10-Q

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2008

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                  

Commission File Number 000-28540

VERSANT CORPORATION

(Exact name of Registrant as specified in its charter)

California	94-3079392
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

255 Shoreline Drive, Suite 450, Redwood City, California 94065

(Address of principal executive offices) (Zip code)

(650) 232-2400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x   No o

*Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer.” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large Accelerated Filer o	Accelerated Filer o
Non-Accelerated Filer x	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes   x  No

As of March 7, 2008, there were outstanding 3,703,520 shares of the Registrant’s common stock, no par value.

VERSANT CORPORATION

QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended January 31, 2008

Table of Contents

Certifications

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PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

VERSANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

	January 31,			October 31,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	21,291		$	19,086
Trade accounts receivable, net of allowance for doubtful accounts of $28 and $68 at January 31, 2008 and October 31, 2007, respectively	3,411			2,330
Other current assets	585			506
Total current assets	25,287			21,922
Property and equipment, net	787			835
Goodwill	6,720			6,720
Intangible assets, net	802			881
Other assets	110			108
Total assets	$	33,706		$	30,466
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	221		$	157
Accrued liabilities	2,059			2,756
Deferred revenues	4,448			3,707
Deferred rent	9			7
Total current liabilities	6,737			6,627
Deferred revenues	560			641
Deferred rent	26			29
Other long-term liabilities	51			4
Total liabilities	7,374			7,301
Stockholders’ equity:
Common stock, no par value, 7,500,000 shares authorized, 3,693,235 and 3,671,924 shares issued and outstanding as of January 31, 2008 and October 31, 2007, respectively	96,405			96,004
Accumulated other comprehensive income, net	1,557			1,346
Accumulated deficit	(71,630		)	(74,185		)
Total stockholders’ equity	26,332			23,165
Total liabilities and stockholders’ equity	$	33,706		$	30,466

See accompanying notes to condensed consolidated financial statements.

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VERSANT CORPORATION AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share amounts)

(unaudited)

	Three Months Ended
	January 31,		January 31,
	2008		2007
Revenues:
License	$	3,962	$	3,164
Maintenance	2,230		1,917
Professional services	92		70
Total revenues	6,284		5,151
Cost of revenues:
License	80		47
Amortization of intangible assets	79		79
Maintenance	384		405
Professional services	27		41
Total cost of revenues	570		572
Gross profit	5,714		4,579
Operating expenses:
Sales and marketing	841		760
Research and development	1,054		891
General and administrative	1,086		1,209
Total operating expenses	2,981		2,860
Income from operations	2,733		1,719
Interest and other income, net	201		101
Income from continuing operations before taxes	2,934		1,820
Provision for income taxes	411		203
Net income from continuing operations	2,523		1,617
Net income from discontinued operations, net of income taxes	82		90
Net income	$	2,605	$	1,707
Basic income per share:
Net income from continuing operations	$	0.69	$	0.45
Earnings from discontinued operations, net of income tax	$	0.02	$	0.02
Net income per share, basic	$	0.71	$	0.47
Diluted income per share:
Net income from continuing operations	$	0.67	$	0.45
Earnings from discontinued operations, net of income tax	$	0.02	$	0.02
Net income per share, diluted	$	0.69	$	0.47
Shares used in per share calculation:
Basic	3,680		3,606
Diluted	3,761		3,657
Non-cash stock-based compensation included in the above expenses:
Cost of revenues	$	13	$	13
Sales and marketing	$	49	$	19
Research and development	$	39	$	11
General and administrative	$	91	$	39

See accompanying notes to condensed consolidated financial statements.

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VERSANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended
	January 31,			January 31,
	2008			2007
Cash flows from operating activities:
Net income	$	2,605		$	1,707
Adjustments to reconcile net income to net cash provided by operating activities:
Net income from discontinued operations, net of income taxes	(82		)	(90		)
Depreciation and amortization	62			72
Amortization of intangible assets	79			79
Stock-based compensation	192			82
Recovery of bad debt allowance	(41		)	(2		)
Changes in assets and liabilities:
Accounts receivable	(988		)	(281		)
Other assets	(71		)	(24		)
Accounts payable	54			181
Accrued liabilities and other liabilities	(735		)	(260		)
Deferred revenues	592			994
Deferred rent	(1		)	(37		)
Net cash provided by operating activities	1,666			2,421
Cash flows from investing activities:
Purchases of property and equipment	(3		)	(197		)
Net cash used in investing activities	(3		)	(197		)
Cash flows from financing activities:
Proceeds from sale of common stock, net	208			81
Principal payments under capital lease obligations	(2		)	(4		)
Net cash provided by financing activities	206			77
Effect of foreign exchange rate changes on cash and cash equivalents	254			20
Net increase in cash and cash equivalents from operating, investing and financing activities	2,123			2,321
Net increase in cash and cash equivalents from discontinued operations	82			90
Cash and cash equivalents at beginning of period	19,086			8,231
Cash and cash equivalents at end of period	$	21,291		$	10,642

See accompanying notes to condensed consolidated financial statements.

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VERSANT CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1.  GENERAL AND BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements contained in this report on Form 10-Q include all of the assets, liabilities, revenues, expenses and cash flows of Versant and all entities in which Versant has a controlling voting interest (subsidiaries) required to be consolidated in accordance with U.S. generally accepted accounting principles. Inter-company accounts and transactions between consolidated companies have been eliminated in consolidation.

The financial statements included herein reflect all adjustments, which, in the opinion of the Company, are necessary for a fair presentation of the results for the interim periods presented. All such adjustments are normal recurring adjustments. These financial statements have been prepared in accordance with generally accepted accounting principles related to interim financial statements and the applicable rules of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

The financial statements and related disclosures have been prepared with the presumption that users of the interim financial information have read or have access to the audited financial statements for the Company’s preceding fiscal year ended October 31, 2007. Accordingly, these financial statements should be read in conjunction with those audited financial statements and the related notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2007, filed on January 29, 2008 (File No. 08557145). The Company’s operating results for the three months ended January 31, 2008 are not necessarily indicative of the results that may be expected for the full fiscal year ending October 31, 2008, or for any future periods. Further, the preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the recorded amounts reported therein. A change in facts or circumstances surrounding the estimates could result in a change to the estimates and impact future operating results.

NOTE 2.  STOCK-BASED COMPENSATION

Stock-based compensation expense recognized in the consolidated statements of operations for the three months ended January 31, 2008 totaled $192,000, and the amount of stock-based compensation expense related to the Company’s stock option and employee stock purchase plan was $178,000 and $14,000, respectively. Stock-based compensation expense recognized in the consolidated statements of operations for the three months ended January 31, 2007 totaled $82,000, and the amount of stock-based compensation expense related to the Company’s stock option and employee stock purchase plan was $60,000 and $22,000, respectively.

NOTE 3.   NET INCOME PER SHARE

Basic net income per share excludes the effect of potentially dilutive securities and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per share, however, reflects the potential dilution of securities by adding dilutive common stock options and shares subject to repurchase to the weighted average number of common shares outstanding for the period.

Additionally, SFAS 128, Earnings per Share, requires that employee equity share options, non-vested shares, and similar equity instruments granted to employees be treated as potential common shares in computing diluted earnings per share. Diluted earnings per share are based on the actual number of options or shares granted and not yet forfeited, unless doing so would be anti-dilutive.

A reconciliation of the numerators and denominators used in the calculation of basic and diluted net income per share is as follows (in thousands, except per share data):

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	Three Months Ended
	January 31,		January 31,
	2008		2007
Net income from continuing operations	$	2,523	$	1,617
Net income from discontinued operations, net of income taxes	82		90
Net income	$	2,605	$	1,707
Calculation of basic net income per share:
Weighted average - common shares outstanding	3,680		3,606
Net income from continuing operations	$	0.69	$	0.45
Net income from discontinued operations, net of income taxes	$	0.02	$	0.02
Net income per share, basic	$	0.71	$	0.47
Calculation of diluted net income per share:
Weighted average - common shares outstanding	3,680		3,606
Dilutive securities - common stock options and shares subject to repurchase	81		51
Weighted average - common shares outstanding and potentially dilutive common shares	3,761		3,657
Net income from continuing operations	$	0.67	$	0.45
Net income from discontinued operations, net of income taxes	$	0.02	$	0.02
Net income per share, diluted	$	0.69	$	0.47

NOTE 4.    OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income presented in the accompanying condensed consolidated balance sheet consists of cumulative foreign currency translation adjustments.

Comprehensive income for the three months ended January 31, 2008 and January 31, 2007 is as follows (in thousands):

	Three Months Ended
	January 31,		January 31,
	2008		2007
Net income, as reported	$	2,605	$	1,707
Foreign currency translation adjustment	211		20
Comprehensive income	$	2,816	$	1,727

NOTE 5.   SEGMENT AND GEOGRAPHIC INFORMATION

Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for the manner in which public companies report information about operating segments in annual and interim financial statements. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. Therefore, the Company has determined that it operates in a single operating segment, Data Management.

The Company operates in North America, Europe and Asia. In general, revenues are attributed to the country in which the contract was originated.

The following table reflects revenues for the three months ended January 31, 2008 and January 31, 2007 by each geographic region (in thousands):

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	Three Months Ended
	January 31,		January 31,
	2008		2007
Revenues by region:
North America	$	2,002	$	2,431
Europe	2,689		2,594
Asia	1,593		126
Total	$	6,284	$	5,151

The following table reflects long-lived assets as of January 31, 2008 and October 31, 2007 in each geographic region (in thousands):

	As of January 31, 2008		As of October 31, 2007
Total long-lived assets by region:
North America	$	263	$	282
Europe	427		460
Asia	207		201
Total	$	897	$	943

NOTE 6.  LEGAL PROCEEDINGS

In accordance with SFAS No. 5, “Accounting for Contingencies,” the Company records an accrual for a contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

The Company’s software license agreements generally include certain provisions for indemnifying customers against liabilities if the Company’s software products infringe upon a third party’s intellectual property rights. To date, the Company has not incurred any material costs as a result of any indemnification. However, as a result of current litigation in which Rockwell Automation, one of Versant’s customers, is seeking indemnification from the Company for alleged infringement of intellectual property rights asserted against Rockwell by Systems America, Inc. and associated costs incurred by Rockwell to defend this infringement claim, Versant had recorded an immaterial loss contingency reserve as of January 31, 2007 in accordance with FASB Statement No. 5. The Company is contesting the allegations of infringement of intellectual property rights and Rockwell’s indemnification claim asserted in this litigation, and the ultimate outcome is uncertain. A trial date in April 2008 has been set by the court to hear the case.

NOTE 7.  DISCONTINUED OPERATIONS

On February 1, 2006 Versant completed the sale of the assets associated with its WebSphere consulting practice to Sima Solutions (“Sima”), a privately held U.S. based company. Versant’s WebSphere consulting practice provided consulting and training services to end-users of IBM’s WebSphere® application server software. As a result of this transaction, Versant ceased conducting its WebSphere business. In connection with Versant’s sale of its WebSphere assets, certain employees of Versant, who formerly worked in Versant’s WebSphere Practice, joined Sima.

Based on Statement of Financial Accounting Standard No. 144 (“SFAS 144”), Impairments of Long-Lived Assets and Discontinued Operations, the WebSphere transaction met the criteria of a long-lived asset (disposal group) held for sale at the end of the first quarter ended January 31, 2006 when the disposition occurred. As a result, Versant has reflected the results of operations of its WebSphere consulting practice for the three months ended January 31, 2008 and January 31, 2007 as net income from discontinued operations, net of income taxes. Reported revenues for these periods no longer include any revenues from the WebSphere consulting practice. The results from the discontinued WebSphere operations, however, are reported as net income from discontinued operations, net of income taxes.

