HARRIS COMPUTER SYSTEMS CORP, S-3/A, 1996-06-24

HARRIS COMPUTER SYSTEMS CORP
S-3/A, 1996-06-24
COMPUTER & OFFICE EQUIPMENT

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 1996
REGISTRATION NO. 333-06253

================================================================================

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------------------

AMENDMENT NO. 1

TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------------------------
HARRIS COMPUTER SYSTEMS CORPORATION*
(Exact Name of Registrant as Specified in Its Charter)

FLORIDA 65-510339
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
-------------------------------------------
2101 WEST CYPRESS CREEK ROAD
FORT LAUDERDALE, FLORIDA 33309
(954) 974-1700
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
-------------------------------------------
ROBERT L. CARBERRY
2101 WEST CYPRESS CREEK ROAD
FORT LAUDERDALE, FLORIDA 33309
(954) 974-1700
(Name, Address Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
COPIES TO:

BRIAN FOREMNY, ESQ.
HARRIS COMPUTER SYSTEMS CORPORATION
2101 WEST CYPRESS CREEK ROAD
FORT LAUDERDALE, FL 33309
(954) 974-1700
TELECOPIER NO. (954) 977-5580

* The Registrant's Board of Directors has approved, and recommended to the
Registrant's shareholders for approval at a meeting to take place on or about
June 26, 1996, an amendment to the Company's Articles of Incorporation to
change the Registrant's name to CyberGuard Corporation.
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement and from
time to time thereafter.
If the only securities being registered on this form are offered pursuant to
dividend or interest reinvestment plans, please check the following box:[ ]

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

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

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

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

================================================================================
<PAGE> 2

EXPLANATORY NOTE

This Registration Statement, including the Prospectus forming a part hereof,
relates to the sale of common stock (the "Common Stock") of Harris Computer
Systems Corporation following the the sale of the certain assets and Common
Stock to Concurrent Computer Corporation. Such sale is expected to be
consummated on June 27, 1996. No shares of Common Stock will be issued or sold
until after such sale has been consummated, and no shares of Common Stock will
be sold if the sale is not consummated. This Prospectus has been prepared as
if such sale had been completed.
<PAGE> 3

SUBJECT TO COMPLETION DATED JUNE 24, 1996

PROSPECTUS

341,589 SHARES

CYBERGUARD CORPORATION

COMMON STOCK
-----------------------------------

All 341,589 shares (the "Shares") of common stock, par value $.01 per share
("Common Stock") of CyberGuard Corporation (the "Company") are being offered by
Concurrent Computer Corporation ("Concurrent"). See "The Selling Shareholder."
The Company issued the Shares to Concurrent in connection with the sale to
Concurrent of the assets of the Company's real-time computer business (the
"Real-time Business"). The Company will not receive any proceeds from the sale
of the Shares by Concurrent. The Common Stock includes a Right to purchase
fractional shares of Preferred Stock, as provided in the Company's Rights
Agreement, dated as of September 29, 1994.

The Shares are included for quotation on the Nasdaq National Market System
under the symbol "CYBG." On June 21, 1996, the last reported sale price of the
Common Stock as reported by the Nasdaq National Market was $16 per share.

THE SHARES OFFERED HEREBY REPRESENT A HIGH DEGREE OF RISK. INVESTORS SHOULD
CAREFULLY CONSIDER CERTAIN RISKS AND OTHER CONSIDERATIONS RELATING TO THE
COMMON STOCK AND THE COMPANY. SEE "RISK FACTORS" COMMENCING ON PAGE __.

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

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.

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

The distribution of the Shares by Concurrent is not pursuant to any
underwriting agreement. Concurrent may sell the Shares covered by the
Prospectus through the Nasdaq/NMS, at prices and terms then prevailing, through
customary brokerage channels, in privately negotiated transactions or
otherwise, either through broker-dealers acting as agents or brokers for the
seller, or through broker-dealers acting as agents or principals. Such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions, or commissions from Concurrent and/or the purchasers of the Shares
for whom they may act as agent, which compensation may be in excess of
customary commissions. To the extent required, the purchase price, the names
of any such agent, dealer or underwriter, and any applicable commission or
discount with respect to a particular offering will be set forth on an
accompanying Prospectus Supplement. The aggregate net proceeds to Concurrent
from the sale of any shares of the Common Stock will be the price thereof less
the aggregate agent's commission or underwriter's discount, if any. See "Plan
of Distribution." Concurrent and any broker-dealer, agent or underwriter, that
participates with Concurrent in the distribution of the Shares may be deemed to
be an underwriter within the meaning of the Securities Act of 1933, as amended
(the "Securities Act") and any commissions received by them and any profit on
the resale of the Shares positioned by them might be deemed to be underwriting
discounts or commissions under the Securities Act. See "Plan of Distribution."

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

The date of this Prospectus is , 1996.
<PAGE> 4

No person has been authorized in connection with any offering made hereby to
give any information or to make any representations other than those contained
in this Prospectus or any Prospectus Supplement, and, if given or made, such
information or represenations must not be relied upon as having been authorized
by the Company, Concurrent, or any underwriter, dealer or agent.
This Prospectus or any Prospectus Supplement does not constitute an offer to
sell or the solicitation of an offer to buy any securities other than the
securities to which it relates or any offer to sell or the solicitation of an
offer to buy such securities in any circumstances in which such offer or
solicitation is unlawful. Neither the delivery of this Prospectus or any
Prospectus Supplement nor any sale hereunder or thereunder shall, under any
circumstances, create any implication that the information contained herein or
therein is correct as of any time subsequent to the date hereof and thereof.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). Copies of such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the SEC at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C 20549 and at the regional
offices of the SEC at 7 World Trade Center, New York, New York 10048 and at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material also may be obtained at prescribed rates
from the Public Reference Section of the SEC, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. The Common Stock is traded on the Nasdaq
National Market (Symbol:CYBG). Reports and other information concerning the
Company can also be inspected at the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.

This Prospectus constitutes part of a Registration Statement on Form S-3
(the "Registration Statement") and does not contain all the information set
forth in the Registration Statement, certain portions of which have been
omitted in accordance with the rules and regulations of the SEC. For further
information with respect to the Company and the Shares offered hereby,
reference is made to the Registration Statement and to the exhibits and
schedules thereto. Statements made in this Prospectus as to the contents of
any contract, agreement, instrument or other document referred to are not
necessarily complete. With respect to each such contract, agreement,
instrument or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement is qualified in its entirety by such
reference.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents previously filed by the Company with the SEC are
incorporated herein by reference: (1) the Company's Annual Report on Form 10-K
for the year ended September 30, 1995; (ii) the Company's Quarterly Reports on
Form 10-Q for the fiscal quarters ended December 29, 1995 and March 30, 1996;
(iii) the Company's Current Report on Form 8-K dated April 10, 1996; and (iv)
the description of the Company's Common Stock contained in the Registration
Statement on Form 10 filed with the SEC on September 29, 1994.

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

The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon written or oral request
of such person to CyberGuard Corporation, 2101 West Cypress Creek Road, Fort
Lauderdale, Florida 33309 (telephone (954) 974-1700), Attention: Investor
Relations, a copy of any or all documents referred to above (other than
exhibits to such documents) that have been incorporated by reference in this
Prospectus.

FORWARD LOOKING STATEMENTS

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors--Limited Operating History in the Commercial Network Security Market;
Unpredictability of Operating Results; --Liquidity and Capital Requirements;
Dependence on Offering Proceeds; Possible Need for Additional Financing;
- --Dependence on Principal Product; Uncertainty of Product Acceptance;
- --Dependence on the Internet and Intranets; --Changes in Technology and
Industry Standards; Significant Research and Development Expenditures;
- --Competition; and --Dependence on Resellers; Need to Establish Collaborative
Marketing Arrangements."

<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere and incorporated by reference
in this Prospectus. Unless otherwise indicated, all share information has been
adjusted to give retroactive effect to a three-for-one split of the Company's
Common Stock effective March 18, 1996 and no effect is given in this Prospectus
to the exercise of the Underwriters' over-allotment option. Unless otherwise
indicated, references to the Company's business and operations with respect to
periods prior to October 7, 1994 refer to the Company's network security
business and operations as part of the Computer Systems Division of Harris
Corporation and, with respect to periods thereafter but prior to June 30, 1996,
to the Company's Trusted Systems Division, which carried on the network security
business described herein. See "Recent Events" below and "Certain Transactions."
References to the sale of the Company's Real-time business to Concurrent assume
that the Real-time Sale has been consummated. Closing of the Real-time Sale is
expected to occur on or about June 27, 1996 to be effective June 30, 1996. This
Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in Risk
Factors.

THE COMPANY

The Company is a leading developer and marketer of commercial network
security products designed to protect data on computer networks from access by
unauthorized users. The Company was among the first companies to establish a
business unit devoted to developing and marketing network security products. As
early as 1989 the Company had developed and begun to market an integrated secure
operating system and secure networking software solution. With the announcement
of its firewall application in 1994, the Company began offering multi-level
secure network security solutions to the commercial market through its
CyberGuard Firewall suite of products.

The Company has combined its secure operating system and secure networking
software with its firewall application to produce the CyberGuard Firewall, which
provides a barrier to unauthorized access to a customer's enterprise networks,
including unauthorized access from (i) the Internet, (ii) networks of other
enterprises or (iii) other intranet users within the same enterprise network.
The CyberGuard Firewall's secure operating system and secure networking software
are designed to protect the firewall itself from attack, a distinction not
shared by most commercially available firewall products. The CyberGuard Firewall
is the only commercially available firewall built on integrated secure operating
system and secure networking software components that are rated B1 by the
National Computer Security Center ("NCSC"). For information regarding NCSC
security ratings, see "Business -- The CyberGuard Solution."

The Company's products provide a comprehensive, secure and high-performance
network security solution. These products include the CyberGuard Firewall and
related products, products offered by the Company with its strategic partners,
and secure operating systems and secure networking software sold separately from
the CyberGuard Firewall. The Company's research and development efforts are
focused in the near term on porting the Company's secure operating system,
secure networking software and firewall application from a Motorola
microprocessor-based Night Hawk platform to the more widely used Intel
PC-compatible computer platform. The Company plans to make the CyberGuard
Firewall available on such platform by December 1996.

The Company has established a broad range of distribution channels through
which to market its products in the United States and internationally, including
more than 30 value added resellers ("VARs"),

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<PAGE> 6

distributors and manufacturers' representatives, as well as direct sales
representatives. During the six months ended March 30, 1996, indirect channels
accounted for approximately 40% of the Company's sales of CyberGuard Firewalls
and related network security products. The Company has alliances for the purpose
of reselling the Company's products with several strategic partners, including
Lucent Technologies, Inc. (formerly AT&T Corporation, now "Lucent") and
Electronic Data Systems Corp. ("EDS"). The Company has additional strategic
resellers outside the United States, which include Nissin Electric Co., Ltd.
(Japan) ("Nissin"), Lukon Financial Industrial Company (Russia) and QPSX
Communications Limited, a subsidiary of Australia's Telstra Corporation.

The Company's customers represent a broad geographic distribution of the
Company's products with a relatively even concentration throughout the United
States and abroad. Of these, international sales accounted for 46% of the
Company's sales in the six months ended March 30, 1996 and 31% of sales in
fiscal year ended September 30, 1995. Of sales to international customers during
such periods, 55% and 49%, respectively, represented sales of the Company's
CyberGuard Firewall and related products. Sales of CyberGuard Firewalls and
related products include government-related customers, but are sold on the same
terms and conditions as to non-government-related commercial customers. During
the six months ended March 30, 1996 and the fiscal year ended September 30,
1995, sales of CyberGuard Firewalls and related products to agencies of the
United States government and its contractors accounted for 26% and 58%,
respectively of overall sales for such products.

STRATEGY

The Company's strategy is to increase its sales and profits by broadening
its indirect marketing channels, capitalizing on its existing international
market penetration, concentrating on selected vertical markets, promoting the
CyberGuard Firewall's strengths beyond network security, and expanding its
product line to provide an enterprise-wide solution, support for other computer
platforms and networks, and software-only products. The key components of the
Company's strategy, many of which are interrelated, are as follows:

- Capitalize on Existing International Penetration. The Company intends to
expand its relationships with VARs in Western and Eastern Europe and Asia
to address the international commercial firewall market. The Company
believes that the international market represents a high-growth market.

- Broaden Product Platforms and Compatibility. In addition to "porting"
its secure operating system, networking software and firewall application
to the more widely used Intel-based PC compatible platforms currently
available in a wide range of multiprocessor systems, the Company further
plans to introduce products that are compatible with other network
protocols.

- Introduce Software-only and Other Product Offerings. The Company plans
to introduce a software-only version of the CyberGuard Firewall,
consisting of an integrated operating system, networking software and base
security software by December 1996, and to offer upgrades to be priced and
sold

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<PAGE> 7

separately. This software-only product will allow the Company to
competitively position its CyberGuard Firewall product against
lower-priced competitors while maintaining or increasing its gross
margins. In addition, the Company is actively seeking strategic alliances
through which the Company can develop new products or enhance the features
of its existing products.

- Provide an Enterprise-Wide Network Security Solution. The Company
intends to emphasize all of the CyberGuard Firewall's network security
capabilities for, among others, secure communication, access control,
encryption, mobile computing and secure databases to provide an
enterprise-wide solution, particularly for enterprises in selected
vertical markets.

- Promote CyberGuard Beyond Network Security. The Company intends to
promote CyberGuard's MLS capabilities for additional applications and
intends to capitalize on its expertise in network security by providing
such tools to specific customers and targeted markets.

RECENT EVENTS

In May 1995, the Company separated its business operations into two units:
the "Real-time Business," consisting of the assets and liabilities associated
with the manufacture and marketing of real-time computer systems, and the
"Trusted Systems Division," consisting of the assets and liabilities of the
Company's network security business described herein. See "Business." The
Real-time Business represented approximately 82% of the assets of the Company as
of March 30, 1996, and accounted for 83%, 89% and 87% of the Company's sales for
the six months ended March 30, 1996 and the fiscal years ended September 30,
1995 and June 30, 1994, respectively. Effective June 30, 1996, the Company has
sold its Real-time Business and issued 683,187 shares of its Common Stock to
Concurrent Computer Corporation ("Concurrent") in exchange for Concurrent common
and preferred stock. See "Certain Transactions." The sale of the Real-time
Business and the related issuance of shares of the Company's Common Stock is
referred to herein as the "Real-time Sale." As a result of the sale, the Company
will own approximately 23% of the common stock of Concurrent outstanding
immediately following the transaction (29% if the preferred stock the Company
receives were to be converted into common stock) and Concurrent will own
approximately 10% of the outstanding common stock of the Company (341,589 shares
of which are offered hereby).

The Company expects to rely on the sale of Concurrent securities (subject
to the terms of a Share Holding Agreement between the Company and Concurrent
relating to such securities), together with the proceeds of this offering and
any line of credit the Company may obtain, to provide liquidity and fund its
cash requirements, which in the past were funded with working capital and cash
flows from the Real-time Business. The Company does not intend to be a long-term
holder of Concurrent securities. The Company currently is attempting to sell
1,500,000 to 4,000,000 shares of common stock of Concurrent to a limited number
of accredited investors. The Company expects that due to the size of the block
of Concurrent common stock to be sold and certain restrictions on
transferability thereon, such stock may be sold at a discount of up to
approximately 20% from current trading prices. The value of Concurrent
securities, over which the Company has no control, is expected to vary from
time to time based on conditions affecting the market for such stock. See
"Risk Factors."

The Company's address is 2101 West Cypress Creek Road, Fort Lauderdale,
Florida 33309. The Company's telephone number is (954) 974-1700. The Company's
Internet home page is www.cyberguardcorp.com.

INVESTMENT IN CONCURRENT

Concurrent securities would have comprised approximately 76% of the
Company's assets on a pro forma basis as of March 30, 1996 (based on a market
price for Concurrent Common Stock of $2.14 per share). Concurrent is engaged in
the business of providing and servicing high-performance real-time computer
systems, including (upon consummation of the Real-time Sale) the Night Hawk.
Concurrent's revenues were $77 million during the nine months ended March 31,
1996 and $140 million, $179 million and $220 million for the fiscal years ended
June 30, 1995, 1994 and 1993, respectively. Concurrent reported net losses of

5
<PAGE> 8

$5.7 million, $2.0 million and $39.8 million and net income of $3.9 million for
such periods, respectively. Concurrent expects that its revenues for the quarter
ending June 30, 1996 will be the lowest quarterly revenues for its fiscal year.
In addition, Concurrent expects to take a material pre-tax charge and to adjust
negative goodwill, as appropriate, in the quarter in which the Real-time Sale
occurs (expected to be the quarter ending June 30, 1996) to cover costs related
to the Real-time Sale and other business integration costs. As of the date
hereof, the estimated aggregate charge for these items is in the range of $29
million to $32 million, approximately $18 million of which is expected to be
paid out in cash in the next two years. See "Risk Factors."

SUMMARY FINANCIAL DATA

The following table sets forth (i) summary financial data derived from the
financial statements of the Company's Trusted Systems Division and the Company
appearing elsewhere or incorporated by reference in this Prospectus and (ii)
summary pro forma data derived from the pro forma financial statements of the
Company appearing elsewhere in this Prospectus. The data should be read in
conjunction with such financial statements and any notes thereto and other
financial information herein.

The Company expects to report certain charges in the quarter ending June
30, 1996. The Company estimates that it will incur a loss of approximately $8.5
million on the sale of the Real-time Business (based on an assumed market price
of Concurrent Common Stock of $2.14 per share); approximately $0.4 million in
charges related to certain grants of Common Stock; and approximately $1.4
million in additional expenses related to the Real-time Sale.

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
--------------------------------------------------------------------------
FISCAL YEAR
SIX MONTHS ENDED ENDED
-------------------------------- JUNE 30,
MARCH 30, MARCH 31, FISCAL YEAR ENDED ---------------
1996 1995 SEPTEMBER 30, 1995(1) 1994 1993
----------------- ------------ --------------------- ------ ------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(2):
Sales........................... $ 4,395 $ 3,489 $ 4,817 $8,464 $5,974
Cost of sales................... 2,915 2,103 3,140 3,842 2,992
Gross profit.................... 1,480 1,386 1,677 4,622 2,982
Operating expenses.............. 3,908 2,309 4,834 4,493 3,165
Operating income (loss)......... (2,428) (923) (3,157) 129 (183)
Net income (loss)............... $ (2,423) $ (727) $ (3,108) $ 109 $ (41)
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
MARCH 30, 1996 SEPTEMBER 30, 1995
----------------- ------------------
<S> <C> <C>
PRO FORMA STATEMENT OF OPERATIONS DATA(3):
Sales.............................. $ 4,395 $ 4,817
Cost of sales...................... 2,915 3,140
Gross profit....................... 1,480 1,677
Operating expenses................. 4,763 5,142
Operating loss..................... (3,283) (3,465)
Net loss........................... $ (3,347) $ (5,063)
Net loss per common share.......... $ (.50) $ (.77)
Weighted average number of common
shares outstanding............... 6,631 6,595
</TABLE>

<TABLE>
<CAPTION>
MARCH 30, 1996
--------------------------------
ACTUAL(4) PRO FORMA(5)
----------------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......... $ 1,307 $ --
Working capital.................... 14,271 22,311
Total assets....................... 38,552 35,080
Total liabilities.................. 9,412 3,595
Total shareholders' equity......... $ 29,140 $ 31,485
</TABLE>

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

(1) In 1994, the Company changed its fiscal year end from June 30 to
September 30.
(2) Includes only financial information attributable to the Company's Trusted
Systems Division and the Company's network security business and operations
as part of the Computer Systems Division of Harris Corporation prior to
October 7, 1994 and excludes the Company's corporate assets and liabilities
not specifically identifiable to the division.
(3) Assumes the Real-time Sale had occurred at the beginning of each such
period.
(4) Represents Harris Computer Systems Corporation historical consolidated
financial information.
(5) Assumes the Real-time Sale had occurred as of such date.

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<PAGE> 9

RISK FACTORS

INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS AND INCORPORATED
BY REFERENCE HEREIN, PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE
FOLLOWING FACTORS IN EVALUATING THE COMPANY BEFORE PURCHASING ANY SHARES.

LIMITED OPERATING HISTORY IN THE COMMERCIAL NETWORK SECURITY MARKET;
UNPREDICTABILITY OF OPERATING RESULTS

Although the Company has been developing network security products since
1989, the Company has operated in the commercial network security market only
since October 1994. In view of, among other things, the Company's short
operating experience in, and the rapidly changing and intensely competitive
nature of, the commercial network security market, the uncertainty of
acceptance of the Company's products, the reliance of such products on the
Internet, the mix of distribution channels through which the Company's products
are sold, and the dependence of the Company on Concurrent as the sole supplier
of computer platforms on which the Company's products are currently sold, there
is no assurance that the Company will be profitable in future years. The
Company's results of operations may become increasingly unpredictable from
quarter to quarter as a result of numerous other factors, including market
acceptance of the Company's products, fluctuations in the development and
growth of the commercial network security industry in general, the timing of
orders and shipments of products, the introduction of new products by the
Company, or the introduction or the announcement of competitive products. In
addition, a substantial portion of the Company's sales occurs during the last
few weeks of each quarter; therefore, any delays in orders or shipments are
more likely to result in revenue not being recognized until the following
quarter. The Company's current and planned expense levels are based in part on
its expectations of future sales and, as a result, net income for a given
period could be disproportionately affected by any reduction in sales. There
can be no assurance that the Company will be able to achieve significant sales
of products in the future or that the level of sales in the future will not
decrease from past levels. There can be no assurance that in future quarters
the Company's sales or operating results will meet the expectations of stock
market securities analysts and investors. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

LIQUIDITY AND CAPITAL REQUIREMENTS; DEPENDENCE ON OFFERING PROCEEDS;
POSSIBLE NEED FOR ADDITIONAL FINANCING

The Company's cash requirements have historically been funded from the
Company's working capital and operating cash flow provided by the Company's
Real-time Business. As a result of the sale of the Real-time Business, the
Company expects that funds generated from operations will be insufficient to
satisfy the Company's anticipated cash requirements. The Company is seeking to
obtain a line of credit that is likely all the assets of the Company (including
all or a substantial part of the Concurrent common and preferred stock to be
received by the Company in connection with the Real-time Sale) and, if drawn
upon, may be subject to, among other things, a number of financial ratios,
levels of cash flow and net worth, and restrictions on indebtedness, asset
dispositions, and investments and corporate transactions, all of which may
affect the operating flexibility of the Company and subject the Company's
assets to seizure upon default. While the Company also may sell or pledge some
of the Concurrent securities to be received by the Company in the Real-time
Sale in order to generate cash, the Company's ability to sell or pledge these
Concurrent securities is subject to a number of limitations and conditions
imposed in connection with the Share Holding Agreement and any line of credit.
These limitations and conditions may affect the Company's flexibility in
generating cash through sales of Concurrent securities and may require the
Company to seek alternative sources of cash, including borrowings and equity
sales. In addition, the timing of any such sales and the prices at which the
Concurrent securities may be sold may be affected by other factors beyond the
Company's control, such as general market conditions and changes in the
business, operations or prospects of Concurrent. See "Fluctuation in Value of
Concurrent Common Stock and Concurrent Preferred Stock Held by the Company"
below. In the event that the Company requires financing from additional
outside sources, there can be no assurance that any additional financing will
be available to the Company on acceptable terms, or at all. Any additional
financing may involve dilution of the interests of the Company's then existing
shareholders. If adequate funds are not available, the Company may be required
to curtail certain activities, including product development, marketing and
sales activities. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and
"Certain Transactions."

<PAGE> 10
FLUCTUATION IN VALUE OF CONCURRENT COMMON STOCK AND CONCURRENT PREFERRED STOCK
HELD BY THE COMPANY

The Real-time Sale consists of the sale of the Company's Real-time
Business and the issuance of 683,178 shares of its Common Stock to Concurrent
in exchange for (i) 10,000,000 newly issued shares (the "Concurrent Common
Stock Consideration") of common stock of Concurrent, par value $.01 per share
("Concurrent Common Stock"); (ii) 1,000,000 newly issued shares of convertible
exchangeable preferred stock of Concurrent ("Concurrent Preferred Stock") with
a 9% cumulative annual dividend payable quarterly in arrears and a liquidation
preference of $10.00 per share (subject to adjustment under certain
circumstances); and (iii) the assumption by Concurrent of certain (but not
all) of the liabilities of the Real-time Business (the "Assumed Liabilities").
See "Certain Transactions." The Concurrent Common Stock Consideration,
represented approximately 23% of the Concurrent Common Stock outstanding as of
the Real-time Sale (29% if the Concurrent Preferred Stock were to be converted
into Concurrent Common Stock). The Concurrent Common Stock Consideration and
Concurrent Preferred Stock would have constituted in the aggregate
approximately 76% of the Company's assets on a pro forma basis as of March 30,
1996 (based on a market price for Concurrent Common Stock of $2.14 per share).
The market price of the Concurrent Common Stock will vary from time to
time as the result of changes in the business, operations or prospects of
Concurrent, its ability to integrate the Real-time Business into its operations
and achieve related cost savings and operating efficiencies, restructuring
charges, including those related to the Real-time Sale, any continuing declines
in sales, any operating losses or shortfalls in liquidity, its success in
shifting from proprietary to open systems, regulatory considerations, general
market, economic and industry conditions and other factors. In addition, the
trading price of the Concurrent Common Stock may be adversely affected by
future issuances of Concurrent Common Stock, including up to 6,046,704 shares
available as of the date hereof for future grants or awards pursuant to the
Concurrent 1991 Restated Stock Option Plan (the "Concurrent Stock Plan"). In
connection with the Real-time Sale, approximately 4,300,000 shares of
Concurrent Common Stock will become issuable and freely tradeable, including
options to purchase approximately 2,600,000 shares (being all options then
outstanding under the Concurrent Stock Plan) and approximately 1,700,000
additional shares issuable as severance or other compensation to, among others,
Concurrent's employees, contractors and financial advisors, pursuant to certain
contracts entered into by Concurrent in connection with the Real-time Sale or
pursuant to outstanding warrants to purchase Concurrent Common Stock. The
market price of Concurrent Common Stock may also be adversely affected by sales
of such stock by the Company. Additionally, any sales of large amounts of
Concurrent Common Stock to fund the Company's significant liquidity
requirements would likely be at a discount to its trading value. See
"Liquidity and Capital Requirements; Dependence on Offering Proceeds; Possible
Need for Additional Financing" above, "Certain Transactions" and "Business --
Interest in Concurrent."

The Company's assets also include Concurrent Preferred Stock. There is no
public market for Concurrent Preferred Stock and it is not anticipated that a
trading market will ever develop. Concurrent has agreed to register the
Concurrent Common Stock issuable upon conversion of the Concurrent Preferred
Stock but not the Concurrent Preferred Stock. See "Certain Transactions
- --Share Holding Agreement. Absent such registration, the transferability of
the Concurrent Preferred Stock is subject to restrictions under applicable
federal and state securities laws. Therefore, the Company may be unable to
sell the Concurrent Preferred Stock for an indefinite period of time. Due to
the convertibility of the Concurrent Preferred Stock into Concurrent Common
Stock, the Concurrent Preferred Stock is expected to fluctuate in value based
on factors which are substantially similar to the factors that influence the
price of the Concurrent Common Stock.

INABILITY TO INFLUENCE CONCURRENT'S OPERATIONS; DECLINING TRENDS IN
CONCURRENT'S RESULTS

As a result of the Real-time Sale, the Company received approximately 23% of
the Concurrent Common Stock then issued and outstanding (29% if the Concurrent
Preferred Stock were to be converted into Concurrent Common Stock). Despite
the Company's ownership of the Concurrent Common Stock Consideration and the
Concurrent Preferred Stock and its right to designate up to three of
Concurrent's nine members of its Board of Directors, the Company will not be
able to control Concurrent's strategic direction or influence the day-to-day
management of Concurrent's business or the future results of Concurrent's
operations.

