INTERLINK COMPUTER SCIENCES INC, 424A, 1996-07-24

INTERLINK COMPUTER SCIENCES INC
424A, 1996-07-24
COMPUTER INTEGRATED SYSTEMS DESIGN

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<PAGE>

Filed Pursuant to Rule 424(a)
Registration No. 333-05243

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS +
+OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

[SUBJECT TO COMPLETION, DATED JULY 23, 1996]

2,700,000 SHARES

[LOGO OF INTERLINK COMPUTER SCIENCES]

COMMON STOCK

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

Of the 2,700,000 shares of Common Stock offered hereby, 2,200,000 shares are
being sold by the Company and 500,000 shares are being sold by the Selling
Stockholders. See "Principal and Selling Stockholders." The Company will not
receive any of the proceeds from the sale of shares by the Selling
Stockholders. Prior to this offering, there has been no public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $13.00 and $15.00 per share. See "Underwriting"
for a discussion of factors to be considered in determining the initial public
offering price. The Company's Common Stock has been approved for quotation on
the Nasdaq National Market under the symbol "INLK."

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

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.

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

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 PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS (1) COMPANY (2) STOCKHOLDERS
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share............ $ $ $ $
- ------------------------------------------------------------------------------
Total (3)............ $ $ $ $
==============================================================================
</TABLE>
(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.

(2) Before deducting expenses payable by the Company, estimated to be
$1,000,000.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 405,000 additional shares of Common Stock solely to cover over-
allotments, if any. If the Underwriters exercise this option in full, the
total Price to Public, Underwriting Discounts and Commissions and Proceeds
to Company will be $ , $ and $ , respectively. See "Underwriting."

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

The shares of Common Stock are offered by the Underwriters named herein,
subject to prior sale, when, as and if accepted by them and subject to certain
conditions. It is expected that the certificates for the shares of Common Stock
will be available for delivery at the offices of Volpe, Welty & Company, One
Maritime Plaza, San Francisco, California, on or about , 1996.

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

VOLPE, WELTY & COMPANY PUNK, ZIEGEL & KNOELL

, 1996
<PAGE>

ENTERPRISE CLIENT/SERVER MODEL

Many large organizations are integrating their mainframe computers into their
distributed client/server networks as "enterprise servers." The enterprise
server and the systems management applications associated with its use are
capable of providing reliable and efficient systems management, data security,
and distribution of data and applications.

Centralized
Computing
Resources

Depiction of a three tier computing environment comprised of enterprise
servers, distributed servers and clients, all linked by common networked
transport.

Distributed
Processing
Systems

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

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

2
<PAGE>

[GATEFOLD]
INTERLINK'S ENTERPRISE SOLUTIONS

Interlink offers a suite of high-performance network transport
products and systems management applications. The network
transport products provide the communication infrastructure
between distributed networks and the enterprise server.
Interlink's systems management applications allow centralized
management of applications and data across distributed systems.

TCPaccess is a network transport Enterprise Print Services manages
product which connects the MVS the printing of enterprise server
enterprise server to client/server applications to network printers
networks using open systems TCP/IP
protocols

HARBOR Backup efficiently
backs up and restores data on
client/server networks to an
enterprise server

HARBOR Distributed Storage Server
allows local backup and restore on
the network with control over
transmission and security

HARBOR Distribution manages the
cataloging, installation, and up-
grading of applications, data files
and software packages across the
enterprise

<PAGE>

PROSPECTUS SUMMARY
This Prospectus contains certain statements of a forward-looking nature
relating to future events or the future financial performance of the Company.
Prospective investors are cautioned that such statements are only predictions
and that actual events or results may differ materially. In evaluating such
statements, prospective investors should specifically consider the various
factors identified in this Prospectus, including the matters set forth under
the caption "Risk Factors," which would cause actual results to differ
materially from those indicated by such forward-looking statements. The
following summary is qualified in its entirety by the more detailed information
and financial statements, including notes thereto, appearing elsewhere in this
Prospectus.
THE COMPANY

Interlink Computer Sciences, Inc. ("Interlink" or the "Company") is a
supplier of high-performance solutions for enterprise networked systems
management. Interlink provides software and services which enable customers to
use their IBM and IBM-compatible MVS mainframes as "enterprise servers" in
distributed, heterogeneous client/server network environments. The Company's
products and services enable customers to transport, access and manage mission-
critical data and applications across distributed network environments. The
Company develops and markets network transport products which provide for
enterprise server TCP/IP connectivity, fault tolerance and network file
transfer. Interlink also develops and markets systems management applications
for network backup, archive and restore, distribution of applications, data and
software, network printing and other tools which expand the functionality of
the enterprise server.

Many large organizations depend on centralized mainframe computer systems to
manage mission-critical software applications and to serve as the repository
for essential business data. Recently, advances in hardware, software and
networking technologies have led to the deployment of client/server systems, in
which computing tasks are distributed throughout a network of computers.
Organizations are now seeking the technology to integrate mainframe computers
into client/server networks as "enterprise servers" which, like other servers
on the client/server network, have a specialized purpose and function.
Specifically, the enterprise server and the systems management applications
associated with its use are capable of providing reliable and efficient systems
management, data security, and distribution of data and applications.
Improvements in the cost-effectiveness of mainframe systems have significantly
increased the use of mainframe computers as enterprise servers.

With almost ten years of experience in the enterprise networked systems
management industry, Interlink provides networking solutions that build upon
its expertise in the integration of the MVS operating system with TCP/IP and
its reputation for high-performance, efficient products. Interlink's objective
is to become the leading supplier of high-performance solutions for enterprise
networked systems management. Key elements of the Company's strategy include:
supplying a suite of products that expand the functionality of the enterprise
server; capitalizing on new sales and cross-selling opportunities resulting
from its recent acquisition; employing a consultative sales approach to build
long-term customer relationships; differentiating its networking solutions
through superior customer support; and leveraging strategic marketing and
development relationships in order to provide complete solutions to its
customers' evolving network systems management needs.

The Company recently formed a strategic relationship with Legato Systems,
Inc. ("Legato") to develop products which will enable the companies to provide
enterprise-class storage management solutions. Pursuant to the terms of the
agreement, Interlink intends to develop a new product called HARBOR Agent for
Networker (Legato's client/server storage management product) which will be
distributed by Legato. Interlink will be an authorized reseller of Legato's
storage management products, including HARBOR Agent for Networker.

On December 29, 1995, the Company acquired New Era Systems Services Ltd.
("New Era") and its HARBOR systems management product line in exchange for cash
and notes payable totaling $12.4 million and warrants to purchase 350,000
shares of its Common Stock with additional contingent earnout payments totaling
up to $5.2 million due January 31, 1997 and 1998. Prior to the acquisition, the
Company distributed the HARBOR products in certain countries in Europe for more
than one year.

Interlink was incorporated under the laws of the state of California in
December 1985. The Company will reincorporate in Delaware prior to the
completion of this offering. Unless the context otherwise requires, references
in this Prospectus to "Interlink" and the "Company" refer to Interlink Computer
Sciences, Inc., a California corporation, and its Delaware successor, together
with their subsidiaries. The Company's principal executive offices are located
at 47370 Fremont Boulevard, Fremont, California 94538, and its telephone number
is (510) 657-9800.

3
<PAGE>

THE OFFERING

<TABLE>
<C> <S>
Common Stock Offered by the Company............. 2,200,000 shares
Common Stock Offered by the Selling Stockhold-
ers............................................ 500,000 shares
Common Stock Outstanding after the Offering..... 5,987,019 shares (1)
Use of Proceeds................................. For repayment of
indebtedness, capital
expenditures, working capital
and other general corporate
purposes.
Nasdaq National Market symbol................... INLK
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA FOR
YEAR ENDED JUNE 30, ACQUISITION (2)
---------------------------------------- ---------------
YEAR ENDED
1992 1993 1994 1995 1996 JUNE 30, 1996
------- ------- ------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues............... $23,326 $21,185 $21,875 $27,079 $34,002 $36,491
Gross profit........... 16,995 17,119 18,065 20,470 25,995 28,197
Purchased research and
development and prod-
uct amortization...... -- -- -- -- 10,479 642
Operating income
(loss)................ (4,935) 2,167 844 104 (6,995) 3,757
Net income (loss)...... (5,864) 2,902 1,667 1,647 (7,616) 2,765
======= ======= ======= ======= ======= =======
Net income (loss) per
share (3)............. $ (5.47) $ 1.17 $ 0.44 $ 0.34 $ (2.44) $ 0.56
======= ======= ======= ======= ======= =======
Shares used in per
share calculation (3). 1,073 2,474 3,808 4,814 3,127 4,954
======= ======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------
AS
ACTUAL ADJUSTED (4)
------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)................................ $(6,371) $21,273
Total assets............................................. 25,925 48,569
Long-term debt, less current portion..................... 2,892 2,892
Total stockholders' equity (deficit)..................... (4,585) 23,059
</TABLE>
- -------
(1) Represents shares outstanding as of June 30, 1996. Reflects the issuance of
74,167 shares of Common Stock immediately subsequent to the offering upon
the net exercise of certain outstanding warrants and excludes as of June
30, 1996: (i) options outstanding to purchase up to 1,018,503 shares of
Common Stock at a weighted average exercise price of $1.82 per share under
the Company's 1992 Stock Option Plan; (ii) 399,644 shares of Common Stock
issuable upon exercise of warrants outstanding at a weighted average
exercise price of $3.08 per share; and (iii) 870,463 shares of Common Stock
reserved for issuance under the Company's 1992 Stock Option Plan, 850,000
shares of which are subject to stockholder approval. See "Management--Stock
Plans," "Description of Capital Stock" and Note 7 of Notes to Consolidated
Financial Statements. Also excludes, subject to stockholder approval,
350,000 shares reserved prior to June 30, 1996 and an additional 300,000
shares reserved subsequent to June 30, 1996 for issuance under the
1992 Stock Option Plan, the 1996 Director Option Plan and the 1996 Employee
Stock Purchase Plan.
(2) Pro forma to give effect to the Company's acquisition of New Era Systems
Services Ltd. in December 1995 as if such acquisition had taken place as of
July 1, 1995. See Notes 1 and 2 of Notes to Unaudited Pro Forma Combined
Condensed Consolidated Financial Statements.
(3) See Note 1 of Notes to Consolidated Financial Statements for a discussion
of the computation of net income (loss) per share.
(4) Adjusted to reflect the sale of the 2,200,000 shares of Common Stock
offered by the Company hereby at an assumed initial public offering price
of $14.00 per share, and after deducting underwriting discounts and
commissions and the estimated expenses of the offering, and the anticipated
application of the estimated net proceeds therefrom. See "Use of Proceeds"
and "Capitalization."

--------------
Enterprise Print Services, SNS and the Interlink logo are registered
trademarks of the Company and TCPaccess, TCPaccess Fault Tolerant, Interlink
3762 Network Controller, SNS/NFS, SNS/TCPaccess, Interlink 3700 Series Network
Controller, CICS Programmers Toolkit, HARBOR and the HARBOR logo are trademarks
of the Company. This Prospectus also contains trademarks and tradenames of
other companies.
--------------
Except as otherwise indicated, all information contained in this Prospectus
(i) assumes that the Underwriters' over-allotment option is not exercised, (ii)
reflects an increase in the authorized shares of Common Stock to 25,000,000
shares which will occur prior to this offering, (iii) reflects the one-for-two
reverse stock split of the Company's capital stock which will occur prior to
this offering, (iv) gives effect to the reincorporation of the Company from
California to Delaware which will occur prior to this offering, (v) reflects
the conversion of all outstanding shares of Preferred Stock into 1,229,714
shares of Common Stock, which will occur automatically upon the closing of this
offering, (vi) reflects the filing, upon the closing of this offering, of the
Company's Restated Certificate of Incorporation authorizing 5,000,000 shares of
undesignated Preferred Stock, and (vii) reflects the issuance of 151,166 shares
upon the net exercise of outstanding warrants, including the reduction of an
outstanding warrant to purchase 75,000 shares to 62,500 shares, which will both
occur upon the closing of this offering. See "Description of Capital Stock,"
"Underwriting" and Note 7 of Notes to Consolidated Financial Statements.

4
<PAGE>

RISK FACTORS

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain
factors, including those set forth in the following risk factors and elsewhere
in this Prospectus. The following factors should be carefully considered in
evaluating the Company and its business before purchasing the Common Stock
offered hereby.

COMPETITION

General. The market in which the Company operates is intensely competitive
and is characterized by extreme price competition and rapid technological
change. The competitive factors influencing the markets for the Company's
products include product performance, price, reliability, features,
scalability, interoperability across multiple platforms, adherence to industry
standards, and the provision of support and maintenance services. The Company
competes with a number of companies, principally International Business
Machines Corp. ("IBM"), that specialize in one or more of the Company's
product lines, and such competitors may have greater financial, technical,
sales and marketing resources to devote to the development, promotion and sale
of their products, and may have longer operating histories, greater name
recognition, and greater market acceptance for their products and services
compared to those of the Company. There can be no assurance that the Company's
current competitors or any new market entrants will not develop networked
systems management products or other technologies that offer significant
performance, price or other advantages over the Company's technologies, the
occurrence of which would have a material adverse effect on the Company's
business, financial condition and results of operations.

Network Transport Products. The Company sells its TCPaccess suite of
products principally to customers who have installed IBM mainframes using the
MVS operating system. The Company's main competition for its TCPaccess
products is IBM. IBM sells TCP/IP and associated products for its MVS
mainframe systems that compete directly with the Company's TCPaccess product
line. IBM has continued to enhance the functionality and performance of its
TCP/IP product, which enhancements may require the Company to update its
TCPaccess product to remain competitive. There can be no assurance that the
Company will be able to make the improvements in its TCPaccess product
necessary to remain competitive with IBM or that any such improvements by IBM
would not have a material adverse effect on the Company's business, financial
condition or results of operations. In addition, IBM recently released its
OS/390 operating system, which includes TCP/IP communications software in a
bundle of software provided to purchasers of OS/390. An IBM customer can
request to have the IBM TCP/IP product removed from the software bundle
provided by IBM and thereby reduce the purchase price of the system purchased.
The reduction in the purchase price related to the exclusion of IBM's TCP/IP
for MVS product from its software bundle, in certain model groups, is
substantially lower than the price the customer would have to pay to purchase
the Company's corresponding TCPaccess product. Because in some IBM model
groups IBM's TCP/IP product is less expensive to purchase than the Company's
corresponding TCPaccess products in the same model groups, there could be
substantial erosion of the Company's margins if the Company reduces the price
of its TCPaccess products in order to compete against IBM, which erosion would
have a material adverse effect on the Company's business, financial condition
and results of operations. Also, IBM could in the future decide to include its
TCP/IP product in the bundle of software provided to purchasers of its OS/390
operating system without charge. The Company believes that any reduction in
price of the IBM TCP/IP products, or the bundling of those products without
charge in its OS/390 operating system, would require the Company to either
reduce the prices of its TCPaccess products or substantially increase sales
and marketing expenses, or both, in order to continue to sell its TCPaccess
products, which actions would have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, if IBM
were to develop or design its OS/390 operating system or other products so
that its TCP/IP product cannot be removed, customers who otherwise would have
been inclined to purchase the Company's TCPaccess product may not do so, which
would have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, the Company derives a
substantial portion of its revenues from maintenance agreements with its
TCPaccess customers. If the Company sells fewer TCPaccess products, either due
to competition from IBM or otherwise, the Company's maintenance revenues would
be reduced, which would have a material adverse

5
<PAGE>

effect on the Company's business, financial condition and results of
operations. If IBM reduces the combined price of its TCP/IP products and
maintenance, IBM's combined price for its TCP/IP products and maintenance
would be more price competitive with the Company's product line, and the
Company's product and maintenance revenues would be adversely affected. The
Company also competes with IBM, Apertus Technologies Inc. ("Apertus"), Cisco
Systems, Inc., Computerm Corporation ("Computerm"), Network Solutions, Inc.
and Memorex Telex Corp. ("Memorex") in the network controller market, where
the Company resells the network controller manufactured by Bus-Tech Inc.
("Bus-Tech"), a division of Storage Technology Corp. ("Storage Technology"),
to provide the hardware connection which links the enterprise server to the
client/server network.

System Management Applications. The primary competitors for the Company's
HARBOR Backup and HARBOR Distributed Storage Server products are IBM, Storage
Technology, Innovation Data Processing, Inc. and Boole & Babbage, Inc. The
Company's competition for the HARBOR Distribution product includes IBM,
Novadigm, Inc. ("Novadigm") and Tangram Enterprise Solutions, Inc. IBM is
aggressively marketing its ADSM backup product, which is included in the
System View package on IBM's UNIX system, AIX. There can be no assurance that
IBM will not include the ADSM backup products in a software "bundle" with the
sale of its mainframe hardware systems. The bundling of competing software
products with mainframe hardware systems could have a material adverse effect
on the Company's business, financial condition and results of operations. The
Company also competes with software vendors who develop and market products
for UNIX and Windows NT operating systems, such as Microsoft Corporation
("Microsoft"), Arcada Software, Inc., Cheyenne Software, Inc., Computer
Associates International, Inc., EMC Corporation, Hewlett-Packard Company,
Legato, Novadigm, OpenVision Technology, Inc., PLATINUM technology, inc.,
Sterling Software, Inc., Sun Microsystems, Inc. and Unison Software, Inc.,
which are focusing on enterprise systems management applications. Although the
Company recently signed a strategic marketing agreement with Legato, the
Company is still a competitor of Legato in the storage management market. The
Company also expects increased competition from vendors of TCP/IP-to-SNA
gateway products, including such companies as Microsoft, Novell, Inc., Apertus
and CNT/Brixton Systems, Inc. Competition from these companies could increase
due to an expansion of their product lines or a change in their approaches to
enterprise systems management or networking products. The bundling of network
transport software with a network controller by these competitors could
prevent the Company from selling TCPaccess to the customers of these
competitors, which would have a material adverse effect on the Company's
business, financial condition and results of operations.

Other Factors. The Company's ability to compete successfully depends on many
factors, including the Company's success in developing new products that
implement new technologies, performance, price, product quality, reliability,
success of competitors' products, general economic conditions, and protection
of Interlink products by effective utilization of intellectual property laws.
In particular, competitive pressures from existing or new competitors who
offer lower prices or other incentives or introduce new products could result
in price reductions which would adversely affect the Company's profitability.
There can be no assurance that the Company's current or other new competitors
will not develop enhancements to, or future generations of, competitive
products that offer superior price or performance features, that the Company
will be able to compete successfully in the future, or that the Company will
not be required to incur substantial additional investment costs in connection
with its engineering, research, development, marketing and customer service
efforts in order to meet any competitive threat. The Company expects
competition to intensify, and increased competitive pressure could cause the
Company to lower prices for its products, or result in reduced profit margins
or loss of market share, any of which could have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business--Competition."

6
<PAGE>

RELIANCE ON IBM AND EMERGENCE OF MAINFRAME AS ENTERPRISE SERVER

The Company's current software products are designed for use with IBM and
IBM-compatible mainframe computers. Specifically, these software products
target users of the MVS operating system, the Customer Information Control
System ("CICS") communications subsystem and the IMS and DB2 database
management systems. As a result, future sales of the Company's existing
products and associated recurring maintenance revenues are dependent upon
continued use of mainframes and their related systems software. In addition,
because the Company's products operate in conjunction with IBM systems
software, changes to IBM systems software may require the Company to adapt its
products to these changes, and any inability to do so, or delays in doing so,
may adversely affect the Company's business, financial condition and results
of operations. Currently, TCP/IP is the communications protocol for the
Internet and is being adopted by some organizations as the communications
protocol for their client/server local area networks ("LANs") and wide area
networks ("WANs"). This adoption has allowed IBM MVS mainframe computers to
act as enterprise servers on such networks. The use of mainframes as
enterprise servers is relatively new and still emerging. The Company's future
financial performance will depend in large part on the acceptance and growth
in the market for centralized network management. Adoption of another
communications protocol on client/server networks could make TCP/IP
communication not viable, which would undermine the demand for the Company's
TCPaccess products, and have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business--Sales,
Marketing and Customer Support."

NEW PRODUCTS AND RAPID TECHNOLOGICAL CHANGE

The markets for the Company's network transport products and systems
management applications are characterized by rapidly changing technologies,
evolving industry standards, frequent new product introductions and rapid
changes in customer requirements. The Company believes that its future success
will depend upon its ability to develop, manufacture and market products which
meet changing user needs, to continue to enhance its products and to develop
and introduce in a timely manner new products that take advantage of
technological advances, keep pace with emerging industry standards, and
address the increasingly sophisticated needs of its customers. There can be no
assurance whether TCP/IP will continue to be accepted as a communications
protocol on client/server networks. Furthermore, there can be no assurance
that the Company will be successful in developing and marketing, on a timely
basis, product enhancements or new products that respond to technological
change or evolving industry standards, that the Company will not experience
difficulties that could delay or prevent the successful development,
introduction and sale of these products, or that any such new products or
product enhancements will adequately meet the requirements of the marketplace
and achieve market acceptance. The Company's failure or inability to adapt its
products to technological changes or to develop new products successfully
would have a material adverse effect on the Company's business, financial
condition and results of operations.

The introduction or announcement of products by the Company or one or more
of its competitors, including but not limited to IBM, embodying new
technologies, or changes in customer requirements or the emergence of new
industry standards and practices could render the Company's existing products
obsolete and unmarketable. As markets for the Company's products develop and
competition increases, the Company anticipates that product life cycles will
shorten and average selling prices will decline. In particular, average
selling prices and gross margins for each of the Company's products are
expected to decline as each product matures. There can be no assurance that
the introduction or announcement of new product offerings by the Company or
one or more of its competitors will not cause customers to defer purchasing
the existing products of the Company or that the Company will successfully
manage the transition from older products to new or enhanced products in order
to minimize disruption in customer ordering. Such deferment of purchases or
inability to manage the transition of products could have a material adverse
effect on the Company's business, financial condition and results of
operations. In addition, there can be no assurance that the Company will
successfully identify new product opportunities, develop and bring to market
in a timely manner such new products, or that products or technologies
developed by others will not render the Company's products or technologies
noncompetitive or obsolete. See "Business--Product Development."

7
<PAGE>

FLUCTUATIONS IN OPERATING RESULTS; ABSENCE OF BACKLOG; SEASONALITY

The Company's operating results have historically been, and will continue to
be, subject to quarterly and annual fluctuations due to a variety of factors,
including: timely introduction, enhancement and market acceptance of new
versions of the Company's products; seasonal customer demand; timing of
significant orders; changes in the pricing policies by the Company or its
competitors; anticipated and unanticipated decreases in average unit selling
prices of the Company's products; increased competition; changes in the mix of
the products sold and in the mix of sales by distribution channel; the gain or
loss of significant customers; the introduction of new products or product
enhancements by competitors; currency fluctuations; and the failure to
anticipate changing customer product requirements. The Company typically sells
its products through a trial process to allow customers to evaluate the
effectiveness of the Company's products before determining whether to proceed
with broader deployment of such products. The Company's sales cycle, from the
date the sales agent first contacts a prospective customer to the date a
customer ultimately purchases the Company's product, is typically three to six
months for the TCPaccess products and six to nine months for the HARBOR
products. There can be no assurance however that the customers will purchase
the Company's products after such trial period or that the Company's sales
cycle will not lengthen, exposing it to the possibility of shortfalls in
quarterly revenues, which could have a material adverse effect on the
Company's business, financial condition or results of operations and cause
results to vary from period to period. The Company's operating results will
also be affected by general economic and other conditions affecting the timing
of customer orders and capital spending, and order cancellations or
rescheduling. Furthermore, it is possible that the Company's products may be
found to be defective after the Company has already shipped in volume such
products. There can be no assurance that defects in the Company's products or
failures in the Company's product quality, performance and reliability, will
not occur and such defects or failures will not have a material adverse effect
on the Company's business, financial condition and results of operations. If
such defects or failures occur, the Company could experience a decline in
revenue, increased costs (including warranty expense and costs associated with
customer support), delays in or cancellations or reschedulings of orders or
shipments, and increased product returns, any of which would have a material
adverse effect on the Company's business, financial condition and results of
operations.

The Company operates with very little backlog and most of its product
revenues in each quarter result from orders closed in that quarter, and a
substantial majority of those orders are completed at the end of that quarter.
The Company establishes its expenditure levels for sales, marketing, product
development and other operating expenses based in large part on its
expectations as to future revenues, and revenue levels below expectations
could cause expenses to be disproportionately high. If revenues fall below
expectations in a particular quarter, operating results and net income are
likely to be materially adversely affected. Any inability of the Company to
adjust spending to compensate for failure to meet sales forecasts or to
collect accounts receivable, or any unexpected increase in product returns or
other costs, could magnify the adverse impact of such events on the Company's
operating results.

The Company's business has experienced and is expected to continue to
experience significant seasonality. The Company has higher sales of its
software products in the quarters ending in December and June and weaker sales
in the quarters ending in September and March. The decrease in product
revenues in the quarters ending in September is due to the international
customer seasonal buying patterns. The quarters ending in March are
historically weak due to government and large organization annual budgeting
cycles. Due to the foregoing factors, quarterly revenue and operating results
are likely to vary significantly in the future and period-to-period
comparisons of its results of operations are not necessarily meaningful and
should not be relied upon as indications of future performance. Further, it is
likely that in some future quarters the Company's revenue or operating results
will be below the expectations of public market analysts and investors. In
such event, the price of the Company's Common Stock would likely be materially
adversely affected. See "Selected Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

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<PAGE>

INTEGRATION OF ACQUISITION; HISTORY OF ACQUIRED TECHNOLOGIES

The Company has no significant history of operations on a combined basis
with New Era, the developer of the HARBOR products, which the Company acquired
in December 1995 in a purchase transaction. Accordingly, the historical
financial statements and pro forma financial information presented in this
Prospectus may not be indicative of the results that would have been obtained
had the acquisition occurred prior to the commencement of the periods covered
therein. There can be no assurance that the Company will be successful in
integrating the operations and personnel of New Era into its business,
incorporating the HARBOR products and any other acquired technologies into its
product lines, deriving significant future sales from the HARBOR products,
establishing and maintaining uniform standards, controls, procedures and
policies, avoiding the impairment of relationships with employees and
customers as a result of changes in management, or overcoming other problems
that may be encountered in connection with the integration of New Era. To the
extent that the Company is unable to accomplish the foregoing, the Company's
business, financial condition and results of operations would be materially
adversely affected. In addition, in order to effectively sell the HARBOR
product in future periods, the Company has decided to establish a direct
HARBOR sales channel in the U.S. and is integrating the HARBOR product into
its European sales channel. Given that lead time for closing a HARBOR sale can
be as much as nine months, the ability of the Company to produce significant
HARBOR product sales in future periods is highly dependent on the Company's
success in implementing these changes. If the Company is unsuccessful in such
implementation, HARBOR product sales will likely not increase over the level
of sales during the six months ended June 30, 1996, which would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Selected Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Unaudited Pro Forma Combined Condensed Consolidated Financial
Statements and Notes thereto.

To date, the Company's core technologies for its principal network transport
products and systems management applications have been acquired and have not
been developed internally. There can be no assurance that the Company will
have the opportunity to successfully acquire or develop new technologies in
the future or that such technology, if acquired, can be successfully
integrated and commercialized by the Company. An inability to acquire, develop
or commercialize new technologies would have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
may also seek to acquire or invest in businesses, products or technologies
that expand, complement or otherwise relate to the Company's current business
or product line. There can be no assurance that such acquisitions will be
successfully or cost-effectively integrated into the Company's current
operations, or that the acquired technologies will provide the necessary
complement to the Company's current products. If the Company consummates
additional acquisitions in the future that must be accounted for under the
purchase method of accounting, such acquisitions would likely increase the
Company's amortization expenses. In addition, any such acquisitions would be
subject to the risks of integration mentioned above. The Company does not
currently have any understandings, commitments or agreements with respect to
any potential acquisition or corporate partnering arrangements, nor is it
currently engaged in any discussions or negotiations with respect to any such
transaction.

RELIANCE ON AND RISKS ASSOCIATED WITH INTERNATIONAL SALES

During the fiscal years ended June 30, 1995 and 1996, 42% and 41%,
respectively, of the Company's total revenues were derived from sales to
international customers. The Company's international sales have been primarily
to European markets, and sales are generally denominated in local currencies.
In addition, sales in Europe and certain other parts of the world typically
are adversely affected in the third quarter of each calendar year as many
customers reduce their business activities during the summer months. The
Company expects that international revenue will continue to represent a
significant portion of its total revenue. The Company intends to enter into
additional international markets and to continue to expand its operations
outside of North America by expanding its direct sales force, adding
distributors and pursuing additional strategic relationships which will
require significant management attention and expenditure of significant
financial resources. To the extent that the Company is unable to make
additional international sales in a timely manner, the Company's growth, if
any, in international revenues will be limited, and the Company's business,
financial condition and results of operations

9
<PAGE>

would be materially adversely affected. Sales to international customers are
subject to additional risks including longer receivables collection periods,
greater difficulty in accounts receivable collection, failure of distributors
to report sales of the Company's products, political and economic instability,
nationalization, trade restrictions, the impact of possible recessionary
environments in economies outside the United States, reduced protection for
intellectual property rights in some countries, currency fluctuations and
tariff regulations and requirements for export licenses. There can be no
assurance that foreign intellectual property laws will adequately protect the
Company's intellectual property rights. In addition, effective copyright and
trade secret protection may be unavailable or limited in certain foreign
countries. Substantially all of the Company's distribution and other
agreements with international distributors require any dispute between the
Company and any distributor to be settled by arbitration. Under these
agreements, the party bringing the action, suit or claim is required to
conduct the arbitration in the domicile of the defendant. The result is that,
if the Company has a cause of action against a party, it may not be feasible
for the Company to pursue such action, as arbitration in a foreign country
could prove to be excessively costly and have a less certain outcome depending
on the laws and customs in the foreign country. These international factors
could have a material adverse effect on future sales of the Company's products
to international end users and, consequently, the Company's business,
financial condition and results of operations.

Most of the Company's international sales are denominated in local
currencies. The Company has not historically attempted to reduce the risk of
currency fluctuations by hedging except in certain limited circumstances where
the Company has held an account receivable expected to be outstanding for a
period of at least 12 months. The Company may be disadvantaged with respect to
its competitors operating in foreign countries by foreign currency exchange
rate fluctuations that make the Company's products more expensive relative to
those of local competitors. The Company may attempt to reduce these risks by
continuing to hedge in certain limited transactions in the future.
Accordingly, changes in the exchange rates or exchange controls may adversely
affect the Company's results of operations. There can be no assurance that the
Company's current or any future currency exchange strategy will be successful
in avoiding exchange related losses or that any of the factors listed above
will not have a material adverse effect on the Company's future international
sales and, consequently, on the Company's business, financial condition and
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business--Sales, Marketing and
Customer Support" and "--Customers."

DEPENDENCE ON DISTRIBUTORS AND STRATEGIC RELATIONSHIPS

The Company's sales are primarily made through the Company's direct sales
force and the Company's distributors in international markets. In May 1996,
the Company entered into a strategic marketing agreement with Legato. The
Company has no historical relationship with Legato, and there can be no
assurance that the Company will be able to sell its products through Legato.
The Company is currently investing, and plans to continue to invest,
significant resources to develop additional relationships, which investments
could adversely affect the Company's operating margins. The Company believes
that its success in penetrating markets for its products depends in large part
on its ability to maintain these relationships, to cultivate additional
relationships and to cultivate alternative relationships if distribution
channels change. There can be no assurance that any distributor, systems
integrator or strategic partner will not discontinue its relationship with the
Company, form competing arrangements with the Company's competitors, or
dispute the Company's other strategic relationships. A former distributor of
the Company's TCPaccess products in Italy, Selesta Integrazioni SRL
("Selesta"), has threatened legal action over the recent termination of
Selesta as a distributor of the Company's TCPaccess products. The Company has
also discontinued its existing distributor relationship with Selesta for the
distribution of the Company's HARBOR products in Italy and Spain. See "--Legal
Dispute." The loss of, or a significant reduction in revenues from, the
Company's distributors through which the Company sells its products could have
a material adverse effect on the Company's business, financial condition and
results of operations. In addition, if one of the Company's distributors
declares bankruptcy, becomes insolvent, or is declared bankrupt before the
distributor remits to the Company the payments for the Company's products, the
Company may not be able to obtain the revenues to which it would be entitled
for sales made by such distributor prior to the bankruptcy or

10
<PAGE>

insolvency proceeding. In addition, the Company's distributors generally offer
other products and these distributors may give higher priority to sales of
such other products. See "--Reliance on and Risks Associated with
International Sales."

DEPENDENCE UPON SUPPLIER

Network access from the enterprise server to the network via the Company's
TCPaccess product requires a network controller, which the Company sells to
its customers. The Company's principal network controller, the 3762 Network
Controller, is supplied only by Bus-Tech and is resold by the Company. Sales
of network controllers have accounted for substantially all of the Company's
hardware revenues to date, and has accounted for 25% and 19% of product
revenues in the fiscal year ended June 30, 1995 and 1996, respectively. In
addition, the Company also relies upon Bus-Tech for network controller
replacement parts. If the Company were unable to purchase an adequate supply
of such sole-sourced product on a timely basis, the Company would be required
to develop or locate alternative sources. If such product became unavailable,
the Company could be required to design a comparable product, qualify an
alternative source, or redesign its products based upon different components.
Furthermore, IBM and Cisco Systems, Inc. could use their positions as a
supplier of network controllers to gain a competitive advantage over the
Company. To date, the Company has not experienced any difficulty or
significant delay in obtaining any such sole-sourced product. However, there
can be no assurance that the Company will not face such difficulties or delay
in the future. An inability of the Company or its customers to obtain such
sole-sourced controllers could significantly delay shipment of products, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.

