CYBERGUARD CORP, S-3, 1996-07-30

CYBERGUARD CORP
S-3, 1996-07-30
ELECTRONIC COMPUTERS

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<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1996
REGISTRATION NO. 333-
================================================================================

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

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

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

CYBERGUARD 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

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. [ ]

CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS TO BE OFFERING PRICE AGGREGATE REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT OFFERING PRICE(2) FEE(3)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value....... 433,389 $9.63 $4,171,369 $1,438
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents shares of common stock to be sold in this offering. This
Registration Statement also relates to the Rights to purchase fractional
shares of Preferred Stock of the Registrant which will be attached to all
shares of Common Stock outstanding as of, and issued subsequent to,
September 29, 1994, pursuant to the terms of the Registrant's Rights
Agreement, dated as of September 29, 1994. Until the occurrence of certain
prescribed events, the Rights are not exercisable, are evidenced by the
certificates of Common Stock and will be transferred with and only with
such stock.
(2) Estimated solely for purposes of calculating the registration fee on the
basis of the average of the high and low sale prices for the Common Stock
of the Company on July 26, 1996, as reported by the National Association of
Securities Dealers Automated Quotation System.
(3) The Prospectus appearing in Part I of this Registration Statement also
serves as the Prospectus for a Registration Statement relating to 341,589
of the shares of Common Stock offered hereby, File No. 333-06253, declared
effective on June 26, 1996.

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

SUBJECT TO COMPLETION, DATED JULY 30, 1996

PROSPECTUS

774,978 SHARES

CYBERGUARD CORPORATION

COMMON STOCK

All 774,978 shares (the "Shares") of common stock, par value $.01 per
share ("Common Stock") of CyberGuard Corporation (the "Company") are being
offered by certain Selling Shareholders. The Company issued the Shares to the
Selling Shareholders in connection with the sale to Concurrent Computer
Corporation ("Concurrent") of the assets of the Company's real-time computer
business (the "Real-time Business") and the related non-competition agreements
with former officers of the Company who resigned upon the closing of the
Real-time Sale to assume management positions with Concurrent. See "The Selling
Shareholders." The Company will not receive any proceeds from the sale of the
Shares by the Selling Shareholders. 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 July 29, 1996, the last reported sale price
of the Common Stock as reported by the Nasdaq National Market was $10.00 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 8.

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 the Selling Shareholders is not
pursuant to any underwriting agreement. The Selling Shareholders 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 the Selling
Shareholders 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 the Selling Shareholders 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." 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 in an accompanying Prospectus Supplement.
The Selling Shareholders and any broker-dealer, agent or underwriter that
participates with the Selling Shareholders 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. The
Selling Shareholders will pay any transaction costs associated with any sales
of the Shares. See "Plan of Distribution."

The date of this Prospectus is July , 1996.
<PAGE> 3
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 representations 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"). 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 450 Fifth Street, N.W.,
Judiciary Plaza, 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, 450 Fifth Street, N.W., Judiciary Plaza, 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 items 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 securities 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: (i) 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 Reports on Form 8-K dated April 10, 1996
(and as amended on June 18, 1996) and July 11, 1996, respectively; 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

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<PAGE> 4
of any or all documents referred to above (other than exhibits to such
documents) that have been incorporated by reference in this Prospectus.

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<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 outstanding options or warrants to
purchase Common Stock. 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." 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
those discussed in Risk Factors, including, but 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; 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."

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."

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<PAGE> 6
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"), 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.

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<PAGE> 7
- 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
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 multi-level secure ("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 683,178 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." Immediately following the
Real-time Sale, the Company owned approximately 22% of the outstanding common
stock of Concurrent (28% if the preferred stock the Company received were to be
converted into common stock) and Concurrent owned approximately 10% of the
outstanding common stock of the Company (all 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), 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.
On June 27, 1996, the Company sold 2,000,000 shares of Concurrent common stock
at an aggregate price of $3,500,000. 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.

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INVESTMENT IN CONCURRENT

Concurrent securities owned by the Company would have comprised
approximately 65% 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 $1.25 per share as
of July 10, 1995). 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 $5.7 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 ended 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."

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REVENUES FOR THE QUARTER ENDED JUNE 30, 1996

The Company's revenues for the fiscal quarter ended June 30, 1996 were
approximately $2.9 million, compared to approximately $431,000 for the fiscal
quarter ended June 30, 1995.