Concurrent's revenues were $220 million, $179 million, $140 million and $77
million for the fiscal years ended June 30, 1993, 1994 and 1995 and the nine
months ended March 31, 1996, respectively. The general decline in Concurrent's
revenues is largely the result of a decline in sales of proprietary real-time
computer systems without a corresponding increase in the sales of open systems.
Concurrent reported net income of $3.9 million and net losses of $39.8 million,
$2.0 million and $5.7 million for the same periods, respectively. Concurrent
expects that revenues for the quarter ending June 30, 1996 will be the lowest
quarterly revenues for the fiscal year, and currently expects to take charges
related to the Real-time Sale in such quarter in an aggregate amount in the
range of $29 million to $32 million. There can be no assurance that Concurrent
will be able to achieve profitability, or if achieved, that such profitability
can be maintained, or that Concurrent will not take additional charges or
write-downs of inventories or other assets in the foreseeable future.

Although the purchase by Concurrent of the Real-time Business and the
planned integration and consolidation of its development and manufacturing
operations could improve Concurrent's liquidity by permitting

<PAGE> 11

additional borrowing availability, there can be no assurance that the
integration of the Real-time Business into Concurrent's operations will be
successful or that cash flow from the combined real-time operations will be
sufficient to fund Concurrent's transaction costs related to the Real-time Sale,
its anticipated restructuring costs and its ongoing working capital
requirements.

Many factors including, but not limited to, a continued deterioration of
Concurrent's business, operations or prospects and the inability of Concurrent
to successfully integrate the Real-time Business to achieve its planned
operational improvements, may have a negative effect on the price of Concurrent
Common Stock and may therefore have a negative effect on the Company's Common
Stock.

DEPENDENCE ON PRINCIPAL PRODUCT; UNCERTAINTY OF PRODUCT ACCEPTANCE

Sales of the Company's CyberGuard Firewall in the commercial network
security market account for a substantial portion of the Company's sales, and
the Company expects the portion of its sales attributable to the CyberGuard
Firewall to increase. As a result, any factor adversely affecting sales of
this product could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company's future success
depends on the continued adoption of the Company's CyberGuard Firewall and
other network security products by users. The market acceptance of the
Company's products is difficult to estimate due in large measure to the recent
emergence of the market for network security products and the effect of a
number of new products, applications or product enhancements that have been
introduced into the market. Competitive products are currently available that
have comparable or more favorable price characteristics and that may be
perceived to have comparable performance characteristics. There can be no
assurance that the Company's products, particularly its CyberGuard Firewall,
will continue to achieve acceptance in the network security market, and the
failure of the Company's products to achieve such continued market acceptance
could have a material adverse effect on the Company's business, operating
results and financial condition. Moreover, the Company anticipates that its
existing and new competitors will introduce additional competitive products,
particularly if demand for enterprise-wide network security products increases,
which could reduce future market acceptance of the Company's products.

As the network security industry continues to evolve, the Company's future
financial performance will depend in part on the successful development,
introduction and market acceptance of new products, applications and product
enhancements. There can be no assurance that the Company will be able to
develop new products or that such products will satisfy evolving consumer
preferences and achieve market acceptance or, if market acceptance is achieved,
that the Company will be able to maintain such acceptance for a significant
period of time. Any significant delay in the introduction of the Company's
future products could result in loss of market share and could have a material
adverse effect on the Company's business, financial condition and results of
operations.

RISKS ASSOCIATED WITH NETWORK SECURITY MARKET

The market for the Company's products is only beginning to emerge. The
rapid development of the Internet and enterprise-wide computing has increased
the vulnerability of proprietary information to access by unauthorized persons
and has in recent years increased demand for computer and network security
products. However, there is no assurance that demand for network security
products will continue at current levels or increase. Moreover, because the
market for network security products is only beginning to develop, it is
difficult to assess the size of this market and the product features and
prices, the optimal distribution strategy and the competitive environment that
will develop in this market. Declines in demand for network security products,
whether as a result of technological change, the public's perception of the
need for network security products, developments in the hardware and software
environments in which these products operate, general economic conditions or
other factors, could have a material adverse effect on the Company's business,
financial condition and results of operations.

COMPETITION

The market for network security products and services is intensely
competitive, rapidly evolving and characterized by frequent technological
change. The Company expects competition to persist and intensify in the future.
The Company's principal current competitors include Advanced Network & Services
Inc. ("ANS", which is owned by America Online, Inc.), Check Point Software
Technologies Ltd. ("Check Point"), Raptor Systems, Inc. ("Raptor"), Secure
Computing Corporation ("Secure Computing") and Trusted Information Systems, Inc.
("TIS"). In addition, companies such as Digital Equipment Corporation ("DEC"),
International Business Machines Corporation ("IBM"), and Sun Microsystems, Inc.
("Sun") sell products with similar features and functions that could be
considered competitors of the Company. Several other companies offering other
network and other computer-related products, including Microsoft Corporation
("Microsoft"), are expected to enter the commercial network security market in
the near future. Many of the Company's current and potential competitors have
greater name recognition, larger installed customer bases and significantly
greater financial, technical or marketing resources than the Company. As a
result, they may be able to adapt more quickly to new or emerging technologies
or changes in customer requirements or to devote greater resources to the
promotion and sale of their products than the Company. In addition, certain of
the Company's competitors may determine, for strategic reasons, to consolidate,
substantially lower the price of their network security products or bundle their
products with other products, such as hardware products or other enterprise
software products. In addition, current and potential competitors have
established or may establish financial or strategic relationships among
themselves, with existing or potential customers, resellers or other third
parties. For example, Compaq Computer Corporation recently acquired a financial
interest in Raptor and agreed to bundle Raptor's network security software with
certain of its product offerings and Secure Computing recently announced the
signing of a definitive agreement for the acquisition of Border Network
Technologies, Inc. ("Border"). Competition could increase if new companies enter
the market or if existing competitors expand their product lines. An increase in
competition could result in price reductions and loss of market share for the
Company. Such competition and any resulting reduction in pricing and gross
margins could have a material adverse effect on the Company's business,
financial condition and results of operations.

There can be no assurance that the Company's competitors will not develop
network security products using approaches substantially similar to or different
from the Company's that may be more effective than the Company's current or
future products or that the Company's technologies and products would not be
rendered obsolete by such developments. Certain of the Company's competitors
have also submitted their commercial network firewall products for evaluation by
the NCSC, and certain of these products could receive B1 or higher ratings upon
completion of the process. Competitors may also employ litigation or the threat
of litigation relating to patents and other intellectual property to gain a
competitive advantage. See "Business -- Competition."

POTENTIAL ACQUISITIONS

In the normal course of its business, the Company evaluates potential
acquisitions of businesses, products and technologies that could complement or
expand the Company's network security business. To date, the Company has not
made any acquisitions. In the event the Company were to identify an appropriate
acquisition candidate, there is no assurance that the Company would be able to
successfully negotiate the terms of any such acquisition, finance such
acquisition and integrate such acquired business, products or technologies into
the Company's existing business and operations. Furthermore, the integration of
an acquired business could cause a diversion of management time and resources.
There can be no assurance that a given acquisition, when consummated, would not
materially adversely affect the Company's business, financial condition and
results of operations. If the Company proceeds with one or more significant
acquisitions in which the consideration consists of cash, a substantial portion
of the Company's available cash (including proceeds of this offering) could be
used to consummate the acquisitions. If the Company consummates one or more
significant acquisitions in which the consideration consists of stock, or is
financed with the proceeds of the issuance of stock, stockholders of the Company
could suffer a significant dilution of their interests in the Company. See "Use
of Proceeds" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

DEPENDENCE ON THE INTERNET AND INTRANETS

The Company's products are designed primarily for computer network
environments, such as the Internet and certain enterprise-wide networks that
are based upon the Transmission Control Protocol/Internet Protocol ("TCP/IP")
network protocol. Accordingly, sales of the Company's current products will
depend in large part upon a robust industry and infrastructure for providing
Internet access and carrying Internet traffic. Because global commerce and the
exchange of information on the Internet and other similar open wide area
networks are new and

<PAGE> 12

evolving, it is difficult to predict with any assurance whether the
complementary products or other factors necessary to make the Internet a viable
commercial marketplace will be developed. The failure of the Internet to
become a viable commercial marketplace could have a material adverse effect on
the Company's business, financial condition and results of operations.
Additionally, the Company plans to continue to develop products for use by
customers with TCP/IP-based enterprise-wide intranet applications. The failure
of the TCP/IP protocol to gain wide acceptance as an enterprise-wide network
protocol could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Industry
Background."

RECENT TRANSITION TO THE COMMERCIAL MARKET

The Company has targeted the world-wide commercial market as its principal
focus for sales of network security products. The Company believes it has
accomplished the transition from its historically focused government products
market to the commercial network security products market with sales to
commercial customers reaching 74% of sales during the six-month period ended
March 30, 1996, up from 42% for the fiscal year ended September 30, 1995. As
the Company's commercial sales have increased relative to its
government-related sales, gross profit margins have declined. Since the
transition to the commercial market has occurred recently, there can be no
assurance that gross margins can be sustained at current levels given the
different competitive nature of the commercial market as compared to the
government market. Furthermore, the Company, until recently, has not relied on
the commercial market as the primary source of its sales and there can be no
assurance that the Company will be successful competing in the commercial
market against competitors that have more experience in such market.

The Company expects to continue to derive a significant portion of its
near-term sales from sales to the government market. Government business is,
in general, subject to additional special risks, including delays in funding,
the need to comply with diverse rules and regulations, termination of contracts
at the convenience of the government, changes in governmental policies and
budgetary restraints. In addition, even if funds are appropriated or remain
available, delays in payment may occur that could have a material adverse
effect on the Company's business, financial condition and results of
operations. See "Business -- Markets and Customers."

CHANGES IN TECHNOLOGY AND INDUSTRY STANDARDS; SIGNIFICANT RESEARCH AND
DEVELOPMENT EXPENDITURES

The network security industry is characterized by rapid changes, including
evolving industry standards, frequent new product introductions, continuing
advances in technology and changes in customer requirements and preferences.
The introduction of new technologies could render the Company's existing
products obsolete or unmarketable. Advances in techniques employed by
individuals and entities seeking to gain unauthorized access to networks could
expose the Company's existing products to new and unexpected attacks and
require accelerated development of new products. There can be no assurance
that the Company will be able to counter challenges to its current products,
that the Company's future product offerings will keep pace with technological
changes implemented by competitors or persons seeking to breach network
security, that the Company will be able to establish and maintain any strategic
technical alliances necessary to achieve a competitive advantage or that the
Company will be successful in developing and marketing products for any future
technology. The development cycle for the Company's new products may be
significantly longer than the Company's historical product development cycle or
significantly longer than anticipated, resulting in higher development costs or
a loss in market share. Failure to develop and introduce new products and
product enhancements on a timely basis could have a material adverse effect on
the Company's business, financial condition and results of operations.
Moreover, the costs of developing new products, and related sales and marketing
expenses, are expected to be significant before such products are in a position
to deliver significant sales or cash flow to the Company. There can be no
assurance that new product introduction will be executed without materially and
adversely affecting the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business -- The CyberGuard Solution" and "--
Product Development."

<PAGE> 13

DEPENDENCE ON RESELLERS; NEED TO ESTABLISH COLLABORATIVE MARKETING ARRANGEMENTS

In marketing its products, the Company depends substantially, and expects to
increase its dependence, upon the performance of indirect sales channels,
including systems integrators and VARs, over which the Company does not have
complete authority. The Company's relationships with most of its resellers
have been established within the last year, and the Company is unable to
predict with accuracy the extent to which its resellers will be successful in
marketing and selling the Company's products. Moreover, the Company's future
success will depend in part on its ability to establish collaborative marketing
relationships in other indirect sales channels. There can be no assurance that
the Company's existing or contemplated collaborative relationships will be
commercially successful, that the Company will be able to negotiate additional
collaborative relationships, that such additional collaborations will be
available to the Company on acceptable terms or that any such relationships, if
established, will be commercially successful. In addition, there can be no
assurance that parties with whom the Company has established collaborative
relationships will not pursue alternative technologies or develop alternative
products in addition to or in lieu of the Company's products either on their
own or with others, including the Company's competitors. The loss of any of
the Company's major resellers, either to competitive products offered by other
companies or to products developed internally by the resellers, could have a
material adverse effect on the Company's business, financial condition or
results of operations. If the Company is successful in expanding its network
of indirect sales channels, the Company will need to add substantially to its
pre-sales, field support, and marketing staffs in order to support the sales
activities of an expanded distribution network. There can be no assurance that
such internal expansion will be successfully completed, that the cost of such
expansion will not exceed the sales generated thereby, or that the Company's
sales and marketing organization will successfully compete against the more
extensive and well-funded sales and marketing operations of many of the
Company's current and future competitors. See "Business -- Sales and
Marketing."

DEPENDENCE ON SOLE-SOURCE SUPPLIERS

The Company's products were developed to function in an open architecture,
real-time environment, based upon UNIX operating system technology. The
Company currently uses only Night Hawk computers, which have certain essential
multiprocessing capabilities, on which to install its secure operating system,
secure networking software and CyberGuard Firewall software applications for
resale. See "Business -- Products" and "Certain Transactions." The Company
also has a relationship with the Santa Cruz Operation, Inc. ("SCO"), which
provides the core UNIX operating system technology into which the Company's
computer security enhancements are integrated.

<PAGE> 14

Concurrent is the only source of supply for Night Hawk computers. The
unavailability of, or any delay in receiving, Night Hawk computers could result
in delays in shipping the Company's products and in loss of sales during such
period. Pursuant to the Shared Services Agreement, the Company may buy Night
Hawk computers at the price and subject to the delivery terms quoted by
Concurrent for Night Hawks as of the day that the Company submits a purchase
order. A substantial increase in the price of Night Hawks or a change in the
delivery terms thereof would result in an increase in the price of the
Company's products, which could result in decreased profit margins or loss of
sales. The Company is actively seeking alternative platforms on which to
install its products; however, there is no assurance that the Company will be
successful in its attempts to market its products on platforms other than the
Night Hawk or that such products will be successful in the marketplace. There
can further be no assurance that such alternative platforms will continue to be
manufactured or that the price and delivery terms of such platforms will be
favorable to the Company. Should the Company be successful in marketing its
products on platforms other than the Night Hawk, the Company will remain
obliged to continue to support the Night Hawk to satisfy existing customer
expectations for the availability and support of the Night Hawk platform. This
support requirement may place significant burdens on the Company's resources.

SCO's UNIX operating system technology has been purchased by the Company as
the basis for the computer security enhancements for the Company's products.
The Company depends upon SCO to develop its UNIX operating system technology
and to provide specific enhancements and features necessary to ensure that the
UNIX operating system remains competitive in the general computer marketplace.
In particular, the Company depends upon SCO to ensure that support is provided
for new and emerging hardware technologies (e.g., Intel processor chipsets, new
communication technologies) and new and emerging software features (e.g.,
standards compliance, DOS/Windows applications support). Should SCO
discontinue development efforts related to the UNIX operating system
technology, or should such technology no longer be offered for sale by SCO to
the Company, the Company would be required to initiate internally funded
development to support new hardware and/or software features or choose an
alternate UNIX operating system supplier. Any such internally funded
development would likely preclude the Company from delivering a competitive
product offering into the marketplace in a timely manner and would likely
result in substantial development expenses. Likewise, choosing an alternate
UNIX operating system supplier would require the Company to transfer a
significant number of computer security enhancements into the alternate UNIX
operating system which would place a substantial strain on the Company's
product development resources and could have a material adverse effect on the
Company's business, financial condition and results of operations.

RISK OF ERRORS OR FAILURES

Products as complex as those offered by the Company may contain undetected
errors when first introduced or when new versions are released. The Company
has in the past discovered software errors in certain of its product offerings
after their introduction and has experienced delays in revenue recognition
during the period required to correct these errors. There can be no assurance
that errors will not be found in new products or releases after commencement of
commercial shipments by the Company, particularly as the Company undertakes to
develop network security products for platforms other than the Night Hawk that
may be characterized by a wide variety of non-standard configurations that make
pre- release testing for programming or compatibility errors very difficult and
time-consuming. A computer break-in or other disruption experienced by one of
the Company's customers, if caused by errors or failures in the Company's
products, could result in product recalls and liability under the Company's
warranties or otherwise. A well publicized actual or perceived breach of
network security at a customer site could adversely affect the market's
perception of the Company or its products. Alleviating such problems could
require significant expenditures of capital and resources by the Company, could
cause interruptions, delays or cessation of service to the Company's customers
and could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company attempts to limit its
liability to customers, including liability arising from a failure of the
security features contained in the Company's products, through contractual
limitations of warranties and remedies. However, some courts have held similar
contractual limitations of liability, or the "shrinkwrap licenses" in which
they are often embodied, to be unenforceable. Accordingly, there can be no
assurance that such limitations will be enforced. Moreover, to the extent such
limitations are enforced as to licensees, there can be no assurance that they
will be enforceable as to other users of the Company's products or as against
parties who have an interest in data stored on networks that might be
compromised by a failure of the Company's product. While the Company currently
has product liability insurance to protect against these risks, there can be no
assurance that such insurance will cover all losses from failures of the
Company's products or will be available to the Company on commercially
reasonable terms or at all.

<PAGE> 15

ANTICIPATED INCREASES IN CERTAIN EXPENSES TO PROVIDE NEW INFRASTRUCTURE

Many of the Company's sales and administrative personnel and facilities were
transferred to Concurrent in connection with the Real-time Sale. In connection
with the Real-time Sale, the Company entered into a Shared Services Agreement
with Concurrent that expires on December 30, 1996, pursuant to which Concurrent
will provide certain administrative and personnel-related services for the
Company. The Company believes that Concurrent will provide these services at
costs equal to or below those which the Company would incur if the Company were
to provide these services for itself. Upon expiration of the Shared Services
Agreement, the Company will be required to acquire the necessary skills, staff
and systems to provide these services for itself. Acquiring such skills, staff
and systems could substantially increase the Company's operating expenses.
There can be no assurance that the Company will be able to make the transition
to providing for itself the services covered by the Shared Services Agreement,
and to continue to provide such services in the future, without incurring costs
that could have a material adverse effect on the Company's business, financial
condition and results of operations.

In addition, the Company currently leases approximately 10,000 square feet of
office and development space from Concurrent at a price that the Company
believes is below market rates for substantially equivalent space. The
Company's lease with Concurrent expires in June 1997, subject to earlier
termination under certain circumstances. Following the expiration or
termination of the lease, the Company will be required to lease substantially
equivalent space at market rates. There can be no assurance that the Company
will be able to offset such additional costs with corresponding increases in
revenues or without having a material adverse effect on the Company's business,
financial condition and results of operations.

NEW MANAGEMENT TEAM

In April 1996, in anticipation of the Real-time Sale, and effective upon the
consummation thereof, the Company engaged a new Chief Executive Officer,
appointed a new Chief Financial Officer from a management position within the
Company's Trusted Systems Division sales force and appointed other executive
officers from positions inside the Company's Trusted Systems Division. These
individuals have not previously worked together as senior managers and are in
the process of integrating as a management team. With the exception of the
Company's new Chief Executive Officer and the Vice President of International
Operations, none of these senior managers has previously served as an executive
officer of a publicly held corporation.

POTENTIAL ACQUISITIONS

DEPENDENCE ON KEY PERSONNEL

The Company's success depends in large part on its ability to attract and
retain highly qualified engineering, management and marketing personnel.
Although the Company maintains key man life insurance on the Company's Chief
Executive Officer, the loss of the services of the Company's Chief Executive
Officer or other key employees of the Company could have a material adverse
effect on the Company. Competition for such personnel is intense and there can
be no assurance that the Company will be able to attract and retain all
personnel necessary for the development and operation of its business. The
loss of the services of key personnel could have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business -- Employees" and "Management."

<PAGE> 16
LIMITED PROTECTION OF INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS; RISK OF
LITIGATION

The Company relies upon license agreements with customers, trademark,
copyright and trade secret laws, and employee conflict of interest and
third-party non-disclosure agreements and other methods to protect its
proprietary rights. The Company currently does not hold any patents and has no
pending patent applications to cover any aspects of its technology. The
Company intends to file patent applications in relevant jurisdictions to
protect aspects of its technology; however, there can be no assurance that any
future patent applications will be granted or that any future patents will not
be challenged, invalidated or circumvented or that the rights granted
thereunder will provide competitive advantages to the Company. There can also
be no assurance that the Company's conflict of interest or non-disclosure
agreements will provide meaningful protection of the Company's proprietary
information. Further, the Company may be subject to additional risk as it
enters into transactions in countries where intellectual property laws are not
well developed or are poorly enforced. The Company's inability to maintain a
competitive advantage based on proprietary rights could have a material adverse
effect on the Company's business, financial condition and results of
operations.

As the number of network security products in the industry increases and the
functionality of these products further overlaps, software developers and
publishers may increasingly become subject to infringement claims. There can
be no assurance that others will not independently develop similar technologies
or duplicate any technology developed by the Company or that the Company's
technology will not infringe upon patents or other rights owned by others.
Likewise, there can be no assurance that third parties will not assert
infringement claims against the Company in the future with respect to current
or future products. Although the Company is not currently the subject of any
intellectual property litigation, there has been substantial litigation
regarding patent, copyright, trademark and other intellectual property rights
involving computer software companies. Any claims or litigation, with or
without merit, could be costly and could result in a diversion of management's
attention, which could have a material adverse effect on the Company's
business, financial condition and results of operations. Adverse
determinations in such claims or litigation could also have a material adverse
effect on the Company's business, financial condition and results of
operations. See "Business -- Patents and Proprietary Technology."

INTERNATIONAL SALES RISKS

For the six months ended March 30, 1996 and the fiscal years ended September
30, 1995 and June 30, 1994, 46%, 31% and 64%, respectively, of the Company's
total trusted sales were attributable to sales outside the United States. The
Company expects to continue to expand its marketing efforts abroad.
International sales are subject to certain risks, such as currency
fluctuations, that could make the Company's products less competitive in
foreign markets and contribute to fluctuations in the Company's operating
results. Other risks affecting international sales include political
instability, difficulties in staffing and managing international operations,
potential insolvency of international resellers, longer receivable collection
periods and difficulty in collecting accounts receivable. In addition, the
laws of certain countries do not protect the Company's products and
intellectual property rights to the same extent as the laws of the United
States. There can be no assurance that these factors would not have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Sales and Marketing."

EFFECT OF GOVERNMENT REGULATION OF TECHNOLOGY EXPORTS

The Company's international sales and operations may be subject to risks
such as the imposition of governmental controls, export license requirements,
restrictions on the export of critical technology, trade restrictions and
changes in tariffs. In particular, because of governmental controls on the
exportation of encryption technology, the Company may be unable to export its
most robust network security products. As a result, foreign competitors that
face less stringent controls on their products may be able to compete more
effectively than the Company in the global network security market. There can
be no assurance that these factors would not have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business -- Regulation."

INADVERTENT INVESTMENT COMPANY

The Concurrent Common Stock Consideration and the Concurrent Preferred
Stock, which the Company received in connection with the Real-time Sale, would
have comprised approximately 76% of the Company's total assets on

<PAGE> 17

a pro forma basis as of March 30, 1996 (based on a market price for Concurrent
Common Stock of $2.14 per share). As a result, the Company may be deemed
to be an "investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "1940 Act"), which defines an investment company as
one engaged in the business of investing or holding securities and owning
"investment securities" having a value exceeding 40% of the value of such
company's total assets. Generally, an investment company is required to
register as such with the SEC, subjecting itself to extensive regulation,
compliance with which would have a material adverse effect on the Company's
business, financial condition and results of operations.

A company is deemed not to be an investment company for one year if it
has a bona fide intent to be engaged in a business other than investing,
holding or trading in securities. Following the Real-time Sale, the Company
intends to sell a portion of the Concurrent Common Stock Consideration. The
Company is currently attempting to arrange for the sale of 1,500,000 to
4,000,000 shares of Concurrent Common Stock. The Company does not intend to
remain a long-term holder of the remaining Concurrent securities or of any
investment securities having a value exceeding 40% of the value of its total
assets when the one-year exemption period expires in June 1997. There is no
assurance that the Company will be successful in its efforts to reduce its
holdings of Concurrent securities, or that, if successful, it can do so at
favorable prices. The Company's ability to sell or pledge the Concurrent
Common Stock or the Concurrent Preferred Stock is subject to the limitations
imposed in the Share Holding Agreement. In addition, the Company's ability to
sell such securities may be affected by factors beyond the Company's control,
such as general market conditions and changes in the business, operations or
prospects of Concurrent. See "Fluctuation in Value of Concurrent Common Stock
and Concurrent Preferred Stock Held by the Company" above and "Certain
Transactions -- Share Holding Agreement."

SHARES ELIGIBLE FOR FUTURE SALE

No assurance can be given as to the effect, if any, that future sales
of shares of Common Stock, or the availability of shares of Common Stock for
future sales, will have on the market price of the Common Stock from time to
time. Future sales of shares of Common Stock (including shares issued upon
exercise of stock options), or the possibility that such sales could occur,
could adversely affect the prevailing market price of the Common Stock and
could also impair the Company's ability to raise capital through an offering of
its equity securities. As of the consummation of the Real-time Sale, there are
approximately 6,900,000 shares of Common Stock outstanding, all of which are
immediately tradable without restriction under the Securities Act. Of these,
683,178 shares of Common Stock (including the 341,589 shares offered hereby)
are subject to the Share Holding Agreement between the Company and Concurrent
pursuant to which such shares may be sold by Concurrent subject to certain
restrictions on transfer (including when the Company is engaged in or is
preparing to engage in a public offering of its Common Stock) and on the
volume of sales by Concurrent of the Company's Common Stock. See "Certain
Transactions." An additional 1,682,730 shares of Common Stock are issuable
upon exercise of currently outstanding options (all of which are in-the-money
and approximately 41% of which are currently exercisable) and 545,106 shares of
Common Stock or options thereon are available for future issuance under the
Company's Stock Incentive Plan. The Company, together with each of its
executive officers and directors and certain shareholders, including
Concurrent (holding in the aggregate 1,467,399 shares of Common Stock or
options to purchase Common Stock) have agreed not to offer, sell, contract to
sell or otherwise dispose of, directly or indirectly, any Common Stock or
securities convertible into Common Stock until six months after the date of
the commencement of any public offering by the Company of its Common Stock
without the prior consent of the underwriters engaged in connection with such
offering; at the expiration of such six months, such shares will be freely
tradable subject to compliance with Rule 144 under the Securities Act with
respect to shares held by affiliates. On May 23, 1995, the Company filed a
registration statement related to an underwritten public offering of 2,500,000
shares (approximately 1,800,000 of which are to be offered by the Company). If
such offering is completed, of which there can be no assurance, all shares of
Common Stock offered by the Company therein will become freely tradable.

ABSENCE OF DIVIDENDS

The Company does not intend to pay any cash dividends for the foreseeable
future. The Company intends to follow a policy of retaining earnings, if any,
to finance the development and expansion of its business. See "Dividend
Policy."

ANTI-TAKEOVER PROVISIONS

The Company's Articles of Incorporation and By-laws contain certain
anti-takeover provisions that could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from acquiring,

<PAGE> 18

a majority of the outstanding voting stock of the Company. These provisions
include a staggered Board of Directors, certain super-majority voting
requirements with respect to removal of directors and amendments of the
Articles of Incorporation and By-laws, requirements concerning the filling of
board vacancies, adoption of Florida's Control Share Acquisition Act,
elimination of shareholder action by written consent, creation of a class of
"blank check" preferred stock and an increase in the percentage of shareholder
votes required to call a special meeting of shareholders. The Company also has
adopted and implemented a Shareholder Rights Agreement that will expire by its
terms on September 20, 2004 pursuant to which each share of Common Stock has
attached to it a right to purchase a share of preferred stock under certain
circumstances. These provisions and agreements are intended to encourage a
person interested in acquiring the Company to negotiate with, and to obtain the
approval of, the Board of Directors in connection with such a transaction.
However, certain of these provisions and agreements may discourage a future
acquisition of the Company, including an acquisition in which shareholders
might otherwise receive a premium for their shares. As a result, shareholders
who might desire to participate in such a transaction may not have the
opportunity to do so. See "Description of Capital Stock."

<PAGE> 19

USE OF PROCEEDS

All proceeds from the sale of the Shares offered hereby will go to
Concurrent. The Company will not receive any proceeds from the sale of Shares
registered hereunder.

THE SELLING SHAREHOLDER

The Shares offered hereby are held by, and offered for the account of,
Concurrent Computer Corporation, 2 Crescent Place, Oceanport, New Jersey 07757
(Telephone number: (908) 870-4779).

