VISIGENIC SOFTWARE INC, 424A, 1996-07-24

VISIGENIC SOFTWARE INC
424A, 1996-07-24
PREPACKAGED SOFTWARE

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FILED PURSUANT TO RULE 424(a)
REGISTRATION NO. 333-06285

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JULY 22, 1996

PROSPECTUS

2,100,000 SHARES

LOGO
OF VISIGENIC SOFTWARE, INC.

COMMON STOCK

Of the 2,100,000 shares of Common Stock offered hereby, 1,700,000 shares are
being sold by the Company and 400,000 shares are being sold by the Selling
Stockholders. The Company will not receive any of the proceeds from the sale of
the shares by the Selling Stockholders. See "Principal and 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 $9.00 and $11.00 per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price. The Company has applied to have the Common Stock approved for
quotation on the Nasdaq National Market under the symbol VSGN.

-----------

THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" 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>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC DISCOUNT (1) COMPANY (2) STOCKHOLDERS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.............. $ $ $ $
- --------------------------------------------------------------------------------
Total (3).............. $ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.
(2) Before deducting expenses payable by the Company estimated at $750,000.
(3) The Company and the Selling Stockholders have granted the Underwriters a
30-day option to purchase up to 315,000 additional shares of Common Stock
solely to cover over-allotments, if any. If all such shares are purchased,
the total Price to Public, Underwriting Discount, Proceeds to Company and
Proceeds to Selling Stockholders will be $ , $ , $ and $ ,
respectively. See "Underwriting."

-----------

The shares of Common Stock are offered by the several Underwriters subject to
prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about , 1996, at the office of the agent of Hambrecht &
Quist LLC in New York, New York.

HAMBRECHT & QUIST ROBERTSON, STEPHENS & COMPANY

, 1996
<PAGE>

[Examples of applications which embed Visigenic's database
connectivity and distributed object connectivity products
appear in color here]

Visigenic, the Visigenic logo, VisiBroker, VisiODBC and VisiChannel are
trademarks of the Company. This Prospectus also includes trademarks of
companies other than the Company.

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

2
<PAGE>

Digitalized artwork illustrating how the Visigenic database connectivity and
distributed object connectivity products simplify the development, deployment
and management of reliable and flexible distributed applications while enabling
enterprise users, customers, suppliers and other business partners to easily
access enterprise data.

<PAGE>

SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
See "Risk Factors" for a discussion of certain factors to be considered by
prospective investors.

THE COMPANY

Visigenic Software, Inc. ("Visigenic" or the "Company") is a leading provider
of software tools for database and distributed object connectivity for the
Internet, Intranet and enterprise computing environments. The Company's
standards-based products facilitate the development, deployment and management
of distributed applications by providing database-independent access to leading
databases and the communications infrastructure for distributed object-oriented
applications.

In today's complex computing environment, enterprises require flexible access
to data and applications, regardless of whether the data and applications are
located at the central office, a remote office or across the Internet.
Enterprise computing environments are increasingly using multiple database
management systems ("DBMSs"), operating systems, networks and hardware
platforms and relying on object-oriented technologies to develop and deploy
distributed applications for these heterogeneous environments. The rapid growth
of the Internet and Intranets, both of which are heterogeneous distributed
computing environments, is accelerating the need for tools to develop, deploy
and manage distributed applications.

The Visigenic solution provides key components of the software infrastructure
that enables developers and information technology ("IT") professionals to
develop, deploy and manage distributed applications. The Company believes
business applications increasingly will be comprised of objects, Java applets
and databases that are distributed on networks and dynamically assembled into
highly customized distributed solutions. The Company's products enable the
enterprise to adapt its application architecture to meet changing business and
computing requirements by simplifying the development and deployment of
distributed database and object-oriented applications. Visigenic's products
support existing and emerging industry standards, making the Company's
solutions open, flexible and interoperable across multiple operating
environments. The Company believes that its products are especially well suited
for large distributed computing environments such as the Internet and
Intranets.

The Company's strategy is to become the premier provider of software tools
which enable developers and IT professionals to develop, deploy and manage
distributed applications for Internet, Intranet and enterprise computing
environments. Visigenic supports and contributes to the enhancement of open
industry standards through active participation in several standards setting
organizations. The Company intends to continue to develop strategic
relationships with leading technology companies to promote the widespread
acceptance and distribution of Visigenic products. Visigenic has established
strategic relationships with Cisco, Hitachi, Microsoft, Netscape and Platinum
technology. Additionally, the Company intends to leverage its products and
expertise to exploit the emergence of the Internet and Intranets.

The Company markets and sells its software through its direct sales and
telesales forces, independent software vendors ("ISVs"), value added resellers
("VARs"), international distributors and on-line Internet sales in North
America, Europe and Asia. The Company's customers include ASCII Corporation,
Cisco, Compuware, Borland, Healtheon, Hewlett-Packard, Hitachi, Merrill Lynch,
MCI Telecommunications, Microsoft, Netscape, Oracle, Platinum technology and
Software AG.

The Company was incorporated in February 1993. The Company's principal
executive offices are located at 951 Mariner's Island Boulevard, Suite 120, San
Mateo, California, 94404. Its telephone number is (415) 286-1900. Its email
address is [email protected] and its World Wide Web site is located at
http://www.visigenic.com. Information contained on the Company's Web site shall
not be deemed to be a part of this Prospectus.

3
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THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.................... 1,700,000 shares
Common Stock offered by the Selling Stockholders....... 400,000 shares
Common Stock to be outstanding after the offering...... 12,169,971 shares (1)
Use of proceeds........................................ General corporate purposes,
including working capital and
possible repayment of revolving and
bridge credit facilities
Proposed Nasdaq National Market symbol................. VSGN
</TABLE>

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

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, QUARTER ENDED JUNE 30,
--------------------------------------- ------------------------------
1996 1996
--------------------- ----------------------
PRO FORMA PRO FORMA
1994 1995 ACTUAL COMBINED (2) 1995 ACTUAL COMBINED (2)
------- ------- ------- ------------ ------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue................. -- $ 1,115 $ 5,575 $ 6,577 $ 911 $ 2,961 $ 3,093
Gross profit............ -- 820 4,564 5,303 722 2,528 2,584
Loss from operations.... (2,496) (4,723) (4,464) (6,422) (978) (13,665) (13,901)
Net loss................ $(2,454) $(4,629) $(4,379) $(6,337) $ (977) $(13,659) $(13,895)
Pro forma net loss per
share (3).............. -- -- $ (.39) $ (.57) $ (.09) $ (1.21) $ (1.23)
Pro forma weighted
average common and
common equivalent
shares (3)............. -- -- 11,120 11,120 10,602 11,289 11,289
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
--------------------------------
PRO
ACTUAL FORMA (4) AS ADJUSTED (5)
------ --------- ---------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents..................... $1,890 $1,890 $16,426
Working capital............................... 2,331 2,331 17,391
Total assets.................................. 9,962 9,962 24,498
Convertible notes payable to stockholders..... 2,000 -- --
Stockholders' equity.......................... 3,111 5,111 20,171
</TABLE>
- -------------
(1) Excludes 1,449,285 shares of Common Stock issuable upon exercise of options
outstanding as of June 30, 1996 with a weighted average exercise price of
$1.76. See "Capitalization" and "Management--Stock Plans."
(2) The pro forma combined statement of operations data gives effect to the May
1996 acquisition of PostModern Computing Technologies Inc. as if it had
occurred on April 1, 1995. The acquisition was accounted for as a purchase
and resulted in the write-off of approximately $12.0 million of in process
product development in the quarter ended June 30, 1996. The pro forma
combined statement of operations data for the year ended March 31, 1996
does not give effect to this write-off. See Note 9 of Notes to Consolidated
Financial Statements of Visigenic and Pro Forma Condensed Combined
Financial Statements.
(3) See Note 2 of Notes to Consolidated Financial Statements of Visigenic for
an explanation of the method used to determine the number of shares used to
compute per share amounts.
(4) Gives pro forma effect to the conversion upon the closing of this offering
of all outstanding shares of Preferred Stock and convertible notes into
shares of Common Stock.
(5) Adjusted to reflect the sale of 1,700,000 shares of Common Stock offered by
the Company hereby at an assumed public offering price of $10.00 per share
and the application of the estimated net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."

---------------
Except as otherwise noted herein, information in this Prospectus assumes (i)
no exercise of the Underwriters' over-allotment option, (ii) the amendment and
restatement of the Company's Certificate of Incorporation prior to the
effective date of this offering effecting a 1 for 2 reverse stock split, (iii)
the conversion of outstanding convertible notes into an aggregate of
approximately 200,000 shares of Common Stock upon the consummation of this
offering, and (iv) the conversion of all outstanding shares of Preferred Stock
of the Company into an aggregate of 4,119,069 shares of Common Stock upon the
consummation of this offering. See "Capitalization," "Description of Capital
Stock" and "Underwriting."

4
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RISK FACTORS

The following risk factors should be considered carefully in addition to the
other information contained in this Prospectus before purchasing the Common
Stock offered hereby. This Prospectus contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Actual results could differ
materially from those projected in the forward-looking statements as a result
of the risk factors set forth below and elsewhere in this Prospectus.

Limited Operating History; History of Losses; Recent Acquisition of
Distributed Object Connectivity Business. The Company was incorporated in 1993
and commenced shipment of its initial products in November 1994. In May 1996,
the Company acquired PostModern Computing Technologies Inc. ("PostModern"), a
developer of distributed object connectivity software. PostModern was founded
in 1991, commenced shipment of its initial products in 1992 and had very
limited product sales prior to the acquisition. Accordingly, the Company has
only a limited operating history, particularly with respect to its newly
acquired distributed object connectivity business, upon which an evaluation of
the Company and its future operating results can be based.

Since inception, the Company has incurred significant losses and negative
cash flow. At June 30, 1996, the Company had cumulative operating losses of
$25.1 million, with net losses of $2.5 million, $4.6 million, $4.4 million and
$13.7 milion for fiscal 1994, fiscal 1995, fiscal 1996 and the quarter ended
June 30, 1996, respectively. A substantial portion of the accumulated deficit
is due to the significant commitment of resources to the Company's product
development and sales and marketing activities and the write-off of
approximately $12.0 million of in process product development in the quarter
ended June 30, 1996 in connection with the acquisition of PostModern. The
Company expects to continue to devote substantial resources in these areas and
as a result will need to generate significant revenue in order to achieve
profitability. The Company currently anticipates that it will operate at a
loss through at least the middle of 1997. The Company has experienced
substantial growth in revenue in fiscal 1996. The Company expects that prior
growth rates of the Company's software product revenue will not be sustainable
in the future. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

The Company, which prior to the acquisition of PostModern did not provide
distributed object connectivity software, expects that its revenue growth
commencing in the current fiscal year will be dependent, in part, on sales of
distributed object connectivity products. The Company's ability to develop a
distributed object connectivity software business will depend upon several
factors, including, but not limited to, its ability to integrate the
operations and personnel of PostModern into the Company, the ability of the
Company's sales personnel and distribution channels to sell distributed object
connectivity software and the commercial acceptance of the Company's
distributed object connectivity software. Because the market for distributed
object technology is new and emerging and customers' expertise about this
technology is limited, the Company believes that customer support is critical
to achieving sales of the Company's distributed object connectivity products.
The Company currently has few dedicated support engineers capable of providing
the required level of customer support with respect to its distributed object
technology business. If the Company is unsuccessful at attracting additional
support and engineering personnel, this is likely to have a material adverse
effect on the Company's distributed object connectivity business. There can be
no assurance, particularly in light of the recent acquisition of PostModern by
the Company and the limited operating history of PostModern itself, that the
Company's distributed object connectivity software business will be
successful. Any failure by the Company to develop a successful distributed
object connectivity software business would have a material adverse effect on
the Company's business, results of operations and financial condition.

The process of integrating PostModern into the Company may result in
unforeseen operating difficulties and expenditures and may absorb significant
management attention that would otherwise be available for ongoing development
of the Company's business. Moreover, there can be no assurance that the
anticipated benefits of this acquisition will be realized.

Potential Fluctuations in Operating Results. The Company's revenue and
results of operations have varied on a quarterly basis in the past and are
expected to vary significantly in the future. Accordingly, the Company

5
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believes that period to period comparisons of its results of operations are
not necessarily meaningful and should not be relied upon as indications of
future performance. The Company's revenue and results of operations are
difficult to forecast and could be adversely affected by many factors,
including, among others, the size, timing and terms of individual license
transactions; the relatively long sales and implementation cycles for the
Company's products; the delay or deferral of customer implementations; changes
in the Company's operating expenses; the ability of the Company to develop and
market new products and control costs; market acceptance of new products;
timing of introduction or enhancement of products by the Company or its
competitors; the level of product and price competition; the ability of the
Company to expand its direct sales and telesales forces, its indirect
distribution channels and its customer support capabilities; activities of and
acquisitions by competitors; changes in connectivity software, database
technology and industry standards; changes in the mix of products and services
sold; changes in the mix of channels through which products and services are
sold; levels of international sales; personnel changes and difficulties in
attracting and retaining qualified sales, marketing and technical personnel;
changes in customers' budgeting cycles; foreign currency exchange rates;
quality control of products sold; and general economic conditions. In
particular, the ability of the Company to achieve revenue growth in the future
will depend on its success in adding a substantial number of sales and sales
support personnel in fiscal 1997. Competition for such personnel is intense
and there can be no assurance the Company will be able to attract and retain
these personnel.

Licensing of the Company's software products historically has accounted for
the substantial majority of the Company's revenue, and the Company anticipates
that this trend will continue for the foreseeable future. The Company's
software products revenue is difficult to forecast for a number of reasons.
The Company typically does not have a material backlog of unfilled orders, and
revenue in any quarter is substantially dependent on contracts received in
that quarter. A significant portion of the Company's revenue in prior periods
has been derived from relatively large sales to a limited number of customers,
and the Company currently anticipates that future quarters will continue to
reflect this trend. In fiscal 1996, approximately 78% of the Company's revenue
was derived from ten customers and revenue from one customer, Platinum
technology, Inc., accounted for approximately 25% of the Company's total
revenue. For the quarter ended June 30, 1996, approximately 75% of the
Company's revenue was derived from ten customers, and revenue from one
customer, Cisco Systems, Inc., accounted for approximately 34% of the
Company's total revenue. Sales cycles for the Company's products typically
range from six to twelve months, and the terms and conditions of individual
license transactions, including prices and discounts, are often highly
negotiated based on volumes and commitments and vary considerably from
customer to customer. In addition, the Company has generally recognized a
substantial portion of its revenue in the last month of each quarter, with
this revenue concentrated in the last weeks of the quarter. Accordingly, the
cancellation or deferral of even a small number of purchases of the Company's
products has in the past and could in the future have a material adverse
effect on the Company's business, results of operations and financial
condition in any particular quarter. Cancellations or deferrals of orders may
be caused by any of a number of factors, including delays in new or enhanced
product shipments. To the extent that significant sales occur earlier than
expected, operating results for subsequent quarters may be adversely affected.
A significant portion of the Company's revenue has been and is expected in the
future to continue to be based upon sales to third party vendors, who will
incorporate the Company's products in their own products. This revenue depends
upon the success of third parties, and as a result is difficult for the
Company to predict and may be subject to extreme fluctuation.

The Company's expense levels are based, in part, on its expectations as to
future revenue and to a large extent are fixed in the short term. The Company
may be unable to adjust spending in a timely manner to compensate for any
unexpected revenue shortfall. Accordingly, any significant shortfall of
revenue in relation to the Company's expectations would have an almost
immediate adverse effect on the Company's business, financial condition and
results of operations. Further, the Company intends to continue to expand its
development teams and its sales and marketing force. The timing of such
expansion and the rate at which new development and sales and marketing
personnel become productive could cause material fluctuations in quarterly
results of operations.

6
<PAGE>

As a result of the foregoing or other factors, it is likely that in some
future period the Company's results of operations will fail to meet the
expectations of public market analysts or investors, and the price of the
Company's Common Stock would likely be materially adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Product Concentration. Prior to the acquisition of PostModern in May 1996,
the Company derived all of its revenue from the licensing of its database
connectivity software products, particularly its Open Database Connectivity
("ODBC") product line, and fees from related services. These products and
services are expected to continue to account for a substantial majority of the
Company's revenue for the foreseeable future. As a result, a reduction in
demand or increase in competition for these products, or a decline in sales of
such products, would have a material adverse effect on the Company's business,
results of operations and financial condition. See "Business--Products."

Dependence on Emerging Markets and Evolving Standards; Acceptance of the
Company's Products. The Company's future financial performance will depend on
the growth in demand for standards-based database connectivity and distributed
object connectivity software products. These markets are new and emerging, are
rapidly evolving, are characterized by an increasing number of market entrants
and will be subject to frequent and continuing changes in customers'
preferences and technology. As is typical in new and evolving markets, demand
and market acceptance for products are subject to a high level of uncertainty.

To date, substantially all of the Company's revenue is derived from the
licensing of database connectivity products and fees for related services.
These products are based on the ODBC standard, which was developed to enable
applications to access data from all ODBC-compliant data sources. While the
ODBC standard is supported by most of the major database and software vendors,
it is a recent standard that has not yet gained widespread acceptance and that
currently co-exists with proprietary database connectivity solutions from many
of these same database and software vendors.

With the acquisition of PostModern in May 1996, the Company began to offer
standards-based distributed object connectivity products. The Company's
current distributed object connectivity products are based on several
standards, including the Common Object Request Broker Architecture ("CORBA")
and the Internet Inter-ORB Protocol ("IIOP"). These standards are intended to
facilitate the management and communication of applications created in object-
oriented programming languages such as C++ and Java. These standards are new,
have not yet gained widespread acceptance and compete with proprietary
solutions such as Microsoft's ActiveX and Distributed Component Object Model
("DCOM"). The distributed object connectivity software market is relatively
young and there are few proven products. Further, some of the Company's
distributed object connectivity products are designed specifically for use in
applications for the Internet and Intranets. Because critical issues
concerning the Internet and Intranets -- including security, reliability,
cost, ease of use and access and quality of service -- remain unresolved, the
growth of applications targeted at the Internet and Intranets is uncertain and
difficult to predict.

Because the markets for the Company's products are new and evolving, it is
difficult to assess or predict with any assurance the size or growth rate, if
any, of these markets. There can be no assurance that the markets for the
Company's products will develop, or that the Company's products will be
adopted. If these markets fail to develop, develop more slowly than expected
or attract new competitors, or if the Company's products do not achieve market
acceptance, the Company's business, results of operations and financial
condition could be materially adversely affected. Because the Company's
strategy is to develop standards-based products and these standards are
relatively new, not widely accepted and compete with other emerging standards,
to the extent that these standards are not commercially successful, this will
have a material adverse affect on the Company's business, results of
operations and financial condition. Competing or alternative technologies are
being or are likely in the future to be promoted by current and potential
competitors of the Company, some of which have well-established relationships
with the current and potential customers of the Company and have extensive
knowledge of the markets served by the Company, better name recognition and
more extensive development, sales and marketing resources than the Company.

7
<PAGE>

While the Company has licensed its products to numerous customers, most of
these customers are currently developing applications that incorporate the
Company's products, and only a very limited number of them have deployed or
shipped such applications. To the extent these customers are unable to or
otherwise do not deploy or ship applications that incorporate the Company's
products, or if these applications are not successful, this will have a
material adverse effect on the Company's business, results of operations and
financial condition. See "--Intense Competition" and "Business--Industry
Background."

Reliance on VARs and ISVs. A significant element of the Company's strategy
is to embed its technology in products offered by the Company's VAR and ISV
customers, such as Cisco, Healtheon, Hewlett-Packard, Microsoft, Netscape,
Oracle and Platinum technology. A relatively small number of VAR and ISV
customers have accounted for a significant percentage of the Company's
revenue. The Company intends to seek similar distribution arrangements with
other VARs and ISVs and expects that these arrangements will account for a
significant portion of the Company's revenue in future periods. To date, the
terms and conditions, including prices and discounts, of the Company's
agreements with its VAR and ISV customers have been highly negotiated and vary
significantly between customers. Many of the markets for the VAR and ISV
products in which the Company's technology are being embedded are new and
evolving and, therefore, subject to the same risks faced by the Company in the
markets for its own products. If the Company is unsuccessful in securing
license agreements with additional VARs and ISVs on commercially reasonable
terms or at all, or if the Company's VAR and ISV customers are unsuccessful in
selling their products, this would have a material adverse effect on the
Company's business, results of operations and financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Dependence on the Internet and Intranets. The Company believes that sales of
its connectivity products, particularly its distributed object connectivity
products, will depend in large part upon the adoption by businesses and end-
users of the Internet and Intranets for commerce and communications. The
Internet and Intranets are new and evolving, and there can be no assurance of
their widespread adoption. Critical issues concerning the Internet and
Intranets, including security, reliability, cost, ease of use and access and
quality of service, remain unresolved at this time, inhibiting adoption by
many enterprises and end-users. If the Internet and Intranets are not widely
used by businesses and end-users, this will have a material adverse effect on
the Company's business, results of operations and financial condition.

Dependence on Java; Risks Associated with Encryption Technology. Certain of
the Company's products are based on Java, an object-oriented programming
language developed by JavaSoft, a subsidiary of Sun Microsystems. Java was
developed primarily for Internet and Intranet applications. Java was only
recently introduced and does not yet have sufficient history to establish its
reliability, thereby inhibiting adoption of Java. To date, there have been
only a very limited number of commercially significant Java-based products,
and it is too early to determine whether Java will become a significant
technology. Alternatives to Java have been announced by several companies,
including Microsoft. To the extent that Java is not adopted or is adopted more
slowly than anticipated, this could have a material adverse effect on the
Company's business, results of operations and financial condition.

The Company plans to use encryption technology in certain of its future
products to provide the security required for the exchange of confidential
information. Encryption technologies have been breached in the past. There can
be no assurance that there will not be a compromise or breach of the security
technology used by the Company. If any such compromise or breach were to
occur, it could have a material adverse effect on the Company's business,
results of operations and financial condition.

Need to Develop New Software Products and Enhancements. The markets for the
Company's products are characterized by rapid technological developments,
evolving industry standards, swift changes in customer requirements, computer
operating environments and software applications, and frequent new product
introductions and enhancements. As a result, the Company's success depends
substantially upon its ability to anticipate changes and continue to enhance
its existing products, develop and introduce in a timely manner new

8
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products incorporating technological advances, comply with emerging industry
standards and meet increasing customer expectations. The Company's products
may be rendered obsolete if the Company fails to anticipate or react to
change. To the extent one or more of the Company's competitors introduce
products that better address customer needs, the Company's business, results
of operations and financial condition could be materially adversely affected.
There can be no assurance that the Company will be successful in developing
and marketing new products or enhancements to its existing products on a
timely basis or at all or that any new or enhanced products will adequately
address the changing needs of the marketplace. The Company has in the past
incurred product development expenses and sales and marketing expenses in
connection with product development activities that did not result in
commercially introduced products. Some of the Company's products are based on
technology from third parties and the Company therefore has limited control
over whether and when these technologies are enhanced. For instance, the
VisiODBC Software Developers Kit ("SDK") products are based upon ODBC software
licensed from Microsoft. The failure or delay in enhancements of technology
from third parties used in the Company's products could have a material
adverse effect on the Company's ability to develop and enhance its own
products. Also, negative reviews of the Company's new products or product
versions in industry publications could have a material adverse effect on the
Company's sales. The Company has in the past experienced delays in the
development of new products and product versions. If the Company is unable to
develop and introduce new products or enhancements to existing products in a
timely manner in response to changing market conditions or customer
requirements, the Company's business, results of operations and financial
condition would be materially and adversely affected.

The Company has in the past engaged and expects that it will continue in the
future to engage in joint development projects with third parties. Currently,
the Company is engaged in joint development with Hitachi of distributed object
connectivity software targeted at transaction processing applications. Joint
development creates several risks for the Company, including loss of control
over the development of aspects of the jointly developed product and over the
timing of product availability. There can be no assurance that joint
development activities will result in products, or that any products developed
will be commercially successful.

Dependence on Key Personnel; Need to Increase Technical, Sales and Marketing
and Managerial Personnel. The Company's future performance depends to a
significant extent upon the continued service of its key technical, sales and
marketing and senior management personnel. The loss of the services of any of
these individuals would have a material adverse effect on the Company. The
Company's future success also depends on its continuing ability to attract,
train and retain highly qualified technical, sales and marketing and
managerial personnel. In particular, the Company currently has a very limited
technical staff devoted to its distributed object connectivity business. An
increase in the technical staff will be required to rapidly develop the
database connectivity and distributed object connectivity products currently
being planned, while an increase in the sales and marketing staff will be
required to expand both the Company's direct and indirect sales activities and
achieve revenue growth. The Company intends to hire a significant number of
additional technical and sales and marketing personnel in fiscal 1997 and
beyond. Competition for such personnel is intense, and there can be no
assurance that the Company can attract, assimilate or retain such personnel.
Because of the complexity of database connectivity and distributed object
connectivity software products, the Company has in the past experienced and
expects to continue in the future to experience a time lag between the date
technical and sales personnel are hired and the date such persons become fully
productive. If the Company is unable to hire and train such personnel on a
timely basis in the future, the Company's business, results of operations and
financial condition could be materially adversely affected.

Management of Growth; Need to Increase Financial Personnel and Implement
Policies. The Company's business has grown rapidly in recent periods, with
revenue increasing from $1.1 million in fiscal 1995 to $5.6 million in fiscal
1996. In addition, the Company acquired PostModern in May 1996 as part of its
strategy of adding distributed object connectivity products to its product
line. The growth of the Company's business, the expansion of the Company's
customer base and the recent acquisition and integration of PostModern have
placed a significant strain on the Company's management, operations and
financial systems, policies and procedures. The Company's recent expansion has
also resulted in substantial growth in the number of its employees, the

9
<PAGE>

scope of its operating and financial systems and the geographic area of its
operations, resulting in increased responsibility for management personnel.
The Company's future results of operations will depend in part on the ability
of its officers and other key employees to continue to implement its
operational, customer support and financial control systems and to expand,
train and manage its employee base. The Company hired a new Chief Financial
Officer and a new controller in July 1996. The Company's current financial
systems, policies and procedures are limited. The Company is in the process of
developing a more comprehensive set of written financial policies and
procedures to supplement its limited current policies and procedures and still
must hire additional accounting staff experienced in the software industry.
There can be no assurance that the Company will be able to manage any future
expansion of its business, if any, successfully, or that its management,
personnel, procedures and systems will be adequate to support the Company's
operations. Any such inabilities or inadequacies to do so would have a
material adverse effect on the Company's business, results of operations and
financial condition.

Potential Acquisitions. If appropriate opportunities present themselves, the
Company intends to acquire businesses, products or technology that the Company
believes are strategic, although the Company currently has no understandings,
commitments or agreements with respect to any material acquisition and no
material acquisition is currently being pursued. There can be no assurance
that the Company will be able to successfully identify, negotiate or finance
such acquisitions, or to integrate such acquisitions with its current
business. The process of integrating an acquired business, product or
technology into the Company may result in unforeseen operating difficulties
and expenditures and may absorb significant management attention that would
otherwise be available for ongoing development of the Company's business.
Moreover, there can be no assurance that the anticipated benefits of any
acquisition will be realized. Acquisitions could result in potentially
dilutive issuances of equity securities, the incurrence of debt and contingent
liabilities and amortization expenses related to goodwill and other intangible
assets, which could materially adversely affect the Company's business,
results of operations and financial condition. Any such future growth and any
acquisitions of other technologies, products or companies may require the
Company to obtain additional equity or debt financing, which may not be
available or may be dilutive.