The sale of Versant’s WebSphere consulting practice assets was consummated pursuant to an Asset Purchase Agreement dated February 1, 2006 (the “Sale Agreement”) between Versant and Sima, pursuant to which Versant is entitled to receive contingent

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earn-out payments from Sima related to the WebSphere business for a 24-month period following the closing of the Sale Agreement, which expired on January 31, 2008. For the three months ended January 31, 2008 and 2007, Versant recorded $82,000 and $90,000, respectively, in royalties from Sima pursuant to the Sale Agreement as net income from discontinued operations.

NOTE 8.  INCOME TAXES

The Company adopted the provisions of Financial Accounting Standards Board (“FASB”) Interpretation Number 48, “Accounting for Uncertainty in Income Taxes,” (“FIN 48”) on November 1, 2007. Previously, the Company had accounted for tax contingencies in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 5, “Accounting for Contingencies”. As required by FIN 48, which clarifies SFAS No. 109, “Accounting for Income Taxes,” the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. At November 1, 2007, the Company applied FIN 48 to all tax positions for which the statute of limitations remained open and determined there are no material unrecognized tax benefits as of that date. In addition, there have been no material changes in unrecognized benefits since November 1, 2007. As a result, the adoption of FIN 48 did not have a material effect on the Company’s financial condition, or results of operations.

The Company is subject to U.S. federal income taxes and to income taxes in various states in the U.S. as well as in foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign tax examinations by tax authorities for tax years before 2002.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes for all periods presented, which were not significant.

NOTE 9.  RECENT ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued Statement No. 141 (revised), Business Combinations, (“SFAS 141R”). The standard changes the accounting for business combinations including the measurement of acquirer shares issued in consideration for a business combination, the recognition of contingent consideration, the accounting for preacquisition gain and loss contingencies, the recognition of capitalized in-process research and development, the accounting for acquisition-related restructuring cost accruals, the treatment of acquisition related transaction costs and the recognition of changes in the acquirer’s income tax valuation allowance. SFAS 141R is effective for Versant beginning November 1, 2009 and will apply prospectively to business combinations completed on or after that date. We expect the impact to be limited to any business combination transactions that occur after October 31, 2009.

In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. The standard changes the accounting for noncontrolling (minority) interests in consolidated financial statements including the requirements to classify noncontrolling interests as a component of consolidated stockholders’ equity, and the elimination of “minority interest” accounting in results of operations with earnings attributable to noncontrolling interests reported as part of consolidated earnings. Additionally, Statement No. 160 revises the accounting for both increases and decreases in a parent’s controlling ownership interest. Statement No. 160 is effective for Versant beginning November 1, 2009 and will apply prospectively, except for the presentation and disclosure requirements, which will apply retrospectively. The Company believes adoption of SFAS 160 will not have an impact on the consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, (“SFAS 157”). This statement clarifies the definition of fair value, the methods used to measure fair value, and requires expanded financial statement disclosures about fair value measurements for assets and liabilities. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. This new guidance will become effective for Versant in the fiscal year ending October 31, 2009 and the Company believes SFAS 157 will not have a material impact on its financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 provides a “Fair Value Option” under which a company may irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial assets and liabilities. This Fair Value Option will be available on a contract-by-contract basis with changes in fair value recognized in earnings as those changes occur. The effective date for SFAS

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159 is the beginning of each reporting entity’s first fiscal year that begins after November 15, 2007. Therefore, SFAS 159 will become effective for Versant in the fiscal year ending October 31, 2009. SFAS 159 also allows an entity to early adopt the statement as of the beginning of an entity’s fiscal year that begins after the issuance of SFAS 159, provided that the entity also adopts the requirements of SFAS No. 157. The Company believes adoption of SFAS 159 will not have an impact on the consolidated financial statements.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis should be read in conjunction with the Company’s financial statements and accompanying notes included in this report and the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2007 filed with the SEC on January 29, 2008. Our historic operating results are not necessarily indicative of results that may occur in future periods.

The following discussion and analysis contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. The forward-looking statements include, among other things, statements regarding the Company’s expected future financial performance, assets, liquidity and trends anticipated for the Company’s business. These statements are based on the Company’s current expectations, assumptions, estimates and projections about the Company’s business and the Company’s industry, which are based on information that is reasonably available to the Company as of the date of this report. Forward-looking statements many include words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “should,” “estimates,” “predicts,” “forecasts,” “guidance,” “potential,” “continue” or the negative of such terms or other similar expressions. These forward-looking statements are subject to and involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual operating results, levels of activity, performance or achievement to be materially different from any future operating results, levels of activity, performance or achievements that are expressed, forecasted, projected, implied in, anticipated or contemplated by the forward-looking statements.  These known and unknown risks, uncertainties and other factors include, but are not limited to, those risks, uncertainties and factors discussed elsewhere in this report, in the Company’s other SEC filings and in Part I, Item 1A (“Risk Factors”) and in Part II, Item 7 (“Management’s Discussion and Analysis of Financial Condition and Results of Operations”) of the Company’s report on Form 10-K for the fiscal year ended October 31, 2007. Versant undertakes no obligation to revise or update any forward-looking statement in order to reflect events or circumstances that may arise or occur after the date of this report.

 Background and Overview

We design, develop, market and support software-based high performance object-oriented database management systems and provide related maintenance and professional services. Our products and services address the complex data management needs of enterprises and providers of products requiring data management functions. Our products and services collectively comprise our single operating segment, which we call “Data Management.”

Our products are typically used to manage data for business systems and to enable these systems to access and integrate data necessary for the customers’ data management applications. Our data management products and services offer users of our products the ability to manage real-time, XML and other types of hierarchical and navigational data. We believe that by using our data management solutions, customers cut their hardware costs, accelerate and simplify their development efforts, significantly reduce system administration costs and deliver products with a significant competitive edge.

Our Data Management business solutions currently consist of the following key products:

·Versant Object Database, previously known as VDS, a seventh generation object database management system that is used in critical, high-performance, large-scale, real-time applications. We also offer several optional ancillary products for use with Versant Object Database to provide compatibility and additional protection of stored data.

·FastObjects, an object-oriented database management system that can be embedded as a high performance component into customers’ applications and systems.

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Our Versant Object Database product offerings are used primarily by larger organizations, such as technology providers, telecommunications carriers, government defense agencies and defense contractors, healthcare companies and companies in the financial services and transportation industries, each of which have significant large-scale data management requirements. With the incorporation of Poet’s FastObjects solution into our product line following our March 2004 merger with Poet, we expanded the scope of our solutions to also address the data management needs of smaller business systems.

Our customers’ data management needs can involve many business functions, ranging from management of the use and sharing of a company’s internal enterprise data to the processing of externally originated information such as customer enrollment, billing and payment transaction data. Our solutions have also been used to solve complex data management issues such as fraud detection, risk analysis and yield management.

In addition to our product offerings, to assist users in developing and deploying applications based on Versant Object Database and FastObjects, we offer a variety of services, including consulting, training and technical support services.

We license our products and sell associated maintenance, training and consulting services to end-users through our direct sales force and through value-added resellers, systems integrators and distributors.

In addition to these products and services, we resell related software developed by third parties. To date, substantially all of our revenues have been derived from the following data management products and related services:

·Sales of licenses for Versant Object Database and FastObjects;

·Maintenance and technical support services for our products;

·Consulting and training services;

·Nonrecurring engineering fees received in connection with providing services associated with Versant Object Database;

·The resale of licenses, and maintenance, training and consulting services for third-party products that complement Versant Object Database;

·Reimbursements received for out-of-pocket expenses, which we incurred and are recorded as revenues in our statement of operations.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amount of our assets and liabilities at the date of our financial statements and of our revenues and expenses during the reporting period covered by our financial statements. We base these estimates and judgments on information reasonably available to us, such as our historical experience and trends, industry, economic and seasonal fluctuations and on our own internal projections that we derive from that information. Although we believe our estimates to be reasonable under the circumstances, there can be no assurances that such estimates will be accurate given that the application of these accounting policies necessarily involves the exercise of subjective judgment and the making of assumptions regarding many future uncertainties. We consider “critical” those accounting policies that require our most difficult, subjective or complex judgments, and that are the most important to the portrayal of our financial condition and results of operations. These critical accounting policies relate to revenue recognition, goodwill and acquired intangible assets, and income taxes.

Revenue Recognition

We recognize revenues in accordance with the provisions of Statement of Position (“SOP”) 97-2, Software Revenue Recognition, SOP 98-9, Modification of SOP 97-2, Software Revenue Recognition with Respect to Certain Transactions, and SOP 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts. Our revenues consist mainly of

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revenues earned under software license agreements, maintenance support agreements (otherwise known as post-contract customer support or “PCS”), and, to a lesser degree, agreements for consulting and training activities.

We use the residual method to recognize revenues when a license agreement includes one or more elements to be delivered at a future date. If there is an undelivered element under the license arrangement, we defer revenues based on vendor-specific objective evidence (“VSOE”) of the fair value of the undelivered element, as determined by the price charged when the element is sold separately. If VSOE of fair value does not exist for all undelivered elements of a transaction, we defer all revenues from that transaction until sufficient evidence exists or until all elements have been delivered. Under the residual method, discounts are allocated only to the delivered elements in a multiple element arrangement, with any undelivered elements being deferred based on the vendor-specific objective evidence of the value of such undelivered elements. We typically do not offer discounts on future undeveloped products.

Revenues from software license arrangements, including prepaid license fees, are recognized when all of the following criteria are met:

·Persuasive evidence of an arrangement exists.

·Delivery has occurred and there are no future deliverables except PCS.

·The fee is fixed and determinable. If we cannot conclude that a fee is fixed and determinable, then assuming all other criteria have been met, we recognize the revenues as payments become due in accordance with paragraph 29 of SOP 97-2.

·Collection is probable.

If an acceptance period or other contingency exists, revenues are not recognized until customer acceptance or expiration of the acceptance period, or until satisfaction of the contingency, as applicable. Our license fees are non-cancelable and non-refundable. Also, our customer agreements for prepaid deployment licenses do not make payment of our license fees contingent upon the actual deployment of the software. Therefore, a customer’s delay or acceleration in its deployment schedule does not impact our revenue recognition in such cases. Revenues from related PCS for all product lines are usually billed in advance of the service being provided and are deferred and recognized on a straight-line basis over the term in which the PCS is to be performed, which is generally twelve months. In some cases PCS revenues are paid in arrears of the service being provided and are recognized as revenues at the time the customer provides a report to us for deployments made during a given time period. Training and consulting revenues are recognized when a purchase order is received, the services have been performed and collection is deemed probable. Consulting services are billed on an hourly, daily or monthly rate. Training classes are billed based on group or individual attendance.

We categorize our customers into two broad groups, End-Users and Value Added Resellers (VARs). End User customers are companies who use our products internally and do not redistribute our product outside of their corporate organizations. VAR customers include traditional Value Added Resellers, Systems Integrators, Original Equipment Manufacturers (“OEMs”) and other vendors who redistribute our products to their external third party customers, either separately or as part of an integrated product.

We license our data management products through two types of perpetual licenses — development licenses and deployment licenses. Development licenses are typically sold on a per seat basis and authorize a customer to develop and test an application program that uses our software product. Prior to an End-User customer being able to deploy an application that it has developed under our development license, it must purchase deployment licenses based on the number of computers connected to the server that will run the application using our product. For certain applications, we offer deployment licenses priced on a per user basis. Pricing of Versant Object Database and FastObjects licenses varies according to several factors, including the number of computer servers on which the application runs and the number of users that are able to access the server at any one time. Customers may elect to simultaneously purchase development and deployment licenses for an entire project. These development and deployment licenses may also provide for prepayment to us of a nonrefundable amount for future deployment.

