylex's facility. To continue this process,
the Company will be required to expand its in-house testing facilities and
personnel.

SUPPLIERS AND COMPONENTS

The Company's most critical components are the i960 RISC processor, the
Company's applications specific integrated circuits or "ASICs," the SCSI chip
and the DRAM SIMM memory module. The Company procures the i960 processor from
Intel and its ASICs, SCSI chip and DRAM SIMM modules from Toshiba, Symbios Logic
and FirstTech Corporation, respectively. One of the Company's

28
<PAGE>
OEM customers also provides an ASIC for inclusion on its custom product, a
proprietary chip that frequently is in short supply. Other components are
available from several sources at competitive prices.

Currently, the Company is dealing with worldwide shortages of DRAM SIMM
memory modules and surface mount capacitors. DRAM SIMM modules are in heavy
demand throughout the personal computer industry, and surface mount capacitors
are in high demand for use in the manufacture of cellular telephones. The
Company is attempting to develop different design strategies which would allow
it to avoid or reduce its dependence on components for which there is a shortage
and has increased its safety stock levels to cope with these shortages.

The Company has no long-term supply contracts. There can be no assurance
that the Company will be able to obtain, on a timely basis, all the components
it requires. If the Company cannot obtain essential components as required, it
could be unable to meet demand for its products, thereby adversely affecting its
operating results. In addition, scarcity of such components could result in cost
increases and adversely affect the Company's gross margins.

The Company's need to manufacture products before receiving firm purchase
orders, combined with risks of technological obsolescence and rapid shifts in
market demand, could result in inventory devaluation or obsolescence, either of
which could have a material adverse effect on its operating results.

RESEARCH AND DEVELOPMENT

The Company conducts an active and ongoing research, development and
engineering program that focuses on the development of new products and new
features for the Company's existing products. The Company has expanded its
development activities and has added an additional 14 engineering and
development employees through August 1, 1995. The Company has budgeted for seven
more technical employees for 1995.

Products currently under development include new SCSI to SCSI controllers, a
controller optimized for multimedia and video imaging, controllers that will
provide for high speed serial interface to disk drives and a low-cost RAID
solution. In addition, in developing the next generation of its current
products, the Company will seek to improve its firmware and software to add
capabilities and performance based on marketplace needs.

As part of its product development strategy, the Company actively seeks
available, cooperative and codevelopment activities with industry leaders in the
hardware, software, silicon and system business. For example, the Company worked
on a cooperative basis with Intel to include a RAID design reference in the
i960*RP I/O processor, which Intel has announced for delivery in sample
quantities in the fourth quarter of 1995. The project, which was the culmination
of several months of cooperative work, makes it possible to implement RAID using
a processor residing on the computer system board. In June 1995, Mylex announced
that it will offer a suite of RAID software and firmware for use with the new
i960*RP I/O processors, starting delivery with Intel's initial shipments of the
processors.

The Company's ability to compete successfully will depend in large part on
its ability, on a timely and cost-effective basis, to enhance its existing
products and introduce new products with features that meet changing customer
requirements and with competitive prices. Despite testing, new products may be
affected by quality, reliability and interoperability problems, which could
result in returns, delays in collecting accounts receivable, unexpected service
or warranty expenses, reduced orders and a decline in the Company's competitive
position.

As of August 1, 1995, the Company had 39 employees engaged in product
development.

29
<PAGE>
COMPETITION

The markets for the Company's RAID controller products have been competitive
and are likely to become more competitive. Furthermore, there are numerous
companies with established reputations in the controller and personal computer
related markets, many of which have greater financial, manufacturing and
marketing resources than those of the Company.

The Company believes that its competitors include Adaptec, which recently
introduced a PCI bus based disk array controller and which has significantly
greater financial, manufacturing and marketing resources than the Company.
Unlike the Company's products, the Adaptec product does not include a processor
on the disk array board, but instead relies on the microprocessor on the system
board to accomplish the RAID function.

Some OEMs (such as Compaq and Dell) have developed their own RAID
controllers. As noted, the customers historically accounting for the most
significant volumes of the Company's sales are major OEMs, any of which could
develop their own controllers at any time rather than purchase such products
from the Company.

The Company's ability to compete successfully in either the personal
computer networking market or the RAID controller market depends upon its
ability to continue to develop products that obtain market acceptance, which can
be sold at competitive prices, while maintaining adequate gross margin levels,
and which are proven to be reliable. Although the Company believes that its RAID
controller products have certain competitive advantages, there can be no
assurance that the Company will be able to compete successfully in the future in
the market for such products or that other companies may not develop products
with greater performance or more favorable prices and thus reduce the demand for
the Company's products. Furthermore, as more companies enter the RAID controller
market, the Company expects to encounter price competition for such products
which could materially and adversely affect its gross margins.

INTELLECTUAL PROPERTY

The Company does not hold any patents applicable to its RAID controllers and
relies on a combination of trade secret, copyright and trademark laws and
employee and third party non-disclosure agreements to protect its intellectual
property. There can be no assurance that the steps taken by the Company to
protect its rights will be adequate to prevent misappropriation of the Company's
technology or to preclude competitors from developing products with features
similar to the Company's products.

Certain patents and copyrights owned by others are of critical importance to
the high technology electronic product industry segment in which the Company
operates. The Company has obtained licenses to certain technology protected by
patents and copyrights which the Company believes are adequate for the operation
of its business as presently conducted. It is likely that such licenses to
produce, use and market new technologies will continue to be important to the
Company. In the future, the Company may be required to obtain licenses from
others, and there are no assurances that such licenses would be available on
terms satisfactory to the Company.

There can be no assurance that third parties will not assert infringement or
related indemnity claims against the Company. Asserting the Company's rights or
defending against third party claims could involve substantial expense, thus
materially and adversely affecting the Company's results of operations.

LITIGATION

The Company and American Megatrends, Inc. ("AMI") entered into an agreement
on February 15, 1987, under which AMI licensed to the Company the rights to use
a basic input/output system and certain other technical information in
consideration for the payment of royalties. On May 5, 1992, AMI initiated
arbitration proceedings before the American Arbitration Association in Miami,
Florida, asserting a right under the agreement to audit the Company's books and
records for the purpose of calculating royalties. The Company counterclaimed
against AMI for breach of contract, failure to pay

30
<PAGE>
a written account, failure to pay for goods sold and delivered, and failure to
provide required information. The arbitration includes claims and counterclaims
asserted in a suit filed against the Company on September 3, 1993, in the United
States District Court in Atlanta, Georgia, and then dismissed without prejudice
in February 1995, pursuant to a stipulation between the parties. The parties are
presently involved in preliminary conferences and discovery, and evidentiary
hearings are scheduled for late October and early November, 1995. The Company
believes it has numerous defenses to AMI's claims and intends to continue to
vigorously defend the arbitration. But there can be no assurance that the
Company will ultimately prevail. An unfavorable outcome could have an adverse
effect on the Company's business and results of operations. Neither the
agreement nor the arbitration concerns any technology used in any Mylex products
manufactured after 1992.

In October 1994, the former Chief Executive Officer of the Company, Dr. M.A.
Chowdry, filed a complaint against the Company and its outside directors,
claiming breach of an employment agreement that he entered into with the Company
approximately three months prior to his termination as the Company's Chief
Executive Officer. The complaint alleges compensatory and consequential damages
of over $6 million (which would vary based on the price of the Company's Common
Stock) and unspecified punitive damages. The Company believes it has meritorious
defenses and will vigorously defend this lawsuit. Nonetheless, given the
unpredictable nature of legal proceedings, there can be no assurance that the
Company will prevail.