The Company attributes this increase in revenue in part to an increase
in sales through indirect distribution channels and further penetration of
targeted vertical markets. Value added resellers and manufacturer's
representatives accounted for approximately 45% of revenues during the quarter,
with approximately 26% of the Company's revenue attributable to Nissin Electric
(a Japanese distributor) and Electronic Data Systems. International sales
during this quarter accounted for approximately 40% of Company sales.

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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 currently expects to report certain charges in the quarter
ended June 30, 1996. The Company estimates that it will incur a loss of
approximately $11 million on the sale of the Real-time Business (based on a
market price of Concurrent Common Stock of $1.86 per share, the average closing
price for such stock from June 17 to July 12, 1996); 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)
----------------------------------------
SIX MONTHS ENDED FISCAL FISCAL YEAR ENDED
---------------- YEAR ENDED JUNE 30,
MARCH 30, MARCH 31, SEPTEMBER 30, --------
1996 1995 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) $ (.76)
Weighted average number of common
shares outstanding 6,723 6,687
</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.

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(5) Assumes the Real-time Sale had occurred as of such date.

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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; 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. On June 27, 1996, the
Company obtained a secured revolving line of credit (the "Revolving Line of
Credit") with Foothill Capital Corporation ("Foothill") that terminates upon
the earlier to occur of a public offering by the Company or September 30, 1996.
On May 23, 1996, the Company has filed with the SEC a Registration Statement
relating to a public offering of common stock that may be completed prior to
September 30, 1996. Under the Revolving Line of Credit, the Company may borrow
a maximum amount of $5,000,000 at an interest rate of 2% above the lowest rate
announced from time to time by Norwest Bank Minnesota, National Association.
The Revolving Line of Credit is secured by all the assets of the Company
(including 7,000,000 shares of the Concurrent common and all of the preferred
stock to be received by the Company in connection with the Real-time Sale).
Following termination of the Revolving Line of Credit, the Company intends to
seek another line of credit that is likely to be secured by all the assets of
the Company (including all or a portion of the Concurrent securities held by
the Company) and to be subject to financial covenants 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 may sell or
pledge some of the Concurrent securities received in connection with the
Real-time Sale, the Company's ability to do so is subject to a number of
limitations and conditions imposed in connection with the Share Holding
Agreement and likely to be imposed by 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

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<PAGE> 13
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."

FLUCTUATION IN VALUE OF CONCURRENT COMMON STOCK AND CONCURRENT PREFERRED STOCK
HELD BY THE COMPANY

The Real-time Sale consisted 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 $8.20 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 22% of the Concurrent Common Stock outstanding as of the
Real-time Sale (28% if the Concurrent Preferred Stock were to be converted into
Concurrent Common Stock). The Concurrent Common Stock and Concurrent Preferred
Stock owned by the Company following the recent sale of 2,000,000 shares of
Concurrent Common Stock would have constituted in the aggregate approximately
65% 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 $1.25 per share as of July 10,
1996). 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 approximately
6,400,000 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 became 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 became issuable as severance or other compensation to, among
others, Concurrent's employees, contractors and financial advisors pursuant to
outstanding warrants to purchase Concurrent Common Stock, or pursuant to
certain contracts entered into by Concurrent in connection with the Real-time
Sale. 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; 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.

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<PAGE> 14
INABILITY TO INFLUENCE CONCURRENT OPERATIONS; DECLINING TRENDS IN CONCURRENT
RESULTS

As a result of the Real-time Sale, the Company received approximately
22% of the Concurrent Common Stock issued and outstanding as of the date
thereof (28% if the Concurrent Preferred Stock were to be converted into
Concurrent Common Stock), and the Company holds as of the date hereof
approximately 19% of such stock (24% 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 the combined development and
manufacturing operations could improve Concurrent's liquidity by permitting
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

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<PAGE> 15
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."

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<PAGE> 16
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 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 "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 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

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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."

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.

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<PAGE> 18
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 a one-year Night Hawk Supplier Agreement dated June 27,
1996, 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,

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<PAGE> 19
there can be no assurance that such insurance will cover all losses from
failures of the Company's products or will continue to be available to the
Company on commercially reasonable terms or at all.

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 June 27, 1997 pursuant to
which Concurrent provides certain administrative and personnel-related services
for the Company. The Company believes that Concurrent provides 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 has agreed to lease 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 had 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 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.