Intense Competition. The Company's products are targeted at the emerging
markets for standards-based database connectivity software and standards-based
distributed object connectivity software. The markets for the Company's
products are intensely competitive, subject to rapid change and significantly
affected by new product introductions and other market activities of industry
participants. The Company believes that the principal competitive factors in
these markets are product quality, performance and price, vendor and product
reputation, product architecture and quality of support.

In the standards-based database connectivity market, the Company competes
principally against Intersolv. The Company's database connectivity products
also indirectly compete against proprietary database connectivity solutions
from database vendors. In the standards-based distributed object connectivity
market, the Company competes principally against two private companies, Iona
and Expersoft. The Company's distributed object connectivity products also
compete against existing or proposed distributed object connectivity solutions
from hardware vendors such as DEC, Hewlett-Packard, IBM and Sun. In addition,
because there are relatively low barriers to entry in the software market and
because the Company's products are based on publicly available standards, the
Company expects to experience additional competition in the future from other
established and emerging companies if the market for database connectivity and
distributed object connectivity software continues to develop and expand. In
particular, relational database vendors including Informix, Microsoft, Oracle
and Sybase may offer standards-based database connectivity software to their
customers, eliminating or reducing demand for the Company's products.
Similarly, operating system vendors such as DEC, Hewlett-Packard, IBM,
Microsoft and Sun may offer standards-based distributed object connectivity
products bundled with their operating systems. For instance, Microsoft has
announced plans to introduce DCOM, which would eliminate the need for CORBA-
compliant ORBs, such as those offered by the Company, for Microsoft operating
systems. Many of these current and potential competitors have well-established
relationships with the current and potential customers of the Company, have
extensive knowledge of the markets serviced by the Company, better name

10
<PAGE>

recognition and more extensive development, sales and marketing resources and
are capable of offering single vendor solutions. As a result, these current
and potential competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements, or to devote
greater resources to the development, promotion and sale of their products,
than the Company. It is also possible that new competitors or alliances among
competitors may emerge and rapidly acquire significant market share. The
Company also expects that competition will increase as a result of software
industry consolidations.

The Company expects that it will face increasing pricing pressures from its
current competitors and new market entrants. Increased price competition may
result in price reductions, reduced gross margins and loss of market share,
any of which could materially adversely affect the Company's business,
financial condition or results of operations. There can be no assurance that
the Company will be able to compete successfully against current and future
competitors or that competitive pressures will not materially and adversely
affect its business, results of operations and financial condition. See
"Business--Competition."

Risk of Product Defects. Software products as complex as those offered by
the Company frequently contain undetected errors or failures that may be
detected at any point in the product's life cycle. The Company has in the past
discovered software errors in certain of its new products and enhancements and
has experienced delays in shipment of products during the period required to
correct these errors. There can be no assurance that, despite testing by the
Company and potential customers, errors will not occur, resulting in loss of
or delay in market acceptance and sales, diversion of development resources,
injury to the Company's reputation or increased service and warranty costs,
any of which could have a material adverse effect on the Company's business,
results of operations and financial condition. This risk is amplified for the
Company because a significant portion of its future sales are expected to be
derived from arrangements under which third parties embed the Company's
products in their own products. Any significant errors in the Company's
products, or in the products of VARs or ISVs which embed the Company's
products, might discourage such third parties or other customers from
utilizing the Company's products, which would have a material adverse effect
on the Company's business, results of operations and financial condition.
Although the Company generally attempts to limit by contract its exposure to
incidental and consequential damages, and to cap the Company's liabilities to
its proceeds under a contract, if a court failed to enforce the liability
limiting provisions of the Company's contracts for any reason, or if
liabilities arose which were not effectively limited, the Company's business,
results of operations and financial condition could be materially and
adversely affected. See "Business--Product Development."

Dependence on Company and Third Party Proprietary Technology. The Company's
success is dependent in part upon its proprietary technology. While the
Company relies on a combination of copyright and trademark laws, trade
secrets, confidentiality procedures and contractual provisions to protect its
proprietary rights, the Company believes that factors such as the technical
and creative skills of its personnel, new product developments, frequent
product enhancements, name recognition and reliable products and product
support are more essential to establishing and maintaining a technology
leadership position, particularly because the Company is supplying standards-
based products. The Company seeks to protect its software, published data,
documentation and other written materials under trade secret and copyright
laws, which afford only limited protection. The Company has granted limited
access to its source code to third parties under confidentiality obligations.
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.

Policing unauthorized use of the Company's products is difficult, and while
the Company is unable to determine the extent to which piracy of its software
products exists, software piracy can be expected to be a persistent problem.
In addition, the laws of some foreign countries do not protect the Company's
proprietary rights to as great an extent as do the laws of the United States.
There can be no assurance that the Company's means of protecting its
proprietary rights will be adequate or that the Company's competitors will not
independently develop similar technology. The Company distributes its products
electronically through the

11
<PAGE>

Internet. Distributing the Company's products through the Internet makes the
Company's software more susceptible than other software to unauthorized
copying and use. The Company has historically allowed and currently intends to
continue to allow, customers to electronically download its client and server
software. If as a result of changing legal interpretations of liability for
unauthorized use of the Company's software or otherwise, users were to become
less sensitive to avoiding copyright infringement, the Company's business,
results of operations and financial condition could be materially adversely
affected.

The Company is not aware that any of its products infringes the proprietary
rights of third parties. There can be no assurance, however, that third
parties will not claim infringement by the Company with respect to current or
future products. The Company expects that software developers will
increasingly be subject to infringement claims as the number of products and
competitors in the Company's industry segment grows and the functionality of
products in different industry segments overlaps. Any such claims, with or
without merit, could be time-consuming, result in costly litigation, cause
product shipment delays or require the Company to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may
not be available on terms acceptable to the Company or at all, which could
have a material adverse effect upon the Company's business, results of
operations and financial condition.

In addition, the Company relies on certain software that it licenses from
third parties, including software that is integrated with internally developed
software and used in the Company's products to perform key functions. The
Company licenses from Microsoft the base technology for the VisiODBC SDK
products and licenses from RSA Data Security, Inc. ("RSA") security technology
it plans to use in several of its future products. Microsoft has the right to
terminate its license with the Company at any time after delivery to the
Company of the Microsoft SDK for ODBC 3.0, which is expected to occur in the
second half of 1996. The Company's license with RSA may only be terminated for
breach. The Company has entered into a joint technology agreement with
JavaSoft, a subsidiary of Sun Microsystems, that grants the Company the right
to sublicense JavaSoft's Java database connectivity ("JDBC") test suites and
ODBC bridge. There can be no assurances that such firms will remain in
business, that they will continue to support their technology or that their
technology will otherwise continue to be available to the Company on
commercially reasonable terms. The loss of or inability to maintain any of
these software licenses could result in delays or cancellations in product
shipments until equivalent software can be identified and licensed or
developed and integrated with the Company's products. Any such delay or
cancellation could materially adversely affect the Company's business, results
of operations and financial condition. See "Business--Intellectual Property
and Other Proprietary Rights."

International Sales. The Company's export sales accounted for approximately
10% and 4% of the Company's total revenue in fiscal 1996 and the first quarter
of fiscal 1997, respectively. The Company had no material export sales in
fiscal 1994 or 1995. The Company expects to increase its emphasis on export
sales. Revenue derived from export sales may account for a growing percentage
of the Company's revenue in future periods, although there can be no assurance
that the Company will achieve significant penetration in any international
market. The Company has only one international sales office, which is located
in Paris, France. The Company believes that its continued growth will require
expansion of its international operations and export sales. To successfully
expand export sales, the Company must establish additional foreign sales
offices, hire additional personnel and recruit additional international
resellers. To the extent the Company is unable to do so in a timely manner,
the Company's growth in export sales, if any, will be limited, and the
Company's business, results of operations and financial condition could be
materially adversely affected. The Company has granted exclusive distribution
rights in Japan for the Japanese versions of its ODBC products to ASCII
Corporation, a Japanese software distributor. The Company may not terminate
these exclusive rights unless ASCII fails to meet certain minimum annual sales
objectives commencing in fiscal year 1998 or otherwise breaches the agreement.
There can be no assurance that ASCII will be successful selling the Company's
products.

There are a number of risks inherent in the Company's international business
activities, including unexpected changes in regulatory requirements, tariffs
and other trade barriers, costs and risks of localizing and internationalizing
products for foreign countries, longer accounts receivable payment cycles,
potentially adverse

12
<PAGE>

tax consequences, repatriation of earnings and the burdens of complying with a
wide variety of foreign laws. None of the Company's products is currently a
"double byte" product, which is required to localize these products in certain
non-English character set markets such as Asia. The Company believes that it
will be required to develop double byte versions of its products and engage in
other internationalization and localization activities. There can be no
assurance the Company will successfully complete these activities in a timely
manner. All of the Company's sales are currently denominated in U.S. dollars
and, therefore, increases in the value of the U.S. dollar relative to foreign
currencies could make the Company's products less competitive in foreign
markets. In addition, revenue of the Company earned in various countries where
the Company does business may be subject to taxation by more than one
jurisdiction, thereby adversely affecting the Company's earnings. There can be
no assurance that such factors will not have an adverse effect on the revenue
from the Company's future international sales and, consequently, the Company's
financial condition or results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business--
Sales and Marketing."

Concentration of Share Ownership and Voting Power; Anti-Takeover
Provisions. Upon completion of this offering (assuming no exercise of the
Underwriters' over-allotment option), officers, directors and affiliates of
the Company will beneficially own approximately 54.1% of the Company's
outstanding Common Stock. As a result, these stockholders as a group will be
able to control the management and affairs of the Company and all matters
requiring stockholder approval, including election of directors, any merger,
consolidation or sale of all or substantially all of the Company's assets and
any other significant corporate transactions. The concentration of ownership
could have the effect of delaying or preventing a change in control of the
Company, reducing the likelihood of any acquisition of the Company at a
premium price. See "Principal and Selling Stockholders."

Upon the closing of this offering, the Company's Board of Directors ("Board
of Directors" or "Board") has the authority to issue up 2,000,000 shares of
Preferred Stock and to determine the price, rights, preferences and privileges
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 shares of Preferred Stock, while
potentially 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 intention to issue
shares of Preferred Stock. In addition, certain provisions of the Company's
Certificate of Incorporation may have the effect of delaying or preventing a
change of control of the Company, which could adversely affect the market
price of the Company's Common Stock. These provisions provide, among other
things, that the Board of Directors is divided into three classes to serve for
staggered three-year terms, that a director may be removed from the Board of
Directors only for cause and only upon the vote of at least 66 2/3% of the
outstanding shares of the Company's capital stock, that stockholders may not
take action by written consent and that the ability of stockholders to call
special meetings of stockholders and to raise matters at meetings of
stockholders is restricted. In addition, the Company is subject to the anti-
takeover provisions of Section 203 of the Delaware General Corporation Law,
which will prohibit the Company from engaging in a "business combination" with
an "interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. The application of
Section 203 also could have the effect of delaying or preventing a change of
control of the Company. See "Description of Capital Stock."

Broad Management Discretion over Use of Proceeds. The primary purposes of
this offering are to increase the Company's equity capital, to create a public
market for the Company's Common Stock and to facilitate future access by the
Company to public capital markets. A significant portion of the anticipated
net proceeds to the Company from this offering have not been designated for
specific uses. Accordingly, management of the Company will have broad
discretion with respect to the use of these funds. See "Use of Proceeds."

No Prior Market; Possible Volatility. Prior to this offering there has been
no public market for the Common Stock of the Company. The initial public
offering price will be determined by negotiations among

13
<PAGE>

the Company, the Selling Stockholders and the Representatives of the
Underwriters. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price. There can be no
assurance that an active public market will develop or be sustained after this
offering or that the market price of the Common Stock will not decline below
the initial public offering price. Future announcements concerning the Company
or its competitors, quarterly variations in operating results, announcements
of technological innovations, the introduction of new products or changes in
product pricing policies by the Company or its competitors, proprietary rights
or other litigation, changes in earnings estimates by market analysts or other
factors could cause the market price of the Common Stock to fluctuate
substantially. In addition, stock prices for many technology companies
fluctuate widely for reasons which may be unrelated to operating results.
These fluctuations, as well as general economic, market and political
conditions such as recessions or military conflicts, may materially and
adversely affect the market price of the Company's Common Stock. See "--
Potential Fluctuations in Operating Results."

Shares Eligible for Future Sale; Registration Rights. Sale of substantial
amounts of Common Stock in the public market following this offering could
have an adverse effect on the price of the Common Stock. Immediately upon the
effectiveness of this offering, 2,100,000 shares will be freely tradeable.
Commencing 180 days following the date of this offering, 8,048,789 additional
shares will become freely tradeable upon the expiration of agreements not to
sell such shares, subject to compliance with Rule 144. Hambrecht & Quist LLC
may, in its sole discretion and at any time without notice, release all or any
portion of the securities subject to such agreements. The remaining 2,021,182
shares held by existing stockholders become eligible for sale at various times
over a period of less than two years, subject to the limitations of Rule 144.
Immediately after this offering, the Company intends to register approximately
3,150,000 shares of the Company's Common Stock reserved for issuance under its
stock option and purchase plans. See "Shares Eligible for Future Sale."

As of the effective date of the Registration Statement, the holders of
6,789,050 shares of the Company's Common Stock will be entitled to certain
piggyback registration rights with respect to such shares. If the Company were
required to include in a Company initiated registration shares held by such
holders pursuant to the exercise of their piggyback registration rights, such
sale might have an adverse effect on the Company's ability to raise needed
capital. See "Description of Capital Stock."

Immediate and Substantial Dilution to New Investors. The initial public
offering price is substantially higher than the book value per outstanding
share of Common Stock. Investors purchasing Common Stock in this offering
will, therefore, incur immediate dilution of $8.34 in net tangible book value
per share of Common Stock from the initial public offering price and may incur
additional dilution upon the exercise of outstanding stock options. See
"Dilution."

14
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,700,000 shares of
Common Stock offered by the Company hereby are estimated to be approximately
$15,060,000 (approximately $17,431,500 if the Underwriters' over-allotment
option is exercised in full), assuming the shares offered hereby are sold at a
public offering price of $10.00 per share. The principal purposes of the
offering are to obtain additional working capital, establish a public market
for the Company's Common Stock and facilitate future access to public markets.
The Company will not receive any proceeds from the sale of Common Stock by the
Selling Stockholders.

The Company expects the net proceeds to be used for general corporate
purposes, including working capital and possible repayment of borrowings under
the Company's revolving and bridge credit facilities. A portion of the net
proceeds may also be used to acquire or invest in complementary businesses or
products or to obtain the right to use complementary technologies. While from
time to time the Company evaluates potential acquisitions of such businesses,
products or technologies, and anticipates continuing to make such evaluations,
there are no present understandings, commitments or agreements with respect to
any acquisition of other businesses, products or technologies. Pending such
uses, the proceeds will be invested in interest-bearing securities.

DIVIDEND POLICY

The Company has never paid or declared any cash dividends. It is the present
policy of the Company to retain earnings to finance the growth and development
of the business and, therefore, the Company does not anticipate paying cash
dividends on its Common Stock in the foreseeable future.

15
<PAGE>

CAPITALIZATION

The following table sets forth (i) the actual capitalization of the Company
at June 30, 1996, (ii) the pro forma capitalization to reflect conversion upon
the closing of this offering of all outstanding shares of Preferred Stock and
convertible notes into shares of Common Stock, and (iii) the pro forma
capitalization as adjusted to reflect the sale of 1,700,000 shares of Common
Stock offered by the Company hereby (assuming an initial public offering price
of $10.00) and the application of the estimated net proceeds therefrom.

<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
-------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt (1)...................... $ 524 $ 524 $ --
======== ======== ========
Long-term debt (2)....................... $ 2,000 $ -- $ --
-------- -------- --------
Stockholders' equity (3):
Preferred stock, $0.001 par value,
10,000,000 shares authorized, 4,119,069
shares issued and outstanding actual;
none issued and outstanding pro forma
and as adjusted......................... 4 -- --
Common stock, $0.001 par value,
30,000,000 shares authorized, 6,150,902
shares issued and outstanding actual;
30,000,000 shares authorized, 10,469,971
shares issued and outstanding pro forma;
50,000,000 shares authorized, 12,169,971
shares issued and outstanding
as adjusted............................. 6 10 12
Additional paid in capital............... 28,222 30,222 45,280
Accumulated deficit...................... (25,121) (25,121) (25,121)
-------- -------- --------
Stockholders' equity .................. 3,111 5,111 20,171
-------- -------- --------
Total capitalization................. $ 5,111 $ 5,111 $ 20,171
======== ======== ========
</TABLE>
- --------
(1) See Note 3 of Notes to Consolidated Financial Statements of Visigenic.
(2) See Note 9 of Notes to Consolidated Financial Statements of Visigenic.
(3) Excludes shares of Common Stock reserved for future issuance pursuant to
the Company's stock plans. As of June 30, 1996, options to purchase
1,449,285 shares at a weighted average exercise price of $1.76 per share
were outstanding. See Note 6 of Notes to Consolidated Financial Statements
of Visigenic.

16
<PAGE>

DILUTION

The net tangible book value of the Company as of June 30, 1996 was $5.1
million or $.49 per share of Common Stock. Net tangible book value per share
represents the amount of total tangible assets of the Company reduced by the
amount of its total liabilities and divided by the total number of shares of
Common Stock outstanding (reflecting the conversion of all outstanding
Preferred Stock and convertible notes into shares of Common Stock upon the
closing of the offering made hereby). Without taking into account any other
change in such net tangible book value after June 30, 1996, other than to give
effect to the sale by the Company of 1,700,000 shares offered hereby at an
assumed initial public offering price of $10.00 per share and receipt of the
estimated net proceeds therefrom, the pro forma net tangible book value of the
Company as of June 30, 1996 would have been approximately $20.2 million, or
$1.66 per share. This represents an immediate increase in such net tangible
book value of $1.17 per share to existing stockholders and an immediate
dilution of $8.34 per share to new investors. The following table illustrates
this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................ $10.00
Net tangible book value per share as of June 30, 1996 before
the offering................................................ $ .49
Increase per share attributable to new investors............. 1.17
-----
Pro forma net tangible book value per share after the
offering...................................................... 1.66
------
Dilution per share to new investors............................ $ 8.34
======
</TABLE>

The following table summarizes, on a pro forma basis as of June 30, 1996,
the differences between the existing stockholders and the new investors with
respect to the number of shares of Common Stock purchased from the Company,
the total consideration paid to the Company and the average price per share
paid:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ ------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ----------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Existing stockholders(1)... 10,469,971 86.0% $30,232,000 64.0% $ 2.89
New investors(1)........... 1,700,000 14.0 17,000,000 36.0 $10.00
---------- ----- ----------- -----
Total.................... 12,169,971 100.0% $47,232,000 100.0%
========== ===== =========== =====
</TABLE>
- --------
(1) Sales by Selling Stockholders in this offering will reduce the number of
shares held by existing stockholders to 10,069,971 or approximately 82.7%
of the total number of shares of Common Stock outstanding after this
offering (10,009,971 or 80.6% if the Underwriters' over-allotment option
is exercised in full), and will increase the number of shares held by new
investors to 2,100,000 or approximately 17.3% of the total number of
shares of Common Stock outstanding after the offering (2,415,000 or 19.4%
if the Underwriters' over-allotment option is exercised in full). See
"Principal and Selling Stockholders."

The above computations assume no exercise of options after June 30, 1996. As
of June 30, 1996, there were outstanding options to purchase 1,449,285 shares
of Common Stock at a weighted average exercise price of $1.76 per share. To
the extent outstanding options are exercised, there will be further dilution
to new investors. See Note 6 of Notes to Financial Statements of Visigenic.

17
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data at March 31, 1995 and
1996 and for the years ended March 31, 1994, 1995, and 1996 have been derived
from the audited financial statements of the Company included elsewhere in
this Prospectus. The consolidated balance sheet data at March 31, 1994 are
derived from audited financial statements not included herein. The following
selected financial data at June 30, 1996 and for the quarters ended June 30,
1995 and 1996 have been derived from unaudited financial statements of the
Company included elsewhere in this Prospectus and which include all
adjustments (consisting only of normal recurring adjustments) that the Company
considers necessary for a fair presentation of its financial position and
results of operations for these periods. The following selected pro forma
combined statement of operations data for the year ended March 31, 1996 and
the quarter ended June 30, 1996 has been derived from the unaudited pro forma
condensed combined financial statements of the Company and PostModern included
elsewhere in this Prospectus. The results of operations for the quarter ended
June 30, 1996 are not necessarily indicative of the results that may be
expected for the fiscal year ending March 31, 1997 or any other period. The
data set forth below is qualified by reference to, and should be read in
conjunction with the financial statements and notes thereto and the discussion
thereof included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, QUARTER ENDED JUNE 30,
-------------------------------------- -----------------------------
1996 1996
-------------------- ---------------------
PRO FORMA PRO FORMA
1994(1) 1995 ACTUAL COMBINED(2) 1995 ACTUAL COMBINED(2)
------- ------- ------- ----------- ------ -------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Revenue:
Software products..... $ -- $ 892 $ 4,479 $ 4,783 $ 544 $ 2,505 $ 2,529
Service and other..... -- 223 1,096 1,794 367 456 564
------- ------- ------- ------- ------ -------- -------- ---
Total revenue....... -- 1,115 5,575 6,577 911 2,961 3,093
------- ------- ------- ------- ------ -------- -------- ---
Cost of revenue:
Software products..... -- 36 284 328 43 138 149
Service and other..... -- 259 727 946 146 295 360
------- ------- ------- ------- ------ -------- -------- ---
Total cost of
revenue............ -- 295 1,011 1,274 189 433 509
------- ------- ------- ------- ------ -------- -------- ---
Gross profit............ -- 820 4,564 5,303 722 2,528 2,584
------- ------- ------- ------- ------ -------- -------- ---
Operating expenses:
Product development... 1,393 3,160 4,348 5,888 729 1,657 1,721
Sales and marketing... 503 1,511 3,215 3,638 636 2,006 2,074
General and
administrative....... 600 872 1,465 1,677 335 473 547
Purchased in process
product development.. -- -- -- -- -- 12,014 12,014
Amortization of excess
of purchase price
over net assets
acquired............. -- -- -- 522 -- 43 129
------- ------- ------- ------- ------ -------- -------- ---
Total operating
expenses........... 2,496 5,543 9,028 11,725 1,700 16,193 16,485
------- ------- ------- ------- ------ -------- -------- ---
Loss from
operations......... (2,496) (4,723) (4,464) (6,422) (978) (13,665) (13,901)
Interest and other
income, net............ 42 94 85 85 1 6 6
------- ------- ------- ------- ------ -------- -------- ---
Net loss................ $(2,454) $(4,629) $(4,379) $(6,337) $ (977) $(13,659) $(13,895)
======= ======= ======= ======= ====== ======== ======== ===
Pro forma net loss per
share (3).............. $ (.39) $ (.57) $ (.09) $ (1.21) $ (1.23)
======= ======= ====== ======== ======== ===
Pro forma weighted
average common and
common equivalent
shares (3)............. 11,120 11,120 10,602 11,289 11,289
======= ======= ====== ======== ======== ===
<CAPTION>
MARCH 31,
---------------------------
JUNE 30,
1994 1995 1996 1996
------- ----------- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............... $ 2,901 $ 553 $2,399 $ 1,890
Working capital......................... 2,722 488 816 2,331
Total assets............................ 3,346 1,829 4,820 9,962
Convertible notes payable to
stockholders........................... -- -- -- 2,000
Stockholders' equity.................... 3,132 1,117 2,220 3,111
</TABLE>
- -------
(1) The statement of operations data for the year ended March 31, 1994 is
presented for the period from inception (February 12, 1993) to March 31,
1994. See Note 1 of Notes to Consolidated Financial Statements of
Visigenic.
(2) The pro forma combined statement of operations data gives effect to the
May 1996 acquisition of PostModern as if it had occurred on April 1, 1995.
The acquisition was accounted for as a purchase and resulted in the write-
off of approximately $12.0 million of in process product development in
the quarter ended June 30, 1996. The pro forma combined statement of
operations data for the year ended March 31, 1996 does not give effect to
this write-off. See Note 9 of Notes to Consolidated Financial Statements
of Visigenic and Pro Forma Condensed Combined Financial Statements.
(3) See Note 2 of Notes to Consolidated Financial Statements of Visigenic for
an explanation of the method used to determine the number of shares used
to compute per share amounts.

18
<PAGE>

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

This Prospectus contains forward-looking statements. Actual results could
differ materially from those projected in the forward-looking statements as a
result of the risks described below and elsewhere in this Prospectus.

OVERVIEW

The Company commenced operations in February 1993 and was engaged
principally in product and market research and product development until the
launch of its initial products in November 1994. The Company shipped version
1.0 of the VisiODBC Software Development Kit ("SDK") and the VisiODBC Drivers
and DriverSets in November 1994, version 1.0 of its VisiChannel product in
March 1996 and version 2.0 of its VisiODBC product line in June 1996. The
Company first recognized material revenue in the fourth quarter of fiscal
1995.

The Company's revenue is derived from license fees from licensing its
products, royalties from VARs, ISVs and distributors, and fees for services
related to its products, including software maintenance, development
contracts, consulting and training. License fees for the Company's products
vary according to the specific products licensed. Terms and conditions of
individual license transactions, including prices and discounts, are often
highly negotiated based on volumes and commitments and vary considerably from
customer to customer. Certain of the Company's license arrangements with VARs
and ISVs provide for sublicense fees payable to the Company based on a percent
of the VAR's or ISV's net revenue. Certain of the Company's license
arrangements with VARs and ISVs provide for fixed fees for the right to make
and distribute an unlimited number of copies of the Company's product for a
specified period of time. Service revenue is primarily attributable to lower
margin maintenance and other revenue, including training revenue and
engineering development fees. Most of the Company's license revenue to date is
attributable to non-recurring license fees for its database connectivity
products, particularly its VisiODBC product line, and fees from related
services. The Company currently expects that license revenue from its database
connectivity products will account for a substantial majority of its revenue
for the remainder of fiscal 1997 and for the foreseeable future. Factors
adversely affecting the pricing of or demand for its products could have a
material adverse effect on the Company's business, results of operations and
financial condition.

The Company generally recognizes revenue from license and pre-paid royalty
fees upon delivery of software products if there are no significant post-
delivery obligations, if collection is probable and if the license agreement
requires payment within 90 days. If significant post-delivery obligations
exist or if a product is subject to customer acceptance, revenue is deferred
until no significant obligations remain or acceptance has occurred. Royalty
revenue (other than from pre-paid royalties) is recognized when it is reported
by VARs, ISVs and distributors. Maintenance revenue from ongoing customer
support and product upgrades is recognized ratably over the term of the
applicable maintenance period, which is typically 12 months. Consulting and
training revenue is generally recognized as services are performed over the
term of the agreement. If maintenance revenue is included in a license
agreement, such amount is unbundled from the license fee at its fair market
value. Revenue from engineering development work is generally recognized on a
percentage of completion basis. If a transaction includes both license and
service elements, license fee revenue is recognized upon shipment of the
software, provided services do not include significant customization or
modification of the base product and payment terms are not subject to
acceptance criteria. In cases where license fee payments are contingent upon
the acceptance of services, revenues from both the license and service
elements are deferred until the acceptance criteria are met. See Note 2 of
Notes to Consolidated Financial Statements of Visigenic.

The Company licenses its products to VARs and ISVs, who include the
Company's products in their own products, and to end users, who deploy the
Company's products in their own computing environments. A substantial portion
of the Company's license revenue to date is attributable to licenses to VARs
and ISVs. A relatively small number of VAR and ISV customers have accounted
for a significant percentage of the

19
<PAGE>

Company's license revenue. For fiscal 1996, licenses to the Company's ten
largest customers accounted for approximately 78% of the Company's total
revenue and licenses to one customer, Platinum technology, Inc., accounted for
approximately 25% of the Company's total revenue. For the first quarter of
fiscal 1997, licenses to the Company's ten largest customers accounted for
approximately 75% of the Company's total revenue and licenses to one customer,
Cisco, accounted for approximately 34% of the Company's total revenue. The
Company expects that licenses to a limited number of VAR and ISV customers
will continue to account for a large percentage of revenue for the foreseeable
future.