The Company has incurred and expects to continue to incur substantial legal
expenses in defending against the AMI arbitration and Dr. Chowdry's suit. Those
expenses may fluctuate from quarter to quarter and are likely to increase.

In addition to matters discussed above, the Company is a party to routine
suits and claims arising in the ordinary course of its business which the
Company does not believe will have a material adverse effect on its business.

EMPLOYEES

As of August 1, 1995, the Company employed 155 people. The Company's
employees include 39 engineering and product development employees, 21 finance
and administration employees, 28 employees in the sales, marketing and technical
and customer support areas, and 67 manufacturing employees.

Recruitment of personnel in the computer industry is highly competitive. The
Company believes that its future success will depend in part on its ability to
attract and retain highly skilled management, sales, marketing, finance and
technical personnel. There can be no assurance of the Company's ability to
recruit the employees that it may need.

PROPERTIES

On April 1, 1991, the Company moved to its current headquarters and
manufacturing facility, located in a 73,887 square foot facility in Fremont,
California. The Company's lease on this facility extends through March 31, 1996,
and the Company has an option to renew the lease for an additional five years at
a rent equal to 95% of prevailing market rentals.

31
<PAGE>
MANAGEMENT

The following table sets forth information regarding the executive officers
and all directors of the Company:

<TABLE>
<CAPTION>
NAME AGE OFFICE/POSITION
-------------------------------------- ----------- ----------------------------------------------------------
<S> <C> <C>
Al Montross 58 President and Chief Executive Officer; Director
Parveen Gupta 47 Senior Vice President and General Manager, Disk Array
Division
Colleen M. Gray 42 Vice President Finance and Chief Financial Officer
Peter Shambora 51 Vice President Sales and Marketing
Sherman W. Tom 40 Vice President Operations
Krishnakumar Rao Surugucchi 39 Vice President of Engineering
Joseph A. Schmidt 51 Vice President, Human Resources
Ismael Dudhia 60 Chairman of the Board
M. Yaqub Mirza 48 Director and Secretary
Inder M. Singh 48 Director
Richard Love 61 Director and Treasurer
Stephen McKensie 65 Director
</TABLE>

AL MONTROSS

Mr. Montross was appointed President and Chief Executive Officer of the
Company in April 1994 and became a Director in May 1994. In September 1993, Mr.
Montross joined the Company as Executive Vice President and in December 1993 was
appointed Acting President and Chief Operating Officer. From August 1992 to
September 1993, he held the position of Senior Vice President at Distributed
Processing Technology, a computer peripherals manufacturer. From 1989 to 1992,
Mr. Montross held the position of President and Chief Operating Officer at
Inacomp Computer Centers, Inc., a computer equipment and network reseller. He
currently serves as a director of American Speedy Printing Centers, Inc. Mr.
Montross holds a bachelor's degree in Economics from Siena College in New York.

PARVEEN GUPTA

Dr. Gupta joined the Company in January 1990 as Vice President, OEM Sales.
In April 1993, he was named Vice President and General Manger, Disk Array
Division. In September 1993, he was promoted to Senior Vice President and
General Manager, Disk Array Division. From May 1989 until January 1990, he
served as a general manager for HCL Limited, a computer manufacturer. From March
1988 through April 1989, he was Sales Manager and Technical Marketing Manager
for Zilog Incorporated, responsible for its microprocessor and computer
peripheral products. From 1973 to 1988, he held various marketing and
engineering positions with Visual Information Technologies, United Technologies,
Mostek Division, and Astronautics Corporation of America. He received a
doctorate in Electrical Engineering from the University of Wisconsin.

COLLEEN M. GRAY

Ms. Gray joined the Company in April 1992 as Controller and in December 1993
she was appointed Chief Financial Officer. She was appointed Vice President
Finance in December 1994. From November 1989 until August 1991, she served as
Controller of Voicemail International, Inc., a voice messaging equipment
manufacturer. From March 1987 through June 1989, she was Assistant Controller
for Alcatel Business Systems, Inc. From 1978 to 1987, she held a series of
financial management positions with ITT Courier Terminal Systems. She received a
bachelor of science degree in Accounting from Arizona State University.

32
<PAGE>
PETER SHAMBORA

Mr. Shambora joined Mylex in October 1993, as Vice President, Sales and
Marketing. From February 1992 to October 1993, he served as Vice President,
Sales and Marketing of Mass Microsystems, a storage subsystem manufacturer. From
January 1987 to February 1992, he served as Vice President, Worldwide Sales of
Storage Dimensions, a storage subsystem manufacturer. Before 1987, Mr. Shambora
held sales or marketing positions at various technology companies, including
Atasi, Four Phase Systems and Ampex. Mr. Shambora received his undergraduate
degree from San Jose State University in Industrial Management and a master's
degree from the University of Southern California in Systems Management.

SHERMAN W. TOM

Mr. Tom joined the Company in February 1994, as Vice President of
Operations. From October 1988 until July 1993, he served as Vice President of
Operations for Ultra Network Technologies, a manufacturer of high performance
network products and services. From December 1984 until August 1988, he held
positions of Director, Manufacturing Technology & Engineering Services, and
Director, Subsystems Manufacturing Group, for Silicon Graphics. Before his
employment with Silicon Graphics, from 1976 to 1984, Mr. Tom was involved in
senior management and technical positions in emerging technology companies,
including six years with Gould Inc., Biomation Division. He attended San Jose
State University, where he studied business and industrial technology.

KRISHNAKUMAR RAO SURUGUCCHI

Mr. Surugucchi joined the Company in February 1992, as Director of Hardware
Engineering. He was promoted to Vice President of Engineering in July 1994.
Before joining the Company, Mr. Surugucchi was Director of Engineering for the
Company's former subsidiary, Mylex, India, from April 1991 to February 1992.
Before that, Mr. Surugucchi was Deputy General Manager for PSI, India, an
engineering consulting firm, from November 1979 to March 1991. Mr. Surugucchi
received his undergraduate degree and master's degree in Electrical Engineering
from The Indian Institute of Technology, Bombay, India.

JOSEPH A. SCHMIDT

Mr. Schmidt joined the Company in March 1995 as its Vice President, Human
Resources. Prior to joining the Company, he served as Director of Human
Resources of Centex Telemanagement, a telecommunications outsourcing company,
from January 1994 to March 1995, and Associate Director of Human Resources for
Z.D. Exposition and Conference Company, a company in the trade show management
business, from May 1993 to December 1993. Mr. Schmidt also served as Vice
President-- Human Resources of Powerup Software Corp, a utility software
developer, from January 1991 to May 1993, and as Director of Corporate Human
Resources Planning for Diasonics, Inc., a medical equipment manufacturer, from
May 1986 through December 1990. Before May 1986, Mr. Schmidt served in human
resources positions with a variety of companies. Mr. Schmidt holds a bachelor's
degree from the University of Waterloo, Ontario, Canada, and a master's degree
in Human Resources and Manpower Development from the New School for Social
Research, New York, New York.