DEPENDENCE UPON PROPRIETARY TECHNOLOGY; RISK OF THIRD-PARTY CLAIMS OF
INFRINGEMENT

The Company's success and ability to compete is dependent in part upon its
proprietary information. The Company relies primarily on a combination of
copyright and trademark laws, trade secrets, software security measures,
license agreements and nondisclosure agreements to protect its proprietary
technology and software products. There can be no assurance, however, that
such protection will be adequate to deter misappropriation, deter unauthorized
third parties from copying aspects of, or otherwise obtaining and using, the
Company's software products and technology without authorization, or that the
rights secured thereby will provide competitive advantages to the Company. In
addition, the Company cannot be certain that others will not develop
substantially equivalent or superseding proprietary technology, or that
equivalent products will not be marketed in competition with the Company's
products, thereby substantially reducing the value of the Company's
proprietary rights. Furthermore, there can be no assurance that any
confidentiality agreements between the Company and its employees or any
license agreements with its customers will provide meaningful protection for
the Company's proprietary information in the event of any unauthorized use or
disclosure of such proprietary information.

There can be no assurance that others will not independently develop similar
products or duplicate the Company's products. Despite the Company's efforts to
protect its proprietary rights, unauthorized parties may attempt to copy
aspects of the Company's products or to obtain and use information that the
Company regards as proprietary. There can be no assurance that the steps taken
by the Company to protect its proprietary technology will prevent
misappropriation of such technology, and such protections may not preclude
competitors from developing products with functionality or features similar to
or superior to the Company's products. A substantial amount of the Company's
sales are in international markets, and the laws of other countries may afford
the Company little or no effective protection of its intellectual property.

11
<PAGE>

consuming, result in costly litigation and diversion of technical and
management personnel, cause product shipment delays or require the Company to
develop non-infringing technology or enter into royalty or licensing
agreements, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
the Company or at all. In the event of a successful claim of product
infringement against the Company and failure or inability of the Company to
develop non-infringing technology or license the infringed or similar
technology, the Company's business, financial condition and results of
operations could be materially adversely affected. In addition, the Company
may initiate claims or litigation against third parties for infringement of
the Company's proprietary rights or to establish the validity of the Company's
proprietary rights. Any such claims could be time consuming, result in costly
litigation, or lead the Company to enter into royalty or licensing agreements
rather than litigating such claims on their merits. Moreover, an adverse
outcome in litigation or similar adversarial proceedings could subject the
Company to significant liabilities to third parties, require expenditure of
significant resources to develop non-infringing technology, require disputed
rights to be licensed from others or require the Company to cease the
marketing or use of certain products, any of which could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Intellectual Property and Other Proprietary
Rights."

PRODUCT ERRORS; PRODUCT LIABILITY

Software products as complex as those offered by the Company often contain
undetected errors or failures when first introduced or as new versions are
released. Testing of the Company's products is particularly challenging
because it is difficult to simulate the wide variety of computing environments
in which the Company's customers may deploy its products. Accordingly, there
can be no assurance that, despite testing by the Company and by current and
potential customers, errors will not be found after commencement of commercial
shipments, resulting in lost revenues, loss of or delay in market acceptance
and negative publicity about the Company and its products, any of which could
have a material adverse effect on the Company's business, financial condition
and results of operations.

The Company's license agreements with customers typically contain provisions
designed to limit the Company's exposure to potential product liability
claims. The limitation of liability provisions contained in such license
agreements may not be effective under the laws of some jurisdictions,
particularly if the Company in the future relies on "shrink wrap" licenses
that are not signed by licensees. The Company's products are generally used to
manage data critical to organizations, and as a result, the sale and support
of products by the Company may entail the risk of product liability claims. A
successful liability claim brought against the Company could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Product Development."

RELIANCE ON TCP/IP AND MAINTENANCE; CONCENTRATION OF PRODUCT SALES

During the fiscal years ended June 30, 1995 and 1996, sales of the TCPaccess
products, excluding maintenance and hardware, accounted for approximately 34%
and 36%, and, including related maintenance and hardware, accounted for
approximately 66% and 67%, respectively, of the Company's total revenues.
Accordingly, the Company's operating results, particularly in the near term,
are significantly dependent upon the continued market acceptance of the
TCPaccess products. During each of the fiscal years ended June 30, 1995 and
1996, maintenance and consulting revenue accounted for approximately 42% of
the Company's total revenues. A portion of the maintenance revenues are from
historical customers of the Company's DECnet product. The Company no longer
actively markets the DECnet product, and maintenance revenues from DECnet
customers have declined each year since the fiscal year ended June 30, 1993,
and are expected to continue to decline. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The life cycles of
the Company's products are difficult to estimate due in part to the effect of
future product enhancements and competition. A decline in the demand for the
Company's products as a result of competition, technological change or other
factors would have a material adverse effect on the Company's business,
financial condition and results of operations.

12
<PAGE>

The Company estimates that the total number of potential sites where its
TCPaccess products could be installed is limited. Many of those sites have
already been serviced by either IBM or the Company. The Company expects that
it will continue to depend upon this limited number of prospective customers
for a significant portion of its revenues in future periods. As a result of
this concentration, the Company's business, financial condition and results of
operations could be materially adversely affected by the failure of
anticipated orders to materialize and by deferrals or cancellations of orders
as a result of changes in customer requirements. In addition, the Company's
future success depends upon the capital spending patterns of such customers
and the continued demand by such customers for the Company's products. The
Company's operating results may in the future be subject to substantial
period-to-period fluctuations as a consequence of such concentration and
factors affecting capital spending in the enterprise networked systems
management market.

DEPENDENCE ON KEY PERSONNEL

The Company is highly dependent on the continued service of, and on its
ability to attract and retain, qualified technical, sales, marketing and
managerial personnel, in particular, its key New Era employees. While the
Company intends to expand its field sales force, experienced field sales
personnel in the Company's industry are in high demand and may not be
attracted and retained on terms advantageous to the Company. Furthermore,
there can be no assurance that the Company's efforts to expand its field sales
force will be successful. The competition for qualified personnel in the
software industry is intense, and the loss of any such persons, as well as the
failure to recruit additional key personnel in a timely manner, could have a
material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that the Company will be able
to continue to attract and retain the qualified personnel necessary for the
development of its business. The Company has employment agreements with
certain executive officers, but such agreements do not ensure their continued
service to the Company or prevent their competition with the Company following
a termination of employment. The Company does not maintain key man life
insurance on the lives of its key employees. See "Business--Employees,"
"Management--Executive Officers and Directors" and "--Employment Agreements
and Change in Control Arrangements."

LEGAL DISPUTE

The Company and the Company's subsidiary in France are involved in a
commercial dispute with Selesta, a former Italian distributor of the Company's
TCPaccess products. Selesta alleged in a letter sent to the Company that the
Company had breached and unlawfully terminated the agreement pursuant to which
Selesta was appointed a distributor of the Company's products in Italy and
asserted other related claims against the Company. The letter demanded
Selesta's reinstatement as a distributor, the execution of a written
distribution agreement setting forth the distribution arrangements between the
parties, and compensation in an unspecified amount to be paid to Selesta for
the harm that it has suffered. The Company's Canadian subsidiary, New Era, has
also previously used Selesta as a distributor of the HARBOR products in Italy
and Spain pursuant to a separate agreement. No legal claim has been filed nor
has arbitration been invoked by Selesta regarding this matter. Should Selesta
initiate legal proceedings and prevail on such claims, the Company's business,
financial condition and results of operations could be materially adversely
affected. See "Business--Legal Dispute."

NO PRIOR TRADING MARKET; POSSIBLE VOLATILITY OF SHARE PRICE

Prior to this offering there has been no public market for the Company's
Common Stock, and there can be no assurance that an active trading market will
develop or be sustained after this offering. The initial public offering price
of the Common Stock offered hereby will be determined through negotiations
among the Company, the representatives of the Selling Stockholders and the
Representatives of the Underwriters, and may not be indicative of future
market prices. There can be no assurance that the market price of the Common
Stock will not decline below the initial public offering price. The trading
prices of the Company's Common Stock may be subject to wide fluctuations in
response to a number of factors, including variations in operating results,
changes in earnings estimates by securities analysts, announcements of
extraordinary events such as litigation or

13
<PAGE>

acquisitions, announcements of technological innovations or new products or
new contracts by the Company or its competitors, announcements and reports
about the declining number of mainframe computers shipped, press releases or
reports of IBM or other competitors introducing competitive or substitute
products, as well as general economic, political and market conditions. In
addition, the stock market has from time-to-time experienced significant price
and volume fluctuations that have particularly affected the market prices for
the common stocks of technology companies and that have often been unrelated
to the operating performance of particular companies. These broad market
fluctuations may also adversely affect the market price of the Company's
Common Stock. In the past, following periods of volatility in the market price
of a company's securities, securities class action litigation has occurred
against the issuing company. There can be no assurance that such litigation
will not occur in the future with respect to the Company. Such litigation
could result in substantial costs and a diversion of management's attention
and resources, which could have a material adverse effect on the Company's
business, financial condition and results of operations. Any adverse
determination in such litigation could also subject the Company to significant
liabilities.

CONTROL BY CURRENT STOCKHOLDERS

The Company's officers, directors and principal stockholders and their
affiliates will in the aggregate beneficially own approximately 50% of the
Company's outstanding shares of Common Stock after this offering. As a result,
these stockholders, acting together, would be able to effectively control most
matters requiring approval by the stockholders of the Company, including the
election of directors and any merger, consolidation or sale of all the
Company's assets. See "Principal and Selling Stockholders" and "Description of
Capital Stock."

POTENTIAL IMPACT OF SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Sales of substantial amounts of Common Stock in the public market after the
offering could adversely affect the market price of the Company's Common
Stock. In addition to the 2,700,000 shares offered hereby, as of the effective
date of the Registration Statement (the "Effective Date"), 67,487 shares of
Common Stock will become eligible for sale in the public market in reliance on
Rule 144(k) under the Securities Act of 1933, as amended (the "Securities
Act"). Approximately 3,279,354 shares of Common Stock will become eligible for
sale in the public market, subject to compliance with Rules 144 and 701 under
the Securities Act, when certain 180-day lock-up agreements between the
Company and/or the Representatives and certain stockholders of the Company,
including officers, directors and Selling Stockholders, expire. In addition,
holders of warrants exercisable into an aggregate of 399,644 shares of Common
Stock have entered into 180-day lock-up agreements and no such shares may be
sold at least until 180 days after commencement of this offering upon
exercise. Upon expiration of the lock-up agreements and assuming the warrants
are then exercised for cash, the shares acquired upon exercise of the
warrants, in the absence of registration, may only be publicly resold pursuant
to Rule 144. Furthermore, all of the optionholders are subject to a 180-day
lock-up period pursuant to their option agreements and the holders of 100% of
the shares of Common Stock subject to options have entered into the same 180-
day lock-up agreements as referenced above. Volpe, Welty & Company may, in its
sole discretion, and at any time without notice, release all or any portion of
the securities subject to such lock-up agreements.

The Company intends to file a registration statement under the Securities
Act covering approximately 2,605,000 shares of Common Stock issued or reserved
for issuance under the 1992 Stock Option Plan, the 1996 Employee Stock
Purchase Plan and the 1996 Director Option Plan. That registration statement
is expected to be filed within 90 days after the date of this Prospectus and
will automatically become effective upon filing. Accordingly, all the shares
registered under that registration statement will, subject to Rule 144 volume
limitations applicable to affiliates, as that term is defined in the
Securities Act, be available for resale in the open market on such date. At
June 30, 1996, options to purchase 1,018,503 shares were issued and
outstanding under the 1992 Stock Option Plan, 598,012 of which were vested and
eligible for exercise as of that date. See "Management--Stock Plans" and
"Shares Eligible for Future Sale."

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<PAGE>

After the closing of the offering, the holders of up to 3,391,695 issued or
issuable shares of Common Stock, of which 399,644 shares are issuable upon
exercise of warrants, will be entitled to certain demand and piggyback rights
with respect to the registration of those shares under the Securities Act.
Demand registration rights will be exercisable commencing six months after the
Effective Date. If the holders of registration rights cause a large number of
shares to be registered and sold in the public market, such sales could have
an adverse effect on the market price for the Company's Common Stock. See
"Description of Capital Stock--Registration Rights."

Holders of 3,279,354 shares of Common Stock of the Company have agreed with
the Company and/or the Representatives that until 180 days after the Effective
Date, they will not sell, offer to sell, contract to sell or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to any shares of
Common Stock, any options or warrants to purchase shares of Common Stock, or
any securities convertible or exchangeable for shares of Common Stock, owned
directly by such holders or with respect to which they have power of
disposition, without the prior written consent of the Company and/or Volpe,
Welty & Company, as the case may be. The Company has agreed with the
Representatives not to release any holders from such agreements without the
prior written consent of Volpe, Welty & Company. The Company has also agreed
not to sell, offer to sell, contract to sell, grant any option to purchase or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or any rights to acquire
Common Stock for a period of 180 days after the Effective Date without the
prior written consent of Volpe, Welty & Company, subject to certain limited
exceptions including sales of shares under the stock plans. The lock-up
agreements with the Representatives may be released at any time as to all or
any portion of the shares subject to such agreements at the sole discretion of
Volpe, Welty & Company.

ANTI-TAKEOVER EFFECT OF DELAWARE LAW AND CERTAIN CHARTER AND BYLAWS PROVISIONS

Certain provisions of the Company's Certificate of Incorporation and Bylaws
may have the effect of making it more difficult for a third party to acquire,
or discouraging a third party from attempting to acquire control of the
Company. Such provisions could limit the price that certain investors might be
willing to pay in the future for shares of the Company's Common Stock. Certain
of these provisions provide for the elimination of the right of stockholders
to act by written consent without a meeting and specify procedures for
director nominations by stockholders and submission of other proposals for
consideration at stockholder meetings. In addition, the Company's Board of
Directors has the authority to issue up to 5,000,000 shares of Preferred Stock
and to determine the price, rights, preferences, privileges and restrictions
of those shares without any further vote or action by the stockholders. The
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be
issued in the future. The issuance of Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue shares of Preferred Stock.
Certain provisions of Delaware law applicable to the Company could also delay
or make more difficult a merger, tender offer or proxy contest involving the
Company, including Section 203 of the Delaware General Corporation Law, which
prohibits a Delaware corporation from engaging in any business combination
with any interested stockholder for a period of three years unless certain
conditions are met. The inability of stockholders to act by written consent
without a meeting, the procedures required for director nominations and
stockholder proposals and Delaware law could have the effect of delaying,
deferring or preventing a change in control of the Company, including without
limitation, discouraging a proxy contest or making more difficult the
acquisition of a substantial block of the Company's Common Stock. These
provisions could also limit the price that investors might be willing to pay
in the future for shares of the Company's Common Stock. See "Description of
Capital Stock--Preferred Stock," "--Certain Provisions of the Certificate of
Incorporation and Bylaws" and "--Certain Provisions of Delaware Law."

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<PAGE>

BENEFITS OF THE OFFERING TO CURRENT STOCKHOLDERS

This offering will provide substantial benefits to current equity
stockholders of the Company. Consummation of this offering is expected to
create a public market for the Common Stock held by the Company's current
stockholders, including directors and executive officers of the Company.
Current stockholders paid an aggregate of approximately $21.6 million for the
3,787,019 shares of Common Stock outstanding at June 30, 1996. Based upon an
assumed initial public offering price of $14.00 per share, this offering will
result in an unrealized gain to such stockholders in the aggregate of
approximately $31.4 million. In addition, certain stockholders will be selling
shares in this offering. However, no member of management will be selling
shares in this offering. See "--No Prior Trading Market; Possible Volatility
of Share Price" and "--Dilution."

DILUTION

As of June 30, 1996, the Company had an accumulated deficit of $24.9 million
and a working capital deficit of $6.4 million. In addition, the Company had a
pro forma tangible negative book value at June 30, 1996 of approximately $7.7
million. Based on the foregoing, purchasers of the Common Stock offered hereby
will experience immediate, substantial dilution in the net tangible book value
per share of the Common Stock from the initial public offering price. See
"Dilution."

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<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of 2,200,000 shares of Common
Stock offered by the Company hereby are estimated to be approximately $27.6
million ($32.9 million if the over-allotment option is exercised in full),
based on an assumed initial public offering price of $14.00 per share, after
deducting underwriting discounts and commissions and estimated offering
expenses. The Company will not receive any of the proceeds from the sale of
Common Stock by the Selling Stockholders.

From these estimated net proceeds, the Company will repay the outstanding
balance of the Company's domestic bank line of credit of approximately $5.0
million at June 30, 1996, which borrowings bear interest at prime plus 1.5%
per annum and mature in November 1996. If the over-allotment option is
exercised in full, the Company intends to repay the outstanding balance of the
Company's long-term note of approximately $3.0 million at June 30, 1996, which
borrowings bear interest at prime plus 2.5% per annum and mature in December
1998. The bank line of credit and the long-term note were incurred in
connection with the acquisition of New Era. In addition, the Company currently
expects to utilize $500,000 of the net proceeds to the Company from the
offering for capital expenditures, including expanding the Company's customer
support system. The remaining net proceeds to the Company from the offering
will be used for working capital and other general corporate purposes. The
Company may use a portion of the net proceeds for the acquisition of
complementary businesses and technologies or for the implementation of various
corporate partnering arrangements. However, the Company has no present
understandings, commitments or agreements, nor is it currently engaged in any
discussions or negotiations with respect to any such transaction, except for
the development of HARBOR Agent for Networker in connection with the strategic
alliance with Legato. Pending such uses, the Company intends to invest the net
proceeds in short-term, investment grade interest bearing securities.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its Common Stock.
The Company intends to retain its earnings, if any, to fund its business and
therefore does not anticipate paying cash dividends in the foreseeable future.
The Company's bank line of credit and Western Economic Development loan
agreements contain restrictive covenants which limit the Company's ability to
pay cash dividends or make stock purchases without the prior written consent
of the lender. See Notes 4 and 5 of Notes to Consolidated Financial
Statements.

17
<PAGE>

CAPITALIZATION

The following table sets forth as of June 30, 1996 (i) the actual
capitalization of the Company, (ii) the pro forma capitalization after giving
effect to the conversion of all outstanding Preferred Stock into Common Stock
and the filing of the Company's Restated Certificate of Incorporation and
(iii) the capitalization as adjusted to reflect the sale of 2,200,000 shares
of Common Stock offered by the Company hereby at an assumed initial public
offering price of $14.00 per share and the application of the net proceeds
therefrom. This table should be read in conjunction with the Consolidated
Financial Statements and Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------------
PRO AS
ACTUAL FORMA (1) ADJUSTED (2)(4)
-------- --------- ---------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Bank line of credit and current portion of
long-term debt............................ $ 8,100 $ 8,100 $ 3,100
======== ======== ========
Long-term debt, less current portion (3)... 2,892 2,892 2,892
-------- -------- --------
Stockholders' equity:
Preferred Stock, no par value, 2,625,000
shares authorized, 1,229,714 issued and
outstanding, actual; $0.001 par value,
5,000,000 shares authorized, no shares
issued and outstanding, pro forma and as
adjusted................................ 6,310 -- --
Common Stock, no par value, 15,000,000
shares authorized, 2,483,138 shares
issued and outstanding, actual; $0.001
par value, 25,000,000 shares authorized,
3,787,019 shares issued and outstanding,
pro forma; $0.001 par value, 25,000,000
shares authorized, 5,987,019 shares
issued and outstanding, as
adjusted (2)(4)......................... 14,602 4 6
Additional paid in capital............... -- 20,908 48,550
Cumulative translation adjustment........ (581) (581) (581)
Accumulated deficit...................... (24,916) (24,916) (24,916)
-------- -------- --------
Total stockholders' equity (deficit)... (4,585) (4,585) 23,059
-------- -------- --------
Total capitalization................. $ (1,693) $ (1,693) $ 25,951
======== ======== ========
</TABLE>
- --------
(1) Pro forma to give effect as if such conversion had taken place as of June
30, 1996. See Note 12 of Notes to Consolidated Financial Statements.
Reflects the issuance of 74,167 shares of Common Stock immediately
subsequent to the offering upon the net exercise of certain outstanding
warrants.

(2) Adjusted to reflect the sale of 2,200,000 shares of Common Stock offered
by the Company hereby at an assumed initial public offering price of
$14.00 per share, and after deducting underwriting discounts and
commissions and the estimated expenses of the offering and the anticipated
application of the estimated net proceeds therefrom. See "Use of
Proceeds."

(3) See Note 5 of Notes to Consolidated Financial Statements.

(4) Excludes as of June 30, 1996: (i) options outstanding to purchase up to
1,018,503 shares of Common Stock at a weighted average exercise price of
$1.82 per share under the Company's 1992 Stock Option Plan; (ii) 399,644
shares of Common Stock issuable upon exercise of warrants outstanding at a
weighted average exercise price of $3.08 per share; and (iii) 870,463
shares of Common Stock reserved for future issuance under the Company's
1992 Stock Option Plan, 850,000 shares of which are subject to stockholder
approval. See "Management--Stock Plans," "Description of Capital Stock"
and Note 7 of Notes to Consolidated Financial Statements. Also excludes,
subject to stockholder approval, 350,000 shares reserved prior to June 30,
1996 and an additional 300,000 shares reserved subsequent to June 30, 1996
for issuance under the 1992 Stock Option Plan, the 1996 Director Option
Plan and the 1996 Employee Stock Purchase Plan.

18
<PAGE>

DILUTION

The pro forma net tangible negative book value of the Company at June 30,
1996 was approximately $(7.7) million, or $(2.04) per share of Common Stock.
Pro forma net tangible negative book value per share represents the amount of
total tangible assets less total liabilities, divided by the number of shares
of Common Stock then outstanding (assuming the conversion of all then
outstanding Preferred Stock into Common Stock). After giving effect to the
sale by the Company of the 2,200,000 shares of Common Stock offered by the
Company hereby (at an assumed initial public offering price of $14.00 per
share and after deduction of estimated underwriting discounts and commissions
and offering expenses), the Company's pro forma net tangible book value at
June 30, 1996 would have been $19.9 million, or $3.33 per share of Common
Stock. This represents an immediate increase in net tangible book value of
$5.37 per share to existing stockholders and an immediate dilution of $10.67
per share to investors purchasing shares in this offering. The following table
illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............. $14.00
Pro forma net tangible negative book value per share at
June 30, 1996............................................. $(2.04)
Increase in net tangible book value per share attributable
to new investors.......................................... 5.37
------
Pro forma net tangible book value per share after this
offering.................................................... 3.33
------
Dilution per share to new investors.......................... $10.67
======
</TABLE>

The following table summarizes, on a pro forma basis as of June 30, 1996,
the differences in the total consideration paid and the average price per
share paid by the Company's existing stockholders and the new investors with
respect to the 2,200,000 shares of Common Stock to be sold by the Company (at
an assumed initial public offering price of $14.00 per share and before
deduction of estimated underwriting discounts and commissions and offering
expenses):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------- ------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders (1).... 3,787,019 63.3% $21,648,000 41.3% $ 5.72
New public investors (1)..... 2,200,000 36.7 30,800,000 58.7 14.00
--------- ----- ----------- -----
Total.................... 5,987,019 100.0% $52,448,000 100.0%
========= ===== =========== =====
</TABLE>
- --------
(1) Sales by the Selling Stockholders in this offering will reduce the number
of shares of Common Stock held by existing stockholders to 3,287,019 or
approximately 54.9% (3,287,019 shares, or approximately 51.4%, if the
Underwriters' over-allotment option is exercised in full) and will
increase the number of shares held by new investors to 2,700,000 or
approximately 45.1% (3,105,000 shares, or approximately 48.6%, if the
Underwriters' over-allotment option is exercised in full) of the total
number of shares of Common Stock outstanding after this offering. See
"Principal and Selling Stockholders."

The foregoing computations assume no exercise of stock options or warrants
after June 30, 1996, except for the issuance of 74,167 shares of Common Stock
immediately subsequent to the offering upon the net exercise of certain
outstanding warrants. As of June 30, 1996, there were outstanding options to
purchase 1,018,503 shares of Common Stock, with a weighted average exercise
price of $1.82 per share and warrants to purchase 399,644 shares of Common
Stock with a weighted average exercise price of $3.08 per share. In addition,
as of June 30, 1996, 870,463 shares of Common Stock were reserved for future
issuance under the Company's 1992 Stock Option Plan, 850,000 of which are
subject to stockholder approval. Also excludes, subject to stockholder
approval, 350,000 shares reserved prior to June 30, 1996 and an additional
300,000 shares reserved subsequent to June 30, 1996 for issuance under the
1992 Stock Option Plan, the 1996 Director Option Plan and the 1996 Employee
Stock Purchase Plan. To the extent that any shares available for issuance upon
exercise of outstanding options or warrants or reserved for future issuance
under the Company's stock plans are issued, there will be further dilution to
new investors. See "Management--Stock Plans," "Description of Capital Stock"
and Note 7 of Notes to Consolidated Financial Statements.

19
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data of the Company should be
read in conjunction with the Company's consolidated financial statements and
the notes thereto, and Management's Discussion and Analysis of Financial
Condition and Results of Operations included elsewhere herein. The
consolidated statement of operations data for the fiscal years ended June 30,
1994, 1995 and 1996 and the consolidated balance sheet data as of June 30,
1995 and 1996 are derived from financial statements of the Company that have
been audited by Coopers & Lybrand L.L.P., independent accountants, and are
included elsewhere herein. The consolidated statement of operations data for
the fiscal years ended June 30, 1992 and 1993 and the consolidated balance
sheet data as of June 30, 1992, 1993 and 1994 are derived from financial
statements of the Company audited by Coopers & Lybrand L.L.P. that are not
included herein. The pro forma selected consolidated financial data are
derived from the unaudited combined condensed consolidated statement of
operations included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PRO FORMA FOR
YEAR ENDED JUNE 30, ACQUISITION(1)
------------------------------------------- --------------
JUNE 30,
1992 1993 1994 1995 1996 1996(2)
------- ------- ------- ------- ------- --------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Revenues:
Product................ $14,904 $11,914 $12,350 $15,818 $19,670 $21,412
Maintenance and
consulting............ 8,422 9,271 9,525 11,261 14,332 15,079
------- ------- ------- ------- ------- -------
Total revenues....... 23,326 21,185 21,875 27,079 34,002 36,491
------- ------- ------- ------- ------- -------
Cost of revenues:
Product................ 4,628 2,679 2,380 3,316 3,413 3,453
Maintenance and
consulting............ 1,703 1,387 1,430 3,293 4,594 4,841
------- ------- ------- ------- ------- -------
Total cost of
revenues............ 6,331 4,066 3,810 6,609 8,007 8,294
------- ------- ------- ------- ------- -------
Gross profit............ 16,995 17,119 18,065 20,470 25,995 28,197
Operating expenses:
Product development.... 5,155 5,042 6,276 6,245 5,241 5,665
Sales and marketing.... 10,998 6,638 8,384 10,792 13,316 13,939
General and
administrative........ 2,727 3,272 2,561 3,329 3,954 4,194
Restructuring charge... 3,050 -- -- -- -- --
Purchased research and
development and
product amortization.. -- -- -- -- 10,479 642
------- ------- ------- ------- ------- -------
Total operating
expenses............ 21,930 14,952 17,221 20,366 32,990 24,440
------- ------- ------- ------- ------- -------
Operating income (loss). (4,935) 2,167 844 104 (6,995) 3,757
Other income............ -- 1,000 -- -- -- (92)
Interest expense, net... (743) (387) (224) (81) (507) (1,105)
------- ------- ------- ------- ------- -------
Income (loss) before
income taxes and
extraordinary items.... (5,678) 2,780 620 23 (7,502) 2,560
Benefit from (provision
for) income taxes...... (186) (953) (273) 1,624 (114) 205
------- ------- ------- ------- ------- -------
Income (loss) before
extraordinary items.... (5,864) 1,827 347 1,647 (7,616) 2,765
Extraordinary items..... -- 1,075 1,320 -- -- --
------- ------- ------- ------- ------- -------
Net income (loss)....... $(5,864) $ 2,902 $ 1,667 $ 1,647 $(7,616) $ 2,765
======= ======= ======= ======= ======= =======
Net income (loss) per
share (3).............. $ (5.47) $ 1.17 $ 0.44 $ 0.34 $ (2.44) $ 0.56
======= ======= ======= ======= ======= =======
Shares used in per share
calculation (3)........ 1,073 2,474 3,808 4,814 3,127 4,954
======= ======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
JUNE 30,
-------------------------------------------
1992 1993 1994 1995 1996
-------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)........ $(12,815) $(2,877) $ 212 $ (183) $(6,371)
Total assets..................... 8,674 8,754 15,853 20,000 25,925
Long-term debt, less current
portion......................... 146 5,175 672 368 2,892
Total stockholders' equity
(deficit)....................... (10,948) (6,915) 996 2,641 (4,585)
</TABLE>
- -------
(1) Pro forma to give effect to the Company's acquisition of New Era on
December 29, 1995 as if it had occurred on July 1, 1995. See Note 2 of
Notes to Consolidated Financial Statements and the Unaudited Pro Forma
Combined Condensed Consolidated Financial Statements, including the Notes
thereto.

(2) A non-recurring charge for purchased research and development was recorded
in the fiscal year ended June 30, 1996 in connection with the acquisition
of New Era. For pro forma data, this charge has been assumed to have been
incurred before the period presented, due to the non-recurring nature of
the charge. See Note 2 of Notes to the Unaudited Pro Forma Combined
Condensed Consolidated Financial Statements.

(3) See Note 1 of Notes to Consolidated Financial Statements for a discussion
of the computation of net income (loss) per share.

20
<PAGE>

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

The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements that involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including those set forth under "Risk Factors" and elsewhere
in this Prospectus.

OVERVIEW

The Company offers a suite of high-performance, network transport products
and systems management applications which efficiently transport, store and
protect the integrity of mission-critical data and applications. The Company
was incorporated in December 1985 and initially focused its products and
development on providing interoperability between IBM mainframes and DECnet
network environments. In 1990, the Company acquired the core technology of its
TCPaccess suite of products. In January 1996, the Company acquired New Era
Systems Services, Ltd. ("New Era"), the developer of the HARBOR products, a
software product line providing enterprise systems management applications for
client/server networks. Prior to the acquisition, the Company distributed the
HARBOR products in certain countries in Europe for more than one year. New Era
is a wholly-owned subsidiary headquartered in Calgary, Alberta with 51
employees as of June 30, 1996.

The Company acquired New Era in exchange for cash and notes payable totaling
$12.4 million and warrants to purchase 350,000 shares of the Company's Common
Stock with additional contingent earnout payments of up to a total of
$5.2 million due January 31, 1997 and 1998. Because the New Era acquisition
was accounted for as a purchase, the Company's operating results only include
the results of New Era operations subsequent to December 29, 1995, the
acquisition date. As a result, comparisons of results for the fiscal years
ended June 30, 1995 and 1996 are not meaningful. For the quarter ended
December 31, 1995, the Company charged to operations approximately
$10.2 million of purchased research and development in connection with the New
Era acquisition. The Company's future operating costs will include the
amortization of intangible assets arising from the acquisition of New Era. At
June 30, 1996, remaining intangible assets derived from the New Era
acquisition total approximately $2.9 million and are being amortized over a
five-year period. The amortization is expected to be approximately $160,000
per quarter through December 31, 2000, but may increase after December 31,
1996 if certain contingent payments are made, based upon meeting revenue
targets for calendar years 1996 and 1997. See Note 2 of Notes to Consolidated
Financial Statements.

The Company's revenues are derived from product sales and related
maintenance and consulting contracts. Product revenues are derived from
software license fees and sales of related hardware to end users, resellers
and distributors. The Company's sales cycle, from the date the sales agent
first contacts a prospective customer to the date a customer ultimately
purchases the Company's product, is typically three to six months for the
TCPaccess products and six to nine months for the HARBOR products. Because
licenses are noncancellable and do not impose significant obligations on the
Company, the Company recognizes software license revenues upon completion of a
trial period and a signed contract. Fees for service revenues are charged
separately from the Company's product sales. The Company recognizes revenues
ratably over the term of agreement. Maintenance agreements are typically one-
year renewable contracts, pursuant to which, historically, a substantial
majority of the Company's maintenance agreements have been renewed upon
expiration. However, there can be no assurance that customers will continue to
renew expiring maintenance agreements at the historical rate. The Company
recognizes consulting revenues as services are accepted.

The Company currently derives substantially all of its product revenues from
its TCPaccess software and related hardware products and services. Although
the Company expects HARBOR products to contribute more substantially to the
Company's product revenues in future periods, broad market acceptance for
TCPaccess and HARBOR is critical to the Company's success. Failure to achieve
broad market acceptance of TCPaccess and

21
<PAGE>

HARBOR, as a result of competition, technological change or otherwise, would
have a material adverse effect on the business, financial condition and
results of operations of the Company. The Company's future performance will
depend in large part on continued growth in the number of organizations
adopting enterprise networked systems management products, and the Company's
successful development and introductions and customer acceptance of new and
enhanced versions of its software products. There can be no assurance that the
market for enterprise networked systems management products will grow or that
the Company will continue to be successful in marketing TCPaccess or HARBOR or
any new or enhanced products.