The sales cycles associated with the license of the Company's products is
often lengthy (typically ranging from six to twelve months) and is subject to
a number of significant delays over which the Company has little or no
control. In some cases, the license of the Company's software products is an
enterprise-wide decision by prospective end user customers or a product
strategy decision by VARs and ISVs. Generally, the Company must provide a
significant amount of information to prospective customers regarding the use
and benefits of the Company's products as part of its sales efforts. In
addition, the implementation of some of the Company's products involves a
significant commitment of resources by prospective customers and may require
substantial reengineering of customers' computing environments. The cost to
the customer of the Company's product is typically only a portion of the
related hardware, software, development, training and integration costs of
implementing a large scale system. Given these factors and the expected
continued dependence on a limited number of customers for a substantial part
of license revenue, the loss of a major customer or any reduction or delay in
sales to or implementations by such customers could have a material adverse
effect on the Company's business, results of operations, and financial
condition.

The Company markets its products in North America through its direct sales
and telesales organizations and through VARs and ISVs. Throughout the rest of
the world, the Company markets its products through distributors, VARs and
ISVs. International revenue accounted for approximately 10% of total revenue
in fiscal 1996 and approximately 4% of total revenue for the first quarter of
fiscal 1997. In February 1996, the Company opened a European sales office in
France. The Company intends to increase its international sales force and
focus on establishing additional international distributor, VAR and ISV
relationships. The Company expects that international revenue will account for
an increasing portion of total revenue in the future. As a result, failure to
manage international sales appropriately could have a material adverse effect
on the Company's business, results of operations and financial condition. See
"Risk Factors--International Sales."

With the exception of the third quarter of fiscal 1996, the Company's
revenue has increased in each of the last six quarters. The Company's limited
operating history, however, makes the prediction of future operating results
difficult. The Company expects that prior growth rates of the Company's
software products revenue will not be sustainable in the future. The Company's
future operating results will depend on many factors, including the size,
timing and terms and conditions of individual license transactions; the
relatively long sales and implementation cycles for the Company's products;
the delay or deferral of customer implementations; changes in the Company's
operating expenses; the ability of the Company to develop and market new
products and control costs; market acceptance of new products; timing of
introduction or enhancement of products by the Company or its competitors; the
level of product and price competition; the ability of the Company to expand
its direct sales and telesales force, its indirect distribution channels and
its customer support capabilities; activities of and acquisitions by
competitors; changes in connectivity software, database technology and
industry standards; changes in the mix of products and services sold; changes
in the mix of channels through which products and services are sold; levels of
international sales; personnel changes and difficulties in attracting and
retaining qualified sales, marketing and technical personnel; changes in
customers' budgeting cycles; foreign currency exchange rates; quality control
of products sold; and general economic conditions. The Company has not been
profitable to date and the Company currently anticipates that it will operate
at a loss through at least the middle of 1997. There can be no assurance that
any of the Company's business or strategies will be successful or that the
Company will be able to achieve or sustain profitability on a quarterly or
annual basis.

The Company's sales generally reflect a relatively high amount of revenue
per order. The loss or delay of individual orders, therefore, can have a
significant impact on the revenue and quarterly results of the Company.

20
<PAGE>

Because the Company's operating expenses are relatively fixed, a delay in the
recognition of revenue from a limited number of license transactions could
cause significant variations in operating results from quarter to quarter and
could result in significant losses. To the extent such expenses precede, or
are not subsequently followed by, increased revenue, the Company's operating
results would be materially adversely affected. As a result of these and other
factors, revenue for any quarter is subject to significant variation, and the
Company believes that period-to-period comparisons of its results of
operations are not necessarily meaningful and should not be relied upon as
indications of future performance. It is likely that in some future quarter
the Company's operating results will be below the expectations of market
analysts and investors. In such event, the price of the Company's Common Stock
would likely be materially adversely affected.

The Company acquired PostModern effective May 31, 1996. The transaction was
accounted for as a purchase. Except for certain combined condensed financial
statements included elsewhere in this Prospectus and for the presentation of
certain pro forma revenue amounts herein, PostModern's financial results prior
to the effective date of the acquisition are not included in the Company's
financial results presented herein. The operating results of the PostModern
business are included in the Company's results of operations for the last
month of the first quarter of fiscal 1997. The Company's ability to
successfully integrate PostModern will depend upon several factors, including
but not limited to, successful integration of the products and operations of
PostModern into the Company. See "Risk Factors -- Limited Operating History;
History of Losses; Recent Acquisition of Distributed Object Connectivity
Business."

21
<PAGE>

RESULTS OF OPERATIONS

The Company first recognized material revenue in the fourth quarter of
fiscal 1995 after the Company shipped version 1.0 of its VisiODBC product
line. As a result, the Company believes that period-to-period comparisons of
annual operating results are less meaningful than an analysis of recent
quarterly results.

The following tables set forth statements of operations for each of the six
quarters ended June 30, 1996, including such amounts expressed as a percentage
of total revenue. This quarterly information is unaudited, but has been
prepared on the same basis as the annual consolidated financial statements
and, in the opinion of the Company's management, reflects all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
representation of the information for the periods presented. Such statements
of operations should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto included elsewhere herein.
Operating results for any quarter are not necessarily indicative of results
for any future period.

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1995 1995 1995 1996 1996
-------- -------- --------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Software products...... $ 500 $ 544 $ 1,033 $ 840 $2,062 $ 2,505
Service and other...... 155 367 268 253 208 456
------- ------ ------- ------- ------ --------
Total revenue........ 655 911 1,301 1,093 2,270 2,961
------- ------ ------- ------- ------ --------
Cost of revenue:
Software products...... 34 43 62 107 72 138
Service and other...... 105 146 180 200 201 295
------- ------ ------- ------- ------ --------
Total cost of
revenue............. 139 189 242 307 273 433
------- ------ ------- ------- ------ --------
Gross profit............ 516 722 1,059 786 1,997 2,528
------- ------ ------- ------- ------ --------
Operating expenses:
Product development.... 660 729 972 1,429 1,218 1,657
Sales and marketing.... 543 636 770 732 1,077 2,006
General and
administrative........ 324 335 336 371 423 473
Purchased in process
product development... -- -- -- -- -- 12,014
Amortization of excess
of purchase price
over net assets
acquired.............. -- -- -- -- -- 43
------- ------ ------- ------- ------ --------
Total operating
expenses............ 1,527 1,700 2,078 2,532 2,718 16,193
------- ------ ------- ------- ------ --------
Loss from
operations.......... (1,011) (978) (1,019) (1,746) (721) (13,665)
Interest and other
income, net............ 4 1 28 48 8 6
------- ------ ------- ------- ------ --------
Net loss................ $(1,007) $ (977) $ (991) $(1,698) $ (713) $(13,659)
======= ====== ======= ======= ====== ========
<CAPTION>
AS A PERCENTAGE OF TOTAL REVENUE
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Software products...... 76.3% 59.7% 79.4% 76.9% 90.8% 84.6%
Service and other...... 23.7 40.3 20.6 23.1 9.2 15.4
------- ------ ------- ------- ------ --------
Total revenue........ 100.0 100.0 100.0 100.0 100.0 100.0
------- ------ ------- ------- ------ --------
Cost of revenue:
Software products...... 5.2 4.7 4.8 9.8 3.2 4.6
Service and other...... 16.0 16.0 13.8 18.3 8.8 10.0
------- ------ ------- ------- ------ --------
Total cost of
revenue............. 21.2 20.7 18.6 28.1 12.0 14.6
------- ------ ------- ------- ------ --------
Gross profit............ 78.8 79.3 81.4 71.9 88.0 85.4
------- ------ ------- ------- ------ --------
Operating expenses:
Product development.... 100.8 80.1 74.7 130.7 53.7 56.0
Sales and marketing.... 82.9 69.8 59.2 67.0 47.4 67.7
General and
administrative........ 49.4 36.8 25.8 33.9 18.6 16.0
Purchased in process
product development... -- -- -- -- -- 405.7
Amortization of excess
of purchase price
over net assets
acquired.............. -- -- -- -- -- 1.5
------- ------ ------- ------- ------ --------
Total operating
expenses............ 233.1 186.7 159.7 231.6 119.7 546.9
------- ------ ------- ------- ------ --------
Loss from
operations.......... (154.3) (107.4) (78.3) (159.7) (31.7) (461.5)
Interest and other
income, net............ 0.6 0.2 2.1 4.3 0.3 0.2
------- ------ ------- ------- ------ --------
Net loss................ (153.7)% (107.2)% (76.2)% (155.4)% (31.4)% (461.3)%
======= ====== ======= ======= ====== ========
</TABLE>

22
<PAGE>

REVENUE

Software Products. Software products revenue increased by 402% from $892,000
in fiscal 1995 to $4.5 million in fiscal 1996 and increased by 360% from
$544,000 in the first quarter of fiscal 1996 to $2.5 million in the first
quarter of fiscal 1997. The Company had no software products revenue in fiscal
1994. The revenue increases from fiscal 1995 to fiscal 1996 and from the first
quarter of fiscal 1996 to the first quarter of fiscal 1997 were primarily due
to an increased volume of licensing of the Company's database connectivity
products, resulting from an increase in the number of products offered and the
expansion of the Company's direct sales and telesales organizations. The
decline in software products revenue in the third quarter of fiscal 1996
resulted primarily from the delay in completion of a large sale which closed
in the fourth quarter.

Service and Other. Service and other revenue, including maintenance revenue,
development fees and consulting and training revenue, increased by 391% from
$223,000 in fiscal 1995 to $1.1 million in fiscal 1996 and increased by 24%
from $367,000 in the first quarter of fiscal 1996 to $456,000 in the first
quarter of fiscal 1997. The Company had no service and other revenue in fiscal
1994. The revenue increases from fiscal 1995 to fiscal 1996 and from the first
quarter of fiscal 1996 to the first quarter of fiscal 1997 were due to the
greater licensing of products to customers under agreements with a maintenance
component and growth in training, consulting and development activities.

COST OF REVENUE

Software Products. Cost of software products revenue includes product
packaging, documentation, production and shipping. Cost of software products
revenue increased from $36,000 in fiscal 1995 to $284,000 in fiscal 1996 and
increased from $43,000 in the first quarter of fiscal 1996 to $138,000 in the
first quarter of fiscal 1997. The increases resulted from increased volume of
licensing of the Company's products. The Company had no costs of software
products revenue in fiscal 1994.

Service and Other. Cost of service and other revenue consists primarily of
personnel and personnel related overhead allocation, facility and systems
costs incurred in providing consulting, training, customer support and
engineering development services. Cost of service and other revenue increased
from $259,000 in fiscal 1995 to $727,000 in fiscal 1996 and increased from
$146,000 in the first quarter of fiscal 1996 to $295,000 in the first quarter
of fiscal 1997. This increase reflects the effect of fixed costs resulting
from the Company's investment during fiscal 1996 and the first quarter of
fiscal 1997 in a larger customer support organization in anticipation of
entering into an increasing number of licenses with maintenance components.
The Company had no costs of service and other revenue in fiscal 1994. The
Company intends to continue investing resources in its customer support
organization. The Company currently expects that costs of service and other
revenue will increase in absolute dollar amount from the level for fiscal
1996.

OPERATING EXPENSES

Product Development. Product development expenses include expenses
associated with the development of new products, enhancements of existing
products and quality assurance activities, and consist primarily of employee
salaries, personnel-related overhead allocation, benefits, consulting costs,
the cost of technology licensed from other software companies and the cost of
software development tools. Product development expenses increased by 38% from
$3.2 million in fiscal 1995 to $4.3 million in fiscal 1996 and by 127% from
$1.4 million in fiscal 1994 to $3.2 million in fiscal 1995. Product
development expenses increased by 127% from $729,000 in the first quarter of
fiscal 1996 to $1.7 million in the first quarter of fiscal 1997. The increases
in the dollar amount of product development expenses were primarily
attributable to costs of additional personnel and full-time contractors in the
Company's product development operations and, to a lesser extent, the
licensing of existing technology from third parties which has been or will be
incorporated into the Company's products. The increase of product development
expenses in the third quarter of fiscal 1996 was the result of increased
consulting fees and licensing of third party technology which was expensed
because it was used exclusively in the development process. A substantial
portion of the product development costs in fiscal 1994 and in early fiscal
1995 consisted of expenses for the development of a product the Company later
chose not to introduce

23
<PAGE>

commercially. There can be no assurance that the Company will not devote
significant resources in the future to develop and market other products that
the Company may choose not to introduce commercially. The Company anticipates
that it will continue to devote substantial resources to product development,
including acquiring or licensing technology from others, in order to introduce
new products, enhance existing products or accelerate its time to market. The
Company plans to hire a substantial number of product development personnel in
fiscal 1997. The Company currently expects that product development expenses
will increase in absolute dollar amount from the level for fiscal 1996.

In accordance with Statement of Financial Accounting Standards No. 86, the
Company has charged all software development costs to product development
expense as incurred because expenditures which were eligible for
capitalization in prior periods were insignificant.

Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, commissions and bonuses earned by sales and marketing personnel,
personnel related overhead allocation, field office rent and related expenses,
travel and entertainment, and advertising and promotional expenses. Sales and
marketing expenses increased by 113% from $1.5 million in fiscal 1995 to $3.2
million in fiscal 1996 and by 200% from $503,000 in fiscal 1994 to $1.5
million in fiscal 1995. Sales and marketing expenses increased by 215% from
$636,000 in the first quarter of fiscal 1996 to $2.0 million in the first
quarter of fiscal 1997. The increases in sales and marketing expenditures
reflect primarily the hiring of additional sales and marketing personnel,
costs associated with expanded advertising and promotional activities,
increased sales commissions and increased costs associated with field sales
offices. A substantial portion of sales and marketing costs in fiscal 1994
consisted of expenses relating to a product the Company later chose not to
introduce commercially. The Company plans to hire a substantial number of
sales and sales support personnel in fiscal 1997. The Company expects that
sales and marketing expenses will continue to increase in absolute dollar
amount as the Company continues to expand its sales and marketing efforts
domestically and internationally, establishes additional sales offices and
increases advertising and promotional activities. The Company currently
expects that sales and marketing expenses will increase in absolute dollar
amount from the level for fiscal 1996.

General and Administrative. General and administrative expenses consist
primarily of salaries and occupancy costs for administrative, executive and
finance personnel and personnel related overhead allocation. These expenses
increased by 68% from $872,000 in fiscal 1995 to $1.5 million in fiscal 1996
and by 45% from $600,000 in fiscal 1994 to $872,000 in fiscal 1995. General
and administrative expenses increased by 41% from $335,000 in the first
quarter of fiscal 1996 to $473,000 in the first quarter of fiscal 1997. The
increases in the absolute dollar amounts of general and administrative
expenses were primarily due to increased staffing and associated expenses
necessary to manage and support the Company's increased scale of operations.
The Company believes that the absolute dollar amount of its general and
administrative expenses will continue to increase as a result of the
anticipated expansion of the Company's administrative staff to support growing
operations and expenses associated with being a public company.

INTEREST AND OTHER INCOME, NET

Interest and other income, net, is comprised primarily of interest income
earned on the Company's cash and cash equivalents. Interest and other income,
net, decreased by 10% from $94,000 in fiscal 1995 to $85,000 in fiscal 1996
and increased by 124% from $42,000 in fiscal 1994 to $94,000 in fiscal 1995.
Interest and other income, net, increased from $1,000 in the first quarter of
fiscal 1996 to $6,000 in the first quarter of fiscal 1997. The variations
reflect changing cash balances.

PROVISION FOR INCOME TAXES

As of March 31, 1996, the Company had federal and state net operating loss
carryforwards of approximately $9.8 million and $2.0 million, respectively,
which expire at various dates through 2011. In addition, as of March 31, 1996,
the Company had general business credit carryforwards of approximately
$372,000, which expire at various dates through 2011. Utilization of the net
operating loss carryforwards and business credits may

24
<PAGE>

be subject to a substantial annual limitation due to the ownership change
limitations provided by the Internal Revenue Code of 1986, as amended, and
similar state provisions. See Note 8 of Notes to Consolidated Financial
Statements of Visigenic.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, the Company has financed its operations and met its capital
expenditure requirements primarily from proceeds from the private sales of
Preferred and Common Stock. Through June 30, 1996, the Company had raised
$17.8 million from the sale of Preferred and Common Stock. At June 30, 1996,
the Company's principal sources of liquidity included cash and cash
equivalents of $1.9 million and a $1.0 million revolving line of credit
agreement which expires on August 15, 1996. Advances under the agreement,
which bear interest at the bank's prime lending rate plus 1.25%, are limited
to 80% of eligible accounts receivable and are secured by substantially all of
the assets and contractual rights of the Company. After the end of fiscal
1996, the Company borrowed $524,000 under the line of credit, which bore
interest at a rate of 9.5%, as of June 30, 1996. The line of credit agreement
also contains certain financial restrictions and covenants. The Company is in
compliance with these financial restrictions and covenants. See Note 3 of
Notes to Consolidated Financial Statements of Visigenic.

On July 16, 1996 the Company executed an amended loan and security agreement
which increased the revolving line of credit to $3.0 million and extended its
term to July 15, 1997. The amended agreement also provides for a $2.0 million
bridge loan for a term ending the earlier of 120 days following the loan
advance or November 28, 1996. As consideration for the bridge loan the Company
will issue a five year warrant to purchase up to 6,666 shares of the Company's
Common Stock. Borrowings outstanding under the amended agreement will bear
interest at the bank's prime lending rate plus 1.0%.

On May 24, 1996, the Company sold 444,444 shares of its Series C Preferred
Stock at a price of $9.00 per share to three investors, for aggregate proceeds
of $4.0 million. Subject to certain conditions, the Company has the right to
require these investors to purchase up to an additional $4.0 million in
convertible notes at any time prior to October 31, 1996. Between May 28 and
June 7, 1996, the Company issued $2.0 million principal amount of these
convertible notes, bearing interest at the rate of 8.25% per annum. The
principal amount of the notes and all accrued interest are due three years
after the issuance date. However, upon the closing of the Company's initial
public offering, the principal amount of each note and all accrued interest
will automatically convert into shares of the Company's Common Stock at the
lesser of $13.00 per share or the offering price per share to the public. Upon
the closing of the Company's initial public offering, the Series C Preferred
Stock will automatically convert into shares of the Company's Common Stock.
The Company used a portion of the proceeds from the sale of the Series C
Preferred Stock and the convertible notes to pay amounts payable in connection
with the closing of the acquisition of PostModern. See "--PostModern
Acquisition" and Note 9 of Notes to Consolidated Financial Statements of
Visigenic.

The Company's operating activities used cash of $2.2 million in fiscal 1994,
$4.6 million in fiscal 1995, $2.6 million in fiscal 1996 and $4.6 million in
the first quarter of fiscal 1997. The increased use of cash in fiscal 1995 as
compared with fiscal 1994 was primarily attributable to increased operating
costs and increased accounts receivable reduced by an increase in accounts
payable, accrued liabilities and deferred revenue. The decline in net cash
used in operations in fiscal 1996 as compared with fiscal 1995 was primarily
due to an increase in accounts payable, accrued liabilities and deferred
revenue. The increased use of cash in the first quarter of fiscal 1997 was
primarily due to an increase in accounts receivable.

The Company used $477,000, $378,000, $1.1 million and $2.6 million of net
cash during fiscal 1994, fiscal 1995, fiscal 1996 and the first quarter of
fiscal 1997, respectively, for investing activities, due primarily to
purchases of property and equipment. Financing activities provided $5.6
million, $2.6 million, $5.5 million and $6.7 million of net cash during fiscal
1994, fiscal 1995, fiscal 1996 and the first quarter of fiscal 1997,
respectively, due to the issuance of Preferred and Common Stock and
convertible notes and debt financing.

Deferred revenue consists primarily of the unrecognized portion of revenue
under maintenance and support contracts (which revenue is deferred and
recognized ratably over the term of such contracts) and advance

25
<PAGE>

payment of software development fees and software license fees. Capital
expenditures were primarily for computers, furniture and equipment. The
Company expects that its capital expenditures will increase as the Company's
employee base grows. As of June 30, 1996, the Company did not have any
material commitments for capital expenditures.

The Company believes that the proceeds from the sale of the Common Stock
offered hereby, together with its existing sources of liquidity and cash
generated from operations, will satisfy the Company's projected working
capital and other cash requirements for at least the next twelve months.
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 will use cash. Any such future
growth and any acquisitions of other technologies, products or companies may
require the Company to obtain additional equity or debt financing, which may
not be available or may be dilutive.

POSTMODERN ACQUISITION

In May 1996, the Company completed the acquisition of PostModern, a supplier
of distributed object connectivity software. In the acquisition, which was
structured as a merger, the Company issued 3,099,821 shares of its Common
Stock and paid a total of $2.3 million in exchange for all of PostModern's
outstanding shares. The Company also assumed PostModern's outstanding stock
options and reserved 361,785 shares of the Company's Common Stock for issuance
upon exercise of such options. The Company also incurred acquisition-related
costs of approximately $450,000, resulting in a total purchase price of
approximately $13.1 million. In addition, the Company made cash payments,
subject to one-year vesting and totaling $1.5 million, to certain PostModern
employees. The acquisition of PostModern was accounted for as a purchase in
the quarter ended June 30, 1996. The Company recorded a write-off in the
quarter ended June 30, 1996 of approximately $12.0 million of in process
product development that had not reached technological feasibility and, in
management's opinion, had no probable alternative future use. The remaining
purchase price of approximately $1.1 million will be amortized over two years.

The following pro forma revenue information gives effect to the May 1996
acquisition of PostModern as if it had occurred on April 1, 1995. This
information is unaudited and is based on the respective historical financial
statements of the Company and PostModern. The Company's acquisition of
PostModern was accounted for as a purchase, and the following pro forma data
are presented for comparison purposes only. This data should be read in
conjunction with the pro forma condensed combined financial statements and
historical financial statements contained herein.

This revenue data has been prepared on the same basis as the annual
consolidated financial statements and, in the opinion of the Company's
management, reflects all adjustments necessary for a fair presentation of the
information for the periods presented.

<TABLE>
<CAPTION>
PRO FORMA COMBINED QUARTER ENDED
----------------------------------------------
JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30,
1995 1995 1995 1996 1996
-------- --------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Pro Forma Revenue:
Software products........... $ 580 $1,179 $ 868 $2,156 $2,529
Service and other........... 422 605 394 373 564
------ ------ ------ ------ ------
Total revenue............. $1,002 $1,784 $1,262 $2,529 $3,093
====== ====== ====== ====== ======
</TABLE>

The majority of PostModern's revenue consisted of service and other revenue,
attributable to development, training and consulting fees.

26
<PAGE>

BUSINESS

OVERVIEW

Visigenic Software, Inc. is a leading provider of software tools for
database and distributed object connectivity for the Internet, Intranet and
enterprise computing environments. The Company's standards-based products
facilitate the development, deployment and management of distributed
applications by providing database-independent access to leading databases and
the communications infrastructure for distributed object-oriented
applications. The Company markets and sells its software through its direct
sales and telesales forces, independent software vendors ("ISVs"), value added
resellers ("VARs"), international distributors and on-line Internet sales in
North America, Europe, and Asia. The Company's customers include ASCII
Corporation, Cisco, CompuWare, Borland, Healtheon, Hewlett Packard, Hitachi
Ltd., Merrill Lynch, MCI Telecommunications, Microsoft, Netscape, Oracle,
Platinum technology and Software AG.

INDUSTRY BACKGROUND

In an increasingly complex computing environment, today's enterprises
require flexible access to data and applications, regardless of whether the
data and applications are located at the central office, a remote office or
across the Internet. This requirement is being driven by the following market
trends:

. The increasing use of multiple database management systems ("DBMSs"),
requiring DBMS-independent client/server database connectivity solutions.

. The increasing use of object-oriented technologies to provide distributed
application solutions.

. The increasing use of Internet and Intranet technologies within
mainstream commercial markets, which is increasing the demand for
applications capable of operating in distributed computing environments.

Database Connectivity

Client/server computing has given organizations the flexibility to develop
and deploy applications on a wide variety of computer platforms and DBMSs. The
computing infrastructure of the typical enterprise now consists of a
heterogeneous mix of operating systems, databases, networks and hardware. One
industry survey of Fortune 500 companies found that these companies use an
average of six different DBMSs. For example, an enterprise may support the
Windows 3.1, Windows NT, UNIX and MVS operating system platforms running
Microsoft SQL Server, Oracle and IBM DB2 DBMSs. To manage this heterogeneous,
cross-platform database environment, a common method of accessing, managing
and analyzing data from multiple databases was needed. The Open Database
Connectivity ("ODBC") standard was created to address this problem.

ODBC, originally developed by Microsoft, is an industry standard that is
based on a specification defined by the SQL Access Group, a consortium of
database, software and hardware vendors. ODBC provides a common data access
application programming interface ("API") for developers building DBMS-
independent applications. With ODBC, a single application can access multiple
databases on multiple platforms, avoiding the need for developers to write
versions of each application for each DBMS vendor's proprietary data access
API. The ODBC API is supported by most major software vendors in their
programming languages, application development tools and report writing tools,
including Microsoft Visual Basic and Visual C++, Sybase PowerBuilder and the
Oracle 2000 family, and Seagate Crystal Reports.

Although ODBC provides heterogeneous database connectivity, organizations
seeking the benefits afforded by ODBC have encountered two limitations as they
move to a more distributed computing environment. First, ODBC development
tools and ODBC drivers originally were only available for Windows platforms.
This limited the ability of enterprises to realize the multi-platform
potential of ODBC and to deploy ODBC solutions in multi-platform computing
environments such as Intranets and the Internet. Second, initial
implementations of ODBC are client-centric and are suitable for departmental
or limited enterprise deployments. These client-centric implementations
require that an ODBC driver and database-specific network libraries for each
DBMS to be accessed reside on each client system. For larger deployments,
which may involve hundreds, or even thousands,

27
<PAGE>

of ODBC-enabled client systems accessing multiple DBMSs, maintaining and
managing this client/server infrastructure is expensive and difficult because
each client system must be updated for each new version of the DBMS and the
ODBC driver. The Company believes that organizations need a simplified,
server-centric ODBC database access architecture for larger deployments,
including Intranet and Internet computing environments.

Distributed Object Connectivity

In today's rapidly evolving computing environments, enterprises require
improved data access as well as improved software application architectures.
Computing environments are becoming more distributed, with numerous client and
server machines networked together within a single enterprise as well as
across the Internet. The traditional method of building applications as
monolithic programs is not suited for this distributed environment. Instead,
applications must be more modular in nature, where the application is built as
a set of modules that can be distributed over a number of client and server
systems. Enterprises can improve computing performance by distributing
application logic over these computing networks so that the appropriate
application logic resides on the most appropriate system. For example, logic
for the graphical user interface could reside on a client machine while the
business logic is located on one or more servers where the business
application resides and the logic that manipulates the data in the DBMS is
located on one or more servers where the data resides.

Object-oriented programming languages like C++ and Java have enabled
software developers to develop and deploy distributed applications more
easily. These languages are based on the concept of objects, which are
reusable software components that contain both data and the related procedures
that act upon them. Objects are modular in nature and can be arranged or
reused in many different combinations to form new applications. This modular,
self-contained characteristic makes objects ideal for distributed computing
environments because applications can now be created by linking a series of
objects that may be distributed over a number of different systems.