ISMAEL DUDHIA

Mr. Dudhia was elected a Director of the Company in July 1991 and became
Chairman in December 1993. From 1983 until October 1991, Mr. Dudhia was Chairman
of the Board and active in the management of Coolidge Bank and Trust Company,
which Mr. Dudhia owned from 1986 until 1991. In 1991, principally as a result of
the local and national recession and significant declines in the real estate
market in the Boston, Massachusetts area, Coolidge was declared insolvent and
its assets were sold by the Federal Deposit Insurance Corporation to another
bank. Mr. Dudhia received a degree of Barrister-at-Law from Lincolns Inn, an
educational institution in England. From November 1993 until April 1994, Mr.
Dudhia served as a director and Chairman of Northgate Computer Systems, Inc., a
Minnesota based computer company ("Northgate"). See "Certain Relationships and
Related Transactions."

33
<PAGE>
M. YAQUB MIRZA

Dr. Mirza has served as a Director of the Company since December 1988 and as
Secretary since February 1989. He is currently President and Chief Executive
Officer of Mar-Jac Investments, Inc., an investment and management consulting
firm that is one of the Company's shareholders. See "Principal Shareholders." He
currently serves as a Trustee and Treasurer on the Board of Trustees of Amana
Mutual Funds Trust, a mutual fund. He is also Chairman of the Board of Jugos
Concetrados, S.A. which is traded on the Santiago, Chile Stock Exchange. He also
serves as an officer of Safa Trust. Dr. Mirza holds a doctorate in Physics from
the University of Texas. From July 1992 until April 1994, Dr. Mirza served as a
member of the Board of Directors of Northgate. See "Certain Relationships and
Related Transactions."

INDER M. SINGH

Dr. Singh has served as a Director of the Company since December 1986 and
served as the Company's Treasurer from February 1989 to November 1989. Since
March 1988, Dr. Singh has been the President of Lynx Real-Time System, Inc., a
software company. From April 1985 to March 1988, he was the owner and operator
of Simran Associates, a computer consulting firm. From March 1982 to March 1985,
he served as President of Excelan, Inc. Before forming Excelan, Inc., Dr. Singh
held executive level positions with Zilog Incorporated and Amdahl Corporation.
Dr. Singh holds a doctorate in Electrical Engineering from Yale University.

RICHARD LOVE

Mr. Love has served as a Director of the Company since July 1993, and was
appointed Treasurer in January 1995. Mr. Love is currently a principal of RJL
Capital Management of Santa Barbara, an investment management firm. From 1973 to
1988, Mr. Love served as an investment counselor, then senior partner, with
Loomis, Sayles & Co. Before joining Loomis, Sayles & Co., Mr. Love held various
positions with James Capel Investment Banking from 1969 to 1973 and with Stein,
Roe & Farnham from 1959 to 1969. Mr. Love attended the Lawrenceville School and
received a bachelor's degree in Metallurgical Engineering from Cornell
University. He is an ICAA Chartered Investment Counselor. From July 1992 to
September 1993, Mr. Love served as a member of the Board of Directors of
Northgate. See "Certain Relationships and Related Transactions."

STEPHEN MCKENSIE

Mr. McKensie was appointed a Director in January 1995. Mr. McKensie is
currently Chief Executive Officer of Resource Management, a receivable financing
company. From December 1989 to January 1991, he was Senior Vice President of
Sales and Marketing and cofounder of Reply Corporation, a manufacturer of Micro
Channel personal computers. From February 1987 to September 1989, Mr. McKensie
was President of Acer America, Inc. He currently serves as the Chairman of the
Board of Microspeed Corporation, a manufacturer of personal computer input
devices. Mr. McKensie holds a bachelor's degree in Political Science from the
University of Nebraska.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In July 1992, a group of investors purchased a majority interest in
Northgate Computer Systems, Inc. ("Northgate"). As a result of this transaction,
two current directors, Dr. Mirza and Mr. Love, were appointed to Northgate's
Board of Directors in July 1992. One former director of the Company, Dr. M.
Akram Chowdry, was appointed to the Northgate Board in September 1992 and later
became Chairman. Mr. Dudhia was appointed Chairman of Northgate's Board in
November 1993. Mr. Love resigned from the Northgate Board in September 1992,
shortly after election to the Company's Board. Dr. Chowdry resigned from the
Northgate Board in August 1993 and Dr. Mirza and Mr. Dudhia each resigned from
the Northgate Board in April 1994. The Company has no equity interest in
Northgate. However, the Company did have an ongoing business relationship with
Northgate pursuant to which Northgate had purchased products from the Company at
prices established by the Company for other third party purchasers who buy
similar quantities of products. During 1992 and the first seven months of 1993,
the Company provided commercial credit to Northgate for such purchases. For the

34
<PAGE>
year ended December 31, 1994, sales to Northgate totaled $64,866 and the Company
made no sales to Northgate after May, 1994. In late 1994, certain of the
creditors of Northgate, including the Company, filed a bankruptcy petition
against Northgate, seeking its liquidation under the provisions of Chapter 7 of
the Federal Bankruptcy Act. Subsequently, the filing was converted to a
reorganization under Chapter 11 of the Act. After the filing, the Company wrote
off approximately $4,600,000, representing substantially all of its account
receivable from Northgate. The Company had fully reserved the receivable during
1993 due to the deterioration of Northgate's financial condition.

The Company, in 1994, utilized the services of Saicom, a company owned by
the wife of Dr. Parveen Gupta, an officer of the Company, for software
duplication and printing of product manuals. The Company determined, at the
time, that Saicom's prices, for comparable quantities, were competitive with
other providers of such services. All transactions were completed in the normal
course of business and the Company paid $101,717 for Saicom services in 1994.
The Company ceased using Saicom's services in 1994.

The Company and Mr. Montross, the Company's President, entered into an
employment agreement, dated January 1, 1995. The agreement will extend for a
term of four years. The basic terms provide for an annual salary of $250,000 and
a bonus based upon the Company's profitability. The terms also provide that Mr.
Montross be granted options to purchase shares of Common Stock as follows:
130,000 shares in January 1995; 130,000 shares in January 1996; and 110,000
shares in January 1997. Pursuant to the Agreement, Mr. Montross was paid a
special bonus of $75,000 in recognition of his prior contributions to the
Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the completion of this offering, the Company will have outstanding
approximately 16,830,000 shares of Common Stock, virtually all of which,
including the 2,000,000 shares (assuming that the Underwriters do not exercise
their over-allotment option) sold in this offering, will be freely tradeable
without restriction or further registration under the Securities Act. In June
1995, the Company registered 912,081 shares of Common Stock, issued upon
conversion of its convertible debentures and the exercise of warrants, for
resale by holders of those shares. The Company believes that most of these
shares have not, as yet, been sold. In addition, the Company has reserved an
aggregate of 2,407,000 shares of Common Stock for issuance under its stock
option plans, virtually all of which will be freely tradeable upon their
issuance. Of those shares, 563,000 were subject, as of June 30, 1995, to
presently exerciseable options.

The directors and executive officers of the Company have agreed, at the
request of the Underwriters, not to sell or otherwise dispose of Common Stock in
the public market for 90 days after the date of this Prospectus without the
prior written consent of the Underwriters' Representative. Upon the expiration
of these "lock-up" agreements, such persons will have the right to sell an
aggregate of 1,389,061 shares, including shares subject to options, in the
public market.