VARs and distributors purchase development licenses from us on a per seat basis on terms similar to those of development licenses sold directly to End-Users. VARs are authorized to sublicense deployment copies of our data management products that are either bundled or embedded in the VAR’s applications and sold directly to End-Users. VARs are required to report their distribution of our software and are charged a royalty that is either based on the number of copies of our application software that are distributed

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or computed as a percentage of the selling price charged by the VARs to their end-user customers. These royalties from VARs may be prepaid in full or paid upon deployment. Provided that all other conditions for revenue recognition have been met, revenues from arrangements with VARs are recognized, (i) as to prepaid license arrangements, when the prepaid licenses are sold to the VARs, and (ii) as to other license arrangements, at the time the VAR provides a royalty report to us for sales made by the VAR during a given period.

Revenues from our resale of third-party products or services are recorded at total contract value with the corresponding cost included in the cost of sales when we act as a principal in these transactions by assuming the risks and rewards of ownership (including the risk of loss for collection, delivery or returns). When we do not assume the risks and rewards of ownership, revenues from the resale of third-party products or services are recorded at contract value net of the cost of sales.

In instances where, at a customer’s request, we perform engineering work to port our products to an unsupported platform or to customize our software for specific functionality, or any other non-routine technical assignment, we recognize revenues in accordance with SOP 81-1 Accounting Research Bulletin (“ARB”) No. 45 (As Amended), Long-Term Construction-Type Contracts and use either time and material percentage of completion or completed contract methods for recognizing revenues. We use the percentage of completion method if we can make reasonable and dependable estimates of labor costs and hours required to complete the work in question. We periodically review these estimates in connection with the work performed and rates actually charged and recognize any losses when identified. Progress to completion is determined using the cost-to-cost method, whereby cost incurred to date as a percentage of total estimated cost determines the percentage completed and revenue recognized. When using the percentage of completion method, the following conditions must exist:

·An agreement must include provisions that clearly specify the rights regarding goods or services to be provided and received by both parties, the consideration to be exchanged and the manner and terms of settlement.

·The customer is able to satisfy their obligations under the contract.

·Versant is able to satisfy its obligations under the contract.

The completed contract method is used when reasonable or dependable estimates of labor costs and time to complete the work cannot be made. As a result, in such situations, we defer all revenues until such time as the work is fully completed.

Management makes significant judgments and estimates in connection with the determination of the revenue we recognize in each accounting period. If we had made different judgments or utilized different estimates for any period, material differences in the amount and timing of revenue recognized would have resulted.

Goodwill and Acquired Intangible Assets

Certain intangible assets, such as acquired technology, are amortized to expense over time, while in-process research and development costs, or “IPR&D”, if any, are charged to operations expenditures at the time of acquisition.

We test for any goodwill impairment within our single Data Management operating segment. All our goodwill has been aggregated from, and acquired in connection with, the following acquisitions:

·Versant Europe, acquired in 1997;

·Poet Holdings, Inc., acquired in March 2004;

·Technology of JDO Genie (PTY) Ltd, acquired in June 2004; and

·FastObjects, Inc., acquired in July 2004.

Identifiable intangibles are currently amortized over five years in relation to the JDO Genie (PTY) Ltd acquisition, six years in relation to the FastObjects, Inc. acquisition, and seven years in relation to our acquisition of Poet, using the straight-line method in each of these cases.

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Income Taxes

Significant management judgment is required in determining any valuation allowance recorded against our net deferred tax assets. Due to uncertainties related to our ability to utilize our deferred tax assets, we have established full valuation allowances at October 31, 2007 and January 31, 2008 for our deferred tax assets.

In addition, we adopted the provisions of Financial Accounting Standards Board (“FASB”) Interpretation Number 48, “Accounting for Uncertainty in Income Taxes,” (“FIN 48”) on November 1, 2007. Previously, we had accounted for tax contingencies in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 5, “Accounting for Contingencies”. As required by FIN 48, which clarifies SFAS No. 109, “Accounting for Income Taxes,” we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. At November 1, 2007, we applied FIN 48 to all tax positions for which the statute of limitations remained open and determined there are no material unrecognized tax benefits as of that date. In addition, there have been no material changes in unrecognized benefits since November 1, 2007. As a result, the adoption of FIN 48 did not have a material effect on our financial condition, or results of operations.

We are subject to U.S. federal income taxes and to income taxes in various states in the U.S. as well as in foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, we are no longe r subject to U.S. federal, state and local, or foreign tax examinations by tax authorities for tax years before 2002.

Results of Operations

The following table sets forth, for the periods indicated, the percentage relationship of certain items from our condensed consolidated statement of operations to total revenues:

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	Three Months Ended
	January 31,		January 31,
	2008		2007
	(unaudited)
Revenues:
License	63	%	62	%
Maintenance	35		37
Professional services	2		1
Total revenues	100		100
Cost of revenues:
License	1		1
Amortization of intangible assets	1		1
Maintenance	6		8
Professional services	1		1
Total cost of revenues	9		11
Gross profit	91		89
Operating expenses:
Sales and marketing	13		15
Research and development	17		17
General and administrative	17		24
Total operating expenses	47		56
Income from operations	44		33
Interest and other income, net	3		2
Income from continuing operations before taxes	47		35
Provision for income taxes	7		4
Net income from continuing operations	40		31
Net income from discontinued operations, net of income taxes	1		2
Net income	41	%	33	%

Revenues

The following table summarizes license, maintenance and professional services revenues for the three months ended January 31, 2008 and January 31, 2007 (in thousands, except percentages):

	Three Months Ended
	January 31,		January 31,		Change
	2008		2007		Amount		Percentage
	(unaudited)
Revenues:
License revenues	$	3,962	$	3,164	$	798	25	%
Maintenance revenues	2,230		1,917		313		16	%
Professional services revenues	92		70		22		31	%
Total	$	6,284	$	5,151	$	1,133	22	%

Total Revenues. Total revenues are comprised of license fees, and revenues from maintenance, consulting, training and other support services. Fluctuations in total revenues are generally attributable to changes in product and customer mix, general trends in

information technology spending, as well as to changes in geographic mix and the corresponding impact of changes in foreign

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exchange rates. Further, product life cycles impact revenues periodically as old contracts end and new products are released. Our revenues as shown in the above table and in the accompanying statements of operations included in this report do not include revenues from our disposed WebSphere consulting practice. Instead, as required by generally accepted accounting principles, our financial statements report former WebSphere activities as “net income from discontinued operations, net of income taxes”. See NOTE 7 of our “NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS” in Item 1 of this Quarterly Report on Form 10-Q.

Our total revenues increased by $1.1 million (or 22%) for the three months ended January 31, 2008 from the corresponding period in fiscal 2007. This increase resulted primarily from an approximate $798,000 (or 25%) increase in license revenues and an approximate $313,000 (or 16%) increase in maintenance revenues for the three months ended January 31, 2008 compared to the corresponding period in fiscal 2007, and included favorable foreign currency fluctuations of approximately $376,000.

One customer accounted for 23% of our total revenues for the three months ended January 31, 2008. No one customer accounted for 10% or more of our total revenues for the three months ended January 31, 2007.

The inherently unpredictable business cycle of an enterprise software company makes discernment of continued and meaningful business trends difficult. In terms of license revenues, we are still experiencing lengthy sales cycles and customers’ preference for licensing our software on an “as needed” basis, versus the historical practice of prepaying license fees in advance of usage, a factor which can adversely affect the amount of our license revenues. License revenues also are a factor in driving the amount of our services revenues, as new license customers typically enter into support and maintenance agreements with us, from which our maintenance revenues are derived.

License. License revenues represent license fees received and recognized from our End-Users and Value Added Resellers.

License revenues were $4.0 million for the three months ended January 31, 2008, an increase of $798,000 (or 25%) from $3.2 million reported for the comparable period in fiscal 2007. The higher license revenues for the three months ended January 31, 2008 were mainly attributable to one significant license agreement with an Asia Pacific telecommunications customer (an independent software vendor) for approximately $1.4 million.

Maintenance. Maintenance and technical support revenues include revenues derived from maintenance agreements, under which we provide customers with internet and telephone access to support personnel and software upgrades, dedicated technical assistance and emergency response support options.

Maintenance revenues were $2.2 million for the three months ended January 31, 2008, an increase of $313,000 (or 16%) from $1.9 million reported for the comparable period in fiscal 2007. The increase in maintenance revenues for the three months ended January 31, 2008 was due primarily to incremental maintenance revenues of approximately $316,000 recognized in the first quarter of fiscal 2008 related primarily to license revenue growth from both U.S. and European based customers over the past year.

Professional Services. Professional services revenues consist of revenues from consulting, training and technical support as well as billable travel expenses incurred by our professional services organization.

Professional services revenues were $92,000 for the three months ended January 31, 2008, an increase of $22,000 (or 31%) from $70,000 reported for the comparable period in fiscal 2007. The increase in professional services revenues for the three months ended January 31, 2008 was mainly attributable to consulting revenues derived from our European operations.

International Revenues. The following table summarizes our revenues by geographic area for the three months ended January 31, 2008 and January 31, 2007 (in thousands, except percentages):

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	Three Months Ended January 31,
			Percentage				Percentage		Change
	2008		of revenues		2007		of revenues		Amount			Percentage
	(unaudited)
Revenues by geographic area:
North America	$	2,002	32	%	$	2,431	47	%	$	(429	)	-18	%
Europe	2,689		43	%	2,594		51	%	95			4	%
Asia	1,593		25	%	126		2	%	1,467			1164	%
Total	$	6,284	100	%	$	5,151	100	%	$	1,133		22	%

International revenues (revenues from the European and Asian regions) represented approximately 68% of our total revenues for the three months ended January 31, 2008, as compared to 53% for the comparable period in 2007.

For the three months ended January 31, 2008, we experienced a higher proportion of international revenues than in recent quarters due primarily to the closing of a significant license transaction for approximately $1.4 million with an Asia Pacific telecommunications customer.

Since the Company’s acquisition of Poet Holdings, Inc. in early 2004, we have generally derived a higher percentage of international revenues due to stronger demand for our products in Europe. We expect in the future to experience a somewhat stronger demand for our products in Europe as compared to our other geographic markets.

Cost of Revenues

The following table summarizes total cost of revenues for the three months ended January 31, 2008 and January 31, 2007 (in thousands, except percentages):

	Three Months Ended
	January 31,		January 31,		Change
	2008		2007		Amount			Percentage
	(unaudited)
Cost of revenues:
Cost of license	$	80	$	47	$	33		70	%
Amortization of intangible assets	79		79		—			0	%
Cost of maintenance	384		405		(21		)	-5	%
Cost of professional services	27		41		(14		)	-34	%
Total	$	570	$	572	$	(2	)	0	%

Total Cost of Revenues.  Total cost of revenues was $570,000 for the three months ended January 31, 2008 remaining at a relatively consistent level in absolute dollars compared to $572,000 for the comparable period in fiscal 2007, although revenues for the three months ended January 31, 2008 increased by 22% over revenues for the corresponding period in fiscal 2007.

License. Cost of license revenues consists primarily of royalties, the cost of third party products which we resell to our customers, product media and packaging costs.