The Company's maintenance revenues are derived primarily from its TCPaccess
and DECnet product lines. The Company expects maintenance revenue from its
HARBOR line to grow in relation to growth in the HARBOR customer base. The
Company no longer actively markets its DECnet product line. As a consequence,
license revenues from this product line have declined substantially, although
the Company continues to provide maintenance to its installed DECnet
customers. Total revenues from the Company's DECnet product line were $8.5
million, $7.1 million and $7.0 million for the fiscal years ended June 30,
1994, 1995 and 1996, respectively. Maintenance revenues from the DECnet
product were $6.6 million, $6.5 million and $6.0 million for the fiscal years
ended June 30, 1994, 1995 and 1996, respectively. The Company expects that
maintenance revenues from this product line will continue to decline in the
future.

The Company licenses its software in U.S. dollars and certain foreign
currencies. The Company has experienced foreign currency exchange gains and
losses. The Company expects that fluctuations in foreign currencies may have a
significant impact on either its revenues or expenses in the future. See "Risk
Factors--Reliance on and Risks Associated with International Sales."

The Company completed a recapitalization in October 1992 in which all
previously outstanding Preferred Stock was converted to Common Stock and the
Company restructured its bank lines of credit. At that time, the Company hired
new members of its management team including a new chief executive officer and
chief financial officer. The financial statements of the Company for the
fiscal years ended June 30, 1991 and 1992 were restated due to material
misstatements contained in such financial statements resulting from misconduct
involving the preparation of accounting records, particularly in regard to the
recording of revenue. No officer of the Company at the time any such
misconduct occurred is currently an employee or officer of the Company.
Although one director at the time remains a director, the Company believes
that such director was not involved in such misconduct.

22
<PAGE>

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
-------------------
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Revenues:
Product................................................ 56.5% 58.4% 57.9%
Maintenance and consulting............................. 43.5 41.6 42.1
----- ----- -----
Total revenues....................................... 100.0 100.0 100.0
----- ----- -----
Cost of revenues:
Product................................................ 10.9 12.2 10.0
Maintenance and consulting............................. 6.5 12.2 13.5
----- ----- -----
Total cost of revenues............................... 17.4 24.4 23.5
----- ----- -----
Gross profit............................................. 82.6 75.6 76.5
Operating expenses:
Product development.................................... 28.7 23.0 15.4
Sales and marketing.................................... 38.3 39.9 39.2
General and administrative............................. 11.7 12.3 11.6
Purchased research and development and product
amortization.......................................... -- -- 30.8
----- ----- -----
Total operating expenses............................. 78.7 75.2 97.0
----- ----- -----
Operating income (loss).................................. 3.9 0.4 (20.5)
Interest expense, net.................................... (1.1) (0.3) (1.5)
----- ----- -----
Income (loss) before income taxes and extraordinary
items................................................... 2.8 0.1 (22.0)
Benefit from (provision for) income taxes................ (1.2) 6.0 (0.4)
----- ----- -----
Income (loss) before extraordinary items................. 1.6 6.1 (22.4)
Extraordinary items...................................... 6.0 -- --
----- ----- -----
Net income (loss)........................................ 7.6% 6.1% (22.4)%
===== ===== =====
Cost of sales as a percentage of the related revenues:
Product................................................ 19.3% 21.0% 17.4%
Maintenance and consulting............................. 15.0 29.2 32.1
</TABLE>

FISCAL YEARS ENDED JUNE 30, 1995 AND 1996

As a result of the acquisition of New Era in December 1995, the Company's
operating results for the years ended June 30, 1995 and 1996 are not directly
comparable. The results of the Company's operations for fiscal 1996 are not
representative of the combined anticipated results of operations of the
Company and New Era.

Revenues

Total revenues were $27.1 million and $34.0 million for the fiscal years
ended June 30, 1995 and 1996, respectively, representing an increase of 26%.
Product sales were $15.8 million and $19.7 million for the fiscal years ended
June 30, 1995 and 1996, respectively, representing an increase of 24%. This
increase was primarily due to a $2.5 million increase over fiscal 1995 in
TCPaccess license fees and associated hardware sales as well as the addition
of six months of revenues from HARBOR products of $1.0 million. Maintenance
and consulting revenues were $11.3 million and $14.3 million for the fiscal
years ended June 30, 1995 and 1996, respectively, representing an increase of
27%, resulting principally from an increase in the number of customers
purchasing maintenance agreements.

23
<PAGE>

Cost of Revenues

Product. Cost of revenues from product sales consists primarily of hardware,
product media, documentation and packaging costs. Cost of revenues for product
sales was $3.3 million and $3.4 million, representing 21% and 17% of total
product revenues for the fiscal years ended June 30, 1995 and 1996,
respectively. This percentage decrease was due to a reduction in third-party
product revenue and a decline in hardware revenue, which carry higher product
costs as a percentage of their respective revenue items offset somewhat by a
provision for excess and obsolete inventory of $28,000 for certain hardware
components with decreasing sales.

Maintenance and Consulting. Cost of revenues from maintenance and consulting
consists primarily of personnel related costs incurred in providing telephone
support and software updates. Cost of revenues from maintenance and consulting
was $3.3 million and $4.6 million, representing 29% and 32% of total
maintenance and consulting revenues for the fiscal years ended June 30, 1995
and 1996, respectively. This increase, as a percentage of related revenues,
was due to added headcount in the worldwide customer support department
required to keep pace with the increased product sales from period to period
and outsourcing of support and maintenance obligations from the Company's
Swiss subsidiary. Although the Company expects that the percentage may
increase in the next fiscal year as a result of the HARBOR acquisition, the
Company does not expect it to increase thereafter.

Operating Expenses

Total operating expenses were $20.4 million and $33.0 million, representing
75% and 97% of total revenues for the fiscal years ended June 30, 1995 and
1996, respectively. Excluding the charge for purchased research and
development related to the New Era acquisition, the operating expenses for the
fiscal year ended June 30, 1996 were $22.8 million representing 67% of total
revenues.

Product Development. Product development expenses consist primarily of
personnel related costs. Product development expenses were $6.2 million and
$5.2 million, representing 23% and 15% of total revenues for the fiscal years
ended June 30, 1995 and 1996, respectively. The reduction in product
development expenses resulted from the cancellation in March 1995 of a
significant product development program. The Company believes that research
and development expenses will increase in the future primarily due to the
expansion of the Company's product line as a result of the acquisition of New
Era and other anticipated product development efforts.

Product development expenditures are generally charged to operations as
incurred. Statement of Financial Accounting Standards No. 86, "Accounting for
the Costs of Computer Software to be Sold, Leased or Otherwise Marketed,"
requires capitalization of certain software development costs subsequent to
the establishment of technological feasibility. Based on the Company's product
development process, technological feasibility is established upon completion
of a working model. Costs incurred by the Company between completion of the
working model and the point at which the product is ready for general release
have not been significant in recent periods. In accordance with the Company's
policy, during fiscal year 1995 the Company wrote off $112,000 of capitalized
software because certain product enhancements were determined to be obsolete
based on the Company's assessment of net realizable value.

Sales and Marketing. Sales and marketing expenses consist primarily of
salaries and commissions for sales and marketing personnel, the fixed costs of
worldwide field offices, and promotional costs. The Company sells through its
direct sales force, resellers and distributors. The direct channel produced
88% and 86% of product revenues for the fiscal years ended June 30, 1995 and
1996, respectively, and is also the major component of sales channel costs.
Sales and marketing expenses were $10.8 million and $13.3 million,
representing 40% and 39% of total revenues for the fiscal years ended June 30,
1995 and 1996, respectively. The increase in absolute dollars was a result of
higher commission rates, marketing program costs and the New Era acquisition.
The Company believes that sales and marketing expenses will increase in
absolute dollars as the Company continues to expand its sales force for both
HARBOR and TCPaccess and launch new corporate marketing programs.

General and Administrative. General and administrative expenses include
personnel and other costs of the finance, human resources and administrative
departments of the Company, and includes gains and losses on

24
<PAGE>

foreign currency exchange. General and administrative expenses were $3.3
million and $4.0 million, representing 12% of total revenues in each of the
fiscal years ended June 30, 1995 and 1996. The increase in dollar amounts for
general and administrative is attributable to the increased headcount required
to support the Company's expansion and a provision of $215,000 for doubtful
accounts. The increase in the allowance for doubtful accounts was the result
of an increase in accounts receivable and was based on management's judgment
relating to collectability of such accounts.

Purchased Research and Development and Product Amortization. Purchased
research and development expense incurred in connection with the New Era
acquisition was approximately $10.2 million, representing 30% of total
revenues for the fiscal year ended June 30, 1996. In addition, approximately
$321,000 of product amortization resulting from such acquisition was included
in the fiscal year ended June 30, 1996. See Note 2 of Notes to Consolidated
Financial Statements.

Interest Expense, net. Net interest expense was $81,000 and $507,000 for the
fiscal years ended June 30, 1995 and 1996, respectively. The increase was due
primarily to bank borrowings related to the New Era acquisition.

Benefit from (Provision for) Income Taxes. The income tax benefit for the
fiscal year ended June 30, 1995 was $1.6 million, with a net tax provision of
$114,000 recorded for the fiscal year ended June 30, 1996. The effective tax
rate for the fiscal year ended June 30, 1996 before income taxes and excluding
the write-off of purchased research and development and the benefit relating
to the recognition of the Company's deferred tax asset was approximately 39%.
See Note 8 of Notes to Consolidated Financial Statements.

FISCAL YEARS ENDED JUNE 30, 1994 AND 1995

Revenues

Total revenues were $21.9 million and $27.1 million for the fiscal years
ended June 30, 1994 and 1995, respectively, representing an increase of 24%
from fiscal 1994 to fiscal 1995. International revenues accounted for 36% and
42% of total revenues for the fiscal years ended June 30, 1994 and 1995,
respectively. The increase in international revenues in fiscal 1995 was
primarily attributable to an increase in the market acceptance of the
Company's products overseas and an increase in the number of international
sales offices, distributors and resellers selling the Company's products. The
Company established a sales and support office in Switzerland during fiscal
1994 and a sales and support office in Spain during fiscal 1995. The increase
in absolute dollar revenues from fiscal 1994 to fiscal 1995 accounted for the
increase in accounts receivable from period to period.

Product. Product revenues were $12.4 million and $15.8 million for the
fiscal years ended June 30, 1994 and 1995, respectively, representing an
increase of 28% from fiscal 1994 to fiscal 1995. The increase from year to
year was primarily the result of increased sales of TCPaccess which reflect
the accelerated acceptance of TCP/IP as a networking protocol. Product
revenues derived from hardware product sales were $2.8 million and $4.0
million for the fiscal years ended June 30, 1994 and 1995, respectively.

Maintenance and Consulting. Maintenance and consulting revenues were $9.5
million and $11.3 million, representing 44% and 42% of total revenues for the
fiscal years ended June 30, 1994 and 1995, respectively, and represented an
increase of 18% from fiscal 1994 to fiscal 1995. The increase was primarily
due to an increase in the number of registered customers electing to subscribe
to maintenance and support contracts after the expiration of the warranty
period, which is generally 90 days. The increase from fiscal 1994 to fiscal
1995 parallels the overall higher increase in product revenues. In fiscal
1995, the Company began to sell consulting services.

Cost of Revenues

Product. Cost of revenues from product sales was $2.4 million and $3.3
million, representing 19% and 21% of the related revenues for the fiscal years
ended June 30, 1994 and 1995, respectively. The increase in cost of

25
<PAGE>

revenues from product sales in absolute dollars and as a percentage of total
revenues from fiscal 1994 to fiscal 1995 was primarily related to an increase
in third-party product revenue, which carries a higher cost of revenues than
the Company's software products.

Maintenance and Consulting. Cost of revenues from maintenance and consulting
was $1.4 million and $3.3 million, representing 15% and 29% of the related
revenues for the fiscal years ended June 30, 1994 and 1995, respectively. The
increase in cost of revenues from maintenance and consulting in fiscal 1995 as
a percentage of related revenues compared to fiscal 1994 was attributable to
added headcount in worldwide customer support and consulting and a change in
the estimate for the recoverability of support inventory to reflect net
realizable value which caused a decrease in inventory. The Company does not
anticipate additional changes to this estimate in the future.

Operating Expenses

Product Development. Product development expenses were $6.3 million and $6.2
million, representing 29% and 23% of total revenues for the fiscal years ended
June 30, 1994 and 1995, respectively. Product development expenses were higher
in fiscal 1994 due to staffing for software engineers required to research and
develop new client/server technology. In fiscal 1995, the Company canceled
this research project and reduced the staffing levels in research and
development.

Sales and Marketing. Sales and marketing expenses were $8.4 million and
$10.8 million, representing 38% and 40% of total revenues for the fiscal years
ended June 30, 1994 and 1995, respectively. Sales and marketing expenses
increased in the period due to the opening of two international subsidiaries,
expansion of the Company's sales force and associated support staff, increased
marketing and promotional activities and increased commission expenses.

General and Administrative. General and administrative expenses were $2.6
million and $3.3 million, representing 12% of total revenues in each of the
fiscal years ended June 30, 1994 and 1995. The increase in absolute dollars in
fiscal 1995 compared to fiscal 1994 was primarily the result of adjustments
for import duties and sales tax liability.

Interest Expense, net. Net interest expense was $224,000, and $81,000, for
the fiscal years ended June 30, 1994, and 1995, respectively. Net interest
expense decreased year to year as bank borrowings declined and as interest
income increased due to higher invested cash balances.

Benefit from (Provision for) Income Taxes. The Company recorded an income
tax benefit of $1.6 million in the fiscal year ended June 30, 1995, reflecting
partial reversal of the valuation allowance against the Company's deferred tax
asset. The income tax provision for the fiscal year ended June 30, 1994 was
$273,000.

Extraordinary Items. In fiscal 1994, the Company recorded a gain of $1.3
million as the result of restructuring debt with a commercial lender. See Note
5 of Notes to Consolidated Financial Statements.

26
<PAGE>

QUARTERLY RESULTS

The following tables set forth certain unaudited consolidated statement of
operations data for the eight quarters ended June 30, 1996, as well as such
data expressed as a percentage of the Company's total revenues for the periods
indicated. This data has been derived from unaudited consolidated financial
statements that, in the opinion of management, include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of such information when read in conjunction with the Company's
audited consolidated financial statements and notes thereto. The Company
believes that results of operations for the interim periods are not
necessarily indicative of the results to be expected for any future period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------------------------------
SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30,
1994 1994 1995 1995 1995 1995 1996 1996
--------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Product............... $3,533 $4,016 $ 2,619 $5,650 $3,034 $ 4,880 $5,282 $6,474
Maintenance and
consulting........... 2,473 2,720 3,177 2,891 3,531 3,284 3,691 3,826
------ ------ ------- ------ ------ ------- ------ ------
Total revenues...... 6,006 6,736 5,796 8,541 6,565 8,164 8,973 10,300
------ ------ ------- ------ ------ ------- ------ ------
Cost of revenues:
Product............... 856 834 665 961 640 1,002 641 1,130
Maintenance and
consulting........... 555 669 1,123 946 1,067 1,081 1,171 1,275
------ ------ ------- ------ ------ ------- ------ ------
Total cost of
revenues........... 1,411 1,503 1,788 1,907 1,707 2,083 1,812 2,405
------ ------ ------- ------ ------ ------- ------ ------
Gross profit............ 4,595 5,233 4,008 6,634 4,858 6,081 7,161 7,895
Operating expenses:
Product development... 1,604 1,737 1,751 1,153 1,124 1,170 1,487 1,460
Sales and marketing... 2,292 2,651 2,500 3,349 2,505 3,033 3,422 4,356
General and
administrative....... 648 771 1,138 772 833 955 1,202 964
Purchased research and
development and
product amortization. -- -- -- -- -- 10,158 160 161
------ ------ ------- ------ ------ ------- ------ ------
Total operating
expenses............ 4,544 5,159 5,389 5,274 4,462 15,316 6,271 6,941
------ ------ ------- ------ ------ ------- ------ ------
Operating income (loss). 51 74 (1,381) 1,360 396 (9,235) 890 954
Interest expense, net... (44) (30) (26) 19 21 20 (261) (287)
------ ------ ------- ------ ------ ------- ------ ------
Income (loss) before
provision for income
taxes.................. 7 44 (1,407) 1,379 417 (9,215) 629 667
Benefit from (provision
for) income taxes...... -- -- -- 1,624 (163) 554 (245) (260)
------ ------ ------- ------ ------ ------- ------ ------
Net income (loss)....... $ 7 $ 44 $(1,407) $3,003 $ 254 $(8,661) $ 384 $ 407
====== ====== ======= ====== ====== ======= ====== ======
Net income (loss) per
share.................. $ 0.00 $ 0.01 $ (0.45) $ 0.62 $ 0.05 $ (2.77) $ 0.08 $ 0.08
====== ====== ======= ====== ====== ======= ====== ======
Shares used in per share
calculation............ 4,770 4,823 3,114 4,849 4,829 3,125 5,016 5,161
====== ====== ======= ====== ====== ======= ====== ======
</TABLE>

27
<PAGE>

The following table sets forth certain unaudited quarterly financial
information of the Company for each of the Company's last eight fiscal
quarters expressed as a percent of total revenues for the periods indicated.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------------------------------
SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30,
1994 1994 1995 1995 1995 1995 1996 1996
--------- -------- --------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Product............... 58.8% 59.6% 45.2% 66.2% 46.2% 59.8% 58.9% 62.9%
Maintenance and
consulting........... 41.2 40.4 54.8 33.8 53.8 40.2 41.1 37.1
----- ----- ----- ----- ----- ------ ----- -----
Total revenues...... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- ----- ------ ----- -----
Cost of revenues:
Product............... 14.3 12.4 11.5 11.3 9.7 12.3 7.1 11.0
Maintenance and
consulting........... 9.2 9.9 19.3 11.0 16.3 13.2 13.1 12.3
----- ----- ----- ----- ----- ------ ----- -----
Total cost of
revenues........... 23.5 22.3 30.8 22.3 26.0 25.5 20.2 23.3
----- ----- ----- ----- ----- ------ ----- -----
Gross profit............ 76.5 77.7 69.2 77.7 74.0 74.5 79.8 76.7
Operating expenses:
Product development... 26.7 25.8 30.2 13.5 17.1 14.3 16.6 14.1
Sales and marketing... 38.2 39.4 43.1 39.2 38.2 37.2 38.1 42.3
General and
administrative....... 10.8 11.4 19.7 9.0 12.7 11.7 13.4 9.4
Purchased research and
development and
product amortization. -- -- -- -- -- 124.4 1.8 1.6
----- ----- ----- ----- ----- ------ ----- -----
Total operating
expenses........... 75.7 76.6 93.0 61.7 68.0 187.6 69.9 67.4
----- ----- ----- ----- ----- ------ ----- -----
Operating income (loss). 0.8 1.1 (23.8) 16.0 6.0 (113.1) 9.9 9.3
Interest expense, net... (0.7) (0.4) (0.5) 0.2 0.4 0.2 (2.9) (2.8)
----- ----- ----- ----- ----- ------ ----- -----
Income (loss) before
provision for income
taxes.................. 0.1 0.7 (24.3) 16.2 6.4 (112.9) 7.0 6.5
Benefit from (provision
for) income taxes...... -- -- -- 19.0 (2.5) 6.8 (2.7) (2.5)
----- ----- ----- ----- ----- ------ ----- -----
Net income (loss)....... 0.1% 0.7% (24.3)% 35.2% 3.9% (106.1)% 4.3% 4.0%
===== ===== ===== ===== ===== ====== ===== =====
</TABLE>

The Company's business has experienced and is expected to continue to
experience significant seasonality. The Company has higher sales of its
software products in the quarters ending in December and June and weaker sales
in the quarters ending in September and March. The decrease in product
revenues in the quarters ending in September is due to the international
customer seasonal buying patterns. The quarters ending in March are
historically weak due to government and large organization annual budgeting
cycles. The Company believes this pattern will continue. The increase in
product revenues in the three most recent quarters is primarily attributable
to increased software license fees for the Company's TCPaccess product as well
as the sale of the HARBOR product internationally. The decrease in product
revenues in the quarter ended in March 31, 1995 also reflected the delay in
the release of Version 3.1 of TCPaccess until the quarter ended June 30, 1995.
The increase in maintenance and consulting revenue in the quarter ended
September 30, 1995 related primarily to delays in renewals of customer
maintenance agreements and increased consulting and a maintenance revenue
adjustment for prior periods.

28
<PAGE>

of new products or product enhancements by competitors; currency fluctuations;
and the failure to anticipate changing customer product requirements. The
Company's sales cycle, from the date the sales agent first contacts a
prospective customer to the date a customer ultimately purchases the Company's
product, is typically three to six months for the TCPaccess products and six
to nine months for the HARBOR products. There can be no assurance that the
Company's sales cycle will not lengthen, exposing it to the possibility of
shortfalls in quarterly revenues, which could have a material adverse effect
on the Company's business, financial condition or results of operations, and
cause results to vary from period to period. The Company's operating results
will also be affected by general economic and other conditions affecting the
timing of customer orders and capital spending, and order cancellations or
rescheduling. The Company operates with very little backlog and most of its
product revenues in each quarter result from orders closed in that quarter,
and a substantial majority of those orders are completed at the end of that
quarter. The Company establishes its expenditure levels for sales, marketing,
product development and other operating expenses based in large part on its
expectations as to future revenues, and revenue levels below expectations
could cause expenses to be disproportionately high. If revenues fall below
expectations in a particular quarter, operating results and net income are
likely to be materially adversely affected. Any inability of the Company to
adjust spending to compensate for failure to meet sales forecasts or to
collect accounts receivable, or any unexpected increase in product returns or
other costs, could magnify the adverse impact of such events on the Company's
operating results. Due to the foregoing factors, quarterly revenue and
operating results are likely to vary significantly in the future and period-
to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.

LIQUIDITY AND CAPITAL RESOURCES

Since the beginning of fiscal 1994, the Company has financed its operations
primarily through bank borrowings and cash generated from operations. Net cash
provided by (used in) operating activities was $(1.4) million, $2.2 million
and $4.1 million for the fiscal years ended June 30, 1994, 1995 and 1996,
respectively. Net cash used in operating activities in fiscal 1994 consisted
primarily of an increase in accounts receivable and a non-cash gain on debt
restructuring, partially offset by net income. Net cash provided by operating
activities in fiscal 1995 consisted primarily of the net income, depreciation
and amortization and an increase in deferred maintenance revenue, partially
offset by an increase in deferred income taxes. Net cash provided by operating
activities in fiscal 1996 consisted primarily of purchased research and
development partially offset by a net loss. Net cash used in investing
activities was $952,000, $2.6 million and $8.1 million for the fiscal years
ended June 30, 1994, 1995 and 1996, respectively. Net cash used in investing
activities in fiscal 1994 related to the acquisition of property and equipment
and capitalization of software development costs. Net cash used in fiscal 1995
consisted primarily of the purchase of available-for-sale securities. Net cash
used in investing activities in fiscal 1996 was primarily due to the Company's
acquisition of New Era. Net cash provided by (used in) financing activities
was $4.5 million, $(1.4) million and $6.1 million for the fiscal years ended
1994, 1995 and 1996, respectively. Net cash provided by financing activities
in fiscal 1994 consisted primarily of proceeds from issuance of Preferred
Stock and proceeds from bank line of credit and notes payable to stockholder,
partially offset by payments on notes payable. Net cash provided by financing
activities in fiscal 1995 was primarily from payments on capital lease
obligations and payments on notes payable and bank line of credit. Net cash
provided by financing activities in fiscal 1996 consisted primarily of
proceeds from the bank line of credit and term loan established for the New
Era acquisition. The Company's business is geographically dispersed resulting
in a significant portion of its cash residing outside of the United States. At
June 30, 1996, 39% of the Company's cash was in European bank accounts.

The local currency is the functional currency for each of the Company's
foreign subsidiaries. Assets and liabilities of the foreign subsidiaries are
translated to U.S. dollars at current rates of exchange, and revenues and
expenses are translated using weighted average rates, in accordance with
Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation." Foreign currency transaction gains and losses are included in
the results of operations. The change in exchange gains and losses in the
Consolidated Statements of Cash Flows is due to the fluctuation of local
currency compared to the U.S. dollar during the periods presented.
Historically, the Company has not invested in derivative securities or any
other financial instruments that involve

29
<PAGE>

a high level of complexity or risk. Management expects that, in the future,
cash in excess of current requirements will be invested in investment grade,
interest-bearing securities.

At June 30, 1996, the Company had $6.1 million in cash and cash equivalents
and $(6.4) million in working capital. The negative working capital balance at
June 30, 1996 resulted from the use of working capital in connection with the
acquisition of New Era in December 1995. The Company also has available a line
of credit agreement with a bank that expires on November 29, 1996, which is
collateralized by certain assets of the Company and permits borrowings of a
percentage of eligible accounts receivable and bears interest at the lender's
prime rate plus 1.5%. Under the terms of the agreement, the Company is
required to maintain a certain minimum quick ratio and tangible net worth and
maximum debt to tangible net worth, as well as quarterly profitability. At
June 30, 1996, $5.0 million was outstanding under the line of credit with no
amounts remaining available for borrowing under this line. The Company expects
to renew this line of credit or obtain a replacement credit facility upon
expiration of this line of credit. In addition, the Company has a note payable
with a bank that is due on December 31, 1998, is collateralized by certain
assets of the Company and bears interest at the lender's prime rate plus 2.5%.
Under the terms of the note, the Company is required to maintain certain
financial covenants. At June 30, 1996, $3.0 million was outstanding under the
note. The Company had $9.4 million in accounts receivable, net of allowance
for doubtful accounts, and $8.1 million of unearned revenues, substantially
all of which will be earned over the 12-month period following June 30, 1996.

Capital expenditures, including amounts financed under capital leases, have
remained relatively constant in recent periods, aggregating approximately
$885,000, $721,000 and $384,000 for the fiscal years ended June 30, 1994, 1995
and 1996, respectively. The Company had no material capital expenditure
commitments at June 30, 1996. The Company expects that it will have
$1.0 million of capital expenditures through June 30, 1997, including
approximately $500,000 to expand its customer support system.

The Company believes that the net proceeds from the sale of the Common Stock
offered hereby, together with its current balances, cash available under its
line of credit and cash flow from operations, if any, will be sufficient to
meet its working capital and capital expenditure requirements at least through
December 31, 1997. Although operating activities may provide cash in certain
periods, to the extent the Company experiences growth in the future, the
Company anticipates that its operating and investing activities may use cash.
Consequently, any such future growth may require the Company to obtain
additional equity or debt financing, which may not be available or may be
dilutive.

30
<PAGE>

BUSINESS

The following Business section contains forward-looking statements which
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth under "Risk Factors" and
elsewhere in this Prospectus.

OVERVIEW

Interlink Computer Sciences, Inc. ("Interlink" or the "Company") is a
supplier of high-performance solutions for enterprise networked systems
management. Interlink provides software and services which enable customers to
use their IBM and IBM-compatible MVS mainframes as "enterprise servers" in
distributed, heterogeneous client/server network environments. The Company's
products and services enable customers to transport, access and manage
mission-critical data and applications across distributed network
environments. The Company develops and markets network transport products
which provide for enterprise server TCP/IP connectivity, fault tolerance and
network file transfer. Interlink also develops and markets systems management
applications for network backup, archive and restore, distribution of
applications, data and software, network printing and other tools which expand
the functionality of the enterprise server.

As of June 30, 1996, the Company had approximately 1,200 customers
worldwide. The Company markets and sells its software and services primarily
through its direct sales organization in North America and Europe and, to a
lesser extent, through resellers and international distributors. Significant
customers which have purchased/licensed the Company's products include the
Internal Revenue Service, MACIF, U.S. Sprint, W.R. Grace & Co. and Wells Fargo
Bank. The Company recently entered a strategic relationship with Legato to
develop products which will enable the companies to provide enterprise-class
storage management solutions.

INDUSTRY BACKGROUND

Many large organizations depend on centralized mainframe computer systems to
manage mission-critical software applications and to serve as the repository
for essential business data. These systems, along with sophisticated systems
management software, provide highly available computer processing resources,
are extremely reliable over extended periods of usage, are scalable to
accommodate a large number of users, and provide for secure processing and
storage of large amounts of data.

Recently, advances in hardware, software and networking technologies have
led to the deployment of client/server systems, in which computing tasks are
distributed throughout a network of computers. Organizations have adopted
client/server networks to obtain the advantages inherent in distributed
computing, such as independent local processing and storage of data, lower
initial cost and efficient use of common software programs.

Organizations are now seeking the technology to integrate mainframe
computers into their client/server networks as "enterprise servers" which,
like other servers on the client/server network, have a specialized purpose
and function. Specifically, the enterprise server and the systems management
applications associated with its use are capable of providing reliable and
efficient systems management, data security, and distribution of data and
applications. Improvements in the cost-effectiveness of mainframe systems have
significantly increased the use of mainframe computers as enterprise servers.

The integration of TCP/IP, an open systems transport protocol, with the IBM
MVS mainframe operating system, enables the connection of centralized
mainframes to distributed client/server networks on a peer-to-peer basis
regardless of the hardware or software used on such networks. Organizations
seeking distributed access to mainframe data, highly reliable computing
resources, and leverage from existing investments in hardware, applications
and training, have seen the integration of the enterprise server into the
client/server network as a necessary evolution. Software applications which
enhance the management of complex computing resources allow client/server
networks to take advantage of the mainframe as an enterprise server. By
recognizing this

31
<PAGE>

movement to "network-centric" computing and incorporating TCP/IP functionality
in recent releases of the MVS operating system, IBM has also acknowledged the
emergence of the mainframe as an enterprise server. Organizations now can take
advantage of investments in mainframe computers and applications by leveraging
these investments across the client/server network.

Organizations implementing client/server computing environments which
leverage the benefits of the enterprise server require rapid TCP/IP access and
a new class of software solutions to enable these previously disparate
computing environments to efficiently interoperate. At the network transport
level, the speed, efficiency and reliability of a given transport solution can
have a considerable impact on the effectiveness of the overall computing
environment, particularly as the volume of data stored and accessed across the
network increases. Organizations which implement high-performance, efficient
network transport solutions are able to lower the computing burden on their
enterprise servers and increase the potential to defer costly hardware
upgrades. At the systems level, the complexity of networks with both
centralized and distributed resources creates the need for robust applications
to perform storage management, software distribution and output management.
Customers thus require both high-performance network transport products and
systems management applications to transport, store and protect critical data
and applications. Furthermore, users require a high level of customer service
and support as they strive to leverage the advantages of both centralized and
distributed architectures in a single seamless network.

THE INTERLINK SOLUTION

Interlink's products enable MVS mainframes to function as enterprise servers
in client/server environments. The Company offers a suite of high-performance
network transport products and systems management applications which
efficiently transport, store and protect the integrity of mission-critical
data and applications. By providing both network transport products and
systems management applications as a single solution, the Company enhances the
customer's ability to manage complex computing resources. The Company believes
its high level of customer service and technical support form a key component
of its enterprise networked systems management solution by addressing the
customer's need to integrate the enterprise server with complex, heterogeneous
client/server networks. With almost ten years of experience in the enterprise
networked systems management industry, Interlink provides networking solutions
that build upon its expertise in the integration of the MVS operating system
with TCP/IP and its reputation for high-performance, efficient products.

The Company's principal network transport product, TCPaccess, integrates the
MVS enterprise server into client/server networks using open systems TCP/IP
protocols. The Company's HARBOR and other systems management applications
backup data from, distribute software to, and allow printing across the
clients and servers on the network, which expands the functionality of the
enterprise server.

32
<PAGE>

STRATEGY

Interlink's objective is to become the leading supplier of high-performance
solutions for enterprise networked systems management. Key elements of the
Company's strategy include:

Expand Functionality of the Enterprise Server. Interlink seeks to enable
customers to leverage the benefits of the enterprise server by integrating it
into client/server networks and by optimizing the utilization of powerful
existing computing resources. The Company's approach to providing integrated
enterprise server-to-network connectivity and systems management solutions is
to develop, market and support a suite of products that collectively address
the needs of the organization seeking to fully exploit the benefits of an
enterprise server. To address the needs of the enterprise networked systems
management market, the Company recently acquired New Era and its HARBOR
products, is developing enhanced versions of Enterprise Print Services, and
intends to continue to upgrade and enhance its existing product line.

Capitalize on Sales Opportunities. The Company is expanding its sales force
and is dedicating additional resources to capitalize on new sales
opportunities resulting from the acquisition of New Era. The Company intends
to pursue significant cross-sell opportunities by leveraging its existing
customer base of approximately 900 TCPaccess, 160 HARBOR and 530 DECnet
licenses. The Company also plans to market and sell its HARBOR products to
organizations that utilize SNA rather than TCP/IP networks.

Employ Consultative Sales Approach. The Company intends to develop and
maintain strong customer relationships by leveraging the broad range of
expertise of its consultative sales force to address the complexity of network
solutions. This expertise includes knowledge of mainframes, numerous server
operating systems, TCP/IP, networking technologies and a variety of third-
party software products. The Company seeks to provide comprehensive solutions
to its customers by examining their current network architectures and system
problems and by configuring solutions that best leverage the use of enterprise
servers and other existing computing resources. The Company believes that
providing a comprehensive solution, using both Interlink and complementary
third-party products, builds long-term customer relationships and facilitates
future add-on sales efforts.