35
<PAGE>
PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Share by (i) each director and certain
officers of the Company; (ii) all directors and executive officers of the
Company as a group; and (iii) each person known by the Company to own more than
five percent of the Company's Common Stock. The table presents the information
both as of August 1, 1995, and as adjusted to reflect the sale of the shares
offered by this Prospectus.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
SHARES BENEFICALLY BENEFICALLY OWNED
OWNED --------------------------
------------------- PRIOR TO AFTER
NAME OFFERING OFFERING (1)
---------------------------------- ----------- -------------
<S> <C> <C> <C>
Al Montross....................... 102,500(2) * *
Parveen Gupta..................... 190,000(3) 1.2% 1.1%
Colleen M. Gray................... 25,000(3) * *
Peter Shambora.................... 8,500(3) * *
Sherman W. Tom.................... 17,250(4) * *
Ismael Dudhia..................... 82,491(5) * *
M. Yaqub Mirza.................... 864,251(6) 5.6% 5.0%
Inder M. Singh.................... 259,991(7) 1.7% 1.5%
Richard Love...................... 395,003(8) 2.6% 2.3%
Stephen McKensie.................. 12,501(3) * *
2,022,487(9) 13.1% 11.6%
All directors and executive
officers as a group
(12 persons).....................
</TABLE>

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

* Less than one percent.

(1) Assumes no exercise of the Underwriters' over-allotment option.

(2) Includes 92,500 shares of Common Stock subject to options that may be
exercised on or before October 16, 1995. Does not include an option to
purchase 130,000 shares granted in January 1995 under Mr. Montross' January
1, 1995 employment agreement with the Company or a further 130,000 and
110,000 share option grant that Mr. Montross has the right to receive, under
the agreement, in January 1996 and January 1997, respectively.

(3) All of these shares of Common Stock are subject to options that are
exercisable on or before October 16, 1995.

(4) Includes 16,250 shares of Common Stock subject to options that are
exercisable on or before October 16, 1995.

(5) Includes 72,491 shares of Common Stock subject to options that are
exercisable on or before October 16, 1995.

(6) Includes 87,492 shares of Common Stock subject to options that are
exercisable on or before October 16, 1995. Also includes 276,759 shares held
in the name of Safa Trust and 375,000 shares held in the name of Mar Jac
Investments, Inc. Dr. Mirza is an officer of Safa Trust and the president
and a director of Mar Jac. As a result, Dr. Mirza may be deemed to
beneficially own all shares held by Safa Trust and Mar Jac. However, Dr.
Mirza disclaims ownership of all such shares.

(7) Includes 22,491 shares of Common Stock subject to options that are
exercisable on or before October 16, 1995.

(8) Includes 37,503 shares of Common Stock subject to options that are
exercisable on or before October 16, 1995.

(9) Includes 629,728 shares of Common Stock subject to options that are
exercisable on or before October 16, 1995, 276,759 shares of Common Stock
held in the name of Safa Trust, and 375,000 shares of Common Stock held in
the name of Mar Jac Investments, Inc.

36
<PAGE>
UNDERWRITING

Under the terms and subject to the conditions of the Underwriting Agreement,
the Underwriters named below, for whom Needham & Company, Inc. is acting as
representative (the "Representative"), have severally agreed to purchase from
the Company, and the Company has agreed to sell to each Underwriter, the
aggregate number of shares of Common Stock set forth opposite their respective
names in the table below. The Underwriting Agreement provides that the
obligations of the Underwriters to pay for and accept delivery of the shares of
Common Stock are subject to certain conditions precedent, and that the
Underwriters are committed to purchase and pay for all shares if any shares are
purchased.

<TABLE>
<CAPTION>
NUMBER
OF
NAME SHARES
--------------------------------------------------------------------- -------------
<S> <C>
Needham & Company, Inc............................................... 980,000
Bear, Stearns & Co. Inc.............................................. 70,000
A.G. Edwards & Sons, Inc............................................. 70,000
Hambrecht & Quist LLC................................................ 70,000
Lehman Brothers...................................................... 70,000
Merrill Lynch & Co................................................... 70,000
Montgomery Securities................................................ 70,000
Morgan Stanley & Co. Incorporated.................................... 70,000
Prudential Securities Incorporated................................... 70,000
Robertson, Stephens & Company, L.P................................... 70,000
Brean Murray, Foster Securities Inc.................................. 30,000
The Chicago Corporation.............................................. 30,000
Cowen & Company...................................................... 30,000
Crowell, Weedon & Co................................................. 30,000
Cruttenden Roth Incorporated......................................... 30,000
First Albany Corporation............................................. 30,000
Pacific Growth Equities, Inc......................................... 30,000
Raymond James & Associates, Inc...................................... 30,000
Rodman & Renshaw, Inc................................................ 30,000
SoundView Financial Group, Inc....................................... 30,000
Unterberg Harris..................................................... 30,000
Van Kasper & Company................................................. 30,000
Wessels, Arnold & Henderson.......................................... 30,000
-------------
Total.......................................................... 2,000,000
-------------
-------------
</TABLE>

The Company has been advised by the Representative that the Underwriters
propose to offer the shares of Common Stock to the public at the offering price
set forth on the cover page of this Prospectus and to certain dealers (who may
include the Underwriters) at such price less a concession not in excess of $.50
per share. The Underwriters may allow, and such dealers may reallow, a
concession to certain other dealers (who may include the Underwriters) not in
excess of $.10 per share. After the offering to the public, the offering price
and other selling terms may be changed by the Representative.

37
<PAGE>
The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of 300,000 shares of Common Stock at the public offering price per share, less
the underwriting discounts and commissions, set forth on the cover page of this
Prospectus. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the Common Stock offered
hereby. To the extent the Underwriters exercise such option, each of the
Underwriters will be committed, subject to certain conditions, to purchase
approximately the same percentage of such additional shares as the number of
shares of Common Stock to be purchased by such Underwriter, as shown in the
above table, bears to the total shown.

In connection with this offering, certain of the Underwriters and selling
group members may engage in passive market marking transactions in the Common
Stock of the Company in the Nasdaq National Market immediately prior to the
commencement of sales in this offering, in accordance with Rule 10b-6A under the
Exchange Act. Passive market making consists of displaying bids in the Nasdaq
National Market which are limited by the bid prices of independent market makers
and making purchases limited by such prices and effected in response to order
flow. Net purchases by a passive market maker on each day are generally limited
to a specified percentage of the passive market maker's average daily trading
volume in the Company's Common Stock during a specified prior period and must be
discontinued when such limit is reached. Passive market making may stabilize the
market price of the Common Stock of the Company at a level above that which
might otherwise prevail in the open market and, if commenced, may be
discontinued at any time.

In the Underwriting Agreement, the Company has agreed to indemnify the
Underwriters against certain liabilities that may be incurred in connection with
this offering, including liabilities under the Securities Act, or to contribute
payments that the Underwriters may be required to make in respect thereof.

The Representative has advised the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

The Company and its directors and executive officers have agreed that,
without the prior written consent of the Representative, they will not directly
or indirectly offer to sell, sell, or otherwise dispose of shares of Common
Stock or any securities convertible or exchangeable therefor, for a period of 90
days after the date of this Prospectus, subject to certain limited exceptions.

LEGAL MATTERS

The validity of the shares of Common Stock offered by this Prospectus will
be passed upon for the Company by Brown & Bain, Palo Alto, California, and
certain matters will be passed upon for the underwriters by Gray Cary Ware &
Freidenrich, Palo Alto, California.

EXPERTS

The annual consolidated financial statements, and the related financial
statement schedule, of Mylex included and incorporated by reference in this
Prospectus have been audited by KPMG Peat Marwick LLP, independent auditors, as
stated in their reports, which are included and incorporated by reference in
this Prospectus. Such financial statements and schedule are included and
incorporated herein in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.