Cost of license revenues was $80,000 (or 2% of license revenues) for the three months ended January 31, 2008, an increase of $33,000 (or 70%) from $47,000 (or 1% of license revenues) reported for the comparable period in fiscal 2007. The increase in cost of license revenues for the three months ended January 31, 2008 was primarily due to an increase in cost of third party products in our U.S. operations of approximately $18,000.

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Amortization of Intangible Assets. Amortization of intangible assets consists of the amortization of intangible assets from our fiscal 2004 acquisitions of Poet Holdings, Inc., FastObjects, Inc. and JDO Genie technology.

Amortization of intangible assets was $79,000 for the three months ended January 31, 2008, which was consistent with the amount incurred in the corresponding period in fiscal 2007. We expect to incur quarterly amortization charges of approximately $79,000 for the remainder of fiscal 2008.

Maintenance. Cost of maintenance revenues consists primarily of customer support personnel and related expenses, including payroll, employee benefits and allocated overhead.

Cost of maintenance revenues was $384,000 (or 17% of maintenance revenues) for the three months ended January 31, 2008, a decrease of $21,000 (or 5%) from $405,000 (or 21% of maintenance revenues) reported for the comparable period in fiscal 2007. The decrease was primarily due to a reduction in facility expenses in our U.S. operations as a result of our occupying lesser square footage in our new Redwood City facility than in our former Fremont offices.

Cost of maintenance revenues as a percentage of maintenance revenues decreased by 4% for the three months ended January 31, 2008 from the corresponding period in fiscal 2007. This decrease was primarily due to the fact that, during the first quarter of fiscal 2008, we have been able to provide increased maintenance and support services with approximately the same number of personnel as we used to provide such services for the corresponding period in fiscal 2007 and also due to the fact that maintenance revenues increased by 16% for the three months ended January 31, 2008 compared to the corresponding period in fiscal 2007.

Professional Services. Cost of professional services consists of salaries, bonuses, third party consulting fees and other costs associated with supporting our professional services organization.

Cost of professional services revenues was $27,000 (or 29% of professional services revenues) for the three months ended January 31, 2008, a decrease of $14,000 (or 34%) from $41,000 (or 59% of professional services revenues) reported for the comparable period in 2007. The decrease was primarily due to cost of professional services related to a one time consulting project performed through our Indian operations in the first quarter of fiscal 2007 that was not replicated in the first quarter of fiscal 2008.

Operating Expenses

The following table summarizes our operating expenses for the three months ended January 31, 2008 and January 31, 2007 (in thousands, except percentages):

	Three Months Ended
	January 31,		January 31,		Change
	2008		2007		Amount			Percentage
	(unaudited)
Operating expenses:
Sales and marketing	$	841	$	760	$	81		11	%
Research and development	1,054		891		163			18	%
General and administrative	1,086		1,209		(123		)	-10	%
Total	$	2,981	$	2,860	$	121		4	%

Total Operating Expenses. Total operating expenses were $3.0 million for the three months ended January 31, 2008, an increase of $121,000 (or 4%) from $2.9 million reported for the comparable period in 2007. This increase resulted primarily from an increase in our research and development expenses and, to a lesser degree, from an increase in our sales and marketing expenses, and were partially offset by a decrease of approximately $123,000 in our general and administrative expenses during the three months ended January 31, 2008, and included an unfavorable foreign currency exchange fluctuation of approximately $116,000.

For the remainder of fiscal year 2008, we expect our quarterly operating expenses to be moderately higher than we experienced in the first quarter of this fiscal year as further explained below.

Sales and Marketing. Sales and marketing expenses consist primarily of personnel and personnel related expenses, commissions earned by sales personnel, trade shows, travel and other marketing communication costs, such as advertising and other marketing programs.

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Sales and marketing expenses were $841,000 (or 13% of revenues) for the three months ended January 31, 2008 and $760,000 (or 15% of revenues) for the comparable period in fiscal 2007. The $81,000 (or 11%) increase in absolute dollars for the three months ended January 31, 2008 was primarily due to an approximate $62,000 increase in marketing expenses related to advertising campaigns, trade shows and other marketing programs in our European operations.

For the remainder of fiscal 2008, we expect our quarterly sales and marketing expenses to increase moderately due to anticipated increases in sales personnel and in marketing programs. Sales and marketing expense will continue to represent a considerable percentage of our operating expenditures.

Research and Development. Research and development expenses consist primarily of personnel and related expenses, including payroll and employee benefits, facility expenses and costs to engage software development contractors.

Research and development expenses were $1.1 million (or 17% of revenues) for the three months ended January 31, 2008 and $891,000 (or 17% of revenues) for the comparable period in fiscal 2007. The $163,000 (or 18%) increase in absolute dollars for the three months ended January 31, 2008 was mainly due to an increase of eight headcounts in our European operations, resulting in an increase of approximately $176,000 in salary and payroll related expenses from the corresponding period in fiscal 2007, and an increase of approximately $130,000 as a result of using third party contractors for certain research and development projects during the three months ended January 31, 2008, and an increase in building rent expense in our Indian facility of approximately $45,000 from the comparable period of fiscal 2007. These increases were partially offset by a decrease in research and development expenses as a result of headcount reductions of four personnel in our U.S. operations, resulting in a reduction of salary and payroll related expenses of approximately $188,000.

We anticipate that we will continue to invest significant resources in research and development activities to develop new products, advance the technology of our existing products and develop new business opportunities. We expect research and development expenditures to generally remain at the current levels for the remainder of fiscal 2008.

General and Administrative. General and administrative expenses consist primarily of personnel and related expenses and general operating expenses.

General and administrative expenses were $1.1 million (or 17% of revenues) for the three months ended January 31, 2008 and $1.2 million (or 24% of revenues) for the comparable period in fiscal 2007. The $123,000 (or 10%) decrease in absolute dollars for the three months ended January 31, 2008 was primarily due an approximate $72,000 decrease in facility expenses in our U.S. operations as a result of our occupying lesser square footage in our new Redwood City facility than in our former Fremont offices, and an approximate $54,000 decrease in the first quarter of fiscal 2008 in legal fees and costs associated with our pending litigation with Rockwell Automation.

For the remainder of fiscal 2008, we expect our quarterly general and administrative expenses to increase from the levels we experienced in the first quarter. We anticipate increased quarterly costs associated with implementation of Section 404 of the Sarbanes-Oxley Act of 2002 and legal fees and other costs related to the Company’s pending litigation with Rockwell Automation.

Interest and Other Income, Net

Interest and other income, net consists of interest income earned from our cash and cash equivalents net of interest expense due to our financing activities, miscellaneous refunds and foreign exchange rate gains and losses as a result of settling transactions denominated in currencies other than our functional currency.

Interest and other income, net was $201,000 (or 3% of total revenues) for the three months ended January 31, 2008 and was $101,000 (or 2% of total revenues) for the comparable period in 2007. The increase in absolute dollars of $100,000 was largely due to an increase in interest income from both our European and U.S. operations as a result of higher cash balances and was partially offset by losses on foreign exchange rate fluctuations.

Provision for Income Taxes

The following table reflects the Company’s provision for income taxes for the three months ended January 31, 2008 and January 31, 2007 (in thousands, except percentages):

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	Three Months Ended
	January 31,		January 31,		Change
	2008		2007		Amount			Percentage
	(unaudited)
Provision for income taxes
Foreign withholding taxes	$	237	$	17	$	220		1294	%
Provision for income taxes Europe	173		165		8			5	%
Federal, state and franchise taxes	1		21		(20		)	-95	%
Total	$	411	$	203	$	208		102	%

Although we have not exhausted our net operating tax loss carry forwards in Germany, the German tax code provides for certain annual statutory limitations related to the use of tax loss carry forward amounts. Consequently, we accrued income taxes for our European operations of approximately $173,000 and $165,000 for the three months ended January 31, 2008 and 2007, respectively. The Company’s tax provisions were based upon our projected fiscal 2008 and fiscal 2007 effective tax rates, respectively.

We incurred foreign withholding taxes of approximately $237,000 and $17,000 for the three months ended January 31, 2008 and 2007, respectively, which we have included in our income tax provision. The increase of approximately $220,000 in foreign withholding taxes for the three months ended January 31, 2008 over the comparable period in fiscal 2007 was mainly attributable to withholding taxes related to one significant license agreement with one Asia Pacific customer.

We record a valuation allowance to reduce our tax assets to an amount for which realization is more likely than not. We have recorded a valuation allowance for all of our deferred tax assets as of January 31, 2008, except to the extent of deferred tax liabilities, as we are presently unable to conclude that it is more likely than not that the existing net deferred tax assets will be realized.

LIQUIDITY AND CAPITAL RESOURCES

Cash and Cash Equivalents

We funded our business from cash generated by our operations during the three months ended January 31, 2008. As of January 31, 2008, we had cash and cash equivalents of approximately $21.3 million, an increase of $2.2 million over the $19.1 million of cash and cash equivalents we held at October 31, 2007.

As of January 31, 2008, $13.9 million of our $21.3 million in cash and cash equivalents at that date was held in foreign financial institutions, of which substantially all was held in foreign currencies.

The following table summarizes our cash balances held in foreign currencies and their equivalent U.S. dollar amounts for the periods indicated (in thousands):

	As of January 31, 2008					As of October 31, 2007
	Local Currency			U.S. Dollar		Local Currency			U.S. Dollar
	(unaudited)
Cash in foreign currency:
Euros	€	9,102		$	13,456	€	6,924		$	9,978
British Pound	£	100		200		£	48		99
Indian Rupee	Rs.		9,081	230		Rs.		4,445	113
Total				$	13,886				$	10,190

We transact business in various foreign currencies and, accordingly, we are subject to exposure from adverse movements in foreign currency exchange rates. The effect of changes in foreign currency exchange rates on our net operating results in the first quarter of fiscal 2008 was comprised of approximately $376,000 of favorable foreign currency fluctuations on our revenues, $104,000 of unfavorable foreign currency fluctuations on our cost of revenues, and $116,000 of unfavorable foreign currency fluctuations on our operating expenses, resulting in a net favorable effect of approximately $156,000 in our statement of operations

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for the three months ended January 31, 2008. Operating expenses incurred by our foreign subsidiaries are denominated primarily in local currencies. We currently do not use financial instruments to hedge these operating expenses. We intend to assess the need to utilize financial instruments to hedge currency exposures on an ongoing basis during fiscal 2008.

Our exposure to foreign exchange risk is related to the magnitude of foreign net profits and losses denominated in euros and pounds sterling, as well as our net position of monetary assets and monetary liabilities in those foreign currencies. These exposures have the potential to produce either gains or losses within our consolidated results. However, in some instances our European operations act as a natural hedge since both operating expenses as well as revenues are denominated in local currencies. In these instances, although an unfavorable change in the exchange rate of euros or pound sterling against the U.S. dollar will result in lower revenues when translated into U.S. dollars, the operating expenditures will be lower as well. Additionally, we have maintained approximately 35% of our total cash balance in the form of U.S. dollars to assist in neutralizing the impact of foreign currency fluctuations.

In relation to our cash balances held overseas, there were no European Union foreign exchange restrictions on repatriating our overseas-held cash to the United States.  However, we may be subject to income tax withholding in the source countries and to U.S. federal and state income taxes if the cash payment or transfer from our subsidiaries to the U.S. parent were to be classified as a dividend.  Other payments made by our European overseas subsidiaries in the ordinary course of business (e.g. payment of royalties or interest from the subsidiaries to the U.S. parent) were generally not subject to income tax withholding due to tax treaties.

Our cash equivalents primarily consist of money market accounts; accordingly, our interest rate risk is not considered significant.