In connection with the Real-time Sale, the Company issued to Concurrent
683,178 shares of Common Stock. See "Recent Events" and "Certain
Transactions." One-half of such shares were included in a Registration
Statement on Form S-3 (Registration No. 333-04407), which was filed with the
SEC on May 23, 1996 and relates to an underwritten public offering of 2,500,000
shares of Common Stock of the Company (approximately 1,800,000 of which are
offered by the Company and approximately 700,000 of which are offered by
certain selling shareholders, including Concurrent). Such public offering has
not been concluded as of the date hereof; shares of Common Stock offered
thereby will be sold only in connection with a prospectus relating to such
shares (this Prospectus is not such a prospectus). The remaining 341,589
shares of Common Stock of the Company issued to Concurrent in connection with
the Real-time Sale are offered hereby and have been registered on the
Registration Statement of which this Prospectus forms a part. Upon the
successful completion of the Company's underwritten public offering and upon
sale of all Shares offered hereby, Concurrent will own no shares of the Company
other than those shares that Concurrent may purchase from time to time in open
market transactions.

<PAGE> 20

PLAN OF DISTRIBUTION

The Shares will be offered and sold by Concurrent for its own account. The
Company will not receive any proceeds from the sale of the Shares pursuant to
this Prospectus. The Company has agreed to pay the expenses of registration of
the Shares, including legal and accounting fees.

Concurrent may choose to sell the Shares offered hereby at any time in the
future. The Company intends to maintain the effectiveness of its registration
of the Shares until June 30, 1999 (as such period may be extended under certain
circumstances, as provided in the Share Holding Agreement) during which time
Concurrent may choose to sell the Shares by use of one or more of the
distribution methods discussed below.

The distribution of the Shares by Concurrent is not pursuant to any
underwriting agreement. Any or all of the Shares offered hereby may be offered
and sold to purchasers directly by or on behalf of Concurrent from time to time
in the over-the-counter market, in privately negotiated transactions, or
otherwise at prices prevailing in such market or as may be negotiated at the
time of sale. The Shares may also be publicly offered through agents,
underwriters or dealers. In such event Concurrent may enter into agreements
with respect to any such offering. Such underwriters, dealers or agents may
receive compensation in the form of underwriting discounts, concessions or
commissions from Concurrent and/or the purchasers of the Shares. Concurrent
and any such underwriters, dealers or agents that participate in the
distribution of such Shares may be deemed to be underwriters, and any profit on
the sale by them may be deemed to be underwriting discounts and commissions
under the Securities Act. Any such underwriters, dealers and agents may also
engage in transactions with, and perform services for, the Company. At the
time a particular offer of the Shares is made, to the extent required, a
supplement to this Prospectus will be distributed that will set forth the
aggregate number of Shares being offered, and the terms of the offering,
including the public offering price thereof, the name or names of any
underwriters, dealers or agents, any underwriting discounts commissions and
other items constituting compensation from, and the resulting net proceeds to,
Concurrent, any discounts, commissions or concessions allowed or reallowed or
paid to dealers and, if applicable, the purchase price to be paid by an
underwriter for Shares purchased from Concurrent.

In order to comply with the securities laws of certain states, sales of
Shares to the public in such states may be made only through broker-dealers who
are registered or licensed in such states. Sales of Shares must also be made
by Concurrent in compliance with other applicable state securities laws and
regulations.

Under the terms of the Share Holding Agreement, the Company has agreed to
indemnify Concurrent and Concurrent's officers, directors, agents and
employees, against certain liabilities that may be incurred in connection with
the sale of Shares under this Prospectus. The terms of the Share Holding
Agreement also provide for rights of contribution if such indemnification is
not available. See "Certain Transactions."

Concurrent is not restricted as to the price or prices at which it may sell
its Common Stock. Sales of Common Stock at less than the market prices thereof
may depress the market price of the Common Stock. Concurrent is a party to the
Share Holding Agreement with Concurrent relating to the Shares offered hereby
that contains certain limitations on the sales of Common Stock held by
Concurrent. Exceptions to such limitations include, but are not limited to,
sales in an amount of less than 5% of the outstanding securities of any class
of stock of the Company (and for these purposes sales in open market
transactions that are not intentionally planned by the seller to assist any
person in acquiring more than 5% of the outstanding securities of any class of
stock of the Company shall be permitted). The Share Holding Agreement provides
that Concurrent may pledge the Common Stock to a bank or other lending
institution (each, a "Pledgee") to secure borrowings or other indebtedness as
extended from time to time, provided that as a condition to such pledge, (i)
the Pledgee shall agree in writing not to sell, transfer or otherwise dispose
of the securities pledged to it other than pursuant to an effective
registration statement on Form S-3 with respect to the disposition of such
securities or an applicable exemption from registration under the Securities
Act, (ii) the Pledgee shall agree in writing that such securities, and (iii)
all certificates representing securities pledged to such Pledgee shall bear an
appropriate restrictive legend subtantially as set forth in the Share Holding
Agreement. Notwithstanding the above restrictions, sales of a significant
number of shares of Common Stock at the same time may have an adverse effect on
the market price of the Common Stock.

<PAGE> 21

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma financial statements have been prepared to
give effect to the Real-time Sale. See "Certain Transactions." These financial
statements do not purport to represent what the results of operations or
financial position actually would have been had the Real-time Sale occurred on
the dates when they are reflected to have occurred in the pro forma financial
statements, or to project the results of operations or financial condition for
any future period or date.

The pro forma condensed consolidated statements of operations for the year
ended September 30, 1995 and for the six months ended March 30, 1996 have been
prepared assuming the Real-time Sale occurred as of the beginning of each of
the respective periods. The pro forma condensed consolidated statement of
operations for the year ended September 30, 1995 includes the Company's equity
interest in the losses of Concurrent for the year ended June 30, 1995. The pro
forma condensed consolidated statement of operations for the six months ended
March 30, 1996 includes the Company's equity interest in the losses of
Concurrent for the six months ended March 31, 1996. The pro forma condensed
consolidated balance sheet at March 30, 1996 has been prepared assuming the
Real-time Sale had occurred as of that date.

The pro forma condensed financial statements should be read in conjunction
with (i) the consolidated financial statements of the Company incorporated by
reference in this Prospectus and (ii) the financial statements related to the
Company's Trusted Systems Division appearing elsewhere in this Prospectus. The
financial statements related to the Company's Trusted Systems Division exclude
corporate assets and liabilities not specifically identifiable to the division.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<PAGE> 22
HARRIS COMPUTER SYSTEMS CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 30, 1996

<TABLE>
<CAPTION>
HARRIS LESS OTHER
HISTORICAL REAL-TIME PRO FORMA
CONSOLIDATED BUSINESS(a) ADJUSTMENTS PRO FORMA
------------ ----------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Sales
Equipment . . . . . . . . . . . . . . . . . . . . . . . $18,942 $(14,765) $ 4,177
Maintenance . . . . . . . . . . . . . . . . . . . . . . 6,622 (6,404) 218
------- -------- -------
Total sales . . . . . . . . . . . . . . . . . . . . . . . 25,564 (21,169) 4,395

Cost of sales
Equipment . . . . . . . . . . . . . . . . . . . . . . . 10,051 (7,228) 2,823
Maintenance . . . . . . . . . . . . . . . . . . . . . . 3,279 (3,187) 92
------- -------- -------
Total cost of sales . . . . . . . . . . . . . . . . . . . 13,330 (10,415) 2,915
------- -------- -------
Gross profit . . . . . . . . . . . . . . . . . . . . . . 12,234 (10,754) 1,480
Operating expenses
Research and development . . . . . . . . . . . . . . . 3,580 (3,003) 577
Selling, general and administrative expenses . . . . . 11,266 (8,054) 154 (b) 3,366
Transaction expenses . . . . . . . . . . . . . . . . . 820 -- 820
------- -------- ----- -------
Total operating expenses . . . . . . . . . . . . . . . . 15,666 (11,057) 154 4,763
------- -------- ----- -------
Operating loss . . . . . . . . . . . . . . . . . . . . . (3,432) 303 (154) (3,283)
Equity interest in losses of Concurrent . . . . . . . . . (141)(c) (141)
Dividends on Concurrent Preferred Stock . . . . . . . . . 51 (d) 51
Interest income . . . . . . . . . . . . . . . . . . . . . 155 (129) 26
Other expense . . . . . . . . . . . . . . . . . . . . . . 2 (2) --
------- -------- ----- -------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . $(3,275) $ 172 $(244) $(3,347)
======= ======== ===== =======
Net loss per common share . . . . . . . . . . . . . . . . $(.55) $(.50)
Weighted average number of common shares outstanding . . 5,948 6,631
</TABLE>

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

The following unaudited pro forma adjustments were made to the Company's
historical condensed consolidated statements of operations for the six months
ended March 30, 1996 to give effect to the Real-time Sale as if it had occurred
as of the beginning of such period:

(a) To subtract the operating results of the Company's Real-time Business.
(b) To record the amortization of compensation for the Common Stock granted
to Messrs. Siegel and Dunleavy in consideration for non-competition
agreements between each of them and the Company. The amount represents
the pro-rated amortization expense over five years.
(c) To record the Company's equity interest in the net losses of Concurrent
based on its percentage ownership of Concurrent Common Stock.
(d) To record preferred stock dividends on Concurrent Preferred Stock
received as partial consideration for the Real-time Sale.

<PAGE> 23
HARRIS COMPUTER SYSTEMS CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1995

<TABLE>
<CAPTION>
HARRIS LESS OTHER
HISTORICAL REAL-TIME PRO FORMA
CONSOLIDATED BUSINESS(a) ADJUSTMENTS PRO FORMA
------------ ----------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Sales
Equipment . . . . . . . . . . . . . . . . . . . . . . . $31,184 $(26,650) $ 4,534
Maintenance . . . . . . . . . . . . . . . . . . . . . . 13,927 (13,644) 283
------- -------- -------
Total sales . . . . . . . . . . . . . . . . . . . . . . . 45,111 (40,294) 4,817

Cost of sales
Equipment . . . . . . . . . . . . . . . . . . . . . . . 18,550 (15,549) 3,001
Maintenance . . . . . . . . . . . . . . . . . . . . . . 7,214 (7,075) 139
------- -------- -------
Total cost of sales . . . . . . . . . . . . . . . . . . . 25,764 (22,624) 3,140
------- -------- -------
Gross profit . . . . . . . . . . . . . . . . . . . . . . 19,347 (17,670) 1,677
Operating expenses
Research and development . . . . . . . . . . . . . . . 7,903 (7,068) 835
Selling, general and administrative expenses . . . . . 22,984 (18,985) 308 (b) 4,307
------- -------- -------
Total operating expenses . . . . . . . . . . . . . . . . 30,887 (26,053) 308 5,142
------- -------- ------- -------
Operating loss . . . . . . . . . . . . . . . . . . . . . (11,540) 8,383 (308) (3,465)
Equity interest in losses of Concurrent . . . . . . . . . (1,850)(c) (1,850)
Dividends on Concurrent Preferred Stock . . . . . . . . . 203 (d) 203
Interest income . . . . . . . . . . . . . . . . . . . . . 456 (407) 49
Other expense . . . . . . . . . . . . . . . . . . . . . . (4) 4 0
------- -------- ------- -------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . $(11,088) $ 7,980 $(1,955) $(5,063)
======== ======== ======= =======
Net loss per common share . . . . . . . . . . . . . . . . $(1.88) $(.77)
Weighted average number of common shares outstanding . . 5,911 6,595
</TABLE>

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

The following unaudited pro forma adjustments were made to the Company's
historical condensed consolidated statements of operations for the year ended
September 30, 1995 to give effect to the Real-time Sale as if it had occurred
as of the beginning of such period:

<PAGE> 24

HARRIS COMPUTER SYSTEMS CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
MARCH 30, 1996

<TABLE>
<CAPTION>
HARRIS LESS OTHER
HISTORICAL REAL-TIME PRO FORMA
CONSOLIDATED BUSINESS(a) ADJUSTMENTS PRO FORMA
------------ ----------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . $ 1,307 $ (1,307) $ --
Concurrent Common Stock available for sale . . . . . . . 21,400 (b) 21,400
Accounts receivable . . . . . . . . . . . . . . . . . . . 15,335 (12,709) 2,626
Inventories . . . . . . . . . . . . . . . . . . . . . . . 6,381 (6,294) 87
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 660 1,540 (c) 1,793
------- ------
(407)
Total current assets . . . . . . . . . . . . . . . . 23,683 25,906

Property, plant and equipment . . . . . . . . . . . . . . 5,912 (4,878) 1,034
Capitalized software . . . . . . . . . . . . . . . . . . 8,135 (5,409) 2,726
Concurrent Preferred Stock available for sale . . . . . . 5,384 (b) 5,384
Other assets . . . . . . . . . . . . . . . . . . . . . . 822 (792) 30
------- ------
Total assets . . . . . . . . . . . . . . . . . . . . $38,552 $35,080
======= =======
Accounts payable . . . . . . . . . . . . . . . . . . . . 4,565 (4,100) 465
Deferred revenue . . . . . . . . . . . . . . . . . . . . 628 (591) 37
Accrued expenses . . . . . . . . . . . . . . . . . . . . 4,219 (3,326) 2,200 (d) 3,093
------- ------
Total current liabilities . . . . . . . . . . . . . . 9,412 3,595
Equity . . . . . . . . . . . . . . . . . . . . . . . . . 29,140 1,540 (c) 31,485
(2,200) (d)
(8,459) (e)
11,464 (f)
------- -------
Total liabilities and equity . . . . . . . . . . . . $38,552 $35,080
======= =======
</TABLE>

NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

The following unaudited pro forma adjustments were made to the historical
condensed consolidated balance sheet as of March 30, 1996 to give effect to the
Real-time Sale as if it had occurred as of such date:
(a) To reflect the sale of the assets and liabilities of the Company's
Real-time Business.
(b) To reflect the receipt of Concurrent Common Stock and Concurrent
Preferred Stock valued at $21,400 and $5,384, respectively, as part of
the Real-time Sale. The value of the Concurrent Common Stock is the
average of the closing prices for Concurrent Common Stock from May 1
to May 7, 1996. The value of Concurrent Preferred Stock is based on the
assumptions (i) that no cash dividends will be paid until the redemption
of the Concurrent Preferred Stock; (ii) that such redemption will occur
in 2006; and (iii) that the value of Concurrent Preferred Stock is
discounted at a rate of 14% per annum. The Share Holding Agreement
contains restrictions on the volume of sales of Concurrent Common Stock
by the Company in certain circumstances.
(c) To reflect the issuance of shares of Common Stock to Mr. Siegel (78,000
shares) and Mr. Dunleavy (13,800 shares) at $16.78 per share (the
average of the closing prices from May 1 through May 7, 1996) in
consideration for their respective five-year non-competition agreements
with the Company.
(d) To reflect the accrual of estimated expenses relating to the Real-time
Sale of $2,200.
(e) To reflect the book loss on the Real-time Sale; such amount is subject
to change based on the value of the Concurrent Common Stock
Consideration and Concurrent Preferred Stock at the time of the closing
of the Real-time Sale.
(f) To reflect the issuance of 683,178 shares of Common Stock valued at
$11,464 to Concurrent as part of the Real-time Sale. The value of the
stock is the average of the closing prices of the Common Stock from May
1 through May 7, 1996.

<PAGE> 25
SELECTED FINANCIAL DATA

The following table sets forth certain selected historical financial data
for the Company's Trusted Systems Division, which exclude the Company's
corporate assets and liabilities not specifically identifiable to the division.
The financial data for the six months ended March 30, 1996 and for the fiscal
year ended September 30, 1995 have been derived from audited financial
statements of the Company for such periods audited by KPMG Peat Marwick LLP.
Such data have been derived from, and should be read in conjunction with, the
audited financial statements and other financial information, including the
notes thereto, appearing elsewhere in this Prospectus. The statement of
operations data set forth for the six months ended March 30, 1996 are not
necessarily indicative of results for the entire year. Financial data for the
six months ended March 31, 1995 and for the fiscal years ended June 30, 1994
and 1993 has been derived from unaudited financial statements that include all
adjustments that the Company considers necessary for a fair presentation of the
financial data set forth therein, in accordance with generally accepted
accounting principles. The financial data included herein may not necessarily
reflect the results of operations of the Company in the future or what the
results of operations of the Trusted Systems Division would have been had it
been a separate, stand-alone entity during the period covered.

<TABLE>
<CAPTION>
Six Months Ended Fiscal Fiscal
-------------------- Year Ended Year Ended
March 30, March 31, Sept. 30, June 30,
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . $ 4,395 $ 3,489 $ 4,817 $ 8,464 $ 5,974

Cost of sales . . . . . . . . . . . . . . . 2,915 2,103 3,140 3,842 2,992
------- ------- ------- ------- -------
Gross profit . . . . . . . . . . . . . . . 1,480 1,386 1,677 4,622 2,982
Selling, general and administrative . . . . 3,330 1,879 3,999 3,677 2,467
Research and development . . . . . . . . . 578 430 835 816 698
------- ------- ------- ------- -------
Operating income (loss) . . . . . . . . . . (2,428) (923) (3,157) 129 (183)
Interest income (expense), net . . . . . . 26 18 49 (1) --

Other income (expense), net . . . . . . . . (21) 5 -- 7 5
------- ------- ------- ------- -------
Net income (loss) before income tax . . . . (2,423) (900) (3,108) 135 (178)
Income tax expense (benefit) . . . . . . . -- (173) -- 26 (137)
------- ------- ------- ------- -------
Net income (loss) . . . . . . . . . . . . . $(2,423) $ (727) $(3,108) $ 109 $ (41)
======= ======= ======= ======= =======
</TABLE>

<PAGE> 26

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

The following information contains forward-looking statements that involve
risks and uncertainties. The Company's actual results may differ significantly
from the results discussed in the forward-looking statements. Factors that
might cause such a difference include, but are not limited to, those discussed
in "Risk Factors." References to the Company's results of operations from
October 7, 1994 are to the Company's Trusted Systems Division and, prior to
such time, to the Company's network security business and operations as part of
the Computer Systems Division of Harris Corporation. The following information
should be read in conjunction with the financial statements of the Company's
Trusted Systems Division, including the notes thereto, appearing elsewhere in
this Prospectus. See "Selected Financial Data."

OVERVIEW

The Company is a leading developer and marketer of commercial network
security products designed to protect data on computer networks from
unauthorized users. The Company began marketing its CX/SX secure operating
system in 1989 and its LAN/SX secure networking software in 1990. In 1993,
these products received a B1 rating from the NCSC, which qualified the products
for a number of government and civilian applications and resulted in increased
marketability of such products. Until the introduction of the CyberGuard
Firewall during the first quarter of fiscal year 1995, the Company's sales were
attributable exclusively to sales of its secure operating system and secure
networking software on Night Hawk computer platforms, and largely to government
customers. During fiscal year 1993 and 1994, the Company derived substantial
revenues from two contracts: a multi-unit government contract with the British
Ministry of Defence ("British MOD") and a secure operating system porting
contract with IBM.

In May 1995, in response to initial and anticipated market acceptance of the
CyberGuard Firewall, the Company established a sales force separate from the
sales force of its former Real-time Business to focus on the Company's network
security products. At the same time, the Company began an aggressive expansion
of indirect sales channels to market its products in the United States and
internationally and since May 1995 has formed relationships with more than 30
VARs, distributors and manufacturers' representatives. As a result of these and
other efforts since such time, which coincided with greater market acceptance
of firewall products in general, sales of the Company's network security
products have shown strong quarter-to-quarter increases. See "Quarterly
Comparisons" below. However, given the Company's short operating history in the
commercial network security market, the Company believes that period-to-period
comparisons of its financial results are not necessarily meaningful and should
not be relied upon as an indicator of future performance.

Following the Real-time Sale, the Company intends to increase its marketing
staff to promote its products and also to continue to invest a significant
amount of resources in the continued development of the CyberGuard
technologies, including software-only products that support other computer
platforms and networks. The Company's planned levels of investment are based on
an expectation of higher revenue from increased product sales. As a result, net
income for a given period could be disproportionately affected by any
reductions in sales. See "Use of Proceeds," "Business -- Strategy" and "Risk
Factors."

Prior to June 30, 1996, the Company's operations included the Real-time
Business, which provided significant cash flows and certain economies of scale
with respect to sales, general and administrative costs. Many of the Company's
sales and administrative personnel and facilities were transferred to
Concurrent in connection with the Real-time Sale. As a result, the Company
expects to incur significant costs typically associated with new operating
companies. The Company has entered into a Shared Services Agreement effective
June 30, 1996 with Concurrent, which expires December 30, 1996, pursuant to
which Concurrent will provide certain administrative and personnel-related
services for the Company. The Company believes that it receives these services
at costs equal to or below that which the Company would incur if the Company
were to provide these services itself. Upon expiration of the Shared Services
Agreement, the Company will be required to provide these services for itself,
which may increase the Company's operating expenses. Also, the Company
currently leases its office and development facilities from Concurrent at
below-market rates. The lease terminates at the earlier of June 1997 or upon 90
days' written notice from Concurrent. Upon such termination the Company
anticipates its lease costs to increase. The Company expects such additional
costs to be offset in part by increased sales; however, there can be no
assurance that such additional

<PAGE> 27

sales will be generated. The failure of the Company to increase sales
sufficiently to offset these additional expenses would have a material adverse
effect on the Company's business, financial condition and results of
operations.

The Company expects to report certain charges in the quarter ending June 30,
1996. The Company estimates that it will incur a loss of approximately $8.5
million on the sale of the Real-time Business (based on an assumed market price
of Concurrent Common Stock of $2.14 per share); approximately $0.4 million in
charges related to certain grants of Common Stock; and approximately $1.4
million in additional expenses related to the Real-time Sale. In addition, the
Company will report approximately 23% of any losses reported by Concurrent in
the same period. See "Certain Transactions."

The Company was incorporated in August 1994 for the purpose of consolidating
in a corporate subsidiary the activities of the former Computer Systems
Division performed by Harris Corporation and its subsidiary, Lanier Worldwide,
Inc. ("Lanier"). The Harris Computer Systems Division had been established in
1974. On October 7, 1994, all of the Company's Common Stock was distributed on
a pro rata basis to Harris Corporation shareholders. In May 1995 the Company
separated its business operations into two units: the Real-time Business and
the Trusted Systems Division. Effective June 30, 1996, the Company has sold to
Concurrent its Real-time Business, representing approximately 82% of the
Company's total assets as of March 30, 1996. See "Certain Transactions." The
Company's focus is now exclusively on the development and marketing of network
security products. As a result of the Real-time Sale, the Company's assets
include Concurrent Common Stock and Concurrent Preferred Stock, the value of
which may vary from time to time. See "Risk Factors -- Fluctuation in Market
Value of Concurrent Common Stock and Concurrent Preferred Stock Held by the
Company."

RESULTS OF OPERATIONS

The following table sets forth certain items in the Trusted Systems Division
statements of operations as a percentage of sales on a historical basis for the
six-month periods ended March 30, 1996 and March 31, 1995 and for the fiscal
years ended September 30, 1995 and June 30, 1994 and 1993.

Fiscal
Six Months Ended Year Ended
-------------------- Fiscal June 30,
March 30, March 31, Year Ended -------------------
1996 1995 Sept. 30, 1995 1994 1993
--------- -------- -------------- ------- -------
<S> <C> <C> <C> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . 100% 100% 100% 100% 100%
Cost of sales . . . . . . . . . . . . . . . 66 60 65 45 50
--- --- --- --- ---
Gross profit . . . . . . . . . . . . . . . 34 40 35 55 50

Operating expenses:
Selling, general and administrative . . . 76 55 84 43 41
Research and development . . . . . . . . 13 12 17 10 12
--- --- --- --- ---
Total operating expenses . . . . . . . . . 89 67 101 53 53

Operating income (loss) . . . . . . . . . . (55) (27) (66) 2 (3)
Interest/other income (expense) . . . . . . -- 1 1 -- --
--- --- --- --- ---
Net income (loss) before taxes . . . . . . (55) (26) (65) 2 (3)

Income tax expense . . . . . . . . . . . . -- (5) -- -- (2)
--- --- --- --- ---
Net income (loss) . . . . . . . . . . . . . (55)% (21)% (65)% 2% (1)%
=== === === === ===
</TABLE>

Six Months Ended March 30, 1996 Compared to Six Months Ended March 31, 1995

Net Sales. Net sales consist primarily of product sales, systems
integration services and sales related to porting the Company's secure
operating system. Net sales increased $0.9 million to $4.4 million for the six
months ended

<PAGE> 28

March 30, 1996 compared to the same period ended March 31, 1995. The 1996
period included sales of 91 network security firewalls compared to 62 such
units in the 1995 period. The six months ended March 31, 1995 included a $1.9
million sale (or 54% of total sales) to one government-related customer for 43
units; the six month period ended March 30, 1996 included sales to the British
MOD of approximately $0.6 million (or 14% of total sales). There were no sales
in the six months ended March 30, 1996 for more than five units to any one
customer. The increase in product sales is the result of increased acceptance
in the commercial marketplace for the CyberGuard Firewall. During the six
months ended March 30, 1996, 74% of the Company's sales were to commercial
customers, compared to 35% for the same period of fiscal year 1995.

International sales increased $1.1 million to $2.0 million for the six
months ended March 30, 1996. Domestic sales decreased $0.2 million to $2.4
million. The domestic sales figure for the period ended March 31, 1995
includes $1.9 million in sales to one domestic customer.

Gross Profit. The Company's gross profit increased $0.1 million to $1.5
million for the period ended March 30, 1996 from the period ended March 31,
1995. The Company's gross margin decreased to 33.7% for the period ended March
30, 1996 from 39.7% for the 1995 period. This decrease in gross margin is the
result of the change in the mix of the Company's product sales to include a
greater percentage of CyberGuard Firewalls, which have significantly lower
gross margin than the Company's secure operating system and secure networking
software that, until the first quarter of fiscal year 1995, represented the
Company's primary products.

Net Income. The Company's operating expenses increased $1.6 million to $3.9
million during the six months ended March 30, 1996, compared to the same period
in the prior year, due to an increase in selling, general and administrative,
and research and development expenses. These increased expenses were incurred
to enhance and market the CyberGuard Firewall in the commercial network
security market. The Company also incurred expenses of $0.1 million in
connection with the Real-time Sale. As a result primarily of these expenditures
and costs, the Company incurred a loss of $2.4 million for the period ended
March 30, 1996, compared to a loss of $0.7 million for the period ended March
31, 1995.

Fiscal Year Ended September 30, 1995 Compared to Fiscal Year Ended June 30,
1994

Net Sales. Net sales decreased to $4.8 million for fiscal year 1995
compared to $8.5 million for fiscal year 1994. Sales in fiscal year 1994
included $5.4 million in sales of the Company's secure operating system to the
British MOD for a project involving the deployment of secure office automation
systems and $1.6 million in sales of the Company's secure operating system to
IBM. Sales in fiscal year 1995 included sales of $1.9 million (or 39% of total
sales) to a government-related customer and sales of approximately $0.7 million
(or 14% of total sales) related to porting the Company's secure operating
system to Groupe Bull S.A.'s Escala workstation. Sales of CyberGuard Firewalls,
introduced during the first quarter of fiscal year 1995, represented $2.5
million in sales (including sales of $1.9 million to the government-related
customer). During the fiscal year ended September 30, 1995, sales to customers
in commercial markets accounted for 42% of the Company's sales.

Overall domestic sales were 3.3 million and $3.0 million for the fiscal
years 1995 and 1994, respectively. International sales decreased $3.9 million
to $1.5 million for fiscal year 1995. The higher international sales for fiscal
year 1994 were attributable to the contract with the British MOD for sales of
the Company's secure operating system. International sales in fiscal year 1995
related primarily to sales of the CyberGuard Firewall. International sales
represented approximately 31% of total sales, compared to approximately 64% in
fiscal year 1994; the decrease is attributable to the British MOD contract that
ended during fiscal year 1994.

Gross Profit. The Company's gross profit decreased $2.9 million to $1.7
million in fiscal year 1995. This decrease is the result of lower sales and
significantly lower profit margins for CyberGuard Firewalls when compared to
sales of secure operating systems and secure networking software. Gross margin
decreased to 34.8% for fiscal year 1995 from 54.6% for fiscal year 1994.

Net Income. The Company experienced a net loss of $3.1 million for fiscal
year 1995, compared to net income of $0.1 million for fiscal year 1994. The net
loss is the result of lower product sales and gross margins and increased
operating expenses incurred to establish sales and marketing programs for the
commercial introduction of the CyberGuard Firewall.