Differentiate Through Superior Customer Support. To support customers that
have implemented complex networks to manage mission-critical applications and
data, the Company provides for local-language customer service and technical
support for both domestic and international customers. This support includes
24-hour, 7 day worldwide telephone support, on-site problem resolution, and
comprehensive consulting and training. The Company believes that this high
level of customer support not only differentiates its solution but also
provides insight into customer needs which influences the Company's future
product development efforts.

Leverage Strategic Relationships. The Company will leverage strategic
marketing and development relationships in order to provide a complete
solution to its customers' evolving network systems management needs. The
Company recently formed a strategic relationship with Legato to develop
products which will enable the companies to provide enterprise-class storage
management solutions. In addition, the Company is a member of the IBM S/390
Partners in Development group, which provides the Company advance notification
of developments in the MVS operating system.

33
<PAGE>

PRODUCTS

The Company's principal software products include network transport products
and systems management applications. The Company's network transport products
provide the communication infrastructure between distributed client/server
networks and the enterprise server. Interlink's systems management
applications allow centralized management of applications and data across
distributed systems. The following table summarizes the Company's software
products and their principal functions:

PRODUCT NAME DESCRIPTION
============================ ===========================================

NETWORK TRANSPORT PRODUCTS
--------------------------
TCPaccess Provides TCP/IP networking protocols that
allow MVS mainframes to communicate with
clients and servers.

TCPaccess Fault Tolerant TCPaccess enhanced to provide redundancy to
achieve high levels of reliability in
networks with multiple paths.

SNS/NFS Allows the enterprise server to act as a
file server in Network File System ("NFS")
environments.

SYSTEMS MANAGEMENT APPLICATIONS
-------------------------------
HARBOR Backup Efficiently backs up and restores data on
client/server networks to an enterprise
server.

HARBOR Distribution Manages cataloging, installing, and up-
grading of applications, data files and
software packages across the enterprise.

HARBOR Distributed Storage Allows local backup and restore on the LAN
Server with centralized control over transmission
and security.

Enterprise Print Services Manages the printing of enterprise server
applications to network printers.

CICS Programmers Toolkit Simplifies the development of applications
for the CICS on-line transaction processing
environment across TCP/IP networks.

Network Transport Products

The Company's network transport products, including its TCPaccess products,
enable peer-to-peer communication and processing between enterprise servers
and heterogeneous network systems. The TCPaccess products operate with all IBM
System/370 and System/390 and compatible enterprise servers operating on
essentially all MVS operating systems. The network transport products include
a base module and several optional modules. For the last fiscal year, a
typical sale of the Company's network transport products ranged from $50,000
to $100,000 per enterprise server, based on its size and customer location.

TCPaccess. TCPaccess provides TCP/IP protocols and common applications such
as file transfer, terminal access, electronic mail and system management.
TCPaccess is manageable from remote Simple Network Management Protocol
("SNMP") management stations through the SNMP agent contained in the product.
TCPaccess includes an Application Programmer Interface ("API") which allows
customers to easily write interfaces to applications.

TCPaccess Fault Tolerant. TCPaccess Fault Tolerant helps ensure continuous
operations for mission-critical production environments and allows user
sessions to continue across hardware failures and routing changes by quickly
re-establishing failed connections. This optional product is contained within
TCPaccess, and is enabled with a software key.

34
<PAGE>

SNS/NFS. SNS/NFS enables LAN clients that support the NFS model to
transparently access the wide variety of file types on the enterprise server.
SNS/NFS gives LAN users the ability to access remote MVS datasets as if they
were local.

Systems Management Applications

The Company's systems management applications provide centralized backup,
restore, distribution and output management. The Company's recent acquisition
of New Era and its HARBOR products enhanced the Company's systems management
applications product line. Prior to the acquisition, the Company distributed
the HARBOR products in certain countries in Europe for more than a year. The
HARBOR products are integrated client/server applications, which enable
management of distributed systems at the enterprise level. The HARBOR products
integrate with existing data storage resources and allow information
technology personnel to centrally manage a variety of client systems and
communications products. For the last fiscal year, a typical initial sale of
the Company's systems management applications ranged from $20,000 to $100,000,
based on the number of servers and clients as well as the customer's location.

HARBOR Backup. HARBOR Backup provides reliable, centralized backup and
restore for distributed environments. This product efficiently backs up data
stored on clients and servers to the enterprise server. HARBOR Backup features
a file redundancy checker to scan for identical files to avoid duplicative
data movement, a consolidation routine to ensure that a full backup of a
server or client need only be done once, and exclusion rules to eliminate
backing up temporary or system files that would not need to be restored in the
event of loss.

HARBOR Distribution. HARBOR Distribution offers management of applications,
data files and software packages across the enterprise. HARBOR Distribution
enables administrators to catalog, install, upgrade and de-install
applications, data files and software packages for all clients and servers. By
using HARBOR Distribution, customers can eliminate repetitive installation and
upgrade procedures through enterprise level automation. HARBOR Distribution
updates all clients and servers with the most recent application release,
before application processing resumes, and reports the inventory of software
for each client and server on the system. A distributed LAN server can be used
to store files for later delivery to client systems, substantially reducing
delivery times, especially over WANs.

HARBOR Distributed Storage Server. HARBOR Distributed Storage Server allows
for local network storage, backup and restore of data, while utilizing the
enterprise server to provide overall control. HARBOR Distributed Storage
Server reduces restore time and minimizes communications costs.

Enterprise Print Services. Enterprise Print Services ("EPS") manages the
printing of enterprise server applications to network printers. Each printing
resource in the enterprise can be utilized from other environments. EPS
resides on the enterprise server, providing bi-directional access from
applications in one environment to printers in the other.

CICS Programmers Toolkit. CICS Programmers Toolkit simplifies the task of
developing applications for the CICS on-line transaction processing
environment that communicate with peer applications in the TCP/IP environment.
Key features of the product include: an easy-to-use API and tools that allow
for more rapid development of applications; efficient operation allowing
higher transaction volumes; and a powerful administrator interface allowing
product configuration, operation and debugging in real-time without adversely
affecting on-line applications.

Other Products

The Company sells a network controller which is the physical hardware
connection between the enterprise server and the network. This product,
manufactured by Bus-Tech, is generally sold with the Company's TCPaccess
product. The list price of the current network controller ranges from $17,000
to $48,000. Sales of network controllers accounted for 15% and 11% of total
revenues in the fiscal years ended June 30, 1995 and 1996, respectively. The
Company's DECnet products provide networking protocols that allow MVS and VM
mainframes to communicate with devices using the DECnet protocol. Although the
Company no longer actively markets this product, the Company derives
substantial maintenance revenues from the DECnet installed customer base.

35
<PAGE>

SALES, MARKETING AND CUSTOMER SUPPORT

The Company markets and sells its software and services primarily through
its direct sales organization and, to a lesser extent, through resellers and
international distributors. The Company intends to develop and maintain strong
customer relations by leveraging the broad range of expertise of its
consultative sales force to address the complexity of network solutions. The
Company's large national and multinational customers require a highly
consultative sales approach and specialized account management due to the
technical complexities of their network environments, their geographically
dispersed installations, systems management needs and centralized decision
making processes. The sales process normally requires a customer trial, which
is managed by the Company's local technical systems engineers to aid the
customer in planning and selecting their enterprise products. The Company
believes that its consultative sales approach provides it with valuable
customer feedback which the Company uses to direct product development. The
Company facilitates leasing through various independent leasing companies for
its customers who prefer monthly payment arrangements, usually over a term of
36 months. As of June 30, 1996, the Company employed 89 persons in sales,
marketing, customer support, and consulting. For the fiscal years ending June
30, 1995 and 1996, 50% and 46%, respectively, of the Company's product
revenues were derived from international sales and 88% and 86%, respectively,
of the Company's product revenues were derived from direct sales.

Sales

Direct Sales. The Company's sales organization consists of a staff of
software sales professionals based in field sales offices. As of June 30,
1996, the Company's direct sales force included 22 account executives and 21
technical pre-sales systems engineers. Field offices are staffed by both sales
and technical pre-sales systems engineers who are located in Atlanta, Chicago,
Dallas, San Francisco and Washington, D.C. The international sales
organization has offices in Calgary, Koln, London, Madrid, Paris and Zurich.

Strategic Relationship with Legato. The Company recently formed a strategic
relationship with Legato to develop products which will enable the companies
to provide enterprise-class storage management solutions. Pursuant to the
terms of the agreement, Interlink intends to develop a new product called
HARBOR Agent for Networker (Legato's client/server storage management
product), which will be distributed by Legato. Interlink will be an authorized
reseller of Legato's storage management products, including the new HARBOR
Agent for Networker. The Company has no historical relationship with Legato,
and there can be no assurance that the Company will be able to sell its
products through Legato.

Indirect Distribution Channels. The Company currently has a reseller
relationship with Hitachi Data Systems Corp., which distributes the Company's
products in North America. The Company also sells through international
distributors that provide pre- and post-sale local-language support in
Australia, Belgium, Brazil, Denmark, Finland, Holland, Italy, Japan, Norway,
the Philippines, Singapore, South Africa, Sweden and Venezuela.

Marketing

In support of its direct and indirect sales, the Company conducts marketing
programs to position and promote its products and services. Marketing
personnel engage in a wide variety of activities to support the distribution
channels, including direct mail, advertising, seminars, public relations and
trade shows. In addition, the marketing department also conducts sales and
product training seminars for both the Company's internal sales force and
those of its channel partners. The marketing organization also has a leading
role in product marketing activities, including product management,
competitive positioning and long term product direction.

Customer Support

For each of the fiscal years ended June 30, 1995 and 1996, 42% of the
Company's total revenues were derived from maintenance and consulting. The
Company offers an annual maintenance program to its licensees through its own
support organization that includes product updates and post-sales telephone,
electronic mail,

36
<PAGE>

Internet and fax hotline support. The price for annual maintenance is
typically 15% to 18% of the product list price. The Company also offers
installation and training services on a fee basis to assist customers in
deploying enterprise wide applications utilizing the Company's products.
Training is offered at the Company's in-house facilities or at the customers'
site. The Company's distributors and resellers also offer first level customer
support to their end users, while relying on the Company for any additional
support as needed. Because the Company's customers depend on the Company's
products to transport, store and protect critical data, the Company believes
its ability to provide a high level of customer service and technical support
is important to its marketing efforts and to the building of long-term
customer relationships.

CUSTOMERS

As of June 30, 1996, the Company had approximately 1,200 customers, with no
single customer accounting for more than 5% of the Company's net revenues in
any of the last three fiscal years. The following is a representative list of
the Company's customers categorized by industry. The Company believes these
customers are typical of the Company's customer base by virtue of the
industries they represent and the computer operations they manage using the
Company's products.

Communications Financial Services Health Care Manufacturing
- -------------- ------------------ ----------- -------------
<S> <C> <C> <C>
BellSouth ABN-Amro Bank CHU Nancy Hospital General Air Products and
NYNEX Bank for International Settlements Cox Medical System Chemicals
Pacific Telecom Bank of Montreal University of California at Davis Apple Computer
SITA Bank Vontobel University of Pittsburgh Boeing
SBC Communications Barclays Bank Vision Service Plan Ford Werks
Telecom Eirann Citicorp Inland Steel
Telecomm Italia Commerzbank Insurance Industries
U.S. Sprint Credit Agricole Pyrenees Gascogne --------- Leggett & Platt
Williams Information Services Edward D. Jones Allstate Insurance Group Legrand
Imperio Abbey Life Assurance MAN
Consumer/Retail Pictet & Cie California State Auto Association McDonnell Douglas
- --------------- SIBS Kemper National Insurance Companies Otis Elevator Company
Argos Distributers Schweiz Kreditanstalt MACIF Rolls Royce
Federated Systems Group United Overseas Bank Pearl Insurance Ross Laboratories
Giant Food Wells Fargo State Farm Mutual Saarstahl
J. Crew Group Automobile Insurance SNECMA Group
Johnson & Johnson Government Sollac
Publix SuperMarkets ---------- Sony
Quaker Oats Company AOK Bundesverband Thyssen
Sara Lee Internal Revenue Service W.R. Grace
Service Merchandise NASA
Sherwin-Williams Company Securities and Exchange Commission Services
Talbots U.S. Department of State --------
Tandy Information Services Virginia Department of Information Axiom Corporation
The Gap Technology Comdisco
Wilson's House of Suede Debis Munich
Dun & Bradstreet
Energy Lexis-Nexis
- ------ Mastercard
British Gas International
Florida Power & Light Mead Corporation
Powergen Reuters Holdings
South Wales Electricity
Southern California Edison
Southern Company
</TABLE>

37
<PAGE>

The following examples are representative of how the Company's present
customers utilize TCPaccess and HARBOR in solving their network transport and
systems management needs. These examples have been prepared by the Company
based on information provided by the respective customer.

University Medical Center

A major university medical center with more than 1,000 patient beds and
10,000 employees sought to centralize the management of computerized patient
records, enable the collection of critical information from numerous sources,
such as physicians offices, surgery areas, test labs and pharmacy, and provide
data access wherever needed to assure that doctors, nurses and lab technicians
have up-to-date information. In order to achieve these objectives, the
university decided to integrate its mainframe applications with numerous LANs
and thousands of terminal devices located across the campus. When the
university standardized on TCP/IP as its interconnectivity protocol, it
selected Interlink to provide connectivity between the mainframe and the LANs.
The university installed TCPaccess, Enterprise Print Services, and the CICS
Toolkit for query processing to handle both inbound and outbound telnet
terminal sessions, file transfers and large volumes of remote printing to the
mainframe's page printers. Using Interlink's capabilities, the university has
been sending all of the major print jobs on this system to the enterprise
server. The university cited the Company's superior customer support in
addition to the functionality of the Company's products as principal reasons
for its decision to use the Company's products.

Natural Gas Supplier

A large supplier of industrial gases serving 2 million customers in Europe
is using TCPaccess to leverage the power of its mainframe resources to enhance
its client/server network. This customer's computer network in the United
Kingdom is used to ensure that its customers receive effective service
regardless of their geographic location. Historically, this customer used an
SNA network with approximately 2,000 terminals connected to an IBM mainframe.
In implementing its client/server environment this customer replaced its
terminals with PCs connected to Compaq servers running Windows NT, but wanted
to maintain the enterprise server to provide centralized data storage and
offer all users on the entire network a single point-of-contact for all key
customer information. As TCP/IP traffic increased, this customer's existing
TCP/IP product became less efficient. Switching to TCPaccess allowed this
customer to make more efficient use of its enterprise server by providing more
clients access to the central data store of the company.

Banking Institutions

Information is vital to the banking industry and protecting customer and
bank data is one of the foremost priorities at this major bank. This bank is a
full service financial organization serving customers throughout North America
and managing assets in excess of $150 billion. The bank has over 1,000
branches/offices and utilizes over 8,000 workstations and servers. The bank
chose HARBOR as its backup product because HARBOR meets its multi-site, data
integrity and high security needs.

A major European bank, with numerous worldwide subsidiaries, is using HARBOR
Backup in its decentralized backup system project. This customer sought host-
initiated, unattended over-night backup, and user-oriented and helpdesk-
supported restore in the case of emergency. The first phase of the project
covers backup and restore of approximately 700 OS/2 servers. Functionality,
security and support were the crucial factors in the bank's decision to choose
HARBOR. The bank plans to extend the project to an additional 500 OS/2
software development servers. In addition, in the first quarter 1996, the
decision was made to use HARBOR Distribution as the solution for software
distribution and management for their electronic software distribution
project.

38
<PAGE>

TECHNOLOGY

The Company's core technologies are the basis for its enterprise networked
systems management products. These technologies allow for the expansion of
existing products and addition of new products to the Company's systems
management architecture.

Network Transport Products

The TCPaccess product line, the Company's principal network transport
products, was developed within an application architecture consisting of key
components which provide high-performance, efficient operation, rapid
development, reusable code and improved maintainability. These key components
are: (i) TCP/IP Base; (ii) TCP/IP APIs; (iii) TCP/IP Applications; and (iv)
IFS Architecture.

TCP/IP Base. The TCP/IP base technology incorporates a high speed, efficient
transport protocol implementation which allows client/server applications to
communicate using TCP/IP. This software product is a multi-layered
communications module with two basic functions: (i) communicating via drivers
with the LAN controller devices to provide physical network connectivity; and
(ii) implementing protocols to establish interoperability between TCP/IP
environments and the enterprise server. Included within the base technology
are fault tolerant features enabled when the customer purchases TCPaccess
Fault Tolerant. This fault tolerant technology allows TCP/IP to recover
automatically from hardware problems in the network to preserve the sessions
between the enterprise server and remote TCP/IP systems. All portions of
TCPaccess critical to high performance and efficient operation are written in
assembler language. The base technology was architected and implemented
natively in MVS for the enterprise server environment. Use of technology
porting was minimized to ensure optimum performance and efficiency. The
technology is developed in accordance with Requests for Comments governed by
the Internet Engineering Task Force, and the Company's personnel participate
in the standards development process for key TCP/IP standards.

TCP/IP Application Programming Interfaces. TCPaccess contains an API layer
to allow independent software vendors ("ISVs") and the Company's customers to
use the TCP/IP technology to develop client/server applications. A variety of
industry standard APIs are provided, including BSD sockets, X/Open Transport
Interface and Sun/ONC RPC/XDR. All of the APIs in TCPaccess were architected
and designed specifically for the enterprise server environment to deliver
high performance and efficient operation for ISV and customer applications.

TCP/IP Applications. Certain TCP/IP applications such as file transfer
protocol and tn3270 terminal access are implemented in the same address space
as the TCP/IP base technology. This architecture, in which key servers are in
the same address space, enhances the performance and efficiency of these
important services. The TCP/IP base and application services are implemented
as threads within a multi-threaded environment provided as part of the base
connectivity technology. The use of threading technology provides scalability
and permits large numbers and applications to be supported in TCPaccess.

IFS Architecture. IFS Architecture ("IFS") is proprietary enterprise server
software that provides for rapid development of systems management
applications within the enterprise server environment. TCPaccess is an IFS
application. Components of TCPaccess execute within IFS as separate processes
(e.g., TCP/IP protocol stack, API, domain name resolver, SNMP agent and
others). IFS is written in assembler language for high performance and low CPU
resource usage. Applications developed in IFS can span threads, processes and
address spaces, providing location transparency to developers to simplify and
speed the development of software. IFS also provides common system-level
services for IFS application developers. IFS significantly reduces the time
required to create new TCPaccess applications.

39
<PAGE>

Systems Management Applications

The HARBOR products, the Company's principal systems management
applications, were developed within an application architecture consisting of
key components which provide high-performance, efficient operation, rapid
development, reusable code, portable code and improved maintainability. These
key components are: (i) HARBOR Transport Services; (ii) HARBOR Transport
Gateway; (iii) HARBOR Multi-System Platform; (iv) HARBOR Policy Database; and
(v) HARBOR Client User Interface.

HARBOR Transport Services. The HARBOR Transport Services is proprietary
networking middleware software that connects a large variety of clients,
servers, and networks in a customer's distributed system. HARBOR Backup,
HARBOR Distribution, HARBOR Transport Gateway and HARBOR Distributed Storage
Server all make use of HARBOR Transport Services. The technology enables
HARBOR developers to use one programming interface for network access,
regardless of the underlying transport protocol, shielding them from the
issues and difficulties that can be encountered in programming to individual
network transport protocol interfaces. HARBOR Transport Services can
automatically recover from network failures, including retrying operations
over an alternate protocol, transparently to the application. This single
networking API, and other APIs within HARBOR Transport Services, are key to
being able to develop portable networked systems management applications on a
variety of common client/server platforms.

HARBOR Transport Gateway. The HARBOR Transport Gateway is an application
built upon the HARBOR Transport Services which connects a large variety of
clients, servers and networks in a customer's distributed system. This
technology provides transparent conversion between LAN/WAN transport protocols
including TCP/IP, APPC, 3270, IPX/SPX, Asynch and others. The HARBOR Transport
Gateway permits a customer to utilize two or more dissimilar network transport
protocols in their environment, with the gateway performing the mapping of
HARBOR application data streams from one transport to another.

HARBOR Multi-System Platform. The HARBOR Multi-System Platform ("MSP") is
proprietary enterprise server software that permits rapid development of
applications within the HARBOR environment. The HARBOR Backup and HARBOR
Distribution products are MSP applications. Applications developed in MSP can
span threads, processes, address spaces and machines, providing location
transparency to developers to simplify and speed development of software. The
support within MSP for threading is a key to providing scalability,
performance and efficiency for HARBOR applications. MSP also provides common
system-level services for HARBOR software developers.

HARBOR Policy Database. The HARBOR Policy Database is a proprietary database
and an administrative facility that controls all HARBOR management functions,
and improves user and system administrator productivity. It provides a single
location for defining and managing security access, administrative policies
and distribution schedules for HARBOR Backup and HARBOR Distribution. The
database is hierarchical in nature allowing rules to be defined at a high
level as defaults and then augmented by different levels of administration.
The technology is integrated with standard security management interfaces such
as RACF, CA-Top Secret and CA-ACF2.

HARBOR Client User Interface. The HARBOR Client User Interface is the
graphical user interface presented to both HARBOR Backup and HARBOR
Distribution client users. Technology for the development of graphical user
interfaces provided by a third party enables the Company to develop HARBOR
user interfaces rapidly, with a high degree of portability and with a
consistent "look and feel" across platforms.

PRODUCT DEVELOPMENT

The Company has made substantial investments in research and development to
produce high-performance network transport products and systems management
applications. As of June 30, 1996, the Company's research and development and
quality assurance organization consisted of 60 employees. The Company intends
to enhance its existing product offerings and to introduce additional products
for the enterprise networked

40
<PAGE>

systems management market. The Company uses standard product development
methodologies in the design and development of its products to ensure
efficiency in development and high product quality. In addition, the Company
solicits input from its customers to gain insight into their specific network
requirements, enabling the research and development staff to enhance existing
products and create new products to suit the market. The Company designs its
products to be portable and adaptable to new client/server hardware and
software environments. Interlink uses software development tools such as
configuration management, code testing, and performance monitoring to aid in
this development. The Company outsources its host computing resource
requirements for cost effectiveness and efficiency. To date, most of the
Company's core technologies for its network transport products and systems
management applications have been acquired and have not been developed
internally. While the Company expects that certain of its new products will be
developed internally, the Company may also, based on timing and cost
considerations, acquire technology and products.

The Company is currently completing the development of TCPaccess Version
4.1, which is expected to be released late 1996 and is intended to support
open edition MVS-API. The Company intends to develop additional versions to
provide compatibility with IBM APIs and certain IBM user-level applications.
The Company is also developing enhancements to the HARBOR products, including
a version of HARBOR to support Windows NT on platforms other than the Intel-
based NT platform currently supported. The Company expects to also add Netware
remote administration with a graphical user interface for Windows 95. The
Company intends to develop HARBOR Agent for Networker (Legato's client/server
storage management solution) which will provide HARBOR functionality to
client/server storage management products sold by Legato. There can be no
assurance that the Company's new or enhanced products will be timely
developed, or at all, and even if developed, that such products will achieve
market acceptance.

COMPETITION

General. The market in which the Company operates is intensely competitive
and is characterized by extreme price competition and rapid technological
change. The competitive factors influencing the markets for the Company's
products include product performance, price, reliability, features,
scalability, interoperability across multiple platforms, adherence to industry
standards, and the provision of support and maintenance services. The Company
competes with a number of companies, principally IBM, that specialize in one
or more of the Company's product lines, and such competitors may have greater
financial, technical, sales and marketing resources to devote to the
development, promotion and sale of their products, and may have longer
operating histories, greater name recognition, and greater market acceptance
for their products and services compared to those of the Company. There can be
no assurance that the Company's current competitors or any new market entrants
will not develop networked systems management products or other technologies
that offer significant performance, price or other advantages over the
Company's technologies, the occurrence of which would have a material adverse
effect on the Company's business, financial condition and results of
operations.

41
<PAGE>

the Company reduces the price of its TCPaccess products in order to compete
against IBM, which erosion would have a material adverse effect on the
Company's business, financial condition and results of operations. Also, IBM
could in the future decide to include its TCP/IP product in the bundle of
software provided to purchasers of its OS/390 operating system without charge.
The Company believes that any reduction in price of the IBM TCP/IP products,
or the bundling of those products without charge in its OS/390 operating
system, would require the Company to either reduce the prices of its TCPaccess
products or substantially increase sales and marketing expenses, or both, in
order to continue to sell its TCPaccess products, which actions would have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, if IBM were to develop or design its
OS/390 operating system or other products so that its TCP/IP product cannot be
removed, customers who otherwise would have been inclined to purchase the
Company's TCPaccess product may not do so, which would have a material adverse
effect on the Company's business, financial condition and results of
operations. In addition, the Company derives a substantial portion of its
revenues from maintenance agreements with its TCPaccess customers. If the
Company sells fewer TCPaccess products, either due to competition from IBM or
otherwise, the Company's maintenance revenues would be reduced, which would
have a material adverse effect on the Company's business, financial condition
and results of operations. If IBM reduces the combined price of its TCP/IP
products and maintenance, IBM's combined price for its TCP/IP products and
maintenance would be more price competitive with the Company's product line,
and the Company's product and maintenance revenues would be adversely
affected. The Company also competes with IBM, Apertus, Cisco Systems, Inc.,
Computerm, Network Solutions, Inc. and Memorex in the network controller
market, where the Company resells the network controller manufactured by Bus-
Tech to provide the hardware connection which links the enterprise server to
the client/server network.

System Management Applications. The primary competitors for the Company's
HARBOR Backup and HARBOR Distributed Storage Server products are IBM, Storage
Technology, Innovation Data Processing, Inc. and Boole & Babbage, Inc. The
Company's competition for the HARBOR Distribution product includes IBM,
Novadigm and Tangram Enterprise Solutions, Inc. IBM is aggressively marketing
its ADSM backup product, which is included in the System View package on IBM's
UNIX system, AIX. There can be no assurance that IBM will not include the ADSM
backup products in a software "bundle" with the sale of its mainframe hardware
systems. The bundling of competing software products with mainframe hardware
systems could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company also competes with
software vendors who develop and market products for UNIX and Windows NT
operating systems, such as Microsoft, Arcada Software, Inc., Cheyenne
Software, Inc., Computer Associates International, Inc., EMC Corporation,
Hewlett-Packard Company, Legato, Novadigm, OpenVision Technology, Inc.,
PLATINUM technology, inc., Sterling Software, Inc., Sun Microsystems, Inc. and
Unison Software, Inc., which are focusing on enterprise systems management
applications. Although the Company recently signed a strategic marketing
agreement with Legato, the Company is still a competitor of Legato in the
storage management market. The Company also expects increased competition from
vendors of TCP/IP-to-SNA gateway products, including such companies as
Microsoft, Novell, Inc., Apertus and CNT/Brixton Systems, Inc. Competition
from these companies could increase due to an expansion of their product lines
or a change in their approaches to enterprise systems management or networking
products. The bundling of network transport software with a network controller
by these competitors could prevent the Company from selling TCPaccess to the
customers of these competitors, which would have a material adverse effect on
the Company's business, financial condition and results of operations.

42
<PAGE>

costs in connection with its engineering, research, development, marketing and
customer service efforts in order to meet any competitive threat. The Company
expects competition to intensify, and increased competitive pressure could
cause the Company to lower prices for its products, or result in reduced
profit margins or loss of market share, any of which could have a material
adverse effect on the Company's business, financial condition and results of
operations.

INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS

While the Company believes that its products and trademarks do not infringe
upon the proprietary rights of third parties, there can be no assurance that
the Company will not receive future communications from third parties
asserting that the Company's products infringe, or may infringe, on the
proprietary rights of third parties. The Company expects that software product
developers will be increasingly subject to infringement claims as the number
of products and competitors in the Company's industry segment grows and the
functionalities of products in different industry segments overlap. Any such
claims, with or without merit, could be time consuming, result in costly
litigation and diversion of technical and management personnel, cause product
shipment delays or require the Company to develop non-infringing technology or
enter into royalty or licensing agreements, any of which could have a material
adverse effect on the Company's business, financial condition and results of
operations. Such royalty or licensing agreements, if required, may not be
available on terms acceptable to the Company or at all. In the event of a
successful claim of product infringement against the Company and failure or
inability of the Company to develop non-infringing technology or license the
infringed or similar technology, the Company's business, financial condition
and results of operations could be materially adversely affected. In addition,
the Company may initiate claims or litigation against third parties for
infringement of the Company's proprietary rights or to establish the validity
of the Company's proprietary rights. Any such claims could be time consuming,
result in costly litigation, or lead the Company to enter into royalty or
licensing agreements rather than litigating such claims on their merits.
Moreover, an adverse outcome in litigation or similar adversarial proceedings
could subject the Company to significant liabilities to third parties, require
expenditure of significant resources to develop non-infringing technology,
require disputed rights to be licensed from others or require the Company to
cease the marketing or use of certain products, any of which could have a
material adverse effect on the Company's business, financial condition and
results of operations.

43
<PAGE>

EMPLOYEES

As of June 30, 1996, the Company and its subsidiaries employed a total of
175 persons, of which 64 are in sales and marketing, 60 are in research and
development and quality assurance, 25 are in customer support and consulting,
and 26 are in finance and administration. Interlink employs 97 persons in the
United States, 46 persons in Canada, and 32 persons in Europe. The Company's
continued success will depend on its ability to attract and retain key
employees. No employees are represented by a labor union, and the Company
considers its employee relations to be good.

FACILITIES

The Company is headquartered in a 24,000 square foot facility in Fremont,
California. The Fremont facility houses the corporate functions, marketing,
research and development, customer support and finance and administration.
Interlink occupies this space under a lease agreement that expires on December
31, 2000. The Company has a research and development center in Columbia,
Maryland where the TCPaccess product line is developed, and in Calgary,
Alberta, Canada where the HARBOR products are developed and supported. The
Company leases office space in ten locations in the United States and Europe
for use by its regional sales and support staff. The Company believes that its
facilities are adequate to meet its requirements through the expiration of its
leases.

LEGAL DISPUTE

The Company and the Company's subsidiary in France are involved in a
commercial dispute with Selesta, a former Italian distributor of the Company's
TCPaccess products. Selesta alleged in a letter sent to the Company that the
Company had breached and unlawfully terminated the agreement pursuant to which
Selesta was appointed a distributor of the Company's products in Italy and
asserted other related claims against the Company. The letter demanded
Selesta's reinstatement as a distributor, the execution of a written
distribution agreement setting forth the distribution arrangements between the
parties, and compensation in an unspecified amount to be paid to Selesta for
the harm that it has suffered. The Company's Canadian subsidiary, New Era, has
also previously used Selesta as a distributor of the HARBOR products in Italy
pursuant to a separate agreement. No legal claim has been filed nor has
arbitration been invoked by Selesta regarding this matter. Should Selesta
initiate legal proceedings and prevail on such claims, the Company's business,
financial condition and results of operations could be materially adversely
affected. See "Risk Factors--Legal Dispute."

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<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information regarding the executive
officers and directors of the Company as of June 30, 1996:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Charles W. Jepson....... 50 President, Chief Executive Officer and Director
Augustus J. Berkeley.... 50 Vice President of Worldwide Sales
Barbara A. Booth........ 41 Vice President of Research & Development and
Customer Support
D. Benedict Dulley...... 52 Vice President of the HARBOR Division and Director
Donald R. Gammon........ 50 Vice President of Marketing
Gloria M. Purdy......... 48 Chief Financial Officer and Secretary
Thomas H. Bredt (1)..... 55 Chairman of the Board of Directors
Ronald W. Braniff (1)(2) 60 Director
Andrew I. Fillat (2).... 48 Director
</TABLE>
- --------
(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

Charles W. Jepson has served as President, Chief Executive Officer and a
member of the Board of Directors since May 1992. Prior to joining Interlink,
he served as President and Chief Executive Officer for Touch Communications, a
networking software company, from April 1991 to January 1992. He holds an
M.B.A. from the University of California at Berkeley and a B.A. in Economics
from San Jose State University.

Augustus J. Berkeley has served as Vice President of North American Sales
from January 1995 to December 1995 and has served as Vice President of
Worldwide Sales from January 1996 to the present. From March 1993 to January
1995, he served as Vice President of Sales and Marketing at CRAY Research
Superserver Inc., a computer systems company. From May 1990 to January 1993,
Mr. Berkeley served as Vice President of Marketing at Sequoia Systems, Inc. a
computer systems company. Mr. Berkeley holds a B.S. in Economics and Finance
from University of Southwestern Louisiana.

Barbara A. Booth served as Vice President of Research and Development from
December 1992 to October 1994 and has served as Vice President of Research and
Development and Customer Support from February 1996 to the present. From
September 1995 to February 1996, Ms. Booth was a business development
consultant for Inter-Island Systems Development & Integration. Ms. Booth co-
founded and served as Vice President of Technology for Viewpoint System
Software, Inc., a client/server tools company, from June 1988 until September
1992. Ms. Booth holds a B.A. in Mathematics from the University of California
at Berkeley.

D. Benedict Dulley has served as Vice President of the HARBOR Division since
the acquisition of New Era in December 1995 and as a member of the Board of
Directors since January 1996. From August 1988 to December 1995, he served as
President and Chief Executive Officer of New Era Systems Services, Ltd., now a
wholly-owned subsidiary of the Company. Mr. Dulley holds a B.S. in Mathematics
from the University of Nottingham in the United Kingdom.