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

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effect on the Company's business, financial condition and results of
operations. See "Business--Employees" and "Management."

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."

19
<PAGE> 21
INADVERTENT INVESTMENT COMPANY

The Concurrent Common Stock and the Concurrent Preferred Stock owned
by the Company would have comprised approximately 65% 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 $1.25 per share as of July 10, 1996). 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 Securities and Exchange Commission,
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. 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. Although on June 27, 1996,
the Company sold 2,000,000 shares of Concurrent Common Stock for an aggregate
purchase price of $3,500,000, 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 a favorable price. 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 and the
Revolving Line of Credit. 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" and "--Revolving Line of Credit."

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. There are 6,877,576 shares of Common Stock outstanding,
all of which, upon the effectiveness of this Registration Statement, will be
tradable without restriction under the Securities Act of 1933, as amended (the
"Securities Act"). Of the shares outstanding, 683,178 shares of Common Stock
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 1,961,664 shares of Common Stock are issuable upon
exercise of options that are currently outstanding (a majority of which are
in-the-money and approximately 38% of which are currently exercisable), and
200,000 shares are issuable upon the exercise of outstanding warrants to
purchase Common Stock. A total of 545,106 shares of Common Stock or options
thereon are available for future issuance under the Company's Stock Incentive
Plan.

20
<PAGE> 22
See "Shares Eligible for Future Sale."

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,
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."

21
<PAGE> 23
USE OF PROCEEDS

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

THE SELLING SHAREHOLDERS

A total of 683,178 Shares offered hereby are held by, and offered for
the account of, Concurrent Computer Corporation, 2101 West Cypress Creek Road,
Fort Lauderdale, Florida 33309 (telephone: (954) 947-1700). In connection with
the Real-time Sale, the Company issued to Concurrent 683,178 shares of Common
Stock. See "Recent Events" and "Certain Transactions."

Upon the closing of the Real-time Sale, the Company 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; such
shares (a total of 93,180 shares) are registered on the Registration Statement
of this Prospectus forms a part and are offered by Messrs. Siegel and Dunleavy
for sale hereby. Messrs. Siegel and Dunleavy are the President and Chief
Executive Officer and the Chief Financial Officer, respectively, of Concurrent.
The address for each of Messrs. Siegel and Dunleavy is 2101 West Cypress Creek
Road, Fort Lauderdale, Florida 33309 (telephone: (954) 947-1700). See "Pro
Forma Financial Statements" and "Principal Shareholders."

22
<PAGE> 24
PLAN OF DISTRIBUTION

The Shares will be offered and sold by the Selling Shareholders for
their own accounts. 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.

The Selling Shareholders 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 the Selling Shareholders may choose to sell the
Shares by use of one or more of the distribution methods discussed below.

The distribution of the Shares by the Selling Shareholders 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 the Selling
Shareholders 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 the Selling Shareholders
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 the Selling Shareholders and/or the
purchasers of the Shares. The Selling Shareholders 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, the Selling Shareholders, 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 the
Selling Shareholders.

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
the Selling Shareholders 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 by Concurrent 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."

The Selling Shareholders are not restricted as to the price or prices
at which they may sell their 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 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 Pledgee will be bound by
the terms of the Share Holding Agreement relating to any restrictions on such
securities, and (iii) all certificates representing securities pledged to such
Pledgee shall bear an appropriate restrictive legend substantially 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.

23
<PAGE> 25
DIVIDEND POLICY

The Company has never paid dividends on its Common Stock. The Company
intends to retain earnings, if any, to finance future operations and expansion
and, therefore, does not anticipate paying any cash dividends in the
foreseeable future. Any future payment of dividends will depend upon the
financial condition, capital requirements and earnings of the Company, as well
as upon other factors that the Board of Directors may deem relevant.

24
<PAGE> 26
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."

25
<PAGE> 27
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 6,723
</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 E. Courtney Siegel and Daniel S. Dunleavy (the Company's
former Chief Executive Officer and Chief Financial Officer,
respectively) 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.

26
<PAGE> 28
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) 2 $ 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 costs 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) $ (.76)
Weighted average number of
common shares outstanding 5,911 6,687
</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:

(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.

27
<PAGE> 29
HARRIS COMPUTER SYSTEMS CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
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>

28
<PAGE> 30
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.

29
<PAGE> 31
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 periods covered.