<PAGE> 29
Fiscal Year Ended June 30, 1994 Compared to Fiscal Year Ended June 30, 1993

Net Sales. Net sales increased to $8.5 million for fiscal year 1994 from
$6.0 million for fiscal year 1993. Sales in fiscal years 1994 and 1993 precede
the introduction of the CyberGuard Firewall and are primarily attributable to
the contract with the British MOD ($5.4 million and $4.3 million in fiscal
years 1994 and 1993, respectively) and the contract with IBM ($1.6 million and
$1.0 million in fiscal years 1994 and 1993, respectively).

Sales to domestic customers increased to $3.0 million from approximately
$1.6 million in fiscal year 1993. During fiscal year 1994, the NCSC rated the
Company's secure operating system and networking software at a B1 level, which
contributed in large part to the increase in sales. The Company's contract with
IBM accounted for approximately $0.6 million of the increase in domestic sales.
International sales increased to $5.4 million from $4.3 million as product
shipments increased to complete the British MOD contract.

Gross Profit. Gross profit increased $1.6 million from approximately $3.0
million in fiscal year 1993 to $4.6 million in fiscal year 1994. Gross margin
increased to 54.6% from 49.9% as a result of increased sales. The increase in
gross margin is also attributable to the initial contract start-up expenses for
the IBM and British MOD contracts that were incurred during fiscal year 1993.

Net Income. Total indirect expenses increased $1.3 million to $4.5 million
for fiscal year 1994 from $3.2 million for fiscal year 1993. Selling, general
and administrative expenses increased $1.2 million to $3.7 million for fiscal
year 1994 as the Company marketed its certified product to government agencies
and prime contractors around the world. The increase in sales offset by an
increase in selling, general and administrative expenses increased net income
to $0.1 million from a net loss of $41,000 in fiscal year 1993.

LIQUIDITY AND CAPITAL RESOURCES

The Company's historical uses of cash have been to fund net losses from
operations, machinery and equipment acquisitions and software development
costs. Capital expenditures for the six months ended March 30, 1996 and the
fiscal year ended September 30, 1995 were $0.4 million and $0.6 million
respectively. Capitalized software development costs were $1.4 million and $0.7
million, respectively, during the same periods. The Company has funded these
cash requirements from its working capital and cash flow provided from its
Real-time Business. As a result of the Real-time Sale, it is expected that cash
flows from operations will be insufficient to satisfy the Company's ongoing
cash requirements.

The future liquidity of the Company will be affected by numerous factors,
including sales volumes, gross margins, the levels of selling, general and
administrative expenses required to fully implement product sales to commercial
customers, levels of required capital expenditures and access to external
sources of financing. The Company expects expenditures to increase commensurate
with increased development and marketing of CyberGuard Firewalls and other
network security products. Estimated cash expenditures relating to the
Real-time Sale are $2.2 million. The Company also anticipates certain one-time
expenditures approximating $0.7 million to $0.8 million for leasehold
improvements and related expenses as the Company relocates to a new facility
prior to June 1997. Leasehold expense and general and administrative expenses
also may increase upon the termination of the Shared Services Agreement.

A principal source of liquidity will be the Concurrent Common Stock
Consideration and the Concurrent Preferred Stock. The Company may obtain a
line of credit that is likely to be secured by all of its assets (including
these Concurrent securities). Additionally, immediately following the Real-time
Sale, the Company intends to sell a portion of the Concurrent Common Stock. The
Company does not intend to be a long-term holder of the remaining Concurrent
securities. The Company's ability to sell or pledge these Concurrent
securities will be subject to limitations imposed in the Share Holding
Agreement and in any line of credit obtained. See "Certain Transactions --
Share Holding Agreement." These limitations and conditions may affect the
Company's flexibility in generating cash through sales of the Concurrent Common
Stock Consideration and the Concurrent Preferred Stock and may require the
Company to seek alternative sources of cash, including borrowings and equity
sales. In addition, the timing of such sales may be affected by other factors
beyond the Company's control, such as general market conditions and changes in
the business, operations or prospects of Concurrent. At present, the Company is
attempting to sell 1,500,000 to 4,000,000 shares of Concurrent Common Stock.
The Company expects that, given the size of the block of common stock to be
sold and certain restrictions on transferability thereon, such stock may be
sold at a discount of up to approximately 20% from current trading prices.
The Company is seeking to obtain a line of credit with one or more financial
institutions. Any line of credit is likely to be secured by all the assets of
the Company (including all or a substantial part of the Concurrent Common Stock
Consideration and the Concurrent Preferred Stock) and, if drawn upon, may be
subject to, among other things, a number of financial ratios, levels of cash
flow and net worth, and restrictions on indebtedness, asset dispositions, and
investments and corporation transactions. There can be no assurance, however,
that any line of credit will be available on acceptable terms. In addition, on
May 23, 1996, the Company filed a Registration Statement relating to the public
offering of approximately 1,800,000 shares of Common Stock to be offered by
the Company. Such public offering, if completed and successful (of which there
can be no assurance), is expected to serve as an additional source of
liquidity for the Company.

If adequate funds are not available, the Company may be required to curtail
certain activities, including product development, marketing and sales

27
<PAGE> 30

activities. Although there can be no assurance that additional financing will
be available to the Company on acceptable terms, the Company believes that the
net proceeds of this offering together with proceeds from sales or pledges of
the Concurrent securities and any additional financing will be sufficient to
satisfy the Company's operations and capital requirements for the foreseeable
future.

QUARTERLY COMPARISONS

The following table presents selected financial information for the
three-month periods indicated. The information presented is derived from
unaudited financial information of the Company that, in the opinion of
management, reflects all adjustments necessary for a fair presentation of such
data. Data for each quarter is not necessarily indicative of the results that
may be expected for any other quarterly period or for the entire fiscal year.

<TABLE>
<CAPTION>
FISCAL YEAR 1995
---------------------------------------------------------
DECEMBER 29, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 29, MARCH 30,
1994 1995 1995 1995 1995 1996
----------- --------- -------- ------------- ------------ ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Product sales
Domestic . . . . . . . . . . . . $ 442 $2,001 $ 210 $ 404 $ 663 $ 1,494
International . . . . . . . . . . 137 777 137 426 1,082 938
----- ------ -------- ------- ------- -------
Total product sales . . . . . . . . 579 2,778 347 830 1,745 2,432
Other . . . . . . . . . . . . . . . 66 66 84 67 80 138
----- ------ -------- ------- ------- -------
Total sales . . . . . . . . . . . . 645 2,844 431 897 1,825 2,570
Cost of sales
Product sales . . . . . . . . . . 402 1,636 328 635 1,084 1,739
Other . . . . . . . . . . . . . . 32 33 42 32 36 56
----- ------ -------- ------- ------- -------
Total cost of sales . . . . . . . . 434 1,669 370 667 1,120 1,795
----- ------ -------- ------- ------- -------
Gross profit . . . . . . . . . . . 211 1,175 61 230 705 775
Operating expenses
Research and development . . . . 219 211 156 250 307 271
Selling, general and
administrative . . . . . . . . . 497 1,382 834 1,285 1,602 1,728
----- ------ -------- ------- ------- -------
716 1,593 990 1,535 1,909 1,999
----- ------ -------- ------- ------- -------
Total operating expenses . . . . .

Operating loss . . . . . . . . . . (505) (418) (929) (1,305) (1,204) (1,224)
Other income (expense) . . . . . . -- 5 (4) (1) -- (21)
Interest income . . . . . . . . . . 7 11 8 23 13 13
----- ------ -------- ------- ------- -------
Net loss before income tax . . . . (498) (402) (925) (1,283) (1,191) (1,232)
Income tax expense (benefit) . . . (173) -- 173 -- -- --
----- ------ -------- ------- ------- -------
Net loss . . . . . . . . . . . . . $(325) $ (402) $(1,098) $(1,283) $(1,191) $(1,232)
===== ====== ======= ======= ======= =======
</TABLE>

<PAGE> 31

BUSINESS

THE FOLLOWING INFORMATION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY
FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT
MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED
IN "RISK FACTORS." REFERENCES TO THE "COMPANY" WITH RESPECT TO PERIODS BEFORE
THE REAL-TIME SALE ARE TO THE COMPANY'S TRUSTED SYSTEMS DIVISION.

OVERVIEW

The Company is a leading developer and marketer of commercial network
security products designed to protect data on computer networks from access by
unauthorized users. The Company was among the first companies to establish a
business unit devoted to developing and marketing network security products. As
early as 1989 the Company had developed and begun to market an integrated
secure operating system and secure networking software solution. With the
announcement of its firewall application in 1994, the Company began offering
multi-level secure network security solutions to the commercial market through
its CyberGuard Firewall suite of products.

The Company has combined its secure operating system and secure networking
software with its firewall application to produce the CyberGuard Firewall,
which provides a barrier to unauthorized access to a customer's enterprise
network, including unauthorized access from (i) the Internet, (ii) networks of
other enterprises or (iii) other intranet users within the same enterprise
network. The CyberGuard Firewall's secure operating system and secure
networking software are designed to protect the firewall itself from attack, a
distinction not shared by most commercially available firewall products. The
superior level of security of the Company's product, together with its high
network throughput capabilities, permits the CyberGuard Firewall to address
network security markets having the most demanding performance requirements
such as the healthcare and financial services markets. The CyberGuard Firewall
is the only commercially available firewall built on integrated secure
operating system and secure networking software components that are rated B1 by
the NCSC. For information regarding NCSC security ratings, see "The CyberGuard
Solution" below.

The Company has established a broad range of channels through which to
market its products in the United States and internationally, including more
than 30 VARs, distributors and manufacturers' representatives, as well as
direct sales representatives. During the six months ended March 30, 1996,
indirect channels accounted for approximately 40% of the Company's sales of
CyberGuard Firewalls and related network security products. Sales to customers
in international markets accounted for approximately 55% of the Company's
CyberGuard Firewall sales during the same period. The Company's strategy is to
expand indirect channels to achieve a 75% indirect sales level and to broaden
international channels while maintaining a 50% sales level in the international
markets. To strengthen the commercial appeal of the CyberGuard Firewall, the
Company is currently "porting" its secure operating system, secure networking
software and firewall application from a Motorola microprocessor-based Night
Hawk computer to the more widely used Intel PC-compatible computer platform.
The Company plans to make the CyberGuard Firewall available on such platforms,
and plans to make available a software-only solution, by December 1996.

The Company is the former Computer Systems Division of Harris Corporation
("Harris") and was incorporated in August 1994 for the purposes of
consolidating such division's real-time and trusted computer businesses in a
separate corporate entity. On October 7, 1994, Harris effected a tax-free
distribution, on a pro rata basis to its shareholders, of all of the Company's
issued and outstanding capital stock. In May 1995 the Company separated its
business operations into two units: the Real-time Business and the Trusted
Systems Division, which developed network security products. Effective June 30,
1996, the Company has sold to Concurrent the assets of its real-time computer
business, representing approximately 82% of the Company's total assets. See
"Recent Events." With the completion of this transaction, the Company is now
focused solely on the business of developing and marketing firewalls and other
network security products.

INDUSTRY BACKGROUND

The Internet. Interest in computer networking changed dramatically in the
1990s with the rise in public access to the Internet. The Internet is a global
"network of networks," an interconnection of commercial, academic and

<PAGE> 32

governmental computer networks and host computers. Computers connected to the
Internet use a variety of incompatible operating systems, and in order to
communicate with each other, data is transmitted back and forth between host
computers using a standard known as Transmission Control Protocol/Internet
Protocol or TCP/IP. As of September 1995, INPUT estimated that the number of
Internet users around the world will grow from more than 53 million in 1995 to
250 million in 2000. Much of the recent growth of the Internet has been
attributed to an increase in commercial Internet access providers and
organizations seeking to advertise or provide products or services to Internet
users as well as the commercial availability of PC-based World Wide Web ("WWW")
browser software such as Netscape's Navigator. See "Risk Factors--Dependence on
the Internet and Intranets."

Intranets. In recent years, organizations have increasingly begun using the
TCP/IP protocol for their enterprise networks or using the Internet as an
inexpensive alternative to establishing their own wide area networks. An
enterprise network that uses the TCP/IP protocol is called an "intranet." An
intranet can extend internal information systems and enterprise applications to
geographically dispersed facilities, remote offices and mobile employees using
personal computers running on incompatible operating systems. Using any "web
browser," an employee can view electronic information notwithstanding the
incompatible operating systems utilized by the employee and the information
source. In many cases, different departments within the same organization can
create "home pages" used to share information among co-workers. The increasing
ability to interconnect with disparate enterprise units has increased the use
of mobile or "nomadic" computing by which users connect to enterprise networks
from remote offices and while traveling. The increasing use of the
non-proprietary TCP/IP network protocol for internal network communications is
due, in large part, to (i) the widely distributed nature of such protocol, (ii)
the fact that TCP/IP network protocol support is available on nearly all types
of computer systems currently manufactured, and (iii) cost considerations.

The Growth in the Market for Firewalls and Other Network Security Products.
Network security has historically been the focus of primarily those businesses
in security-sensitive industries such as healthcare, financial services,
insurance, telecommunications, government and others. Businesses in these
industries historically maintained a secure network environment by isolating
their networks privately and allowing only authorized users to connect to their
privately managed networks.

As popularity and use of the Internet and intranets has increased, companies
have become increasingly concerned that data collected and stored
electronically by organizations might be vulnerable to access by unauthorized
users, including certain of a company's own employees. This concern is due in
part to the fact that the TCP/IP protocol is particularly susceptible to
penetration, and, as a result, interest in and purchases of firewall software
to protect enterprise networks have increased. In February 1996, International
Data Corporation ("IDC") estimated that the worldwide firewall market would
grow from $160 million in 1995 to an estimated $987 million in 2000. As of
September 1995, INPUT estimated that by 2000 the international market for
firewall and software services will grow from 28% of the total worldwide market
to about half of the worldwide market.

The Company believes that more than half of the firewall software and
services market is related to the use of firewalls within intranets. This is
because each intranet subnet can use a firewall to protect its data from the
numerous other subnets of the same intranet, whereas firewalls for Internet
access may protect only a small number of Internet connections, often only one.
The intranet-related firewall market is generally comprised of large, often
multinational corporations that typically segment their internal networks into
a number of subnets.

Spectrum of Network Security Technologies. The network security market
consists of a large number of companies offering a range of network security
products using widely diverse technologies. Some of the broad categories of
network security products are depicted in the graphic presentation below. Each
of these approaches to network security provides varying degrees of protection,
with the most secure solution represented by having no external connections to
the network at all (depicted below as "no access") and the least secure being
one or more external connections with no attempt to provide network security
(depicted below as "full access").

[graphic]

Generally, these technologies build on each other so that the most secure
technologies can also perform the functions of the less secure ones and,
depending on price and other factors, can serve markets for such products. A
more detailed description of these technologies follows:

<PAGE> 33
- Router-Based Packet Filtering. Routers can be configured with "packet
filters," that is, devices that determine the source and destination of
the communication between networks and the type of "service" requested
(e.g., file transfer, electronic mail ("e-mail")). Packet filters,
however, are not generally considered to provide a high level of
security because they make security decisions based on the address of
the communication packet, which can be easily "spoofed."

- Proxy Application Firewalls. A level of protection beyond that offered
by a packet filtering router is provided by a "firewall," which monitors
traffic between one network and another--such as an intranet and the
Internet or between different segments of an intranet--and blocks access
to data according to predefined security parameters. Most firewalls
operate using "proxy" applications that look beyond the source and
destination of a communication and also monitor certain details
regarding the communication's content. Proxy application firewalls can
suffer from performance-related problems, such as the inability to
support the types of network service and/or network protocol to be used,
and degradation of network throughput and performance.

- Hybrid Firewalls. A hybrid firewall is a proxy application firewall
offering other security options and features, such as encryption, token
authentication and others. Encryption refers to the alteration of data
such that during the transmission of the data an attacker is unable to
see the "original" information and instead only observes what would
appear to be a random sequence of information. Token authentication
refers to a system of dynamically changing passwords. Hybrid firewall
systems generally provide the packet filtering, proxy application,
encryption and token authentication features in an integrated firewall
security product, and, as a result, represent a more complete network
security solution.

- Hybrid Firewall with Secure Operating System. The most complete
security solution is provided by a hybrid firewall with a secure
operating system and secure networking software; the Company's
CyberGuard Firewall is such a system. A secure operating system and
secure networking software form the only network security solution that
is self-protecting by requiring network communications to pass through
the firewall application and preventing penetration through the
operating system and networking software.

THE CYBERGUARD SOLUTION

The Company's secure operating system and secure networking software
technologies allow it to position the CyberGuard product suite to address the
full range of the commercial network security market. Generically speaking, a
firewall consists of a firewall application, an operating system and networking
software, each playing an important role in the receipt and processing of data
through the firewall. In standard network security products, only the firewall
application has been designed to resist penetration by an attacker, leaving the
operating system and network software unsecure. Therefore, an attacker can
penetrate a standard firewall through the unsecure operating system or
networking software. The Company's CyberGuard Firewall uses a secure operating
system and secure networking software to prevent network penetration by
requiring network communication to pass through the firewall application.

The graphic presentation below depicts the three major components of a
firewall system and demonstrates the fundamental security deficiency of an
application-only solution as compared to the CyberGuard Firewall.

[graphic]

Both the secure operating system and secure networking software are based on
multi-level security ("MLS"), that is, they restrict access to information
based on the sensitivity of the information and the access authorization of
system users. In an MLS system, a user cannot read data that has been labeled
at a level more sensitive than the security level given the user and cannot
create or modify data having a different security label. The operating system
and programs reside at a protected level that cannot be read or modified by
network users.

The Company's secure operating system and networking software have been
rated by the NCSC at a B1 level. The NCSC ratings range from D (systems with
minimal security) to A1 (systems with assured security). Certain agencies of
the United States government have incorporated the NCSC ratings into their
procurement requirements,

<PAGE> 34
and commercial users, while not having specific NCSC-rating requirements, often
look to an NCSC rating as an indication of the product's proven reliability.
The Company's CyberGuard Firewall is the only commercially available firewall
built on an integrated operating system and networking software with a rating
as high as B1. These components have also been successfully evaluated by the
Centre d'Electronique de l'Armement ("CELAR") in France and are in evaluation
in the United Kingdom against the European Information Technology Security
Evaluation Criteria ("ITSEC"). The Company's product is currently in evaluation
for the NCSC's higher B2 rating. The Company believes that systems having a
NCSC rating higher than B2 are impractical for use in commercial firewall
applications. The Company has substantially completed a two-year evaluation
process with Logica U.K. and expects to receive an E3 rating for its products
which, in the Company's opinion, will increase the marketability of the
CyberGuard Firewall in international markets. Logica U.K. is an international
industry-sponsored agency.

The Company's CyberGuard Firewall also addresses the high performance end of
the commercial network security market because the underlying operating system
and networking software were designed for demanding security environments. The
Company's secure operating system is designed to function as a high
performance, real-time operating system able to process high levels of
throughput without time-consuming failures. This same operating system
technology underlies the Company's secure networking software and firewall
technology.

The CyberGuard Firewall product is the basis for the Company's ability to
offer a complete suite of enterprise-wide security products including mobile
security applications, secure data base application, and network access control
filters.

STRATEGY

- Broaden Indirect Distribution Channel Coverage. The Company has
established a broad range of channels through which to market its
products in the United States and internationally, including more than
30 VARs, distributors and manufacturers' representatives. The Company
intends to continue to expand its indirect channels by concentrating its
marketing through indirect distribution channels, including extensive
VAR relationships. The Company attracts resellers by providing them
broad support as part of what it believes is one of the most
comprehensive reseller programs in the network security industry. During
the six months ended March 30, 1996, indirect sales channels accounted
for approximately 24% of the Company's sales; the Company's goal is to
have its indirect channels account for 75% of its sales by the end of
fiscal year 1997. The Company is actively seeking additional strategic
marketing partners in order to expand the geographic distribution of its
products.

- Capitalize on Existing International Penetration. During the first two
quarters of fiscal year 1996, the Company's international channels
accounted for 46% of the Company's revenues. The Company intends to
expand these relationships with VARs in Western and Eastern Europe and
Asia to address the international commercial firewall market. The
Company believes that the international market represents a high-growth
market.

- Pursue Selected Vertical Markets. The Company intends to continue to
focus its marketing efforts on selected vertical markets, such as
healthcare, financial services, insurance, telecommunications, and
travel, that the Company perceives as having a need for network security
due to the confidential nature of data they collect or due to the
devastating potential impact of computer "hacking." Early experience in
these vertical markets has given the Company insight necessary to
address industry specific security requirements. The Company intends to
expand on its strategic relationships, such as its alliance with Coopers
& Lybrand LLP, which has helped to accelerate sales of the CyberGuard
Firewall within the financial industry. The Company intends to pursue
these selected vertical markets both with its direct sales force and
through indirect channels such as VARs and systems integrators who
already serve such markets.

<PAGE> 35
- Broaden Product Platforms and Compatibility. The Company intends to
broaden the appeal of the Company's CyberGuard Firewall by "porting" its
secure operating system, networking software and firewall application to
the more widely used Intel-based PC compatible platforms currently
available in a wide range of multiprocessor systems. The Company further
plans to introduce products that are compatible with other network
protocols, such as Novell Inc.'s NetWare, in addition to TCP/IP. In
moving to address the widely used Intel platform and NetWare protocol,
the Company believes its solutions will more closely match the
requirements and expectations of its customers.

- Introduce Software-only Product Offerings. The Company plans to
introduce a software-only version of the CyberGuard Firewall, consisting
of an integrated operating system, networking software and base security
software, and to offer upgrades to be priced and sold separately. This
software-only product will allow the Company to competitively position
its CyberGuard Firewall product against lower-priced competitors while
maintaining or increasing its gross margins. In addition, the Company
is actively seeking strategic alliances, particularly with companies
offering encryption, token authentication and virus detection products,
with which the Company can develop new products or to enhance the
features of its existing products.

- Provide an Enterprise-Wide Network Security Solution. The Company
intends to emphasize all of the CyberGuard Firewall's network security
capabilities for, among others, secure communication, access control,
encryption, mobile computing (both through remote network connections
and dial-up systems), and secure databases (through alliances such as
with Informix, Inc.) to provide an enterprise-wide solution,
particularly for enterprises in selected vertical markets. The Company
believes that each element of an enterprise-wide solution will broaden
the appeal of its products in these markets.

- Promote CyberGuard Beyond Network Security. The Company intends to
promote CyberGuard's MLS capabilities for additional applications such
as tracking network usage and other network management control
functions. In this regard, the Company intends to capitalize on its
expertise in network security by providing such tools to specific
customers and targeted markets, such as Internet service providers and
Internet-based retailers of subscription products and services.

PRODUCTS AND SERVICES

Products

The Company's products provide a comprehensive, secure and high-performance
network security solution. These products include the CyberGuard Firewall and
related products, products offered by the Company with its strategic partners,
and secure operating systems and secure networking software sold separately
from the CyberGuard Firewall. The table below contains a summary of the
Company's products, their respective dates of first shipment, and a brief
description of each. Additional information regarding each product follows the
table.

<TABLE>
<CAPTION>
DATE OF FIRST
SHIPMENT
PRODUCT (calendar quarters) DESCRIPTION
<S> <C> <C>
CyberGuard Firewall Q4 1994 Commercial firewall built on an
evaluated secure operating system and
secure networking software

Packet Filtering Q4 1994 Guarantees a basic level of security
for all network traffic

Security Auditing and Alarms Q4 1994 Real-time alarm capability

Application Proxies Q3 1995 Enhanced security customized to
network applications

Remote Administration Q3 1995 Firewall administration from remote
site

Network Address Translation Q4 1995 Hides internal network addresses to
complicate hacker attempts

Graphical User Interface Q1 1996 Point-and-click administration

</TABLE>

<PAGE> 36

<TABLE>
<S> <C> <C>
Split Domain Name Service Q1 1996 Hides internal host names to
complicate hacker attempts

High Availability CyberGuard
Firewall Q1 1996 CyberGuard feature designed to ensure
minimal network downtime

Virtual Private Networking Q4 1995 Encrypted firewall-to-firewall link

WebTrack URL Blocker Q1 1996 Monitors and controls access to
selected WWW sites

Token Authentication Devices Authenticates network users through
Enigma Logic Q3 1995 use of token authentication cards in
Security Dynamics Q2 1996 place of static password

Informix Online/Client Server Q4 1992 Secure database tool for server and
Systems electronic commerce applications

CX/SX Secure Operating System Q2 1989 B1-evaluated secure operating system

LAN/SX Secure Networking Q3 1990 B1-evaluated secure networking
Software software

PowerSX Secure Operating System Q2 1994 Latest generation secure operating
system currently in evaluation by NCSC
for B2 rating

PowerProtocols Secure Q2 1996 Latest generation secure networking
Networking Software software currently in evaluation by
NCSC for B2 rating

</TABLE>

CyberGuard Firewall. The CyberGuard Firewall and related products build
upon the Company's B1-evaluated secure operating system and secure networking
software. The CyberGuard Firewall includes the following features:

- Packet Filtering. The CyberGuard Firewall implements packet filtering
technology allowing the firewall to expressly permit or deny connections
using criteria based upon source and destination host or network and the
type of network service being requested.

- Security Auditing and Alarms. The CyberGuard Firewall incorporates a
built-in auditing and alarm function that permits administrators to
review a chronological record of system activities allowing the
reconstruction of security sensitive activities. The CyberGuard Firewall
can be configured to dynamically process the security auditing
information and, in real-time, take explicit actions in response to
actions deemed security sensitive or possible attempts to attack the
network or firewall.

- Application Proxies. The CyberGuard Firewall supports a number of
security enhanced application proxies for many network services,
including remote login ("rlogin"), terminal emulation ("Telnet"), file
transfer protocol ("FTP"), hypertext transport protocol ("HTTP") (used
with the WWW), network news transport protocol ("NNTP"), simple mail
transport protocol ("SMTP"), and simple network management protocol
("SNMP").

- Remote Administration. The CyberGuard Firewall supports the ability to
remotely monitor and administer a firewall from a "Network Operations
Center." Using this remote administration capability, a CyberGuard
Firewall can be managed from a remote site as if the system
administrator were physically located with the firewall.

- Network Address Translation. The CyberGuard Firewall can be configured
to translate all internal addresses to the firewall's network address.
From the Internet, the firewall appears to be the only machine
connected, reducing the risk of possible penetration attacks against the
internal network.

- Graphical User Interface. The CyberGuard Firewall provides a
Motif-based graphical user interface, or "GUI," designed to facilitate
system configuration and administration. A GUI is generally considered
easier to use than the traditional command-line interface.

- Split Domain Name Service. The CyberGuard Firewall can function as a
Domain Name Service ("DNS") server. With Split DNS, the network responds
to queries differently depending on their source. For example,

<PAGE> 37
responses to requests from the Internet might contain only the
CyberGuard Firewall information; responses from internal requests might
contain a complete list of hosts.

- Private Virtual Networking. The CyberGuard Firewall supports an
optional Private Virtual Networking ("PVN") product that provides a
mechanism for establishing a logically separate network between multiple
CyberGuard Firewall systems. This logical network supports fully
encrypted communication among the machines of the network. PVN supports
high-performance encrypted communication between CyberGuard Firewalls
and allows the customer to locally replace the encryption algorithm with
their locally preferred algorithm.

- High Availability CyberGuard Firewall. The CyberGuard Firewall supports
an optional Higher Availability configuration, which combines two
firewalls to operate as a single logical unit. If the primary firewall
should fail, the secondary firewall takes over to provide nearly
continuous network connectivity. For critical connections, such as
electronic commerce sites, this High Availability configuration
minimizes the risk of lost network connectivity.

In addition, through strategic alliances, the Company offers certain network
security products for use with the CyberGuard Firewall. See "Strategic
Alliances" below. These products include:

WebTrack URL Blocking. Together with its CyberGuard Firewall, the Company
offers WebTrack, a product developed by Webster Network Strategies (which has
entered into an agreement to be acquired by Secure Computing). WebTrack is a
software product that monitors and controls access to non-business related WWW
sites such as pornography, hate speech, on-line shopping, job searching and
sports. The Company offers WebTrack through a strategic alliance with Webster
Network Strategies and the CyberGuard Firewall is the only commercial firewall
that supports WebTrack.