Donald R. Gammon has been Vice President of Marketing since July 1994. He
also served as acting Vice President of Research and Development from April
1995 to January 1996. From December 1992 to June 1994, Mr. Gammon was the
owner of Gammon & Co., a consulting company specializing in marketing strategy
and market development. From May 1991 to December 1992, he served as Vice
President of Sales and Marketing of Structural Research and Analysis
Corporation, an analysis software company. Mr. Gammon holds a B.A. in
Marketing Management from Oklahoma State University.

45
<PAGE>

Gloria M. Purdy has served as Chief Financial Officer and Secretary from
January 1996 to the present. She had also served as Chief Financial Officer of
the Company from June 1992 to October 1992 and from February 1993 to May 1994.
She also served as Vice President of International Operations from February
1994 to September 1995 and Vice President of Business Development from October
1995 to January 1996. She served as Chief Financial Officer for Viewpoint
System Software, Inc., a client/server tools company, from 1990 to 1992. She
holds a B.S. in Accounting from Golden Gate University.

Thomas H. Bredt has served as a member of the Board of Directors since March
1990 and as Chairman of the Board of Directors since May 1992. Mr. Bredt has
been a general partner with Menlo Ventures, a venture capital firm, from April
1986 to the present. He also serves as a director and member of the
Compensation and Audit Committees of Red Brick Systems, a data warehousing
company, and as a director and member of the Compensation Committee of
Clarify, Inc., an applications software company. Mr. Bredt holds a Ph.D. in
Computer Sciences from Stanford University, an M.E.E. from New York University
and a B.S. in Engineering from the University of Michigan.

Ronald W. Braniff has served as a member of the Board of Directors since
March 1993. Mr. Braniff is a private investor and software business
consultant. He also serves as a director of Apsylog Inc., an applications
software company, Consensys Software Inc., an applications software company,
and DB Star Inc., a systems development tools software company. Mr. Braniff
served as President and Chief Executive Officer of ASK Computer Systems, a
computer systems company, from 1984 to 1989. From 1966 to 1984 he was employed
by Tymshare, a networking company, and held the position of Vice President and
General Manager of the Computer Systems Division. Mr. Braniff holds a B.S.M.E.
from Oregon State University.

Andrew I. Fillat has served as a member of the Board of Directors since
January 1994. From April 1989 to the present, Mr. Fillat has been a partner
with Advent International, Corp., a management company for several venture
capital and private equity funds ("Advent") and from June 1995 to the present,
he has served as Senior Vice President with Advent. He serves as a director
and member of the Compensation and Audit Committees of Advanced Radio Telecom,
a wireless services provider company, and Lightbridge, Inc., a services and
software provider to wireless carriers. Mr. Fillat holds a B.S. and M.S. in
Electrical Engineering and Computer Science from the Massachusetts Institute
of Technology and an M.B.A. from Harvard Graduate School of Business
Administration.

All directors hold office until the next annual meeting of stockholders or
until their successors have been elected and qualified. Officers serve at the
discretion of the Board of Directors. There are no family relationships
between any of the directors or executive officers of the Company.

The Company's Board of Directors has established a Compensation Committee
and an Audit Committee. The Compensation Committee establishes salaries,
incentives and other forms of compensation for directors, officers and other
employees of the Company, and administers various incentive compensation and
benefit plans. The Audit Committee oversees actions taken by the Company's
independent accountants and reviews the Company's internal financial controls.

DIRECTOR COMPENSATION

Members of the Company's Board of Directors do not receive compensation for
their services as directors. The Company's 1996 Director Option Plan
("Director Plan") provides that options will be granted to non-employee
directors of the Company pursuant to an automatic nondiscretionary grant
mechanism. On the effective date of the Director Plan or when the director
becomes an outside director, each of the non-employee directors will
automatically be granted an option to purchase 15,000 shares of the Company's
Common Stock at an exercise price equal to the initial public offering price.
In addition, upon joining the Board of Directors, each new non-employee
director will automatically be granted an option to purchase 15,000 shares of
Common Stock and each non-employee director will subsequently be granted an
additional option to purchase 3,750 shares of Common Stock, each such option
to be granted at the fair market value of the Common Stock on the date of
grant. In addition, the Company reimburses the reasonable travel expenses of
the directors. See "--Stock Plans--Director Option Plan."

46
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is responsible for determining salaries,
incentives and other forms of compensation for directors, officers and other
employees of the Company and administers various incentive compensation and
benefit plans. The Compensation Committee consists of Mr. Braniff and Mr.
Fillat. Mr. Jepson, President, Chief Executive Officer and a director of the
Company, participates in all discussions and decisions regarding salaries and
incentive compensation for all employees and consultants of the Company,
except that Mr. Jepson is excluded from discussions regarding his own salary
and incentive compensation.

EXECUTIVE COMPENSATION

The following table sets forth all compensation for services rendered in all
capacities during the fiscal year ended June 30, 1996 awarded to, earned by,
or paid to (i) the Company's Chief Executive Officer and (ii) the Company's
other most highly compensated officers whose salary and bonus for such fiscal
year exceeded $100,000 and who were serving as an officer of the Company as of
the end of such fiscal year (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION (1)
------------------------------------- SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION SALARY ($) BONUS ($) COMPENSATION (2) OPTIONS (#) COMPENSATION (3)
- ------------------ ---------- --------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Charles W. Jepson....... $190,008 $ 95,300 -- -- $1,339
President and Chief
Executive Officer
Augustus J. Berkeley.... 100,008 205,648 -- -- 1,629
Vice President of
Worldwide Sales
Donald R. Gammon........ 150,000 76,000 -- -- 1,233
Vice President of
Marketing
Gloria M. Purdy......... 150,000 60,000 -- -- 3,759
Chief Financial Officer
and Secretary
</TABLE>
- --------
(1) Includes all compensation earned in the fiscal year ended June 30, 1996.

(2) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted in those cases where the aggregate amount of such
perquisites and other personal benefits constituted less than the lesser
of $50,000 or 10% of the total annual salary and bonus for the Named
Executive Officer for such year.

(3) Includes premiums paid by the Company on life insurance policies where the
Company was not the beneficiary.

47
<PAGE>

OPTION GRANTS IN FISCAL YEAR 1996

The following table sets forth information regarding the grant of stock
options to each of the Named Executive Officers during the fiscal year ended
June 30, 1996.
<TABLE>
<CAPTION>

POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF STOCK
--------------------------------------------------- PRICE
NUMBER OF PERCENTAGE OF APPRECIATION
SECURITIES TOTAL OPTIONS FOR OPTION TERM
NAME UNDERLYING GRANTED TO (1)
- ---- OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION ---------------
GRANTED (2) FISCAL 1996 PER SHARE (3) DATE 5% 10%
----------- ------------- -------------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Jepson....... 29,000 8.2 $1.10 9/19/02 $12,986 $30,264
Augustus J. Berkeley.... 30,000 8.4 1.10 9/19/02 13,434 31,308
Donald R. Gammon........ 37,500 10.6 1.10 9/19/02 16,793 39,135
Gloria M. Purdy......... 15,000 4.2 1.10 9/19/02 6,717 15,654
</TABLE>
- --------
(1) This column shows the hypothetical gains or "option spreads" of the
options granted based on assumed annual compound stock appreciation rates
of 5% and 10% over the full seven-year term of the options. The 5% and 10%
assumed rates of appreciation are mandated by the rules of the Securities
and Exchange Commission and do not represent the Company's estimate or
projection of future Common Stock prices. The gains shown are net of the
option exercise price, but do not include deductions for taxes or other
expenses associated with the exercise of the option or the sale of the
underlying shares. The actual gains, if any, on the exercises of stock
options will depend on the future performance of the Common Stock, the
option holder's continued employment through the option period, and the
date on which the options are exercised.

(2) Options vest as to 9/48th of the option shares after nine months from the
vesting commencement date and as to 1/48th of the option shares each month
thereafter, with full vesting occurring on the fourth anniversary of the
vesting commencement date. The Board of Directors determined the market
value of the Common Stock based on various factors, including the illiquid
nature of an investment in the Common Stock, the Company's historical
financial performance, the preferences (including liquidation) of the
outstanding Series 1 Preferred Stock, the Company's future prospects and
the prices paid for securities of the Company in arm's length transactions
between third parties.

(3) Options were granted at an exercise price equal to the fair market value
of the Company's Common Stock, as determined by the Board of Directors on
the date of grant. Exercise price may be paid in cash, promissory note, by
delivery of already-owned shares subject to certain conditions, or
pursuant to a cashless exercise procedure under which the optionee
provides irrevocable instructions to a brokerage firm to sell the
purchased shares and to remit to the Company, out of the sale proceeds, an
amount equal to the exercise price plus all applicable withholding taxes.

48
<PAGE>

AGGREGATE OPTION EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

No Named Executive Officer exercised stock options during fiscal 1996. The
following table sets forth certain information regarding stock options held as
of June 30, 1996 by the Named Executive Officers.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
JUNE 30, 1996 JUNE 30, 1996 (1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Charles W. Jepson.......... 215,155 70,345 $2,830,599 $915,051
Augustus J. Berkeley....... 38,228 36,772 493,141 474,359
Donald R. Gammon........... 41,797 33,203 539,181 428,319
Gloria M. Purdy............ 77,687 29,813 1,013,933 387,317
</TABLE>
- --------
(1) There was no public trading market for the Common Stock as of June 30,
1996. Accordingly, these values have been calculated on the basis of an
assumed initial public offering of $14.00 per share, less the applicable
option exercise price.

STOCK PLANS

1992 Stock Option Plan. The Company's 1992 Stock Option Plan (as amended,
the "1992 Plan") was adopted by the Board of Directors in June 1992, approved
by the Company's stockholders in July 1992 and amended in June 1996. In June
1996 and July 1996, the Board of Directors approved an increase in the number
of shares of Common Stock reserved under the 1992 Plan by 1,000,000 shares to
2,105,000 shares, subject to stockholder approval. The 1992 Plan provides for
grants of incentive stock options, restricted stock and stock purchase rights
to employees (including officers and employee directors) and nonstatutory
stock options to employees (including officers and employee directors) and
consultants of the Company. The purpose of the 1992 Plan is to attract and
retain the best available personnel to the Company and to encourage stock
ownership by employees, officers and consultants of the Company to give them a
greater personal stake in the success of the Company. The 1992 Plan is
presently being administered by the Board of Directors, which determines
optionees and the terms of options granted, including the exercise price,
number of shares subject to the option and the exercisability thereof.

The terms of options granted under the Option Plan generally may not exceed
ten years. However, the term of all incentive stock options and nonstatutory
stock options granted to an optionee who, at the time of grant, owns stock
representing more than 10% of the Company's outstanding capital stock, may not
exceed five years. The vesting of all stock option grants is determined by the
Board of Directors. Generally options granted under the 1992 Plan vest and
become exercisable starting nine months after the date of grant, with 9/48th
of the shares subject to option becoming exercisable at that time and an
additional 1/48th of such shares subject to the option becoming exercisable
each month thereafter. No option may be transferred by the optionee other than
by will or the laws of descent or distribution, and each option may be
exercised, during the lifetime of the optionee, only by such optionee. An
optionee whose relationship with the Company or any related corporation ceases
for any reason (other than by death or permanent and total disability) may
exercise options in the 30-day period following such cessation (unless such
options terminate or expire sooner by their terms) or in such longer period as
is determined by the Board of Directors. In the event of a merger of the
Company with or into another corporation, all outstanding options may either
be assumed or an equivalent option may be substituted by the surviving entity
or, if such options are not assumed or substituted, such options shall
terminate as of the date of closing of the merger. The exercise price of
incentive stock options granted under the 1992 Plan must be at least equal to
the fair market value of the shares on the date of grant. The exercise price
of nonstatutory stock options granted under the 1992 Plan is determined by the
administrator. With respect to any participant who owns stock possessing more
than 10% of the voting rights of the Company's outstanding capital stock, the
exercise price of any incentive stock option or any nonstatutory stock option
granted must equal at least 110% of the fair market value on the grant date.
The consideration for exercising any incentive stock option or any
nonstatutory stock

49
<PAGE>

option may consist of cash, check, promissory note, delivery of already-owned
shares of the Company's Common Stock subject to certain conditions, delivery
of a properly executed exercise notice together with irrevocable instructions
to a broker to promptly deliver to the Company the amount of sale or loan
proceeds required to pay the exercise price, a reduction in the amount of any
Company liability to an optionee, or any combination of the foregoing methods
of payment or such other consideration or method of payment to the extent
permitted under applicable law. No incentive stock options may be granted to a
participant, which, when aggregated with all other incentive stock options
granted to such participant, would have an aggregate fair market value in
excess of $100,000 becoming exercisable in any calendar year.

As of June 30, 1996, 66,035 shares of Common Stock had been issued upon the
exercise of options granted under the 1992 Plan, options to purchase 1,018,503
shares of Common Stock at a weighted average exercise price of $1.82 share
were outstanding and 870,463 shares remained available for future option
grants. The 1992 Plan will terminate in June 2002, unless sooner terminated by
the Board of Directors.

Employee Stock Purchase Plan. The Company's 1996 Employee Stock Purchase
Plan (the "Purchase Plan") was adopted by the Board of Directors in June 1996,
subject to stockholder approval. A total of 350,000 shares of Common Stock has
been reserved for issuance under the Purchase Plan. The Purchase Plan, which
is intended to qualify under Section 423 of the Internal Revenue Code of 1986,
as amended, is administered by the Board of Directors or by a committee
appointed by the Board. Employees (including officers and employee directors
of the Company) are eligible to participate if they are customarily employed
for at least 20 hours per week and for more than five months in any calendar
year. The Purchase Plan permits eligible employees to purchase Common Stock
through payroll deductions, which may not exceed 15% of an employee's
compensation; provided that a participant may not purchase more than $12,500
worth of shares of the Company's Common Stock during each purchase period. The
Purchase Plan will be implemented in a series of overlapping purchase periods,
each to be of approximately six months duration. The initial purchase period
under the Purchase Plan will begin on the effective date of this offering and
subsequent purchase periods will begin on the first trading day on or after
November 1 and May 1 of each year. Each participant will be granted an option
on the first day of the purchase period and such option will be automatically
exercised on the last date of each semi-annual period throughout the purchase
period. If the fair market value of the Common Stock on any purchase date is
lower than such fair market value on the start date of that purchase period,
then all participants in that purchase period will be automatically withdrawn
from such purchase period and reenrolled in the immediately following purchase
period. The purchase price of the Common Stock under the Purchase Plan will be
equal to 85% of the lesser of the fair market value per share of Common Stock
on the start date of the purchase period or on the date on which the option is
exercised. Employees may end their participation in a purchase period at any
time during that period, and participation ends automatically on termination
of employment with the Company. The Purchase Plan will terminate in June 2006,
unless sooner terminated by the Board of Directors.

Director Option Plan. The Company's 1996 Director Option Plan (the "Director
Plan") was adopted by the Board of Directors in June 1996, subject to
stockholder approval. A total of 150,000 shares of Common Stock are reserved
for issuance under the Director Plan. The option grants under the Director
Plan are automatic and non-discretionary, and the exercise price of the
options is 100% of the fair market value of the Common Stock on the grant
date. The Director Plan provides for an initial grant of options to purchase
15,000 shares of Common Stock to each non-employee director of the Company (an
"Outside Director") upon the later of the effective date of the Director Plan
or when the director becomes an outside director after the effective date of
this offering. Each new non-employee director will automatically be granted an
option to purchase 15,000 shares of Common Stock upon joining the Board of
Directors. Subsequently, each Outside Director will automatically be granted
an additional option to purchase 3,750 shares of Common Stock at the next
meeting of the Board of Directors following the annual meeting of stockholders
in each year beginning with the 1997 annual meeting of stockholders, if on
such date, such Outside Director has served on the Board of Directors for at
least six months. The term of such options is ten years. The initial option
grant of 15,000 shares to an Outside Director shall vest

50
<PAGE>

at a rate of 1/48th of the shares per month following the date of grant and
the subsequent option grant of 3,750 shares shall vest at the end of four
years. The Director Plan will terminate in June 2006, unless sooner terminated
by the Board of Directors.

401(k) PLAN

Effective in September 1990, the Company adopted the 401(k) Profit Sharing
Plan (the "401(k) Plan") that covers all eligible employees of the Company. An
eligible employee may elect to defer, in the form of contributions to the
401(k) Plan, up to 15% of the total compensation that would otherwise be paid
to the employee, not to exceed approximately $9,500 per year (adjusted for
cost-of-living increases). Employee contributions are invested in selected
equity mutual funds, a guaranteed interest contract account or a money market
fund according to the directions of the employees. The contributions are fully
vested and nonforfeitable at all times. The 401(k) Plan provides for employer
contributions as determined by the Board of Directors. The Company has not
made any contributions through fiscal 1996.

EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS

Messrs. Jepson, Gammon, Berkeley, Ms. Purdy and Ms. Booth each have entered
into letter agreements with the Company which provide for severance payments
if they are terminated without cause. Messrs. Jepson, Gammon and Ms. Purdy
will be entitled to severance payments equal to six months salary, and Mr.
Berkeley and Ms. Booth will be entitled to severance payments equal to three
months salary. All of the Named Executive Officers' employment with the
Company is terminable at will.

In connection with an acquisition of the Company by merger or asset sale,
each outstanding option held by the Named Executive Officers under the 1992
Stock Option Plan will automatically accelerate in full and all unvested
shares of Common Stock held by such individuals subject to direct issuances
made under the 1992 Stock Option Plan will immediately vest in full, except to
the extent such options are to be assumed by, and the Company's repurchase
rights with respect to these shares are to be assigned to, the successor
corporation.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS

Prior to the closing of this offering, the Company will reincorporate in
Delaware. In conjunction with such reincorporation, the Company will adopt
provisions in its Certificate of Incorporation that eliminate to the fullest
extent permissible under Delaware law the liability of its directors to the
Company for monetary damages. Such limitation of liability does not affect the
availability of equitable remedies such as injunctive relief or rescission, or
the liability of its officers and directors pursuant to federal securities
laws. The Company's Bylaws provide that the Company shall indemnify its
directors and officers to the fullest extent permitted by Delaware law,
including in circumstances in which indemnification is otherwise discretionary
under Delaware law. The Company has entered into indemnification agreements
with its officers and directors containing provisions which may require the
Company, among other things, to indemnify the officers and directors against
certain liabilities that may arise by reason of their status or service as
directors or officers (other than liabilities arising from willful misconduct
of a culpable nature), and to advance their expenses incurred as a result of
any proceeding against them as to which they could be indemnified.

At the present time, there is no pending litigation or proceeding involving
a director, officer, employee or other agent of the Company in which
indemnification would be required or permitted. The Company is not aware of
any threatened litigation or proceeding which may result in a claim for such
indemnification.

51
<PAGE>

CERTAIN TRANSACTIONS

On December 29, 1995, the Company acquired New Era ("New Era Acquisition").
In connection with the New Era Acquisition, the Company, through a wholly-
owned Canadian acquisition subsidiary, acquired the outstanding New Era Common
Stock, Class B Preferred Stock and outstanding options. Immediately prior to
the closing of the New Era Acquisition, Mr. Dulley beneficially controlled
26,616 shares of New Era Common Stock and an option to acquire 8,230 shares of
New Era Common Stock. At the closing of the New Era Acquisition, Mr. Dulley
and his relatives collectively received $1,700,387 from the Company as
consideration for their New Era Common Stock. Pursuant to the New Era
Acquisition, Mr. Dulley and his relatives received warrants to purchase an
aggregate of 40,720 shares of the Company's Common Stock.

In January and March 1994, the Company sold 1,229,714 shares of Series 1
Preferred Stock to certain individuals and entities in a private placement
transaction at $5.50 per share. The holders of the Series 1 Preferred Stock
are entitled to certain registration rights. See "Descriptions of Capital
Stock--Registration Rights." The purchasers of the Series 1 Preferred Stock
included, among others, the following entities affiliated with directors and
underwriters of the Company's proposed initial public offering:

<TABLE>
<CAPTION>
NAME SHARES
---- ---------
<S> <C>
Entities affiliated with Menlo Ventures............................ 183,531
Entities affiliated with Advent International...................... 1,000,001
Punk, Ziegel & Knoell, L.P......................................... 11,835
</TABLE>

In December 1993, the Company granted Menlo Ventures IV, L.P. and Menlo
Evergreen V, L.P. (collectively the "Menlo Entities") warrants to purchase an
aggregate of 31,668 shares of the Company's Common Stock (collectively, the
"Menlo Warrants"). The Menlo Warrants resulted from bridge financing from the
Menlo Entities of $1,000,000 to the Company. The Menlo Warrants, which each
have identical terms, expire on the closing of an initial public offering of
shares of the Company's Common Stock with gross proceeds to the Company of at
least $10,000,000. Provided no initial public offering occurs, the Menlo
Warrants expire on December 15, 1998. The exercise price for the Menlo
Warrants is $0.90 per share.

The Company believes that the transactions set forth above were made on
terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions, including loans, between
the Company and its officers, directors, principal stockholders and their
affiliates will be approved by a majority of the Board of Directors, including
a majority of the independent and disinterested outside directors, and will
continue to be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties.

52
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of June 30, 1996, and as adjusted
to reflect the sale of the shares of Common Stock offered hereby by (i) each
person known by the Company to be the beneficial owner of more than 5% of the
Company's Common Stock, (ii) each of the Company's directors, (iii) each of
the Named Executive Officers (See "Management--Executive Compensation"), (iv)
all executive officers and directors as a group and (v) each Selling
Stockholder.

<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY NUMBER BENEFICIALLY
OWNED PRIOR TO OF OWNED AFTER THE
THE OFFERING (1) SHARES OFFERING (1)
----------------- BEING ---------------------
NAME OF STOCKHOLDER NUMBER PERCENT SOLD NUMBER PERCENT
- ------------------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
Entities affiliated with Menlo
Ventures (2).................. 1,218,476 32.8% -- 1,218,476 20.4%
3000 Sand Hill Road
Building 4, Suite 100
Menlo Park, CA 94025
Entities affiliated with Advent
International Corporation (3). 1,000,001 26.9 -- 1,000,001 16.7
101 Federal Street
Boston, MA 02110
Charles W. Jepson (4).......... 226,469 5.7 -- 226,469 3.6
Gloria M. Purdy (5)............ 81,542 2.1 -- 81,542 1.3
D. Benedict Dulley (6)......... 44,581 1.2 -- 44,581 *
Donald R. Gammon (7)........... 44,141 1.2 -- 44,141 *
Augustus J. Berkeley (8)....... 40,523 1.1 -- 40,523 *
Ronald W. Braniff (9).......... 16,334 * -- 16,334 *
Thomas H. Bredt (10)........... 1,218,476 32.8 -- 1,218,476 20.4
Andrew I. Fillat (11).......... 1,000,001 26.9 -- 1,000,001 16.7
All directors and executive
officers as a group
(9 persons) (12).............. 2,692,067 64.6 -- 2,692,067 41.8
Selling Stockholders as a
group......................... 1,422,534 38.3 500,000 896,942(13) 15.0
</TABLE>
- --------
* Less than 1% of the outstanding shares.

(1) Applicable percentage of ownership is based on 3,712,852 shares of Common
Stock prior to the offering and 5,987,019 shares of Common Stock after
the offering and a remainder of 74,167 shares following the net exercise
and sale of warrants representing 76,999 shares of Common Stock
outstanding as of June 30, 1996, together with applicable options and
warrants for such stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to securities,
subject to community property laws, where applicable. Shares of Common
Stock subject to options that are presently exercisable or exercisable
within 60 days of June 30, 1996 are deemed to be beneficially owned by
the person holding such options for the purpose of computing the
percentage of ownership of such person but are not treated as outstanding
for the purpose of computing the percentage of any other person. Assumes
over-allotment is not exercised.

(2) Includes 501,638 shares of Common Stock, a warrant to purchase 15,834
shares of Common Stock, and 91,766 shares of Preferred Stock held by
Menlo Ventures IV, L.P. and 501,638 shares of Common Stock, a warrant to
purchase 15,834 shares of Common Stock, and 91,766 shares of Preferred
stock held by Menlo Evergreen V, L.P. (collectively, "Menlo Ventures").

(3) Includes 81,818 shares of Preferred Stock held by Adtel L.P., 45,454 held
by Adventact L.P., 1,818 held by Advent International Investors II L.P.,
36,364 held by Adwest L.P., 26,385 held by Austin Venture Capital
Limited, 26,385 held by European Venture Network L.P., 682,054 held by
Global Private Equity II, L.P., and 99,723 held by Golden Gate
Development and Investment L.P. (collectively, "Advent International
Corporation").

53
<PAGE>

(4) Includes 226,469 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of June 30, 1996.

(5) Includes 81,542 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of June 30, 1996.

(6) Includes warrant held by Mr. Dulley and family members exercisable for
44,581 shares of the Company's Common Stock.

(7) Includes 44,141 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of June 30, 1996.

(8) Includes 40,523 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of June 30, 1996.

(9) Includes 16,334 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of June 30, 1996.

(10) Includes 1,218,476 shares owned by entities affiliated with Menlo
Ventures, of which Mr. Bredt is a general partner. Mr. Bredt disclaims
beneficial ownership of all such shares held by those entities, except to
the extent of his pecuniary interest therein arising from his general
partnership interests therein.

(11) Includes 1,000,001 shares owned by entities affiliated with Advent
International Corporation, of which Mr. Fillat is a general partner. Mr.
Fillat disclaims beneficial ownership of all such shares held by those
entities, except to the extent of his pecuniary interest therein arising
from his general partnership interests therein.

(12) Includes 453,590 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of June 30, 1996.

(13) Reflects the net exercise of warrants held by certain selling
stockholders at the time of the offering.

54
<PAGE>

DESCRIPTION OF CAPITAL STOCK

Upon the completion of this offering, the authorized capital stock of the
Company will consist of 25,000,000 shares of Common Stock, $0.001 par value,
and 5,000,000 shares of undesignated Preferred Stock, $0.001 par value.

COMMON STOCK

As of June 30, 1996, there were 2,483,138 shares of Common Stock outstanding
held of record by approximately 247 stockholders. As of June 30, 1996, options
to purchase an aggregate of 1,018,503 shares of Common Stock were also
outstanding. See "Management--Stock Plans."

The holders of Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders and have cumulative voting rights with
respect to the election of directors. The holders of Common Stock are entitled
to receive such dividends, if any, as may be declared from time to time by the
Board of Directors in its discretion from funds legally available therefor.
Upon liquidation or dissolution of the Company, the remainder of the assets of
the Company will be distributed ratably among the holders of Common Stock. The
Common Stock has no preemptive or other subscription rights and there are no
conversion rights or redemption or sinking fund provisions with respect to
such shares. All of the outstanding shares of Common Stock are, and the shares
to be sold in this offering will be, fully paid and nonassessable.

WARRANTS

As of June 30, 1996, there were outstanding warrants to purchase an
aggregate of 66,667 shares of Common Stock at an exercise price of $0.90 per
share, which expire December 1998, 75,000 shares of Common Stock at an
exercise price of $0.90 per share, which expire January 1999, an aggregate of
350,000 shares of Common Stock at an exercise price of $3.20 per share, which
expire December 2000, an aggregate of 75,000 shares of Common Stock at an
exercise price of $3.20 per share, which expire April 2003 (which will be
reduced to 62,500 upon the closing of this offering), an aggregate of 6,250
shares of Common Stock at an exercise price of $12.80 per share, which expire
April 2003 and an aggregate of 15,000 shares of Preferred Stock at an exercise
price of $5.50 per share, which expire December 1998.

PREFERRED STOCK

Effective upon the closing of this offering, the Company will be authorized
to issue 5,000,000 shares of undesignated Preferred Stock. The Board of
Directors has the authority to issue the Preferred Stock in one or more series
and to fix the price, rights, preferences, privileges and restrictions
thereof, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption prices, liquidation preferences and
the number of shares constituting a series or the designation of such series,
without any further vote or action by the Company's stockholders. The issuance
of Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
delaying, deferring or preventing a change in control of the Company without
further action by the stockholders and may adversely affect the market price
of, and the voting and other rights of, the holders of Common Stock. The
Company has no current plans to issue any shares of Preferred Stock.

REGISTRATION RIGHTS

Following the closing of this offering, the holders of approximately
3,391,695 issued or issuable shares of Common Stock (the "Registrable
Securities"), of which 399,644 are issuable upon exercise of warrants, will be
entitled to certain rights with respect to the registration of such shares of
Common Stock under the Securities Act. Under an agreement among the Company
and holders of Registrable Securities, if the Company proposed to register any
of its Common Stock under the Securities Act, certain holders of Registrable
Securities are entitled to notice of such registration and to include their
Registrable Securities therein; provided, among other conditions, that the
underwriters have the right to limit the number of shares included in any such
registration.

55
<PAGE>

Beginning 180 days after the closing of this offering, the holders of at least
twenty-five percent (25%) of the Registrable Securities have the right to
require the Company, on not more than two occasions, to file a registration
statement under the Securities Act in order to register all or any part of
their Registrable Securities. The Company may, in certain circumstances, defer
such registration and the underwriters have the right, subject to certain
limitations, to limit the number of shares included in such registrations.
Further, the holders of Registrable Securities may require the Company to
register all or any portion of their Registrable Securities on Form S-3, when
such form becomes available to the Company, subject to certain conditions and
limitations.

CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS

Certain provisions of the Company's Certificate of Incorporation and Bylaws
may have the effect of preventing, discouraging or delaying a change in the
control of the Company and may maintain the incumbency of the Board of
Directors and management. The authorization of undesignated Preferred Stock
makes it possible for the Board of Directors to issue Preferred Stock with
voting or other rights or preferences that could impede the success of any
attempt to change control of the Company. In addition, the Company's Bylaws
limit the ability of stockholders of the Company to raise matters at a meeting
of stockholders without giving advance notice.

The Certificate of Incorporation provides that stockholder action can be
taken only at an annual or special meeting of stockholders and cannot be taken
by written consent in lieu of a meeting. The Certificate of Incorporation and
the Bylaws provide that, except as otherwise required by law, special meetings
of the stockholders can only be called pursuant to a resolution adopted by a
majority of the Board of Directors, by the Chief Executive Officer of the
Company, or by stockholders holding shares in the aggregate entitled to cast
not less than 10% of the votes at that meeting.

The Bylaws establish an advance notice procedure for stockholder proposal to
be brought before an annual meeting of stockholders of the Company, including
proposed nominations of persons for election to the Board. Stockholders at an
annual meeting may only consider proposals or nominations specified in the
notice of meeting or brought before the meeting by or at the direction of the
Board or by a stockholder who was a stockholder of record on the record date
for the meeting, who is entitled to vote at the meeting and who has given to
the Company's Secretary timely written notice, in proper form, of the
stockholder's intention to bring that business before the meeting. Although
the Bylaws do not give the Board the power to approve or disapprove
stockholder nominations of candidates or proposals regarding other business to
be conducted at a special or annual meeting, the Bylaws may have the effect of
precluding the conduct of certain business at a meeting if the proper
procedures are not followed or may discourage or defer a potential acquiror
from conducting a solicitation of proxies to elect its own slate of directors
or otherwise attempting to obtain control of the Company.

The Certificate of Incorporation provides that the affirmative vote of
holders of at least 66 2/3% of the total votes eligible to participate in the
election of directors is required to amend, alter, change or repeal certain of
their provisions. This requirement of a supermajority vote to approve
amendments to the Certificate of Incorporation and Bylaws could enable a
minority of the Company's stockholders to exercise veto power over any such
amendments.

CERTAIN PROVISIONS OF DELAWARE LAW

Following the consummation of the offering, the Company will be subject to
the "Business Combination" provisions of the Delaware General Corporation Law.
In general, such provisions prohibit a publicly held Delaware corporation from
engaging in various "business combination" transactions with any "interested
stockholder" for a period of three years after the date of the transaction
which the person became an "interested stockholder," unless (i) the
transaction is approved by the Board of Directors prior to the date the
interested stockholder obtained such status, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an "interested
stockholder," the "interested stockholder" owned at least 85% of the voting
stock of the corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares outstanding those
shares owned by (a) persons who are directors and also officers and

56
<PAGE>

(b) employee stock plans in which employee participants do not have the right
to determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer, or (iii) on or subsequent to such date
the "business combination" is approved by the board of directors and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least 66 2/3% of the outstanding voting stock which is not owned by
the "interested stockholder." A "business combination" is defined to include
mergers, asset sales and other transactions resulting in a financial benefit
to a stockholder. In general, an "interested stockholder" is a person who,
together with affiliates and associates, owns (or within three years, did own)
15% or more of a corporation's voting stock. The statute could prohibit or
delay mergers or other takeover or change in control attempts with respect to
the Company and, accordingly, may discourage attempts to acquire the Company.

TRANSFER AGENT

The transfer agent for the Common Stock is The First National Bank of
Boston.

57
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have outstanding
5,987,019 shares of Common Stock (assuming net exercise of certain warrants
and no exercise of options after June 30, 1996). Of these shares, the
2,200,000 shares sold in this Offering will be freely tradeable without
restriction under the Securities Act, unless purchased by "affiliates" of the
Company.