<TABLE>
<CAPTION>
FISCAL
SIX MONTHS ENDED FISCAL YEAR ENDED
---------------- YEAR ENDED JUNE 30,
MARCH 30, MARCH 31, SEPTEMBER 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
expenses 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>

30
<PAGE> 32
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.

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
"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 June 27, 1997, 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

31
<PAGE> 33
be no assurance that such additional 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
$11 million on the sale of the Real-time Business (based on a market price of
Concurrent Common Stock of $1.86 per share, the average closing price for such
stock from June 17 to July 12, 1996); 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. 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.

<TABLE>
<CAPTION>
FISCAL FISCAL
SIX MONTHS ENDED YEAR ENDED YEAR ENDED
MARCH 30, MARCH 31, SEPT. 30, JUNE 30,
1996 1995 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 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

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<PAGE> 34
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.

33
<PAGE> 35
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.

Under the Revolving Line of Credit the Company may borrow a maximum
amount of $5,000,000 at an interest rate of 2% above the lowest rate announced
from time to time by Norwest Bank Minnesota, National Association. The
Revolving Line of Credit terminates upon the earlier to occur of a public
offering of securities by the Company or September 30, 1996. On May 23, 1996,
the Company has filed with the SEC a Registration Statement relating to a
public offering of common stock that may be completed prior to September 30,
1996. The Revolving Line of Credit is secured by all the assets of the Company.
The maximum amount that the Company may draw under the Revolving Line of Credit
is subject to certain financial covenants and reduction based upon, among other
things, the value of the Company's accounts receivable. The Revolving Line of
Credit restricts the Company, without Foothill's prior written consent, from
incurring any additional indebtedness, allowing the creation of liens,
undergoing major corporate transactions (including a change of control), or
making capital expenditures in excess of certain amounts. The Company

34
<PAGE> 36
has also agreed not to declare dividends on its Common Stock (other than
dividends in capital stock) without Foothill's prior written consent. See
"Certain Transactions -- Revolving Line of Credit."

A principal source of liquidity will be the Concurrent Common Stock
Consideration and the Concurrent Preferred Stock. The Company does not intend
to be a long-term holder of the remaining Concurrent securities. On June 27,
1996, the Company sold 2,000,000 shares of Concurrent common stock at an
aggregate price of $3,500,000. The Company's ability to sell or pledge these
Concurrent securities is subject to limitations imposed in the Share Holding
Agreement and the Revolving Line of Credit. 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 and the prices at which such 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.

If adequate funds are not available, the Company may be required to
curtail certain activities, including product development, marketing and sales
activities. There can be no assurance that additional financing will be
available to the Company on acceptable terms.

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 39, 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
----- ------ ------- ------- ------- -------
</TABLE>

35
<PAGE> 37
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
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
----- ------ ------- ------- ------- -------
Total operating expenses 716 1,593 990 1,535 1,909 1,999
----- ------ ------- ------- ------- -------
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>

36
<PAGE> 38
BUSINESS

OVERVIEW

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 "Certain Transactions." 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

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<PAGE> 39
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
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").

38
<PAGE> 40
[CHART]

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:

- 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.

39
<PAGE> 41
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.

[GRAPH]

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, 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.

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<PAGE> 42
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.

- 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 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, 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, through
which the Company can develop new products or enhance the
features of its existing products.

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<PAGE> 43
- 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
PRODUCTS (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
Split Domain Name Service Q1 1996 Hides internal host names to complicate hacker attempts
Private Virtual Networking Q4 1995 Encrypted firewall-to-firewall link
High Availability CyberGuard Firewall Q1 1996 CyberGuard feature designed to ensure minimal network down-time
WebTrack URL Blocker Q1 1996 Monitors and controls access to selected WWW sites
Token Authentication Devices
Enigma Logic Q3 1995 Authenticates network users through use
</TABLE>

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<PAGE> 44
<TABLE>
<S> <C> <C>
Security Dynamics Q2 1996 of token authentication cards in place of static password
Informix Online/Client Server Systems Q4 1992 Secure database tool for server and electronic
commerce applications
CX/SX Secure Operating System Q2 1989 B1-evaluated secure operating system
LAN/SX Secure Networking Software Q3 1990 B1-evaluated secure networking software
</TABLE>

43
<PAGE> 45
<TABLE>
<CAPTION>
DATE OF FIRST
SHIPMENT
PRODUCTS (CALENDAR QUARTERS) DESCRIPTION
- -------- ------------------- -----------
<S> <C> <C>
PowerSX Secure B2 Operating System Q2 1994 Latest generation secure operating system currently
in evaluation by NCSC for B2 rating
PowerProtocols Secure B2
Networking Software Q2 1996 Latest generation secure networking 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, 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.