Significant challenges in distributed application development and deployment
include communications and interoperability between objects that are
distributed over a network. The Common Object Request Broker Architecture
("CORBA") specification, developed by the Object Management Group, a
consortium of software and hardware vendors and corporate end users, was
created to address these challenges. The CORBA specification defines an Object
Request Broker ("ORB") that manages and monitors the interactions of
distributed objects on a network. To enable interoperability among
applications using ORBs, CORBA also specifies the Internet Inter-ORB Protocol
("IIOP"), which defines a standard distributed messaging protocol for
communication between objects. CORBA-compliant objects are portable across
programming languages, development environments, computer platforms and
networks, which is an increasingly important attribute of applications in the
heterogeneous computing environments of the Internet, Intranets and
enterprises.

Before the CORBA specification, many enterprises had not undertaken the
development and deployment of distributed applications because of the lack of
software development tools that provide a distributed object communication
infrastructure. This meant that building enterprise-wide distributed
applications entailed writing a new, proprietary communication
infrastructure--a task that was difficult and time-consuming for many
enterprises. The introduction of CORBA-compliant ORBs has freed enterprises
from having to write their own communication infrastructure and allows
enterprises to focus their development efforts on business logic. The Company
believes that enterprises now need commercially available ORBs from third
party vendors that provide this communications infrastructure.

The Internet and Intranets Increase the Need for Distributed Applications

The Internet has quickly emerged as an important aspect of business
computing. Internet-based business applications have expanded beyond
electronic mail to a broad range of business applications and services,
including electronic publishing, direct-to-customer transactions, product
marketing, advertising and customer support. The widespread use of the
Internet by enterprises has also resulted in the emergence of Intranets,
internal information systems based upon the Internet infrastructure. Intranets
use Internet protocols and applications to share information and services both
within the enterprise and across the Internet. Intranets allow the enterprise
to

28
<PAGE>

distribute data and applications across geographically dispersed facilities as
well as enable customers, suppliers and other business partners to easily
access enterprise data and applications.

The Internet and Intranets are large heterogeneous distributed computing
environments, consisting of vast numbers of networked client and server
systems and distributed databases. The rapid growth of the Internet and
Intranets is accelerating the importance of distributed applications that can
access data wherever the data resides. The Company believes business
applications increasingly will be comprised of objects, Java applets and
databases that are distributed on networks and dynamically assembled into
highly customized solutions. As a result, development and deployment tools for
database access and distributed object connectivity solutions are increasingly
key components of the software infrastructure required for Internet, Intranet
and enterprise computing environments.

VISIGENIC SOLUTION

Visigenic provides key components of the software infrastructure that enable
developers and IT professionals to develop, deploy and manage distributed
applications. The Company provides software tools for database and distributed
object connectivity for Internet, Intranet and enterprise computing
environments. The Company's cross-platform database connectivity products,
based on the ODBC API, are open, flexible and cost effective for developing,
deploying and maintaining DBMS-independent applications. The Company's
distributed object connectivity products, consisting of CORBA-compliant ORBs,
provide a communication infrastructure and enable the development and
deployment of reliable, flexible and cost-effective distributed applications.

The Company's solution provides the following benefits:

Application Architecture Flexibility. Visigenic's products are designed to
enable developers and IT professionals to build applications for a variety of
enterprise architectures. The Company's database connectivity products provide
application developers with the flexibility to implement the ODBC database
connection on the client, on the server or across the Internet. The Company's
distributed object connectivity products allow developers to build
applications that can be distributed over multiple client and server machines
and can interoperate with other CORBA-compliant applications. This flexibility
allows the enterprise to adapt its application architecture to meet changing
business or computing requirements.

Simplification of Application Development. Visigenic's products simplify
application development by reducing the time and expertise required to develop
applications. The Company's database connectivity products allow developers to
access multiple DBMSs by writing to a single API rather than multiple
proprietary APIs. The Company's distributed object connectivity products
provide the developer with the communications infrastructure required for
distributed object applications, allowing the developer to focus on developing
business objects and facilitating the reuse of these objects in multiple
applications.

Simplification of Distributed Application Deployment. Visigenic's products
simplify the deployment of distributed applications. The VisiChannel product
is based on Visigenic's server-centric ODBC architecture that shifts the
database connectivity software components from clients to servers, thereby
simplifying deployment and centralizing administration. The VisiBroker for C++
and VisiBroker for Java agent-based architecture reduces the deployment and
administration effort for distributed applications by automatically launching
objects, tracking their state and adapting to their changing resource
requirements.

Support of Open Industry Standards. Visigenic's products for database and
distributed object connectivity support existing and emerging industry
standards, enabling developers and IT professionals to build solutions that
are open, flexible and interoperable across multiple operating environments.
Visigenic's products support key industry standards including database
connectivity standards such as ODBC and X/Open SQL Access and distributed
object standards such as CORBA 2.0 and IIOP. The Company is currently
developing products that support Java Database Connectivity ("JDBC") and other
de facto industry standards such as RSA data encryption technology.

29
<PAGE>

Technology Independence. Visigenic's products enable the development of
solutions for the heterogeneous computing environments confronting the
enterprise by supporting multiple operating systems, DBMSs, development
languages and hardware platforms.

Manageability. Visigenic's products provide monitoring tools that control
the computing environment while reducing the time and resources spent on
managing distributed applications. The VisiChannel product provides a monitor
that supplies information regarding client/server database connections and
provides administrators with the ability to adjust system configuration
parameters. The Company's VisiBroker products provide monitoring capabilities
for distributed object usage and location. These monitoring tools provide
administrators with the information needed to manage and administer
distributed application environments.

VISIGENIC STRATEGY

Support and Enhance Open Industry Standards. The Company's products are
based on existing and emerging industry standards for heterogeneous database
connectivity and distributed object connectivity. The Company actively
participates in standards-setting organizations including X/OPEN and the
Object Management Group. The Company intends to contribute to the expansion of
existing standards and the development of future standards created by these
and other standards-setting organizations. For example, the Company was
instrumental in accelerating ODBC's acceptance as a standard for heterogeneous
database access by exclusively licensing certain ODBC enabling technology from
Microsoft and providing the VisiODBC SDK on Macintosh, OS/2 and many UNIX
platforms. In addition, the Company has developed the first commercial
implementation of IIOP, defined as part of the CORBA 2.0 specification, in its
ORB products. The Company intends to promote acceptance of IIOP as the de
facto standard for distributed object messaging for the Internet and
Intranets.

Leverage Strategic Partners. The Company intends to continue to establish
close relationships with leading technology companies through technology
licensing, joint development, strategic investments, and distribution and
marketing arrangements to promote the widespread acceptance and distribution
of Visigenic products. Key partnerships include the following:

. Cisco is a strategic investor in the Company and has entered into a
license agreement to incorporate the Company's database connectivity
products in Cisco's network management product line.

. Hitachi has entered into a joint-development agreement with the Company
for the development of a transaction-enabled ORB based on the VisiBroker
for C++ and VisiBroker for Java products.

. JavaSoft, a division of Sun Microsystems, has entered into an agreement
for JDBC technology that grants the Company the right to sub-license
JavaSoft's JDBC test suites and its JDBC-to-ODBC bridge.

. Microsoft has entered into a series of agreements to incorporate certain
of the Company's VisiODBC products with certain Microsoft products and to
exclusively license to the Company the Microsoft ODBC SDK and test suites
for non-Microsoft operating systems.

. Netscape is a strategic investor in the Company and has entered into a
license agreement to incorporate VisiBroker technology in future versions
of Netscape products.

. Oracle has entered into a license agreement with the Company to
incorporate the Company's VisiODBC products with a number of Oracle's
Transparent Gateway products.

. Platinum technology is a strategic investor in the Company and has
entered into an agreement to incorporate the Company's VisiODBC,
VisiChannel and VisiBroker products with certain Platinum products.

30
<PAGE>

Provide a Broad Suite of Products and Services. The Company offers a suite
of software tools for database and distributed object connectivity, as well as
support, consulting and training services. The Company intends to develop new
products, enhance its current products and integrate its database connectivity
software products with its distributed object connectivity products to address
the requirements of the emerging Internet and Intranet distributed markets.

Maintain Technology Leadership. The Company is committed to maintaining its
technological leadership through internal product development efforts and, if
appropriate opportunities present themselves, through acquisitions of
technologies, products and companies to address the specific requirements of
distributed applications in the areas of database connectivity, distributed
object connectivity and the monitoring of distributed environments. The
Company has invested and will continue to invest in technology so that it can
react and adapt to changing technological trends and market needs.

Exploit and Develop Internet/Intranets Market Opportunities. The Company
believes that the emergence of the Internet and Intranets will significantly
increase the market for database and distributed object connectivity software.
Visigenic intends to leverage its products and expertise in heterogeneous
database connectivity and distributed object connectivity to exploit the
market opportunity for distributed applications for the Internet and
Intranets.

Expand Brand Name Awareness. Visigenic believes that the brand name
awareness of the Company and its products will be an important element of its
success. Visigenic is targeting its marketing efforts to establish and expand
the recognition of the Company and its products through advertising,
promotional activities, selected sales channels and strategic partners. The
Company believes that establishing and expanding market awareness is
particularly important given the emerging nature of the market in which it
competes.

Expand Distribution Channels Worldwide. To achieve broad distribution of its
database and distributed object connectivity software, the Company believes it
must continue to build multiple distribution channels worldwide. The Company
is expanding its direct sales and telesales forces as well as broadening its
indirect channels of distribution, including VARs, ISVs, systems integrators
("SIs"), Internet sales and international distributors. The Company's
international distribution strategy is to penetrate key international markets
by seeking additional VARs, ISVs and regional distributors and by further
developing its existing relationships with these customers.

31
<PAGE>

PRODUCTS

The Company provides software tools for database connectivity and
distributed object connectivity for Internet, Intranet and enterprise
computing environments. The Company's products provide key components of the
software infrastructure that enable developers and IT professionals to
develop, deploy and manage distributed applications.

The following table identifies the Company's current products:

<TABLE>
<CAPTION>
MOST
ORIGINAL RECENT
PRODUCT RELEASE RELEASE SUPPORTED US SUGGESTED
NAMES DATE DATE PLATFORMS LIST PRICE (1)

<S> <C> <C> <C> <C>
DATABASE CONNECTIVITY
- --------------------------------------------------------------------------------
VisiODBC Drivers 11/94 6/96 Windows 3.1 $95-$150/Driver
and DriverSet Windows 95 $295-$595/DriverSet
Windows NT
UNIX
Macintosh
OS/2
- --------------------------------------------------------------------------------
VisiODBC SDK 11/94 6/96 UNIX $995/user
Macintosh
OS/2
- --------------------------------------------------------------------------------
VisiChannel 3/96 3/96 Windows 3.1 $500-$700/user
Windows 95
Windows NT
- --------------------------------------------------------------------------------

DISTRIBUTED OBJECT CONNECTIVITY
- --------------------------------------------------------------------------------
VisiBroker for Java 4/96 4/96 Windows 95 $3,000-$5,000/
Windows NT developer
UNIX $150-$250/runtime
- --------------------------------------------------------------------------------
VisiBroker for C++ 9/94 9/95 Windows 95 $3,000-$5,000/
Windows NT developer
UNIX $150-$250/runtime
</TABLE>

(1) Actual price depends upon platform selected and quantity purchased, among
other factors. The terms and conditions, including prices and discounts
from list prices, of individual license transactions are often highly
negotiated based on volumes and commitments and vary considerably from
customer to customer.

Database Connectivity Products

The Visigenic software tools for database connectivity are based on the ODBC
standard and enable data access independent of both the DBMS and platform. The
ODBC products include the VisiODBC Drivers and DriverSets (formerly Visigenic
ODBC Drivers and Driver Sets), VisiODBC Software Development Kits (formerly
Visigenic ODBC Software Development Kits) and VisiChannel (formerly Visigenic
OpenChannel).

32
<PAGE>

LOGO
[DIGITIZED ARTWORK OF VISIODBC DRIVERS]

VisiODBC Drivers and DriverSets. The VisiODBC Drivers and DriverSets
(formerly Visigenic ODBC Drivers and DriverSets) provide cross-platform access
to multiple SQL relational DBMSs--including CA-Ingres, IBM DB2, Informix,
Microsoft SQL Server, Oracle and Sybase SQL Server (DBLib and CTLib)--from any
ODBC-enabled application. The VisiODBC Driver and DriverSets are made up of
two ODBC components: the Driver Manager and a set of database drivers. The
Driver Manager loads the ODBC drivers that an ODBC-enabled application
requests. The VisiODBC drivers provide the communication link between the
ODBC-enabled application and a specific DBMS; the drivers process ODBC
function calls from the application, translate them to DBMS-specific calls and
return the results of those calls to the application. For example, to access
an Oracle DBMS, an ODBC-enabled application, such as Microsoft Excel, would
send SQL calls through the VisiODBC Oracle driver. Likewise, to access an
Informix DBMS, Microsoft Excel would send the same SQL calls through a
VisiODBC Informix driver. The Company sells VisiODBC drivers separately or as
the VisiODBC DriverSet, which consists of the full set of VisiODBC drivers
available for each platform. VisiODBC Drivers are available for Windows 3.1,
Windows NT, Windows 95, ATT GIS, HP-UX, IBM AIX, SGI Irix, SCO, Solaris, Sun
OS, Macintosh and Power Macintosh and OS/2. The Company initially released
VisiODBC Drivers and DriverSets in November 1994.

VisiODBC SDKs. VisiODBC SDKs (formerly Visigenic ODBC SDKs) allow developers
to develop vendor-independent database applications and ODBC drivers. Using
the VisiODBC SDKs, developers write database-independent C and C++
applications that communicate simultaneously with multiple databases from
different vendors. Each VisiODBC SDK comes with the Driver Manager, header
files, programmer's reference and graphical utilities.

Visigenic has ported the Microsoft ODBC 2.X SDK to ATT GIS, HP-UX, IBM AIX,
SGI Irix, SCO, Solaris, Sun OS, Macintosh, Power Macintosh and OS/2. Visigenic
currently has the exclusive right to license and port the Microsoft ODBC SDK
versions 2.X and 3.0 for Windows to all non-Microsoft platforms. The Company
released its first VisiODBC SDK in November 1994.

VisiChannel. VisiChannel (formerly Visigenic OpenChannel) provides an
architecture that simplifies database connectivity in large distributed
application environments such as the Internet, Intranets and enterprise
computing environments. The Company initially released VisiChannel in March
1996.

33
<PAGE>

LOGO
[DIGITIZED ARTWORK OF VISICHANNEL]

VisiChannel's server-centric architecture shifts the administrative burden
and processing load for ODBC-enabled applications by relocating ODBC drivers
and network libraries away from each user's individual machine to a central
server, allowing easier administration and control. A "thin" database-
independent client driver connects to any database through the VisiChannel
Server, where server-side ODBC drivers manage the actual database connections.
Since database connections are centralized, VisiChannel can reduce the time
and resources spent on deploying and managing database applications.

VisiChannel consists of the VisiChannel Client, Server and Manager. The
VisiChannel Client replaces the ODBC drivers and database vendor's proprietary
libraries on the client. The VisiChannel Server can be used to access any ODBC
data source, either through a VisiODBC Driver or other third party ODBC
drivers. The VisiChannel Server has been designed to support large numbers of
concurrent users through the use of a multi-threaded architecture, which
provides for efficient resource utilization, enhanced throughput and shared
resource integrity. The VisiChannel Manager is a monitoring tool that allows
IT professionals to monitor all VisiChannel connections and adjust system
configuration parameters from a single location.

VisiChannel can be deployed for use with existing ODBC applications without
any changes to the client application. VisiChannel is optimized for large-
scale ODBC traffic and runs over standard TCP/IP transports, enabling it to be
used for database connectivity across the Internet. The Company is developing
a version of VisiChannel that will support the JDBC API for Java applets and
applications.

The VisiChannel Server is available for Windows NT, and VisiChannel Clients
are available for Windows 3.1, Windows NT and Windows 95. The Company expects
to begin shipping VisiChannel Servers and Clients for UNIX in the second half
of 1996.

Distributed Object Connectivity Products

Visigenic develops and markets two Object Request Broker ("ORB") products:
VisiBroker for C++ and VisiBroker for Java (formerly Orbeline and BlackWidow).
Visigenic's ORBs, which are based on the Common Object Request Broker
Architecture ("CORBA") specification, provide an object-oriented solution for
the development and deployment of distributed applications.

34
<PAGE>

LOGO
[DIGITIZED ARTWORK OF VISIBROKER FOR JAVA]

VisiBroker for C++. VisiBroker for C++ (formerly ORBeline) provides a
communication framework that enables the development, deployment and
management of complex, distributed C++ applications. VisiBroker for C++
consists of two main components: a development component and a runtime
component. The development component includes a code generator that converts
object interfaces specified in CORBA's Interface Definition Language ("IDL")
into C++. The developer adds application logic and the runtime code to the
generated code to create a distributed application. The generated code is used
by the objects' application logic to interact with the VisiBroker runtime
component which manages the communication among the distributed objects.

VisiBroker for C++ operates on SunOS, Solaris, Digital UNIX, HP-UX, IBM AIX,
Windows NT and Windows 95 platforms. VisiBroker for C++ was first released in
September 1994 and the Company is currently shipping version 2.0.

VisiBroker for Java. VisiBroker for Java (formerly BlackWidow) is the
industry's first client and server Java ORB. VisiBroker for Java enables
distributed computing on the Internet and Intranets. Like VisiBroker for C++,
VisiBroker for Java consists of a development component and a runtime
component. The VisiBroker for Java development component converts IDL
interfaces into client-side and server-side Java code. The VisiBroker for Java
runtime is written entirely in Java and can run in any Java-enabled Web
browser, such as Netscape Navigator 2.0. The VisiBroker for Java environment
allows Internet, Intranet and enterprise deployment. On the Internet, a user
can load a client-side VisiBroker for Java applet into any Java-enabled
browser, execute the applet and establish IIOP connectivity with CORBA
objects, whether the objects are written in Java or in another language such
as C++ or Smalltalk.

The VisiBroker for Java development environment is available on Windows NT,
Windows 95 and Solaris. Distributed applications developed with VisiBroker for
Java can be deployed on any platform supporting the Java environment.
VisiBroker was first released in April 1996.

35
<PAGE>

VisiBroker Architecture. VisiBroker for C++ and VisiBroker for Java share a
common architecture. Both products use IIOP as their internal communications
protocol and do not rely on conversion of a proprietary protocol into IIOP in
order to interoperate with other ORB implementations. IIOP is an emerging
standard for distributed object messaging and is designed for applications
distributed across the Internet and Intranets. Each of the Company's VisiBroker
products is multi-threaded, facilitating scalability and enhancing throughput.
Applications developed using the Company's VisiBroker products can support
multiple concurrent threads to service both incoming and outgoing object
requests simultaneously, permitting objects within an application to process a
request without affecting the responsiveness of other objects within the
application. The Company's VisiBroker products have an agent-based architecture
and include one or more agents that communicate and monitor the location of the
ORB objects on the network. This agent-based architecture is designed to adapt
itself to changes in the objects and the network, such as a heavy system load
or the failure of objects. The architecture minimizes the need for
configuration files, making it easier to deploy and administer applications,
and enables automatic fail-over capabilities, significantly reducing
interruptions in any service provided as part of or implemented using the ORB.

CUSTOMERS

The Company's customers include the following:

FINANCIAL SERVICES NETWORK MANAGEMENT/SYSTEMS MANAGEMENT

Global Trade Technologies Bytex--A Division of Storage
Merrill Lynch Technology
Wells Fargo Bank Cisco
Compuware

TELECOMMUNICATIONS Embarcadero Technologies
Hewlett-Packard

Bell Northern Research Network General
British Telecom-North America Platinum technology
DSC Communications Software Professionals
MCI Telecommunications

INDEPENDENT SOFTWARE VENDORS AND VALUE ADDED RESELLERS

AimTech Corporation Oracle
Applix Premenos
AT&T Global Information Solutions Research Systems
Borland Software AG
Healtheon Starware
Hitachi UniSQL
Information Builders Vmark
Informix Software Wall Data
Investment Intelligence Systems Corporation
Wang
Microsoft XVT Software
Netscape

In fiscal 1996, one customer, Platinum technology, accounted for
approximately 25% of revenue and in the first quarter of fiscal 1997, one
customer, Cisco, accounted for approximately 34% of revenue. No other customer
accounted for more than 10% of revenue in either period. A relatively small
number of VAR and ISV customers have accounted for a significant percentage of
the Company's revenue, and the Company expects that sales to VAR and ISV
customers will continue to represent a significant portion of the Company's
revenue in future periods. In fiscal 1996, approximately 78% of the Company's
revenue was derived from ten customers. In the first quarter of fiscal 1997,
approximately 75% of the Company's revenue was derived from ten customers.

36
<PAGE>

The Company's products can be used in many applications, including the
following examples:

Oracle Corporation. Oracle Corporation, a leading supplier of information
management software, wanted to provide their customers with access to
competitors' DBMSs. Their customers are increasingly operating in
heterogeneous environments and require a solution that allows them to develop
applications that access multiple DBMSs. Oracle integrated VisiODBC technology
in their Transparent Gateway, allowing them to support a single, standard
DBMS-independent API versus supporting multiple proprietary APIs of their
competitors. For the first time, Oracle provided their customers with direct
gateway access, providing distributed database capabilities, from the Oracle7
database to Sybase, Informix, and CA-Ingres.

Healtheon. Healtheon, an Internet-based on-line healthcare and benefit
information and service company, needed a distributed object connectivity
solution for its applications. Healtheon is using VisiBroker for C++ as an
integral part of its technology infrastructure for its applications.

Platinum technology. Platinum technology, a provider of application
development, business intelligence, database administration, data warehousing,
and systems software solutions, was seeking a consistent database access
solution for their Platinum Open Enterprise Management System ("POEMS")
products. Platinum was supporting several proprietary database access methods.
Platinum integrated VisiODBC technology and VisiChannel into the POEMS
architecture, providing Platinum with a single database access architecture to
support and providing their customers with database connectivity across
multiple databases, operating systems and hardware platforms.

SALES AND MARKETING

The Company's sales and marketing objective is to achieve broad market
penetration by targeting multiple channels of distribution, including direct
sales and telesales, ISVs, VARs, SIs, international distributors and on-line
Internet sales. The Company is actively seeking to increase its base of VARs,
ISVs, SIs and international distributors.

Direct Sales/Telesales. The Company's direct sales and telesales forces
focus on medium to large-sized VARs, ISVs and corporate IT opportunities. To
date, the direct sales and telesales forces have been primarily targeting
strategic VARs and ISVs to leverage their sales and marketing expertise as
well as their position in the market. The Company has direct sales offices or
personnel in San Mateo, California; Atlanta, Georgia; Boston, Massachusetts;
Dallas, Texas; Reston, Virginia and Paris, France. The Company's telesales
organization, based in San Mateo, California, works jointly with the direct
sales force to receive customer orders as well as proactively identify,
contact and qualify customer leads.

Independent Software Vendors. The Company has relationships with a number of
ISVs to leverage their sales and marketing channels through joint marketing
programs and product bundling agreements.

Value Added Resellers and System Integrators. VARs and SIs customize,
configure and install the Company's software products and bundle these
products with their software solutions and services.

International Distributors. The Company believes that it is important to
develop a strong international presence and intends to do business in markets
outside of North America principally through distributors. International sales
accounted for 10% and 4% of revenue in fiscal 1996 and the first quarter of
fiscal 1997, respectively. The Company is working with its distributors to
develop end user, ISV, VAR and SI relationships in their respective
territories. As of June 30, 1996, the Company had 12 international
distributors, mostly in Europe and Asia.

37
<PAGE>

Internet Sales. Certain of the Company's products can be evaluated and
purchased electronically over the Internet. The Company believes that the
Internet can be an effective way to market its products to potential
customers.

The Company's marketing efforts are directed at building brand name
awareness while also highlighting the value of the Company's database
connectivity and distributed object connectivity products. The Company's
marketing efforts include market research, product planning, creating
collateral materials, managing press coverage and other public relations,
identifying potential customers, advertising, attending tradeshows, speaking
at industry conferences, direct mail campaigns and establishing and
maintaining close relationships with recognized industry analysts. The Company
also maintains a home page on the Internet that is a source of sales leads.

As of June 30, 1996, the Company's sales organization included 29 employees
and its marketing organization included 8 employees. The Company intends to
hire a significant number of additional sales and marketing personnel in
fiscal 1997 and beyond. An increase in the sales and marketing staff will be
required to expand both the Company's direct and indirect sales activities and
achieve revenue growth. Competition for such personnel is intense, and there
can be no assurance that the Company can attract, assimilate or retain such
personnel. Because of the complexity of database connectivity and distributed
object connectivity software products, the Company has in the past and expects
to continue in the future to experience a time lag between the date sales
personnel are hired and the date such persons become fully productive. If the
Company is unable to hire and train such personnel on a timely basis in the
future, the Company's business, financial condition and results of operations
could be materially adversely affected. See "Risk Factors--Reliance on VARs
and ISVs" and "--International Sales."

CUSTOMER SERVICE AND SUPPORT

The Company believes that a high level of customer service and support is
critical to the Company's success. The services provided by the Company
include technical support, maintenance, training and consulting. These
services are designed to increase customer satisfaction and provide feedback
to the Company as to customers' demands and requirements.

Technical Support and Maintenance. The Company offers customer support
through telephone, electronic mail and fax. Visigenic provides new software
releases, maintenance releases and enhancements under annual support
agreements with customers. Maintenance and customer support license fees are
not included in software license fees but are purchased separately for an
annual fee.

Training and Consulting. The Company offers its customers education and
training programs, as well as customized consulting services. Fees for
training and consulting services are generally charged on a per diem basis,
separately from the Company's software products.

PRODUCT DEVELOPMENT

The Company believes its future success will depend in large part on its
ability to expand the Visigenic product family by enhancing existing products,
integrating database connectivity technology with distributed object
connectivity technology and developing new products to meet a broad range of
customer needs. The Company's product development organization is responsible
for new product and technology development, product testing and user interface
development. This organization is working to expand the availability of the
Company's products on the leading hardware platforms, operating systems,
DBMSs, programming languages and networking and communication protocols.

Since inception, the Company has made substantial investments in product
development and related activities. The Company's products have been developed
primarily by the Company's internal development staff and, in some instances,
with the assistance of external consultants. Certain technologies have been
acquired and

38
<PAGE>

integrated into Company's products through licensing arrangements. The Company
expects that most of its new products will be developed internally. However,
the Company will evaluate on an ongoing basis externally developed
technologies and products for integration into its product lines.

The Company expects that development activities with respect to its database
connectivity products will include development of VisiODBC SDKs, VisiODBC
drivers and test suites compliant with the ODBC 3.0 specification as well as
additional features for its VisiChannel products, including high performance
scalability, message and queuing capabilities, a server-procedure architecture
and Simple Network Management Protocol ("SNMP") agents and other management
and monitoring tools. The Company intends to support the JDBC API through a
JDBC-to-ODBC product that will allow Java programmers using the JDBC API to
access heterogeneous data sources through the Company's VisiODBC Drivers or
VisiChannel products. Visigenic also expects to ship a VisiChannel Client
implementation in Java in the second half of fiscal 1997.

The Company expects to enhance its VisiBroker for C++ and VisiBroker for
Java products and expand its distributed object connectivity product line. The
Company is developing an object-oriented transaction processing system based
on the Object Transaction Service ("OTS") specified by the OMG that enables
mission-critical On-line Transaction Process ("OLTP") applications. This
product is being jointly developed with Hitachi and is a combination of the
Company's VisiBroker for C++ product, the OTS interface implementations and
OpenTP1, Hitachi's advanced transaction processing engine. The Company
currently expects to release the product in the second half of fiscal 1997.
The Company also plans to leverage its CORBA expertise to develop products
that enable Microsoft's Active/X objects to interact with CORBA objects.