Token Authentication Products. With the CyberGuard Firewall, the Company
offers a number of third-party token authentication devices, including those
offered by the Company through alliances with Security Dynamics and Enigma
Logic, among others. Token authentication devices provide for an alternative to
the use of static passwords for user authentication, resulting in reduced
likelihood of system penetration through the reuse of an old password.

Informix Online/Secure Client Server Systems. The Company, through a
strategic alliance with Informix, Inc. ("Informix"), offers the Informix
Online/Secure B1-evaluated secure relational database management system
("Online/Secure"). Online/Secure extends the Company's security policy into the
relational database product technology of Informix, providing a fully secure,
high-performance, multi-level secure database environment for secure
transaction processing and secure database applications.

Secure Operating Systems. The Company offers secure operating systems based
on Power PC and non-Power PC technology. The Company's PowerSX product is a
high assurance, secure multi-threaded operating system based on UNIX System V
Extended Security/Multi-Processing operating system with additional security
features developed by the Company. The Company's CX/SX operating system is a
multi-threaded, fully preemptive operating system for high performance, secure
Unix-based applications. The Company's CX/SX operating system has received
rigorous evaluation from the NCSC in the United States and CELAR in France. The
NCSC performed an evaluation of the Company's CX/SX operating system and
subsequently granted it a B1 security rating. The NCSC is currently evaluating
the Company's PowerSX operating system against the higher B2 security rating
criteria. For information regarding NCSC security ratings, see "The CyberGuard
Solution" above.

Secure Networking Software. The Company's LAN/SX product is a secure
network software product that provides a multi-level secure interface between
CX/SX and a heterogeneous networking environment. The Company's PowerProtocols
product is a secure network software product that provides a multi-level secure
interface between PowerSX and a heterogeneous networking environment. The NCSC
performed an evaluation of the Company's LAN/SX operating system and
subsequently granted it a B1 rating. The NCSC is currently evaluating the
Company's PowerProtocols networking software at the higher B2 security rating
criteria. For information regarding NCSC security ratings, see "The CyberGuard
Solution" above.

Systems Integration Services

The Company offers a number of systems integration services, both directly
and through strategic alliances, with the purpose of offering customers network
security expertise for their particular networking environment. In addition,
the Company markets several specific types of pre-packaged consulting services
relating to, among others, penetration testing, Internet gateway security and
technical evaluation, system security, corporate data security policies and
management control, network security

<PAGE> 38

policy and management control, Internet security policy and management
controls, network security analysis, and information security training.

The Company's CyberGuard Firewall and related security products accounted
for 92% and 86% of the Company's sales for the six months ended March 30, 1996
and the fiscal year ended September 30, 1995. The remaining portion of the
Company's sales in each such period are related to porting the Company's secure
operating system to Groupe Bull S.A.'s Escala line of computer systems.

PRODUCT DEVELOPMENT

The Company's research and development efforts are focused in the near
term on porting the Company's secure operating system, secure networking
software and firewall application from a Motorola microprocessor-based Night
Hawk platform to the more widely used Intel PC-compatible computer platform.
The following table shows the significant products and product enhancements
that the Company expects to introduce during the last two quarters of calendar
year 1996 and during calendar year 1997.

<TABLE>
<CAPTION>
EXPECTED DATE OF
INTRODUCTION
PRODUCT (calendar quarters) DESCRIPTION
<S> <C> <C>
Intel Pentium/Pentium Pro- Q4 1996 Low-cost, software-only CyberGuard
compatible CyberGuard Firewall Firewall product

Remote/Mobile PC Secure Link Q4 1996 Encrypted protection for PC and laptop
connections to host networks

Virus Scanning Q4 1996 Helps prevent viruses from infecting
host computers

RSA Encryption Q4 1996 Largest commercially available
encryption product

CyberGuard Intranet Firewall Q4 1996 Novell NetWare support and other

TerraMax ISP Solution Q2 1997 intranet-specific features
Multiple virtual firewalls

Fortezza Encryption Q2 1997 Government-sponsored encryption process

X.400 Secure Message Handling Q4 1997 Secure X.400 e-mail service
</TABLE>

The expected dates of introduction in the above table are forward looking
statements and are based on certain assumptions, including certain assumed
levels of staffing and capital resources, contractual arrangements with
suppliers, customers or strategic allies, market conditions, overall product
development costs and related sales and marketing expenses, the nature of
available competing and complementary technologies and products, and other
assumptions. Should these assumptions change or prove to be inaccurate, or
should the Company's plans change due to certain unforeseen factors, the
development of such products may be delayed or discontinued. See "Risk Factors"
for a discussion of other factors that may cause such assumptions to differ
from actual results.

Development of new products and features is performed by the Company's
internal engineering staff and through third- party licensing. The Company has
30 employees devoted to product development and expects to increase this number
modestly during fiscal year 1996. The Company supplements the development staff
from time to time with contract engineers as needed to meet product demands in
the market. For the six months ended March 30, 1996 and the fiscal years ended
September 30, 1995 and June 30, 1994, the Company spent $2.0 million, $1.5
million and $1.6 million, respectively, on research and development, an
equivalent of 44%, 31%, and 18% of total sales during such periods,
respectively. These amounts include software development costs that have been
capitalized during such periods.

STRATEGIC ALLIANCES

<PAGE> 39
To complement CyberGuard Firewall product sales, the Company offers
consulting and security products through a series of strategic alliances with
prominent organizations. The Company has formed alliances with several
consulting partners world-wide, including with EG&G, Inc. and Coopers & Lybrand
Consulting since 1995 and with Coopers & Lybrand L.L.P. since February 1996.
Consulting services include network and on-site analysis services, network
penetration testing, security policy and management control, migration planning
and security training.

The Company has alliances for the purpose of reselling the Company's
products with several strategic partners, including Lucent Technologies, Inc.
(formerly AT&T Corporation, now "Lucent") and Electronic Data Systems Corp.
("EDS"). The Company has additional strategic resellers outside the United
States, which include Nissin Electric Co., Ltd. (Japan) ("Nissin"), Lukon
Financial Industrial Company (Russia) and QPSX Communications Limited, a
subsidiary of Australia Telstra Corporation.

The Company has also entered into product-related strategic alliances with
Enigma Logic, Inc., Security Dynamics, Inc., VASCO Corporation and CryptoCard
to offer a variety of identification and token authentication capabilities. In
March 1996, the Company announced a strategic alliance with Webster Network
Strategies to provide the WebTrack Internet monitoring and blocking service on
the CyberGuard Firewall. In April 1996, the Company announced strategic
alliances with Trend Micro, Inc and PC Security Limited to support virus
scanning and encrypted data tunneling, respectively. The Company also has
strategic alliances with Informix, Inc. and Oracle Corporation to provide
database or database proxy support on the Company's secure operating system.

The Company is actively seeking additional strategic alliances for product
development and sales and marketing purposes. The Company expects such
alliances to contribute to efforts to develop additional products or
enhancements to its existing product offerings, particularly those relating to
encryption, token authentication and virus detection. The Company is also
actively pursuing sales and marketing alliances, particularly with VARs and
distributors, in order to expand the geographic distibution of the Company's
products.

CUSTOMERS AND MARKETS

The Company's current and prospective commercial customers include medium to
large domestic and multinational companies and other commercial enterprises
that routinely create and store proprietary or highly sensitive information and
have high throughput requirements. These customers are likely to consider
network security and performance to be high priorities when purchasing a
firewall. During the fiscal year ended September 30, 1995, sales related to
porting the Company's secure operating system to Groupe Bull S.A.'s Escala line
of computer systems accounted for 14% of the Company's sales.

The specific uses and applications of the CyberGuard Firewall and related
products vary significantly among market sectors and business organizations.
Examples of the uses of the Company's products by customers include:

- Southwest Airlines uses the CyberGuard to secure their "Home Gate" web
site, which allows customers to schedule flights and purchase tickets
on-line through the Internet. Ticket purchases include the required
transmission of credit card numbers, a process in which security is a
critical concern.

- A leading enterprise-wide software application developer distributes
enhancements and fixes to its maintenance customers using a CyberGuard
Firewall.

- A multi-national bank processes loan applications using the CyberGuard
Firewall's Virtual Private Network to communicate sensitive financial
information between branch offices and the bank's central approval
department.

- A Fortune 150 high technology conglomerate uses the CyberGuard Firewall
to allow controlled Internet access to nearly 12,000 employees. Data
traffic that could cause harm to the customer's internal management
information systems is blocked while allowing legitimate requests for
product descriptions.

- A major aircraft designer and manufacturer uses the CyberGuard Firewall
to strictly control access to human resource information on the
customer's intranet.

New customers accounted for 82% of the Company's sales in the six months
ended March 30, 1996 and 28% of sales in the fiscal year ended September 30,
1995. Of sales to new customers during such periods, 96% and 100%,
respectively, represented non-government customers and related to sales of the
Company's CyberGuard Firewall and related products.

<PAGE> 40

Sales of CyberGuard Firewalls and related products include
government-related customers, but are sold on the same terms and conditions as
to non-government-related commercial customers. During the six months ended
March 30, 1996 and the fiscal year ended September 30, 1995, sales of
CyberGuard Firewalls and related products to agencies of the United States
government and its contractors accounted for 26% and 58%, respectively of
overall sales for such products. Sales of secure operating systems and secure
networking software sold separately from CyberGuard Firewalls have been
primarily to government agencies (both in the United States and
internationally), including the United States government and government
contractors. During the six months ended March 30, 1996, total sales to the
British MOD were 13% of the Company's sales, and during the fiscal year ended
September 30, 1995, a single government-related customer accounted for 39% of
the Company's sales.

SALES AND MARKETING

The Company has established a broad range of indirect channels by which
to market its products in the United States and internationally, including
VARs, distributors and manufacturers' representatives, as well as direct sales
representatives. Within the last year, the Company has entered into contracts
with 30 VARs, distributors, and manufacturing representatives for its products,
including EDS, EMJ America, Inc., Lucent, QPSX Communications Limited, a
subsidiary of Australia's Telstra Corporation, Public IP Exchange Limited, a
U.K. subsidiary of UUnet Technologies, and Nissin. During the six months ended
March 30, 1996, the indirect marketing channels for the Company's products
accounted for 40% of the Company's sales. See "Strategic Alliances" above. The
Company is seeking to expand its indirect sales channels for the marketing of
its products and has a goal to have its indirect channels account for 75% of
its sales by the end of fiscal year 1997. See "Risk Factors--Dependence on
Resellers; Need to Establish Collaborative Marketing Relationships."

In May 1995, the Company established a sales force separate from that of its
former Real-time Business to focus on sales of its network security products.
The Company employs 13 sales representatives and maintains sales offices in
Atlanta, Georgia; Chicago, Illinois; Dayton, Ohio; Fort Lauderdale, Florida;
Houston, Texas; Los Angeles, California; New York, New York; St. Louis,
Missouri; Washington, D.C.; London, England; and Ottawa, Canada. The sales
force focuses its sales and marketing efforts towards customers and VARs in
selected vertical markets such as healthcare, financial services, insurance,
telecommunications and travel. The Company's sales staff also solicits
prospective customers and provides technical advice and support with respect to
the Company's products.

In support of its sales efforts, the Company markets its products through
direct mail, advertising, seminars, trade shows, telemarketing, and on-going
customer and third-party communications programs. The Company has entered into
strategic marketing relationships with various vendors of communications,
security and network management products and consulting services. Certain of
these vendors recommend the Company's products along with their own solutions
to meet a customer's security needs. The Company also seeks to generate
interest in, and to educate potential customers about, computer and network
security through its speaking engagements, contributed articles, interviews and
documentaries.

The Company focuses its direct and indirect marketing efforts on, among
other things, selected vertical markets, such as healthcare, financial
services, insurance, telecommunication, and travel, that the Company perceives
as having a need for network security due to the sensitive nature of data they
collect or due to the devastating potential impact of computer "hacking." The
Company intends to address this market both with its direct sales force and
through indirect channels such as VARs and systems integrators who already
serve such markets. The Company also believes its products are particularly
well suited to Internet service providers and Internet-based retailers of
subscription products and services. See "Risk Factors--Dependence on Principal
Product; Uncertainty of Product Acceptance."

COMPETITION

<PAGE> 41

The market for network security products is intensely competitive and
characterized by frequent technological change. The Company believes that
competition in this market is likely to persist and to intensify if demand for
network security products increases.

In the market segments requiring the highest levels of security, the Company
competes with Secure Computing, which also offers a firewall with a security
enhanced operating system. The Company also competes with manufacturers of
proxy application firewalls and hybrid systems, such as ANS and Raptor, whose
products lack a secure operating system but might nonetheless be considered
competing products by some consumers. The Company competes with a number of
manufacturers, such as CheckPoint, whose products consist mainly of packet
filtering systems or routers but whose products may be considered to be
alternatives to the Company's. In addition, companies such as IBM, DEC and Sun
sell products with similar features and functions that could be considered
competitors of the Company's. Several other companies offering other network
and other computer-related products, including Microsoft Corporation, are
expected to enter the commercial network security market in the near future.
While the Company believes that it does not compete against manufacturers of
other classes of security products, such as token authentication or encryption,
due to the complementary functions performed by such other classes, the
Company's customers may perceive such other companies as competitors of the
Company.

Certain of the Company's competitors offer software-only products that will
compete with the Company's products. The Company believes that its customer
base will broaden as a result of the commercial introduction of an integrated
software-only version of the Company's operating system, networking software
and firewall application on platforms other than that of the Night Hawk.
However, there can be no assurance that the Company can maintain its
competitive position against current and potential competitors, especially
those with significantly greater financial, marketing, service, support,
technical and other competitive resources. Certain of the Company's competitors
may determine, for strategic reasons, to consolidate, substantially lower the
price of their network security products or bundle their products with other
products, such as hardware products or other enterprise software products. In
addition, current and potential competitors have established or may establish
financial or strategic relationships among themselves, with existing or
potential customers, resellers or other third parties. For example, Compaq
Computer Corporation recently acquired a financial interest in Raptor and
agreed to bundle Raptor's network security software with certain of its product
offerings and Secure Computing recently announced the signing of a definitive
agreement for the acquisition of Border.

The Company believes that the principal competitive factors affecting the
market for computer and network security products include the product's level
of security, performance and reliability (particularly maximum levels of
throughput), technical features, ease of use, capabilities, customer service
and support, distribution channels and price. Based upon its understanding of
the features of the products and services offered by the Company's competitors,
the Company believes that its products currently compete favorably with respect
to such factors. Based upon its experience and understanding of the existing
network security market, the Company believes that potential purchasers of the
Company's security products who do not differentiate between the level of
security provided by competing security products are as likely to base their
purchasing decisions on price, ease of use, or other considerations as they are
to base such decisions on the level of security provided. In circumstances
where a potential purchaser's primary concern is the level of security provided
by products being considered, the Company, based upon its understanding of the
features in products and of the services offered by the Company's competitors,
believes that its products compete favorably.

Additionally, the Company believes a key competitive factor in the network
security market is a computer system's security rating by intelligence and
other government agencies such as the NCSC. The CyberGuard is the only
commercially available firewall built on an integrated secure operating system
and secure networking software components that are rated B1 by the NCSC. The
Company's secure operating system has also successfully completed evaluation by
CELAR and is currently in evaluation in the United Kingdom against ITSEC
requirements. The Company's PowerPC-based operating system and networking
products are designed for, and being evaluated against, the B2 rating security
requirements. Certain of the Company's competitors have also submitted their
commercial network firewall products for evaluation by the NCSC, and certain of
these products could receive B1 or higher ratings upon completion of the
evaluation process.

PATENTS AND PROPRIETARY TECHNOLOGY

The Company relies upon license agreements with customers; trademark,
copyright and trade secret laws; employee conflict of interest and third-party
non-disclosure agreements and other methods to protect the trade secrets,
proprietary know-how and other proprietary rights on which the Company's
business depends. There can be no assurance that these agreements will not be
breached, that the Company will have adequate remedies for any breach, or that
the Company's trade secrets will not otherwise become known to or independently
developed by competitors. The Company currently does not hold any patents and
has no pending patent applications to cover any aspects of it technology. The
Company intends to introduce patent applications to protect aspects of its
technology;

<PAGE> 42

however, there can be no assurance that any future patent applications will be
granted or that any future patent applications will not be challenged,
invalidated or circumvented or that the rights granted thereunder will provide
competitive advantages to the Company.

The Company is not aware of any patent infringement charge or any violation
of other proprietary rights claimed by any third party relating to the Company
or the Company's products. The computer technology market is characterized by
frequent and substantial intellectual property litigation. Intellectual
property litigation is complex and expensive, and the outcome of such
litigation is difficult to predict.

The Company has applied for registration in the United States, Canada and
certain other countries for its "CyberGuard Firewall" marks and its CyberGuard
logo.

REGULATION

The Company is not currently subject to direct regulation by any government
agency other than regulations applicable to businesses generally. Export
controls on cryptographic products may place limits on the export of the
Company's products to certain countries identified from time to time by the
U.S. Department of State. In addition, certain of the Company's government
products are subject to U.S. government contracting regulations and to the
International Trade in Arms Regulation ("ITAR"), which restricts the exports of
certain products affecting national security. These regulations could restrict
the Company's ability to sell its products to foreign governments and
businesses identified from time to time by the U.S. Department of State,
creating delays in the introduction of the Company's products in international
markets.

There are currently few laws or regulations directly applicable to access to
or commerce on the Internet. The Communications Reform Act, which applies to,
among other things, communications over the Internet, has recently become
effective, and additional laws and regulations could be adopted with respect to
the Internet, covering issues such as user privacy, pricing and characteristics
and quality of products and services. The Company believes that some
regulations could be addressed by application of the Company's Internet-related
network security products and that certain types of regulation would be
beneficial to the Company. However, the adoption of laws or regulations may
decrease the growth of the Internet, which could in turn decrease the demand
for the Company's products and increase the Company's cost of doing business or
otherwise have an adverse effect on the Company's business, operating results
or financial condition.

EMPLOYEES

At June 7, 1996, the Company employed 61 full-time employees.
Additionally, from time to time the Company employs contract engineers on a
temporary basis for software development or documentation. No employee of the
Company is represented by a labor union or is subject to a collective
bargaining agreement. All employees are bound by agreements containing
confidentiality and conflict of interest provisions. The Company believes it
maintains good relations with its employees.

OPERATIONS

The Company's production operations consist primarily of the purchasing of
assembled and tested hardware components and the installation of the Company's
products on such platforms. The Company sells its CyberGuard Firewall on Night
Hawk real-time computers purchased from Concurrent. Night Hawk real-time
computers were formerly developed and manufactured by the Company. See "Risk
Factors--Dependence on Sole Source Suppliers" and "Certain Transactions." The
Company sells its products with memory, displays, power supplies and
peripherals such as hard drives and network interface cards purchased from
other third-party vendors. The Company also purchases software media and user
documentation for its software products and uses subcontractors for its
duplication services.

PROPERTIES

<PAGE> 43

The Company's principal administrative, sales and marketing, development,
engineering, production and support facilities are located in Fort Lauderdale,
Florida. The Company is currently subleasing administrative and production
facilities from Concurrent and will be relocating to separate facilities
within 12 months.

LEGAL PROCEEDINGS

The Company is not involved in any pending or, to its knowledge, threatened
litigation.

INTEREST IN CONCURRENT

The Company owns approximately 23% of the outstanding Concurrent Common
Stock and $10 million liquidation preference of Concurrent Preferred Stock. The
Company's ownership of Concurrent Common Stock would be 29% if the Concurrent
Preferred Stock were to be converted into Concurrent Common Stock. See "Recent
Events." Concurrent is engaged in the business of providing and servicing
high-performance real-time computer systems and services, including the Night
Hawk. "Real-time" systems acquire, analyze, store, display and control analog,
digital and network data to provide time critical information as real-world
events occur. Concurrent has over 25 years of experience in real-time systems,
including specific expertise in systems, applications software, productivity
tools and networking. Concurrent's real-time systems offer networked and
distributed computing solutions and may be configured to provide fault
tolerance. Concurrent sells its systems worldwide to end-users as well as to
original equipment manufacturers, systems integrators, independent software
vendors and value-added resellers who combine Concurrent's products with other
equipment or with additional application software for resale to end-users. End
uses of Concurrent's systems include product design and testing; flight
simulation; air traffic control and weather forecasting; intelligence data
acquisition and analysis; financial trading; and hospital information
management. Concurrent designs, manufactures, sells, and supports real-time
proprietary and standards-based open systems. Concurrent also offers
traditional maintenance and support services and professional services, such as
performance and capacity analysis and systems integration.

Concurrent is subject to the informational requirements of the Exchange Act
and, in accordance therewith, files reports, proxy statements and other
information with the SEC, to which reference is made for detailed financial and
other information regarding Concurrent. Such reports, proxy statements and
other information can be inspected and copied at the offices of the SEC and the
National Association of Securities Dealers, Inc. The Company does not warrant
the accuracy or completeness of such reports, proxy statements or other
information nor that there have not occurred events not yet publicly disclosed
by Concurrent which would affect either the accuracy or the completeness of the
information concerning Concurrent included herein or therein.

Concurrent's revenues were $77 million during the nine months ended March
31, 1996 and $140 million, $179 million and $220 million for the fiscal years
ended June 30, 1995, 1994 and 1993, respectively. Concurrent reported net
losses of $5.7 million, $2.0 million, and $39.8 million and net income of $3.9
million for such periods, respectively. Concurrent expects that its revenues
for the quarter ending June 30, 1996 will be the lowest quarterly revenues for
its fiscal year. In addition, Concurrent expects to take a material pre-tax
charge and to adjust negative goodwill, as appropriate, in the quarter in which
the Real-time Sale occurs (expected to be the quarter ending June 30, 1996) to
cover costs related to the Real-time Sale and other business integration costs.
As of the date hereof, the estimated aggregate charge for these items is in the
range of $29 million to $32 million, approximately $18 million of which is
expected to be paid out in cash in the next two years.

The Company expects to account for its interest in Concurrent using the
equity method whereby its proportionate share of Concurrent's earnings or
losses will be included in income. See Notes to Condensed Consolidated
Statement of Operations for certain additional information regarding the
Company's equity in Concurrent.

<PAGE> 44

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Certain biographical information concerning the Company's executive
officers and directors is presented below.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert L. Carberry . . . . . . . . . . . 53 President, Chief Executive Officer and Chairman of the
Board of Directors(1)

Patrick O. Wheeler . . . . . . . . . . . 37 Chief Financial Officer and Vice President Finance

Frank Gelbart . . . . . . . . . . . . . . 34 Vice President Marketing and Sales, North America

Katherine K. Hutchinson . . . . . . . . . 38 Vice President Corporate Development

Bradley C. Lesher . . . . . . . . . . . . 60 Vice President International Operations

Robert Perks . . . . . . . . . . . . . . 52 Vice President North American Operations

Rick A. Siebenaler . . . . . . . . . . . 33 Vice President Software Development

Brian Foremny . . . . . . . . . . . . . . 47 General Counsel, Secretary and Director(1)

C. Shelton James . . . . . . . . . . . . 56 Director(2)(4)

Michael F. Maguire . . . . . . . . . . . 69 Director(3)(4)

Richard F. Rifenburgh . . . . . . . . . . 64 Director(2)
</TABLE>

_______
(1) Member of the class of directors whose term expires at the annual
meeting to be held in 1999. See "Description of Capital Stock -- Certain
Anti-takeover Provisions Included in the Company's Articles of
Incorporation and Bylaws."

(2) Member of the class of directors whose term expires at the annual
meeting to be held in 1998.

(3) Member of the class of directors whose term expires at the annual
meeting to be held in 1997.

(4) Member of the Audit and Compensation and Stock Options Committees of the
Board of Directors.

Robert L. Carberry. Mr. Carberry was appointed President of the Company's
Trusted Systems Division in April 1996 in anticipation of the Real-time Sale
and President and Chief Executive Officer of the Company upon the consummation
of the Real-time Sale. Before joining the Company, Mr. Carberry was Vice
President, New Technology at Blockbuster/Viacom Group and Vice President,
Managing Executive for Blockbuster Technology Holding Corporation from 1994
and, before that, was President of Multimedia Investment Organization, a
division of IBM. At IBM, Mr. Carberry also held the positions of Vice President
Technology/Business Development for the Personal Computer Division; Director of
the Large Systems Programming Laboratory and IBM Corporate Director of
Technology.

Patrick O. Wheeler. Mr. Wheeler was appointed Chief Financial Officer and
Vice President Finance of the Company's Trusted Systems Division in April 1996
in anticipation of the Real-time Sale and continues in such position for the
Company. Prior thereto, Mr. Wheeler held various positions with the Company
including Director of Accounting, Senior Account Manager and most recently,
Midwest Regional Sales Manager. Mr. Wheeler joined the Company following its
spin-off from Harris Corporation, which Mr. Wheeler joined in 1984 from Price
Waterhouse LLP.

Frank Gelbart. Mr. Gelbart joined the Company in June 1996. From November
1993 until he joined the Company, Mr. Gelbart was Director of Sales, Rest of
World at Cheyenne Software, Inc. From April 1992, Mr. Gelbart was Director of
World-wide Sales and Director of International Sales for Equinox Systems, Inc.,
a $21 million data communications hardware manufacturer in Plantation, Florida,
and from April 1989 to April 1992, was Vice President, Latin America and Vice
President Commercial Sales for Uniplex, Inc., a $30 million UNIX office
automation software company headquartered in Irving, Texas.

Katherine K. Hutchison. Ms. Hutchison was appointed Vice President
Marketing, of the Company's Trusted Systems Division in April 1996 in
anticipation of the Real-time Sale and continues in such position for the
Company. Prior thereto, Ms. Hutchison served in positions of increasing
responsibility, most recently as Director of Marketing for the Company's
Trusted Systems Division. Ms. Hutchison joined Harris Corporation in 1993 from
a position as Program Manager and Technical Marketing Manager in the
Information Technology Group of Texas Instruments.

Bradley C. Lesher. Mr. Lesher joined Harris Corporation in July 1994 from
IBM where he had been General Manager of Latin American Caribbean operations
since November 1991. From 1988 to 1991 Mr. Lesher served as Director of General
Business systems in IMB's Latin American Headquarters Operation where he was
responsible for developing and supporting a distribution channel network of over
200 dealer and agent organizations selling IBM PC's and mid-range proprietary
and UNIX-based open systems. He joined IBM in 1957 and has over 30 years of
diverse international management experience including 19 years of living abroad.

<PAGE> 45

Robert Perks. Mr. Perks was appointed Vice President Sales of the Company's
Trusted Systems Division in April 1996 in anticipation of the Real-time Sale
and continues in such position for the Company. Mr. Perks joined the Computer
Systems Division of Harris Corporation in 1977. He was employed by Real Time
Products Corporation from 1992 to 1995 as Director, Customer Support and
rejoined the Company in May 1995 as Director of Trusted Sales for the Company.

Rick A. Siebenaler. Mr. Siebenaler was appointed Vice President Software
Development of the Company's Trusted Systems Division in April 1996 in
anticipation of the Real-time Sale and continues in such position for the
Company. Prior thereto, Mr. Siebenaler served as Director of Software
Development of the Company's Trusted Systems Division from 1994 and, before
that, as Chief Engineer from 1991. Mr. Siebenaler joined Harris Corporation in
1991 from the NCSC where he was a Commercial Products Evaluator in the Trusted
Products Evaluation Division.

Brian Foremny. Mr. Foremny is an attorney and, since 1995, a partner with
the law firm of Holland & Knight where he maintains a law practice in addition
to his service as the Company's General Counsel. Prior thereto, Mr. Foremny was
a partner of the law firm of Kirkpatrick & Lockhart LLP beginning in 1983.

C. Shelton James. Since May 1991, Mr. James has served as Chief Executive
Officer of Elcotel, Inc., a public company that manufactures telecommunications
equipment. Mr. James is President of Fundamental Management Corporation, an
investment management firm specializing in active investment in small
capitalization companies, where he was Executive Vice President from 1990 to
April 1993. Prior to 1990, Mr. James was Executive Vice President of Gould,
Inc., a diversified electronics company, and President of Gould's Computer
Systems Division. Mr. James is Chairman of the Board of Directors of Elcotel,
Inc. and serves on the boards of directors of CSPI, NAI Technologies, Inc.,
Fundamental Management Corporation and SK Technologies, Inc.