38
<PAGE>
ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits, referred to herein as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the shares being offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby made
to the Registration Statement, which may be obtained from the Commission at its
principal office in Washington, D.C. upon payment of the charges prescribed by
the Commission. Statements contained in this Prospectus or in any document
incorporated herein by reference as to the contents of any contract or document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the Registration Statement or such other document, each such statement being
qualified in all respects by such reference.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder. In accordance therewith, the Company files
periodic reports, proxy and information statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
and information statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well
as at the following regional offices of the Commission: New York Regional
Office, Seven World Trade Center, New York, New York 10048 and Chicago Regional
Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60621-2511. Copies of such material can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Common Stock is quoted on the Nasdaq National Market.
Reports, proxy and information statements and other information statements and
other information described above may be inspected and copied at the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.

39
<PAGE>
INFORMATION INCORPORATED BY REFERENCE

The following documents filed with the Commission are incorporated into this
Prospectus by reference:

(1) The Company's Annual Report on Form 10-K for the year ended December 31,
1994, as amended;

(2) The Company's Quarterly Report on Forms 10-Q for the quarters ended
March 31 and June 30, 1995;

(3) The Company's Proxy Statement for its Annual Meeting of Shareholders
held on April 24, 1995;

(4) The description of the Company's Common Stock contained in Form 8-A
declared effective April 12, 1985; and

(5) All other reports and other documents filed by the Company since
December 31, 1994, pursuant to Section 13(a) or 15(d) of the Exchange
Act.

All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
termination of the offering, shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person, including any
beneficial owner of any of the Common Stock, to whom a copy of this Prospectus
has been delivered, upon the written or oral request of such person, a copy of
any and all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus, except that exhibits to such
documents shall not be provided unless they are specifically incorporated by
reference into such documents. Requests for such copies of any document should
be directed to: Mylex Corporation, 34551 Ardenwood Boulevard, Fremont,
California 94555, Attention: Chief Financial Officer, telephone: (510) 796-6100.

40
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
INDEX

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Independent Auditors' Report............................................................................... F-2

Consolidated Financial Statements:
Balance Sheets as of December 31, 1993 and 1994, and
June 30, 1995 (Unaudited).............................................................................. F-3

Statements of Operations,
Years Ended December 31, 1992, 1993, and 1994, and Six Months
Ended June 30, 1994 and 1995 (Unaudited).............................................................. F-4

Statements of Stockholders' Equity,
Years Ended December 31, 1992, 1993, and 1994, and Six Months
Ended June 30, 1995 (Unaudited)....................................................................... F-5

Statements of Cash Flows,
Years Ended December 31, 1992, 1993, and 1994, and Six Months
Ended June 30, 1994 and 1995 (Unaudited).............................................................. F-6

Notes to Consolidated Financial Statements................................................................. F-7
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Mylex Corporation:

We have audited the accompanying consolidated balance sheets of Mylex
Corporation and subsidiary as of December 31, 1994 and 1993, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1994. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Mylex
Corporation and subsidiary as of December 31, 1994 and 1993, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1994, in conformity with generally accepted accounting
principles.

KPMG PEAT MARWICK LLP

San Jose, California
January 30, 1995

F-2
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1994
--------- --------- JUNE 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and equivalents....................................................... $ 3,253 $ 3,866 $ 2,242
Accounts receivable, including trade accounts receivable from affiliate of
$4,633 in 1993............................................................ 9,424 11,321 15,623
Allowance for doubtful accounts............................................ (5,403) (532) (509)
--------- --------- -----------
Net accounts receivable.................................................. 4,021 10,789 15,114
Inventories................................................................ 4,631 10,237 18,868
Prepaid expenses and other current assets.................................. 622 775 1,114
--------- --------- -----------
Total current assets..................................................... 12,527 25,667 37,338
Property and equipment, net.................................................. 2,001 1,579 1,499
Other assets................................................................. 112 112 112
--------- --------- -----------
$ 14,640 $ 27,358 $ 38,949
--------- --------- -----------
--------- --------- -----------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable........................................................... $ 2,479 $ 3,187 $ 9,121
Accrued liabilities........................................................ 1,377 3,151 3,006
Line of credit payable to bank............................................. 2,500 2,350 2,500
Current portion of long-term capital lease obligations..................... 385 417 359
Convertible subordinated debentures........................................ 2,325 -- --
--------- --------- -----------
Total current liabilities................................................ 9,066 9,105 14,986
Long-term capital lease obligations.......................................... 910 493 343
Commitments and contingencies................................................
Stockholders' equity:
Common stock, $0.01 par value; 25,000,000 shares authorized; 13,036,000,
14,580,000, and 14,826,000 shares issued and outstanding in 1993, 1994,
and 1995, respectively.................................................... 130 146 148
Additional paid-in capital................................................. 8,149 13,526 14,627
Notes receivable from stockholders......................................... (194) -- --
Retained earnings (deficit)................................................ (3,421) 4,088 8,845
--------- --------- -----------
Total stockholders' equity............................................... 4,664 17,760 23,620
--------- --------- -----------
$ 14,640 $ 27,358 $ 38,949
--------- --------- -----------
--------- --------- -----------
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

See accompanying notes to consolidated financial statements.