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<PAGE> 46
High Availability CyberGuard Firewall. The CyberGuard Firewall
supports an optional High 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 been 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 (which has entered into an agreement to be acquired by Secure
Computing), 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
policy and management control, Internet security policy and management
controls, network security analysis, and information security training.

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<PAGE> 47
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. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations." 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-compatible CyberGuard
Firewall Q4 1996 Low-cost, software-only CyberGuard 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 intranet-specific features
TerraMax ISP Solution Q2 1997 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

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

46
<PAGE> 48
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's 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 value added
resellers and distributors, in order to expand the geographic distribution 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.

47
<PAGE> 49
- 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.

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, Inc., 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.

48
<PAGE> 50
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

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 Check Point, 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.

49
<PAGE> 51
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; 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 Decency 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 July 1, 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

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<PAGE> 52
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

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

Following the recent sale of a portion of the Concurrent Common Stock
Consideration, the Company owns as of the date hereof approximately 19% of the
outstanding Concurrent Common Stock and $8,200,000 liquidation preference of
Concurrent Preferred Stock. The Company's ownership of Concurrent Common Stock
would be 24% if the Concurrent Preferred Stock were to be converted into
Concurrent Common Stock. See "Certain Transactions." 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

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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 Pro Forma Condensed
Consolidated Statement of Operations for certain additional information
regarding the Company's equity in Concurrent.

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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. Hutchison 38 Vice President Corporate Development

Bradley C. Lesher 60 Vice President International Operations

Robert F. 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 P. 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.

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<PAGE> 55
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 as Vice President Corporate
Development 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 IBM'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.

Robert F. 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 as Vice President North American Operations 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, prior to becoming the
Company's General Counsel in 1996, was a partner with the law firm of Holland &
Knight where he continues to maintain a law practice in addition to his service
to the Company. Prior to joining Holland & Knight in 1995, 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 July 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

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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 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 Messrs. Lesher, Gelbart and 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, $115,500 for Mr. Gelbart, $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%; Mr. Gelbart--50%; Ms. Hutchison--50%; Mr. Perks--50%; Mr.
Siebenaler--40%; Mr. Lesher--50% and Mr. Foremny--16.7%.

In addition to the option granted to Mr. Carberry under the Carberry
Employment Agreement,

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<PAGE> 57
options have also been granted to the Company's other executive officers.
Options to purchase Common Stock at an exercise price of $5.50 per share were
granted under the Company's Stock Incentive Plan on February 4, 1996 as
follows: Mr. Wheeler--75,000 options; Ms. Hutchison--60,000 options; Mr.
Lesher--30,000 options; Mr. Perks--60,000 options; and Mr. Siebenaler--60,000
options. Such options will vest in three equal annual installments beginning
February 5, 1997. The Agreement with Mr. Gelbart provides for Mr. Gelbart to
receive options to purchase 100,000 shares of Common Stock at a price per
share to be determined, vesting in equal annual installments beginning June 1,
1997, and a 2,000-share grant of Common Stock subject to restrictions that
lapse on December 31, 1996. The Agreement with Mr. Foremny provides for Mr.
Foremny to receive options to purchase 72,000 shares of 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 have been 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; and Mr. Foremny--6,000 shares at $4.25 per share.

The Executive Employment Agreements relating to Messrs. Lesher,
Gelbart 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.

The Executive Employment Agreements with Messrs. Lesher, Gelbart 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 certain 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

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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.

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 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 with
a 9% cumulative annual dividend payable quarterly in arrears and a liquidation
preference of $8.20 per share (subject to adjustment to reflect, among other
things, the net current assets transferred in the Real-time Sale; the
"liquidation preference")); and (iii) the assumption by Concurrent of the
Assumed Liabilities. As a result of the Real-time Sale, the Company received
approximately 22% of the Concurrent Common Stock issued and outstanding as of
the date thereof (28% 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 as of the date
thereof (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.

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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.

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 $8,200,000, a total
of 3,280,000 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.

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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
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.

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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.

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 3,280,000 (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.

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.

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<PAGE> 62
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 after notice 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 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,
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, 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

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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 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.

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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 $13.75 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.