We believe that with our current cost structure and based on achievement of our current estimates of revenues and collections in fiscal 2008, we can reasonably expect to operate at a positive cash flow level in the remainder of fiscal 2008.

Cash Flow provided by Operating Activities

The main source of our operating cash flows is cash collections from customers who have purchased our products and services. Our primary uses of cash in operating activities are for personnel related expenditures and facilities costs.

The timing of payments to our vendors for accounts payable and collections from our customers for accounts receivable will significantly impact cash flows in our operating activities. We typically pay our vendors and service providers in accordance with their invoice terms and conditions. Our standard payment terms for our invoices are usually between 30 and 60 days net.

We measure the effectiveness of our collection efforts by an analysis of our accounts receivable and our days sales outstanding (DSO). We calculate DSO by taking the ending accounts receivable balances (net of bad debt allowance) divided by the average daily sales amount. Average daily sales amount is calculated by dividing the total quarterly revenue recognized net of changes in deferred revenues by 91.25 days. Collection of accounts receivable and related DSO could fluctuate in the future periods, due to timing and amount of our revenues and the effectiveness of our collection efforts. Our DSOs were 45 days for both the three months ended January 31, 2008 and January 31, 2007.

Our working capital was $18.6 million as of January 31, 2008 compared to $15.3 million as of October 31, 2007.

Cash Flow used in Investing Activities

The primary use of our cash in investing activities is typically for the acquisition of property and equipment.

For the three months ended January 31, 2008, $3,000 of cash was used in investing activities and was comprised entirely of purchases of property and equipment.

Cash Flow provided by Financing Activities

The primary source of cash from financing activities is proceeds from the sale of common stock under our Equity Incentive Plan, Director Plan and Employee Stock Purchase Plan.

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For the three months ended January 31, 2008, $206,000 of cash was provided by financing activities, consisting of cash inflows of $208,000 due to proceeds from the sale of common stock under our Equity Incentive and Employee Stock Purchase Plans, reduced by principal payments of $2,000 under capital lease obligations.

Our future liquidity and capital resources could be impacted by the exercise of outstanding common stock options and the cash proceeds we receive upon exercise of these securities. Further, as of January 31, 2008 we had approximately 155,922 shares available to issue under our current Equity Incentive Plan and our Director Plan. The timing of the issuance, the duration of their vesting provision and the grant price will all impact the timing of any proceeds. Accordingly, we cannot estimate the amount of such proceeds at this time.

Commitments and Contingencies

Our principal commitments as of January 31, 2008 consist of obligations under operating leases for facilities and equipment commitments.

Our annual minimum commitments as of January 31, 2008 under non-cancelable operating leases, not recorded on our Condensed Consolidated Balance Sheet as of January 31, 2008, are as follows (in thousands):

	Rental		Equipment
	Leases		Leases		Total
Nine months ending October 31, 2008	$	420	$	17	$	437
Fiscal year ending October 31,
2009	442		16		458
2010	181		7		188
Thereafter	—		—		—
Total	$	1,043	$	40	$	1,083

We believe that our existing cash and cash equivalents and cash to be generated from operations will be sufficient to finance our operations during the next twelve months. However, if we fail to generate adequate cash flows from operations in the future, due to an unexpected decline in our revenues, or due to a sustained increase in cash expenditures in excess of the revenues generated, then our cash balances may not be sufficient to fund our continuing operations without obtaining additional debt or equity financing. Additional cash may also be needed to acquire or invest in complementary businesses or products or to obtain the right to use complementary technologies, and we expect that, in the event of such an acquisition or investment that is significant, it will be necessary for us to seek additional debt or equity financing.

Our $3.0 million credit facility with a financial institution expired by its terms in June 2007, and we currently do not have in place a credit or loan facility.

If we are required to obtain additional financing for our working capital, there can be no assurance that such financing will be available to us on reasonable financial or other terms, or at all. The prices at which new investors might be willing to purchase our securities may be lower than the market value or the trading price of our common stock. The sale of additional equity or convertible debt securities could also result in dilution to our shareholders, which could be substantial and may involve the issuance of preferred securities that would have liquidation preferences that entitle holders of the preferred securities to receive certain amounts before holders of our common stock in connection with an acquisition or business combination involving Versant or a liquidation of Versant. New investors may also seek agreements giving them additional voting control or seats on our board of directors. Even if we were able to obtain additional debt or equity financing, the terms of any such financing might significantly restrict our business activities and in some circumstances, might require us to obtain the approval of our shareholders, which could delay or prevent consummation of the financing transaction.

Our software license agreements generally include certain provisions for indemnifying customers against liabilities if our software products infringe upon a third party’s intellectual property rights. To date, we have not incurred any material costs as a result of any indemnification. However, as a result of current litigation in which Rockwell Automation, one of our customers, is seeking indemnification from us for alleged infringement of intellectual property rights asserted against it by Systems America, Inc. and associated costs incurred by Rockwell to defend this infringement claim, we

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had recorded an immaterial loss contingency reserve as of January 31, 2007 in accordance with FASB Statement No. 5. To date, we have incurred significant legal costs as a result of this litigation and may continue to incur additional legal costs and may incur other expenses due to this litigation. We are continuing to contest the allegations of infringement of intellectual property rights and Rockwell’s indemnification claim asserted in this litigation, and the ultimate outcome is uncertain. A trial date in April 2008 has been set for the court to hear the case.

Recent Accounting Pronouncements

For recent accounting pronouncements see Note 9, Recent Accounting Pronouncements of Notes to Condensed Consolidated Financial Statements under Part I, and Item 1 of this Report, which is incorporated herein by this reference.

Risk Factors

The Company’s business faces many risks and uncertainties. When evaluating our business and prospects you should, in addition to other information contained in this report and our other filings with the SEC, particularly consider the risk factors set forth in Part I, Item 1A (“Risk Factors”) of the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2007, filed with the SEC on January 29, 2008 (File No. 08557145).

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Foreign currency hedging instruments. We transact business in various foreign currencies and, accordingly, we are subject to exposure from adverse movements in foreign currency exchange rates. The effect of changes in foreign currency exchange rates on our net operating results in the first quarter of fiscal 2008 was comprised of approximately $376,000 of favorable foreign currency fluctuations on our revenues, $104,000 of unfavorable foreign currency fluctuations on our cost of revenues, and $116,000 of unfavorable foreign currency fluctuations on our operating expenses, resulting in a net favorable effect of approximately $156,000 in our statement of operations for the three months ended January 31, 2008. Operating expenses incurred by our foreign subsidiaries are denominated primarily in local currencies. We currently do not use financial instruments to hedge these operating expenses. We intend to assess the need to utilize financial instruments to hedge currency exposures on an ongoing basis.

Our exposure to foreign exchange risk is related to the magnitude of foreign net profits and losses denominated in euros and, to a lesser degree, pounds sterling as well as our net position of monetary assets and monetary liabilities in those foreign currencies. These exposures have the potential to produce either gains or losses within our consolidated results. Our European operations, however, in some instances act as a natural hedge since both operating expenses as well as revenues are denominated in local currencies. In these instances, although an unfavorable change in the exchange rate of euros or pounds sterling against the U.S. dollar will result in lower revenues when translated into U.S. dollars, the operating expenditures will be lower as well. Additionally, we have maintained approximately 35% of our total cash balance in the form of U.S. dollars to assist in neutralizing the impact of foreign currency fluctuations.

We do not own any derivative financial instruments.

Interest rate risk.Our cash equivalents primarily consist of money market accounts; therefore, we do not believe that our interest rate risk is significant at this time.

ITEM 4T. CONTROLS AND PROCEDURES

(a)   Evaluation of Disclosure Controls and Procedures.

SEC rules define the term “disclosure controls and procedures” to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in its reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure

Based on the evaluation of the effectiveness of our disclosure controls and procedures by our management, with the participation

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of our chief executive officer and chief financial officer, as of the end of the period covered by this report, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

(b)  Changes in Internal Control over Financial Reporting.

There was no change in our internal control over financial reporting during the three months ended January 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

SEC rules define the term “internal control over financial reporting” as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

·Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

·Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

·Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS

(a)           Exhibits

The following exhibits are filed with this Quarterly Report on Form 10-Q:

Exhibit		Incorporated by Reference				Filed with this
Number	Exhibit Description	Form	File Number	Exhibit	File Date	10-Q
10.01	Joint Employment Agreement and Managing Director Service Contract effective as of November 1, 2006 between Registrant, Versant GmbH, a wholly owned subsidiary of Registrant, and Jochen Witte**					X
31.01	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
31.02	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
32.01*	Certification of Chief Executive Officer pursuant					X

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	to Section 906 of the Sarbanes-Oxley Act of 2002
32.02*	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X

*This exhibit is being furnished rather than filed, and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

**Management contract or compensatory plan.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		VERSANT CORPORATION
Dated:	March 13, 2008	/s/ Jerry Wong
		Jerry Wong
		Vice President, Finance
		Chief Financial Officer
		(Duly Authorized Officer and Principal
		Financial and Accounting Officer)
		/s/ Jochen Witte
		Jochen Witte
		President and Chief Executive Officer (Duly Authorized Officer and Principal Executive Officer)

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EX-10.01

EXHIBIT 10.01

Joint Employment Agreement

and

Managing Director Service Contract

Effective as of November 1, 2006 (the “Effective Date”)

Between

Versant Corporation,

a California corporation

with offices at 6539 Dumbarton Circle, Fremont, California, 94555 USA

(hereinafter “Versant”), and

Versant GmbH,

a German corporation that is a subsidiary of Versant,

with offices at Wiesenkamp 22b 22359, Hamburg, Germany

(hereinafter “Versant Germany”),

on the one hand

and

Mr. Jochen Witte

Buchenstieg 13b

22359 Hamburg

(hereinafter “Witte”, “Employee” or “Managing Director”, as applicable),

on the other hand.

Preamble and Recitals

Witte is currently the President and Chief Executive Officer of Versant and also currently serves as Managing Director of Versant Germany.  The Parties desire to set forth in this Agreement the terms and conditions on which Witte will, during the Term (as defined in Part C hereof), serve as (i) an officer and employee of Versant and (ii) Managing Director of Versant Germany.  References herein to “Employee” refer to Witte in his capacity as Chief Executive Officer of Versant and references herein to “Managing Director” refer to Witte in his capacity as Managing Director of Versant Germany.

PART A:

Employment With Versant

During the Term of this Agreement (as defined in Part C), Employee’s employment with Versant shall be subject to and governed by the provisions of this Part A and, as applicable, Part C of this Agreement:

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§ 1A Employment; Duties.

(1)Subject to the terms and conditions of this Agreement, Versant hereby employs Employee, and Employee hereby accepts employment, as Versant’s Chief Executive Officer and President, reporting to Versant’s Board of Directors (the “Versant Board”), and Employee agrees that, in that capacity, he shall be an “exempt” employee within the meaning of California law.  Employee shall perform his services as Versant’s Chief Executive Officer and President subject to the supervision and direction of the Versant Board (or any committee thereof) and shall have such responsibilities, duties and authority as are consistent with those offices. In addition, Employee shall have such other duties as the Versant Board may direct and may be asked to hold additional management positions within the Versant group of companies without additional compensation (except for the compensation paid to Employee for his service as Managing Director of Versant Germany, which shall be as provided in Part B of this Agreement).  During Employee’s employment with Versant, Employee shall not engage in any business activities outside those of Versant and the Versant group of companies to the extent that such activities (a) are competitive with those of Versant or any subsidiary or affiliate of Versant or (b) would impair, interfere with, inhibit or prejudice Employee’s obligations or time commitment to Versant.