F-4
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL NOTES RETAINED TOTAL
------------------------- PAID-IN RECEIVABLE FROM EARNINGS STOCKHOLDERS'
SHARES AMOUNT CAPITAL STOCKHOLDERS (DEFICIT) EQUITY
------------ ----------- ----------- ----------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balances as of December 31, 1991............. 11,612,000 $ 116 $ 5,921 $ -- $ 4,023 $ 10,060
Common stock issued for cash upon exercise of
options and warrants........................ 206,000 2 306 -- -- 308
Subordinated debentures converted............ 595,000 6 589 -- -- 595
Net loss..................................... -- -- -- -- (3,000) (3,000)
------------ ----- ----------- ------ ----------- ------------
Balances as of December 31, 1992............. 12,413,000 124 6,816 -- 1,023 7,963
Common stock issued for cash and notes
receivable from stockholders upon exercise
of options.................................. 442,000 4 633 (194) -- 443
Subordinated debentures converted............ 181,000 2 700 -- -- 702
Net loss..................................... -- -- -- -- (4,444) (4,444)
------------ ----- ----------- ------ ----------- ------------
Balances as of December 31, 1993............. 13,036,000 130 8,149 (194) (3,421) 4,664
Common stock issued for cash upon exercise of
options, net of 294,000 shares surrendered
at exercise................................. 863,000 9 494 -- -- 503
Subordinated debentures converted............ 681,000 7 2,631 -- -- 2,638
Tax benefit from disqualifying dispositions
of stock options............................ -- -- 2,252 -- -- 2,252
Notes receivable from stockholders........... -- -- -- 194 -- 194
Net income................................... -- -- -- -- 7,509 7,509
------------ ----- ----------- ------ ----------- ------------
Balances as of December 31, 1994............. 14,580,000 146 13,526 -- 4,088 17,760
Common stock issued for cash upon exercise of
options and warrants (unaudited)............ 246,000 2 726 -- -- 728
Tax benefit from disqualifying dispositions
of stock options (unaudited)................ -- -- 375 -- -- 375
Net income (unaudited)....................... -- -- -- -- 4,757 4,757
------------ ----- ----------- ------ ----------- ------------
Balances as of June 30, 1995 (unaudited)..... 14,826,000 $ 148 $ 14,627 $ -- $ 8,845 $ 23,620
------------ ----- ----------- ------ ----------- ------------
------------ ----- ----------- ------ ----------- ------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
1992 1993 1994 1994 1995
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................................... $ (3,000) $ (4,444) $ 7,509 $ 2,522 $ 4,757
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Tax benefit related to disqualifying dispositions of stock
options...................................................... -- -- 2,252 437 375
Depreciation and amortization................................. 849 987 1,192 557 475
Provision for uncollectible accounts receivable............... 1,956 4,676 -- -- --
Interest expense on convertible debentures converted to common
stock........................................................ -- 27 313 29 --
Changes in operating assets and liabilities:
Accounts receivable......................................... (3,678) (197) (6,768) (3,840) (4,325)
Inventories................................................. (1,430) 2,469 (5,606) (1,154) (8,631)
Prepaid expenses and other current assets................... 508 10 (153) 38 (339)
Tax refund receivable....................................... 199 2,807 -- -- --
Accounts payable............................................ 5,441 (5,737) 708 2,020 5,934
Accrued liabilities......................................... (21) (131) 1,774 1,683 (145)
--------- --------- --------- --------- ---------
Net cash provided by (used in) operating activities....... 824 467 1,221 2,292 (1,899)
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Capital expenditures............................................ (487) (144) (770) (437) (395)
Change in other assets.......................................... (25) 14 -- -- --
--------- --------- --------- --------- ---------
Net cash used in investing activities..................... (512) (130) (770) (437) (395)
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Repayments against line of credit, net of borrowings............ (1,136) (1,864) (150) (241) 150
Proceeds from issuance of convertible subordinated debentures... -- 3,000 300 -- --
Repayment of convertible subordinated debentures................ -- -- (300) -- --
Repayment of capital lease obligations.......................... (330) (348) (385) (188) (208)
Proceeds from exercise of stock options and warrants............ 308 443 503 218 728
Repayment of notes receivable from stockholders................. -- -- 194 194 --
--------- --------- --------- --------- ---------
Net cash provided by (used in) financing activities....... (1,158) 1,231 162 (17) 670
--------- --------- --------- --------- ---------
Net change in cash and equivalents................................ (846) 1,568 613 1,838 (1,624)
Cash and equivalents at beginning of year......................... 2,531 1,685 3,253 3,253 3,866
--------- --------- --------- --------- ---------
Cash and equivalents at end of year............................... $ 1,685 $ 3,253 $ 3,866 $ 5,091 $ 2,242
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Cash paid during the year:
Interest........................................................ $ 522 $ 363 $ 267 $ 146 $ 83
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Income taxes.................................................... $ 1 $ 1 $ 594 $ 1 $ 2,588
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Supplemental disclosure of noncash financing and investing
activities:
Conversion of subordinated debentures....................... $ 595 $ 702 $ 2,638 $ 454 $ --
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1992, 1993, AND 1994
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX-MONTH
PERIODS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION -- The accompanying consolidated financial statements include
the accounts of Mylex Corporation (the Company or Mylex) and its wholly owned
subsidiary. All material intercompany accounts have been eliminated in the
consolidated financial statements.

INDUSTRY SEGMENT -- Mylex designs, produces, markets, and supports
high-performance storage management electronics products for both PC and non-PC
servers and workstation as well as system boards for personal computers, and
operates in this one industry segment.

REVENUE RECOGNITION -- Net sales are recognized upon shipment to customers,
including sales made to distributors under agreements allowing limited right of
return and price protection on merchandise unsold by the distributors. For sales
made to distributors, reserves are provided for expected returns and price
protection at the time of shipment.

CASH EQUIVALENTS -- Cash equivalents include all highly liquid investments,
consisting principally of money market accounts, purchased with a maturity of
three months or less.

INVENTORIES -- Inventories are valued at the lower of cost (first in, first
out) or market.

PROPERTY AND EQUIPMENT -- Property and equipment are carried at cost. Assets
recorded under capital leases are stated at the present value of future minimum
lease payments at the inception of the lease. Depreciation on property and
equipment is calculated on the straight-line method over the estimated useful
life of the asset (generally five years). Assets recorded under capital leases
are amortized using the straight-line method over the shorter of the lease term
or estimated useful life of the asset.

INCOME TAXES -- The Company accounts for income taxes using the asset and
liability method whereby deferred assets and liabilities are recorded for
differences between the book and tax carrying amounts of balance sheet items.
Deferred liabilities or assets at the end of each period are determined using
the tax rate expected to be in effect when the taxes are actually paid or
recovered. The measurement of deferred tax assets is reduced, if necessary, by a
valuation allowance for any tax benefits that are not expected to be realized.
The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.

EARNINGS (LOSS) PER SHARE DATA -- Primary earnings (loss) per share is based
on the weighted average common and common equivalent shares, if dilutive,
outstanding each year. Common equivalent shares consist of shares issuable upon
the exercise of stock options and warrants, except where antidilutive. In
determining fully diluted earnings (loss) per share, convertible subordinated
debentures, if dilutive, are included in outstanding shares using the "if
converted" method.

(2) RELATED PARTY TRANSACTIONS
On July 17, 1992, a group of investors, consisting of certain directors and
several officers and stockholders of the Company, purchased a majority interest
in Northgate Computer Systems, Inc. (Northgate). As a result of this investment,
two directors and one officer of the Company have served on the Northgate Board
of Directors. The Company has no direct equity interest in Northgate.

As of December 31, 1993, $4,633,000 of the Company's gross accounts
receivable were attributable to Northgate. These receivables were fully
reserved. The reserve was increased to 100% of the outstanding balance as a
result of decreased payments from Northgate during the third quarter of 1993 and
the continued deterioration during 1993 of Northgate's financial condition.
Subsequent to

F-7
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX-MONTH
PERIODS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)

(2) RELATED PARTY TRANSACTIONS (CONTINUED)
August 1993, sales to Northgate have been minimal and on a cash-in-advance
basis. During 1994, all outstanding receivables from Northgate were written off
against the reserve. Northgate filed for bankruptcy in 1994.

(3) INVENTORIES
Inventories consisted of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1994
--------- --------- JUNE 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials....................................................... $ 1,495 $ 6,924 $ 11,052
Work in process..................................................... 2,683 2,263 5,748
Finished goods...................................................... 453 1,050 2,068
--------- --------- -----------
$ 4,631 $ 10,237 $ 18,868
--------- --------- -----------
--------- --------- -----------
</TABLE>

(4) PROPERTY AND EQUIPMENT
Property and equipment consisted of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1994
--------- --------- JUNE 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C>
Machinery and equipment............................................... $ 3,656 $ 4,122 $ 4,308
Furniture and fixtures................................................ 511 656 661
Computer equipment and software....................................... 1,213 1,372 1,550
--------- --------- -----------
5,380 6,150 6,519
Less accumulated depreciation and amortization........................ 3,379 4,571 5,020
--------- --------- -----------
$ 2,001 $ 1,579 $ 1,499
--------- --------- -----------
--------- --------- -----------
</TABLE>

As of December 31, 1994, equipment recorded under capital leases was
$2,079,000 and accumulated amortization thereon was $1,648,000.

(5) ACCRUED LIABILITIES
Accrued liabilities consisted of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1994
--------- --------- JUNE 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C>
Accrued compensation and benefits..................................... $ 400 $ 1,234 $ 1,117
Accrued legal......................................................... -- 855 855
Other................................................................. 977 1,062 1,034
--------- --------- -----------
$ 1,377 $ 3,151 $ 3,006
--------- --------- -----------
--------- --------- -----------
</TABLE>

(6) LINE OF CREDIT
The Company has a $6,000,000 line of credit expiring in May 1995 which bears
interest at the bank's prime rate plus 0.75% (8.5% as of December 31, 1994).
Borrowings under this line of credit are limited to 80% of eligible accounts
receivable and are secured by the Company's unencumbered assets.