REVOLVING LINE OF CREDIT

On June 27, 1996, the Company executed an amendment to a Loan and
Security Agreement dated April 1, 1996 (collectively, the "Loan and Security
Agreement") between the Company and Foothill pursuant to which the Company
obtained the Revolving Line of Credit. The Company may borrow up to $5,000,000
under the Revolving Line of Credit. Any borrowings will bear interest at a rate
of 2% above the lowest rate announced from time to time by Norwest Bank
Minnesota, National Association. The Revolving Line of Credit is secured by all
the assets of the Company and terminates upon the earlier to occur of a public
offering by the Company or September 30, 1996. On May 23, 1996, the Company has
filed with the SEC a Registration Statement relating to a public offering of
common stock that may be completed prior to September 30, 1996. The Revolving
Line of Credit is subject to certain financial covenants and restricts the
Company, without Foothill's prior written consent, from incurring any
additional indebtedness, allowing the creation of liens, undergoing major
corporate transactions (including a change of control), or making capital
expenditures in excess of certain amounts. The Company has also agreed not to
declare dividends on its Common Stock (other than dividends in capital stock)
without Foothill's prior written consent. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

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.

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PRINCIPAL SHAREHOLDERS

The following sets forth, as of July 2, 1996 information with respect
to the beneficial ownership of the Company's Common Stock by: (i) each Selling
Shareholder; (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>
SHARES SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO SALE SHARES AFTER SALE
------------------------- TO BE ---------------------
NUMBER OF SOLD NUMBER OF
NAME/ADDRESS SHARES PERCENT HEREUNDER SHARES PERCENT
- ------------ ------ ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Concurrent Computer Corporation
2101 West Cypress Creek Road
Fort Lauderdale, Florida 33309 683,178 9.93% 683,178 0 0%
Okabena Partnership K
5140 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402 548,820 7.98 0 548,820 7.98
Paul Tudor Jones II
c/o Tudor Investment Corporation
One Liberty Plaza, 51st Floor
New York, New York 10006(1) 451,500 6.56 0 451,500 6.56
Austin W. Marxe
153 East 53 Street
New York, New York 10022(2) 366,915 5.33 0 366,915 5.33
E. Courtney Siegel(3)(4) 301,790 4.28 78,000 223,790 3.17
Daniel S. Dunleavy(3)(4) 122,624 1.76 13,800 108,824 1.56
Robert L. Carberry(5) 0 * 0 0 0
Patrick O. Wheeler(3)(5) 3,785 * 0 3,785 *
Frank Gelbart(4) 0 * 0 0 0
Katherine K. Hutchison(3)(5) 12,900 * 0 12,900 *
Bradley C. Lesher(3)(5) 70,641 1.02 0 70,641 1.02
Robert F. Perks(3)(5) 6,477 * 0 6,477 *
Rick A. Siebenaler(3)(5) 11,574 * 0 11,574 *
Brian Foremny(3)(5) 30,000 * 0 30,000 *
C. Shelton James(3)(6) 21,000 * 0 21,000 *
Michael F. Maguire(3) 21,000 * 0 21,000 *
Richard P. Rifenburgh(3) 6,000 * 0 6,000 *
All directors and officers as a group
(9 persons)(5) 183,376 2.60% 0 183,376 2.60%
</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."),

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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) Includes options that are currently exercisable to purchase Common
Stock in the following amounts: Mr. Siegel--177,000 shares; Mr.
Dunleavy--93,000; 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; Mr. Maguire--21,000 shares; and Mr. Rifenburgh--6,000
shares.

(4) Includes 78,000 shares of Common Stock, in the case of Mr. Siegel, and
13,800 shares of Common Stock, in the case of Mr. Dunleavy, issued in
connection with the Real-time Sale pursuant to their respective
non-competition agreements.

(5) Does not include, in the case of Mr. Carberry, 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 that
become exercisable in three equal annual installments beginning March
5, 1997; or, in the cases of the other executive officers, other
options that are not yet exercisable (see "Management -- Compensation
of Executive Officers").

(6) 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.

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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 July 29, 1996, 6,877,576 shares of Common
Stock and no shares of preferred stock were outstanding. An additional
1,961,664 shares of Common Stock may be issued upon the exercise of outstanding
warrants or options to purchase common stock.