The Company also intends to leverage its database connectivity expertise to
provide integrated database connectivity capabilities for its VisiBroker
product line. The Company's VisiBroker products would then provide a more
complete distributed object solution, addressing both the distributed object
and data connectivity requirements of its customer base.

As of June 30, 1996, there were 51 employees on the Company's research and
development staff. The Company's product development expenditures in fiscal
1995, fiscal 1996 and the first quarter of fiscal 1997 were $3.2 million, $4.3
million and $1.7 million, respectively. The Company expects that it will
continue to commit substantial resources to product development in the future.

The markets for the Company's products are characterized by rapid
technological developments, evolving industry standards, swift changes in
customer requirements, computer operating environments and software
applications, and frequent new product introductions and enhancements. As a
result, the Company's success depends substantially upon its ability to
anticipate changes and continue to enhance its existing products, develop and
introduce in a timely manner new products incorporating technological
advances, comply with emerging industry standards and meet increasing customer
expectations. If the Company is unable to develop and introduce new products
or enhancements to existing products in a timely manner in response to
changing market conditions or customer requirements, the Company's business,
operating results and financial condition would be materially and adversely
affected. See "Risk Factors--Need to Develop New Software Products and
Enhancements" and "--Dependence on Java; Risks Associated with Encryption
Technology."

COMPETITION

The Company's products are targeted at the emerging markets for standards-
based database connectivity software and standards-based distributed object
connectivity software. The markets for the Company's products are intensely
competitive, subject to rapid change and significantly affected by new product
introductions and other market activities of industry participants. The
Company believes that the principal competitive factors in these markets are
product quality, performance and price, vendor and product reputation, product
architecture and quality of support.

39
<PAGE>

The Company expects that it will face increasing pricing pressures from its
current competitors and new market entrants. Increased price competition may
result in price reductions, reduced gross margins and loss of market share,
any of which could materially adversely affect the Company's business,
financial condition or results of operations. There can be no assurance that
the Company will be able to compete successfully against current and future
competitors or that competitive pressures will not materially and adversely
affect its business, financial condition or results of operations. See "Risk
Factors--Intense Competition."

INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS

The Company's success is dependent in part upon its proprietary technology.
While the Company relies on a combination of copyright and trademark laws,
trade secrets, confidentiality procedures and contractual provisions to
protect its proprietary rights, the Company believes that factors such as the
technical and creative skills of its personnel, new product developments,
frequent product enhancements, name recognition and reliable products and
product support are more essential to establishing and maintaining a
technology leadership position, particularly because the Company is supplying
standards-based products. The Company seeks to protect its software, published
data, documentation and other written materials under trade secret and
copyright laws, which afford only limited protection. The Company has granted
limited access to its source code to third parties under confidentiality
obligations. 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.

40
<PAGE>

susceptible to unauthorized copying and use. The Company has historically
allowed and currently intends to continue to allow customers to electronically
download its client and server software. If as a result of changing legal
interpretations of liability for unauthorized use of the Company's software or
otherwise, users were to become less sensitive to avoiding copyright
infringement, the Company's business, results of operations and financial
condition could be materially adversely affected.

In addition, the Company relies on certain software that it licenses from
third parties, including software that is integrated with internally developed
software and used in the Company's products to perform key functions. The
Company licenses from Microsoft the base technology for the VisiODBC SDK
products and licenses from RSA security technology it plans to use in several
of its future products. Microsoft has the right to terminate its license with
the Company any time after delivery to the Company of the Microsoft SDK for
ODBC 3.0, which is expected to occur in the second half of 1996. The Company's
license with RSA may only be terminated for breach. The Company has entered
into a joint technology agreement with JavaSoft, a subsidiary of Sun
MicroSystems, that grants the Company the right to sub-license JavaSoft's JDBC
test suites and ODBC bridge. There can be no assurances that such firms will
remain in business, that they will continue to support their technology or
that their technology will otherwise continue to be available to the Company
on commercially reasonable terms. The loss of or inability to maintain any of
these software licenses could result in delays or cancellations in product
shipments until equivalent software can be identified and licensed or
developed and integrated with the Company's products. Any such delay or
cancellation could materially adversely affect the Company's business, results
of operations and financial condition. See "Risk Factors--Dependence on
Company and Third Party Proprietary Technology."

EMPLOYEES

As of June 30, 1996, the Company employed 109 full time personnel, including
51 in product development, 7 in technical support, 37 in sales and marketing
and 14 in finance and administration. See "Risk Factors--Dependence on Key
Personnel; Need to Increase Technical, Sales and Marketing and Managerial
Personnel."

FACILITIES

The Company's principal executive offices and research and development
facilities are located in San Mateo, California and consist of approximately
25,000 square feet under leases that will expire between July 2000 and January
2001. The Company also leases approximately 5,000 square feet of additional
office space, previously used for research and development activities by
PostModern, in Mountain View, California pursuant to a lease that terminates
July 31, 1996. The Company has sales offices in Atlanta, Boston, Dallas and
the Washington D.C. area and in Paris, France. The Company anticipates that it
will require additional space in the near term and that such space will be
available on reasonable terms.

41
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company as of the date of this
Prospectus are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Roger J. Sippl (1)...... 41 Chairman of the Board of Directors
and Chief Executive Officer
Mark D. Hanson.......... 35 President and Chief Operating Officer
Jens Christensen, 33 Vice President, Chief Technical Officer and Director
Ph.D...................
Kevin C. Eichler........ 36 Vice President, Finance, Chief Financial
Officer, Treasurer and Secretary
Therese H. Langlais..... 37 Vice President, Marketing
David T. Shewmake, 44 Vice President, Technical Services
Ph.D...................
Richard L. Gerould...... 43 Vice President, Corporate Development and General Counsel
Robert Perreault........ 39 Vice President, Research and Development
Gill Cogan (2).......... 44 Director
Cristina M. Morgan...... 43 Director
Michael Moritz.......... 41 Director
E. E. van Bronkhorst 72 Director
(2)....................
J. Sidney Webb (1)...... 76 Director
Eric Young (1).......... 40 Director
</TABLE>
- --------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee

Roger J. Sippl is the founder of the Company and has served as a Director
and the Chief Executive Officer since February 1993. Mr. Sippl is a co-founder
of The Vantive Corporation, a customer interaction applications software
company ("Vantive") and has served as a director of Vantive since December
1990. Prior to his relationship with Vantive, Mr. Sippl founded Informix
Software, a database software company ("Informix"), in 1980 and served as that
company's Chairman of the Board until December 1992.

Mark D. Hanson has served as President and Chief Operating Officer of the
Company since January 1995. Mr. Hanson served as Vice President of Worldwide
Sales from June 1994 when he joined the Company until his appointment as
President and Chief Operating Officer. From July 1992 to March 1994, Mr.
Hanson was Vice President of Channel Sales of Sybase, a database software
company, and Vice President, International Sales of Gain Technology ("Gain"),
a software company, before the acquisition of Gain by Sybase. From January
1991 to June 1992, Mr. Hanson served as Vice President, Worldwide Sales and
Support for Macromedia, a supplier of PC multimedia software and services.
Prior to that time, Mr. Hanson was employed as Vice President at Informix from
1984 to January 1991, most recently as Vice President, Americas Sales.

Jens Christensen has served as Vice President, Chief Technical Officer and a
Director of the Company since May 1996. From October 1991 to May 1996, Mr.
Christensen served as President and Chief Executive Officer of PostModern
Computing Technologies Inc., a software company he founded in 1991. From
October 1990 to September 1991, Mr. Christensen was employed as a software
engineer for Teknekron, a software company.

Kevin C. Eichler has served as Vice President, Finance, Chief Financial
Officer, Treasurer and Secretary of the Company since July 1996. From July
1995 to July 1996, Mr. Eichler served as Executive Vice President,

42
<PAGE>

Finance, and Chief Financial Officer for National Insurance Group, a financial
services and related technology solution provider. From January 1991 to June
1995, Mr. Eichler served as Executive Vice President, Finance and Chief
Financial Officer for Mortgage Quality Management, Inc., a national provider
of quality control services and technologies to residential mortgage lenders.
From January 1990 to January 1991, Mr. Eichler served as Tax Manager,
Corporate Finance for NeXT Software, Inc., a software company. From May 1988
to January 1990, Mr. Eichler served as Domestic Tax Manager for Microsoft
Corporation, a software company.

Therese H. Langlais has served as Vice President, Marketing of the Company
since November 1993. Ms. Langlais served as Director of Marketing from April
1993, when she joined the Company until her appointment as Vice President,
Marketing. Prior to this, Ms. Langlais was employed for nine years at
Informix, where she held various positions, the most recent being Director of
Strategic Projects.

David T. Shewmake has served as Vice President, Technical Services of the
Company since September, 1993. In April 1983, Dr. Shewmake co-founded
Interactive Development Environments, a computer-aided-software engineering
tools company, where he served as Vice President until September 1993.

Richard L. Gerould has served as Vice President, Corporate Development and
General Counsel of the Company since December 1993. From April 1993 to
November 1993, Mr. Gerould worked as an independent attorney primarily for
Cadence Design Systems, Inc., a software company. In November 1990, Mr.
Gerould founded Configurex, Inc., a software tools company, where he served as
President until March 1993. From 1984 to 1990, Mr. Gerould was employed at
Micro Focus, a COBOL software tools company, most recently as Vice President
of Corporate Services and previously as Vice President, Marketing Operations.

Robert Perreault has served as Vice President, Research and Development of
the Company since September 1995. From May 1994 to September 1995, Mr.
Perreault served as Vice President of Client/Server Technology at Compuware
Corporation, a software company. From September 1993 to May 1994, he served as
Vice President of Database and Connectivity Products at Uniface Corporation, a
software company which merged with Compuware Corporation in May 1994. In 1993,
Mr. Perreault co-founded and served as President of Data Accessibility
Solutions, Inc., a consulting company which merged with the Company in May
1996. Mr. Perreault co-founded and served as Vice President of U.S. Operations
for RIAL, Inc., a consulting company, from September 1991 to August 1993.

Gill Cogan has served as a Director of the Company since January 1994. Since
October 1991, Mr. Cogan has been a partner at Weiss, Peck & Greer Venture
Partners. Mr. Cogan serves as a director for Electronics for Imaging, Inc.,
Harmonic Lightwaves, Inc., Integrated Packaging Assembly Corp., Microlinear
Corporation, Number Nine Visual Technology, and P-Com Inc.

Cristina M. Morgan has served as a Director of the Company since March 1993.
Ms. Morgan is a Managing Director of Hambrecht & Quist LLC, an investment
banking firm, where she has been employed since October 1982. Hambrecht &
Quist LLC is a managing underwriter of the offering made hereby.

Michael Moritz has served as a Director of the Company since March 1993. Mr.
Moritz has been a partner at Sequoia Capital, a venture capital company, since
1986. Mr. Moritz serves as a director for Yahoo!, Flextronics International
and Global Village Communications.

E. E. van Bronkhorst has served as a Director of the Company since March
1993. Since 1984, Mr. van Bronkhorst has been an independent financial
consultant to various technology companies. From 1962 until 1984, Mr. van
Bronkhorst served as Senior Vice President, Chief Financial Officer and
Treasurer at Hewlett-Packard Company. Mr. van Bronkhorst serves as a director
of California Water Service Co., Nellcor Puritan Bennett Inc. and Mid-
Peninsula Bank.

J. Sidney Webb has served as a Director of the Company since March 1993.
Since May 1984, Mr. Webb has served as director and Chairman of the Board of
The Titan Corporation, a consulting company. Mr. Webb

43
<PAGE>

also serves as a director of Amdahl Corporation, EIP Microwave, Inc. and
Plantronics, Inc. Mr. Webb previously was Vice Chairman and a director of TRW.

Eric Young has served as a Director of the Company since July 1995. Mr.
Young is a general partner of Canaan Capital Partners, a venture capital
company, where he has been employed since October 1987. Mr. Young also serves
as a director for Spectrian Corporation and Integrated Packaging Assembly
Corporation.

The Company's Bylaws currently authorize eight directors, which number may
be changed from time-to-time by the Board of Directors. All directors hold
office until the next annual meeting of stockholders or until their successors
are duly elected and qualified. The Amended and Restated Bylaws which will
become effective upon consummation of this offering will provide that,
beginning with the first annual meeting of stockholders following this
offering, the Board of Directors will be divided into three classes, with each
class serving staggered three-year terms. There are no family relationships
among the directors or executive officers of the Company.

In April 1996, the Board of Directors established an Audit Committee and a
Compensation Committee. The Audit Committee oversees actions taken by the
Company's independent auditors, recommends the engagement of auditors and
reviews the Company's internal audits. The Compensation Committee approves the
compensation of executives of the Company and makes recommendations to the
Board of Directors with respect to standards for setting compensation levels.
The Compensation Committee also administers the Company's employee stock
option and stock purchase plans. See "--Stock Plans."

EXECUTIVE COMPENSATION

The following summary compensation table sets forth the compensation paid by
the Company during the fiscal year ended March 31, 1996 to the Company's Chief
Executive Officer and the four other most highly compensated executive
officers (collectively, the "Named Executive Officers") whose salary and bonus
for services rendered in all capacities to the Company exceeded $100,000
during such fiscal year.

SUMMARY COMPENSATION TABLE FOR FISCAL 1996

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-----------------
ANNUAL
COMPENSATION AWARDS
------------ -----------------
NO. OF SECURITIES
NAME AND UNDERLYING
PRINCIPAL POSITION SALARY (1) OPTIONS
------------------ ------------ -----------------
<S> <C> <C>
Roger J. Sippl ................................. $ 90,001 --
Chairman of the Board
and Chief Executive Officer
Mark D. Hanson.................................. $140,000 62,500
President and Chief Operating Officer
Therese H. Langlais............................. $106,667 27,500
Vice President, Marketing
David T. Shewmake............................... $115,000 10,000
Vice President, Technical Services
Richard L. Gerould.............................. $115,000 15,000
Vice President, Corporate Development and
General Counsel
</TABLE>
- --------
(1) Amounts shown are on a full year basis and include cash and noncash
compensation earned and received by executive officers.

The following table provides information concerning grants of options to
purchase the Company's Common Stock made during the fiscal year ended March
31, 1996 to each of the Named Executive Officers:

44
<PAGE>

OPTION GRANTS IN FISCAL 1996

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
% OF TOTAL ASSUMED ANNUAL RATES
NUMBER OF OPTIONS OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM (4)
OPTIONS IN FISCAL PRICE PER EXPIRATION ----------------------
NAME GRANTED (1) 1996 (2) SHARE (3) DATE 5% 10%
---- ----------- ---------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Roger J. Sippl.......... -- -- -- -- -- --
Mark D. Hanson.......... 25,000 3.0% $0.40 04/18/05 $ 6,289 $ 15,937
12,500 1.5 $0.40 07/27/05 3,144 7,969
12,500 1.5 $0.40 10/25/05 3,144 7,969
12,500 1.5 $0.40 03/31/06 3,144 7,969
Therese H. Langlais..... 7,500 0.9 $0.40 04/18/05 1,887 4,781
10,000 1.2 $0.40 07/27/05 2,516 6,375
10,000 1.2 $0.40 03/15/06 2,516 6,375
David T. Shewmake....... 2,500 0.3 $0.40 04/18/05 629 1,594
7,500 0.9 $0.40 03/15/06 1,887 4,781
Richard L. Gerould...... 5,000 0.6 $0.40 04/18/05 1,258 3,187
10,000 1.2 $0.40 03/15/06 2,516 6,375
</TABLE>
- --------
(1) Options granted in fiscal 1996 are immediately exercisable and generally
vest over five years, with 10% of the option shares becoming fully vested
six months from the initial vesting date and 1/60th of the option shares
vesting each successive month, with full vesting occurring on the fifth
anniversary of the initial vesting date. The Company has a repurchase
right for shares not vested. Under the terms of the Company's 1995 Stock
Option Plan (the "Option Plan"), the Board or a committee of the Board
retains discretion, subject to Option Plan limits, to modify the terms of
outstanding options and to reprice outstanding options. The options have
a term of ten years, subject to earlier termination in certain situations
related to termination of employment. See "--Stock Plans" for a
description of the material terms of the options.
(2) Based on a total of 832,500 options granted to all employees and
consultants during fiscal 1996.
(3) All 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 of the Company on the date of grant. The Company's Common Stock
was not publicly traded at the time of the option grants to the officers.
(4) Potential realizable values are net of exercise price, but before taxes
associated with exercise. Amounts represent hypothetical gains that could
be achieved for the respective options if exercised at the end of the
option term. The assumed 5% and 10% rates of stock price appreciation are
provided in accordance with rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
the future Common Stock price. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common Stock,
overall market conditions and the option holders' continued employment
through the vesting period. This table does not take into account any
appreciation in the price of the Common Stock from the date of grant to
the present. Assuming the fair market value of the Common Stock at the
date of grant is the initial public offering price of $10.00, the
potential realizable value of these options (a) at a 5% assumed annual
rate of stock price appreciation would be $397,224, $198,612, $198,612
and $198,612 for Mr. Hanson's options, $119,167, $158,889 and $158,889
for Ms. Langlais' options, $39,722 and $119,167 for Mr. Shewmake's
options, and $79,445 and $158,889 for Mr. Gerould's options and (b) at a
10% assumed annual rate of stock price appreciation would be $638,436,
$319,218, $319,218 and $319,218 for Mr. Hanson's options, $191,531,
$255,374 and $255,374 for Ms. Langlais' options, $63,844 and $191,531 for
Mr. Shewmake's options, and $127,687 and $255,374 for Mr. Gerould's
options.

45
<PAGE>

AGGREGATE OPTION EXERCISES AND FISCAL 1996 YEAR-END VALUES

The following table provides the specified information concerning
unexercised options held as of March 31, 1996 by each of the Named Executive
Officers:

AGGREGATE OPTION EXERCISES
AND FISCAL YEAR-END VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT 3/31/96
OPTIONS AT 3/31/96 (1) (2)
------------------------ ------------------------
NAME VESTED UNVESTED VESTED UNVESTED
- ---- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Roger J. Sippl................ -- -- -- --
Mark D. Hanson................ 7,500 55,000 -- --
Therese H. Langlais........... 4,750 22,750 -- --
David T. Shewmake............. 583 9,417 -- --
Richard L. Gerould............ 1,167 13,833 -- --
</TABLE>
- --------
(1) These options are immediately exercisable in full at the date of grant,
but shares purchased on exercise of unvested options are subject to a
repurchase right in favor of the Company which lapses ratably over five
years and entitles the Company to repurchase unvested shares at their
original issuance price.
(2) Calculated on the basis of the fair market value of the underlying
securities as of March 31, 1996 of $0.40 per share, as determined by the
Company's Board of Directors, minus the aggregate exercise price.

No options to purchase the Company's Common Stock were exercised during the
fiscal year ended March 31, 1996 by the Named Executive Officers. No
compensation intended to serve as incentive for performance to occur over a
period longer than one fiscal year was paid pursuant to a long-term incentive
plan during the last fiscal year to any Named Executive Officer. The Company
does not have any defined benefit or actuarial plan under which benefits are
determined primarily by final compensation (or average final compensation) and
years of service with any of the Named Executive Officers.

STOCK PLANS

1995 Stock Option Plan. The 1995 Stock Option Plan of the Company (the
"Option Plan") provides for the grant of stock options to employees (including
officers), directors and consultants of the Company and its subsidiaries.
Options may be incentive stock options within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code") or nonstatutory
stock options, although incentive stock options may be granted only to
employees. All options granted under the Option Plan must be granted by April
18, 2005.

The Option Plan is administered by the Board of Directors or a committee
thereof. Subject to the provisions of the Option Plan, the Board or committee
has the authority to select the persons to whom options are granted and
determine the terms of each option, including (i) the number of shares of
Common Stock covered by the option, (ii) when the option becomes exercisable,
(iii) the option exercise price, which, in the case of incentive stock
options, must be at least 100% of the fair market value of a share of Common
Stock as of the date of grant, and, in the case of nonstatutory stock options
must be at least 85% of the fair market value of a share of Common Stock as of
the date of grant, and (iv) the duration of the option (which, in the case of
incentive stock options, may not exceed ten years). Generally, options granted
under the Option Plan are immediately exercisable but remain subject to
repurchase by the Company until vested under a schedule established by the
Board or committee. The Company's repurchase right will terminate upon certain
changes in control of the Company unless the outstanding options are assumed
or replaced by the acquiring corporation or if, following certain changes in
control of the Company, the option holder is terminated without cause or
resigns following "constructive termination" as defined in the Option Plan.
All incentive stock options are nontransferable other than by will or the laws
of descent and distribution. With the Company's consent, nonstatutory stock
options may be transferred to an optionee's immediate family, a trust for his
or her benefit or a partnership in which only the optionee and immediate
family members are partners.

46
<PAGE>

Of the 2,500,000 shares of Common Stock reserved for issuance under the
Option Plan as of June 30, 1996, a total of 225,501 shares had been issued
upon the exercise of options, of which 134,716 remain subject to repurchase,
options for the purchase of a total of 1,087,500 shares at a weighted average
exercise price of $2.24 per share were outstanding and 1,186,999 shares were
available for future option grants.

1996 Outside Directors Stock Option Plan. In June 1996, the Board of
Directors, subject to stockholder approval, adopted the 1996 Outside Directors
Stock Option Plan (the "Directors Plan") and reserved a total of 200,000
shares of Common Stock for issuance thereunder. The Directors Plan provides
for the grant of nonstatutory stock options to nonemployee directors of the
Company. The Directors Plan is designed to work automatically without
administration; however, to the extent administration is necessary, it will be
performed by the Board of Directors. The Directors Plan provides that each
future nonemployee director of the Company will be granted an option to
purchase 15,000 shares of Common Stock on the date on which the optionee first
becomes a nonemployee director of the Company and each current nonemployee
director will be granted an option to purchase 15,000 shares of Common Stock
on the date following the first annual meeting of the stockholders of the
Company after this offering (the "Initial Grant"). Thereafter, on each
anniversary of a nonemployee director's Initial Grant, the director will be
granted an additional option to purchase 5,000 shares of Common Stock (an
"Annual Grant"). Subject to an optionee's continuous service with the Company,
1/8th of an Initial Grant will become exercisable six months after the date of
grant and 1/48th of the Initial Grant will become exercisable monthly
thereafter. Each Annual Grant will become exercisable in twelve monthly
installments beginning in the 37th month after the date of grant, subject to
the optionee's continuous service. The exercise price per share of all options
granted under the Directors Plan will equal the fair market value of a share
of Common Stock on the date of grant. Options granted under the Directors Plan
will have a term of ten years. In the event of certain changes in control of
the Company, options outstanding under the Directors Plan will become
immediately exercisable and vested in full. With the Company's consent, the
options may be transferred to an optionee's immediate family, a trust for
their benefit or a partnership in which only the optionee and immediate family
members are partners.

1996 Employee Stock Purchase Plan. In June 1996, the Board of Directors,
subject to stockholder approval, adopted the 1996 Employee Stock Purchase Plan
(the "Purchase Plan") and reserved a total of 450,000 shares of Common Stock
for issuance thereunder, none of which have been issued as of the effective
date of this offering. The Purchase Plan, which is intended to qualify under
Section 423 of the Code, is administered by the Board of Directors or by a
committee thereof. Employees (including officers and employee directors) of
the Company or any subsidiary designated by the Board for participation in the
Purchase Plan are eligible to participate in the Purchase Plan if they are
customarily employed for more than 20 hours per week and more than five months
per year, and do not own 5% or more of the Company's Common Stock. The
Purchase Plan will be implemented by sequential six-month offerings, the first
of which will commence on the effective date of this offering. The initial
offering period will terminate on January 31, 1997. Thereafter, offering
periods will begin on February 1 and August 1 of each year. The Board may
change the dates or duration of one or more offerings, but no offering may
exceed 27 months. The Purchase Plan permits eligible employees to purchase
Common Stock through payroll deductions at a price no less than 85% of the
lower of the fair market value of the Company's Common Stock on the first day
or the last day of each six-month offering period. Participants generally may
not purchase more than 1,500 shares in a six-month offering period or stock
having a value (measured at the beginning of the offering) greater than
$25,000 in any calendar year. In the event of certain changes in control of
the Company, the Board may accelerate the purchase of shares under the
Purchase Plan unless the acquiring corporation assumes or replaces the
purchase rights outstanding under the Purchase Plan.

Executive Performance Incentive Plan. Under the Company's Executive
Performance Incentive Plan (the "Incentive Plan"), the Compensation Committee
of the Board of Directors (the "Committee") may award performance units to
designated executives that will vest and become payable if one or more
preestablished performance goals are attained during a specified performance
period and the participant remains an employee. Performance goals may be
either absolute or relative (in comparison to a standard determined by the
Committee) measures of revenue, operating income, net income, earnings per
share, or departmental expenses. Performance units are dollar-denominated in
an amount specified by the Committee at the time of initial award and become

47
<PAGE>

payable at a time determined by the Committee following its certification of
the attainment of the performance goals. Participants may elect to receive
payment of vested performance units either in cash or in shares of the
Company's Common Stock having a fair market value on the date of payment equal
to the dollar value of the vested performance units. Immediately prior to
certain changes in control of the Company, Incentive Plan participants will be
paid the value of their performance units for the current performance period
that would have vested had the performance goals been attained at the target
level, prorated, however, for the portion of the performance period elapsed
prior to the change in control.

COMPENSATION OF DIRECTORS

Directors of the Company do not receive cash for services provided as a
director. Directors are reimbursed for all travel and related expenses
incurred in connection with attending board and committee meetings. Upon
adoption of the Directors Plan, directors who are not employees of the Company
will receive yearly grants of options to purchase Common Stock. The Directors
Plan will become effective upon consummation of this offering. See "--Stock
Plans--1996 Outside Directors Stock Option Plan."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

The Compensation Committee was formed in April 1996, and is composed of
Roger J. Sippl, J. Sidney Webb and Eric Young. No interlocking relationship
exists between any member of the Company's Compensation Committee and any
member of any other company's board of directors or compensation committee.
During the fiscal year completed March 31, 1996, the Board of Directors of the
Company, of which Roger J. Sippl, Chief Executive Officer of the Company, was
and is a member, fulfilled all functions of the Compensation Committee with
regard to compensation of executive officers of the Company.

LIMITATION OF LIABILITY AND INDEMNIFICATION

Pursuant to the provisions of the Delaware General Corporation Law, the
Company has adopted provisions in its Certificate of Incorporation, as
amended, which provide that directors of the Company shall not be personally
liable for monetary damages to the Company or its stockholders for a breach of
fiduciary duty as a director, except for liability as a result of: (i) a
breach of the director's duty of loyalty to the Company or its stockholders;
(ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) an act related to the unlawful
stock repurchase or payment of a dividend under Section 174 of Delaware
General Corporation Law; and (iv) transactions from which the director derived
an improper personal benefit. Such limitation of liability does not affect the
availability of equitable remedies such as injunctive relief or rescission.

The Company's Certificate of Incorporation, as amended, also authorizes the
Company to indemnify its officers, directors and other agents, by bylaws,
agreements or otherwise, to the full extent permitted under Delaware law. The
Company intends to enter into separate indemnification agreements with its
directors and officers which may, in some cases, be broader than the specific
indemnification provisions contained in the Delaware General Corporation Law.
The indemnification agreements may require the Company, among other things, to
indemnify such 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), to
advance their expenses incurred as a result of any proceeding against them as
to which they could be indemnified, and to obtain directors' and officers'
insurance if available on reasonable terms. The Company believes that the
provisions and agreements are necessary to attract and retain qualified
directors and officers.

The Company's Amended and Restated Bylaws provide that the Company shall
indemnify its directors and officers and may indemnify its employees to the
fullest extent permitted by law. The Company believes that indemnification
under its Amended and Restated Bylaws covers at least negligence and gross
negligence on the part of the indemnified party.