F-8
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX-MONTH
PERIODS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)

(6) LINE OF CREDIT (CONTINUED)
The agreement requires the Company to maintain a $500,000 compensating balance
and contains covenants that include the maintenance of specific financial ratios
and prohibitions on dividend payments, stock repurchases, and additional
indebtedness without the prior consent of the bank. As of December 31, 1994, the
Company was in compliance with these covenants, except for the covenant related
to inventory turns, which was waived by the bank. The compensating balance is
not legally restricted. See Note 12.

(7) INCOME TAXES
Income taxes for the years ended December 31, 1992, 1993, and 1994, were
comprised of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1992 1993 1994
--------- --------- ---------
<S> <C> <C> <C>
Current tax expense (benefit):
Federal............................................................... $ (1,927) $ (472) $ 911
State................................................................. 1 1 27
--------- --------- ---------
Total current....................................................... (1,926) (471) 938
--------- --------- ---------
Deferred tax expense (benefit):
Federal............................................................... 465 425 (638)
State................................................................. -- -- --
--------- --------- ---------
Total deferred...................................................... 465 425 (638)
--------- --------- ---------
Charge in lieu of taxes attributable to employer stock
option plans:
Current year.......................................................... -- -- 1,222
Prior years........................................................... -- -- 1,030
--------- --------- ---------
Total charge........................................................ -- -- 2,252
--------- --------- ---------
Total tax expense (benefit)......................................... $ (1,461) $ (46) $ 2,552
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-9
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX-MONTH
PERIODS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)

(7) INCOME TAXES (CONTINUED)
The reconciliation between the amount computed by applying the federal
statutory rate of 34% to income (loss) before income taxes and the actual income
tax expense (benefit) were as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1992 1993 1994
--------- --------- ---------

<S> <C> <C> <C>
Statutory federal income tax, at 34%................................... $ (1,517) $ (1,527) $ 3,421
State income tax, net of federal tax benefit........................... 1 (275) 102
Foreign sales corporation benefit...................................... -- -- (41)
Credits available from application of loss carryback................... -- (335) --
Change in the beginning of the year valuation allowance, including
losses and credits for which no benefit has been recognized........... -- 2,081 (1,986)
Credit to paid-in capital.............................................. -- -- 1,030
Other, net............................................................. 55 10 26
--------- --------- ---------
Total tax expense (benefit).......................................... $ (1,461) $ (46) $ 2,552
--------- --------- ---------
--------- --------- ---------
</TABLE>

The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities is presented
below (in thousands).

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1994
--------- ---------
<S> <C> <C>
Deferred tax assets:
Accounts receivable valuation reserves.......................................... $ 1,800 $ 214
Lower of cost or market adjustments to inventory and other tax related
adjustments.................................................................... 190 145
Reserves and accruals for reporting purposes not taken for tax purposes......... 220 1,059
Other credits................................................................... 600 --
State tax benefit, including net operating loss carryovers, net of federal tax
reduction...................................................................... 675 --
Valuation allowance............................................................. (3,285) (1,299)
--------- ---------
Net deferred tax assets....................................................... 200 119
--------- ---------
Deferred tax liabilities:
Depreciation and amortization................................................... (200) (119)
--------- ---------
Net deferred tax liabilities.................................................. (200) (119)
--------- ---------
Net deferred tax assets....................................................... $ -- $ --
--------- ---------
--------- ---------
</TABLE>

The net change in the valuation allowance for the year ended December 31,
1994, was a decrease of $956,000, after adjustment for approximately $1,030,000
realized benefit from prior years' disqualifying disposition of stock options
credited to paid-in capital. Management believes sufficient uncertainty exists
regarding the realizability of these net deferred tax assets such that a
valuation allowance is required.

F-10
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1992, 1993, and 1994
(Information as of June 30, 1995 and for the six-month
periods ended June 30, 1994 and 1995 is unaudited)

(7) INCOME TAXES (CONTINUED)

As of December 31, 1994, for California tax purposes, the Company had net
operating loss carryforwards of approximately $975,000, which expire in 1997
through 1998. The Company had no loss carryforwards for federal tax purposes.
The difference between the net operating loss carryforwards for federal income
tax purposes and for California income tax purposes results from limitations on
the carryback of losses in California.

(8) CONVERTIBLE SUBORDINATED DEBENTURES
During 1993, the Company sold $3,000,000 of 8% convertible debentures
through a private placement. The debentures paid interest semiannually and
provided for conversion of the principal and any outstanding accrued interest
into common stock at conversion prices ranging from $3.875 to $5.00 per share.
Members of the Company's Board of Directors purchased $775,000 of the
debentures, and, during 1993, $675,000 of the debentures held by Board members,
along with $27,300 of related accrued interest, were converted to common stock.

Of the $2,325,000 debentures outstanding as of December 31, 1993, $300,000
were due December 31, 1993, and $2,025,000 were due at the earlier of December
31, 1994, or the closing date of a public offering of stock or debt pursuant to
which the Company receives proceeds of at least $10,000,000. The debentures due
December 31, 1993, were repaid in January 1994.

During 1994, an additional $300,000 of 8% convertible debentures were issued
to replace those repaid in January 1994. These debentures and the $2,025,000
outstanding as of December 31, 1993, along with $313,000 of related accrued
interest, were converted to common stock during 1994 at a rate of $3.875 per
share.

With respect to common stock issued upon conversion of the debentures, the
holders may require, at the Company's expense, filing of a registration
statement under the Securities Act of 1993 covering the securities issued upon
conversion. See Note 12.

(9) COMMITMENTS AND CONTINGENCIES
Future minimum payments under leases as of December 31, 1994, will be as
follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING CAPITAL OPERATING
DECEMBER 31, LEASES LEASES
------------------------------------------------------------------------ --------- -----------
<S> <C> <C>
1995.................................................................. $ 493 $ 631
1996.................................................................. 522 211
--------- -----
Total future minimum lease payments..................................... 1,015 $ 842
-----
-----
Less amount representing interest....................................... 105
---------
Present value of capital lease obligations.............................. 910
Less current portion.................................................... 417
---------
Noncurrent portion of capital lease obligations......................... $ 493
---------
---------
</TABLE>

The Company leases its facility under a noncancelable lease agreement that
expires in 1996 and provides for renewal options. Under this lease, Mylex is
required to pay property taxes, insurance, and normal maintenance costs.

Rent expense was $768,000, $824,000, and $743,000 in 1992, 1993, and 1994,
respectively.

F-11
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX-MONTH
PERIODS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)

(9) COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company is party to an action that alleges breach of contract and other
claims relating to a royalty agreement entered into by the Company. The amount
of damages sought is unspecified. The Company has certain defenses and
counterclaims and intends to defend this action vigorously.

The former chief executive officer of the Company filed a complaint against
the Company and its outside directors in October 1994, claiming breach of his
employment agreement. The claim is for compensatory and consequential damages of
at least $5 million. The Company believes it has meritorious defenses and will
vigorously defend this lawsuit.

The results of legal proceedings cannot be predicted with certainty;
however, in the opinion of management, the Company does not have a potential
liability in connection with these and any other proceedings that would have a
material adverse effect on the Company.