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 50% 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 of the Company also provide that
shareholder action can be taken only at an annual or special meeting of
shareholders or by unanimous written consent in lieu of a meeting. The
Company's Articles of Incorporation provide that special meetings of the
shareholders of the Company can be called (i) pursuant to a resolution approved
by the Chairman of the Board of Directors, the Chief Executive Officer or a
majority of the Company's Board of Directors then in office or (ii) upon
delivery or one or more written demands for a meeting describing the purpose or
purposes for the meeting and signed and dated by the holders of not less

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than 50% of all holders of shares of all classes or series of the Company,
voting as a class, entitled to vote on the issues proposed to be considered at
such special meeting.

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.

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,

67
<PAGE> 69
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 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

68
<PAGE> 70
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 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 approximately 60,000 shares of Preferred Stock.

TRANSFER AGENT AND REGISTRAR

KeyCorp Shareholder Services, Inc. serves as the transfer agent and
registrar for the Common Stock. Its address is KeyCorp Shareholder Services,
Inc., P.O. Box 6477, Cleveland, Ohio 44101-1477.

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

69
<PAGE> 71
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.

Concurrent Computer Corporation's consolidated balance sheets as of
June 30, 1995 and 1994, and the consolidated statement of operations,
shareholders' equity (deficiency) and cash flow for each of the three years in
the period ended June 30, 1995, incorporated by reference in this Prospectus
and in the Registration Statement, have been incorporated herein in reliance
upon the report of Coopers & Lybrand, L.L.P., independent accountants, given
upon the authority of that 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.

70
<PAGE> 72
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>

71
<PAGE> 73
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

72
<PAGE> 74
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.

73
<PAGE> 75
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.

74
<PAGE> 76
HARRIS COMPUTER SYSTEMS CORPORATION--TRUSTED SYSTEMS DIVISION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
MARCH 30, SEPTEMBER 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.

75
<PAGE> 77
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 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.

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<PAGE> 78
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 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.

77
<PAGE> 79
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>

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>

78
<PAGE> 80
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 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.

79
<PAGE> 81
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.

80
<PAGE> 82

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

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 . . . . . . . . . . . . . . . . . . . . . . .
Incorporation of Certain Information by Reference . . . . . . . . .
Recent Events . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . .
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . .
The Selling Shareholder . . . . . . . . . . . . . . . . . . . . . .
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . .
Pro Forma Condensed Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . .
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . .
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Transactions . . . . . . . . . . . . . . . . . . . . . . .
Description of Capital Stock . . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

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

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

341,589 SHARES

CyberGuard Corporation

Common Stock

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

PROSPECTUS

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

JULY 22, 1996

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

81
<PAGE> 83
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.

<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . . . . . . . . . $ 1,438
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . 15,000
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . 10,000
Printing expenses . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . 36,438
=======
</TABLE>

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

II-1
<PAGE> 84
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 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> 85
(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

II-3
<PAGE> 86
and advancement of expenses, including expenses incurred in seeking
court-ordered indemnification or advancement of expenses, if it
determines that:

(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

II-4
<PAGE> 87
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:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<S> <C>
2.01 Restated Purchase and Sale Agreement between Concurrent Computer Corporation and the Company
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
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, Independent Certified Public Accountants
23.04 Consent of Holland & Knight (included in Exhibit 5)
24.01 Power of Attorney (included on signature page)
</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.
**** 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.

II-5
<PAGE> 88
****** 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.

II-6
<PAGE> 89
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-7
<PAGE> 90
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, State of Florida
on July 30, 1996.

CyberGuard Corporation (formerly known
as Harris Computer Systems Corporation)

By:/s/ ROBERT L. CARBERRY
Robert L. Carberry
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.

KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Robert L. Carberry and Pat Wheeler, and
each of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and revocation, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to sign any
Registration Statement (and any and all amendments thereto) related to this
Registration Statement and filed pursuant to Rule 462(b) promulgated by the
Securities and Exchange Commission, and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact
and agent, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C> <C>
/s/ ROBERT L. CARBERRY
Robert L. Carberry President, Chairman and Chief
Executive Officer and Director
(Principal Executive Officer) July 30, 1996

/s/ PATRICK O. WHEELER
Patrick O. Wheeler Vice-President Finance and Chief
Financial Officer (Principal
Financial and Principal Accounting Officer) July 30, 1996

/s/ BRIAN FOREMNY*
Brian Foremny Secretary, General Counsel, and Director July 30, 1996

/s/ C. SHELTON JAMES*
C. Shelton James Director July 30, 1996

/s/ MICHAEL F. MAGUIRE*
Michael F. Maguire Director July 30, 1996
</TABLE>

II-8
<PAGE> 91

/s/ RICHARD F. RIFENBURGH
Richard F. Rifenburgh Director July 30, 1996

* Signed by power of attorney.