48
<PAGE>

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

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

49
<PAGE>

CERTAIN TRANSACTIONS

Since February 12, 1993 (the date of the Company's inception), there has not
been, nor is there currently proposed, any transaction or series of similar
transactions to which the Company was or is to be a party in which the amount
involved exceeds $60,000 and in which any director, executive officer or
holder of more than 5% of any class of voting securities of the Company or
members of such person's immediate family had or will have a direct or
indirect material interest other than the transactions described below.

On March 3, 1993, the Company issued for cash 2,000,000 shares of Common
Stock at a price of $0.08 per share to Roger J. Sippl, the Company's founder,
Chairman of the Board and Chief Executive Officer.

On March 31, 1993, the Company sold 803,000 shares of Series A Preferred
Stock at a price of $2.40 per share. The following executive officers,
directors, beneficial holders of more than 5% of a class of the Company's
capital stock and immediate family members of such persons purchased Series A
Preferred Stock:

<TABLE>
<CAPTION>
SHARES OF
SERIES A
PURCHASER(1) PREFERRED STOCK
------------ ---------------
<S> <C>
Cristina M. Morgan (2)....................................... 10,000
J. Sidney Webb (2)........................................... 20,000
Mark D. Hanson (3)........................................... 5,000
Therese H. Langlais (3)...................................... 15,000
Elizabeth G. Salmon (4)...................................... 197,500
Entities affiliated with Sequoia Capital (4)(5).............. 250,000
</TABLE>
- --------
(1) See notes to table of beneficial ownership in "Principal and Selling
Stockholders" for information relating to the beneficial ownership of such
shares.

(2) Director of the Company.

(3) Executive officer of the Company.

(4) A beneficial holder of more than 5% of a class of the Company's capital
stock.

(5) Represents 227,500 shares held by Sequoia Capital VI, 12,500 shares held
by Sequoia Technology Partners VI and 10,000 shares held by Sequoia XXIII.

Upon the consummation of this offering, all outstanding shares of Series A
Preferred Stock will convert into shares of Common Stock on a one-for-one
basis.

In June 1993, the Company issued 12,500 shares of Common Stock at a price of
$0.20 per share to each of Cristina M. Morgan, J. Sidney Webb, and E. E. van
Bronkhorst, outside directors of the Company.

50
<PAGE>

Between December 17, 1993 and January 14, 1994, the Company sold an
aggregate of 871,625 shares of Series B Preferred Stock at a price of $4.00
per share. Between April 29, 1994 and August 2, 1994, the Company sold an
aggregate of 625,000 shares of Series B Preferred Stock at a price of $4.00
per share. Between May 26, 1995 and August 3, 1995, the Company sold an
aggregate of 1,375,000 shares of Series B Preferred Stock at a price of $4.00
per share. The following executive officers, directors, beneficial holders of
more than 5% of a class of the Company's capital stock and immediate family
members of such persons purchased Series B Preferred Stock:

<TABLE>
<CAPTION>
SHARES OF
SERIES B
PURCHASER (1) PREFERRED STOCK
------------- ---------------
<S> <C>
Roger J. Sippl (2)(3)(4)................................... 261,250
J. Sidney Webb (2)......................................... 37,500
Cristina M. Morgan (2)..................................... 2,500
Mark D. Hanson (3)......................................... 2,500
Therese H. Langlais (3).................................... 3,750
Richard L. Gerould (3)..................................... 12,625
Elizabeth G. Salmon (4).................................... 216,500
Entities Affiliated with Sequoia Capital (4)(5)............ 490,500
Entities Affiliated with Weiss, Peck & Greer Venture
Partners (4)(6)........................................... 592,500
Entities Affiliated with Canaan Capital Partners (4)(7).... 550,000
</TABLE>
- --------
(1) See notes to table of beneficial ownership in "Principal and Selling
Stockholders" for information relating to the beneficial ownership of such
shares.

(2) Director of the Company.

(3) Executive officer of the Company.

(4) A beneficial holder of more than 5% of a class of the Company's capital
stock.

(5) Represents 446,355 shares held by Sequoia Capital VI, 24,525 shares held
by Sequoia Technology Partners VI, 8,820 shares held by Sequoia XXIII and
10,800 shares held by Sequoia XXIV.

(6) Represents 49,888 shares held by Weiss, Peck & Greer Venture Associates II
(Overseas), Ltd., 227,638 shares held by Weiss, Peck & Greer Venture
Associates II, L.P. and 314,973 shares held by WPG Enterprise Fund.

(7) Represents 446,500 shares held by Canaan Capital Offshore Limited
Partnership C.V., 53,500 shares held by Canaan Capital Limited Partnership
and 50,000 shares held by Quai Limited.

Upon the consummation of this offering, all outstanding shares of Series B
Preferred Stock will convert into shares of Common Stock on a one-for-one
basis.

On May 24, 1996, the Company sold an aggregate of 444,444 shares of Series C
Preferred Stock at a price of $9.00 per share, and shortly thereafter issued
convertible notes in the aggregate principal amount of $2.0 million. Cisco
purchased 222,222 of these shares, and a note in the principal amount of $1.0
million. Upon the consummation of this offering, all outstanding shares of
Series C Preferred Stock will convert into shares of Common Stock on a one-
for-one basis, and the amount borrowed by the Company pursuant to the
convertible notes will convert into shares of the Company's Common Stock at a
conversion price equal to the lesser of (i) $13.00 per share or (ii) the
offering price per share to the public in the offering.

In connection with the merger of PostModern with and into the Company in May
1996, the Company issued an aggregate of 3,099,821 shares of its Common Stock
to the former shareholders of PostModern, including 844,486 shares to Jens
Christensen, 851,235 shares to Neguine Navab, 844,486 shares to Prasad
Mokkapati and 426,507 shares to Suresh Challa, and options to purchase an
aggregate of 361,785 shares of its Common Stock

51
<PAGE>

at exercise prices ranging from $0.24 to $0.60 to the former holders of
options to purchase Common Stock of PostModern, including options to purchase
67,494 shares of the Company's Common Stock issued to Neguine Navab. Also in
connection with the merger, the Company paid, subject to vesting, an aggregate
of $1,500,000 to certain former employees of PostModern, including $400,000 to
each of Messrs. Christensen and Mokkapati and $400,000 to Ms. Navab, and
$2,307,152 to certain former shareholders of PostModern, including $750,655 to
each of Messrs. Christensen and Mokkapati, $183,000 to Mr. Challa, and
$696,659 to Ms. Navab. Upon the closing of the merger, Hambrecht & Quist LLC,
of which Cristina M. Morgan, a Director of the Company, is a Managing
Director, received shares of PostModern common stock for financial advisory
services rendered to PostModern in connection with the Company's acquisition
of PostModern, which shares were immediately converted into 84,374 shares of
the Company's Common Stock. The consideration issued by the Company in the
merger was determined through negotiations between the managements of the
Company and PostModern.

In connection with the merger of Data Accessibility Solutions, Inc. ("Data
Accessibility") with and into the Company in May 1996, the Company issued an
aggregate of 12,500 shares of its Common Stock to the former shareholders of
Data Accessibility, including 6,250 shares to Robert Perreault, the Company's
Vice President, Research and Development.

Mr. Sippl, the Company's founder and the Chief Executive Officer and
Chairman of the Board of Directors of the Company, formed Java Development
Corp. ("JDC") in February 1996, in order to pursue technology research and
development projects of interest to him. Mr. Sippl is the sole owner, director
and officer of JDC. In June 1996, the Company acquired certain technology and
other assets being developed by JDC that the Company expects it may use in a
future product or products. The Company paid Mr. Sippl $40,000 to acquire
these assets. JDC's cost of development of the technology, consisting chiefly
of salaries of JDC employees and fees paid to consultants, exceeded the price
paid by the Company. In connection with the asset sale, five employees of JDC
became employees of Visigenic.

The Company has entered into non-compete agreements with certain employees
who joined the Company in connection with the PostModern merger. The Company
intends to enter into indemnification agreements with each of its directors
and executive officers. Such indemnification agreements will require the
Company to indemnify such individuals to the fullest extent permitted by
Delaware law.

52
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of June 30, 1996, and as adjusted
to reflect the sale of the shares offered hereby, assuming no exercise of the
Underwriters' over-allotment option, (i) by each person who is known by the
Company to own beneficially more than 5% of the Company's Common Stock, (ii)
by each of the Named Executive Officers and by each of the Company's
directors, (iii) by all current executive officers and directors as a group,
and (iv) by each Selling Stockholder. Except pursuant to applicable community
property laws or as indicated in the footnotes to this table, each stockholder
identified in the table possesses sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by such
stockholder.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED BEFORE THE OWNED AFTER THE
OFFERING (1) OFFERING (1)
----------------------- SHARES BEING -----------------------
BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT
- ---------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
EXECUTIVE OFFICERS AND
DIRECTORS
Roger J. Sippl (2)...... 2,468,750 23.6% -- 2,468,750 20.3%
Mark D. Hanson (3)...... 275,000 2.6 -- 275,000 2.3
Jens Christensen (4).... 1,695,720 16.1 87,376 1,528,720 12.5
Therese H. Langlais
(5).................... 96,250 * -- 96,250 *
David T. Shewmake (6)... 45,000 * -- 45,000 *
Richard L. Gerould (7).. 90,125 * -- 90,125 *
Michael Moritz (8)...... 740,500 7.1 -- 740,500 6.1
Cristina M. Morgan (9).. 109,374 1.0 -- 109,374 *
Gill Cogan (10)......... 592,500 5.7 -- 592,500 4.9
E. E. van Bronkhorst
(11)................... 12,500 * -- 12,500 *
J. Sidney Webb (11)..... 70,000 * -- 70,000 *
Eric Young (12)......... 550,000 5.3 -- 550,000 4.5
All executive officers
and directors as a
group
(14 persons) (13)...... 6,856,969 64.2 167,000 6,689,969 54.1
5% STOCKHOLDERS
Elizabeth G. Salmon
(14)................... 2,468,750 23.6 -- 2,468,750 20.3
Neguine Navab (15)...... 1,695,720 16.1 79,624 1,528,720 12.5
Prasad Mokkapati (16)... 844,485 8.1 75,000 769,485 6.3
Funds affiliated with
Sequoia Capital (17)... 740,500 7.1 -- 740,500 6.1
3000 Sand Hill Road
Menlo Park, California
94025
Funds affiliated with
Weiss, Peck & Greer 592,500 5.7 -- 592,500 4.9
Venture Partners
(18)..................
555 California Street
San Francisco,
California 94104
Funds affiliated with
Canaan Capital Partners 550,000 5.3 -- 550,000 4.5
(19)..................
2884 Sand Hill Road
Menlo Park, California
94025
</TABLE>

53
<PAGE>

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED BEFORE THE OWNED AFTER THE
OFFERING (1) OFFERING (1)
----------------------SHARES BEING ----------------------
BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT
- ---------------- ----------- ---------------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
OTHER SELLING
STOCKHOLDERS
Justin Broughton........ 6,000 * 6,000 -- *
Suresh Challa (20)...... 426,507 4.1 80,000 346,507 2.8
John D. Fleischhauer.... 1,000 * 1,000 -- *
Richard J. Foley........ 15,000 * 1,500 13,500 *
Tommy Hawkins........... 67,500 * 17,500 50,000 *
Mark Hayes (21)......... 30,500 * 1,000 29,500 *
Miles Kurland........... 2,000 * 500 1,500 *
Lion Investments 100,000 * 50,000 50,000 *
Limited................
Clifford S. Robbins..... 1,875 * 500 1,375 *
</TABLE>
- --------
* Represents less than 1%.
(1) Based on 10,469,971 shares of Common Stock outstanding prior to the
offering. A person is deemed to be the beneficial owner of securities
that can be acquired by such person within 60 days upon the exercise of
options. Calculations of percentages of beneficial ownership assume the
exercise by only the respective named stockholder of all options for the
purchase of Common Stock held by such stockholder which are exercisable
within 60 days of June 30, 1996. Unless otherwise indicated, the address
of each of the named individuals is: c/o Visigenic Software, Inc., 951
Mariner's Island Boulevard, Suite 120, San Mateo, California 94404.
(2) Includes 393,750 shares held by Elizabeth G. Salmon, Mr. Sippl's spouse,
as separate property and 20,000 shares held by Nelson D. Salmon and
Elizabeth G. Salmon, Trustees of the Nelson D. Salmon Trust dated October
14, 1994. Mr. Sippl disclaims beneficial ownership of all such shares.
See footnote 14.
(3) Includes 111,014 shares subject to a right of repurchase in favor of the
Company which lapses over time. Also includes 30,000 shares issuable upon
exercise of options.
(4) Includes 783,740 shares held by Neguine Navab, Mr. Christensen's spouse,
and 67,494 shares issuable upon exercise of options held by Ms. Navab.
Mr. Christensen acquired his shares in the Company in connection with the
Company's acquisition of PostModern. See footnote 15 below. See "Certain
Transactions."
(5) Includes 3,750 shares held by Ms. Langlais, as Co-Trustee of the Halloran
1990 Living Trust dated March 12, 1990. Also includes 18,214 shares
subject to a right of repurchase in favor of the Company which lapses
over time.
(6) Includes 15,419 shares subject to a right of repurchase in favor of the
Company which lapses over time. Also includes 10,000 shares issuable upon
exercise of options.
(7) Includes 30,559 shares subject to a right of repurchase in favor of the
Company which lapses over time.
(8) Represents all shares held by entities affiliated with Sequoia Capital.
See footnote 17 below. Mr. Moritz, as a general partner of Sequoia
Capital, may be deemed to beneficially own shares, but Mr. Moritz
disclaims beneficial ownership of all such shares except to the extent of
his proportional interest therein.
(9) Includes 4,576 shares subject to a right of repurchase in favor of the
Company which lapses over time. Also includes 84,374 shares issued to
Hambrecht & Quist LLC ("H&Q") for financial advisory services rendered to
PostModern in connection with the Company's acquisition of PostModern.
Ms. Morgan is a Managing Director of H&Q. Ms. Morgan disclaims beneficial
ownership of all such shares except to the extent of her proportional
interest therein.
(10) Represents all shares held by entities affiliated with Weiss, Peck &
Greer Venture Partners. See footnote 18 below. Mr. Cogan, as a general
partner of Weiss, Peck & Greer Venture Partners, may be deemed to

54
<PAGE>

beneficially own shares, but Mr. Cogan disclaims beneficial ownership of
all such shares except to the extent of his proportional interest therein.
(11) Includes 4,576 shares subject to a right of repurchase in favor of the
Company which lapses over time.
(12) Represents all shares held by entities affiliated with Canaan Capital
Partners. See footnote 19 below. Mr. Young, as a general partner of
Canaan Capital Partners, may be deemed to beneficially own shares, but
Mr. Young disclaims beneficial ownership of all such shares except to the
extent of his proportional interest therein.
(13) See footnotes 2 through 12, footnote 15, and footnotes 17 through 19.
Includes 16,250 shares held by Robert Perreault. Also includes 202,067
shares subject to a right of repurchase in favor of the Company which
lapses over time, and 202,494 shares issuable upon exercise of options.
Of the 167,000 shares to be sold by the executive officers and directors
of the Company, Mr. Christensen intends to sell 87,376 shares and Ms.
Navab intends to sell 79,624 shares.
(14) Includes 2,055,000 shares held by Roger J. Sippl, Ms. Salmon's spouse,
and 20,000 shares held by Nelson D. Salmon and Elizabeth G. Salmon,
Trustees of the Nelson D. Salmon Trust dated October 14, 1994. See
footnote 2 above.
(15) Includes 67,494 shares issuable upon exercise of options. Also includes
844,486 shares held by Mr. Christensen, Ms. Navab's spouse. Ms. Navab is
Director of Object Technologies for the Company. Ms. Navab acquired her
shares and options in the Company in connection with the Company's
acquisition of PostModern. See "Certain Transactions."
(16) Mr. Mokkapati is Senior Architect for Distributed Objects for the
Company. Mr. Mokkapati acquired his shares in connection with the
Company's acquisition of PostModern. See "Certain Transactions."
(17) Represents 673,855 shares held by Sequoia Capital VI, 37,025 shares held
by Sequoia Technology Partners VI, 18,820 shares held by Sequoia XXIII
and 10,800 shares held by Sequoia XXIV. Michael Moritz, a Director of the
Company, is a general partner of Sequoia Capital. See footnote 8 above.
(18) Represents 49,888 shares held by Weiss, Peck & Greer Venture Associates
II (Overseas), Ltd., 227,638 shares held by Weiss, Peck & Greer Venture
Associates II, L.P. and 314,973 shares held by WPG Enterprise Fund. Gill
Cogan, a Director of the Company, is a general partner of Weiss, Peck &
Greer Venture Partners. See footnote 10 above.
(19) Represents 446,500 shares held by Canaan Capital Offshore Limited
Partnership C.V., 53,500 shares held by Canaan Capital Limited
Partnership and 50,000 shares held by Quai Limited. Eric Young, a
Director of the Company, is a general partner of Canaan Capital Partners.
See footnote 12 above.
(20) Includes 25,590 shares issuable upon exercise of options. Mr. Challa is
Director of Business Development for the Company. Mr. Challa acquired his
shares and options in the Company in connection with the Company's
acquisition of PostModern. See "Certain Transactions."
(21) Includes 7,838 shares subject to a right of repurchase in favor of the
Company. Also includes 8,500 shares issuable upon exercise of options.

55
<PAGE>

DESCRIPTION OF CAPITAL STOCK

Upon consummation of this offering, the authorized capital stock of the
Company will consist of 50,000,000 shares of Common Stock and 2,000,000 shares
of Preferred Stock, par value $0.001 per share. Each outstanding share of
Preferred Stock will be automatically converted into one share of Common Stock
upon the closing of the offering being made hereby. Upon such conversion, such
Preferred Stock will be canceled, retired and eliminated from the shares that
the Company is authorized to issue. The following summary of certain
provisions of the Common Stock and the preferred stock of the Company does not
purport to be complete and is subject to, and qualified in its entirety by,
the Certificate of Incorporation and By-Laws of the Company that are included
as exhibits to the Registration Statement of which this Prospectus forms a
part and by the provisions of applicable law.

COMMON STOCK

As of June 30, 1996, there were approximately 10,469,971 shares of Common
Stock outstanding held of record by 160 stockholders, as adjusted to reflect
the conversion of the outstanding shares of Preferred Stock and convertible
promissory notes upon the closing of the offering. The holders of Common Stock
are entitled to one vote for each share held of record on all matters
submitted to a vote of the holders of Common Stock. Subject to preferences
applicable to any outstanding preferred stock, holders of Common Stock are
entitled to receive ratably such dividends as may be declared by the Board of
Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining after payment of
liabilities and the liquidation preference of any preferred stock. Holders of
Common Stock have no preemptive or subscription rights, and there are no
redemption or conversion rights with respect to such shares. All outstanding
shares of Common Stock are fully paid and non-assessable, and the shares of
Common Stock to be issued upon completion of the offering will be fully paid
and non-assessable.

PREFERRED STOCK

The Board of Directors has the authority, without action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the dividend rate, voting rights and other rights, preferences
and restrictions of each series any or all of which may be greater than the
rights of the Common Stock. It is not possible to state the actual effect of
the issuance of any shares of preferred stock upon the rights of holders of
the Common Stock until the Board of Directors determines the specific rights
of the holders of such preferred stock. However, the effects might include,
among other things, restricting dividends on the Common Stock, diluting the
voting power of the Common Stock, impairing the liquidation rights of the
Common Stock and delaying or preventing a change in control of the Company
without further action by the stockholders. The Company has no present plans
to issue any shares of preferred stock.

REGISTRATION RIGHTS

Following the sale of the shares of Common Stock offered hereby, the holders
of approximately 6,789,050 shares: issuable upon conversion of the outstanding
shares of Preferred Stock and outstanding convertible notes; held by the
founder and certain early employees of the Company; and held by former
PostModern shareholders, and their transferees, will have certain rights to
register those shares under the Securities Act of 1933, as amended. These
rights are provided under the terms of an agreement among the Company and the
holders of such shares. If the Company registers any of its Common Stock
either for its own account or for the account of other security holders, the
holders of such shares are entitled to include their shares of Common Stock in
the registration, subject to the ability of the underwriters to limit the
number of shares included in the offering. All fees, costs and expenses of
such registrations (other than underwriting discounts and commissions) will be
borne by the Company.

56
<PAGE>

DELAWARE LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS

The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203"), which, subject to certain exceptions, prohibits a
Delaware corporation from engaging in any business combination with any
interested stockholder for a period of three (3) years following the date that
such stockholder became an interested stockholder, unless: (i) prior to such
date, the board of directors of the corporation approved either the business
combination or the transaction that resulted in the stockholder becoming an
interested stockholder; (ii) upon consummation of the transaction that
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (x) by persons
who are directors and also officers and (y) by employee stock plans in which
employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer; or (iii) on or subsequent to such date, the business
combination is approved by the board of directors and authorized at an annual
or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock that is
not owned by the interested stockholder.

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

The Company's Amended and Restated Certificate of Incorporation, which will
become effective upon consummation of this offering, will require that any
action required or permitted to be taken by stockholders of the Company must
be effected at a duly called annual or special meeting of the stockholders and
may not be effected by a consent in writing. In addition, special meetings of
the stockholders of the Company may be called only by the Board of Directors
or a committee of the Board. The Amended and Restated Bylaws which will become
effective upon consummation of this offering will provide that, beginning with
the first annual meeting of stockholders following this offering, the Board of
Directors will be divided into three classes, with each class serving
staggered three-year terms. These provisions may have the effect of deferring
hostile takeovers or delaying changes in control or management of the Company.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is The First National
Bank of Boston.

57
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for the Common
Stock. Future sales of substantial amounts of Common Stock in the public
market could adversely affect the market price of the Common Stock.

Upon completion of this offering, the Company will have outstanding an
aggregate of 12,169,971 shares of Common Stock, assuming (i) the issuance of
2,100,000 shares of Common Stock offered hereby, (ii) no exercise of the
Underwriters' over-allotment option and (iii) no exercise of options to
purchase Common Stock after June 30, 1996. Of these shares, the 2,100,000
shares sold in the offering will be freely tradeable without restriction or
further registration under the Securities Act of 1933, as amended (the
"Securities Act"), except for any shares purchased by "affiliates" of the
Company as that term is defined in Rule 144 under the Securities Act (whose
sales would be subject to certain limitations and restrictions described
below).

The remaining 10,069,971 shares of Common Stock held by existing
stockholders were issued and sold by the Company in reliance on exemptions
from the registration requirements of the Securities Act. All such outstanding
shares will be subject to the "lock-up" agreements described below on the date
of this Prospectus. Upon expiration of lock-up agreements 180 days after the
date of this Prospectus, 8,048,789 shares will become eligible for sale,
subject in most cases to the limitations of Rule 144. The remaining 2,021,182
shares held by existing stockholders will become eligible for sale at various
times over a period of less than two years and could be sold earlier if the
holders exercise registration rights. In addition, holders of stock options
could exercise these options and sell certain of the shares issued upon
exercise as described below.

As of June 30, 1996, there were a total of 1,087,500 shares of Common Stock
subject to outstanding options under the Option Plan, all of which were
exercisable. However, these shares are subject to lock-up agreements. All
options held by officers and directors of the Company are subject to a 180 day
lock-up agreement described below, and all other options are subject to a 180
day lock-up agreement with the Company.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned shares for at least
two years (including the holding period of any prior owner except an
affiliate) is entitled to sell in "broker's transactions" or to market makers,
within any three-month period commencing 90 days after the date of this
prospectus, a number of shares that does not exceed the greater of (i) one
percent of the number of shares of Common Stock then outstanding
(approximately 121,700 shares immediately after this offering) or (ii)
generally, the average weekly trading volume in the Common Stock during the
four calendar weeks preceding the required filing of a Form 144 with respect
to such sale. Sales under Rule 144 are generally subject to the availability
of current public information about the Company. Under Rule 144(k), a person
who is deemed not to have been an affiliate of the Company at any time during
the 90 days preceding a sale, and who has beneficially owned the shares
proposed to be sold for a least three years, is entitled to sell such shares
without having to comply with the manner of sale, public information, volume
limitation or notice filing provisions of Rule 144. Under Rule 701 under the
Securities Act, persons who purchase shares upon exercise of options granted
prior to the effective date of this offering are entitled to sell such shares
90 days after the effective date of this offering in reliance on Rule 144,
without having to comply with the holding period and notice filing
requirements of Rule 144 and, in the case of non-affiliates, without having to
comply with the public information, volume limitation or notice filing
provisions of Rule 144.

The Company intends to file registration statements under the Securities Act
180 days after the effective date of the offering to register shares of Common
Stock reserved for issuance under the Option Plan and the Directors Plan, thus
permitting the resale of such shares by non-affiliates and by affiliates,
subject to Rule 144 volume limitations applicable thereto, in the public
market without restriction under the Securities Act. Such registration
statements will become effective immediately upon filing.

As of June 30, 1996, the holders of approximately 6,789,050 shares are
entitled to certain registration rights with respect to such shares. If such
registration rights are exercised, the shares can be sold without any holding
period or sales volume limitation. If such holders, by exercising their
registration rights, cause a large number of

58
<PAGE>

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. If the
Company were required to include in a Company initiated registration the
shares held by such holders pursuant to the exercise of their registration
rights, such sales might have an adverse effect on the Company's ability to
raise needed capital. See "Description of Capital Stock--Registration Rights."

All existing stockholders of the Company have agreed that they will not,
subject to certain limited exceptions, directly or indirectly, offer, sell or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exchangeable or exercisable for any such shares for a period of 180
days after the effective date of the offering without the prior written
consent of the Company, and in most cases, Hambrecht & Quist LLC.

59
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their representatives, Hambrecht & Quist LLC
and Robertson, Stephens & Company LLC (collectively, the "Representatives"),
have severally agreed to purchase from the Company and the Selling
Stockholders the following respective numbers of shares of Common Stock:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
Hambrecht & Quist LLC..............................................
Robertson, Stephens & Company LLC..................................
---------
Total.......................................................... 2,100,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, including the absence of any
material adverse change in the Company's business and the receipt of certain
certificates, opinions and letters from the Company and its counsel and
independent auditors. The nature of the Underwriters' obligation is such that
they are committed to purchase all shares of Common Stock offered hereby if
any of such shares are purchased.

The Underwriters propose to offer the shares of Common Stock directly to the
public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow and such dealers may
reallow a concession not in excess of $ per share to certain other dealers.
After the initial public offering of the shares, the offering price and other
selling terms may be changed by the Representatives.

The Company and the Selling Stockholders have granted to the Underwriters an
option, exercisable no later than 30 days after the date of this Prospectus,
to purchase up to 255,000 and 60,000, respectively, additional shares of
Common Stock at the initial public offering price, less the underwriting
discount, set forth on the cover page of this Prospectus. To the extent that
the Underwriters exercise this option, each of the Underwriters will have a
firm commitment to purchase approximately the same percentage thereof which
the number of shares of Common Stock to be purchased by it shown in the above
table bears to the total number of shares of Common Stock offered hereby. The
Company and the Selling Stockholders will be obligated, pursuant to the
option, to sell shares to the Underwriters to the extent the option is
exercised. The Underwriters may exercise such option only to cover-allotments
made in connection with the sale of shares of Common Stock offered hereby.

The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the
right to reject an order for the purchase of shares in whole or in part.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments the Underwriters may be required
to make in respect thereof.