In addition to the 2,700,000 shares offered hereby, as of the effective date
of the Registration Statement (the "Effective Date"), 67,487 shares of Common
Stock will become eligible for sale in the public market in reliance on Rule
144(k) under the Securities Act of 1933, as amended (the "Securities Act").
Approximately 3,279,355 shares of Common Stock will become eligible for sale
in the public market, subject to compliance with Rules 144 and 701 under the
Securities Act, when certain 180-day lock-up agreements between the Company
and/or the Representatives and certain stockholders of the Company, including
officers, directors and Selling Stockholders, expire. In addition, holders of
warrants exercisable into an aggregate of 399,644 shares of Common Stock have
entered into 180-day lock-up agreements and no such shares may be sold at
least until 180 days after commencement of this offering upon exercise. Upon
expiration of the lock-up agreements and assuming the warrants are then
exercised for cash, the shares acquired upon exercise of the warrants, in the
absence of registration, may only be publicly resold pursuant to Rule 144.
Furthermore, all of the optionholders are subject to a 180-day lock-up period
pursuant to their option agreements and the holders of 100% of the shares of
Common Stock subject to options have entered into the same 180-day lock-up
agreements as referenced above. Volpe, Welty & Company may, in its sole
discretion, and at any time without notice, release all or any portion of the
securities subject to such lock-up agreements.

In general, under Rule 144 as currently in effect, beginning 90 days after
the Effective Date a person (or persons whose shares are aggregated) who has
beneficially owned Restricted Shares for at least two years, will be entitled
to sell in any three month period a number of shares that does not exceed the
greater of: (i) 1% of the number of shares of Common Stock then outstanding
(approximately 59,870 shares immediately after the offering assuming no
exercise of the Underwriters' over-allotment option) and (ii) the average
weekly trading volume of the Company's Common Stock in the Nasdaq National
Market during the four calendar weeks immediately preceding the date on which
notice of the sale is filed with the Securities and Exchange Commission. Sales
pursuant to Rule 144 are subject to certain requirements relating to manner of
sale, notice and availability of current public information about the Company.
A person (or persons whose shares are aggregated) who is not deemed to have
been an affiliate of the Company at any time during the 90 days immediately
preceding the sale and who has beneficially owned Restricted Shares for at
least three years is entitled to sell such shares pursuant to Rule 144(k)
without regard to the limitations and requirements described above.

58
<PAGE>

the prior written consent of Volpe, Welty & Company. The Company has also
agreed not to sell, offer to sell, contract to sell, grant any option to
purchase or otherwise dispose of any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or any rights
to acquire Common Stock for a period of 180 days after the Effective Date
without the prior written consent of Volpe, Welty & Company, subject to
certain limited exceptions including sales of shares under the Benefit Plans.
The lock-up agreements with the Representatives may be released at any time as
to all or any portion of the shares subject to such agreements at the sole
discretion of Volpe, Welty & Company.

Prior to this offering, there has been no prior public market for the Common
Stock and there is no assurance a significant public market for the Common
Stock will develop or be sustained after this offering. Sales of substantial
amounts of Common Stock in the public market could adversely affect the market
price of the Common Stock and could impair the Company's future ability to
raise capital through the sale of its equity securities.

59
<PAGE>

UNDERWRITING

The Underwriters named below, represented by Volpe, Welty & Company and
Punk, Ziegel & Knoell, L.P. (the "Representatives"), have severally agreed,
subject to the terms and conditions of the Underwriting Agreement, to purchase
from the Company and the Selling Stockholders the number of shares of Common
Stock indicated below opposite their respective names below at the initial
public offering price less the underwriting discount set forth on the cover
page of this Prospectus. The Underwriting Agreement provides that the
obligations of the Underwriters are subject to certain conditions precedent,
and that the Underwriters are committed to purchase all of such shares if any
are purchased.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------- ---------
<S> <C>
Volpe, Welty & Company...............................................
Punk, Ziegel & Knoell, L.P. .........................................
---------
Total............................................................ 2,700,000
=========
</TABLE>

The Representatives have advised the Company that the Underwriters initially
propose to offer the shares of Common Stock to the public on the terms set
forth on the cover page of this Prospectus. The Underwriters may allow to
selected dealers a concession of not more than $ per share; and the
Underwriters may allow, and such dealers may reallow, a concession of not more
than $ per share to certain other dealers. After the offering, the
price and concessions and reallowances to dealers may be changed by the
Representatives. The Common Stock is offered subject to receipt and acceptance
by the Underwriters, and to certain other conditions, including the right to
reject orders in whole or in part.

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 405,000 additional shares of Common Stock to cover over-allotments,
if any, at the same price per share as the initial 2,700,000 shares to be
purchased by the Underwriters. To the extent the Underwriters exercise this
option, each of the Underwriters will be committed, subject to certain
conditions, to purchase such additional shares in approximately the same
proportion as set forth in the above table.

The Underwriting Agreement contains covenants of indemnity among the
Underwriters, the Company and the Selling Stockholders against certain civil
liabilities, including liability under the Securities Act.

Certain holders of the outstanding shares of Common Stock of the Company,
including all officers and directors of the Company, have agreed with the
Company and/or the Representatives that until 180 days after the Effective
Date, they will not sell, offer to sell, contract to sell or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to any shares of
Common Stock, any options or warrants to purchase shares of Common Stock, or
any securities convertible or exchangeable for shares of Common Stock owned
directly by such holders or with respect to which they have power of
disposition, without the prior written consent of the Company and/or Volpe,
Welty & Company, as the case may be. The Company has agreed with the
Representatives not to release any holder from such agreements without the
prior written consent of Volpe, Welty & Company. The Company has also agreed
not to sell, offer to sell, contract to sell, grant any option to purchase or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or any rights to acquire
Common Stock for a period of 180 days after the Effective Date without the
prior written consent of Volpe, Welty & Company, subject to certain limited
exceptions. The lock-up agreements may be released at any time as to all or
any portion of the shares subject to such agreements at the sole discretion of
Volpe, Welty & Company.

60
<PAGE>

The Representatives have advised the Company that the Underwriters will not
confirm sales to accounts over which they exercise discretionary authority in
excess of 5% of the number of shares of Common Stock offered hereby.

Prior to the offering, there has been no public market for the Common Stock
of the Company. Consequently, the initial public offering price will be
determined through negotiations among the Company and the Representatives.
Among the factors considered in such negotiations will be prevailing market
conditions, the net revenues and results of operations of the Company in
recent periods, market valuations of publicly traded companies that the
Company and the Representatives believe to be comparable to the Company,
estimates of business of the Company, the present state of the Company's
development and the current state of high technology industries and of the
economy as a whole. In this regard, in determining the anticipated offering
range for the Common Stock, the Underwriters considered, among other things,
the recent growth in the Company's business, the deleveraging of the Company's
balance sheet as a result of the offering, the market for network transport
products and system management applications and the current state of the
capital markets, particularly with respect to initial public offerings by
technology companies.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California.
Certain legal matters with respect to this Offering are being passed upon for
the Underwriters by Brobeck, Phleger & Harrison LLP, San Francisco,
California.

EXPERTS

The consolidated balance sheets of the Company as of June 30, 1995 and 1996
and the consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended June 30, 1996 included
in this Prospectus and the financial statement schedule included elsewhere in
the Registration Statement have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as stated in their reports appearing herein and
elsewhere in the Registration Statement and have been so included in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.

The balance sheets of New Era as of February 28, 1994 and 1995 and the
consolidated statements of operations and deficit and cash flows for each of
the three years in the period ended February 28, 1995 included in this
Prospectus have been audited by Ernst & Young, independent accountants, as
stated in their report appearing herein and elsewhere in the Registration
Statement and have been so included in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed a Registration Statement on Form S-1 under the
Securities Act with the Securities and Exchange Commission (the "Commission")
in Washington D.C. with respect to the shares of Common Stock offered hereby.
This Prospectus, which is part of the Registration Statement, does not contain
all the information set forth in the Registration Statement and the exhibits
and schedules thereto. For further information with respect to the Company and
the Common Stock offered hereby, reference is hereby made to the Registration
Statement and such exhibits and schedules which may be inspected without
charge at, or copies of such material may be obtained at prescribed rates
from, the Public Reference Section of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. The Registration Statement and
such exhibits and schedules are also available on the Commission's Web site
(http://www.sec.gov). Statements contained in this Prospectus as to the
contents of any contract or other document referred to herein 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,
each such statement being qualified in all respects by such reference.

The Company intends to furnish its stockholders annual reports containing
consolidated financial statements audited by its independent accountants, and
quarterly reports containing unaudited consolidated financial data for the
first three quarters of each fiscal year.

61
<PAGE>

GLOSSARY

APPLICATION PROGRAM INTERFACE
(API).......................... A set of libraries and program files that
allow a computer to write new programs making
calls to the functions and routines contained
in the API.

ADVANCED PEER-TO-PEER
COMMUNICATION (APPC)........... An IBM protocol that is part of the SNA ar-
chitecture that enables structured conversa-
tions between two networked applications.
Also referred to as a Logical Unit (LU) Type
6.2.

BACKUP......................... Backup is the process of saving a copy of a
file or database. The copy can be on disk,
tape, or optical devices or libraries. Files
to be backed up are those in active use--ones
that will need to be restored immediately in
case of the loss of the primary data.

CUSTOMER INFORMATION CONTROL
SYSTEM (CICS).................. An IBM mainframe control system combining el-
ements of database management and data commu-
nications, intended to handle transaction-
oriented applications.

CLIENT/SERVER.................. The model of interaction in a distributed
system which a program at one site sends a
request to a program at another site and
awaits a response. The requesting program is
called a client; the program satisfying the
request is called the server.

LOCAL AREA NETWORK (LAN)....... A data network located on the user's premises
in which serial transmission is used for
direct data communication among data
stations.

MULTIPLE VIRTUAL STORAGE
(MVS).......................... An IBM-licensed multipurpose operating system
for the System/370 and System/390 processors.
MVS supports such characteristics as a large
number of concurrent users, teleprocessing,
and efficient storage and retrieval from
large databases.

NETWORK CONTROLLER............. The physical hardware connection between the
enterprise server and the network.

NETWORK FILE SYSTEM (NFS)...... A distributed system developed by Sun
Microsystems which allows a set of computers
to cooperatively access each other's files in
a transparent manner.

PROTOCOL....................... A set of rules for communicating between
diverse systems which are mutually understood
and followed by the different systems or
processes.

62
<PAGE>

SYSTEMS NETWORK ARCHITECTURE
(SNA).......................... IBM's proprietary architecture for
controlling the configuration and operation
of networks.

SIMPLE NETWORK MANAGEMENT
PROTOCOL (SNMP)................ The basic protocol for delivering management
information on network devices in a TCP/IP
environment.

TRANSMISSION CONTROL
PROTOCOL/INTERNET PROTOCOL
(TCP/IP)....................... A suite of protocols designed to allow
communication between networks regardless of
the technologies implemented in each network.
This connectivity includes the ability to
transfer files, send mail, and log on to a
remote host in a network of heterogeneous
systems. TCP/IP forms the base technology for
the Internet that connects most major
research institutions, including university,
corporate, and government labs.

WIDE AREA NETWORK (WAN)........ A network that consists of machines connected
over a wide geographic area.

63
<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

Report of Independent Accountants......................................... F-2

Consolidated Balance Sheets as of June 30, 1995 and 1996 (Audited)........ F-3

Consolidated Statements of Operations for the years ended June 30, 1994,
1995 and 1996 (Audited).................................................. F-4

Consolidated Statements of Stockholders' Equity (Deficit) for the years
ended June 30, 1994, 1995 and 1996 (Audited)............................. F-5

Consolidated Statements of Cash Flows for the years ended June 30, 1994,
1995 and 1996 (Audited).................................................. F-6

Notes to Consolidated Financial Statements................................ F-7

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES AND NEW ERA SYSTEMS
SERVICES LTD. PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS

Pro Forma Combined Condensed Consolidated Statements of Operations for the
year ended June 30, 1996 (Unaudited)..................................... F-25

Notes to Pro Forma Combined Condensed Consolidated Statements of
Operations............................................................... F-27

NEW ERA SYSTEMS SERVICES LTD.

Auditors' Report.......................................................... F-29

Consolidated Balance Sheets as of February 28, 1994 and 1995 (Audited) and
November 30, 1995 (Unaudited)............................................ F-30

Consolidated Statements of Operations and Deficit for the years ended
February 28, 1993, 1994 and 1995 (Audited) and for the nine months ended
November 30, 1994 and 1995 (Unaudited)................................... F-31

Consolidated Statements of Cash Flows for the years ended February 28,
1993, 1994 and 1995 (Audited) and for the nine months ended November 30,
1994 and 1995 (Unaudited)................................................ F-32

Notes to Consolidated Financial Statements................................ F-33
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
Interlink Computer Sciences, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Interlink
Computer Sciences, Inc. and Subsidiaries as of June 30, 1995 and 1996 and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for each of the three years in the period ended June 30, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Interlink
Computer Sciences, Inc. and Subsidiaries as of June 30, 1995 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 1996 in conformity with generally
accepted accounting principles.

San Jose, California
July 22, 1996

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

The accompanying consolidated financial statements give effect to a reverse
stock split on a one-for-two basis of the Company's Common Stock and Preferred
Stock which will occur upon reincorporation of the Company in Delaware. The
above opinion is in the form which will be signed by Coopers & Lybrand L.L.P.
upon completion of such reverse stock split described in Note 13 of notes to
consolidated financial statements and assuming that from July 22, 1996 to the
date of such completion, no other material events have occurred that would
affect the accompanying consolidated financial statements or required
disclosure therein.

COOPERS & LYBRAND L.L.P.

San Jose, California
July 22, 1996

F-2
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA
JUNE 30, JUNE 30,
--------------------- 1996
1995 1996 (NOTE 12)
-------- ----------- ---------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 4,148 $ 6,121
Available-for-sale securities................ 2,525 --
Accounts receivable, net of allowance for
doubtful accounts of $279 in 1995 and $542
in 1996..................................... 7,958 9,445
Inventories.................................. 683 700
Prepaid expenses and other current assets.... 440 269
Income taxes receivable...................... -- 796
Deferred income taxes........................ 865 1,811
-------- --------
Total current assets....................... 16,619 19,142
Property and equipment, net.................... 1,451 1,281
Purchased software products.................... -- 2,893
Goodwill....................................... 248 165
Deferred income taxes.......................... 1,320 1,577
Other assets................................... 362 867
-------- --------
Total assets............................... $ 20,000 $ 25,925
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Bank line of credit.......................... $ 1,300 $ 5,000
Current portion of long-term debt............ 286 3,100
Accounts payable............................. 2,249 2,662
Accrued liabilities.......................... 6,151 6,630
Deferred maintenance and product revenue..... 6,816 8,121
-------- --------
Total current liabilities.................. 16,802 25,513
Long-term debt, less current portion........... 368 2,892
Deferred maintenance revenue................... 189 1,056
Deferred income taxes.......................... -- 771
Other liabilities.............................. -- 278
-------- --------
Total liabilities.......................... 17,359 30,510
-------- --------
Commitments and contingencies (Note 6).
Preferred stock, no par value:
Authorized: 2,625,000 shares
Issued and outstanding: 1,230,000 shares and
no pro forma shares......................... 6,310 6,310
Common stock, no par value:
Authorized: 15,000,000 shares
Issued and outstanding: 2,459,000 shares in
1995 and 2,483,000 shares in 1996 and
3,714,000 pro forma shares.................. 14,167 14,602 $ 20,912
Cumulative translation adjustment.............. (536) (581) (581)
Accumulated deficit............................ (17,300) (24,916) (24,916)
-------- -------- --------
Total stockholders' equity (deficit)....... 2,641 (4,585) $ (4,585)
-------- -------- ========
Total liabilities and stockholders' equity
(deficit)................................. $ 20,000 $ 25,925
======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Revenues:
Product........................................... $12,350 $15,818 $19,670
Maintenance and consulting........................ 9,525 11,261 14,332
------- ------- -------
Total revenues.................................. 21,875 27,079 34,002
------- ------- -------
Cost of revenues:
Product........................................... 2,380 3,316 3,413
Maintenance and consulting........................ 1,430 3,293 4,594
------- ------- -------
Total cost of revenues.......................... 3,810 6,609 8,007
------- ------- -------
Gross profit........................................ 18,065 20,470 25,995
Operating expenses:
Product development............................... 6,276 6,245 5,241
Sales and marketing............................... 8,384 10,792 13,316
General and administrative........................ 2,561 3,329 3,954
Purchased research and development and product
amortization..................................... -- -- 10,479
------- ------- -------
Total operating expenses........................ 17,221 20,366 32,990
------- ------- -------
Operating income (loss)............................. 844 104 (6,995)
Interest income..................................... 77 172 194
Interest expense.................................... (301) (253) (701)
------- ------- -------
Income (loss) before income taxes and
extraordinary items.......................... 620 23 (7,502)
Benefit from (provision for) income taxes........... (273) 1,624 (114)
------- ------- -------
Income (loss) before extraordinary items...... 347 1,647 (7,616)
Extraordinary item--gain on debt restructuring, net
of income taxes.................................... 1,320 -- --
------- ------- -------
Net income (loss)................................... $ 1,667 $ 1,647 $(7,616)
======= ======= =======
Income (loss) per share:
Income (loss) before extraordinary items.......... $ 0.09 $ 0.34 $ (2.44)
Extraordinary item--gain on debt restructuring,
net of income taxes.............................. $ 0.35 -- --
------- ------- -------
Net income (loss) per share......................... $ 0.44 $ 0.34 $ (2.44)
======= ======= =======
Shares used in per share calculation................ 3,808 4,814 3,127
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS)

<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK CUMULATIVE
----------------- -------------- TRANSLATION ACCUMULATED
SHARES AMOUNT SHARES AMOUNT ADJUSTMENT DEFICIT TOTAL
------- -------- ------ ------- ----------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, June 30, 1993. -- $ -- 2,376 $14,063 $(364) $(20,614) $(6,915)
Issuance of Series 1
preferred stock, net
of issuance costs of
$470................. 1,230 6,294 -- -- -- -- 6,294
Exercise of stock
options.............. -- -- 9 6 -- -- 6
Issuance of preferred
and common stock
warrants............. -- 16 -- 26 -- -- 42
Translation
adjustment........... -- -- -- -- (98) -- (98)
Net income............ -- -- -- -- -- 1,667 1,667
------- -------- ----- ------- ----- -------- -------
Balances, June 30, 1994. 1,230 6,310 2,385 14,095 (462) (18,947) 996
Issuance of common
stock for acquisition
of Lennox and Partner
GmbH................. -- -- 42 46 -- -- 46
Issuance of common
stock................ -- -- 5 5 -- -- 5
Exercise of stock
options.............. -- -- 27 21 -- -- 21
Translation
adjustment........... -- -- -- -- (74) -- (74)
Net income............ -- -- -- -- -- 1,647 1,647
------- -------- ----- ------- ----- -------- -------
Balances, June 30, 1995. 1,230 6,310 2,459 14,167 (536) (17,300) 2,641
Issuance of common
stock for acquisition
of Lennox and Partner
GmbH................. -- -- 6 19 -- -- 19
Exercise of stock
options.............. -- -- 18 16 -- -- 16
Issuance of common
stock warrants....... -- -- -- 400 -- -- 400
Translation
adjustment........... -- -- -- -- (45) -- (45)
Net loss.............. -- -- -- -- -- (7,616) (7,616)
------- -------- ----- ------- ----- -------- -------
Balances, June 30, 1996. 1,230 $ 6,310 2,483 $14,602 $(581) $(24,916) $(4,585)
======= ======== ===== ======= ===== ======== =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------
1994 1995 1996
------- ------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................. $ 1,667 $ 1,647 $ (7,616)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Purchased research and development.............. -- -- 10,158
Depreciation and amortization................... 916 1,032 1,477
Gain on debt restructuring...................... (1,361) -- --
Loss on disposal of property and equipment...... -- 42 --
Provision for excess and obsolete inventory..... 64 21 28
Provision for doubtful accounts................. 100 67 215
Exchange (gain) loss............................ (141) (406) 130
Deferred income taxes........................... (174) (2,011) (1,203)
Changes in operating assets and liabilities:
Accounts receivable............................ (3,546) (787) (744)
Inventories.................................... (668) 409 (45)
Prepaid expenses and other assets.............. 55 58 (16)
Accounts payable............................... 612 128 (92)
Accrued liabilities............................ 751 411 (424)
Deferred maintenance and product revenue....... 367 1,626 1,969
Other liabilities.............................. -- -- 278
------- ------- --------
Net cash provided by (used in) operating
activities................................... (1,358) 2,237 4,115
------- ------- --------
Cash flows from investing activities:
Acquisition of New Era, net of cash acquired...... -- -- (10,168)
Proceeds from sale of available-for-sale
securities....................................... -- -- 2,525
Acquisition of property and equipment............. (618) (43) (384)
Capitalization of software development costs...... (334) (30) (90)
Purchase of available-for-sale securities......... -- (2,475) --
Acquisition of Lennox and Partner GmbH............ -- (63) --
------- ------- --------
Net cash used in investing activities......... (952) (2,611) (8,117)
------- ------- --------
Cash flows from financing activities:
Proceeds from term loan........................... -- -- 3,000
Proceeds from bank line of credit................. 1,500 -- 5,000
Payments on capital lease obligations............. (107) (339) (307)
Payments on notes payable and other............... (3,164) (887) (323)
Payments on bank line of credit................... -- (200) (1,300)
Proceeds from notes payable to stockholder........ 1,000 -- --
Proceeds from issuance of preferred and common
stock, net....................................... 5,300 21 36
------- ------- --------
Net cash provided by (used in) financing
activities................................... 4,529 (1,405) 6,106
------- ------- --------
Net increase (decrease) in cash and cash
equivalents................................. 2,219 (1,779) 2,104
Effect of exchange rate changes on cash............. 110 189 (131)
Cash and cash equivalents, beginning of period...... 3,409 5,738 4,148
------- ------- --------
Cash and cash equivalents, end of period............ $ 5,738 $ 4,148 $ 6,121
======= ======= ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

NATURE OF OPERATIONS

Interlink Computer Sciences, Inc. (the "Company") is a supplier of high
performance solutions for enterprise networked systems management. The Company
provides software and services which enable customers to use their IBM and
IBM-compatible MVS mainframes as "enterprise servers" in distributed,
heterogeneous client/server network environments. The Company markets and
sells its software and services primarily through its direct sales
organization in North America and Europe and, to a lesser extent, through
resellers and international distributors to domestic and international
customers, including original equipment manufacturers. The Company's TCPaccess
products, including related maintenance and hardware, have generated the
majority of the Company's revenues. During fiscal years 1994, 1995 and 1996,
sales of the TCPaccess products and related maintenance and hardware accounted
for approximately 61%, 66% and 67%, respectively, of the Company's total
revenues. Therefore, the Company's operating results, particularly in the near
term, are significantly dependent upon the continued market acceptance of the
TCPaccess products. The life cycles of the Company's products are difficult to
estimate due in part to the effect of future product enhancements and
competition. A decline in demand for the Company's products as a result of
competition, technological change or other factors would have a material
adverse affect on the Company's business, financial condition and result of
operations.

USE OF ESTIMATES

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

BASIS OF PRESENTATION

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

FINANCIAL INSTRUMENTS

Cash equivalents are highly liquid investments with original or remaining
maturities of three months or less at the date of purchase. Cash equivalents
present insignificant risk of changes in value because of interest rate
changes. The Company maintains its cash balances with high quality financial
institutions and has not experienced any material losses relating to any
investment instruments.

Available-for-sale securities are carried at fair value, based on quoted
market prices, with the unrealized gains or losses, net of tax, reported in
stockholders' equity. The amortized cost of debt securities is adjusted for
amortization of premiums and accretion of discounts to maturity, both of which
are included in interest income. Realized gains and losses are recorded on the
specific identification method.

The amounts reported for cash equivalents, receivables and other financial
instruments are considered to approximate fair values based upon comparable
market information available at the respective balance sheet dates. Financial
instruments that potentially subject the Company to concentrations of credit
risks comprise, principally cash and cash equivalents, available-for-sale
securities, trade accounts receivable, bank lines of credit and long-term
debt. The Company invests its excess cash primarily in commercial paper and
treasury notes that mature within one year. The carrying value of the
Company's line of credit and long-term debt approximates fair value as the
interest rates are variable or the debt has been discounted at current
interest rates.

F-7
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

CONCENTRATIONS

At June 30, 1995 and 1996, approximately 19% and 39%, respectively, of the
Company's cash and cash equivalents and available-for-sale securities are
invested in Europe with the remaining amounts invested primarily in the United
States and Canada.

At June 30, 1995 and 1996, approximately 62% and 51%, respectively, of the
Company's trade accounts receivable are due from customers in Europe with the
remaining receivables due from customers primarily in the United States and
Canada. The Company performs ongoing evaluations of its customers' financial
condition and does not require collateral. The Company maintains allowances
for potential credit losses and such losses have been within management's
expectations.

Network access from the enterprise server to the network via the Company's
TCPaccess product requires a network controller, which the Company sells to
its customers. The Company's principal network controller, the 3762 Network
Controller, is supplied by one company. Sales of network controllers have
accounted for substantially all of the Company's hardware revenues to date,
and total hardware revenues have accounted for 23%, 25% and 19% of product
revenues in fiscal years 1994, 1995 and 1996, respectively. In addition, the
Company also relies upon this company for network controller replacement
parts. If the Company were unable to purchase an adequate supply of such sole-
sourced products on a timely basis, the Company could be required to design a
comparable product, qualify and develop an alternative source, or redesign its
products based upon different components. Furthermore, IBM could use its
position as a supplier of network controllers to gain a competitive advantage
over the Company. To date, the Company has not experienced difficulty or
significant delay in obtaining any such sole-source products. However, there
can be no assurance that the Company will not face such difficulties or delays
in the future. An inability of the Company or its customers to obtain such
sole-sourced controllers could significantly delay shipment of products, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.

GOODWILL

Goodwill is amortized on a straight line basis and is stated net of
accumulated amortization of $82,000 and $165,000 at June 30, 1995 and 1996,
respectively.

INVENTORIES

Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market. Inventories are principally comprised of finished
goods at June 30, 1995 and 1996.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated using the
straight-line basis over estimated useful lives of three to five years.
Leasehold improvements and property under capital leases are amortized using a
straight-line basis over the shorter of their estimated useful lives or the
terms of the leases. Upon disposal, assets and related accumulated
depreciation are removed from the accounts and the related gain or loss is
included in operations.

REVENUE RECOGNITION

Product Revenues

Product revenues are recognized after shipment of the product, completion of
a trial period, if any, and receipt of a signed contract, if remaining
obligations are insignificant, collection of the resulting receivable is

F-8
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

probable and product returns are reasonably estimatible. Provisions for
estimated product returns, warranty costs and insignificant vendor obligations
are recorded at the time products are shipped. Generally, the Company does not
provide the right of return or price protection to its distributors or its end
user customers.

Deferred product revenues consist generally of revenues from distributors
with which the Company does not have historical collection experience,
revenues under contracts with refundability or cancellation clauses and
revenues for which the Company believes collection is not probable. Product
revenues from distributors with which the Company either does not have
historical collection experience or believes collection is not probable are
recognized upon collection of the related accounts receivable and revenues
under contracts with refundability or cancellation clauses are recognized when
such clauses lapse.

Maintenance and Consulting Revenues

Maintenance and deferred maintenance revenues consist of maintenance and
renewal fees for providing product updates, technical support and related
services for software products, and consulting revenue consists of training
and consulting services fees. The Company unbundles a portion of its initial
product license revenues related to software maintenance revenues based upon
the amount charged for such services when they are sold separately. Unbundled
software maintenance revenues and revenues from separately sold maintenance
contracts are deferred and recognized ratably over the related service period.
Consulting services revenues from contracts are generally recognized on the
percentage of completion basis, measured by the relationship of labor hours
incurred to estimated total labor hours for the contract. The Company
considers expended hours the best available measure of progress for these
contracts. Changes in job performance and estimated profitability may result
in revisions of cost, income and losses on contracts and are recognized in the
period in which the revisions are determined. Training fees are recognized as
the related services are performed.

PRODUCT DEVELOPMENT COSTS

Costs related to the conceptual formulation and design of software products
are expensed as product development while costs incurred subsequent to
establishing technological feasibility of software products are capitalized,
if material, until general release of the product. Generally, technological
feasibility is established when the software module performs its primary
functions described in its original specifications, contains convenience
features required for it to be usable in a production environment and is
completely documented. Amortization of capitalized software costs, which
begins when products are available for general release to customers, is
provided on a product-by-product basis at the greater of the amount computed
using the ratio of current revenues to the total current and anticipated
revenues or the straight-line basis over two years. The Company evaluates the
estimated net realizable value of each software product at each balance sheet
date and records write-downs to net realizable value for any products for
which the net book value is in excess of net realizable value. During fiscal
year 1995, the Company wrote off capitalized software costs of $112,000 and in
fiscal years 1994, 1995 and 1996 capitalized software amortization was
$154,000, $259,000 and $32,000, respectively.

ADVERTISING EXPENSE

Advertising costs are expensed when incurred. In fiscal years 1994, 1995 and
1996 advertising expense was $178,000, $277,000 and $691,000, respectively.

INCOME TAXES

The Company accounts for income taxes under the liability method whereby
deferred tax asset or liability account balances are calculated at the balance
sheet date using current laws and rates in effect.

F-9
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOREIGN CURRENCY TRANSLATION

The functional currency for the majority of the Company's foreign operations
is the applicable local currency. The translation from the applicable foreign
currency to U.S. dollars is performed for balance sheet accounts using current
exchange rates in effect at the balance sheet date and for revenue and expense
accounts using the weighted average exchange rate during the period.
Adjustments resulting from such translation are reflected as a separate
component of stockholders' equity. Gains or losses resulting from foreign
currency transactions are included in the results of operations.

COMPUTATION OF NET INCOME (LOSS) PER SHARE

Net income (loss) per share is computed using the weighted average number of
common and common equivalent shares outstanding during the period. Common
equivalent shares are included in the per share calculations where the effect
of their inclusion would be dilutive. Dilutive common equivalent shares
consist of the incremental common shares issuable upon conversion of
convertible preferred stock (using the "if converted" method) and stock
options and warrants, using the modified treasury stock method in all periods.
Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No.
83, common and common equivalent shares issued by the Company during the
twelve months preceding the initial filing of the Company's initial public
offering, using the treasury stock method and the public offering price per
share, have been included in the calculation of net income (loss) per share
for all periods presented.

RECLASSIFICATIONS

Certain reclassifications have been made to prior year balances to conform
to current classifications.

RECENT PRONOUNCEMENTS

During March 1995, the Financial Accounting Standards Board issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of" (SFAS 121), which requires the Company to
review the impairment of long-lived assets, certain identifiable intangibles,
and goodwill related to those assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. SFAS 121 will become effective for the Company's 1997 fiscal
year. The Company does not expect SFAS 121 to have a material impact on the
Company's financial condition or results of operations.

During October 1995, the Financial Accounting Standards Board issued
Statement No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), which
establishes a fair value based method of accounting for stock based
compensation plans. While the Company is studying the impact of the
pronouncement, it continues to account for employee stock options under APB
Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS 123 will be
effective for fiscal years beginning after December 15, 1995.

F-10
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. ACQUISITIONS:

LENNOX AND PARTNER GmbH

During fiscal year 1995, the Company purchased all of the capital stock of
Lennox and Partner GmbH ("Lennox") in exchange for 42,000 shares of the
Company's common stock and cash of $63,000. Under the terms of the purchase
agreement, the Company is obligated to make future cash payments to the
sellers of $58,000 and may be obligated to make additional cash payments of up
to $232,000 and to issue up to 6,000 additional shares of the Company's common
stock to certain Lennox sellers, who after the acquisition became employees of
the Company, contingent upon cumulative profitability of the subsidiary. The
acquisition was accounted for as a purchase transaction and the results of
operations of Lennox were included with those of the Company after July 1,
1994, the date the acquisition was consummated. During 1995, the Company paid
and expensed $60,000 related to the cumulative profitability requirements and
recorded goodwill of $330,000 related to the transaction and is amortizing
such amounts over four years. The results of operations of Lennox were not
material to those of the Company in 1994.

In December 1995, the cumulative profitability requirements specified in the
purchase agreement were met and the Company recorded an expense totaling
$216,000 related to both cash payments totaling $197,000 and the issuance of
6,000 shares of the Company's common stock with a fair value of $3.20 per
share.

NEW ERA SYSTEMS SERVICES LTD.

Effective December 29, 1995, the Company acquired all of the outstanding
stock of New Era Systems Services Ltd. ("New Era"), a Canadian company that
develops, markets and supports storage management and software distribution
products. In the transaction, the Company paid cash of approximately
$11,000,000 and issued fully exercisable warrants to purchase 350,000 shares
of its common stock at an exercise price of $3.20 per share with a fair value
of $315,000 (see Note 7). In addition, in conjunction with the acquisition,
the Company issued non-interest bearing notes payable to the shareholders of
New Era aggregating approximately $1,300,000, net of discounts for imputed
interest of $133,000 (see Note 5). These amounts resulted in a purchase price
for New Era of $13,001,000 including accruals for direct acquisition costs and
severance costs and certain duplicate facilities related to the planned
closure of New Era's European subsidiary, all totaling approximately $500,000.
The acquisition has been accounted for as a purchase transaction and the
results of operations of New Era have been included with those of the Company
since December 29, 1995, the date the acquisition was consummated.