(10) STOCKHOLDERS' EQUITY
Mylex's 1983 and 1993 incentive and nonqualified stock option plans provide
for the grant, by the Board of Directors, of stock options to employees,
officers, consultants, and outside directors at an exercise price per share not
less than the fair market value on the date of grant. Incentive stock options
granted under the 1983 plan generally vest ratably over 3 years from date of
grant and expire 10 years from date of grant. Nonqualified stock options begin
vesting immediately and expire 5 years from date of grant. Options granted under
the 1993 plan generally vest ratably over 4 years from the date of grant and
expire 10 years from the date of grant.

F-12
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX-MONTH
PERIODS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)

(10) STOCKHOLDERS' EQUITY (CONTINUED)
The 1983 and 1993 plans also provide for automatic grants to outside
directors of options to purchase 50,000 common shares upon election to the Board
of Directors. A summary of stock option transactions under the plans are as
follows:

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
SHARES ---------------------------------
AVAILABLE NUMBER
FOR GRANT OF SHARES EXERCISE PRICE
------------ ------------ -------------------
<S> <C> <C> <C>
Balances as of December 31, 1991................................ 42,000 2,386,000 $1.125 - 5.06
Increases in number of shares available for grant............. 750,000 -- --
Granted....................................................... (300,000) 300,000 4.25 - 4.75
Exercised..................................................... -- (163,000) 1.125 - 2.75
Canceled...................................................... 320,000 (320,000) 1.125 - 4.75
------------ ------------
Balances as of December 31, 1992................................ 812,000 2,203,000 1.15 - 5.06
Increases in number of shares available for grant............. 750,000 -- --
Granted....................................................... (1,168,000) 1,168,000 3.87 - 7.00
Exercised..................................................... -- (442,000) 1.15 - 4.63
Canceled...................................................... 29,000 (29,000) 2.75 - 4.63
Shares expiring with 1983 plan................................ (404,000) -- --
------------ ------------
Balances as of December 31, 1993................................ 19,000 2,900,000 1.25 - 7.00
Increases in number of shares available for grant............. 625,000 -- --
Granted....................................................... (566,000) 566,000 4.63 - 10.25
Exercised..................................................... -- (1,157,000) 1.25 - 4.13
Canceled under 1983 plan...................................... -- (491,000) 1.50 - 5.75
Canceled under 1993 plan...................................... 41,000 (41,000) 3.88 - 10.25
------------ ------------
Balances as of December 31, 1994................................ 119,000 1,777,000 1.56 - 10.25
Increases in number of shares available for grant
(unaudited).................................................. 700,000 -- --
Granted (unaudited)........................................... (424,000) 424,000 10.50 - 10.63
Exercised (unaudited)......................................... -- (188,000) 1.56 - 5.75
Canceled under 1983 plan (unaudited).......................... -- (1,000) 4.13
Canceled under 1993 plan (unaudited).......................... 51,000 (51,000) 5.00 - 10.25
------------ ------------
Balances as of June 30, 1995 (unaudited)........................ 446,000 1,961,000 1.56 - 10.63
------------ ------------
------------ ------------
Exercisable as of December 31, 1994............................. 553,000 1.56 - 5.06
------------
------------
Exercisable as of June 30, 1995 (unaudited)..................... 563,000 1.56 - 5.06
------------
------------
</TABLE>

As of December 31, 1994, the Company had warrants outstanding for the
purchase of 7,500 shares at $1.125 per share.

(11) CONCENTRATION OF CREDIT RISK AND SALES TO MAJOR CUSTOMERS
The Company sells its products primarily to original equipment manufacturers
and distributors in the personal computer industry. The Company generally
requires no collateral on trade receivables,

F-13
<PAGE>
MYLEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX-MONTH
PERIODS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)

(11) CONCENTRATION OF CREDIT RISK AND SALES TO MAJOR CUSTOMERS (CONTINUED)
although certain export sales are guaranteed by letters of credit. As described
in Note 2, the Company's largest customer in 1992, Northgate, was an affiliate.
Receivables from Northgate were fully reserved during 1993 due to the
deterioration of Northgate's financial condition. The receivable from Northgate
was written off during 1994 as a result of Northgate's filing for bankruptcy.

Sales to major customers, as a percentage of net sales, and the amount
receivable (in thousands) as of December 31, 1994, from such customers were as
follows:

<TABLE>
<CAPTION>
GROSS AMOUNT RECEIVABLE
--------------------------
DECEMBER 31,
CUSTOMER 1992 1993 1994 1994
--------------------------------------- ----- ----- ----- SIX-MONTHS -------------
ENDED
JUNE 30, 1995 JUNE 30,
--------------- 1995
(UNAUDITED) -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
A...................................... -- 18% 22% 31% 1,426 5,831
B...................................... -- -- 17% 15% 1,788 700
C...................................... -- 10% 14% 10% 1,018 1,783
D...................................... -- 3% 5% 1% 1,631 1,106
E...................................... 1% 10% 4% -- 95 7
Northgate.............................. 38% 11% -- -- -- --
</TABLE>

Export sales, principally to Europe, comprised 29%, 21%, and 16% of net
sales in 1992, 1993, and 1994, respectively.

(12) SUBSEQUENT EVENTS (UNAUDITED)

CREDIT LINE AGREEMENT

Effective May 15, 1995, the Company renegotiated its revolving line of
credit, described at Note 6, with its bank. The renegotiated line of credit
expires May 15, 1996, bears interest at the Bank's prime rate, is secured by all
of the Company's assets and is subject to an overall borrowing limit of $8
million. Under the agreement, the Company must achieve certain financial results
and maintain compliance with certain financial covenants. The Company was in
compliance with these covenants as of June 30, 1995.

REGISTRATION OF COMMON STOCK

In June, 1995 the Company filed a registration statement under the
Securities Act of 1933 covering the 862,000 shares of common stock issued during
1993 and 1994 upon conversion of the convertible subordinated debentures
described at Note 8.

F-14
<PAGE>
DESCRIPTION APPENDIX

1. The table in page 19 illustrates the functions of RAID Levels 0,1,3 and 5
and summarizes the benefits offered by each level.

2. The diagram on page 22 depicts a Mylex RAID controller and illustrates the
command flow typically associated with the reading of stored data.

3. The diagram on page 23 depicts a Mylex RAID controller and illustrates the
command flow typically associated with the writing of data to storage.

4. The diagram on the gatefold depicts a Mylex RAID controller and explains how
different levels of RAID function.

5. The inside front cover contains a picture of a Mylex DAC960PD RAID
controller.
<PAGE>
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR SINCE THE
DATES AS OF WHICH INFORMATION IS SET FORTH HEREIN. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON
STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary................................ 3
Risk Factors...................................... 5
Use of Proceeds................................... 9
Price Range of Common Stock....................... 9
Dividend Policy................................... 9
Capitalization.................................... 10
Selected Historical Financial Data................ 11
Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 12
Business.......................................... 18
Management........................................ 32
Certain Relationships and Related Transactions.... 34
Shares Eligible for Future Sale................... 35
Principal Shareholders............................ 36
Underwriting...................................... 37
Legal Matters..................................... 38
Experts........................................... 38
Additional Information............................ 39
Available Information............................. 39
Information Incorporated by Reference............. 40
Index to Consolidated Financial Statements........ F-1
</TABLE>

2,000,000 Shares

CORPORATION

Common Stock

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

PROSPECTUS

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

Needham & Company, Inc.

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

September 20, 1995

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