The Selling Stockholders and the other stockholders of the Company,
including the executive officers and directors, who will own in the aggregate
10,069,971 shares of Common Stock after this offering, have agreed that they
will not, without the prior written consent of Hambrecht & Quist LLC, offer,
sell or otherwise dispose of any shares of Common Stock, options or warrants
to acquire shares of Common Stock or

60
<PAGE>

securities exercisable for or convertible into shares of Common Stock owned by
them during the 180-day period following the effective date of the
Registration Statement for this offering. The Company has agreed that it will
not, without the prior written consent of Hambrecht & Quist LLC, offer, sell
or otherwise dispose of any shares of Common Stock, options or warrants to
acquire shares of Common Stock or securities exchangeable for or convertible
into shares of Common Stock during the 180-day period following the effective
date of the Registration Statement for this offering, except that the Company
may grant additional options under its stock plans and issue securities under,
or pursuant to the exercise of options granted under, its stock plans. See
"Shares Eligible for Future Sale."

The Representatives currently anticipate that up to 105,000 shares of Common
stock may be sold at the initial public offering price to directors (or their
affiliated entities) and employees of the Company who have expressed an
interest in purchasing such shares of Common Stock in the offering. The number
of shares available for sale to the general public will be reduced to the
extent such persons purchase such shares. Any such shares not so purchased
will be offered by the Representatives to the general public on the same basis
as other shares offered hereby.

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales of Common Stock offered hereby to any accounts over
which they have discretionary authority.

Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price of the Common Stock was determined by
negotiation among the Company, the representatives of the Selling Stockholders
and the Representatives. Among the factors considered in determining the
initial public offering price were prevailing market and economic conditions
revenues and earnings of the Company, market valuations of other companies
engaged in activities similar to the Company, estimates of the business
potential and prospects of the Company, the present state of the Company's
business operations, the Company's management and other factors deemed
relevant.

LEGAL MATTERS

The validity of the securities offered hereby and general corporate legal
matters will be passed upon for the Company by Gray Cary Ware & Freidenrich, A
Professional Corporation ("GCWF"), Palo Alto, California. As of June 30, 1996,
certain members and investment partnerships of GCWF beneficially owned an
aggregate of 37,000 shares of the Company's Common Stock. Certain legal
matters in connection with this offering will be passed upon for the
Underwriters by Fenwick & West LLP. Fenwick & West LLP owns an aggregate of
18,979 shares of the Company's Common Stock.

EXPERTS

The consolidated financial statements of Visigenic Software, Inc. and
PostModern Computing Technologies Inc. included in this Prospectus and
elsewhere in the Registration Statement to the extent and for the periods
indicated in their reports have been audited by Arthur Andersen LLP,
independent public accountants, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement on Form S-1
under the Securities Act, with respect to the Common Stock offered hereby.
This Prospectus which constitutes a part of the Registration Statement does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto. For further information with respect to
the Company and such Common Stock, reference is made to the Registration
Statement and the exhibits and schedules thereto. Statements contained in this
Prospectus as to

61
<PAGE>

the contents of any contract or any other document referred to are not
necessarily complete. In each instance, reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, and
each such statement is qualified in all respects by such reference. Copies of
the Registration Statement, including exhibits and schedules thereto, may be
inspected without charge at the Commission's principal office in Washington,
D.C., or obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at 7 World Trade Center, Suite 1300, New
York, New York 10048 and at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. The Commission maintains a World Wide Web
site that contains reports, proxy and information statements and other
information filed electronically with the Commission. The address of the site
is http://www.sec.gov.

62
<PAGE>

VISIGENIC SOFTWARE, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
VISIGENIC SOFTWARE, INC.:
Report of Independent Public Accountants............................... F-2
Consolidated Balance Sheets............................................ F-3
Consolidated Statements of Operations.................................. F-4
Consolidated Statements of Stockholders' Equity........................ F-5
Consolidated Statements of Cash Flows.................................. F-6
Notes to Consolidated Financial Statements............................. F-7
POSTMODERN COMPUTING TECHNOLOGIES INC.:
Report of Independent Public Accountants............................... F-15
Balance Sheets......................................................... F-16
Statements of Operations............................................... F-17
Statements of Shareholders' Equity..................................... F-18
Statements of Cash Flows............................................... F-19
Notes to Financial Statements.......................................... F-20
VISIGENIC SOFTWARE, INC. AND POSTMODERN COMPUTING TECHNOLOGIES INC.--
PRO FORMA:
Pro Forma Condensed Combined Financial Statements...................... P-1
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Visigenic Software, Inc.:

We have audited the accompanying consolidated balance sheets of Visigenic
Software, Inc. (a Delaware corporation) and subsidiary as of March 31, 1995
and 1996 and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended March
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Visigenic Software, Inc.
and subsidiary as of March 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period
ended March 31, 1996 in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

San Jose, California
June 17, 1996

F-2
<PAGE>

VISIGENIC SOFTWARE, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, 1996
PRO FORMA
MARCH 31, LIABILITIES AND
----------------- JUNE 30, STOCKHOLDERS'
1995 1996 1996 EQUITY (NOTE 5)
------- -------- -------- ---------------
ASSETS (UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents....... $ 553 $ 2,399 $ 1,890
Accounts receivable, net of al-
lowance for doubtful accounts
of $0, $60 and $97............. 472 760 3,263
Prepaid compensation............ -- -- 1,478
Other current assets............ 175 257 551
------- -------- --------
Total current assets.......... 1,200 3,416 7,182
------- -------- --------
PROPERTY AND EQUIPMENT, net....... 607 1,349 1,731
OTHER ASSETS, net:
Excess of purchase price over
net assets acquired............ -- -- 1,000
Other........................... 22 55 49
------- -------- --------
$ 1,829 $ 4,820 $ 9,962
======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQ-
UITY
CURRENT LIABILITIES:
Line of credit.................. $ -- $ -- $ 524 $ 524
Accounts payable................ 201 811 1,374 1,374
Accrued liabilities-
Payroll and related benefits... 86 347 408 408
Other.......................... 122 301 928 928
Deferred revenue................ 303 1,141 1,617 1,617
------- -------- -------- --------
Total current liabilities..... 712 2,600 4,851 4,851
------- -------- -------- --------
CONVERTIBLE NOTES PAYABLE TO
STOCKHOLDERS..................... -- -- 2,000 --
------- -------- -------- --------
COMMITMENTS (Note 4)
STOCKHOLDERS' EQUITY:
Convertible preferred stock,
$.001 par value, aggregate
liquidation preference of
$17,414
Authorized--10,000,000 shares
Outstanding--Series A, 803,000
shares in 1995, 1996 and June
30, 1996; Series B, 1,496,625
shares in 1995 and 2,871,625
shares in 1996 and June 30,
1996; Series C, 444,444
shares at June 30, 1996; no
shares outstanding pro
forma........................ 3 4 4 --
Common stock, $.001 par value,
Authorized--20,000,000 shares
at March 31, 1996; 30,000,000
at June 30, 1996
Outstanding--2,782,877 shares
in 1995, 2,835,905 shares in
1996 and 6,150,902 shares at
June 30, 1996; 10,469,971
shares outstanding pro
forma........................ 3 3 6 10
Additional paid-in capital...... 8,194 13,675 28,222 30,222
Accumulated deficit............. (7,083) (11,462) (25,121) (25,121)
------- -------- -------- --------
Total stockholders' equity.... 1,117 2,220 3,111 5,111
------- -------- -------- --------
$ 1,829 $ 4,820 $ 9,962 $ 9,962
======= ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-3
<PAGE>

VISIGENIC SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
QUARTER ENDED
YEAR ENDED MARCH 31, JUNE 30,
------------------------- ----------------
1994 1995 1996 1995 1996
------- ------- ------- ------ --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE:
Software products............... $ -- $ 892 $ 4,479 $ 544 $ 2,505
Service and other............... -- 223 1,096 367 456
------- ------- ------- ------ --------
Total revenue................. -- 1,115 5,575 911 2,961
------- ------- ------- ------ --------
COST OF REVENUE:
Software products............... -- 36 284 43 138
Service and other............... -- 259 727 146 295
------- ------- ------- ------ --------
Total cost of revenue......... -- 295 1,011 189 433
------- ------- ------- ------ --------
GROSS PROFIT...................... -- 820 4,564 722 2,528
------- ------- ------- ------ --------
OPERATING EXPENSES:
Product development............. 1,393 3,160 4,348 729 1,657
Sales and marketing............. 503 1,511 3,215 636 2,006
General and administrative...... 600 872 1,465 335 473
Purchased in process product de-
velopment...................... -- -- -- -- 12,014
Amortization of excess of pur-
chase price over net assets ac-
quired......................... -- -- -- -- 43
------- ------- ------- ------ --------
Total operating expenses...... 2,496 5,543 9,028 1,700 16,193
------- ------- ------- ------ --------
Loss from operations.......... (2,496) (4,723) (4,464) (978) (13,665)
INTEREST AND OTHER INCOME, net.... 42 94 85 1 6
------- ------- ------- ------ --------
NET LOSS.......................... $(2,454) $(4,629) $(4,379) $ (977) $(13,659)
======= ======= ======= ====== ========
PRO FORMA NET LOSS PER SHARE...... $ (.39) $ (.09) $ (1.21)
======= ====== ========
PRO FORMA WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT SHARES..... 11,120 10,602 11,289
======= ====== ========
</TABLE>

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

F-4
<PAGE>

VISIGENIC SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL TOTAL
---------------- ----------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT EQUITY
--------- ------ --------- ------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common
stock to founder in
February 1993......... -- $ -- 2,000,000 $ 2 $ 158 $ -- $ 160
Issuance of common
stock................. -- -- 427,019 -- 81 -- 81
Issuance of Series A
convertible preferred
stock................. 803,000 1 -- -- 1,898 -- 1,899
Issuance of Series B
convertible preferred
stock................. 871,625 1 -- -- 3,445 -- 3,446
Net loss............... -- -- -- -- -- (2,454) (2,454)
--------- ----- --------- ---- ------- -------- -------
BALANCE, MARCH 31,
1994................... 1,674,625 2 2,427,019 2 5,582 (2,454) 3,132
Issuance of common
stock................. -- -- 459,575 1 183 -- 184
Repurchase of common
stock................. -- -- (103,717) -- (35) -- (35)
Issuance of Series B
convertible preferred
stock................. 625,000 1 -- -- 2,464 -- 2,465
Net loss............... -- -- -- -- -- (4,629) (4,629)
--------- ----- --------- ---- ------- -------- -------
BALANCE, MARCH 31,
1995................... 2,299,625 3 2,782,877 3 8,194 (7,083) 1,117
Issuance of Series B
convertible preferred
stock................. 1,375,000 1 -- -- 5,459 -- 5,460
Exercise of stock
options............... -- -- 54,068 -- 22 -- 22
Repurchase of common
stock, net of
issuances............. -- -- (1,040) -- -- -- --
Net loss............... -- -- -- -- -- (4,379) (4,379)
--------- ----- --------- ---- ------- -------- -------
BALANCE, MARCH 31,
1996................... 3,674,625 4 2,835,905 3 13,675 (11,462) 2,220
Issuance of Series C
convertible preferred
stock................. 444,444 -- -- -- 4,000 -- 4,000
Issuance of common
stock in connection
with the acquisition
of PostModern
Computing Technologies
Inc................... -- -- 3,099,821 3 10,382 -- 10,385
Exercise of stock
options (unaudited)... -- -- 171,433 -- 69 -- 69
Issuance of common
stock (unaudited)..... -- -- 43,743 -- 96 -- 96
Net loss (unaudited)... -- -- -- -- -- (13,659) (13,659)
--------- ----- --------- ---- ------- -------- -------
BALANCE, JUNE 30, 1996
(unaudited)............ 4,119,069 $ 4 6,150,902 $ 6 $28,222 $(25,121) $ 3,111
========= ===== ========= ==== ======= ======== =======
</TABLE>

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

F-5
<PAGE>

VISIGENIC SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
QUARTER ENDED
YEARS ENDED MARCH 31, JUNE 30,
------------------------- -----------------
1994 1995 1996 1995 1996
------- ------- ------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss....................... $(2,454) $(4,629) $(4,379) $ (977) $(13,659)
Adjustments to reconcile net
loss to net cash used in
operating activities--
Depreciation and
amortization................. 67 158 310 52 164
Purchased in process product
development.................. -- -- -- -- 12,014
Provision for allowance for
doubtful accounts............ -- -- 60 15 12
Changes in net assets and
liabilities, net of
acquisition of PostModern--
Increase in accounts
receivable.................. -- (472) (348) (941) (2,375)
Increase in prepaid expenses
and other current assets.... (35) (139) (82) (93) (1,685)
Increase in accounts
payable..................... 148 53 610 75 472
Increase in accrued
liabilities................. 66 142 440 21 183
Increase in deferred
revenue..................... -- 303 838 488 293
------- ------- ------- ------- --------
Net cash used in operating
activities................. (2,208) (4,584) (2,551) (1,360) (4,581)
------- ------- ------- ------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Payment for purchase of
PostModern, net of cash
acquired...................... -- -- -- -- (2,182)
Purchases of property and
equipment..................... (457) (373) (1,052) (148) (435)
Organization costs and other
assets........................ (20) (5) (33) (17) --
------- ------- ------- ------- --------
Net cash used in investing
activities................. (477) (378) (1,085) (165) (2,617)
------- ------- ------- ------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net borrowings on bank line of
credit........................ -- -- -- -- 524
Proceeds from issuance of
convertible notes............. -- -- -- -- 2,000
Net proceeds from issuance of
preferred stock............... 5,345 2,465 5,460 2,992 4,000
Net proceeds from issuance of
common stock.................. 241 149 22 -- 165
------- ------- ------- ------- --------
Net cash provided by
financing activities....... 5,586 2,614 5,482 2,992 6,689
------- ------- ------- ------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS............ 2,901 (2,348) 1,846 1,467 (509)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD............. -- 2,901 553 553 2,399
------- ------- ------- ------- --------
CASH AND CASH EQUIVALENTS, END OF
PERIOD.......................... $ 2,901 $ 553 $ 2,399 $ 2,020 $ 1,890
======= ======= ======= ======= ========
</TABLE>

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

F-6
<PAGE>

VISIGENIC SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1996
(INFORMATION RELATING TO THE QUARTERS ENDED JUNE 30, 1995 AND 1996 IS
UNAUDITED)

1. ORGANIZATION AND OPERATIONS OF THE COMPANY:

Visigenic Software, Inc. (the "Company") was incorporated on February 12,
1993. The Company operates in a single industry segment and is involved in the
design, development and marketing of database connectivity software products.
Through March 31, 1995 the Company's principal efforts were focused on raising
capital, developing its products and applications, establishing marketing and
sales channels and recruiting key personnel. During fiscal 1996, the Company
emerged from the development stage, however, the Company continues to be
subject to the risks associated with companies in a comparable stage of
development.

Although the Company was incorporated on February 12, 1993, its activities
during the first two months involved limited cash expenditures and consisted
only of recruiting of key personnel and raising capital. Accordingly, the
accompanying consolidated statements of operations, stockholders' equity and
cash flows for the year ended March 31, 1994 are presented for the period from
inception (February 12, 1993) to March 31, 1994.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation and Functional Currency

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary after elimination of intercompany transactions
and balances. The functional currency of the Company's foreign subsidiary is
the U.S. dollar. Foreign exchange gains and losses resulting from the
remeasurement of the financial statements for the subsidiary, which are not
material, are included in other income in the accompanying consolidated
statements of operations.

Use of Estimates in Preparation of Financial Statements

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 results of operations during the reporting period.
Actual results could differ from those estimates.

Cash Equivalents and Short-Term Investments

The Company considers all highly liquid investments with an original
maturity of three months or less from the date of purchase to be cash
equivalents. The Company's short-term investments are accounted for pursuant
to the provisions of Statement of Financial Accounting Standards (SFAS) No.
115, "Accounting for Certain Investments in Debt and Equity Securities." As of
March 31, 1995 and 1996, the Company's cash and cash equivalents were
deposited in checking and money market accounts, U.S. Government Treasury
Bills and certificates of deposits.

Software Development Costs

In accordance with SFAS No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed," the Company capitalizes
eligible computer software development costs upon the establishment of
technological feasibility, which it has defined as completion of a working
model. For the years ended March 31, 1994, 1995 and 1996, the amount of costs
eligible for capitalization, after consideration of factors such as realizable
value, were not material and, accordingly, all software development costs have
been charged to product development expense in the accompanying consolidated
statements of operations.

F-7
<PAGE>

VISIGENIC SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the assets (or
over the lease term if it is shorter for leasehold improvements), which range
from three to five years. Property and equipment consists of the following (in
thousands):

<TABLE>
<CAPTION>
MARCH 31,
-------------- JUNE 30,
1995 1996 1996
----- ------- --------
<S> <C> <C> <C>
Computer equipment................................ $ 453 $ 1,126 $ 1,394
Furniture and fixtures............................ 125 320 373
Purchased software................................ 239 401 572
Leasehold improvements............................ 12 34 39
----- ------- -------
829 1,881 2,378
Less--Accumulated depreciation and amortization... (222) (532) (647)
----- ------- -------
Property and equipment, net..................... $ 607 $ 1,349 $ 1,731
===== ======= =======
</TABLE>

Revenue Recognition and Deferred Revenue

The Company's revenue is derived from fixed license fees from licensing its
products, royalties from VARs, ISVs and distributors, and fees for services
related to its products, including software maintenance, development contracts
and consulting and training. Certain of the Company's license arrangements
with VARs and ISVs provide for sublicense fees payable to the Company based on
a percentage of the VAR's or ISV's net revenue. Other license arrangements
provide for fixed license fees for the right to make and distribute an
unlimited number of copies of the Company's product for a specified period of
time. Ongoing sublicense fee revenue, other than from guaranteed sublicense
fees, is recognized when it is reported by the VAR, ISV or distributor.
Service revenue is primarily attributable to lower margin maintenance and
other revenue, including training revenue and engineering development fees.

The Company generally recognizes revenue from fixed license and guaranteed
sublicense fees upon delivery of software products if there are no significant
post-delivery obligations, if collection is probable and if the license
agreement requires payment within 90 days. If significant post-delivery
obligations exist or if a product is subject to customer acceptance, revenue
is deferred until no significant obligations remain or acceptance has
occurred.

Maintenance revenue from ongoing customer support and product upgrades is
recognized ratably over the term of the applicable maintenance period, which
is typically 12 months. If maintenance is included in a license agreement,
such amounts are unbundled from the license fee at its fair market value.
Consulting and training revenue is generally recognized as services are
performed over the term of the agreement. Revenue from engineering development
work is generally recognized on a percentage of completion basis. If a
transaction includes both license and service elements, license fee revenue is
recognized upon shipment of the software, provided services do not include
significant customization or modification of the base product and payment
terms are not subject to acceptance criteria. In cases where license fee
payments are contingent upon the acceptance of services, revenues from both
the license and service elements are deferred until the acceptance criteria
are met.

F-8
<PAGE>

VISIGENIC SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Significant Customers and Related Parties

A relatively small number of customers have accounted for a significant
percentage of the Company's total revenue. The following four customers
accounted for more than 10% of total revenue:

<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31,
------------- QUARTER ENDED
1995 1996 JUNE 30,1996
----- ----- -------------
<S> <C> <C> <C>
Customer A..................................... 55% * *
Customer B..................................... 20% * *
Customer C..................................... * 25% *
Customer D..................................... * * 34%
</TABLE>
- --------
*less than 10%

Customers C and D are related parties as they were purchasers of Series C
convertible preferred stock in May 1996 and are also holders of the
convertible notes payable to stockholders (see Note 9). Accounts receivable
from these related parties as of June 30, 1996 totalled approximately $1.4
million.

Export Sales

The Company markets its products in North America and in foreign countries
(primarily Europe and Japan) through its sales personnel, VARs, ISVs and
distributors. For fiscal 1996, export sales, which consist of domestic sales
to customers in foreign countries, were 10% of total revenue. For fiscal 1995
and for the quarter ended June 30, 1996 export sales were less than 10% of
total revenue.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to a
concentration of credit risk consist principally of accounts receivable. As of
March 31, 1996, approximately 75% of accounts receivable were concentrated
with ten customers. The Company generally does not require collateral on
accounts receivable as the majority of the Company's customers are large, well
established companies. The Company provides reserves for credit losses, which
to date have been insignificant.

New Accounting Standard

In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation," which will be effective for
the Company's 1997 fiscal year. SFAS No. 123 allows companies which have
stock-based compensation arrangements with employees to adopt a new fair-value
basis of accounting for stock options and other equity instruments or to
continue to apply the existing accounting rules under Accounting Principles
Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," but
with additional financial statement disclosure. The Company expects to
continue to account for stock-based compensation arrangements under APB
Opinion No. 25 and, therefore, does not expect SFAS No. 123 to have a material
impact on its financial position, results of operations and cash flows.

Pro Forma Net Loss per Share

Pro forma net loss per share is computed using the pro forma weighted
average number of common and common equivalent shares outstanding during the
period. Common equivalent shares consist of convertible preferred stock (using
the if converted method) and stock options (using the treasury stock method).
Common stock options are excluded from the computation if their effect is
antidilutive. Convertible preferred stock outstanding during the period is
included (using the if converted method) in the computation of common
equivalent shares even though the effect is antidilutive. Also, pursuant to
the Securities and Exchange Commission Staff Accounting Bulletins and staff
policy, such computations include all common and common equivalent shares
issued within the 12 months preceding the filing date of this registration
statement as if they were outstanding for all periods presented. Historical
net loss per share amounts have not been presented since such amounts are not
deemed meaningful due to the significant change in the Company's capital
structure that will occur in connection with the proposed offering.

F-9
<PAGE>

VISIGENIC SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Unaudited Interim Financial Data

The unaudited interim financial statements as of June 30, 1996 and for the
quarters ended June 30, 1995 and 1996 have been prepared on the same basis as
the audited financial statements and, in the opinion of management, include
all adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial information set forth therein, in accordance with
generally accepted accounting principles. The data disclosed in the notes to
the consolidated financial statements for these periods are unaudited. The
results of operations for the quarter ended June 30, 1996 are not necessarily
indicative of the results to be expected for any future period.

3. LINE OF CREDIT:

The Company has a $1.0 million revolving line of credit agreement (the
"Agreement") with a bank, which expires on August 15, 1996. Advances under the
Agreement bear interest at the bank's prime lending rate plus 1.25% (9.5% at
March 31, 1996), are limited to 80% of eligible accounts receivable and are
secured by substantially all of the assets and contractual rights of the
Company. The Agreement also contains certain financial restrictions and
covenants. As of March 31 and June 30, 1996, the Company was in compliance
with the financial covenants. There were no borrowings outstanding under the
Agreement as of March 31, 1996. As of June 30, 1996, the Company had borrowed
$524,000 under the Agreement.

4. COMMITMENTS:

The Company leases its facilities under operating lease agreements expiring
through January 2001. Rent expense for all operating leases totaled
approximately $131,000, $192,000 and $304,000 for the years ended March 31,
1994, 1995 and 1996, respectively. Minimum future lease payments under all
noncancellable operating leases as of March 31, 1996 were as follows (in
thousands):

<TABLE>
<CAPTION>
EAR ENDINGY
MARCH 31,
- -----------
<S> <C>
1997................................................................... $ 434
1998................................................................... 559
1999................................................................... 571
2000................................................................... 582
2001................................................................... 277
------
$2,423
======
</TABLE>

5. CONVERTIBLE PREFERRED STOCK:

In June 1996, the Company's Board of Directors approved a one-for-two
reverse split of its common and preferred stock. All common and preferred
share and per share amounts in the accompanying consolidated financial
statements have been adjusted retroactively to give effect to this reverse
stock split.

In conjunction with the proposed initial public offering of the Company's
common stock, all outstanding shares of convertible preferred stock will
automatically convert into common stock upon closing of the offering. The pro
forma effects of this conversion, including the Series C preferred stock and
convertible notes payable to stockholders issued in May and June 1996 (see
Note 9), have been reflected in the accompanying consolidated balance sheet as
of June 30, 1996.

The Company's certificate of incorporation, as amended in May 1996,
authorizes the issuance of up to 10,000,000 shares of convertible preferred
stock, of which the Company has designated 1,606,000 shares as

F-10
<PAGE>

VISIGENIC SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Series A preferred stock, 6,000,000 shares as Series B preferred stock and
1,000,000 shares as Series C preferred stock. The rights and preferences of
the Series A, B and C preferred stock are as follows:

Dividends

The holders of Series A, B and C preferred stock are entitled to receive
dividends when and as declared by the Board of Directors. No cash dividends
can be paid on common stock or preferred stock unless, at the same time, a
dividend is paid with respect to all outstanding shares of preferred stock in
an amount for each such share equal to the aggregate amount of such dividends
payable on that number of shares of common stock into which each such share of
preferred stock could then be converted.

Liquidation Preference

In the event of any liquidation, dissolution or winding up of the Company,
holders of Series A, B and C preferred stock are entitled to receive, in
preference to holders of common stock, the amount of $2.40, $4.00 and $9.00
per share, respectively. Such amounts will be adjusted for any stock split,
combination, distribution or dividend. After payment of the above amounts,
holders of common stock are entitled to receive the amount of $2.40 per share,
adjusted for any stock split, combination, distribution or dividend. After
payment of the above amounts, holders of Series A preferred stock and common
stock are entitled to receive the amount of $1.60 per share for each share of
such stock, adjusted for any stock split, combination, distribution or
dividend. Any remaining assets would then be distributed ratably among
stockholders in proportion to their aggregate preferential amounts.

Voting Rights

The holders of preferred stock are entitled to the number of votes equal to
the number of shares of common stock into which such preferred stock is
convertible.

Conversion

Each share of preferred stock is convertible into one share of common stock,
at the option of the holder thereof, at any time after the date of issuance.
The conversion rate is subject to adjustment for dilution, including, but not
limited to, stock splits, stock dividends and stock combinations. In addition,
each share of Series A, B and C preferred stock will automatically convert
into common stock at the then conversion rate upon the written consent of
holders of a majority of all outstanding Series A, B and C preferred stock or
upon the closing of an underwritten public offering of the Company's common
stock at an aggregate offering price of not less than $10,000,000 and at an
offering price per share of at least $4.00 per share, of at least $6.67 per
share and of at least $12.00 per share, for Series A, B and C preferred stock,
respectively. Holders of Series C preferred stock have agreed to reduce the
automatic conversion price of the Series C preferred stock if necessary to
cause such stock to convert automatically into shares of common stock upon the
completion of the Company's initial public offering.

6. COMMON STOCK:

Prior to July 1993, the Company issued 232,575 shares of common stock to
certain employees and directors of the Company that are subject to certain
repurchase rights. These rights of repurchase lapse over a five-year period.
As of March 31, 1996, 64,228 shares of common stock are subject to repurchase
by the Company at prices ranging from $.08 to $.20 per share.

F-11
<PAGE>

VISIGENIC SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Stock Purchase Plans

In April 1993 and August 1994, the Company adopted Stock Purchase Plans (the
"Plans") and authorized the issuance of 952,500 shares thereunder to employees
and consultants. Stock purchased under these Plans generally vests ratably
over a five-year period. Unvested shares may be repurchased by the Company at
the original issuance price in the event of termination.

As of March 31, 1996, 526,287 shares were issued and outstanding under these
Plans at prices ranging from $.20 to $.40 per share, which was the fair market
value of the common stock, as determined by the Board of Directors, on the
date of grant, of which 289,522 were subject to repurchase. As of March 31,
1996, no further shares were available for issuance under the Plans.