The fair value of the assets acquired from New Era, which was determined
through established valuation techniques used in the software industry, and a
summary of the consideration exchanged for these assets is as follows (in
thousands):

<TABLE>
<S> <C>
Total purchase price............................................... $13,001
=======
Assets acquired:
Tangible assets, primarily cash, accounts receivable and property
and equipment................................................... 3,117
Purchased software products...................................... 3,199
Purchased research and development............................... 10,158
Liabilities assumed................................................ (3,473)
-------
$13,001
=======
</TABLE>

The amount allocated to purchased software products, for which technological
feasibility had been established at the acquisition date, is being amortized
on a straight line basis over five years. At June 30, 1996,

F-11
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

accumulated amortization related to purchased software products was $321,000.
The amount of the purchase price allocated to purchased research and
development, which had no alternative future use and relates to products for
which technological feasibility had not been established, was expensed at the
acquisition date.

In addition, contingent consideration up to a total of $5,200,000 is payable
in cash on January 31, 1997 and 1998, upon the attainment of certain targeted
revenue levels for New Era software products and maintenance. These amounts
represent additional consideration paid for the acquisition of New Era, and up
to $2,700,000 will be recorded as purchased research and development and
expensed, if the products in research and development at the date of the
acquisition are still under research and development and up to $800,000 will
be recorded as purchased software products. Amounts paid in excess of amounts
allocated to purchased research and development and purchased software
products will be recorded as goodwill and amortized over the remaining life of
the goodwill, which is estimated at five years from the date of the
acquisition.

Summarized below are the unaudited pro forma results of operations of the
Company as though New Era had been acquired at the beginning of fiscal 1995.
Adjustments have been made for the estimated increases in amortization related
to purchased software, increases and decreases in interest expense and income
and other appropriate pro forma adjustments.

<TABLE>
<CAPTION>
JUNE 30,
--------------------------
1995 1996
------------ ------------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
Revenue.......................................... $ 29,954 $ 36,491
Net income (loss)................................ (450) 2,765
Net income (loss) per share...................... (0.07) 0.56
</TABLE>

The above amounts are based upon certain assumptions and estimates which the
Company believes are reasonable and do not reflect any benefit from economies
which might be achieved from combined operations. The pro forma financial
information presented above is not necessarily indicative of either the
results of operations that would have occurred had the acquisition taken place
at the beginning of fiscal 1995 or of future results of operations of the
combined companies.

3. BALANCE SHEET DETAIL:

Property and equipment, net comprised (in thousands):

<TABLE>
<CAPTION>
JUNE 30,
----------------
1995 1996
------- -------
<S> <C> <C>
Equipment.................................................. $ 6,990 $ 4,131
Furniture and fixtures..................................... 470 338
Leasehold improvements..................................... 221 97
------- -------
7,681 4,566
Less accumulated depreciation and amortization............. (6,230) (3,285)
------- -------
$ 1,451 $ 1,281
======= =======
</TABLE>

Depreciation expense was $762,000, $676,000 and $742,000 in fiscal years
1994, 1995 and 1996, respectively.

F-12
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Equipment acquired under capital leases included in property and equipment
above comprised (in thousands):

<TABLE>
<CAPTION>
JUNE 30,
--------------
1995 1996
------ ------
<S> <C> <C>
Equipment.................................................... $1,066 $1,030
Less accumulated amortization................................ (488) (766)
------ ------
$ 578 $ 264
====== ======
</TABLE>

Capitalized software, net, included in other assets, comprised (in
thousands):

<TABLE>
<CAPTION>
JUNE 30,
------------
1995 1996
----- -----
<S> <C> <C>
Capitalized software........................................... $ 364 $ 454
Less accumulated amortization.................................. (332) (364)
----- -----
$ 32 $ 90
===== =====
</TABLE>

4. BANK LINE CREDIT:

At June 30, 1996, the Company had available a line of credit with a bank
under a loan agreement, which also provided for certain long-term borrowings
of $3,000,000 (see Note 5). At June 30, 1996, $5,000,000 was outstanding under
the line of credit. The line of credit expires on November 29, 1996 and is
collateralized by substantially all the assets of the Company. Borrowings
under the line of credit are limited to the lesser of (i) 85% of domestic
accounts receivable plus 70% of eligible foreign accounts receivable not to
exceed $2,500,000 or (ii) $5,000,000 and bear interest at the lender's prime
rate plus 1.5% (9.75% at June 30, 1996). Under the terms of the agreement, the
Company is required to maintain a certain minimum quick ratio and tangible net
worth and maximum debt to tangible net worth, as well as specified quarterly
profitability and is restricted from paying dividends, repurchasing stock,
hypothecating assets or incurring additional indebtedness. In conjunction with
this loan agreement, the Company issued fully exercisable warrants to the bank
for 75,000 shares and 6,250 shares at $3.20 and $12.80 per share,
respectively, of the Company's common stock. In the event the Company
completes an initial public offering by October 1, 1996, the shares of common
stock exercisable under the warrant for 75,000 shares is reduced to 62,500
shares.

The weighted average interest rate on the Company's short-term borrowing was
8.4%, 10.0% and 11.0% for fiscal years 1994, 1995 and 1996, respectively.

F-13
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. LONG-TERM DEBT:

OUTSTANDING LONG-TERM DEBT

As of June 30, 1996, the Company had long-term debt outstanding as follows
(in thousands):

<TABLE>
<S> <C>
Note payable to bank................................................ $ 3,000
Capitalized lease obligations....................................... 347
Notes payable to former New Era shareholders........................ 1,401
Western Economic Development notes payable.......................... 1,244
-------
5,992
Less current portion................................................ (3,100)
-------
$ 2,892
=======
</TABLE>

The note payable to bank bears interest at prime plus 2.5% (10.75% at June
30, 1996) and is payable in quarterly installments of principal beginning in
June 1996 with the final payment due in December 1998. The note payable, which
was issued to finance, in part, the New Era acquisition, is subject to the
same loan agreement described in Note 4 above.

The Company has leased equipment under capital lease obligations maturing
through fiscal year 2000. The lease agreements require the Company to maintain
liability and property insurance.

The notes payable to the former New Era shareholders were issued in
conjunction with the acquisition of New Era and are non-interest bearing,
unsecured and due on January 2, 1997. The notes payable are recorded net of a
discount of approximately $65,000 at June 30, 1996, which reflects the
estimated interest to maturity at a rate of 10%, the interest rate at which
other short-term borrowings were available to the Company at the time of the
acquisition.

The Western Economic Development notes payable, which were assumed in
conjunction with the Company's acquisition of New Era, are unsecured, non-
interest bearing and are due in quarterly payments through June 2005 with
accelerated principal payments required each quarter beginning in June 1996,
calculated as 14% of quarterly HARBOR revenues in excess of approximately
$600,000. As this criterion was not met at June 30, 1996, no accelerated
payments are currently due. The notes payable are recorded net of a discount
of $614,000 at June 30, 1996 based on the Company's borrowing rate of 11%, the
interest rate at which long-term borrowings were available to the Company at
the time of acquisition. Under the terms of these notes, the Company is
required to maintain minimum equity in its Canadian subsidiary, is restricted
from paying dividends and must continue to conduct certain product development
operations in Western Canada until the notes are fully repaid.

F-14
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

At June 30, 1996, future minimum annual payments due under the long-term
debt and the capital lease obligations are as follows (in thousands):

<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S> <C>
1997................................................................ $3,193
1998................................................................ 1,307
1999................................................................ 994
2000................................................................ 243
2001................................................................ 235
Thereafter.......................................................... 735
------
6,707
Less amount representing interest................................... (715)
------
Total minimum payments.............................................. $5,992
======
</TABLE>

DEBT RESTRUCTURING

During fiscal year 1994, the Company exchanged borrowings of approximately
$5,000,000 for a cash payment of $3,000,000, a warrant to purchase 75,000
shares of the Company's common stock at an exercise price of $0.90 per share
(see Note 7) and a note payable of $495,000 and recorded an extraordinary gain
related to the debt restructuring of $1,320,000 net of income taxes of
$41,000. This gain represented the difference between the recorded amount of
the debt prior to the restructuring less cash paid, the estimated fair value
of the warrants and the note payable including all estimated interest payments
through January 1, 1997. During fiscal year 1995, the Company paid the
remaining $495,000 note payable to the bank.

6. COMMITMENTS AND CONTINGENCIES:

LEASE COMMITMENTS

The Company leases its facilities and certain equipment under various
operating leases with terms ranging from month-to-month to five years. Under
the terms of these leases, the Company is also responsible for taxes,
insurance and utilities.

The minimum future annual rental payments as of June 30, 1996 under leases
with initial or remaining non-cancelable lease terms longer than one year are
as follows (in thousands):

<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S> <C>
1997................................................................ $1,650
1998................................................................ 1,092
1999................................................................ 497
2000................................................................ 471
2001................................................................ 276
Thereafter.......................................................... 296
------
Total minimum lease payments........................................ $4,282
======
</TABLE>

Rent expense was $1,318,000, $1,668,000 and $1,767,000 in fiscal years 1994,
1995 and 1996, respectively. Sublease rental income was $9,000 in fiscal year
1994. The Company's sublease expired during fiscal year 1994.

F-15
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

CONTINGENCY

The Company and the Company's subsidiary in France are involved in a
commercial dispute with a former Italian distributor of the Company's
TCPaccess products. The former distributor alleged in a letter sent to the
Company that the Company had breached and unlawfully terminated the agreement
pursuant to which the former distributor was appointed a distributor of the
Company's products in Italy and asserted other related claims against the
Company. The letter demanded the former distributor's reinstatement as a
distributor, the execution of a written distribution agreement setting forth
the distribution arrangements between the parties, and compensation in an
unspecified amount to be paid to the former distributor for the harm that it
has suffered. The Company's Canadian subsidiary, New Era, has also previously
used the former distributor as a distributor of the HARBOR products in Italy
pursuant to a separate agreement. No legal claim has been filed nor has
arbitration been invoked by the former distributor regarding this matter. No
provision for any liability that may result upon resolution of this matter has
been made in the accompanying financial statements. Should the former
distributor initiate legal proceedings and prevail on such claims, the
Company's business, financial condition and results of operations could be
materially adversely affected.

FOREIGN EXCHANGE CONTRACTS

The Company had foreign exchange contracts outstanding with notional amounts
of $158,000 and $1,465,000 at June 30, 1995 and 1996, respectively. Risk equal
to the notional amounts of these contracts arises from the possible inability
of the counter parties to meet the terms of these contracts. The other parties
to these contracts are major financial institutions. The Company does not
expect any significant losses as a result of default by the other party. Gains
and losses resulting from these contracts are insignificant and are recorded
in general and administrative expense.

MANAGEMENT AND KEY EMPLOYEE COMPENSATION AGREEMENTS

The Company has agreements with certain members of management that provide
for the immediate acceleration of the exercisability of the options to
purchase the Company's common stock held by these individuals and for cash
bonuses if there is any reorganization, merger, or acquisition that results in
a change in the Company's ownership by at least 50%. Under these agreements,
the amount of additional compensation to be paid to each of these employees
would be determined based on a formula which considers the purchase price paid
for the Company and the amounts the preferred shareholders are entitled to
receive through liquidation preferences. All of these agreements terminate
immediately prior to the closing of an underwritten public offering of the
Company's common stock registered under the Securities Act of 1933, as
amended.

7. STOCKHOLDERS' EQUITY:

PREFERRED STOCK

The Board of Directors has the authority to issue preferred stock in one or
more series and to fix the price, rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting a series or the designation
of such series, without any further vote or action by the Company's
stockholders.

The Company's Series 1 preferred stock is initially convertible into common
stock, on a one for one basis, subject to certain antidilution adjustments.
Conversion is at the option of the holder, or is automatic upon the

F-16
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

earlier of the closing of a public offering of the Company's common stock at a
price of not less than $10.00 per share, as amended by the Company's Board of
Directors in July 1996, and an aggregate gross offering price to the public of
not less than $10,000,000 or upon the election of 50% of the holders of the
Series 1 preferred stock. The holders of preferred stock have voting rights
equal to the number of shares of common stock into which the preferred stock
is convertible. Further, holders of a certain majority of the outstanding
shares of the Series 1 preferred stock must approve a merger or sale of
substantially all the assets of the Company or amendments of the Articles of
Incorporation. The preferred stockholders are entitled to elect two members of
the Board of Directors.

In the event of liquidation or merger, or upon the election of 50% of the
holders of the Series 1 preferred stock, the holders of the Series 1 preferred
stock are entitled to receive an initial preference amount of $5.50 per share
and all declared but unpaid dividends. Thereafter, the property and/or cash
shall be distributed 50% among the holders of Series 1 preferred stock and 50%
to the holders of common stock until the holders of the Series 1 preferred
stock have received $10.00 per share. Remaining assets shall be distributed to
the common stockholders until each has received $10.00 per share and then
ratably among the common and preferred stockholders, with the preferred
stockholders sharing on an as converted basis.

The holders of Series 1 preferred stock are entitled to receive a non-
cumulative dividend of $0.38 per share, per annum, payable when, as and if
declared by the Board of Directors. The holders of the Series 1 preferred
stock also have certain registration rights.

INCENTIVE STOCK OPTION PLAN

The Company terminated its 1988 Stock Option Plan and replaced it with a
1992 Stock Option Plan ("1992 Plan") under which 975,000 shares of common
stock were reserved for issuance. During 1996, the Company increased the
number of shares of common stock reserved under the 1992 Plan by 980,000
shares to 1,955,000 shares, of which 850,000 shares are subject to stockholder
approval. All stock options outstanding or available for grant under the 1988
Stock Option Plan were canceled or terminated, respectively. Under the 1992
Plan, incentive stock options may be granted to employees, officers and
directors and non-statutory stock options to employees, officers, directors or
consultants at prices not lower than 100% and 85%, respectively of the fair
market value of the Company's common stock at the date of grant as determined
by the Board of Directors. Furthermore, the 1992 Plan provides that options
are exercisable within the times, or upon the events determined by the Board
of Directors, or by a committee of the Board appointed to administer the 1992
Plan, and are exercisable no later than seven years from the date of grant.
Generally, options become exercisable as to 9/48 after nine months from the
date of grant and ratably thereafter over three years and three months.
Options to purchase 87,750 shares of the Company's common stock with an
exercise price of $1.10 per share, however, become exercisable on the earlier
to occur of the achievement of specified performance milestones or five years
from the date of grant. In July 1996, the specified performance milestones
were determined to be satisfied and all of these options became exercisable.

F-17
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Option activity under the plan for the fiscal years 1994, 1995, and 1996
follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
OPTIONS ----------------------------------
AVAILABLE EXERCISE
FOR GRANT SHARES PRICE AMOUNT
--------- --------- ------------ ----------
<S> <C> <C> <C> <C>
Balances, June 30, 1993.......... 69,465 420,045 $0.70 $ 295,000
Options reserved................. 400,000 -- -- --
Options granted.................. (348,350) 348,350 $0.70-$1.10 348,000
Options exercised................ -- (9,182) $0.70 (6,000)
Options canceled................. 65,874 (65,874) $0.70-$0.90 (47,000)
-------- --------- ------------ ----------
Balances, June 30, 1994.......... 186,989 693,339 $0.70-$1.10 590,000
Options reserved................. 75,000 -- -- --
Options granted.................. (313,483) 313,483 $1.10 345,000
Options exercised................ -- (27,798) $0.70-$1.10 (21,000)
Options canceled................. 182,796 (182,796) $0.70-$1.10 (170,000)
-------- --------- ------------ ----------
Balances, June 30, 1995.......... 131,302 796,228 $0.70-$1.10 744,000
Options reserved................. 980,000 -- -- --
Options granted.................. (355,150) 355,150 $1.10-$14.00 1,250,000
Options exercised................ -- (18,564) $0.70-$1.10 (16,000)
Options canceled................. 114,311 (114,311) $0.70-$1.10 (123,000)
-------- --------- ------------ ----------
Balances, June 30, 1996.......... 870,463 1,018,503 $0.70-$14.00 $1,855,000
======== ========= ==========
</TABLE>

At June 30, 1996, 598,012 outstanding options were exercisable.

WARRANTS

At June 30, 1996, the Company had issued fully exercisable warrants to
purchase the following types of stock with the terms indicated:

<TABLE>
<CAPTION>
NUMBER EXERCISE
TYPE OF STOCK OF SHARES PRICE EXERCISE PERIOD
------------- --------- -------- ---------------
<C> <C> <C> <S>
Series 1 preferred......................... 15,000 $ 5.50 through December 1998
Common..................................... 66,667 $ 0.90 through December 1998
Common..................................... 75,000 $ 0.90 through January 1999
Common..................................... 350,000 $ 3.20 through December 2000
Common..................................... 75,000 $ 3.20 through April 2003
Common..................................... 6,250 $12.80 through April 2003
</TABLE>

The warrant for 75,000 shares of common stock with an exercise price of
$0.90 expires earlier than January 1999 if the Company closes an initial
public offering at a specified price per share and the gross proceeds are at
least $10,000,000 or upon a merger or reorganization. As of June 30, 1996, the
Company has reserved 15,000 shares of its Series 1 preferred stock for
exercise of these warrants and 587,917 shares of its common stock.

EMPLOYEE STOCK PURCHASE PLAN

In June 1996, the Company's Board of Directors, subject to stockholder
approval, authorized the 1996 Employee Stock Purchase Plan (the "Purchase
Plan") and reserved a total of 250,000 shares of common stock for issuance
under the Purchase Plan. Employees (including officers and employee directors
of the Company) are eligible to participate if they are customarily employed
for at least 20 hours per week and for more than five

F-18
<PAGE>

months in any calendar year. The Purchase Plan permits eligible employees to
purchase common stock through payroll deductions, which may not exceed 15% of
any employee's compensation. The purchase price of the common stock under the
purchase Plan will be equal to 85% of the lesser of the fair market value per
share of common stock on the start date of the purchase period or on the date
on which the option is exercised. The Purchase Plan will terminate in June
2006, unless sooner terminated by the Board of Directors. As of June 30, 1996,
no shares have been issued under the Purchase Plan.

DIRECTOR OPTION PLAN

In June 1996, the Company's Board of Directors, subject to stockholder
approval, authorized the 1996 Director Option Plan (the "Director Plan") and
reserved a total of 100,000 shares of common stock for issuance under the
Director Plan. The option grants under the Director Plan are automatic and
non-discretionary, and the exercise price of the options is 100% of the fair
market value of the common stock on the grant date. The Director Plan provides
for an initial grant of options to purchase 15,000 shares of common stock to
each non-employee director of the Company (an "Outside Director") upon the
effective date of this offering at a per share exercise price equal to the
initial public offering price. Each new non-employee director will
automatically be granted an option to purchase 15,000 shares of common stock
upon joining the Board of Directors. Subsequently, each Outside Director will
automatically be granted an additional option to purchase 3,750 shares of
common stock at the next meeting of the Board of Directors following the
annual meeting of stockholders in each year beginning with the 1997 annual
meeting of stockholders, if on such date, such Outside Director has served on
the Board of Directors for at least six months. The term of such options is
ten years. As of June 30, 1996, no shares have been issued under the Director
Plan.

REINCORPORATION IN DELAWARE

In June 1996, the Company's Board of Directors, subject to stockholder
approval, authorized the reincorporation of the Company in Delaware. As a
result of the reincorporation, the Company's authorized common stock will
increase to 25,000,000 shares, with a par value of $0.001 per share, and,
subject to the conversion of all outstanding preferred stock upon the
completion of the initial public offering, the Company will be authorized to
issue 5,000,000 shares of undesignated preferred stock.

8. INCOME TAXES:

Income (loss) applicable to domestic and foreign income taxes follows (in
thousands):

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Domestic........................................ $1,841 $73 $ 3,737
Foreign......................................... 140 (50) (11,239)
------ --- --------
$1,981 $23 $ (7,502)
====== === ========
</TABLE>

F-19
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Benefit from (provision for) income taxes comprises (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------
1994 1995 1996
----- ------ -------
<S> <C> <C> <C>
Current:
Federal (net of benefit of operating loss
carryforward of $737 in 1994, $600 in 1995 and
$45 in 1996)..................................... $ (45) $ (580) $(1,100)
State (net of benefit of operating loss
carryforward of $64 in 1994, $44 in 1995 and $12
in 1996)......................................... (25) -- (218)
Foreign........................................... (70) 193 --
----- ------ -------
(140) (387) (1,318)
----- ------ -------
Deferred:
Federal........................................... -- 1,091 262
State............................................. -- 100 91
Foreign........................................... (174) -- (72)
----- ------ -------
(174) 1,191 281
----- ------ -------
Decrease in valuation allowance..................... -- 820 923
----- ------ -------
$(314) $1,624 $ (114)
===== ====== =======
</TABLE>

Benefit from (provision for) income taxes relates to (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
-------------------
1994 1995 1996
----- ------ -----
<S> <C> <C> <C>
Operations............................................. $(273) $1,624 $(114)
Gain on debt restructuring............................. (41) -- --
----- ------ -----
$(314) $1,624 $(114)
===== ====== =====
</TABLE>

The components of the deferred tax asset are as follows (in thousands):
<TABLE>
<CAPTION>
JUNE 30,
--------------
1995 1996
------ ------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts receivable................. $ 112 $ 180
Allowance for excess and obsolete inventories.............. 26 50
Depreciation and amortization.............................. 707 1,092
Accrual for warranty, royalties and other.................. 1,116 1,452
Net operating loss carryforwards........................... 949 1,164
Tax credit carryforwards................................... 198 --
------ ------
Total deferred tax assets................................ 3,108 3,938
Deferred tax liability:
Purchased software products................................ -- (1,321)
Valuation allowance.......................................... (923) --
------ ------
Net deferred tax assets.................................. $2,185 $2,617
====== ======
</TABLE>

The valuation allowance decreased $820,000 in fiscal year 1995, primarily due
to the fact that management believed it is more likely than not that a portion
of the deferred tax asset will be realized in the next two fiscal

F-20
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

years primarily because of its expectation that both the Company and certain
of its subsidiaries will be profitable in fiscal years 1996 and 1997. At June
30, 1996, the Company reduced its valuation allowance and recorded the full
amount of its net deferred tax assets, primarily because management believes
that it is more likely than not that the Company will have continued
profitability.

The principal items accounting for the difference between income taxes
computed at the U.S. statutory rate and the (provision for) benefit from
income taxes reflected in the statements of operations are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------
1994 1995 1996
----- ------ -------
<S> <C> <C> <C>
United States statutory rate......................... $(674) $ (8) $ 2,551
State taxes, net of federal benefit.................. (20) (1) (127)
Foreign taxes, net................................... (257) 193 (72)
Utilization of operating loss carryforwards.......... 674 644 --
Change in valuation allowance........................ -- 820 923
Alternative minimum tax.............................. (37) -- 5
Foreign sales corporation............................ -- -- 60
Non-deductible purchased research and development.... -- -- (3,454)
Other................................................ -- (24) --
----- ------ -------
$(314) $1,624 $ (114)
===== ====== =======
</TABLE>

The Company has net operating loss and general business tax credit
carryforwards for federal income tax purposes which may be used to reduce
future taxable income, if any, and federal income tax liability, respectively.
The years in which these carryforwards expire and their amounts as of June 30,
1996 are as follows:

<TABLE>
<CAPTION>
EXPIRATION
DATE AMOUNTS
------------ ----------
<S> <C> <C>
U.S. federal net operating loss carryforwards....... Through 2007 $1,500,000
Foreign net operating loss carryforwards............ None 480,000
California state regular tax operating loss
carryforwards...................................... Through 1997 135,000
</TABLE>

The Tax Reform Act of 1986 substantially changed the rules relating to net
operating loss and tax credit carryforwards in the case of an ownership change
of a corporation. The Company had such an ownership change, as defined, which
has limited the amount of net operating loss carryforwards that can be used in
any one year to approximately $135,000.

F-21
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. SEGMENT INFORMATION:

The Company is a supplier of high performance solutions for enterprise
networked systems management. The Company provides software and services which
enable IBM and IBM-compatible MVS mainframes to be used as "enterprise
services" in distributed, heterogeneous client/server network environments.
Its business falls into one industry segment. No one customer accounted for
more than 10% of consolidated annual revenues in fiscal 1994, 1995 and 1996.
The distribution of revenues between the United States, Canadian and European
operations follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Revenues from unaffiliated customers:
United States................................... $14,263 $16,105 $19,923
Canada.......................................... -- -- 1,258
Europe.......................................... 7,612 10,974 12,821
Transfer from U.S. to Europe.................... 4,243 5,221 5,620
Eliminations.................................... (4,243) (5,221) (5,620)
------- ------- -------
Consolidated...................................... $21,875 $27,079 $34,002
======= ======= =======
</TABLE>

The Company assembles its systems domestically and then sells these systems
to its European subsidiaries for distribution in the European market. Internal
selling prices are designed to allocate operating profits to the operating
entity, with sales and service profits to the sales and service entities.
Consolidated income (loss) before income taxes and extraordinary items
comprised (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------
1994 1995 1996
------ ------ -------
<S> <C> <C> <C>
United States..................................... $480 $ 73 $ 4,711
Canada............................................ -- -- (10,858)
Europe............................................ 140 (50) (1,355)
---- ---- --------
$620 $ 23 $ (7,502)
==== ==== ========
</TABLE>

Consolidated total assets comprised (in thousands):

<TABLE>
<CAPTION>
JUNE 30,
---------------
1995 1996
------- -------
<S> <C> <C>
United States................................................ $12,373 $10,858
Canada....................................................... -- 5,857
Europe....................................................... 7,627 9,210
------- -------
$20,000 $25,925
======= =======
</TABLE>

Export sales were $276,000, $440,000 and $305,000 in fiscal years 1994, 1995
and 1996, respectively.

F-22
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. SUPPLEMENTAL CASH FLOW DISCLOSURES (IN THOUSANDS):

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------
1994 1995 1996
------ ---- -------
<S> <C> <C> <C>
Interest paid............................................. $ 329 $309 $ 591
Income taxes paid......................................... $ 106 $ 14 $ 890
Noncash transactions from investing and financing
activities:
Property and equipment acquired from capital lease
obligations............................................ $ 267 $678 --
Exchange of 363,636 shares of Series 1 preferred stock
for a note payable due to a common shareholder......... $1,000 -- --
Issuance of preferred and common stock warrants......... $ 42 -- $ 84
Issuance of common stock for acquisition of Lennox and
Partner GmbH........................................... -- $ 46 $ 19
Issuance of common stock in lieu of recruiting expenses. -- $ 5 --
Reclassification of inventory as rental equipment under
property and equipment................................. -- $230 --
Reduction of property and equipment and accumulated
depreciation for the disposal of fully depreciated
assets................................................. -- -- $ 4,127
Acquisition of New Era (see Note 2):
Assets acquired, excluding cash......................... -- -- $ 2,330
Liabilities assumed..................................... -- -- (3,473)
Purchased software products............................. -- -- 3,199
Purchased research and development...................... -- -- 10,158
Notes payable issued to former New Era stockholders (see
Note 5)................................................ -- -- (1,328)
Accrued liabilities for acquisition costs............... -- -- (403)
Issuance of common stock warrants....................... -- -- (315)
------ ---- -------
Net cash payments..................................... -- -- $10,168
====== ==== =======
</TABLE>

11. EMPLOYEE BENEFIT PLAN:

The Company has a 401(k) Profit Sharing Plan (the "Plan") qualified under
Section 401(k) of the Internal Revenue Code of 1986. All full-time U.S.
employees are eligible to participate in the Plan.

Each eligible employee may elect to contribute to the Plan up to 15% of the
employee's annual compensation. The Company, at the discretion of its board of
directors, may make matching contributions to the Plan but has not done so for
fiscal years 1994, 1995 and 1996.

12. PRO FORMA FINANCIAL STATEMENT INFORMATION:

Upon the closing of the Company's initial public offering, each outstanding
share of the Company's preferred stock will be converted automatically to
common stock. The pro forma effect of the conversion has been presented as a
separate column in the Company's balance sheet assuming the conversion had
occurred as of June 30, 1996.

F-23
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. SUBSEQUENT EVENTS:

In July 1996, the Company's Board of Directors, subject to stockholder
approval, authorized the outstanding shares of the predecessor California
corporation's common stock and all classes of its preferred stock to be
converted automatically into shares of the Delaware corporation's common stock
and its preferred stock on a reverse one-for-two basis (see Note 7).

In July 1996, the Company's Board of Directors, subject to stockholder
approval, authorized a further increase in the shares of common stock reserved
under the Company's 1992 Plan (see Note 7) of 150,000 shares to 2,105,000
shares.

In July 1996, the Company's Board of Directors, subject to stockholder
approval, authorized a further increase in the shares of common stock reserved
under the Company's Purchase Plan (see Note 7) of 100,000 shares to 350,000
shares.

In July 1996, the Company's Board of Directors, subject to stockholder
approval, authorized a further increase in the shares of common stock reserved
under the Company's Director Plan (see Note 7) of 50,000 shares to 150,000
shares.

F-24
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES
AND
NEW ERA SYSTEMS SERVICES LTD.

PRO FORMA COMBINED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

On December 29, 1995, Interlink Computer Sciences, Inc. and Subsidiaries
("Interlink" or the "Company") acquired New Era Systems Services Ltd ("New
Era") and its HARBOR product line in exchange for cash and notes payable
totaling $12,400,000 and warrants to purchase 350,000 shares of its Common
Stock with additional contingent earnout payments totaling up to $5,200,000
due January 31, 1997 and 1998. HARBOR is an enterprise level software product
line providing systems management functions such as backup, restore, and
distribution for centralized network management.

The following unaudited pro forma financial statement gives effect to the
acquisition of substantially all of the assets and liabilities of New Era by
Interlink as if such acquisition had taken place as of July 1, 1995.

The accompanying unaudited pro forma combined condensed consolidated
statement of operations for the year ended June 30, 1996 combines the
historical consolidated statement of operations of the Company for the year
ended June 30, 1996 and the historical statement of operations of New Era for
the six months ended November 30, 1995 as if the acquisition had occurred on
July 1, 1995. The results of operations of New Era are only included for the
six months ended November 30, 1995 as Interlink's historical results of
operations for the year ended June 30, 1996 include the results of New Era
since the date of acquisition on December 29, 1995. The unaudited pro forma
combined condensed consolidated statement of operations gives effect to the
acquisition using the purchase method of accounting based upon allocation of
the purchase price of New Era, and the adjustments described in the notes
attached hereto.

The pro forma combined information is not necessarily indicative of future
operations or the actual results that would have occurred had the acquisition
been consummated at the beginning of the periods presented. The pro forma
combined information and related adjustments are based upon available
information and upon certain assumptions which the Company believes are
reasonable. The pro forma combined condensed consolidated statement of
operations should be read in conjunction with the Company's and New Era's
historical financial statements and notes thereto incorporated by reference or
contained elsewhere herein.

Certain line items are reclassified in order to remain consistent with the
Company's financial presentation. The pro forma combined information is
presented in U.S. dollars.

F-25
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES
AND
NEW ERA SYSTEMS SERVICES LTD.

PRO FORMA COMBINED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>
INTERLINK, NEW ERA,
YEAR NINE MONTHS
ENDED ENDED PRO FORMA
JUNE 30, NOVEMBER 30, ADJUSTMENTS PRO FORMA
1996 1995 (SEE NOTE 2) COMBINED
---------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
Revenues:
Product.................. $19,670 $2,473 $ (731)(F) $21,412
Maintenance and
consulting.............. 14,332 1,060 (313)(F) 15,079
------- ------ -------- -------
Total revenue.......... 34,002 3,533 (1,044) 36,491
------- ------ -------- -------
Cost of revenues:
Product.................. 3,413 60 (20)(F) 3,453
Maintenance and
consulting.............. 4,594 367 (120)(F) 4,841
------- ------ -------- -------
Total cost of revenue.. 8,007 427 (140) 8,294
------- ------ -------- -------
Gross profit............... 25,995 3,106 (904) 28,197
Operating expenses
Product development...... 5,241 813 (389)(F) 5,665
Sales and marketing...... 13,316 829 (206)(F) 13,939
General and
administrative.......... 3,954 440 (200)(F) 4,194
Purchased research and
development............. 10,158 -- (10,158)(A) --
Amortization of
intangibles............. 321 -- 321 (B) 642
------- ------ -------- -------
Total operating
expenses.............. 32,990 2,082 (10,632) 24,440
------- ------ -------- -------
Operating income (loss).... (6,995) 1,024 9,728 3,757
Other income (expense),
net....................... -- (92) -- (92)
Interest income............ 194 -- (90)(D) 104
Interest expense........... (701) (4) (504)(C)(F) (1,209)
------- ------ -------- -------
Income (loss) before
benefit from
(provision for)
income taxes......... (7,502) 928 9,134 2,560
Benefit from (provision
for) income taxes......... (114) (15) 334 (E)(F) 205
------- ------ -------- -------
Net income (loss).... $(7,616) $ 913 $ 9,468 $ 2,765
======= ====== ======== =======
Net income (loss) per
share..................... $ (2.44) $ 0.56
======= =======
Shares used in per share
calculations.............. 3,127 1,827 (G) 4,954
======= ======== =======
</TABLE>

See the accompanying notes to Pro Forma Combined Condensed Consolidated
Statements of Operations (unaudited).

F-26
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES
AND
NEW ERA SYSTEMS SERVICES LTD.