Michael F. Maguire. Since 1984, Mr. Maguire has served as President,
director and sole shareholder of Maguire Investment Management, Inc., a
management consulting company. For more than 13 years, Mr. Maguire served as an
executive at Harris Corporation, most recently as Senior Vice President from
1979 to 1986. Mr. Maguire serves on the board of directors of Autosight, Inc.,
as well as several non-profit corporations.

Richard P. Rifenburgh. Mr. Rifenburgh joined the Company's Board of
Directors in June 1996 following the Real-time Sale as the designee of
Concurrent. See "Certain Transactions -- Share Holding Agreement." Mr.
Rifenburgh is Chairman of the Board of Moval Management Corporation, a
privately held company specializing in restoring companies in financial
distress. He is, or in the past five years has been, a member of the Board of
Directors of the following public companies: Concurrent since 1991; Tristar
Corporation (formerly known as Ross Cosmetics Distribution Centers, Inc.) since
June 1992 and Chairman since August 1992; Miniscribe Corporation (manufacturer
of disc drives for personal computers), Chairman and CEO from 1989 to 1991; and
Library Bureau (a manufacturer of library furniture) from 1976 to 1995.

COMPENSATION OF EXECUTIVE OFFICERS

Employment Agreements. The Company and Mr. Carberry entered into an
agreement dated as of March 5, 1996 (the "Carberry Employment Agreement"),
effective as of April 12, 1996. The Carberry Employment Agreement provides for
the employment of Mr. Carberry as Chairman of the Board, President and Chief
Executive Officer of the Company at an annual base salary of $200,000, $225,000
and $250,000 for the first, second and third twelve-month periods,
respectively, of the Carberry Employment Agreement. The Carberry Employment
Agreement provides, as of March 5, 1996, for Mr. Carberry to be granted options
to purchase 339,000 shares of the Company's Common Stock at an exercise price
of $10.67 per share and becoming exercisable in three equal installments of
113,000 on each of March 5, 1997, 1998, and 1999. The Carberry Employment
Agreement provides for Mr. Carberry to have a target bonus for the achievement
of certain performance objectives to be established by the Company of 50% of
his annual base salary.

The Company may terminate the Carberry Employment Agreement for "cause."
The Carberry Employment Agreement defines "cause" as willful acts against the
Company intended to enrich Mr. Carberry at the expense of the Company, the
conviction of Mr. Carberry for a felony involving moral turpitude, willful and
gross neglect by Mr. Carberry of his duties or the intentional failure of Mr.
Carberry to observe policies of the Company's Board

<PAGE> 46

of Directors that have or will have a material adverse effect on the Company.
If the Carberry Employment Agreement is terminated by the Company other than
for "cause" or the death, disability or normal retirement of Mr. Carberry or by
Mr. Carberry for "good reason," Mr. Carberry will receive severance pay of two
times his annual base salary and two times his target bonus as in effect
immediately prior to termination, and all of Mr. Carberry's stock options and
stock appreciation rights will be exercisable at termination. If Mr. Carberry's
employment with the Company is terminated within one year following a "change
in control" of the Company other than for "cause" or the death, disability or
normal retirement of Mr. Carberry or by Mr. Carberry for "good reason," Mr.
Carberry will receive severance pay of three times his annual base salary and
three times his target bonus as in effect immediately prior to termination, and
all of Mr. Carberry's stock options and stock appreciation rights will become
exercisable at termination. If Mr. Carberry's employment is terminated at any
time by the Company for "cause" or by Mr. Carberry other than for "good
reason," the Carberry Employment Agreement prohibits Mr. Carberry from engaging
in any business competitive with the business of the Company for a one-year
period following the effective date of termination. If Mr. Carberry's
employment is terminated by the Company other than for "cause" or the death,
disability or normal retirement of Mr. Carberry or by Mr. Carberry for "good
reason," other than within one year of a "change in control," the Carberry
Employment Agreement prohibits Mr. Carberry from engaging in any business
competitive with the business of the Company for a two-year period following
the effective date of termination.

In addition to the Carberry Employment Agreement, the Company has employment
agreements with Mr. Lesher and Mr. Foremny and expects to enter into
employment agreements with the other executive officers. Such employment
agreements, other than the Carberry Employment Agreement, are referred to
herein as the "Executive Employment Agreements." The initial base salaries
under such Employment Agreements are or are expected to be, as the case may be,
$100,000 for Mr. Wheeler, $90,000 for Ms. Hutchison, $90,000 for Mr. Perks,
$90,000 for Mr. Siebenaler, $115,500 for Mr. Lesher, and $120,000 for Mr.
Foremny (based on part-time service). The Executive Employment Agreements with
Mr. Lesher and Mr. Foremny expire on September 30, 1996 and February 28, 1998,
respectively. Certain of the Executive Employment Agreements also provide or
are expected to provide, as the case may be, for bonuses based on certain
Company performance targets in initial amounts based upon the following
percentages of base salary: Mr. Wheeler -- 40%; Ms. Hutchison -- 50%; Mr. Perks
- -- 50%; Mr. Siebenaler -- 40%; Mr. Lesher -- 50% and Mr. Foremny -- 16.7%. The
terms of Mr. Gelbart's employment agreement have not yet been finalized.

Certain of the Executive Employment Agreements will provide for the Company
to issue to such officers options to purchase Common Stock at a price of $5.50
per share, as follows: Mr. Wheeler -- 75,000 options; Ms. Hutchison -- 60,000
options; Mr. Perks -- 60,000 options; and Mr. Siebenaler -- 60,000 options.
Such options will vest in three equal annual installments beginning one year
from the date of the respective Executive Employment Agreement. The agreement
with Mr. Foremny provides for Mr. Foremny to receive options to purchase
72,000 shares of Harris Common Stock at a price of $5.50 per share, vesting in
three equal annual installments beginning March 1, 1996. The Agreement with Mr.
Lesher provides for Mr. Lesher to receive options to purchase 60,000 shares of
Common Stock at a price of $2.58 per share, all of which have vested. Certain
executive officers also were granted options to purchase shares in the
following amounts at the indicated prices: Mr. Wheeler -- 3,000 shares at $2.58
per share; Ms. Hutchinson -- 12,000 shares at $2.58 per share and 600 shares at
$3.71 per share; Mr. Lesher -- 9,000 shares at $4.71 per share and 60,000
shares at $2.58 per share; Mr. Perks -- 6,000 shares at $3.83 per share; and
Mr. Siebenaler -- 12,000 shares at $2.58 per share and 600 shares at $4.92 per
share.

The Executive Employment Agreements relating to Messrs. Lesher and Foremny
may be terminated by either the Company or the respective executive officer at
any time. In the event the executive officer resigns without "good reason" or
is terminated for "cause," compensation under the employment agreements will
end. In the event any such employment agreement is terminated by the Company
without "cause" or the executive officer resigns for "good reason," the
terminated executive officer will receive, among other things, severance
compensation equal to a specified multiple of such employee's annual base
salary and target bonus under the Company's bonus program. In addition, all
non-statutory options and stock appreciation rights of all such executive
officers will be immediately exercisable upon termination of employment and
certain other awards previously made under any of the Company's compensation
plans or programs and previously not paid will immediately vest on the date of
such termination. Termination by the Company or by the executive (except for
such terminations occurring within three years after a change of control) give
rise to certain noncompetition and nonsolicitation provisions (except in the
case of Mr. Foremny, who maintains a legal practice apart from the Company).
The other Executive Agreements are expected to contain similar termination
provisions.

<PAGE> 47

The Executive Employment Agreements with Messrs. Lesher and Foremny contain
severance provisions that apply if the executive officer's employment is
terminated within three years after the occurrence of a change of control. In
the event that any such employee is terminated by the Company within three
years following the occurrence of a change in control or by such employee for
"good reason", such employee will be entitled to receive on the date of such
termination an amount equal to, among other things, a specific multiple of such
employee's base salary, target bonus under the Company's bonus program, and any
performance award payable under the Stock Incentive Plan or similar plan, as
well as any other benefits which any such employee would be entitled to where
termination was without "cause" or with "good reason" by employee. The other
Executive Employment Agreements are expected to contain similar severance
provisions.

Stock Incentive Plan. The Company has adopted the CyberGuard Corporation
Stock Incentive Stock Plan (the "Stock Incentive Plan"), as amended, pursuant
to which 2,025,000 shares of Common Stock have been authorized for issuance.
The primary purpose of the Stock Incentive Plan is to attract and retain
capable executives and employees by offering them a greater personal interest
in the Company's business through stock ownership. The Stock Incentive Plan is
administered by the Incentive and Stock Option Committee of the Company's Board
of Directors (the "Committee"), which determines, among other things, the
nature and the terms of any award granted thereunder. The Stock Incentive Plan
provides for the granting of stock options (including incentive stock options
meeting the requirements of the Internal Revenue Code), restricted stock, stock
appreciation rights, performance awards, and other stock-based awards. In the
case of stock options, the Stock Incentive Plan provides that the exercise
price of any stock option granted under the Stock Incentive Plan must be equal
to the fair market value of the shares underlying the option on the date of
grant, or, in the case of incentive stock options, 110% of fair market value of
the shares underlying the option on the date of the grant. Any stock options
granted under the Stock Incentive Plan expire no later than ten years from the
date of their granting. No award under the Stock Incentive Plan is transferable
except upon the death of the optionee. The Committee has the power to impose
additional limitations, conditions and restrictions in connection with the
grant of any option. In the event of a change of control of the Company, all
outstanding awards become immediately exercisable prior to the occurrence of
the change in control, in the manner determined by the Committee. A change in
control is deemed to occur if any person or entity acquires 20% or more of the
outstanding shares of the Company or if, as a result of any tender or exchange
offer, merger or other business combination, sale of assets or contested
election, there is a change of a majority of the directors. As of the date
hereof, 545,106 shares are available for grant or award of options under the
Stock Incentive Plan.

The Stock Incentive Plan provides that non-employee directors of the Company
will receive options to purchase shares of the Company's common stock. Upon
joining the Board of Directors, all non-employee directors receive 6,000 such
options. In addition, on the date of each annual meeting of shareholders, each
director who is not an employee of the Company will automatically be granted an
option to purchase 1,500 shares of common stock of the Company. In addition,
the Stock Incentive Plan provides for non-employee directors who served in such
capacity on February 4, 1996 to receive options to purchase 15,000 shares of
the Company's Common Stock at an exercise price of $5.50 per share. All such
options will be non-statutory stock options and priced at 100% of the fair
market value on the date of grant. In the event of a director's retirement, the
options which are exercisable at the date of retirement will be exercisable for
three months thereafter, and, in the event of a director's death, the options
which are exercisable at the date of death will be exercisable for the next
succeeding twelve months. Neither the Board of Directors nor any committee of
the Board of Directors will have any discretion with respect to options granted
to non-employee directors pursuant to the Stock Incentive Plan.

COMPENSATION OF DIRECTORS

In addition to grants pursuant to the Stock Incentive Plan, non-employee
directors of the Company receive a $15,000 annual retainer payable upon
election as a director of the Company at an annual meeting of shareholders (and
a pro rata amount to any non-employee who becomes a director of the Company
thereafter, payable at the time of becoming a director) and $1,000 per Board of
Directors meeting attended. In addition, directors receive $750 ($1,000 for the
Chairman) for attendance at any meeting of a committee of the Board of
Directors, payable at any such meeting, except for committee meetings held on
the same day as Board of Directors meetings, in which case no such fee will be
payable. Directors are also reimbursed for travel and lodging expenses in
connection with Board of Directors and committee meetings.

<PAGE> 48

CERTAIN TRANSACTIONS

Effective June 30, 1996, pursuant to the Purchase and Sale Agreement, the
Company sold the assets of its Real-time Business and issued 683,178 shares of
its Common Stock (341,589 shares of which represent the Shares offered hereby)
to Concurrent in exchange for (i) the Concurrent Common Stock Consideration
(consisting of 10,000,000 newly issued shares of Concurrent Common Stock); (ii)
Concurrent Preferred Stock (consisting of 1,000,000 newly issued shares of
convertible exchangeable preferred stock of with a 9% cumulative annual
dividend payable quarterly in arrears and a liquidation preference of $10.00
per share (subject to adjustment to reflect, among other things, the net
current assets transferred in the Real-time Sale)); and (iii) the assumption by
Concurrent of the Assumed Liabilities. As a result of the Real-time Sale, the
Company received approximately 23% of the Concurrent Common Stock issued and
outstanding (29% if the Concurrent Preferred Stock were to be converted into
Concurrent Common Stock as set forth in the Purchase and Sale Agreement and as
described generally below), and Concurrent received approximately 10% of the
issued and outstanding shares of Common Stock of the Company (one-half of which
are included in this offering).

CONCURRENT PREFERRED STOCK

The terms and conditions of the Concurrent Preferred Stock are set forth in
a Certificate of Designation containing generally the terms and conditions
described below. The description below is qualified entirely by reference to
the form of Certificate of Designation, which is incorporated by reference as
an exhibit to the Registration Statement of which this Prospectus is a part.

Designation and Number of Shares. The Concurrent Preferred Stock is 9.00%
Class B Convertible Preferred Stock, and the number of shares constituting such
series is 1,000,000, par value $0.01 per share. Holders of Concurrent Preferred
Stock do not have preemptive rights to acquire shares of any class or series of
capital stock of Concurrent.

Rank. The Concurrent Preferred Stock ranks, with respect to rights to
receive dividends and rights to receive distributions upon the liquidation,
winding up or dissolution of Concurrent: (a) senior to the Concurrent Common
Stock, and senior to any class or series of capital stock, including any
preferred stock, issued by Concurrent, other than the Class A Preferred Stock
("junior stock") and (b) on a parity with the Class A Preferred Stock ("parity
stock"), none of which was issued or outstanding as of the Real-time Sale.

Dividends and Distributions. Holders of shares of Concurrent Preferred
Stock are entitled to receive, when, as and if declared by the Concurrent's
Board of Directors (the "Concurrent Board") out of funds legally available for
such purpose, dividends at the rate per annum of 9.00% of the liquidation
preference (as defined below) of such shares. Such dividends are fully
cumulative, accumulate from the date of original issuance of the Concurrent
Preferred Stock, and are payable quarterly in arrears in cash at the end of
each calendar quarter, commencing with the first business day of the first
fiscal quarter which commences following the Closing Date.

No dividends or other distributions to shareholders may be paid or declared
and set apart for payment on any junior stock (including the Concurrent Common
Stock) for any period nor may any payment be made or set apart for the
purchase, redemption or other retirement of any shares of junior stock, except
the Rights (as defined below) and a distribution consisting solely of junior
stock, unless (i) full cumulative dividends have been, or contemporaneously
are, paid or declared and set apart for payment on the Concurrent Preferred
Stock for all dividend periods terminating on or prior to the date of payment
of such full cumulative dividends and (ii) Concurrent shall not be in default
or in arrears with respect to any redemption of Concurrent Preferred Stock.

Dividends may not be paid or declared and set apart for payment on the
Concurrent Preferred Stock or parity stock for any period unless full
cumulative dividends have been, or contemporaneously are, paid or declared and
set apart for payment on any parity stock or the Concurrent Preferred Stock, as
the case may be, for all dividend periods terminating on or prior to the date
of payment of such full cumulative dividends. When dividends are not paid in
full upon the Concurrent Preferred Stock and any parity stock, Concurrent may
make dividend payments on account of arrears on the Concurrent Preferred Stock
or any such parity stock, provided that Concurrent shall make such payments
ratably upon all outstanding shares of Concurrent Preferred Stock and such
parity stock in proportion to the respective amounts of dividends in arrears
upon all such outstanding shares of Concurrent Preferred Stock and such parity
stock to the date of such dividend payment.

<PAGE> 49

Conversion Rights. Each holder of Concurrent Preferred Stock has the right,
at the option of such holder, at any time to convert, subject to certain terms
and conditions, one or more shares of Concurrent Preferred Stock into fully
paid and nonassessable shares of Concurrent Common Stock. Such conversion will
be made at a conversion rate of one share of Concurrent Preferred Stock for a
number of shares of Concurrent Common Stock equal to (x) the liquidation
preference divided by (y) the conversion price of Concurrent Common Stock at
the time of conversion. The conversion price will initially be $2.50, subject
to adjustment for stock splits, stock dividends, or subdivisions or
reclassifications of the Concurrent Common Stock. Assuming the initial
conversion price of $2.50 and a liquidation preference of $10,000,000, a total
of 4,000,000 shares of Concurrent Common Stock would be issuable upon
conversion of all the shares of the Concurrent Preferred Stock. An amount in
cash equal to the full cumulative dividends accrued and accumulated but unpaid,
whether or not declared and without interest, on such shares of Concurrent
Preferred Stock is to be paid on the effective date of the conversion through
the last quarterly payment date that immediately precedes the effective date of
the conversion. A holder's right to convert the Concurrent Preferred Stock
terminates on the date such stock is redeemed by Concurrent. See "Redemption"
below.

In the event that Concurrent shall be a party to any transaction pursuant to
which Concurrent Common Stock shall be exchanged for, converted into, acquired
for or constitute solely the right to receive other securities, cash or other
property, then appropriate provision shall be made as part of the terms of such
transaction whereby each holder of Concurrent Preferred Stock then outstanding
shall thereafter have the right to convert such share only into the kind of
securities, cash or other property receivable by a holder of Concurrent Common
Stock.

Exchange. Concurrent may, at its option, cause shares of Concurrent
Preferred Stock, as a whole or in part, at any time and from time to time, to
be exchanged for debentures (the "Debentures"). See "Debentures" below. Such
exchange of shares of Concurrent Preferred Stock for the Debentures will be
made at an exchange rate of Debentures in the principal amount equal to the
liquidation preference. On the effective date of the exchange, Concurrent will
pay holders of the Concurrent Preferred Stock to be exchanged an amount in cash
equal to the full cumulative dividends accrued and accumulated but unpaid,
whether or not declared and without interest, on such shares of Concurrent
Preferred Stock through the last quarterly dividend payment date that
immediately precedes the effective date of the exchange.

Each holder of Concurrent Preferred Stock will have the right at any time
after September 1, 1998, at the option of such holder, whenever dividends due
for four quarterly periods have not been paid, to exchange such shares of
Concurrent Preferred Stock, as a whole or in part, for the Debentures. Such
exchange of shares of Concurrent Preferred Stock for the Debentures shall be at
an exchange rate of Debentures in the principal amount equal to the liquidation
preference plus all dividends which are accrued and accumulated but unpaid,
whether or not declared and without interest up to the calendar quarter
immediately preceding the calendar quarter in which the date of exchange
occurs.

Redemption. Whenever the Current Market Price (as defined below) exceeds
$3.75, as such price may be adjusted pursuant to stock splits, stock dividends,
subdivisions or reclassifications, prior to the date of any notice of
redemption, Concurrent may, at its option, redeem all or a portion of the
shares of Concurrent Preferred Stock, at any time or from time to time, at a
price per share equal to the liquidation preference, plus all accrued and
accumulated but unpaid dividends, whether or not declared, without interest, to
the date fixed for redemption. Dividends on the shares to be redeemed will
cease to accrue on such redemption date. "Current Market Price" means the
average of the daily closing sale prices per share of Concurrent Common Stock
for the 30 consecutive trading days immediately prior to the date in question
as such price is quoted on the principal national securities exchange or
quotation system on which such security is quoted or listed or admitted to
trading.

Concurrent is required to redeem all Concurrent Preferred Stock on June 1,
2006 at a price per share equal to the liquidation preference, plus accrued and
accumulated but unpaid dividends, whether or not declared, without interest, to
the date fixed for redemption. Dividends on the shares to be redeemed will
cease to accumulate on such redemption date.

Liquidation Preference. In the event of any liquidation, dissolution or
winding up of Concurrent, whether voluntary or involuntary, each holder of
Concurrent Preferred Stock is entitled to receive out of the assets of
Concurrent available for distribution to shareholders, before any distribution
of assets shall be made to the holders of Concurrent Common Stock or of any
other shares of junior stock, a liquidating distribution in the amount of the

<PAGE> 50

liquidation preference of $10.00 per share ("liquidation preference") plus an
amount equal to any accrued and accumulated but unpaid dividends thereon to the
date of final distribution to such holders, whether or not declared, without
interest, provided that the liquidation preference is subject to adjustment
based on an audit of the value of assets of the Real-time Business transferred
to Concurrent. If, upon any voluntary or involuntary liquidation, dissolution
or winding up of Concurrent, the assets available for distribution are
insufficient to pay in full the amounts payable with respect to the Concurrent
Preferred Stock and any other outstanding shares of parity stock, the holders
of the Concurrent Preferred Stock and of such other parity stock share ratably
in any distribution of assets of Concurrent in proportion to the full
respective preferential amounts to which they are entitled.

Voting. Except as otherwise provided by applicable law, the holders of
shares of the Concurrent Preferred Stock have no voting rights with respect to
the election of directors or for any other purpose, except that the holders of
a majority of the outstanding shares of Concurrent Preferred Stock, voting
separately as a class, must approve any amendment, alteration or repeal of any
provision of Concurrent's Certificate of Incorporation or the Certificate of
Designation if such action would (a) increase or decrease the aggregate number
of authorized shares of Concurrent Preferred Stock, (b) increase or decrease
the par value of such shares or (c) amend, alter, repeal or change the powers,
rights, privileges or preferences of the holders of shares of Concurrent
Preferred Stock so as to affect them adversely, provided that the creation,
issuance or increase in the amount of authorized shares of any series of junior
stock will not be deemed to adversely affect such powers, rights, privileges or
preferences of the Concurrent Preferred Stock.

DEBENTURES

The terms of the Debentures into which the Concurrent Preferred Stock may be
converted are set forth in a term sheet (the "Debenture Term Sheet") and are
described generally below. The description below is qualified entirely by
reference to the form of Debenture Term Sheet incorporated by reference as an
exhibit to the Registration Statement of which this Prospectus is a part.

Principal Amount. If the Concurrent Preferred Stock is converted into
Debentures pursuant to Concurrent's conversion privilege in accordance with the
Certificate of Designation, the initial principal amount shall equal the Total
Liquidation Preference of the Concurrent Preferred Stock outstanding on the
date that such Concurrent Preferred Stock is converted (the "Conversion Date")
into the Debentures in accordance with the Certificate of Designation. If the
Concurrent Preferred Stock is converted into Debentures by the holder thereof,
the initial principal amount shall equal the Total Liquidation Preference of
the Concurrent Preferred Stock outstanding on the Conversion Date plus all
dividends which are accrued and accumulated but unpaid, whether or not declared
and without interest, up to the calendar quarter immediately preceding the
quarter in which the Conversion Date occurs. The principal amount of the
Debentures issuable upon conversion of Concurrent Preferred Stock is subject to
adjustment in a manner similar to adjustments to the liquidation preference of
Concurrent Preferred Stock. See "Concurrent Preferred Stock -- Liquidation
Preference" below.

Payment-in-Kind. Interest payments on the Debentures may be paid in cash or
in kind.

Interest Rate. The Debentures will bear interest at the rate of 9% per
annum, accruing from the first day of the calendar quarter (the "Accrual Date")
during which the Conversion Date occurred, and payable quarterly at the end of
each calendar quarter commencing on the Accrual Date.

Maturity Date. The Debentures will mature on the tenth anniversary of the
date of issuance of the Concurrent Preferred Stock.

Redemption. Subject to certain adjustments for stock splits, stock
dividends and similar transactions, whenever the Current Market Price (as
defined in the Certificate of Designation) of Concurrent Common Stock exceeds
$3.75, Concurrent may, at its option, redeem all or a portion of the
Debentures, at any time or from time to time, at par plus any accrued interest
thereon. On June 1, 2006, Concurrent is required to redeem all of the
Debentures then outstanding at par plus any accrued interest thereon or at any
time the outstanding principal amount of the Debentures is less than an amount
to be determined.

<PAGE> 51
Conversion of Debentures. Each holder of a Debenture shall have the right,
at the option of such holder, at any time or from time to time, in whole or in
part, to convert such Debenture into fully paid and nonassessable shares of
Concurrent Common Stock. Such conversion of Debentures to shares of Concurrent
Common Stock shall be made at a conversion rate equal to (x) the principal
amount of such Debenture (plus any accrued and unpaid interest thereon) divided
by (y) the applicable conversion price per share of Concurrent Common Stock at
the time of conversion. The conversion price will initially be $2.50, subject
to certain adjustments for stock splits, stock dividends, or subdivisions or
reclassifications of the Concurrent Common Stock. Notwithstanding any other
provision to the contrary, the maximum number of shares in which the Debentures
shall be convertible shall be 4,000,000 (subject to adjustment on a basis
similar to the anti-dilution adjustments contained in the Certificate of
Designation for the Concurrent Preferred Stock).

Ranking. The Debentures will be general unsecured indebtedness of
Concurrent and will rank pari passu in right of payment to existing unsecured
indebtedness; provided, however, that the Debentures shall rank junior to the
claims of Foothill Capital Corporation, Fleet Bank of Massachusetts, N.A. and
CIBC Inc. with respect to the assets secured under the credit facilities
between Concurrent and such entities.

Modification of Debenture Terms. Modifications to provisions of the
indenture or similar instrument for the Debentures (the "Debenture Indenture")
will be effected by majority of outstanding principal amount, with certain
exceptions involving certain fundamental changes which shall require unanimous
approval.

Certain Restrictions. The terms of the Debenture Indenture will
provide that, subject to certain exceptions, Concurrent will not, directly or
indirectly, (i) declare or pay any dividend or make any distribution on account
of any of its capital stock or of its subsidiaries; (ii) purchase or redeem
for value any of its capital stock of Concurrent, any subsidiary or other
affiliates; nor (iii) purchase or redeem for value or make any cash interest
payment on any indebtedness of Concurrent that is subordinated to the
Debentures, unless at the time of such payment no default or event of default
will have occurred and be continuing or would occur as a consequence thereof
and interest due on the Debentures for the four calendar quarters immediately
preceding the quarter in which such payment occurs shall have been paid in
cash. The Debenture Indenture will further provide that Concurrent may not
consolidate or merge or sell or lease all or substantially all of its
properties and assets as an entirety, unless (i) the surviving entity (if other
than Concurrent) is an entity organized in the United States and assumes all
the obligations of Concurrent under the Debenture Indenture and (ii)
immediately before and after giving effect to such transaction, no event of
default with respect to the Debentures will have occurred and be continuing.

Events of Default. The terms of the Debentures will provide that each of
the following constitutes an event of Default: (i) default in the payment when
due of interest on the Debentures for a number of days to be determined by
Concurrent and the Company; (ii) default in payment when due of the principal
of, or premium, if any, on the Debentures; (iii) failure by Concurrent to
comply with any of its other agreements in the Debenture Indenture or the
Debentures for a number of days after notice to be determined by Concurrent and
the Company after notice; and (iv) certain events of bankruptcy or insolvency
with respect to Concurrent or any of its subsidiaries.

THE SHARE HOLDING AGREEMENT

In connection with the Real-time Sale, the Company and Concurrent entered
into a Share Holding Agreement relating to the Purchased Shares and the
Concurrent Common Stock Consideration. The Share Holding Agreement is described
generally below. The description below is qualified entirely by reference to
the Share Holding Agreement, which is incorporated by reference as an exhibit
to the Registration Statement of which this Prospectus is a part. All
references to numbers of shares are subject to adjustment for stock splits or
stock dividends and similar transactions.

Corporate Governance. Pursuant to the Share Holding Agreement, the
Concurrent Board must consist of no more than nine directors, including the
initial directors designated by the Company. The initial designees of the
Company are E. Courtney Siegel (formerly the President and Chief Executive
Officer of the Company), C. Shelton James and Michael F. Maguire. Until
September 30, 1997, the Company will be entitled to designate three members of
the Concurrent Board, provided that if the Company beneficially owns less than
2,400,000 shares of Concurrent Common Stock on the date of the mailing of the
proxy statement for the next annual meeting of Concurrent, the Company will not
be entitled to any representation on the Concurrent Board. After September 30,
1997, as long as the Company beneficially owns at least 10,700,000 shares,
4,700,000 shares or 2,400,000 shares of Concurrent Common Stock, the Company
will be entitled to designate three directors, two directors or one director,

<PAGE> 52

respectively, on the Concurrent Board and Concurrent will maintain a board of
directors of no more than nine directors.