§ 2A Compensation.

As his sole and exclusive compensation for Employee’s services as Versant’s Chief Executive Officer and President, during the Term Employee will, subject to the terms of this Agreement, receive the following compensation from Versant:

(1)Bonus Provisions.

(a)      Existing Fiscal 2006 Bonus Program.  The parties acknowledge that Employee is currently participating in a Versant bonus program for Versant’s fiscal year ending October 31, 2006 which is on terms substantially identical to that of the bonus program described in §2A(1)(b) below, except that it applies only to Versant’s fiscal year ending October 31, 2006 (the “FY 2006 Bonus Program”).  Versant and Employee agree that Employee will continue to participate in and be compensated under the FY 2006 Bonus Program in accordance with the existing terms and conditions of the FY 2006 Bonus Program, subject to the provisions of this Agreement.

(b)      Fiscal 2007 Bonus Program.  As used herein, the term “Bonusable Net Income” means Versant’s reported net income (if any) for Versant’s fiscal year ending October 31, 2007 (the “2007 Fiscal Year”), as determined in accordance with United States generally accepted accounting principles (“GAAP”) but computed before deduction of Employee’s bonus provided for in this §2A(1)(b). Subject to the following provisions of this §2A(1)(b) and §3A, Employee shall be paid by Versant a bonus with respect to the 2007 Fiscal Year as follows:

(i)Promptly following the close of each fiscal quarter of Versant during the 2007 Fiscal Year (other than the fourth fiscal quarter of the 2007 Fiscal Year) in which Versant has Bonusable Net Income, Employee will be paid an amount (a “Bonus Advance”) equal to three percent (3%) of Versant’s Bonusable Net Income (if any) for such fiscal quarter, with such payment to be paid in Euros based on then-current Euro/ U.S. Dollar exchange rates.

(ii)Following the close of the 2007 Fiscal Year, Employee will be entitled to be paid a bonus in an amount equal to six percent (6%) of Versant’s Bonusable Net Income for the 2007 Fiscal Year, minus all Bonus Advances previously paid to Employee under §2A(1)(b)(i).  Such bonus will be paid promptly after the first public announcement of Versant’s audited statement of operations for its 2007 Fiscal Year and will be paid in Euros based on then-current Euro/ U.S. Dollar exchange rates.

(iii)If the sum of Employee’s Bonus Advances paid pursuant to §2A(1)(b)(i) above exceed six percent (6%) of Versant’s Bonusable Net Income for the 2007 Fiscal Year, then (A) no further payment will be made to Employee under the bonus program for the 2007 Fiscal Year described in this §2A(1)(b) and (B) Employee will retain all Bonus Advances previously paid to him under this §2A(1)(b)(i).

(c)      Future Bonus Program(s).  For so long as Employee continues to serve as Versant’s Chief Executive Officer during the Term of this Agreement, for each fiscal year of Versant beginning after the 2007 Fiscal Year and occurring during the Term of this Agreement, the Versant Board and/or the Compensation Committee of the Versant Board (“Versant

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Compensation Committee”) shall adopt a contingent bonus program for Employee on such terms and conditions as the Versant Board and/or the Versant Compensation Committee shall determine in its sole discretion.

(d)      Effect of Termination.  If Employee ceases to be employed as Versant’s Chief Executive Officer, then the effect of such termination on Employee’s rights to be paid under the bonus program for the 2007 Fiscal Year under §2A(1)(b) or under any bonus program described in §2A(1)(c) shall be governed by the applicable provisions of §3A below

(2)Stock Option Provisions.

(a)      Stock Option Grant. Upon signing of this Agreement, pursuant to Versant’s 2005 Equity Incentive Plan, as it may be amended (the “Plan”), Versant shall grant Employee a nonqualified option to purchase up to Twenty Thousand (20,000) shares of Versant’s Common Stock (as constituted on the Effective Date) in accordance with the terms of the Plan and Versant’s then-current standard employee stock option grant agreement, at an exercise price per share equal to the closing price of Versant’s Common Stock on the date of grant, as provided in the Plan.  The right to purchase shares under such option will vest and become exercisable over a three (3) year period from the date the option is granted on Versant’s standard employee stock option vesting terms which are as follows: for so long as Employee continues to be employed by or provide other services to Versant (or any Subsidiary or Parent of Versant as those terms are defined in the Plan):  (i) the right to purchase 25% of the shares subject to the option will vest and become exercisable nine (9) months after the date the option is granted; and (ii) thereafter the option will vest and become exercisable with respect to 1/27 of the remaining 75% of the shares each month for a period of 27 months; provided that the vesting of such option is subject to potential acceleration as provided in §3A(2).

(b)      Consideration of Potential Future Stock Option Grants.  For so long as Employee continues to serve as Versant’s Chief Executive Officer, on an annual basis for each fiscal year of Versant after the 2007 Fiscal Year that occurs during the Term of this Agreement, the Versant Board and/or the Versant Compensation Committee shall review and consider the appropriateness of granting Employee an additional option to purchase shares of Versant Common Stock in such amounts and on such terms and conditions as the Versant Board and/or the Versant Compensation Committee shall determine in its sole discretion; provided however, that nothing herein shall obligate Versant, the Versant Board or the Versant Compensation Committee to grant Employee (i) any additional options to purchase shares of Versant’s stock or other securities of Versant or (ii) or any award of stock or other securities.

§ 3A Termination.

(1)Right of Termination.  Employee’s employment by Versant is “at will” and can be terminated by either Employee or Versant at any time with or without Cause (as defined in §3A(3) below); except that Employee will give Versant at least three (3) months’ advance written notice of his voluntary termination or resignation (other than a termination or resignation due to Employee’s serious physical illness or disability).  In the event that Employee gives Versant such advance written notice of his voluntary termination as provided in the preceding sentence, (i) Versant shall have the right, at its sole option and discretion, to require that Employee immediately (or at any later time during the three (3) month notice period) cease reporting for work and terminate his employment with Versant and (ii) such termination shall not be deemed to be an involuntary termination of Employee’s employment by Versant without Cause.

(2)Termination without Cause.  If during the Term of this Agreement Employee’s employment as Chief Executive Officer of Versant is involuntarily terminated by Versant without Cause (as defined in §3A(2)(c) below) (other than due to Employee’s death or disability) and without Employee’s consent or agreement, then:

(a)      Effect on Options.  The vesting of Employee’s right to exercise all Employee’s then outstanding options to purchase shares of Versant stock (“Versant Options”) will then accelerate by twelve (12) months of vesting based on the then-effective vesting schedules of such Versant Options (i.e. such Versant Options will become vested and exercisable to the same extent that (but for this paragraph) they would have been vested and exercisable by their terms on the date that is (12) months after Employee’s involuntary termination by Versant without Cause (the “Vesting Extension Date”) if Employee had been

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continuously employed by Versant at all times through and including the Vesting Extension Date.  Except as expressly provided in this §3A(2), nothing herein will alter or modify the terms of any Versant Options held by Employee.

(b)      Effect on Bonus Programs.  Employee shall not be entitled to be paid any bonus under any bonus program established by Versant for Employee pursuant to this Agreement except and only to the extent that (i) such bonus had already been fully earned by Employee under the terms of the applicable bonus program as of the date of Employee’s termination without Cause and (ii) such bonus had not previously been paid to Employee.

(c)      “Cause” Defined.  As used in Part A of this Agreement, the term “Cause” shall mean the involuntary termination of Employee because of:  (a) any willful, material violation by Employee of any law or regulation applicable to the business of Versant or its subsidiaries or affiliates or any other misconduct by Employee which is materially injurious to Versant or any of its subsidiaries or affiliates; (b) Employee’s conviction for, or guilty plea to, a felony or a crime involving serious moral turpitude; (c) Employee’s commission of an act of personal dishonesty or fraud; (d) the continued failure or refusal of Employee, after warning from the Versant Board or a committee thereof, (i) to follow the lawful directions of the Versant Board or a committee thereof or the policies of Versant or any of its subsidiaries or affiliates or (ii) to perform Employee’s material duties as an employee or officer of Versant or a subsidiary or affiliate of Versant; or (e) Employee’s wilful, material breach of his Invention Assignment and Confidentiality Agreement (as defined in §4A below) or any similar agreement with Versant or with any Versant affiliate or subsidiary that is not susceptible to cure or that is not cured within ten (10) days after Employee is given notice of such breach by Versant.  In addition, as used in Part A of this Agreement, the term “Cause” shall include the involuntary termination of Managing Director’s employment with Versant Germany for Cause (as defined in §5B(3)) pursuant to §5B(3) below.

(3)Termination for Cause.  If, during the Term of this Agreement, Employee’s employment with Versant is involuntarily terminated by Versant for Cause (as defined in §3A(2) above) then:

(a) there shall be no acceleration of vesting of any of Employee’s Versant Options; and

(b) Employee shall not be entitled to be paid any bonus under any bonus program established by Versant for Employee pursuant to this Agreement except and only to the extent that (i) such bonus had already been fully earned by Employee under the terms of the applicable bonus program as of the date of Employee’s termination for Cause, and (ii) such bonus had not previously been paid to Employee.

(4)Termination due to Death or Disability. If during the Term of this Agreement Employee’s employment with Versant terminates due to Employee’s death or disability, then:

(a) there shall be no acceleration of vesting of any of Employee’s Versant Options; and

(b)      Employee not be entitled to be paid any bonus under any bonus program established by Versant for Employee pursuant to this Agreement except and only to the extent that (i) such bonus had already been fully earned by Employee under the terms of the applicable bonus program as of the date of Employee’s termination due to Employee’s death or disability, and (ii) such bonus had not previously been paid to Employee.

(5)No Severance.  Upon termination of Employee’s employment with Versant for any reason (whether such termination is a voluntary termination by Employee, an involuntary termination for Cause, an involuntary termination without Cause or a termination due to Employee’s illness, disability or death), Employee will not be entitled to any severance payment or any salary continuation from Versant.  Nothing in this §3A(5) is intended to alter or affect the provisions of §5B(2) of this Agreement.

(6)Future Employment Terms.  If Employee is still employed as Chief Executive Officer and/or President of Versant (or is otherwise employed by Versant) at the expiration of the Term of this Agreement, then (unless and except to the extent that Versant and Employee have otherwise agreed in writing):  (a) Employee shall be an at-will employee of Versant solely for the compensation Versant then agrees to pay Employee; (b) Employee’s employment with Versant may be terminated by Versant or by Employee at any time with or without Cause.

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§ 4A Intellectual Property / Confidentiality.

Employee will enter into, and shall continue to be bound and obligated by, Versant’s Employee Invention Assignment and Confidentiality Agreement, a copy of which is attached hereto as Annex 1 (the “Invention Assignment and Confidentiality Agreement”)

PART B:

Managing Director Service Contract with Versant Germany

During the Term of this Agreement (as defined in Part C), Managing Director’s employment as the Managing Director of Versant Germany shall be subject to and governed by the provisions of this Part B and, as applicable, Part C of this Agreement:

§ 1B Termination of Previous Contract of Service.

(1)Versant Germany and Managing Director agree that, upon expiry of the day immediately preceding the Effective Date of this Agreement, the Managing Director’s “Contract of Service” as of March 18, 2004, together with Exhibit 1 thereto and all further additional agreements related thereto, shall automatically terminate, Managing Director shall have no further rights thereunder and the conditions of employment of the Managing Director as Managing Director of Versant Germany shall be governed solely and exclusively by the provisions of Part B and Part C of this Agreement.

§ 2B Position and Tasks.