II-9
<PAGE> 92
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<S> <C>
2.01 Restated Purchase and Sale Agreement between Concurrent Computer Corporation and the Company
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
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, Independent Certified Public Accountants
23.04 Consent of Holland & Knight (included in Exhibit 5)
24.01 Power of Attorney (included on signature page)
</TABLE>

<PAGE> 1
Exhibit 5.01

July 30, 1996

CyberGuard Corporation
2101 West Cypress Creek Road
Fort Lauderdale, Florida 33309

Re: CyberGuard Corporation--Registration
Statement on Form S-3 (the "Registration
Statement")--Opinion re Legality

Gentlemen:

We have acted as counsel to CyberGuard Corporation, a Florida
corporation (the "Company"), in connection with the preparation of the
above-referenced Registration Statement filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), under which certain selling shareholders named therein (the "Selling
Shareholders") intend to offer and sell in a public offering, from time to
time, an aggregate of 433,389 shares (the "Shares") of the Common Stock, $.01
par value per share, of the Company ("Common Stock").

The shares to be sold by Concurrent Computer Corporation, a Delaware
corporation ("Concurrent") consist partly of those issued in connection with a
Purchase and Sale Agreement dated as of March 26, 1996 as restated May 23, 1996
(the "Purchase and Sale Agreement") between the Company and Concurrent
pursuant to which the Company sold its real-time computer business and issued
683,178 shares of its Common Stock to Concurrent in exchange for (i)
10,000,000 newly issued shares of common stock of Concurrent, par value $.01
per share, (ii) 1,000,000 newly issued shares of convertible exchangeable
preferred stock of Concurrent with a 9% cumulative annual dividend payable
quarterly in arrears and a liquidation preference of $8.20 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
computer business to be sold by the Company. The shares to be sold by each of
E. Courtney Siegel and Daniel S. Dunleavy were issued in consideration for the
covenants of such persons as set forth in the respective Non-competition
Agreements, each dated June 28, 1996, between themselves and the Company
(the "Non-competition Agreements").
<PAGE> 2
CyberGuard Corporation
July 30, 1996
Page 2

We have reviewed copies of the Articles of Incorporation and Bylaws of
the Company, the Purchase and Sale Agreement and the Non-competition
Agreements, and have examined such corporate documents and records and other
certificates, and have made such investigations of law, as we have deemed
necessary in order to render the opinion hereinafter set forth.

Based upon and subject to the foregoing, we render the following
opinions:

The Shares are duly authorized, are validly issued, fully paid and
nonassessable.

We hereby consent to the reference to our firm under the caption "Legal
Matters" in the Registration Statement and to the use of this opinion as an
exhibit to the Registration Statement. In giving this consent, we do not hereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act or the rules and regulations of the
Securities and Exchange Commission thereunder.

Very truly yours,

Holland & Knight

<PAGE> 1
EXHIBIT 23.01

The Board of Directors
CyberGuard Corporation:

We consent to the use of our reports included herein and incorporated
herein by reference and to the reference to our firm under the headings
"Selected Financial Data" and "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Miami, Florida
July 23, 1996

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EXHIBIT 23.02

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-3 and related Prospectus of CyberGuard
Corporation (formerly known as Harris Computer Systems Corporation) for the
registration of 341,589 shares of its Common Stock and to the incorporation by
reference therein of our report dated July 13, 1994, with respect to the
financial statements of Harris Computer Systems Corporation included in its
Annual Report on Form 10-K for the year ended June 30, 1994, filed with the
Securities and Exchange Commission.

ERNST & YOUNG LLP

Jacksonville, FL
July 23, 1996

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EXHIBIT 23.03

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration
statement of CyberGuard Corporation (formerly Harris Computer Systems
Corporation) on Form S-3 of our report dated August 15, 1995, except for Note
19, as to which the date is September 26, 1995, on our audits of the
consolidated financial statements and financial statement schedules of
Concurrent Computer Corporation. We also consent to the reference to our Firm
under the caption "Experts."

COOPERS & LYBRAND L.L.P.

Parsippany, New Jersey
July 23, 1996