Pursuant to the Share Holding Agreement, the Company's Board of Directors
will consist of no more than seven directors, including Richard P. Rifenburgh,
who is designated by Concurrent. So long as Concurrent beneficially owns at
least 375,000 shares of the Company's Common Stock, Concurrent is entitled to
name one nominee to the Company's Board of Directors, provided that if
Concurrent beneficially owns less than 375,000 shares of the Company's Common
Stock on the date of the mailing of the proxy statement for the next annual
meeting of the Company's shareholders, Concurrent will not be entitled to any
representation on the Company's Board of Directors.

Voting of Shares. Until Concurrent beneficially owns less than 341,589
shares of the Company's Common Stock (the number of shares Concurrent will own
immediately following this offering), Concurrent must be present for all
shareholder meetings for purposes of establishing a quorum and must vote all
securities of the Company owned by it and entitled to vote in favor of matters
recommended by the Company's Board of Directors for approval by shareholders.
So long as either (i) the Company beneficially owns at least 4,700,000 shares
of Concurrent Common Stock or (ii) the Company beneficially owns at least at
least 2,400,000 shares of Concurrent Common Stock and at least one member of
the existing Concurrent Board (other than the Chief Executive Officer) is a
designee of the Company, the Company must be present for all shareholder
meetings for purposes of establishing a quorum and must vote all securities of
Concurrent owned by it and entitled to vote in favor of matters recommended by
the Concurrent Board for approval by shareholders.

Transfer Restrictions. Except in connection with any transfers in
accordance with clause (ii) under "Third Party Offers" below, neither the
Company nor Concurrent nor their subsidiaries may, directly or indirectly,
sell, transfer or otherwise dispose of any securities of the other except (i)
pursuant to a sale to any other person of any such securities in an amount of
less than 5% of the outstanding securities of any class of Concurrent or the
Company, as the case may be (including open market transactions that are not
intended to assist the buyer in acquiring over 5% of the securities of the
other or, if to certain institutional investors eligible to file a statement on
Schedule 13G, greater than 5% but less than 10%); (ii) pursuant to a merger,
consolidation or other business combination if the surviving or purchasing
entity agrees to be bound by the terms of the Share Holding Agreement; (iii)
certain intracompany transfers; (iv) pursuant to the pledge provisions
described below; and (v) in order to, and only to the extent necessary to,
comply with applicable law. For purposes of the provisions regarding
restrictions on transfer, the Concurrent Preferred Stock shall be deemed to be
the same class of securities as the Concurrent Common Stock.

The Company or Concurrent may pledge the securities of the other received in
connection with the Real-time Sale to secure borrowings or other indebtedness
as extended from time to time if (i) the pledgee agrees in writing not to sell,
transfer or otherwise dispose of the securities pledged to it other than
pursuant to an effective registration statement on Form S-3 or an applicable
exemption from registration under the Securities Act; (ii) the pledgee agrees
in writing to be bound by the terms of the Share Holding Agreement; and (iii)
all certificates representing securities pledged to such pledgee bear an
appropriate restrictive legend.

Standstill. Until December 30, 1999, neither Concurrent nor the Company nor
any of their controlled affiliates may, directly or indirectly, seek (i) to
acquire or affect control of the other; (ii) to propose or support any merger,
business combination, change of control of the other or their subsidiaries;
(iii) to gain additional representation on the Board of Directors of the other,
remove directors from the other's Board or change size or composition of such
Board; (iv) to propose any security holder proposal without the approval of the
Board of Directors of the other; (v) deposit any securities of the other in a
voting trust or similar arrangement; (vi) disclose or take any action that
would require disclosure of any intent, purpose, plan, arrangement or proposal
inconsistent with the foregoing; (vii) make any request to amend or waive any
portion of the standstill provision in the Share Holding Agreement, which
request would require public disclosure under applicable law, rule or
regulation; (viii) take any action challenging the validity or enforceability
of the foregoing; (ix) or assist, advise, encourage or negotiate with any
person with respect to, or seek to do, any of the foregoing.

Third Party Offers. As long as the Company beneficially owns more than 10%
of the outstanding voting securities of Concurrent, the Company may either (i)
exercise its right of first refusal with respect to offers by any third party
to acquire Concurrent that has been approved by a majority of the Concurrent
Board or (ii) support such

<PAGE> 53

third party offer, including tender or sale of all the Concurrent securities
owned by it and its controlled affiliates to the third party offeror.

Registration. The Share Holding Agreement requires Concurrent and the
Company to register the shares of their respective common stock received by the
other in connection with the Real-time Sale (or issuable upon conversion of the
Concurrent Preferred Stock) on Form S-3 (to be maintained effective for three
years plus the amount of time during such period that certain standstill
provisions, described below, shall have been in effect) and to list such shares
for trading on the Nasdaq National Market System. For certain periods when the
Company or Concurrent is "in registration" with respect to a public offering of
its shares and the other party holds certain threshold numbers of shares, the
party not in registration is subject to certain standstill provisions
restricting sales of the securities of the other. However, each such
restricted party has the right to include a certain number of shares in the
public offering of the other. An amount of 341,589 shares of Common Stock held
by Concurrent is included in this offering pursuant to the registration
provisions of the Share Holding Agreement. The Share Holding Agreement provides
both the Company and Concurrent certain cross indemnification rights for losses
incurred in connection with the registration of securities, including for
liabilities arising under the Securities Act.

Termination. The Share Holding Agreement will automatically terminate upon
the last to occur of all of the following (i) any standstill period has expired
and (ii) each of the Company and Concurrent own less than 5% of the common
stock of the other.

ANCILLARY AGREEMENTS

The Company and Concurrent are parties to a Noncompetition Agreement, a
Shared Services Agreement, a Lease, A Night Hawk Supplier Agreement and a
CyberGuard Reseller Agreement, each effective upon the closing of the Real-time
Sale. The Noncompetition Agreement contains provisions prohibiting the Company
and Concurrent from competing in the respective markets of each Company for
five years. The Shared Services Agreement, which has a one-year term,
provides for Concurrent to provide certain administrative and personnel-related
services to the Company at prices based on the cost of providing such services
at market rates. The Lease provides for Concurrent to lease approximately
10,000 square feet of Concurrent's Fort Lauderdale facility to the Company
at per square foot. The Lease has a one-year term. The Night Hawk Supplier
Agreement provides for Concurrent to supply the Company's requirements for
Night Hawk computers at advantageous rates. The CyberGuard Reseller Agreement
provides for Concurrent to purchase the Company's products for installation on
Concurrent's Night Hawk computers for resale by Concurrent. Both the Night Hawk
Supplier Agreement and the CyberGuard Reseller Agreement have terms of one
year, and are renewable for as many as two additional one-year terms.

OTHER

Upon the closing of the Real-time Sale, 640,229 options outstanding to
purchase Common Stock became vested and exercisable. In addition, restrictions
on 39,000 and 13,800 shares of Common Stock owned, respectively, by E. Courtney
Siegel, the Company's president and Chief Executive Officer prior to the
Real-time Sale, and Daniel S. Dunleavy, the Company's Chief Financial and Chief
Administrative Officer prior to the Real-time Sale, lapsed upon consummation of
the Real-time Sale. The Company also issued 78,000 and 13,800 shares of Common
Stock, respectively, to Messrs. Siegel and Dunleavy as consideration for their
entering into non-competition agreements with the Company that became effective
upon consummation of the Real-time Sale. In addition, in connection with Mr.
Siegel's non-competition agreement with the Company, Mr. Siegel agreed that
options held by him to purchase 134,001 shares of Common Stock that would
otherwise have become exercisable upon consummation of the Real-time Sale would
instead become exercisable in equal installments on each of October 8, 1996 and
1997.

<PAGE> 54
PRINCIPAL SHAREHOLDERS

The following sets forth, as of June 1, 1996, information with respect to
the beneficial ownership of the Company's Common Stock by: (i) Concurrent (ii)
each person known by the Company to beneficially own more than 5% of the
outstanding shares of the Company's Common Stock; (iii) each director of the
Company; (iv) each of the Company's named executive officers; and (v) all
directors and executive officers as a group. Unless otherwise indicated, each
of the shareholders named in this table: (a) has sole voting and investment
power with respect to all shares of Common Stock beneficially owned and (b) has
the same address as the Company.

<TABLE>
<CAPTION>
NUMBER OF
NAME/ADDRESS SHARES PERCENT
- ------------ -------- -------
<S> <C> <C>
Concurrent Computer Corporation .............. 683,178 10.23%
2 Crescent Place
Oceanport, New Jersey 07757
Okabena Partnership K ........................ 608,800 8.96
5140 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
David L. Babson & Co., Inc. .................. 491,700 7.24
One Memorial Drive
Cambridge, Massachussetts 02142
Paul Tudor Jones II .......................... 451,500 6.65
c/o Tudor Investment Corporation
One Liberty Plaza, 51st Floor
New York, New York 10006(1)
Austin W. Marxe .............................. 366,915 5.40
153 East 53 Street
New York, New York 10022(2)

Robert L. Carberry(3) ........................ 0 *
Patrick O. Wheeler(4) ........................ 3,785 *
Katherine K. Hutchinson(4) ................... 12,900 *
Bradley C. Lesher(4) ......................... 70,642 1.10
Robert F. Perks(2) ........................... 6,477 *
Rick A. Siebenaler(4) ........................ 11,574 *
Brian Foremny(4) ............................. 30,000 *
C. Shelton James(4)(5) ....................... 21,000 *
Michael F. Maguire(4) ........................ 21,000 *
All directors and officers as a group
(9) persons ............................. 177,376 2.55%
</TABLE>

- ------------------
* Less than 1%

(1) Includes 146,600 shares of Harris Common Stock owned by The Raptor Global
Fund Ltd. ("Raptor Ltd."), 77,400 shares of Harris Common Stock owned by
The Raptor Global Fund L.P. ("Raptor L.P."), 30,100 shares of Harris Common
Stock owned by Tudor Arbitrage Partners L.P. ("TAP"), 30,100 shares of
Harris Common Stock owned by Tudor Global Trading LLC ("TGT") and 197,400
shares of Harris Common Stock owned by Tudor BVI Futures, Ltd. ("Tudor
BVI"). Tudor Investment Corporation ("TIC"), Raptor L.P.'s general partner,
shares voting and investment power with respect to shares owned by Raptor
Ltd., Raptor L.P., TAP and Tudor BVI. In addition, Paul Tudor Jones II
("Mr. Jones"), the principal shareholder and executive officer of TIC,
shares voting and investment power with respect to shares owned by TIC.
TGT, sole general partner of TAP, shares voting and investment power with
respect to shares owned by TAP.

(2) Includes 97,705 shares of Common Stock owned by Special Situations Fund
III, L.P. (the "Fund") and 24,600 shares of Common Stock owned by Special
Situations Cayman Fund, L.P. (the "Cayman Fund"). MGP Advisors Limited
Partnership ("MGP"), the Fund's general partner, shares voting and
investment power as to the shares of Common Stock owned by the Fund. AWM
Investment Company, Inc. ("AWM"), the general partner of MGP and the Cayman
Fund, and Austin W. Marxe, the principal shareholder and executive officer
of AWM, share voting and investment power as to the shares of Common Stock
beneficially owned by the MGP, the Fund, and the Cayman Fund.

(3) Does not include options granted pursuant to the Carberry Employment
Agreement to purchase 339,000 shares of Common Stock at an exercise price
of $10.67 per share; the options become exercisable in equal installments
of 113,000 shares on each March 5, 1997, 1998 and 1999.

(4) Includes options that are currently exercisable to purchase Common Stock in
the following amounts: Mr. Wheeler -- 3,000 shares; Ms. Hutchison --
12,600 shares; Mr. Lesher -- 69,000 shares; Mr. Perks -- 6,000 shares;
Mr. Siebenaler -- 11,301 shares; Mr. Foremny -- 30,000 shares; Mr. James
-- 21,000 shares; and Mr. Maguire -- 21,000 shares.

(5) Does not include 255,000 shares that are deemed beneficially owned by
Mr. James as a result of his serving as an executive officer and director
of various investment limited partnerships.

<PAGE> 55

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company's authorized capital stock consists of 20,000,000 shares of
Common Stock, par value of $.01 per share and 5,000,000 shares of Preferred
Stock, par value $.01 per share. As of June 1, 1996, 6,016,927 shares of
Common Stock and no shares of preferred stock were outstanding. An additional
1,693,630 shares of Common Stock may be issued upon the exercise of outstanding
options.

COMMON STOCK

Each holder of Common Stock is entitled to one vote for each share held.
Shareholders do not have the right to cumulate their votes in elections of
directors. Accordingly, holders of a majority of the issued and outstanding
Common Stock will have the right to elect all the Company's directors and
otherwise control the affairs of the Company.

Holders of Common Stock are entitled to dividends on a pro rata basis upon
declaration of dividends by the Board of Directors. Dividends are payable only
out of funds legally available for the payment of dividends. The Board of
Directors is not required to declare dividends, and it currently expects to
retain earnings to finance the development of the Company's business. See
"Dividend Policy."

Upon a liquidation of the Company, holders of the Common Stock will be
entitled to a pro rata distribution of the assets of the Company, after payment
of all amounts owed to the Company's creditors, and subject to any preferential
amount payable to holders of Preferred Stock of the Company, if any. Holders of
Common Stock have no preemptive, subscription, conversion, redemption or
sinking fund rights.

PREFERRED STOCK

The Articles of Incorporation permit the Company's Board of Directors to
issue shares of Preferred Stock in one or more series and to fix the relative
rights, preferences and limitations of each series. Among such rights,
preferences and limitations are dividend rates, provisions of redemption,
rights upon liquidation, conversion privileges and voting powers. Should the
Board of Directors elect to exercise this authority, the rights and privileges
of holders of Common Stock could be made subject to the rights and privileges
of any such series of Preferred Stock. The Board of Directors of the Company
currently has no plans to issue any shares of Preferred Stock. The issuance of
Preferred Stock could have the effect of making it more difficult for a third
party to acquire, or discouraging a third party from acquiring, a majority of
the outstanding voting stock of the Company.

CERTAIN ANTI-TAKEOVER PROVISIONS INCLUDED IN THE COMPANY'S ARTICLES OF
INCORPORATION AND BYLAWS

The Articles of Incorporation provide for a Board of Directors divided
into three classes, as nearly equal in number as possible. The directors are
elected for three-year terms, which are staggered so that the terms of
approximately one-third of the directors expire each year. The Articles of
Incorporation permit removal of directors only for cause by the shareholders of
the Company at a meeting by the affirmative vote of at least 60% of the
outstanding shares entitled to vote for the election of directors (the "Voting
Stock"). The Articles of Incorporation provide that any vacancy on the Board of
Directors may be filled only by the remaining directors then in office.

The Articles of Incorporation also contain provisions which require: (i)
the affirmative vote of 60% of the Voting Stock to amend the Articles of
Incorporation or Bylaws of the Company; and (ii) the demand of not less than
50% of all votes entitled to be cast on any issue to be considered at a
proposed special meeting to call a special meeting of shareholders. In
addition, the Articles of Incorporation require that all shareholder action,
including the election of directors, be taken by means of a vote at a duly
convened shareholders meeting and not by use of written consents.

The Bylaws establish an advance notice procedure for the nomination of
candidates for election as directors by shareholders as well as for shareholder
proposals to be considered at shareholders' meetings.

<PAGE> 56

The above-described provisions may have certain anti-takeover effects. Such
provisions, in addition to the provisions described below, may make it more
difficult for persons, without the approval of the Company's Board of
Directors, to make a tender offer or acquire substantial amounts of the Common
Stock or launch other takeover attempts that a shareholder might consider in
such shareholder's best interests, including attempts that might result in the
payment of a premium over the market price for the Common Stock held by such
shareholder.

CERTAIN PROVISIONS OF FLORIDA LAW

The Company is subject to certain anti-takeover provisions under Florida law
that apply to a public corporation organized under Florida law including the
Florida Control Share Acquisition Act (the "Control Share Act"). The Control
Share Act prohibits the voting of shares in a publicly-held Florida corporation
that are acquired in a "control share acquisition" unless the holders of a
majority of the corporation's voting shares (exclusive of shares held by
officers of the corporation, inside directors or the acquiring party) approve
the granting of voting rights as to the shares acquired in the control share
acquisition or unless the acquisition is approved by the corporation's board of
directors. A "control share acquisition" is defined as an acquisition that
immediately thereafter entitles the acquiring party to voting power within each
of the following ranges: (i) one-fifth or more but less than one-third of such
voting power; (ii) one-third or more but less than a majority of such voting
power; or (iii) a majority or more of such voting power.

RIGHTS AGREEMENT

The Company has adopted and implemented a Shareholder Protection Rights
Agreement (the "Rights Agreement"), dated September 29, 1994, with Society
National Bank, N.A. as "Rights Agent." Pursuant to the terms of the Rights
Agreement, each share of Common Stock has attached a preferred stock purchase
right (the "Rights"). Each Right entitles its holder to purchase from the
Company, after the Separation Time (as defined below), one hundredth of a share
of Preferred Stock, par value $.01 per share, or, at the option of the Company,
one share of Common Stock for $12.67 (the "Exercise Price"), subject to
adjustment. The Rights do not trade separately from the Common Stock unless and
until the Separation Time.

The Rights are evidenced by certificates of the Company's Common Stock until
the close of business on the earlier of (either, the "Separation Time"): (i)
the tenth business day (or such later date as the Board of Directors may from
time to time fix by resolution adopted prior to the Separation Time that would
otherwise have occurred) after the date on which any Person (as defined in the
Rights Agreement) commences a tender or exchange offer that, if consummated,
would result in such Person's becoming an Acquiring Person (as defined below);
and (ii) the first date (the "Flip-in Date") of public announcement by the
Company that a Person has become an Acquiring Person, other than as a result of
a Flip-over Transaction or Event (as defined below); provided that if a tender
or exchange offer referred to in clause (i) is cancelled, terminated or
otherwise withdrawn prior to the Separation Time without the purchase of any
Common Stock pursuant thereto, such offer will be deemed never to have been
made.

An Acquiring Person is any Person having Beneficial Ownership (as defined in
the Rights Agreement) of 15% or more of the outstanding Common Stock, which
term does not include: (i) the Company, any wholly-owned subsidiary of the
Company or any employee stock ownership or other employee benefit plan of the
Company; (ii) any Person who becomes the Beneficial Owner of 15% or more of the
outstanding Common Stock solely as a result of an acquisition of Common Stock
by the Company, until such time as such Person acquires additional Common
Stock, other than through a dividend or stock split; (iii) any Person who
becomes an Acquiring Person without any plan or intent to seek or affect
control of the Company if such Person, upon notice by the Company, promptly
divests sufficient securities such that such 15% or greater Beneficial
Ownership ceases; or (iv) any Person who beneficially owns Common Stock
consisting solely of (A) shares acquired pursuant to the grant or exercise of
an option granted by the Company in connection with an agreement to merge with,
or acquire, the Company at a time at which there is no Acquiring Person, (B)
shares owned by such Person and its affiliates and associates at the time of
such grant and (C) shares, amounting to less than 1% of the outstanding Common
Stock, acquired by affiliates and associates of such Person after the time of
such grant.

The Rights Agreement provides that, until the Separation Time, the Rights
will be transferred only with the Common Stock. Common Stock certificates
issued after the Record Time but prior to the Separation Time will evidence one
Right for each share of Common Stock represented thereby and will contain a
legend incorporating

<PAGE> 57

by reference the terms of the Rights Agreement (as such may be amended from
time to time). Promptly following the Separation Time, separate certificates
evidencing the Rights (the "Rights Certificates") will be mailed to holders of
record of Common Stock at the Separation Time.

The Rights are not be exercisable until the business day following the
Separation Time. The Rights will expire on the earliest of: (i) the Exchange
Time (as defined below); (ii) the close of business on the tenth year
anniversary of the date the Company enters into the Rights Agreement; and (iii)
the date on which the Rights are terminated as described below (in any such
case, the "Expiration Time").

The Exercise Price and the number of Rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution in the event of a
Common Stock dividend on, or a subdivision or a combination into a smaller
number of shares of, Common Stock, or the issuance or distribution of any
securities or assets in respect of, in lieu of or in exchange for Common Stock.

In the event that prior to the Expiration Time a Flip-in Date occurs, the
Company must take such action as necessary to ensure that each Right (other
than Rights beneficially owned by the Acquiring Person or any affiliate or
associate thereof, which Rights will become void) will constitute the right to
purchase from the Company, upon its exercise, that number of shares of Common
Stock of the Company having an aggregate Market Price (as defined in the Rights
Agreement), on the date of the public announcement of a Person becoming an
Acquiring Person (the "Stock Acquisition Date"), equal to twice the Exercise
Price for an amount in cash equal to the then current Exercise Price. In
addition, the Board of Directors may, at any time after a Flip-in Date and
prior to the time that an Acquiring Person becomes the Beneficial Owner of more
than 50% of the outstanding Common Stock, elect to exchange all (but not less
than all) the then outstanding Rights (other than Rights beneficially owned by
the Acquiring Person or any affiliate or associate thereof, which Rights become
void) for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of the Separation Time
(the "Exchange Ratio"). Immediately upon such action by the Board of Directors
(the "Exchange Time"), the right to exercise the Rights will terminate and each
Right will thereafter represent only the right to receive a number of shares of
Common Stock equal to the Exchange Ratio.

Whenever the Company becomes obligated as described in the preceding
paragraph to issue shares of Common Stock upon exercise of or in exchange for
Rights, the Company may substitute therefor shares of Preferred Stock, at a
ratio of one hundredth of a share of Preferred Stock for each share of Common
Stock so issuable.

In the event that prior to the Expiration Time the Company enters into,
consummates or permits to occur a transaction or series of transactions after
the time an Acquiring Person has become such in which, directly or indirectly,
(i) the Company shall consolidate or merge or participate in a binding share
exchange with any other Person if, at the time of the consolidation, merger or
share exchange or at the time the Company enters into an agreement with respect
to such consolidation, merger or share exchange, the Acquiring Person controls
the Board of Directors and any term of, or arrangement concerning the treatment
of shares of, capital stock in such consolidation, merger or share exchange
relating to the Acquiring Person is not identical to the terms and arrangements
relating to other holders of Common Stock or (ii) the Company shall sell or
otherwise transfer (or one or more if its subsidiaries shall sell or otherwise
transfer) assets (A) aggregating more than 50% of the assets (measured by
either book value or fair market value) or (B) generating more than 50% of the
operating income or cash flow of the Company and its subsidiaries (taken as a
whole) to any other Person (other than the Company or one or more of its
wholly-owned subsidiaries) or two or more such Persons which are affiliated or
otherwise acting in concert, if, at the time of such sale or transfer of assets
or at the time the Company (or any such subsidiary) enters into an agreement
with respect to such sale or transfer, the Acquiring Person controls the Board
of Directors (a "Flip-over Transaction or Event"), the Company must take such
action as is necessary to ensure, and must not enter into, consummate or permit
to occur such Flip-over Transaction or Event until it has entered into a
supplemental agreement with the Person engaging in such Flip-over Transaction
or Event or the parent corporation thereof (the "Flip-over Entity"), for the
benefit of the holders of the Rights, providing, that upon consummation or
occurrence of the Flip-over Transaction or Event (i) each Right will thereafter
constitute the right to purchase from the Flip-over Entity, upon its exercise,
that number of shares of common stock of the Flip-over Entity having an
aggregate Market Price on the date of consummation or occurrence of such
Flip-over Transaction or Event equal

<PAGE> 58

to twice the Exercise Price for an amount in cash equal to the then current
Exercise Price and (ii) the Flip-over Entity will thereafter be liable for, and
must assume, by virtue of such Flip-over Transaction or Event and such
supplemental agreement, all the obligations and duties of the Company pursuant
to the Rights Agreement. For purposes of the foregoing description, the term
"Acquiring Person" includes any Acquiring Person and its Affiliates and
Associates counted together as a single Person.

The Board of Directors may, at any time prior to the Flip-in Date, terminate
the Rights without any payment to the holders thereof. Immediately upon the
action of the Board of Directors to terminate the Rights, without further
action and without any notice, the right to exercise the Rights will terminate
and each Right will thereafter be null and void.

The holders of Rights will, solely by reason of their ownership of Rights,
have no rights as shareholders of the Company, including the right to vote or
to receive dividends.

The Company and the Rights Agent may from time to time supplement or amend
the Rights Agreement without the approval of any holders of Rights: (i) prior
to the Flip-in Date, in any respect; and (ii) after the Flip-in Date, to make
any changes that the Company may deem necessary or desirable and that do not
materially adversely affect the interests of the holders of Rights generally or
in order to cure any ambiguity or to correct or supplement any provision
contained therein which may be inconsistent with any other provision therein or
otherwise defective.

The Rights will not prevent a takeover of the Company. However, the Rights
may cause substantial economic and voting dilution to a person or group that
acquires 15% or more of the Common Stock unless the Rights are first terminated
by the Board of Directors. Nevertheless, management believes that the Rights
should not interfere with a transaction that is in the best interests of the
Company and its shareholders because the Rights can be terminated on or prior
to the Flip-in Date, before the consummation of such transaction.

As long as the Rights are attached to the Common Stock, the Company will
issue one Right with each new share of Common Stock, including the shares
offered by the Company hereby, so that all shares will have Rights attached.
The Company's Board of Directors has reserved for issuance upon exercise of the
Rights 60,000 shares of Preferred Stock.

<PAGE> 59

EXPERTS

The consolidated financial statements of Harris Computer Systems
Corporation as of September 30, 1995 and 1994 and for the year ended September
30, 1995 and the three months ended September 30, 1994 have been incorporated
by reference herein and in the Registration Statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants, and
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing. The financial statements of Harris Computer
Systems Corporation -- Trusted Systems Division (a division of Harris Computer
Systems Corporation) as of March 30, 1996 and September 30, 1995 and for the
six months ended March 30, 1996 and the year ended September 30, 1995 have been
included herein and in the Registration Statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.

The consolidated financial statements of Harris Computer Systems Business at
June 30, 1994 and 1993 and for the years then ended appearing in Harris
Computer Systems Corporation's annual report on Form 10-K have been audited by
Ernst & Young LLP, independent auditors, as set forth on their report included
therein and incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for the
Company by the law firm of Holland & Knight, One East Broward Boulevard, Suite
1300, Fort Lauderdale, Florida 33301.

57
<PAGE> 60

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants.................................... F-2
Balance Sheets as of March 30, 1996 and September 30, 1995............................ F-3
Statements of Operations and Cumulative Trusted Systems Division Losses for the Six
Months Ended March 30, 1996 and Year Ended September 30, 1995....................... F-4
Statements of Cash Flows for the Six Months Ended March 30, 1996 and Year Ended
September 30, 1995.................................................................. F-5
Notes to Financial Statements......................................................... F-6
</TABLE>

F-1
<PAGE> 61

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors
Harris Computer Systems Corporation:

We have audited the accompanying balance sheets of Harris Computer Systems
Corporation -- Trusted Systems Division (a division of Harris Computer Systems
Corporation) as of March 30, 1996 and September 30, 1995 and the related
statements of operations and changes in cumulative Trusted Systems Division
losses and cash flows for the six months ended March 30, 1996 and the year ended
September 30, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Harris Computer Systems
Corporation -- Trusted Systems Division as of March 30, 1996 and September 30,
1995, and the results of its operation and its cash flows for the six months
ended March 30, 1996 and the year ended September 30, 1995, in conformity with
generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Miami, Florida
May 10, 1996

F-2
<PAGE> 62

HARRIS COMPUTER SYSTEMS CORPORATION -- TRUSTED SYSTEMS DIVISION

BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 30, SEPTEMBER 30,
1996 1995
--------- -------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Accounts receivable, less allowance for uncollectible accounts of $29
at March 30, 1996 and $84 at September 30, 1995.................... $ 2,626 $ 814
Inventories.......................................................... 87 121
Prepaid expenses..................................................... 49 61
--------- -------------
Total current assets....................................... 2,762 996
Machinery and equipment at cost, less accumulated depreciation of
$953 at March 30, 1996 and $828 at September 30, 1995.............. 1,034 716
Capitalized computer software development costs, less accumulated
amortization of $602 at March 30, 1996, and $408 at September 30,
1995............................................................... 2,726 1,545
--------- -------------
Total assets............................................... $ 6,522 $ 3,257
======= ==========
LIABILITIES AND CUMULATIVE TRUSTED SYSTEMS DIVISION LOSSES
Due to Harris Computer Systems Corporation........................... $12,053 $ 6,365
--------- -------------
Total liabilities.......................................... 12,053 6,365
Cumulative Trusted Systems Division losses........................... (5,531) (3,108)
--------- -------------
Total liabilities and Cumulative Trusted Systems Division
losses................................................... $ 6,522 $ 3,257
======= ==========
</TABLE>

See accompanying notes to financial statements.