(1)Subject to the terms and conditions of this Agreement, Versant Germany hereby employs Managing Director, and Managing Director hereby accepts employment, as Versant Germany’s Managing Director.  The Managing Director of Versant Germany is responsible for the European operations of Versant and its subsidiaries. At the discretion of the shareholder assembly of Versant Germany the Managing Director may be asked to hold additional management positions inside the Versant group without additional compensation (other than the position of Chief Executive Officer and President of Versant, which shall be compensated for as provided in Part A of this Agreement).

(2)The Managing Director shall conduct the business of Versant Germany conscientiously with the care of a proper businessman and shall exercise in a responsible manner the duties assigned to him by the law, articles of incorporation, contract and where necessary general codes of practice and rules of procedure. In particular he shall also obey the basic principles of Versant Germany’s business plan.

(3)The Managing Director’s main activity comprises the responsible management and supervision of Versant Germany (including the initiation, co-ordination and execution of all procedures).

(4)The Managing Director may not appoint any additional Managing Directors of Versant Germany.  Additional Managing Directors of Versant Germany may be appointed only with the prior approval of Versant (given with the approval of the Versant Board) as the sole shareholder of Versant Germany (the “Shareholder”).

§ 3B Shareholder Resolutions.

(1)The Managing Director is bound by the resolutions of the Shareholder adopted at a Shareholders’ Meeting. In particular, actions taken by the Shareholder at a Shareholders’ Meeting can define general guidelines regarding the conduct of business transactions.  Moreover through the Shareholders’ Meeting the Shareholder can issue binding rules of procedure defining the demarcation of the areas of activity of the Managing Director.

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(2)Subject to further instructions provided by the Shareholder at a Shareholders’ Meeting, the Managing Director shall require the prior approval of Shareholder at a Shareholders’ Meeting for all activities going above and beyond Versant Germany’s ordinary scope of business activities.

(3)Consent of the Shareholder can already be granted in advance, including for individual groups of transactions.  Specific inclusion of a particular matter in the annual budget for Versant Germany approved by the Shareholder shall count as the shareholder’s consent to such matter, unless a reservation was attached to its adoption in this respect.

(4)All consents and approvals of the Shareholder described in this § 3B mean such consents and approvals of the Shareholder as are approved by the Versant Board.

§ 4B Power of Representation.

(1)The Managing Director represents Versant Germany (alongside the other Managing Directors, if any are appointed by the Shareholder) legally and extrajudicially in accordance with the conditions of his appointment and Versant Germany’s articles of association.

(2)The Managing Director shall obey the restrictions imposed on him by this Agreement, Versant Germany’s articles of association, the law, an instruction or a resolution by the Shareholder approved or adopted at any Shareholders’ Meeting.

§ 5B Termination.

(1)Right of Termination.  Managing Director’s service and employment as Managing Director can be terminated without Cause (as defined in §5B(3) below) by either Versant Germany or Managing Director at the end of each calendar month by giving three (3) months’ advance written notice of such termination (such three (3) month period, the “Notice Period”).  In the event that Versant Germany or Managing Director gives such advance written notice of termination as provided in the preceding sentence, Versant Germany shall have the right, at its sole option and discretion, to require that Managing Director immediately (or at any later time during the Notice Period) cease reporting for work and terminate his services as Managing Director, provided that : (i) Versant Germany continues to pay Managing Director his then-current Base Salary (as defined in § 6B(1) below) in instalments in accordance with Versant Germany’s regular payroll practices during the three (3) month Notice Period and (ii) if such notice of termination is given by Versant Germany, nothing in this §5B(1) is intended to alter Managing Director’s rights under § 5B(2) below).  For the avoidance of doubt, the parties acknowledge and agree that if Managing Director gives Versant Germany such notice of termination, then Managing Director’s termination shall not be deemed to be an involuntary termination of Managing Director by Versant Germany without Cause within the meaning of this Agreement.

(2)Termination without Cause; Severance.  Subject to the provisions of this §5B(2), in case of an involuntary termination of Managing Director by Versant Germany according to §5B(1) above without Cause (as defined in §5B(3) below) prior to the expiration of the Term of this Agreement, Managing Director will be entitled to receive a severance payment (the “Severance Payment”) which is equivalent to the sum of:  (i) the amount of Managing Director’s base salary paid to him by Versant Germany as provided in §6B(1) below in Versant’s three most recent fiscal quarters ended preceding the date of such termination; plus (b) an amount equal to all Bonus Advances or other bonus payments paid to Managing Director by Versant pursuant to §2A(1) of Part A above in the three most recent fiscal quarters (i.e. Versant’s reporting fiscal quarters) ended preceding the date of such termination.  The Severance Payment will be due and payable in six (6) equal monthly instalments, with the first such payment being due one (1) month after the date of Managing Director’s termination without Cause.  Notwithstanding the foregoing, Managing Director will not be entitled to receive any part of the Severance Payment unless and until Managing Director has first executed and delivered to Versant Germany a written general release of claims in customary form releasing Versant, Versant Germany and all their respective subsidiaries, affiliates, officers, directors and personnel from any and all claims or causes of action that Managing Director may have or hold.

(3)Termination for Cause.  Versant Germany’s right to terminate Managing Director for Cause and/or to give extraordinary and immediate notice of termination of Managing Director for Cause remains unaffected by the terms of this Agreement.  As

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used in this §5B, the term “Cause” shall mean and include: (i) all the grounds and meanings of Cause as defined in §3A(2)(c) of Part A above (as if such definition referred to “Versant Germany” in each place it refers to “Versant”)); (ii) the involuntary termination of Employee’s employment with Versant for Cause (as defined in §3A(2)(c) of Part A above) pursuant to §3A(3) above; (iii) Managing Director’s death or disability; and (iv) any other grounds or circumstances constituting “cause” under applicable German law.  Without limiting the foregoing definition of “Cause”, “Cause” for termination exists in particular if the Managing Director violates the provisions of this Agreement or the restrictions concerning management that are imposed on him in the internal relationship so that the continuation of the agreement would be intolerable to Versant Germany because of such violation.  The extraordinary notice of termination of Managing Director as Managing Director of Versant Germany for “Cause” must be in writing to be effective.

(4)Release of Duties on Full Pay.   Versant Germany shall be entitled, at its sole option and in its discretion, to release Managing Director from further activities for Versant Germany on full Base Salary (as defined below) paid on regular payroll period, as provided herein for the entire remaining duration of the Term of this Agreement, especially in case of a recall from his position as Managing Director.  In the event that Versant Germany elects to so release Managing Director from further activities for Versant Germany on full Base Salary as provided herein, Versant Germany will so notify Managing Director in writing.  Such a release of duties shall not be considered to be a termination of Managing Director without Cause and shall not obligate Versant Germany to make any Severance Payment pursuant to §5B(2).

(5)Shareholder’s Right of Termination.  The Managing Director’s appointment as Managing Director of Versant Germany can be revoked at any time by the Shareholder at any Shareholders’ Meeting, notwithstanding any rights of Managing Director to compensation pursuant to this Agreement.

(6)Non-Competition Covenant.  As partial consideration for Versant Germany’s agreements hereunder, for a period of one (1) year after the date of (i) a voluntary termination by Managing Director of his employment with Versant Germany, (ii) a termination of Managing Director’s employment with Versant Germany without Cause, (iii) a termination of Managing Directors’ employment with Versant Germany for Cause or (iv) any other termination of Managing Director’s employment with Versant Germany (such one (1) year period being hereinafter referred to as the “Non-Competition Period”), Managing Director shall not, directly or indirectly, engage in any Competitive Activities (as defined below) with, or for the direct or indirect benefit of, any of the object-oriented database companies or businesses listed in Part A of Annex 2 attached hereto (“Part A Competitors”) or any of their affiliates or successors-in-interest; provided further, that in addition to the foregoing covenant, Managing Director also agrees that, for so long during the Non-Competition Period as Versant Germany continues (at its sole option and discretion) to pay Managing Director a monthly payment (in addition to any Severance Payment that may become payable to Managing Director hereunder) equal to fifty percent (50%) of Managing Director’s monthly base salary in effect on the date of termination of his employment, Managing Director shall not, directly or indirectly, engage in any Competitive Activities (as defined below) with, or for the direct or indirect benefit of, any of the companies or businesses listed in Part B of Annex 2 attached hereto (“Part B Competitors”) or any of their affiliates or successors-in-interest (it being acknowledged that nothing herein obligates Versant Germany to make any payment described in this proviso).  As used herein, the term “Competitive Activities” shall mean (i) providing services, whether as an employee, officer, director, independent contractor, freelancer, consultant, advisor to, or other service provider, whether such services are rendered for any compensation or are provided free of charge, or (ii) or investing or lending money to a third party.  If the Managing Director breaches this obligation not to compete, then Versant Germany shall be immediately released of all further obligation to pay Managing Director any unpaid Severance Payment that would otherwise be payable to Managing Director and, in addition, can claim a contractual fine for each case of a breach in the amount of one (1) month of Managing Director’s last Base Salary, in addition to seeking an injunction against such breach by the Managing Director.  In case of a permanent breach this fine is due again for each commenced month of a breach. Any further claims, including claims for cease-and-desist and for damages, shall not be affected hereby.  If any of the provisions of this §5B(6) is held to be invalid, the remaining provisions shall remain valid and shall be construed in a manner in which such provisions are enforceable to the maximum extent permitted by applicable law.

(7)Limits.  For the avoidance of doubt, the parties acknowledge and agree that (except as otherwise expressly provided in §5B(2) above regarding an involuntary termination by Versant Germany of Managing Director without Cause), upon a termination of Managing Director for Cause or upon any other termination of Managing Director, Managing Director will not be entitled to

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the Severance Payment, any other salary continuation or any similar severance compensation.  Nothing in this §5B(7) is intended to alter or affect the provisions of §5B(1) or §5B(2) of this Agreement.

(8)Future Employment Terms.  If Managing Director is still employed as Managing Director of Versant Germany at the expiration of the Term of this Agreement, then (unless and except to the extent that Versant Germany and Managing Director have otherwise agreed in writing):  (a) Managing Director shall be an at-will employee of Versant Germany solely for the compensation Versant Germany then agrees to pay Managing Director; (b) Managing Director’s service and  employment with Versant Germany may be terminated by Versant Germany or by Managing Director at any time with or without Cause.

§ 6B Compensation.

As his sole and exclusive compensation for Managing Director’s services as Versant Germany’s Managing Director, Managing Director will receive the following compensation from Versant Germany, Managing Director shall receive the compensation and benefits described in this §6B and in §§7B, 8B and 9B of this Part B:

(1)Managing Director shall receive from Versant Germany an annual fixed gross salary of EUR 216.000.-(“Base Salary”) as compensation for his work for Versant Germany, which shall be payable in 12 equal installments of EUR 18.000. - gross (Monthly Gross Salary) less statutory deductions at the end of each calendar month. If a contract year is shorter than the calendar year, the compensation shall be paid pro rata temporis.

(2)No employer’s pension commitment exists.

(3)The compensation of Managing Director payable under this Part B is the settlement for the entire activity by the Managing Director as Managing Director of Versant Germany, in particular where necessary also that for subsidiaries, part-owned or other companies of the Versant group (other than Versant itself as provided in Part A hereof) or on Sundays and public holidays. Insofar as the Managing Director receives compensation for such activities directly from the companies involved, these shall be off-set against the compensation according to this agreement, except as expressly agreed otherwise.

§ 7B Other Benefits.