Stock Option Plan

In fiscal 1996, the Company established the 1995 Stock Option Plan (the
"1995 Plan") and reserved 2,000,000 shares of common stock for issuance. Under
the 1995 Plan, the Board of Directors may grant incentive and nonqualified
stock options to employees, consultants and directors of the Company. The
exercise price per share for an incentive stock option cannot be less than the
fair market value, as determined by the Board of Directors, on the date of
grant. The exercise price per share for nonqualified stock options cannot be
less than 85% of the fair market value, as determined by the Board of
Directors, on the date of grant. Options generally expire ten years after the
date of grant and vest over a period of five years. Option activity under the
1995 Plan was as follows:

<TABLE>
<CAPTION>
OPTIONS
OUTSTANDING
---------------------
OPTIONS PRICE PER
AVAILABLE SHARES SHARE
--------- --------- ----------
<S> <C> <C> <C>
Authorized................................ 2,000,000 -- --
Granted................................... (820,250) 820,250 $ .40
Exercised................................. -- (54,068) $ .40
Canceled.................................. 12,932 (12,932) $ .40
--------- --------- ----------
Balance at March 31, 1996.................. 1,192,682 753,250 $ .40
Authorized................................ 500,000 -- --
Granted................................... (520,250) 520,250 $.40-$6.00
Exercised................................. -- (171,433) $ .40
Canceled.................................. 14,567 (14,567) $ .40
--------- --------- ----------
Balance at June 30, 1996................... 1,186,999 1,087,500 $.40-$6.00
========= ========= ==========
</TABLE>

At June 30, 1996, options outstanding for the purchase of 59,634 shares were
vested under the 1995 Plan at an exercise price of $.40 per share.

Common Stock Reserved for Future Issuance

As of June 30, 1996, the Company has reserved the following shares of common
stock for future issuance:

<TABLE>
<S> <C>
Conversion of Series A preferred stock............................. 803,000
Conversion of Series B preferred stock............................. 2,871,625
Conversion of Series C preferred stock............................. 444,444
Conversion of convertible notes payable to stockholders............ 200,000
Stock Option Plan and options assumed from PostModern.............. 2,636,284
1996 Stock Plans................................................... 650,000
---------
7,605,353
=========
</TABLE>

F-12
<PAGE>

VISIGENIC SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. EMPLOYEE BENEFIT PLAN:

In June 1995, the Company adopted the Visigenic Software, Inc. 401(k) Plan
(the "401(k) Plan"), as allowed under Section 401(k) of the Internal Revenue
Code, which provides for tax deferred salary deductions for eligible employees
of the Company. Employees who are 21 years of age or older are eligible to
participate immediately upon the date of hire and may make voluntary
contributions of their compensation to the 401(k) Plan. The 401(k) Plan does
not provide for Company contributions and the Company is the administrator.

8. INCOME TAXES:

The Company accounts for income taxes pursuant to SFAS No. 109, "Accounting
for Income Taxes." SFAS No. 109 requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns based upon
enacted tax laws and rates applicable to the periods in which taxes become
payable. A valuation allowance has been recorded for the entire deferred tax
asset as a result of uncertainties regarding realization of the asset
including the limited operating history of the Company, the lack of
profitability to date and the uncertainty over future operating profitability.
Components of the net deferred tax asset are as follows (in thousands):

<TABLE>
<CAPTION>
MARCH 31,
--------------
1995 1996
------ ------
<S> <C> <C>
Net operating loss carryforwards............................. $1,894 $3,398
Cumulative book to tax differences........................... 750 994
General business credit carryforwards........................ 311 372
------ ------
2,955 4,764
Valuation allowance.......................................... (2,955) (4,764)
------ ------
Net deferred tax asset................................... $ -- $ --
====== ======
</TABLE>

As of March 31, 1996, the Company had Federal and state net operating loss
carryforwards of approximately $9.8 million and $2.0 million, respectively,
which expire at various dates through 2011. In addition, as of March 31, 1996,
the Company had general business credit carryforwards of approximately
$372,000 which expire at various dates through 2011.

Under current tax law, net operating loss and credit carryforwards available
in any given year may be limited upon the occurrence of certain events,
including significant changes in ownership interests.

9. SUBSEQUENT EVENTS:

Acquisition of PostModern Computing Technologies Inc.

In May 1996, the Company completed the acquisition of PostModern, a
developer of distributed object connectivity software. In the acquisition,
which was structured as a merger, the Company issued 3,099,821 shares of its
common stock, valued at $3.00 per share based on an independent appraisal of
the Company's common stock, and paid a total of $2.3 million in exchange for
all of PostModern's outstanding shares. The Company also incurred acquisition-
related costs of approximately $450,000, resulting in a total purchase price
of approximately $13.1 million. In addition, the Company made cash payments,
subject to one-year vesting and totaling $1.5 million, to certain PostModern
employees. The acquisition of PostModern was accounted for as a purchase in
the quarter ended June 30, 1996.

F-13
<PAGE>

VISIGENIC SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

In connection with the purchase price allocation, the Company received an
appraisal of the intangible assets which indicated that approximately $12.0
million of the acquired intangible assets consisted of in process product
development. Because there can be no assurance that the Company will be able
to successfully complete the development and integration of the PostModern
products or that the acquired technology has any alternative future use, the
acquired in process product development was charged to expense by Visigenic in
its quarter ended June 30, 1996.

As a result of the purchase price allocation, the excess of the purchase
price over net assets acquired is $1.1 million, which is being amortized on a
straight-line basis over a period of two years. Management believes that the
unamortized balance is recoverable through future operating results.

In connection with the acquisition, the Company also assumed PostModern's
outstanding stock options and reserved 361,785 shares of the Company's common
stock for issuance upon exercise of such options at an exercise price of $0.24
to $0.60 per share under similar vesting terms.

Issuance of Series C Convertible Preferred Stock and Convertible Notes

On May 24, 1996, the Company sold 444,444 shares of its Series C preferred
stock at a price of $9.00 per share to three investors, for aggregate proceeds
of $4.0 million. Subject to certain conditions, the Company has the right to
require these investors to purchase up to an additional $4.0 million in
convertible notes at any time prior to October 31, 1996. Between May 28 and
June 7, 1996, the Company issued convertible notes, bearing interest at the
rate of 8.25% per annum, for $2.0 million of the available $4.0 million. The
principal amount of the notes and all accrued interest are due and payable 3
years after the issuance date. However, upon the closing of the Company's
initial public offering, the principal amount of each note and all accrued
interest will automatically convert into shares of the Company's common stock
at the lesser of $13.00 per share or the offering price per share to the
public, and the Series C preferred stock will automatically convert into
shares of the Company's common stock. The Company used a portion of the
proceeds from the sale of the Series C preferred stock and the convertible
notes to pay amounts payable in connection with the acquisition of PostModern.

1996 Employee Stock Purchase Plan

The Company's 1996 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Company's Board of Directors in June 1996, subject to approval
by the stockholders. A total of 450,000 shares of common stock has been
reserved for issuance under the Purchase Plan. The Purchase Plan permits
eligible employees to purchase common stock at 85% of the lower of the fair
market value of the Company's common stock on the first day or the last day of
each six-month offering period.

1996 Outside Directors Stock Option Plan

The Company's 1996 Outside Directors Stock Option Plan (the "Directors
Plan") was adopted by the Company's Board of Directors in June 1996, subject
to approval by the stockholders. A total of 200,000 shares of common stock has
been reserved for issuance under the Directors Plan. The Directors Plan
provides for the initial grant of nonstatutory stock options to purchase
15,000 shares of common stock on the earlier of the first annual meeting
following the initial public offering of the Company's common stock or the
date on which the optionee first becomes a nonemployee director of the
Company, and an additional option to purchase 5,000 shares of common stock on
the next anniversary to existing and future nonemployee directors of the
Company. The exercise price per share of all options granted under the
Directors Plan will equal the fair market value of a share of the Company's
common stock on the date of grant of the option.

F-14
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To PostModern Computing Technologies Inc.:

We have audited the accompanying balance sheets of PostModern Computing
Technologies Inc. (a California corporation) as of March 31, 1995 and 1996 and
the related statements of operations, shareholders' equity and cash flows for
each of the three years in the period ended March 31, 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PostModern Computing
Technologies Inc. as of March 31, 1995 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
March 31, 1996 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

San Jose, California
May 31, 1996

F-15
<PAGE>

POSTMODERN COMPUTING TECHNOLOGIES INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31,
------------------
1995 1996
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash..................................................... $ 38,342 $ 56,860
Accounts receivable...................................... 138,383 303,604
Prepaid expenses......................................... 6,200 33,714
-------- --------
Total current assets................................... 182,925 394,178
-------- --------
PROPERTY AND EQUIPMENT:
Computer equipment....................................... 53,719 85,596
Furniture and fixtures................................... 5,295 27,626
-------- --------
59,014 113,222
Less--Accumulated depreciation........................... (29,479) (47,680)
-------- --------
Net property and equipment............................. 29,535 65,542
-------- --------
OTHER ASSETS............................................... 6,457 14,051
-------- --------
$218,917 $473,771
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to shareholders............................. $ 22,500 $ --
Accounts payable......................................... 13,035 109,488
Accrued payroll and related benefits..................... 95,541 55,312
Deferred revenue......................................... 19,321 189,252
-------- --------
Total current liabilities.............................. 150,397 354,052
-------- --------
COMMITMENTS (Note 3)
SHAREHOLDERS' EQUITY:
Convertible preferred stock, no par value -- --
Authorized--5,000,000 shares
Outstanding--none
Common stock, no par value
Authorized--20,000,000 shares
Outstanding--6,600,000 and 6,920,000 shares in 1995 and
1996, respectively..................................... 18,775 50,775
Note receivable from shareholder......................... -- (32,000)
Retained earnings........................................ 49,745 100,944
-------- --------
Total shareholders' equity............................. 68,520 119,719
-------- --------
$218,917 $473,771
======== ========
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-16
<PAGE>

POSTMODERN COMPUTING TECHNOLOGIES INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------
1994 1995 1996
-------- --------- ---------
<S> <C> <C> <C>
REVENUE:
Software products.............................. $324,874 $ 253,056 $ 304,161
Consulting, maintenance and other.............. 319,349 250,758 697,702
-------- --------- ---------
Total revenue................................ 644,223 503,814 1,001,863
-------- --------- ---------
COST OF REVENUE:
Software products.............................. 9,459 31,746 43,340
Consulting, maintenance and other.............. 74,613 140,622 219,228
-------- --------- ---------
Total cost of revenue........................ 84,072 172,368 262,568
-------- --------- ---------
GROSS PROFIT..................................... 560,151 331,446 739,295
-------- --------- ---------
OPERATING EXPENSES:
Research and development....................... 116,840 150,428 223,297
Sales and marketing............................ 87,681 183,264 240,383
General and administrative..................... 83,104 176,672 211,766
-------- --------- ---------
Total operating expenses..................... 287,625 510,364 675,446
-------- --------- ---------
Income (loss) before provision for income
taxes....................................... 272,526 (178,918) 63,849
PROVISION FOR INCOME TAXES....................... -- -- 5,000
-------- --------- ---------
NET INCOME (LOSS)................................ $272,526 $(178,918) $ 58,849
======== ========= =========
</TABLE>

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

F-17
<PAGE>

POSTMODERN COMPUTING TECHNOLOGIES INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
------------------- NOTES RETAINED
SHARES AMOUNT RECEIVABLE EARNINGS TOTAL
---------- ------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1993.... 10,000,000 $35,775 $ -- $ (3,863) $ 31,912
Declaration and payment
of dividend............. -- -- -- (40,000) (40,000)
Net income............... -- -- -- 272,526 272,526
---------- ------- -------- -------- --------
BALANCE, MARCH 31, 1994.... 10,000,000 35,775 -- 228,663 264,438
Issuance of common stock
........................ 500,000 25,000 -- -- 25,000
Repurchase of common
stock .................. (3,900,000) (42,000) -- -- (42,000)
Net loss................. -- -- -- (178,918) (178,918)
---------- ------- -------- -------- --------
BALANCE, MARCH 31, 1995.... 6,600,000 18,775 -- 49,745 68,520
Declaration and payment
of dividend............. -- -- -- (7,650) (7,650)
Issuance of common stock
........................ 320,000 32,000 (32,000) -- --
Net income............... -- -- -- 58,849 58,849
---------- ------- -------- -------- --------
BALANCE, MARCH 31, 1996.... 6,920,000 $50,775 $(32,000) $100,944 $119,719
========== ======= ======== ======== ========
</TABLE>

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

F-18
<PAGE>

POSTMODERN COMPUTING TECHNOLOGIES INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------
1994 1995 1996
-------- --------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................. $272,526 $(178,918) $ 58,849
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities--
Depreciation and amortization................ 7,680 11,572 18,201
Changes in net assets and liabilities--
Decrease (increase) in accounts receivable.. (139,206) 37,532 (165,221)
Increase in prepaid expenses................ -- (6,200) (27,514)
Increase (decrease) in accounts payable..... 7,053 (2,715) 96,453
Increase (decrease) in accrued liabilities.. (6,000) 87,041 (40,229)
Increase in deferred revenue................ 8,344 10,977 169,931
-------- --------- --------
Net cash provided by (used in) operating
activities................................ 150,397 (40,711) 110,470
-------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment........... (13,850) (20,995) (54,208)
Other assets.................................. (2,567) (2,703) (7,594)
-------- --------- --------
Net cash used in investing activities...... (16,417) (23,698) (61,802)
-------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock........ -- 25,000 --
Repurchase of common stock.................... -- (42,000) --
Payment of cash dividends to shareholders..... (40,000) -- (7,650)
Borrowings from (repayments to) shareholders.. -- 22,500 (22,500)
-------- --------- --------
Net cash provided by (used in) financing
activities................................ (40,000) 5,500 (30,150)
-------- --------- --------
NET INCREASE (DECREASE) IN CASH................. 93,980 (58,909) 18,518
CASH, BEGINNING OF PERIOD....................... 3,271 97,251 38,342
-------- --------- --------
CASH, END OF PERIOD............................. $ 97,251 $ 38,342 $ 56,860
======== ========= ========
</TABLE>

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

F-19
<PAGE>

POSTMODERN COMPUTING TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 1996

1. THE COMPANY:

PostModern Computing Technologies Inc. (the "Company") was incorporated in
October 1991 in California. The Company, which is closely held, operates in a
single industry segment and is involved in the design, marketing and support
of distributed object connectivity software.

In May 1996, the Company was acquired by Visigenic Software, Inc.
("Visigenic"), a Delaware corporation, according to the terms of an agreement
which provides that the Company be merged with and into Visigenic (the
"Acquisition"). In connection with the Acquisition, Visigenic issued 3,099,821
shares of its common stock and paid cash consideration of approximately $2.3
million in exchange for all of the outstanding shares of common stock of the
Company and assumed all issued and outstanding options to purchase common
stock of the Company. In addition, at the closing of the Acquisition,
Visigenic made cash payments to certain employees of the Company totaling $1.5
million, subject to one-year vesting. The Acquisition was structured as a tax-
free exchange according to Section 368(a)(II)(E) of the Internal Revenue Code.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Revenue Recognition

The Company generates revenue from licensing the rights to use its software
products, sales of post-contract support, development contracts, consulting
services and training services performed for customers who license its
products.

Revenue from software license agreements is recognized upon shipment of the
software if there are no significant post-delivery obligations and collection
is probable. If an acceptance period is required, revenue is recognized upon
the earlier of customer acceptance or the expiration of the acceptance period.
Revenue from post-contract support services is recognized ratably over the
term of the support period. Consulting revenue is primarily related to
development and customization services performed on a time and material basis
under separate service and consulting arrangements. Revenue from development
contracts and training services is recognized as the services are performed
over the term of the agreement. In cases where license fee payments are
contingent upon the acceptance of services, revenue from both the license and
the service elements is deferred until the acceptance criteria are met.

Significant Customers

For fiscal 1994, 1995 and 1996, the combined revenue from five customers
accounted collectively for 96%, 88% and 83% of total revenue, respectively.
The following customers accounted for more than 10% of total revenue:

<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31,
----------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Customer A....................................................... 74% * *
Customer B....................................................... * 44% 29%
Customer C....................................................... * 18% *
Customer D....................................................... * 11% 10%
Customer E....................................................... * * 25%
Customer F....................................................... * * 12%
</TABLE>
- --------
*less than 10%

F-20
<PAGE>

POSTMODERN COMPUTING TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Export Revenue

Export revenue for fiscal 1996, which consisted of sales to a customer in
Japan, was 12% of total revenue. Export revenue was less than 10% of total
revenue for fiscal 1994 and 1995.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to a
concentration of credit risk consist principally of accounts receivable. As of
March 31, 1996, approximately 72% of accounts receivable were concentrated
with five customers. The Company believes that its credit and collection
procedures are adequate to monitor and evaluate risk among its customer base.
For fiscal 1994, 1995 and 1996 credit losses have been insignificant.

Software Development Costs

The Company capitalizes eligible software development costs upon the
establishment of technological feasibility, which the Company has defined as
completion of a working model. For fiscal 1994, 1995 and 1996, costs which
were eligible for capitalization, after consideration of factors such as
realizable value, were insignificant and, thus, the Company has charged all
software development costs to research and development expense in the
accompanying statements of operations.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using
the double declining balance method over the estimated useful lives of the
assets of five to seven years.

Use of Estimates in Preparation of Financial Statements

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

3. COMMITMENTS:

The Company leases its office space under a non-cancelable operating lease
which expires on March 31, 1998. Rent expense for all operating leases was
approximately $23,000, $38,000 and $38,000 for fiscal 1994, 1995 and 1996,
respectively. Future minimum lease payments under all non-cancelable operating
leases are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
MARCH 31,
-----------
<S> <C>
1997............................................................. $126,000
1998............................................................. 129,000
--------
$255,000
========
</TABLE>

4. LINE OF CREDIT:

In December 1995, the Company entered into a line of credit agreement (the
"Agreement") with a bank which allows for borrowings of up to $125,000 and
expires in December 1996. Advances under the Agreement, which are secured by
substantially all of the Company's assets and contractual rights of the
Company, bear interest at the bank's prime lending rate plus 1.0% (9.25% at
March 31, 1996). As of March 31, 1996, there were no borrowings outstanding
under the Agreement.

F-21
<PAGE>

POSTMODERN COMPUTING TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. STOCK OPTION PLAN:

In November 1995, the Company established the 1995 Stock Option Plan (the
"Plan") and reserved 1,980,000 shares of common stock for issuance thereunder.
Under the Plan, the Board of Directors may grant incentive stock options to
employees and directors at the fair market value of the shares, as determined
by the Board of Directors, on the date of grant. The exercise price per share
for nonqualified stock options cannot be less than 85% of fair market value of
the shares, as determined by the Board of Directors, on the date of grant.
Options generally expire ten years after the date of grant and vest over a
period of four years. Activity under the Plan is summarized as follows:

<TABLE>
<CAPTION>
OPTIONS
AVAILABLE OPTIONS PRICE
FOR ISSUANCE OUTSTANDING PER SHARE
------------ ----------- ------------
<S> <C> <C> <C>
Authorized for issuance............... 1,980,000 -- --
Granted............................... (1,644,500) 1,644,500 $0.10--$0.25
---------- --------- ------------
Balance, March 31, 1996............... 335,500 1,644,500 $0.10--$0.25
========== ========= ============
</TABLE>

As of March 31, 1996, options to purchase 826,250 shares of common stock at
prices ranging from $0.10 to $0.25 were fully vested and exercisable. In
connection with the Acquisition, Visigenic assumed all outstanding options of
the Company.

6. INCOME TAXES:

Through December 31, 1995, the Company was an S corporation. Effective
January 1, 1996, the Company changed to C corporation status. Federal and
state income tax regulations require that the income or loss of an S
corporation be included in the tax returns of the individual shareholders.
Accordingly, no provision for taxes is made in the accompanying financial
statements for fiscal 1994, 1995 and for the period from April 1, 1995 to
December 31, 1995.

The Company accounts for income taxes pursuant to SFAS No. 109, "Accounting
for Income Taxes." SFAS No. 109 provides for an asset and liability approach
to accounting for income taxes under which deferred income taxes are provided
based upon enacted tax laws and rates applicable to the periods in which taxes
become payable. The provision for income taxes for the year ended March 31,
1996 was as follows:

<TABLE>
<S> <C>
Current provision:
Federal............................................................ $5,000
State.............................................................. 1,000
------
6,000
------
Deferred benefit:
Federal............................................................ (1,000)
State.............................................................. --
------
(1,000)
------
Total provision for income taxes..................................... $5,000
======
</TABLE>

As of March 31, 1996, the components of the net deferred income tax asset of
approximately $1,000 consisted of differences in book versus tax depreciation
and nondeductible reserves and accruals.

F-22
<PAGE>

VISIGENIC SOFTWARE, INC. AND POSTMODERN COMPUTING TECHNOLOGIES INC.

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

PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
(UNAUDITED)

In May 1996, Visigenic Software, Inc. (the "Company" or "Visigenic")
completed the acquisition of PostModern Computing Technologies Inc., a
California corporation ("PostModern"). PostModern is a developer of
distributed object software. The acquisition of PostModern has been accounted
for as a purchase.

The accompanying pro forma condensed combined statement of operations for
the fiscal year ended March 31, 1996 and the quarter ended June 30, 1996
assumes that the acquisition took place as of the beginning of fiscal 1996,
and combines Visigenic's and PostModern's statements of operations for each
Company's respective fiscal year ended March 31, 1996 and quarters ended June
30, 1996. The historical financial statements of PostModern for the quarter
ended June 30, 1996 only include two months of operations as it was merged
into Visigenic effective May 31, 1996. The pro forma condensed combined
statement of operations for the fiscal year ended March 31, 1996 does not
include the effect of any nonrecurring charges directly attributable to the
acquisition.

The purchase price allocation reflected in the accompanying pro forma
condensed combined financial statements has been prepared on an estimated
basis. The effects resulting from any differences in the final allocation of
the purchase price are not expected to have a material effect on the Company's
financial statements.

The accompanying pro forma condensed combined financial statements should be
read in conjunction with the historical financial statements and related notes
thereto for both Visigenic and PostModern, which are included in this
Prospectus.

P-1
<PAGE>

VISIGENIC SOFTWARE, INC. AND
POSTMODERN COMPUTING TECHNOLOGIES INC.

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

PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1996
-------------------------------------------
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
VISIGENIC POSTMODERN ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE:
Software products.............. $ 4,479 $ 304 $ -- $ 4,783
Service and other.............. 1,096 698 -- 1,794
------- ------ -------
Total revenue................ 5,575 1,002 6,577
------- ------ -------
COST OF REVENUE:
Software products.............. 284 44 -- 328
Service and other.............. 727 219 -- 946
------- ------ -------
Total cost of revenue........ 1,011 263 1,274
------- ------ -------
GROSS PROFIT..................... 4,564 739 5,303
------- ------ -------
OPERATING EXPENSES:
Product development............ 4,348 223 1,317(a) 5,888
Sales and marketing............ 3,215 240 183(a) 3,638
General and administrative..... 1,465 212 -- 1,677
Amortization of excess of
purchase price over net assets
acquired...................... -- -- 522(a) 522
------- ------ -------
Total operating expenses..... 9,028 675 11,725
------- ------ -------
Operating income (loss)...... (4,464) 64 -- (6,422)
INTEREST AND OTHER INCOME, net... 85 -- -- 85
------- ------ -------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES................ (4,379) 64 -- (6,337)
PROVISION FOR INCOME TAXES....... -- 5 5(b) --
------- ------ -------
NET INCOME (LOSS)................ $(4,379) $ 59 $(6,337)
======= ====== =======
NET LOSS PER SHARE............... $ (.39) $ (.57)
======= =======
PRO FORMA WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT SHARES.... 11,120 11,120(c)
======= =======
</TABLE>

The accompanying notes are an integral part of this statement.

P-2
<PAGE>

VISIGENIC SOFTWARE, INC. AND
POSTMODERN COMPUTING TECHNOLOGIES INC.

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

PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, 1996
-------------------------------------------
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
VISIGENIC POSTMODERN ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE:
Software products.............. $ 2,505 $ 24 $ -- $ 2,529
Service and other.............. 456 108 -- 564
-------- ----- --------
Total revenue................ 2,961 132 3,093
-------- ----- --------
COST OF REVENUE:
Software products.............. 138 11 -- 149
Service and other.............. 295 65 -- 360
-------- ----- --------
Total cost of revenue........ 433 76 509
-------- ----- --------
GROSS PROFIT..................... 2,528 56 2,584
-------- ----- --------
OPERATING EXPENSES:
Product development............ 1,657 64 -- 1,721
Sales and marketing............ 2,006 68 -- 2,074
General and administrative..... 473 74 -- 547
Purchased in process product
development................... 12,014 -- -- 12,014
Amortization of excess of
purchase price over net assets
acquired...................... 43 -- 86(a) 129
-------- ----- --------
Total operating expenses..... 16,193 206 16,485
-------- ----- --------
Operating income (loss)...... (13,665) (150) -- (13,901)
INTEREST AND OTHER INCOME, net... 6 -- -- 6
-------- ----- --------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES................ (13,659) (150) -- (13,895)
PROVISION FOR INCOME TAXES....... -- -- -- --
-------- ----- --------
NET INCOME (LOSS)................ $(13,659) $(150) $(13,895)
======== ===== ========
NET LOSS PER SHARE............... $ (1.21) $ (1.23)
======== ========
PRO FORMA WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT SHARES.... 11,289 11,289(c)
======== ========
</TABLE>

The accompanying notes are an integral part of this statement.

P-3
<PAGE>

VISIGENIC SOFTWARE, INC. AND POSTMODERN COMPUTING TECHNOLOGIES INC.

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

NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1. PRO FORMA ADJUSTMENTS

Certain pro forma adjustments have been made to the accompanying pro forma
condensed combined statements of operations as described below:

(a) Reflects the amortization of the excess of the purchase price over net
assets acquired of approximately $1.1 million, which will be amortized
on a straight line basis over its estimated life of two years, and $1.5
million of cash payments made to certain PostModern employees subject
to one-year vesting.

(b) Reflects the elimination of the PostModern tax provision for fiscal
1996 due to the pro forma 1996 net loss.

(c) Pro forma weighted average common and common equivalent shares do not
include common stock equivalents as inclusion of these shares would be
anti-dilutive. The stand alone Visigenic and the pro forma combined
weighted average common and common equivalent shares are identical as
the Visigenic shares issued to PostModern shareholders are included in
the stand alone Visigenic weighted average share calculation pursuant
to the Securities and Exchange Commission Staff Accounting Bulletin No.
83.

NOTE 2. PURCHASE PRICE ALLOCATION

In connection with the acquisition, the Company exchanged 3,099,821 shares
of its common stock, valued at $3.00 per share based on an independent
appraisal of the Company's stock, and paid cash consideration of approximately
$2.3 million in exchange for all of the outstanding shares of common stock of
PostModern. The Company also incurred acquisition related costs of
approximately $450,000 resulting in a total purchase price of approximately
$13.1 million. In addition to the forgoing, at the closing of the acquisition,
the Company made cash payments to certain PostModern employees totaling $1.5
million. In the event that such employees leave the Company within the 12
months following the date of acquisition, the employees must refund back to
the Company a pro rata portion of the payment for the months they are no
longer employees.

P-4
<PAGE>

Digitalized artwork illustrating how the Visigenic database connectivity and
distributed object connectivity products simplify the development, deployment
and management of distributed applications in today's complex environment.
<PAGE>

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

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

-----------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 5
Use of Proceeds.......................................................... 15
Dividend Policy.......................................................... 15
Capitalization........................................................... 16
Dilution................................................................. 17
Selected Consolidated Financial Data..................................... 18
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 19
Business................................................................. 27
Management............................................................... 42
Certain Transactions..................................................... 50
Principal and Selling Stockholders....................................... 53
Description of Capital Stock............................................. 56
Shares Eligible for Future Sale.......................................... 58
Underwriting............................................................. 60
Legal Matters............................................................ 61
Experts.................................................................. 61
Additional Information................................................... 61
Index to Financial Statements............................................ F-1
</TABLE>

-----------

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

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

2,100,000 SHARES

[LOGO OF VISIGENIC SOFTWARE, INC.]

COMMON STOCK

---------------
PROSPECTUS
---------------

HAMBRECHT & QUIST

ROBERTSON, STEPHENS & COMPANY

, 1996

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