F-3
<PAGE> 63

HARRIS COMPUTER SYSTEMS CORPORATION -- TRUSTED SYSTEMS DIVISION

STATEMENTS OF OPERATIONS
AND CUMULATIVE TRUSTED SYSTEMS DIVISION LOSSES

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
MARCH 30, SEPTEMBER 30,
1996 1995
---------- -------------
(IN THOUSANDS)
<S> <C> <C>
Sales
Products.......................................................... $ 4,177 $ 4,534
Other............................................................. 218 283
---------- -------------
Total sales............................................... 4,395 4,817
Cost of sales
Products.......................................................... 2,823 3,001
Other............................................................. 92 139
---------- -------------
Total cost of sales....................................... 2,915 3,140
Gross profit........................................................ 1,480 1,677
Other operating expense
Research and development.......................................... 578 835
Selling, general and administrative............................... 3,330 3,999
---------- -------------
Total other operating expenses............................ 3,908 4,834
---------- -------------
Operating loss...................................................... (2,428) (3,157)
Interest income..................................................... 26 49
Other expense....................................................... (21) --
---------- -------------
Total other income........................................ 5 49
---------- -------------
Net loss............................................................ $ (2,423) $(3,108)
======== ==========
Changes in cumulative Trusted Systems Division losses:
Cumulative Trusted Systems Division losses, beginning of period... $ (3,108) $ --
Net loss.......................................................... (2,423) (3,108)
---------- -------------
Cumulative Trusted Systems Division losses, end of period......... $ (5,531) $(3,108)
======== ==========
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE> 64

HARRIS COMPUTER SYSTEMS CORPORATION -- TRUSTED SYSTEMS DIVISION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER
MARCH 30, 30,
1996 1995
---------- ------------
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities
Net loss........................................................... $ (2,423) $ (3,108)
Adjustment to reconcile net loss to net cash provided from (used
in) operating activities:
Depreciation.................................................... 125 415
Amortization.................................................... 206 278
Bad debt expense................................................ -- 84
Changes in assets and liabilities
Accounts receivables.......................................... (1,812) 5,062
Inventories................................................... 34 (16)
---------- ------------
Net cash provided from (used in) operating activities...... (3,870) 2,715
---------- ------------
Cash flows from investing activities
Additions to machinery and equipment............................... (443) (635)
Software development costs......................................... (1,375) (653)
---------- ------------
Net cash used in investing activities...................... (1,818) (1,288)
---------- ------------
Cash flows from financing activities
Increase (decrease) in due to Harris Computer Systems Corporation,
net............................................................. 5,688 (1,427)
---------- ------------
Net cash provided from (used in) financing activities...... 5,688 (1,427)
---------- ------------
Net increase in cash and cash equivalents............................ -- --
Cash and cash equivalents, beginning of period....................... -- --
---------- ------------
Cash and cash equivalents, end of period............................. $ -- $ --
======== ==========
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE> 65

HARRIS COMPUTER SYSTEMS CORPORATION -- TRUSTED SYSTEMS DIVISION

NOTES TO FINANCIAL STATEMENTS
MARCH 30, 1996 AND SEPTEMBER 30, 1995
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

1. NATURE OF BUSINESS

Harris Computer Systems Corporation -- Trusted Division (the "Division"),
is a division of Harris Computer Systems Corporation ("Harris"). The Division is
engaged in supplying computer and network security products, including operating
systems and firewall application products, to commercial and government markets
in the United States and abroad.

On November 5, 1995, Harris entered into an agreement and plan of merger
and reorganization with Concurrent Computer Corporation ("Concurrent"). The
transaction contemplated between Harris and Concurrent was revised. On March 26,
1996, Harris and Concurrent signed a Purchase and Sale Agreement. Under the
revised transaction structure, Harris will sell its Real-time computer business
(the "Real-time Business") and 683,178 shares of its common stock to Concurrent
in exchange for (i) 10 million newly issued shares of Concurrent common stock,
par value $0.01 per share, (ii) 1 million convertible exchangeable preferred
stock of Concurrent paying a 9% cumulative annual dividend quarterly in arrears
with an aggregate liquidation preference of $10,000 subject to adjustment, to
reflect, among other things, the amount of net current assets of the Real-time
Business transferred in the Real-time Sale and (iii) the assumption of certain
liabilities of the Real-time Business hereafter defined as (the "Real-time
Sale"). The Real-time Sale is subject to a number of conditions including
approval of the shareholders of each company.

Immediately following the Real-time Sale, Concurrent's shareholders are
expected to own approximately 77% of Concurrent's outstanding common stock, with
the balance to be owned by Harris. Harris' shareholders will own approximately
90% of its common stock, with Concurrent owning approximately 10%; Harris could
increase its position in Concurrent from approximately 23% to approximately 29%
upon full conversion of the preferred stock.

Harris will retain its Trusted Systems product line after the Real-time
Sale.

2. LIQUIDITY

At March 30, 1996, the Division had net current assets of $2,762 comprised
mainly of accounts receivables, inventory and other prepaid expenses compared to
$996 at September 30, 1995. The Division increased its investment in machinery
and equipment and capitalized software by $443 and $1,375 respectively for the
six months ended March 30, 1996 and by $635 and $653, respectively, for the year
ended September 30, 1995.

Since the formation of Harris Computer Systems Corporation in August 1994,
the Division has relied upon the Real-time Business to fund its operating
working capital and capital asset purchase requirements. Inception-to-date
funding of the Division by the Real-time Business is disclosed as "Due to Harris
Computer Systems Corporation" in the "Liabilities and Cumulative Trusted
Division Losses" section of the Balance Sheet. Continued operational funding of
the Division by the Real-time Business is expected to continue until the sale of
the Real-time Business assets to Concurrent is complete.

Following the Real-time Sale, the Division expects to fund its operational
requirements through various means. Initially, the Division expects to reduce
its stock holding in Concurrent Corporation. While the Company may sell or
pledge part of the Concurrent Common Stock consideration to generate cash, the
Company's ability to do so is subject to certain restrictions set forth in the
Share Holding Agreement. The proceeds from the Concurrent Stock Sale are
expected to be utilized to provide working capital for the Company's operations.

At the present time, Division management is not able to predict whether
funding sources from operations and the sale of Concurrent stock will be
sufficient to support its long-term working capital and capital

F-6
<PAGE> 66

HARRIS COMPUTER SYSTEMS CORPORATION -- TRUSTED SYSTEMS DIVISION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

expenditure requirements. If management determines that additional funding is
required to support its on-going or strategic requirements, external financing
may be sought. These external financing sources may include, but are not limited
to, asset-backed lines of credit and/or funds generated through the issuance of
additional shares of Harris' stock. Although there can be no assurance that
external sources of financing will be available, or that, if available, such
financing will be on acceptable terms, management believes that such funding
should be available if required.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of Reporting -- The accompanying financial statements include the
operations, assets and liabilities of the Division. The financial statements do
not include Harris' corporate assets and liabilities not specifically
identifiable to the Division. Further, certain cost of goods sold components and
operating expense items were also allocated based on reasonable allocation
methods. The financial information included herein may not necessarily reflect
the financial position and results of operations of the Division in the future
or what the financial position and results of operations of the Division would
have been had it been a separate, stand-alone entity during the periods covered.

Inventories -- Inventories are carried at the lower of cost, determined by
the First-In-First-Out (FIFO) method, or market.

Machinery and Equipment -- Machinery and equipment is carried on the basis
of cost. Depreciation is computed by the straight-line method using the
estimated useful lives of the assets.

Software Development Costs -- The Division capitalizes costs related to the
development of certain software products. Capitalization begins when
technological feasibility has been established and ends when the product is
available for general release to customers. Software development costs incurred
prior to technological feasibility are considered research and development costs
and are expensed as incurred. Capitalized costs are amortized as the greater of
the amount computed using the ratio that current gross revenues for a product
bear to the total current and anticipated future gross revenues for that product
or the straight-line method.

Due to Harris Computer Systems Corporation -- The Due to Harris Computer
Systems Corporation represents the net amount assumed to have been paid for or
accrued for by Harris on behalf of the Division since October 1, 1994. This
assumption is reasonable in light of the fact that Real-Time and the Division
share the same operating infrastructure, substantially all operating costs are
commingled, and the predominance of Real Time to Harris.

Revenue Recognition -- Revenue is recognized from sales when a product is
shipped, from rentals as they accrue, and from services and maintenance when
performed. Unearned income on service contracts is amortized by the
straight-line method over the term of the contracts. Revenue from long-term
software contracts is accounted for by the percentage of completion method
whereby income is recognized based on the estimated stage of completion of
individual contracts using costs incurred as a percentage of total estimated
costs at completion. Losses on long-term contracts are recognized in the period
in which such losses are determined.

Income Taxes -- For the periods presented, the Division was included in the
consolidated Federal income tax return of Harris. The income tax provision
presented has been determined, as if the Division was a stand-alone business
filing separate tax returns for the six months ended March 30, 1996 and the year
ended September 30, 1995.

Certain items of revenue and expense are reported for Federal income tax
purposes in different periods than for financial reporting purposes and are
accounted for under the asset and liability method as required by

F-7
<PAGE> 67

HARRIS COMPUTER SYSTEMS CORPORATION -- TRUSTED SYSTEMS DIVISION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

the provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("FAS No. 109").

FAS No. 109 requires the asset and liability method of accounting for
income taxes. Under the asset and liability method, a deferred tax asset or
liability is recognized for temporary differences between financial reporting
and income tax bases of assets and liabilities, tax credit carryforwards and
operating loss carryforwards. A valuation allowance is established to reduce
deferred tax assets if it is more likely than not that such deferred tax assets
will not be realized.

Use of Estimates -- Management of the Division has made a number of
estimates and assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from these estimates.

4. SOFTWARE DEVELOPMENT COSTS

Software development costs capitalized were $1,375 and $653 for the six
months ended March 30, 1996 and the year ended September 30, 1995, respectively.
Software amortization expenses were $194 and $234 for the six months ended March
30, 1996 and the year ended September 30, 1995, respectively.

5. INCOME TAXES

As disclosed in Note 1, Harris Computer Systems Corporation -- Trusted
Systems Division is a division of Harris Computer Systems Corporation. The
deferred tax inventory shown below reflects deferred tax assets and liabilities
as though the Division was a separate company and not part of a consolidated
filing for U.S. Federal income tax purposes.

There is no provision for income taxes because the Division incurred
operating losses for both book and tax purposes during the six months ended
March 30, 1996 and the year ended September 30, 1995.

The components of deferred income tax assets (liabilities) are as follows:

<TABLE>
<CAPTION>
MARCH 30, SEPTEMBER 30,
1996 1995
--------- -------------
<S> <C> <C>
Net operating losses........................................... $ 2,380 $ 1,315
Depreciation................................................... (52) (39)
Capitalized software........................................... (927) (525)
Accrued vacation............................................... 41 39
All other -- net............................................... 56 26
Valuation allowance............................................ (1,498) (816)
--------- -------------
Net deferred income taxes............................ $ -- $ --
======= ==========
</TABLE>

The net increase in the total valuation allowance for the six months ended
March 30, 1996 was $682.

A reconciliation of the effective income tax rate and the statutory United
States income tax rate follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 30, SEPTEMBER 30,
1996 1995
----------------- -------------
<S> <C> <C>
Statutory U.S. income tax rate.......................... (34.0)% (34.0)%
Operating loss carryforwards............................ 31.0 32.2
Other Items............................................. 3.0 1.8
------ ------
Effective income tax rate............................... --% --%
============== ==========
</TABLE>

F-8
<PAGE> 68

HARRIS COMPUTER SYSTEMS CORPORATION -- TRUSTED SYSTEMS DIVISION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

As of March 30, 1996, the Division has U.S. net operating loss
carryforwards of approximately $7,000. The Division's net operating loss
carryforwards begin to expire in 2010.

6. INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
MARCH 30, SEPTEMBER 30,
1996 1995
--------- -------------
<S> <C> <C>
Work in Process.............................................. $87 $ 31
Raw materials................................................ -- 90
--- ------
$87 $ 121
======= ==========
</TABLE>

7. MACHINERY AND EQUIPMENT, NET

Machinery and equipment, net is summarized as follows:

<TABLE>
<CAPTION>
ESTIMATED
MARCH 30, SEPTEMBER 30, USEFUL LIFE
1996 1995 (IN YEARS)
--------- ------------- -----------
<S> <C> <C> <C>
Machinery and equipment.................................. $ 1,334 $ 1,143 5-10
Loan equipment and service parts......................... 653 401 1-5
--------- -------------
Gross machinery and equipment............................ 1,987 1,544
Less: Accumulated depreciation........................... 953 828
--------- -------------
Net machinery and equipment.............................. $ 1,034 $ 716
======= ==========
</TABLE>

8. EMPLOYEE BENEFIT PLANS

The employees of Harris Computer Systems Corporation -- Trusted Systems
Division are eligible to participate in the Harris Computer Systems Corporation
401(k) savings plan (the "Plan"). An employee is eligible to participate in the
Plan on the date he completes one year of service. The amount of profit-sharing
contributions made is discretionary and shall be determined based on a
percentage of adjusted net income before taxes. Each participant may contribute
up to 12% of his compensation into the Plan. Matching contributions are made on
behalf of each participant for the first 6% of their individual contribution.
Participant's profit-sharing and matching contributions vest over a seven-year
period. The Division's contributions to the Plan were $99 and $195 for the six
months ended March 30, 1996 and the year ended September 30, 1995, respectively.

9. CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Division to a
concentration of credit risk principally consist of trade receivables.
Concentrations of credit risk with respect to receivables are limited due to the
Division's large number of customers.

10. GEOGRAPHIC INFORMATION

The Division operates exclusively in the computer systems industry. A
significant portion of the Division's sales are to contractors who resell the
Division's computer and network systems to the U.S. Government and its agencies
as the ultimate end-user. These sales represented approximately 24% and 58% of
the Division's sales for the six months ended March 30, 1996 and the year ended
September 30, 1995, respectively. The Division had two significant commercial
customers, who combined, accounted for 20% and 14% of total sales

F-9
<PAGE> 69

HARRIS COMPUTER SYSTEMS CORPORATION -- TRUSTED SYSTEMS DIVISION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

for the periods ended March 30, 1996 and September 30, 1995, respectively. No
other customers individually represented more than 5% of total sales for the
referenced periods.

A summary of the Division's operations by geographic area is summarized
below:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 30,
1996
--------------------------
U.S. EUROPEAN TOTAL
------ -------- ------
<S> <C> <C> <C>
Net Sales................................................... $3,357 $1,038 $4,395
====== ======= ======
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
1995
--------------------------
U.S. EUROPEAN TOTAL
------ -------- ------
<S> <C> <C> <C>
Net Sales................................................... $4,356 $ 461 $4,817
====== ======= ======
</TABLE>

U.S. export sales were $983 and $1,016 for the six months ended March 30,
1996 and for the year ended September 30, 1995, respectively.

Identifiable assets relating to European operations were $958 and $287 at
March 30, 1996 and September 30, 1995, respectively.

Foreign operations principally represent sales offices and disclosure of
separate operating profit is not meaningful.

F-10
<PAGE> 70
=============================================================================

NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OR PROJECTIONS OF FUTURE PERFORMANCE
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND ANY SUCH OTHER INFORMATION,
PROJECTIONS OR REPRESENTATIONS IF GIVEN OR MADE MUST NOT BE RELIED UPON AS
HAVING BEEN SO AUTHORIZED. THE DELIVERY OF THIS PROSPECTUS OF ANY SALE
HEREUNDER AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.

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

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Information by Reference . . . . . 2
Forward Looking Statements . . . . . . . . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . . . . . . 3
Strategy . . . . . . . . . . . . . . . . . . . . . . . . . 4
Recent Events . . . . . . . . . . . . . . . . . . . . . . . 5
Investment in Concurrent . . . . . . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . 7
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 17
The Selling Shareholder . . . . . . . . . . . . . . . . . . 17
Plan of Distribution . . . . . . . . . . . . . . . . . . . 18
Pro Forma Condensed Consolidated Financial Statements . . . 19
Selected Financial Data . . . . . . . . . . . . . . . . . . 23
Management's Discusssion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 24
Business . . . . . . . . . . . . . . . . . . . . . . . . . 29
Management . . . . . . . . . . . . . . . . . . . . . . . . 42
Certain Transactions . . . . . . . . . . . . . . . . . . . 46
Principal Shareholders . . . . . . . . . . . . . . . . . . 52
Description of Capital Stock . . . . . . . . . . . . . . . 53
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>

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

=============================================================================

341,589 SHARES

CyberGuard Corporation

Common Stock

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

PROSPECTUS

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

___________ 1996

================================================================================

<PAGE> 71
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following sets forth expenses and costs expected to be incurred in
connection with the issuance and distribution of the common stock being
registered and payable by the Company. All amounts are estimated except for
the SEC registration fee and the Nasdaq fees.

SEC Registration Fee . . . . . . . . . . . . . . . . . . . $ 2,135
Nasdaq fees . . . . . . . . . . . . . . . . . . . . . . . . 13,664
Transfer agent and registrar fees . . . . . . . . . . . . . 0
Legal fees and expenses . . . . . . . . . . . . . . . . . . 25,000
Accounting fees and expenses . . . . . . . . . . . . . . . 10,000
Blue Sky fees and expenses . . . . . . . . . . . . . . . . 10,000
Printing expenses . . . . . . . . . . . . . . . . . . . . . 30,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 10,000
Total . . . . . . . . . . . . . . . . . . . . . . . . .

- ---------------------------
* To be supplied by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Florida Business Corporation Act ("FBCA") and the Company's Articles of
Incorporation provide that in certain cases, each officer and director of the
Company shall be indemnified by the Company against certain costs, expenses and
liabilities which he or she may incur in his or her capacity as such.

The Company's Articles provide:

To the fullest extent permitted by the Florida Business Corporation
Act, the Corporation shall indemnify, or advance expenses to, any person
made, or threatened to be made, a party to any action, suit or proceeding by
reason of the fact that such person (i) is or was a director of the
Corporation; (ii) is or was serving at the request of the Corporation as a
director of another corporation; (iii) is or was an officer of the
Corporation, provided that such person is or was at the time a director of
the Corporation; or (iv) is or was serving at the request of the Corporation
as an officer of another corporation, provided that such person is or was at
the time a director of the Corporation or a director of such other
corporation, serving at the request of the Corporation. Unless otherwise
expressly prohibited by the Florida Business Corporation Act, and except as
otherwise provided in the previous sentence, the Board of Directors of the
Corporation shall have the sole and exclusive discretion, on such terms and
conditions as it shall determine, to indemnify, or advance expenses to, any
person made, or threatened to be made, a party to any action, suit or
proceeding by reason of the fact that such person is or was an officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as an officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. No person falling
within the purview of this paragraph may apply for indemnification or
advancement of expenses to any court of competent jurisdiction.

FBCA 607.0850 "Indemnification of officers, directors, employees and
agents," provides:

(1) A corporation shall have power to indemnify any person who was or is
a party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of
the corporation as a director, officer,

II-1
<PAGE> 72

employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise against liability incurred in connection with
such proceeding, including any appeal thereof, if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any proceeding by judgment, order, settlement, or conviction
or upon a plea of nolo contendere or its equivalent shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in, or not opposed to, the best
interests of the corporation or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.

(2) A corporation shall have power to indemnify any person, who was or
is a party to any proceeding by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or other
enterprise, against expenses and amounts paid in settlement not exceeding,
in the judgment of the board of directors, the estimated expense of
litigating the proceeding to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such proceeding, including any
appeal thereof. Such indemnification shall be authorized if such person
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, except that no
indemnification shall be made under this subsection in respect of any claim,
issue, or matter as to which such person shall have been adjudged to be
liable unless, and only to the extent that, the court in which such
proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but
in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such court shall
deem proper.

(3) To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsection (1) or subsection (2), or in defense of
any claim, issue, or matter therein, he shall be indemnified against
expenses actually and reasonably incurred by him in connection therewith.

(4) Any indemnification under subsection (1) or subsection (2), unless
pursuant to a determination by a court, shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in subsection (1) or subsection (2). Such determination shall be made:

(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;

(b) If such a quorum is not obtainable or, even if obtainable, by
majority vote of a committee duly designated by the board of directors (in
which directors who are parties may participate) consisting solely of two or
more directors not at the time parties to the proceeding;

1. Selected by the board of directors prescribed in paragraph (a)
or the committee prescribed in paragraph (b); or

2. If a quorum of the directors cannot be obtained for paragraph
(1) and the committee cannot be designated under paragraph (b), selected by
majority vote of the full board of directors (in which directors who are
parties may participate); or

II-2
<PAGE> 73

(d) By the shareholders by a majority vote of a quorum consisting of
shareholders who were not parties to such proceeding or, if no such quorum
is obtainable, by a majority vote of shareholders who were not parties to
such proceeding.

(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of
permissibility is made by independent legal counsel, persons specified by
paragraph (4)(c) shall evaluate the reasonableness of expenses and may
authorize indemnification.

(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if he is ultimately
found not to be entitled to indemnification by the corporation pursuant to
this section. Expenses incurred by other employees and agents may be paid in
advance upon such terms or conditions that the board of directors deems
appropriate.

(7) The indemnification and advancement of expenses provided pursuant to
this section are not exclusive, and a corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office. However, indemnification or advancement of expenses shall not
be made to or on behalf of any director, officer, employee, or agent if a
judgment or other final adjudication establishes that his actions, or
omissions to act, were material to the cause of action so adjudicated and
constitute:

(a) A violation of the criminal law, unless the director, officer,
employee, or agent had reasonable cause to believe his conduct was lawful or
had no reasonable cause to believe his conduct was unlawful;

(b) A transaction from which the director, officer, employee, or
agent derived an improper personal benefit;

(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in
the right of a shareholder.

(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person, unless otherwise provided when authorized
or ratified.

(9) Unless the corporation's articles of incorporation provide
otherwise, notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary determination of the board or of
the shareholders in the specific case, a director, officer, employee, or
agent of the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting
the proceeding, to the circuit court, or to another court of competent
jurisdiction. On receipt of an application, the court, after giving any
notice that it considers necessary, may order indemnification and
advancement of expenses, including expenses incurred in seeking
court-ordered indemnification or advancement of expenses, if it determines
that:

II-3
<PAGE> 74

(a) The director, officer, employee, or agent is entitled to
mandatory indemnification under subsection (3), in which case the court
shall also order the corporation to pay the director reasonable expenses
incurred in obtaining court-ordered indemnification or advancement of
expenses;

(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the
exercise by the corporation of its power pursuant to subsection (7); or

(c) The director, officer, employee, or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or both,
in view of all the relevant circumstances, regardless of whether such person
met the standard of conduct set forth in subsection (1), subsection (2), or
subsection (7).

(10) For purposes of this section, the term "corporation" includes, in
addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger, so that any person who is or was a director, officer, employee, or
agent of a constituent corporation, or is or was serving at the request of a
constituent corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise,
is in the same position under this section with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.

(11) For purposes of this section;

(a) The term "other enterprises" includes employee benefit plans;

(b) The term "expenses" includes counsel fees, including those for
appeal;

(c) The term "liability" includes obligations to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with respect to
any employee benefit plan), and expenses actually and reasonably incurred
with respect to a proceeding;

(d) The term "proceeding" includes any threatened, pending, or
completed action, suit, or other type of proceeding, whether civil,
criminal, administrative, or investigative and whether formal or informal;

(e) The term "agent" includes a volunteer;

(f) The term "serving at the request of the corporation" includes any
service as a director, officer, employee, or agent of the corporation that
imposes duties on such persons, including duties relating to an employee
benefit plan and its participants or beneficiaries; and

(g) The term "not opposed to the best interest of the corporation"
describes the actions of a person who acts in good faith and in a manner he
reasonably believes to be in the best interests of the participants and
beneficiaries of an employee benefit plan.

(12) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or agent
of the corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this section.

ITEM 16. EXHIBITS

The following documents are filed as exhibits to this registration
statement:

II-4
<PAGE> 75

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
<S> <C>
2.01 Restated Purchase and Sale Agreement between Concurrent Computer Corporation and the Registrant dated May 23,
1996*

4.01 Form of Common Stock Certificate******

4.02 Form of Stockholder Rights Plan**

4.03 Non-Statutory Stock Option Agreement dated as of October 8, 1994 between the Company and Robert E.
Chism****

4.04 Non-Statutory Stock Option Agreement dated as of October 8, 1994 between the Company and Robert T.
Menzel****

4.05 Non-Statutory Stock Option Agreement dated as of October 8, 1994 between the Company and Michael N.
Smith****

4.06 Non-Statutory Stock Option Agreement dated as of October 8, 1994 between the Company and Bradley C.
Lesher****

4.07 Non-Statutory Stock Option Agreement dated as of October 8, 1994 between the Company and Daniel S.
Dunleavy****

4.08 Non-Statutory Stock Option Agreement dated as of October 8, 1994 between the Company and E. Courtney
Siegel****

4.09 Restricted Stock Award Agreement dated as of October 8, 1994 between the Company and Daniel S. Dunleavy****

4.10 Restricted Stock Award Agreement dated as of October 8, 1994 between the Company and E. Courtney Siegel****

4.11 Form of Share Holding Agreement between Concurrent Computer Corporation and the Company*****

5.01 Opinion of Holland & Knight (previously filed)

23.01 Consent of KPMG Peat Marwick LLP, Independent Certified Public Accountants

23.02 Consent of Ernst & Young LLP, Independent Certified Public Accountants

23.03 Consent of Coopers & Lybrand, L.L.P.

23.04 Consent of Holland & Knight (included in Exhibit 5)

24.01 Power of Attorney (previously filed)
</TABLE>

- ------------------------
* Incorporated by reference to Annex A of the Registrant's definitive
proxy statement as filed with the Commission on May 24, 1996.
** Filed with Post-Effective Amendment No. 1 to the Company's
Registration Statement on Form 10, dated September 29, 1994, File No.
0-24544 and incorporated herein by reference.
*** Filed with the Company's Current Report on Form 8-K dated March 26,
1996 and incorporated herein by reference.

II-5
<PAGE> 76

<TABLE>
<S> <C>
**** Filed with the Company's Quarterly Report on Form 10-Q for the period ending December 30, 1994 and
incorporated herein by reference.
***** Filed with the Company's Registration Statement on Form S-3 dated May 23, 1996 (File No. 333-04407) and
incorporated herein by reference.
****** Filed with Amendment No. 1 to the Company's Registration Statement on
Form S-3 dated June 21, 1996 (File No. 333-04407) and incorporated
herein by reference.
</TABLE>

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

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

(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Act");

(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;

(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.

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

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

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

II-6
<PAGE> 77

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fort Lauderdale, Florida on June 24, 1996.

HARRIS COMPUTER SYSTEMS CORPORATION

By: /s/ E. Courteny Siegel*
-----------------------------------------------
E. Courtney Siegel
President, Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
and on the dates stated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President, Chairman and Chief
Executive Officer (Principal Executive
/s/ E. Courtney Siegel* Officer) June 24, 1996
-----------------------------------------
E. Courtney Siegel
Vice-President, Chief Administrative
Officer and Chief Accounting Officer
(Principal Financial and Principal
/s/ Daniel S. Dunleavy* Accounting Officer) June 24, 1996
-----------------------------------------
Daniel S. Dunleavy

President, Trusted Systems Division;
/s/ Robert L. Carberry Director June 24, 1996
-----------------------------------------
Robert L. Carberry

Secretary, General Counsel, and
/s/ Brian Foremny* Director June 24, 1996
-----------------------------------------
Brian Foremny

</TABLE>

II-7
<PAGE> 78

<TABLE>
<S> <C> <C>
/s/ C. Shelton James* Director June 24, 1996
-----------------------------------------
C. Shelton James

/s/ Michael F. Maguire*
-----------------------------------------
Michael F. Maguire Director June 24, 1996
</TABLE>

* signed by power of attorney
II-8
<PAGE> 79
INDEX TO EXHIBITS