NOTES TO PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

1. PURCHASE PRICE ALLOCATION:

The following outlines the current estimates for the purchase price of the
acquisition of New Era. Management believes that there will be no material
adjustments to this allocation, which is based on an independent appraisal of
the assets purchased and liabilities assumed as follows (in thousands):

<TABLE>
<S> <C>
Purchased research and development.................................. $10,158
Purchased software products......................................... 3,199
-------
13,357
Net book value of tangible assets acquired, net of liabilities
assumed............................................................ 356
-------
$13,001
=======
</TABLE>

In addition, contingent consideration up to a total of $5,200,000 is payable
in cash on January 31, 1997 and 1998, upon the attainment of certain targeted
revenue levels for New Era software products and maintenance. These amounts
represent additional consideration paid for the acquisition of New Era and up
to $2,700,000 will be recorded as purchased research and development and
expensed, if the products in research and development at the date of the
acquisition are still under research and development, and up to $800,000 will
be recorded as purchased software products. Amounts paid in excess of amounts
allocated to purchased research and development and purchased software
products will be recorded as goodwill and amortized over the remaining life of
the goodwill, which is estimated at five years from the date of the
acquisition.

2. PRO FORMA ADJUSTMENTS:

To reflect (i) the amortization and depreciation resulting from the
allocation of the New Era purchase price to the assets acquired based on their
fair value, as determined by the management of Interlink and an independent
appraiser, (ii) the changes in interest income and expense resulting from the
reduction in cash and cash equivalents and additional borrowings,
respectively, and (iii) the income tax impact of the foregoing, certain pro
forma adjustments have been made to the accompanying pro forma combined
condensed consolidated statements of operations, assuming that the purchase
took place on July 1, 1995, as follows:

(A) Elimination of a non-recurring charge of $10,158,000 for purchased
research and development. Due to the non-recurring nature of the purchased
research and development, it has been assumed to have been charged to
operations before the beginning of the pro forma periods.

(B) Records the amortization of purchased software over five years as if the
acquisition occurred on July 1, 1995 resulting in amortization of $321,000 for
the year ended June 30, 1996. Only six months of amortization is reflected in
this adjustment for the year ended June 30, 1996 as Interlink's historical
consolidated statement of operations included amortization of $321,000 for six
months.

(C) Records the interest expense of $492,000 for the year ended June 30,
1996 on additional short-term borrowings of $3,500,000 at a rate of 10.5% and
additional long-term borrowings, including non-interest-bearing borrowings
assumed or incurred in the acquisition, all totaling approximately $5,600,000.
Only six months interest is included in the adjustment for the year ended June
30, 1996 as Interlink's historical consolidated statement of operations
includes interest expense related to the acquisition for six months.

(D) Records the decrease in interest income resulting from the reduction of
cash available for investment of approximately $4,500,000 disbursed in the
acquisition.

F-27
<PAGE>

INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES
AND
NEW ERA SYSTEMS SERVICES LTD.

NOTES TO PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

(E) Adjusts the historical tax benefit of the Company for the tax benefit
realized from the deductible portion of entries (B), (C), and (D) at 40% for
Interlink and 45% for New Era, the incremental tax rate for each company.

(F) Elimination of New Era's results of operations for the three months
ended May 31, 1995 from New Era's results of operations for the nine months
ended November 30, 1995 as Interlink's historical results of operations for
the year ended June 30, 1996 includes the results of operations of New Era for
six months from December 29, 1995, the date of acquisition, to June 30, 1996.

(G) Increases shares used in the per share calculation for the dilutive
impact of the conversion of 1,230,000 shares of Series 1 Preferred Stock to
Common Stock on a one-for-one basis and the outstanding options and warrants
using the modified treasury stock method.

F-28
<PAGE>

AUDITORS' REPORT

To the Directors of
New Era Systems Services Ltd.

We have audited the consolidated balance sheets of New Era Systems Services
Ltd. as at February 28, 1994 and 1995 and the consolidated statements of
operations and deficit and cash flows for each of the years in the three year
period ended February 28, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in Canada. Those standards require that we plan and perform an audit
to obtain reasonable assurance 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.

In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of New Era Systems Services Ltd.
as at February 28, 1994 and 1995 and the results of its operations and the
changes in its financial position for each of the years in the three year
period ended February 28, 1995 in accordance with accounting principles
generally accepted in the United States.

Ernst & Young
Chartered Accountants

Calgary, Canada
May 1, 1995

F-29
<PAGE>

NEW ERA SYSTEMS SERVICES LTD.

CONSOLIDATED BALANCE SHEETS

(IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
FEBRUARY 28,
------------------------ NOVEMBER 30,
1994 1995 1995
----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS [note 4]
Current:
Cash and cash equivalents............. $ 182,409 $ 276,147 $ 762,032
Accounts receivable (net of $160,000
allowance for doubtful
accounts at November 30, 1995; nil -
February 28, 1995 and 1994).......... 1,493,654 1,522,294 1,066,975
Prepaid expenses...................... 26,945 46,418 51,934
Investment tax credit receivable...... 772,921 620,784 1,142,784
Current portion of long-term receiv-
ables [note 2]....................... -- 40,026 88,645
----------- ----------- -----------
Total current assets.............. 2,475,929 2,505,669 3,112,370
Long-term receivables [note 2].......... 220,467 385,602 441,399
Investment in New Era Software Inc. .... 26,089 134,041 124,118
Fixed assets [note 3]................... 440,096 429,630 512,409
----------- ----------- -----------
Total assets...................... $ 3,162,581 $ 3,454,942 $ 4,190,296
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIENCY)
Current:
Bank indebtedness [note 4]............ $ 160,000 $ 96,000 --
Accounts payable and accrued liabili-
ties................................. 770,340 431,959 $ 345,739
Current portion of deferred revenue
[note 5]............................. 344,625 1,658,221 859,083
Current portion of long-term debt
[note 6]............................. 45,794 51,355 157,615
----------- ----------- -----------
Total current liabilities......... 1,320,759 2,237,535 1,362,437
----------- ----------- -----------
Long-term debt [note 6]................. 1,478,715 2,129,323 2,461,991
----------- ----------- -----------
Deferred revenue [note 5]............... 78,030 77,471 76,082
----------- ----------- -----------
Commitments [note 9]
Shareholders' equity (deficiency)
Share capital [note 7].................. 2,413,342 2,599,807 2,628,125
Deficit................................. (2,128,265) (3,589,194) (2,338,339)
----------- ----------- -----------
Total shareholders' equity
(deficiency)..................... 285,077 (989,387) 289,786
----------- ----------- -----------
Total liabilities and
shareholders' equity
(deficiency)..................... $ 3,162,581 $ 3,454,942 $ 4,190,296
=========== =========== ===========
</TABLE>

See accompanying notes

F-30
<PAGE>

NEW ERA SYSTEMS SERVICES LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

(IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED FEBRUARY 28, NOVEMBER 30,
------------------------------------ ------------------------
1993 1994 1995 1994 1995
---------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue [note 5]........ $2,570,680 $ 3,857,592 $ 3,937,725 $ 2,694,495 $ 4,839,137
---------- ----------- ----------- ----------- -----------
Expenses:
Sales and marketing... 1,176,358 2,635,110 2,647,208 2,156,225 1,533,039
General and adminis-
trative.............. 571,501 588,861 758,599 514,258 586,516
Research and develop-
ment................. 1,487,450 1,459,470 1,583,174 1,166,332 1,060,731
Royalties............. 49,881 70,524 103,369 39,021 102,152
Depreciation.......... 125,032 205,310 238,148 178,553 147,465
Interest on long-term
debt................. 24,202 21,950 19,787 14,911 5,654
Restructuring of U.S.
operations........... -- 86,727 116,613 52,124 5,348
Foreign exchange
(gain) loss.......... (83,638) (86,549) 3,952 14,703 117,571
Gain on sale of soft-
ware assets.......... (110,063) -- (8,570) -- --
---------- ----------- ----------- ----------- -----------
Total expenses.... 3,240,723 4,981,403 5,462,280 4,136,127 3,558,476
---------- ----------- ----------- ----------- -----------
Income (loss) from oper-
ations................. (670,043) (1,123,811) (1,524,555) (1,441,632) 1,280,661
Equity earnings (loss)
from investment
[note 1]............... (107,237) (24,607) 87,640 52,714 (9,923)
---------- ----------- ----------- ----------- -----------
Income (loss) before
income taxes........... (777,280) (1,148,418) (1,436,915) (1,388,918) 1,270,738
Current income taxes
(recovery) [note 8].... (57,990) 14,405 24,014 8,173 19,883
---------- ----------- ----------- ----------- -----------
Net income (loss) for
the period............. $ (719,290) $(1,162,823) $(1,460,929) $(1,397,091) $ 1,250,855
========== =========== =========== =========== ===========
Deficit, beginning of
period................. $ (246,152) $ (965,442) $(2,128,265) $(2,128,265) $(3,589,194)
---------- ----------- ----------- ----------- -----------
Deficit, end of period.. $ (965,442) $(2,128,265) $(3,589,194) $(3,525,356) $(2,338,339)
========== =========== =========== =========== ===========
Earnings (loss) per
share.................. $ (4.01) $ (5.35) $ (6.25) $ (5.98) $ 5.35
========== =========== =========== =========== ===========
Shares used in per share
calculation............ 179,370 217,287 233,817 233,767 233,966
========== =========== =========== =========== ===========
</TABLE>

See accompanying notes

F-31
<PAGE>

NEW ERA SYSTEMS SERVICES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED FEBRUARY 28, NOVEMBER 30,
----------------------------------- -----------------------
1993 1994 1995 1994 1995
--------- ----------- ----------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operat-
ing activities:
Net income (loss) for
the period............ $(719,290) $(1,162,823) $(1,460,929) $(1,397,091) $1,250,855
Add (deduct) items not
requiring cash:
Depreciation.......... 125,032 205,310 238,148 178,553 147,465
Gain on sale of soft-
ware assets.......... (110,063) -- (8,570) -- --
Equity (earnings) loss
from investment...... 107,237 24,607 (87,640) (52,714) 9,923
Net change in non-cash
working capital
balances related to
operations [note 10].. 525,519 (608,902) 706,054 583,439 (1,067,678)
--------- ----------- ----------- ----------- ----------
Net cash provided by
(used in) operating
activities......... (71,565) (1,541,808) (612,937) (687,813) 340,565
--------- ----------- ----------- ----------- ----------
Cash flows from invest-
ing activities:
Additions to fixed as-
sets.................. (298,240) (322,336) (239,003) (98,612) (230,244)
Proceeds on sale of
fixed assets.......... -- -- 19,891 -- --
Investment............. -- -- (20,312) -- --
--------- ----------- ----------- ----------- ----------
Net cash used in
investing
activities......... (298,240) (322,336) (239,424) (98,612) (230,244)
--------- ----------- ----------- ----------- ----------
Cash flows from financ-
ing activities:
Increase in notes re-
ceivable.............. (38,967) (16,500) (16,500) (12,375) (12,375)
Proceeds from long-term
debt.................. 954,119 606,651 698,283 705,870 489,932
Repayment of long-term
debt.................. (10,057) (26,204) (42,114) (66,913) (51,004)
Issue of share capital. 712,991 739,495 2,500 2,500 4,925
Issue of share options. -- -- -- -- 6,700
Net change in non-cash
working capital
balances related to
financing [note 10]... (834,231) 307,112 303,930 190,400 (62,614)
--------- ----------- ----------- ----------- ----------
Net cash provided by
financing
activities......... 783,855 1,610,554 946,099 819,482 375,564
--------- ----------- ----------- ----------- ----------
Net increase (decrease)
in cash and cash
equivalents during
period................. 414,050 (253,590) 93,738 33,057 485,885
Cash and cash
equivalents, beginning
of period.............. 21,949 435,999 182,409 182,409 276,147
--------- ----------- ----------- ----------- ----------
Cash and cash equiva-
lents, end of period... $ 435,999 $ 182,409 $ 276,147 $ 215,466 $ 762,032
========= =========== =========== =========== ==========
Supplemental disclosure
of cash flow
information:
Interest paid on long-
term debt............. $ 24,202 $ 21,950 $ 19,787 $ 14,911 $ 5,654
Income taxes paid (re-
covered).............. (57,990) 14,405 24,014 8,173 19,883
Proceeds on sale of
software.............. 157,933 -- -- -- --
Investment............. (157,933) -- -- -- --
</TABLE>

See accompanying notes

F-32
<PAGE>

NEW ERA SYSTEMS SERVICES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(IN CANADIAN DOLLARS)

Information for the nine months ended November 30, 1994 and
information for periods subsequent to February 28, 1995 is unaudited

1. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States. The Company is
incorporated under the laws of Canada and the consolidated financial
statements are presented in Canadian dollars.

BASIS OF CONSOLIDATION

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

CASH EQUIVALENTS

The Company considers all investments with a maturity of three months or
less from the date of purchase and money market funds to be cash equivalents.

REVENUE RECOGNITION

Revenue from product sales is recognized upon delivery of the software, if
collectability is probable and remaining obligations are insignificant.
Estimated returns and provisions for estimated insignificant costs are
recorded upon shipment. Maintenance and support revenues, including revenue
bundled with initial licensing fees, are recognized ratably over the
contractual period of customer support.

FIXED ASSETS

Fixed assets are stated at cost and depreciated on the straight-line basis
over estimated useful lives of the assets. These lives are generally two years
for computer equipment and software and five years for furniture and
equipment. Automobiles are amortized over the remaining term of the lease.
Upon disposal, assets and related accumulated depreciation are removed from
the accounts and the related gain or loss is included in operations.

PRODUCT DEVELOPMENT COSTS

INVESTMENT

The Company accounts for its investment in New Era Software Inc., using the
equity method. On December 1, 1994, additional shares were issued by New Era
Software Inc. diluting the Company's ownership interest from 40% to 34.2%.

INCOME TAXES

Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes".
Under SFAS 109, deferred tax assets and liabilities are

F-33
<PAGE>

NEW ERA SYSTEMS SERVICES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN CANADIAN DOLLARS)

Information for the nine months ended November 30, 1994 and
information for periods subsequent to February 28, 1995 is unaudited

determined based on differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.

FOREIGN CURRENCY TRANSLATION

The Company's functional currency is Canadian dollars. Monetary assets and
liabilities denominated in foreign currencies are translated at exchange rates
in effect at the balance sheet date. Non-monetary assets and liabilities
denominated in foreign currencies are translated at rates in effect on the
dates the assets were acquired or liabilities were assumed. Revenues and
expenses are translated at rates of exchange prevailing on the transaction
dates. Gains and losses on translation are reflected in income when incurred.

INVESTMENT TAX CREDITS

Investment tax credits relating to software development are recognized at
such time as their recovery is reasonably assured and are recorded as a
reduction of research and development expenses.

INTERIM FINANCIAL DATA (UNAUDITED)

The unaudited financial statements for the nine months ended November 30,
1994 and 1995 have been prepared on the same basis as the audited financial
statements and, in the opinion of management, include all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation
of the financial position and results of operations, in accordance with
accounting principles generally accepted in the United States.

EARNINGS (LOSS) PER SHARE

Earnings (loss) per common and common equivalent share is computed using the
weighted average number of common and dilutive common equivalent shares
outstanding during the period. Dilutive common equivalent shares consist of
stock options using the treasury stock method.

2. LONG TERM RECEIVABLES

<TABLE>
<CAPTION>
FEBRUARY 28,
----------------- NOVEMBER 30,
1994 1995 1995
-------- -------- ------------
<S> <C> <C> <C>
Leases receivable............................. -- $188,661 $280,702
NOTE RECEIVABLE FROM AFFILIATE:
HTS Hi-Tech Systems Ltd.
Note receivable............................. $165,000 165,000 165,000
Interest receivable......................... 55,467 71,967 84,342
-------- -------- --------
220,467 425,628 530,044
Less current portion........................ -- 40,026 88,645
-------- -------- --------
$220,467 $385,602 $441,399
======== ======== ========
</TABLE>

Leases receivable are sales-type leases, which relate to the sale of HARBOR
software. The above amount represents the future aggregate minimum lease
payments over the next four years.

F-34
<PAGE>

NEW ERA SYSTEMS SERVICES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN CANADIAN DOLLARS)

Information for the nine months ended November 30, 1994 and
information for periods subsequent to February 28, 1995 is unaudited

The note receivable from HTS Hi-Tech Systems Ltd., a shareholder, has no
specified terms of repayment, bears interest at 10% per annum and has 20,000
Class A preferred shares of the Company pledged as collateral.

3. FIXED ASSETS

<TABLE>
<CAPTION>
FEBRUARY 28,
---------------------------------------------
1994 1995 NOVEMBER 30, 1995
--------------------- ----------------------- -----------------------
ACCUMULATED ACCUMULATED ACCUMULATED
COST DEPRECIATION COST DEPRECIATION COST DEPRECIATION
-------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Computer equipment...... $658,288 $384,014 $ 683,424 $501,889 $ 755,093 $535,657
Computer software....... 111,546 91,499 264,935 123,519 365,801 177,065
Furniture and fixtures.. 112,313 29,493 109,509 43,791 130,899 61,219
Automobiles............. 75,546 12,591 75,546 38,719 75,546 45,123
Trademark............... -- -- 4,134 -- 4,134 --
-------- -------- ---------- -------- ---------- --------
$957,693 $517,597 $1,137,548 $707,918 $1,331,473 $819,064
======== ======== ========== ======== ========== ========
Net book value.......... $440,096 $429,630 $512,409
================= ===================== =====================
</TABLE>

4. BANK INDEBTEDNESS

The Company has a $480,000 revolving credit facility. Amounts outstanding
under the facility bear interest at bank prime plus 1%. The Company has
pledged as collateral a general security agreement against all assets.

5. DEFERRED REVENUE
<TABLE>
<CAPTION>
FEBRUARY 28,
------------------- NOVEMBER 30,
1994 1995 1995
-------- ---------- ------------
<S> <C> <C> <C>
Unearned maintenance revenue................ $422,655 $ 612,138 $935,165
Prepaid royalties........................... -- 1,123,554 --
-------- ---------- --------
422,655 1,735,692 935,165
Less current portion........................ 344,625 1,658,221 859,083
-------- ---------- --------
$ 78,030 $ 77,471 $ 76,082
======== ========== ========
</TABLE>

Prepaid royalties relate to amounts received in advance from Hitachi Data
Systems Corporation with respect to the marketing rights acquired for the sale
of HARBOR software in the United States.

F-35
<PAGE>

NEW ERA SYSTEMS SERVICES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN CANADIAN DOLLARS)

Information for the nine months ended November 30, 1994 and
information for periods subsequent to February 28, 1995 is unaudited

6. LONG-TERM DEBT
<TABLE>
<CAPTION>
FEBRUARY 28,
--------------------- NOVEMBER 30,
1994 1995 1995
---------- ---------- ------------
<S> <C> <C> <C>
Western Economic Diversification loan
#1...................................... $ 888,097 $ 888,097 $ 888,097
Western Economic Diversification loan
#2...................................... 530,549 1,228,832 1,714,764
Obligation under capital leases......... 105,863 63,749 16,745
---------- ---------- ----------
1,524,509 2,180,678 2,619,606
Less current portion.................... 45,794 51,355 157,615
---------- ---------- ----------
$1,478,715 $2,129,323 $2,461,991
========== ========== ==========
</TABLE>

On June 12, 1995 the Western Economic Diversification agreement regarding
loan #1 was amended, such that it is repayable in quarterly installments
commencing June 30, 1996. Interest does not accrue until 1996 and only if any
amount remains unpaid 30 days after the due date. Interest accrues at 3% above
the Bank of Canada rate. Installments may be accelerated if certain conditions
are met.

On June 12, 1995 the Western Economic Diversification agreement regarding
loan #2 was amended, such that it is repayable in quarterly installments
commencing June 30, 1996. Interest of 3% above the Bank of Canada rate does
not accrue until 1996 and only if any amount remains unpaid 30 days after the
due date. Installments may be accelerated if certain conditions are met.

The future principal repayments of the Western Diversification loans and
obligation under capital leases are as follows:
<TABLE>
<CAPTION>
WESTERN DIVERSIFICATION OBLIGATION UNDER
LOANS CAPITAL LEASE
----------------------- ----------------
<S> <C> <C>
1996 (Three months).............. $ 140,870 $16,745
1997............................. 280,000 --
1998............................. 300,000 --
1999............................. 320,000 --
2000............................. 320,000 --
Thereafter....................... 1,241,991 --
---------- -------
$2,602,861 $16,745
========== =======
</TABLE>

7. SHARE CAPITAL

AUTHORIZED

Unlimited Class A common shares, restricted as to dividend payments thereon
unless the net realizable value of assets less liabilities exceeds the
combined redemption value of Class A and Class B preferred shares

100,000 Class A, 8% cumulative preferred non-voting shares, redeemable at
the option of the company or the holder at $8.25 per share on or after
September 1, 1993

100,000 Class B, 8% cumulative preferred non-voting shares, redeemable at
the option of the company or the holder at $8.25 per share on or after
September 1, 1993

F-36
<PAGE>

NEW ERA SYSTEMS SERVICES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN CANADIAN DOLLARS)

Information for the nine months ended November 30, 1994 and
information for periods subsequent to February 28, 1995 is unaudited

<TABLE>
<CAPTION>
NOVEMBER 30, 1995
---------------------
NUMBER
OF
SHARES CONSIDERATION
------- -------------
<S> <C> <C>
COMMON SHARES
Class A.............................................. 233,867 $1,989,431
Issued for cash...................................... 197 4,925
Proceeds on sale of options.......................... -- 6,700
------- ----------
234,064 $2,001,056
======= ==========
PREFERRED SHARES
Class A.............................................. 70,000 $ 577,500
Class B.............................................. 30,000 247,500
------- ----------
100,000 825,000
------- ----------
Notes receivable from employees...................... -- (197,931)
------- ----------
334,064 $2,628,125
======= ==========
</TABLE>

<TABLE>
<CAPTION>
FEBRUARY 28,
-----------------------------------------------------------------
1993 1994 1995
--------------------- --------------------- ---------------------
NUMBER NUMBER NUMBER
OF OF OF
SHARES CONSIDERATION SHARES CONSIDERATION SHARES CONSIDERATION
------- ------------- ------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
COMMON SHARES
Class A................. 149,934 $ 534,445 200,806 $1,247,436 233,767 $1,986,931
Issued for cash......... 50,872 712,991 32,961 739,495 100 2,500
------- ---------- ------- ---------- ------- ----------
200,806 $1,247,436 233,767 $1,986,931 233,867 $1,989,431
======= ========== ======= ========== ======= ==========
PREFERRED SHARES
Class A................. 70,000 $ 577,500 70,000 $ 577,500 70,000 $ 577,500
Class B................. 30,000 247,500 30,000 247,500 30,000 247,500
------- ---------- ------- ---------- ------- ----------
100,000 $ 825,000 100,000 $ 825,000 100,000 $ 825,000
======= ========== ======= ========== ======= ==========
Notes receivable
from employees......... -- $ (472,145) -- $ (398,589) -- $ (214,624)
------- ---------- ------- ---------- ------- ----------
308,806 $1,600,291 333,767 $2,413,342 333,867 $2,599,807
======= ========== ======= ========== ======= ==========
</TABLE>

Included in the Class A and Class B preferred shares is a contributed
surplus of $507,500 and $205,500 respectively.

The dividends on the Class A and Class B, 8% cumulative preferred non-voting
shares have not been declared or paid. As at November 30, 1995, the cumulative
amount in arrears are $219,450 (February 28, 1995--$184,800; February 28,
1994--$138,600) and $94,050 (February 28, 1995--$79,200; February 28, 1994--
$59,400) respectively.

At November 30, 1995 directors, officers and employees held options to
purchase 50,000 Class A common shares of the Company at a price of $15 per
share. The options expire on February 28, 1998.

F-37
<PAGE>

NEW ERA SYSTEMS SERVICES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN CANADIAN DOLLARS)

Information for the nine months ended November 30, 1994 and
information for periods subsequent to February 28, 1995 is unaudited

Upon the issue of common shares from treasury, or under option, the proceeds
are credited to the common stock account. No charges are made against income
with respect to these transactions, as the options are issued at fair market
value.

The notes receivable from employees represent advances to employees of the
Company and one of its wholly owned subsidiaries to purchase Class A common
shares. The notes bear interest at rates between 6% and 11% per annum and are
repayable over three to ten years. The common shares purchased have been
pledged as collateral for the notes receivable.

8. INCOME TAXES

The provision for income taxes differs from the amount that would have been
expected by applying corporate income tax rates to income before income taxes.
The principal reasons for this difference are as follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED FEBRUARY 28, NOVEMBER 30,
---------------------------------- ----------------------
1993 1994 1995 1994 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Domestic income (loss)
before income taxes.... $ (515,283) $ (348,817) $ (647,530) $ (536,783) $ (227,545)
Foreign income (loss)
before income taxes.... (261,997) (800,101) (789,385) (852,135) 1,498,283
---------- ---------- ---------- ---------- ----------
Income (loss) before
income taxes........... (777,280) (1,148,918) (1,436,915) (1,388,918) 1,270,738
---------- ---------- ---------- ---------- ----------
Expected tax expense
(recovery)............. (344,646) (509,209) (637,128) (619,180) 566,495
Add (deduct) impact of:
Non-taxable portion of
royalty income....... (19,860) (12,705) (34,791) 21,862 19,860
Investment tax credit
earned............... (34,698) (31,703) (62,672) (63,436) (55,342)
Non-taxable portion of
capital gain......... (12,200) -- -- -- --
Non-deductible equity
loss (earnings)...... 47,549 10,911 (38,859) 23,373 4,399
Foreign rate
differences.......... 27,733 79,158 74,307 123,256 (52,312)
Other................. 26,836 (70,797) 97,563 61,930 69,704
---------- ---------- ---------- ---------- ----------
(309,286) (534,345) (601,580) (452,195) 552,804
Less change in valuation
allowance.............. 251,296 548,750 625,594 460,368 (532,921)
---------- ---------- ---------- ---------- ----------
$ (57,990) $ 14,405 $ 24,014 $ 8,173 $ 19,883
========== ========== ========== ========== ==========
</TABLE>

As at November 30, 1995, the Company had net operating losses carried
forward for income taxes purposes of approximately $195,348 which are
available to be carried forward to future periods. These losses expire as
follows:

<TABLE>
<CAPTION>
CANADA IRELAND TOTAL
------ -------- --------
<S> <C> <C> <C>
1999................................................ $1,021 -- $ 1,021
Indefinitely........................................ -- $194,327 194,327
------ -------- --------
$1,021 $194,327 $195,348
====== ======== ========
</TABLE>

F-38
<PAGE>

NEW ERA SYSTEMS SERVICES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN CANADIAN DOLLARS)

Information for the nine months ended November 30, 1994 and
information for periods subsequent to February 28, 1995 is unaudited

The Company has investment tax credits of $370,000 available as a reduction
of future years' taxes payable. These credits expire in 2002 ($53,000), 2003
($32,000), 2004 ($41,000), 2005 ($79,000) and 2006 ($165,000).

The deferred tax asset primarily represents research and development
expenditures charged against income in the financial statements but not yet
deducted for income tax purposes. As there is substantial uncertainty as to
whether these deductions will be utilized, the Company has established a
valuation allowance to recognize this uncertainty.
<TABLE>
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
--------------------------------- ----------------------
1993 1994 1995 1994 1995
--------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Deferred tax asset...... $ 251,296 $ 800,046 $ 1,425,640 $ 1,260,414 $ 892,719
Valuation allowance..... (251,296) (800,046) (1,425,640) (1,260,414) (892,719)
--------- --------- ----------- ----------- ---------
Net deferred tax asset.. -- -- -- -- --
========= ========= =========== =========== =========
</TABLE>

9. COMMITMENTS

Future minimum lease payments over the next five years under the Company's
office leases are as follows:

<TABLE>
<S> <C>
1996 (three months).............................................. $ 42,413
1997............................................................. 169,650
1998............................................................. 163,962
1999............................................................. 156,000
2000............................................................. 156,000
Thereafter....................................................... 13,000
--------
$701,025
========
</TABLE>

F-39
<PAGE>

NEW ERA SYSTEMS SERVICES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN CANADIAN DOLLARS)

Information for the nine months ended November 30, 1994 and
information for periods subsequent to February 28, 1995 is unaudited

10. NET CHANGE IN NON-CASH WORKING CAPITAL
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED FEBRUARY 28, NOVEMBER 30,
---------------------------------- ----------------------
1993 1994 1995 1994 1995
--------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
(INCREASE) DECREASE IN
CURRENT ASSETS
Accounts receivable.... $ (39,577) $(1,020,678) $ (28,640) $ 206,491 $ 455,319
Prepaid expenses....... 5,826 (19,043) (19,473) (30,043) (5,516)
Investment tax credit
receivable............ (161,885) (93,858) 152,137 250,921 (522,000)
Lease receivable....... -- -- (188,661) (4,125) (92,041)
Notes receivable from
employees............. (292,437) 73,556 183,965 175,204 16,693
--------- ----------- ---------- --------- -----------
$(488,073) $(1,060,023) $ 99,328 $ 598,448 $ (147,545)
========= =========== ========== ========= ===========
INCREASE (DECREASE) IN
CURRENT LIABILITIES
Bank indebtedness...... -- $ 160,000 $ (64,000) $(160,000) $ (96,000)
Accounts payable and
accrued liabilities... $ (7,189) 419,628 (338,381) 335,755 (86,220)
Deferred maintenance
revenue............... 186,550 178,605 1,313,037 (364) (800,527)
--------- ----------- ---------- --------- -----------
179,361 758,233 910,656 175,391 (982,747)
--------- ----------- ---------- --------- -----------
$(308,712) $ (301,790) $1,009,984 $ 773,839 $(1,130,292)
========= =========== ========== ========= ===========
NET CHANGE IN NON-CASH
WORKING CAPITAL BALANCES
RELATED TO:
Operating.............. $ 525,519 $ (608,902) $ 706,054 $ 583,439 $(1,067,678)
Financing.............. (834,231) 307,112 303,930 190,400 (62,614)
--------- ----------- ---------- --------- -----------
$(308,712) $ (301,790) $1,009,984 $ 773,839 $(1,130,292)
========= =========== ========== ========= ===========
</TABLE>

11. SUBSEQUENT EVENTS

On December 28, 1995 the Company sold its 34.2% interest in New Era Software
Inc. and the royalty rights to certain software owned by New Era Software Inc.
for net cash consideration of U.S. $540,000.

On December 29, 1995, 100% of the issued and outstanding common shares of
the Company were acquired by Interlink Computer Sciences, Inc. Immediately
prior to this acquisition all of the Class A preferred shares of the Company
were redeemed for aggregate consideration of $808,500, including unpaid
dividends.

F-40
<PAGE>

NEW ERA SYSTEMS SERVICES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN CANADIAN DOLLARS)

Information for the nine months ended November 30, 1994 and
information for periods subsequent to February 28, 1995 is unaudited

12. SEGMENTED INFORMATION

The Company is involved in three distinct geographic segments.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED FEBRUARY 28, NOVEMBER 30,
------------------------------------ -----------------------
1993 1994 1995 1994 1995
---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
REVENUES:
Canada................ $1,719,017 $ 2,613,710 $ 1,984,688 $ 1,519,033 $2,581,708
United States......... 851,663 856,100 1,134,611 766,090 1,370,104
Ireland............... -- 387,782 818,426 409,372 887,325
---------- ----------- ----------- ----------- ----------
Total revenues...... $2,570,680 $ 3,857,592 $ 3,937,725 $ 2,694,495 $4,839,137
========== =========== =========== =========== ==========
OPERATING INCOME:
Canada................ $ (408,046) $ (323,710) $ (735,170) $ (589,497) $ (217,622)
United States......... (261,997) (735,244) (583,604) (534,430) 1,305,417
Ireland............... -- (64,857) (205,781) (317,705) 192,866
---------- ----------- ----------- ----------- ----------
Total operating
income............. $ (670,043) $(1,123,811) $(1,524,555) $(1,441,632) $1,280,661
========== =========== =========== =========== ==========
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
------------------------------------ -----------------------
1993 1994 1995 1994 1995
---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Canada................ $1,389,923 $ 1,804,852 $ 1,921,001 $ 1,564,247 $2,121,554
United States......... 783,750 966,699 897,420 662,388 1,283,489
Ireland............... -- 391,030 636,521 355,681 785,253
---------- ----------- ----------- ----------- ----------
Total assets........ $2,173,673 $ 3,162,581 $ 3,454,942 $ 2,582,316 $4,190,296
========== =========== =========== =========== ==========
</TABLE>

F-41
<PAGE>

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

NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDERS OR ANY OF THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY, ANY SECURITIES OTHER THAN THE SHARES OF COMMON STOCK TO WHICH IT
RELATES OR AN OFFER TO, OR A SOLICITATION OF, ANY PERSON IN ANY JURISDICTION
WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. 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 AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 17
Dividend Policy........................................................... 17
Capitalization............................................................ 18
Dilution.................................................................. 19
Selected Consolidated Financial Data...................................... 20
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 21
Business.................................................................. 31
Management................................................................ 45
Certain Transactions...................................................... 52
Principal and Selling Stockholders........................................ 53
Description of Capital Stock.............................................. 55
Shares Eligible for Future Sale........................................... 58
Underwriting.............................................................. 60
Legal Matters............................................................. 61
Experts................................................................... 61
Additional Information.................................................... 61
Glossary.................................................................. 62
Index to Consolidated Financial Statements................................ F-1
</TABLE>

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

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

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

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2,700,000 SHARES

[LOGO OF INTERLINK COMPUTER SCIENCES]

COMMON STOCK

--------

PROSPECTUS

--------

VOLPE, WELTY & COMPANY

PUNK, ZIEGEL & KNOELL

, 1996

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