(1)Versant Germany will provide the Managing Director with a company car with a monthly lease rate up to EUR 800,- net. An upgrading shall be financed by the Managing Director. A downgrading shall be taken into account as gross motor vehicle compensation in the monthly salary statement. The Managing Director is entitled to use the company car for private purposes. According to German tax regulations, as in force from time to time, the private use is taxable as compensation in kind, which shall be taken into consideration for the payroll. Otherwise, the motor vehicle guidelines of the Versant Germany shall apply in their respectively applicable version. Upon termination of the employment, the Managing Director shall return the company car immediately.

(2)Versant Germany will reimburse the Managing Director for proved travel expenses and other expenditure which became necessary in the interest of the Versant Germany or its affiliates in accordance with guidelines of Versant Germany or Versant in force from time to time and German tax regulations in force from time to time.

(3)The Managing Director is entitled to a life insurance benefit with a monthly premium up to EUR 130, - net.

(4)Versant Germany shall insure the Managing Director against accident to the usual and appropriate amount.

§ 8B Vacation.

(1)The Managing Director is entitled to an annual vacation of 28 working days.

(2)The Managing Director shall agree with the other managing directors (if any) on the time of his vacation reasonably in advance. This shall also apply for the grant of extra vacation for exceptional circumstances (e.g. death of close relatives).

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(3)The vacation entitlement for each calendar year expires at the latest on 31st March of the following calendar year. There is no compensation for vacation days that are not taken.

§ 9B Sickness/Death/Accident.

(1)The Managing Director shall promptly notify Versant Germany and its parent Versant about sickness, if any, and, in case the sickness lasts more than three days, submit a medical certificate attesting to his inability to work and the probable length thereof.

(2)In the event of temporary illness or other impediment for which he is not to blame, the monthly Base Salary (§6B(1)) will continue to be paid for a period ending on the earlier of (i) six (6) months or (ii) expiration of the Term of this Agreement.

(3)Any benefits from third parties, for example based on legal liability claims or sickness insurances, shall be off-set against Versant Germany’s obligations to pay the Managing Director hereunder to the extent that, as a result of these benefits from third parties and Versant Germany’s performances, the net earnings the Managing Director would have had according to §6B(1) if he had not been unable to work, are exceeded.

(4)If the Managing Director dies while employed as Managing Director and during the Term of this agreement, then, if applicable, his widow and his legitimate children (provided that the latter have not yet completed the 25^th year of their life and are still in professional training), shall as joint creditors be entitled to the continuation of the monthly Base Salary (§ 6B(1)) for the month of death and for the six (6) following months and the provisions of §9B(3) above will apply accordingly to such payments.

§ 10B Duties and Secondary Activities.

(1)Except for Managing Director’s duties as an officer of Versant as provided in Part A hereof, Managing Director shall put his entire working efforts and their results as well as the whole of his experience and knowledge at the sole disposal of Versant Germany. The working hours are governed by the duties arising and amount to at least 40 hours per week.

(2)Every other employment of Managing Director aimed at earning income requires the prior written consent of Versant Germany’s shareholder(s) given at a Shareholders’ Meeting.  The Managing Director undertakes an obligation to give Versant and Versant Germany advance written notice of every secondary employment that may actually or possibly require permission. Under no circumstance shall the Managing Director engage himself in Competitive Activities (as defined in §5B(6) above) for any enterprise that (i) is primarily engaged in database management or (ii) is primarily engaged in any other areas that Versant Germany or any of its parent or affiliated companies has derived more than fifteen percent (15%) of its gross revenue within the prior 12 month period.

(3)The written consent of the Shareholder at a Shareholders’ Meeting is also required in order for Managing Director to undertake honorary offices that cause a not inconsiderable expenditure of work, as well as for appointments to a supervisory board, association committee or similar institution. The same also applies to a scientific, authorship, consultancy or similar activity.

(4)The Shareholders’ Meeting is permitted to refuse or, as is possible at any time, revoke its consent to a notified secondary activity only if the secondary activity involved, in itself or in conjunction with other secondary activities, gives reason to fear an impairment of the Managing Director’s activity for Versant Germany or Versant Germany’s other needs or involves any Competitive Activities.

(5)On the termination of this service relationship and/or at the time release is given in the case of premature release, the Managing Director shall, in response to a resolution by the Shareholders’ Meeting, give up all appointments he undertook and/or carried out on the basis of his activity or in relation to his activity in Versant Germany.

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§ 11B Confidentiality/Return of Documents.

(1)Managing Director acknowledges and agrees that he shall be bound and obligated by his Invention Assignment and Confidentiality Agreement (as defined in §4A) with Versant, which shall survive any termination of Managing Director’s employment or services to Versant Germany as Managing Director or otherwise.  Accordingly the following obligations of Managing Director in this §11B and in §12B below shall be in addition to (and not in lieu of) Managing Director’s’ duties and obligations under the Invention Assignment and Confidentiality Agreement.  In the event of any conflict or inconsistency between the terms of Managing Director’s Invention Assignment and Confidentiality Agreement with Versant and the following provisions of this §11B and of §12B below, such terms shall be construed to provide Versant, Versant Germany and their respective subsidiaries and affiliates the maximum possible rights and protections:

(2)The Managing Director shall, during the period of employment with Versant Germany or at any time thereafter, strictly keep confidential any confidential information concerning the business, contractual arrangements, deals, transactions or particular affairs of Versant Germany or its affiliates, and will not utilise any such information for his own benefit or for the benefit of others.

(3)Publications and lectures concerning the scope of business of Versant Germany or its affiliates shall require the prior consent of the shareholder(s) of Versant Germany at a Shareholders’ Meeting. They constitute intellectual property of Versant Germany or its affiliates.

(4)During his employment, upon request of Versant Germany, without request at the latest upon his resignation from Versant Germany and/or at the time release is given in the case of release at an earlier time, the Managing Director shall return to Versant Germany all files and other documents concerning the business of Versant Germany and its affiliates in his possession or open to his access, specifically all designs, customer and price lists, printed material, documents, sketches, notes, drafts - as well as copies thereof – regardless whether or not the same were originally furnished by Versant Germany or by its affiliates. The Managing Director is not entitled to exercise any right of retention or possession with respect to any of such items.

§ 12B Copyright and Other Intellectual Property Rights, Inventions.

(1)It is acknowledged and agreed by Versant Germany and Managing Director that, except as expressly provided below in §12B(2), the Invention Assignment and Confidentiality Agreement between Managing Director and Versant shall apply to and exclusively govern the assignment of any inventions, trade secrets and intellectual property rights or other similar property Managing Director to Versant during his employment with Versant Germany or Versant.

(2)To the extent that any assignment by Managing Director to Versant of any invention, trade secret, intellectual property right or other similar property pursuant to the Invention Assignment and Confidentiality Agreement is not permitted or is restricted or limited under German law or is otherwise not covered or accomplished by the Invention Assignment and Confidentiality Agreement, the Managing Director hereby assigns to Versant Germany the exclusive right of use and exploitation, unrestricted in time, territory and content, of all work output which is capable of copyright protection or of protection under trademark, registered design and/or utility model or any other intellectual property rights, which the Managing Director produces during the period of his employment, during his working hours or outside of his working hours, insofar as they relate to his service duties under this agreement. The assignment of the use and exploitation rights includes the authorisation to further revision and to the issue of licenses to third parties and is fully compensated for by the Base Salary set out in §6B(1) of this Agreement. The Managing Director expressly waives all other rights due to him as holder of copyright or other intellectual property rights in the work output, in particular the right to be named or to access to the work.

§ 13B Place of Fulfilment.

(1)Solely for purposes of Managing Director’s employment by Versant Germany under the provisions of this Part B, the place of fulfilment shall be the registered office of Versant Germany.

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PART C:

Term; Miscellaneous Terms

§ 1C Term of Agreement.

As used herein, the “Term” of this Agreement shall be that time period beginning on the Effective Date and ending on earlier to occur of:

a)the close of business on the last day of Versant’s fiscal year ending in calendar 2009 (which, based on Versant’s current fiscal year, would be October 31, 2009); or

b)the first date after the Effective Date on which Witte is not employed by Versant as Versant’s Chief Executive Officer or by Versant Germany as Versant Germany’s Managing Director.

§ 2C Amendments.

Amendments to and revisions of this agreement including this clause must be in writing to be effective. It shall not be possible for the contracting parties to cite an actual exercise deviating from the Agreement for as long as such deviation has not been recorded in writing.

§ 3COther Provisions.

1)All declarations of intent by the Managing Director that affect this Agreement shall be addressed to the Shareholders’ Meeting. All of the rights reserved to the Shareholders’ Meeting in this Agreement can be exercised by an advisory board, if any.

2)If individual provisions of this Agreement should be or become invalid, this shall not affect the legal validity of the other provisions of this Agreement. The invalid provision shall be replaced by the legally admissible provision which comes closest to the economic intent of the invalid provision. The same applies in the event of any gaps in this Agreement.

3)Part A of this Agreement and all provisions hereof relating to Employee’s service or employment by Versant shall be governed by the internal laws of the State of California, USA (“Part A Governing Law”).  Part B of this Agreement and all provisions thereof relating to Managing Director’s service or employment by Versant Germany shall be governed by German law (“Part B Governing Law”).  The provisions of Part C shall be governed by (i) Part A Governing Law to the extent such provisions of Part C are apply or relate to Part A hereof; and (ii)  Part B Governing Law to the extent such provisions of Part C are apply or relate to Part B hereof;

4)This Agreement may be executed in counterpart signature pages.

[The remainder of this Page has intentionally been left blank]

[Signature Page to Follow]

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In Witness Whereof, the undersigned parties have executed and delivered this Joint Employment Agreement and Managing Director Service Contract effective as of the Effective Date.

VERSANT CORPORATION (“Versant”)

By:

Name:

Title:

VERSANT GMBH (“Versant Germany”)

represented by its shareholder Versant Corporation

represented in turn by its Chief Financial Officer, Jerry Wong

(Date, place)

By:

(Versant Corporation, by Jerry Wong its Chief Financial Officer)

EMPLOYEE / MANAGING DIRECTOR

(Date, place)

(Jochen Witte)

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EX-31.01

EXHIBIT 31.01

Certification of Chief Executive Officer Pursuant To Exchange Act Rule 13a-14(a) / 15d-14(a)
As Adopted Pursuant To Section 302 of The Sarbanes-Oxley Act of 2002

I, Jochen Witte, President and Chief Executive Officer of Versant Corporation, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Versant Corporation (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 13, 2008
By	/s/ Jochen Witte
	Jochen Witte
	Chief Executive Officer

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EX-31.02

EXHIBIT 31.02

Certification of Chief Financial Officer Pursuant To Exchange Act Rule 13a-14(a) / 15d-14(a)
As Adopted Pursuant To Section 302 of The Sarbanes-Oxley Act of 2002

I, Jerry Wong, Vice President, Finance and Chief Financial Officer of Versant Corporation, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Versant Corporation (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s), and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s), and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 13, 2008
By	/s/ Jerry Wong
	Jerry Wong
	Vice President, Finance and Chief Financial Officer

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EX-32.01

EXHIBIT 32.01

Certification of Chief Executive Officer
Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Versant Corporation (the “Company”) on Form 10-Q for the quarter ended January 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jochen Witte, as Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company for the quarterly period covered by the Report.

/s/ Jochen Witte

Jochen Witte

President and Chief Executive Officer

March 13, 2008

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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EX-32.02

EXHIBIT 32.02

Certification of Chief Financial Officer
Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Versant Corporation (the “Company”) on Form 10-Q for the quarter ended January 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jerry Wong, as Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company for the quarterly period covered by the Report.

/s/ Jerry Wong

Jerry Wong

Vice President, Finance and Chief Financial Officer

March 13, 2008

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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