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 July 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 September 5, 2008, there were outstanding 3,745,790 shares of the Registrant’s common stock, no par value.

VERSANT CORPORATION

QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended July 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)

	July 31,			October 31,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	27,407		$	19,086
Trade accounts receivable, net of allowance for doubtful accounts of $72 and $68 at July 31, 2008 and October 31, 2007, respectively	3,511			2,330
Other current assets	797			506
Total current assets	31,715			21,922
Property and equipment, net	787			835
Goodwill	6,720			6,720
Intangible assets, net	645			881
Other assets	201			108
Total assets	$	40,068		$	30,466
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	363		$	157
Accrued liabilities	2,663			2,756
Deferred revenues	3,933			3,707
Deferred rent	14			7
Total current liabilities	6,973			6,627
Deferred revenues	456			641
Deferred rent	19			29
Other long-term liabilities	53			4
Total liabilities	7,501			7,301
Stockholders’ equity:
Common stock, no par value, 7,500,000 shares authorized, 3,745,547 and 3,671,924 shares issued and outstanding as of July 31, 2008 and October 31, 2007, respectively	97,406			96,004
Accumulated other comprehensive income, net	2,140			1,346
Accumulated deficit	(66,979		)	(74,185		)
Total stockholders’ equity	32,567			23,165
Total liabilities and stockholders’ equity	$	40,068		$	30,466

See accompanying notes to condensed consolidated financial statements.

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VERSANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except for per share amounts)

(unaudited)

	Three Months Ended				Nine Months Ended
	July 31,		July 31,		July 31,		July 31,
	2008		2007		2008		2007
Revenues:
License	$	3,943	$	2,925	$	12,330	$	9,373
Maintenance	2,305		2,225		6,764		6,019
Professional services	52		98		211		197
Total revenues	6,300		5,248		19,305		15,589
Cost of revenues:
License	75		73		233		215
Amortization of intangible assets	79		79		237		237
Maintenance	354		377		1,103		1,153
Professional services	18		33		74		93
Total cost of revenues	526		562		1,647		1,698
Gross profit	5,774		4,686		17,658		13,891
Operating expenses:
Sales and marketing	898		877		2,696		2,511
Research and development	1,003		785		3,159		2,497
General and administrative	1,181		1,039		4,244		3,342
Total operating expenses	3,082		2,701		10,099		8,350
Income from operations	2,692		1,985		7,559		5,541
Interest and other income, net	261		116		591		358
Income from continuing operations before taxes	2,953		2,101		8,150		5,899
Provision for income taxes	295		228		992		585
Net income from continuing operations	2,658		1,873		7,158		5,314
Net income from discontinued operations, net of income taxes	—		61		98		232
Net income	$	2,658	$	1,934	$	7,256	$	5,546
Basic income per share:
Net income from continuing operations	$	0.71	$	0.51	$	1.93	$	1.47
Earnings from discontinued operations, net of income tax	$	—	$	0.02	$	0.03	$	0.06
Net income per share, basic	$	0.71	$	0.53	$	1.96	$	1.53
Diluted income per share:
Net income from continuing operations	$	0.70	$	0.50	$	1.89	$	1.44
Earnings from discontinued operations, net of income tax	$	—	$	0.02	$	0.03	$	0.06
Net income per share, diluted	$	0.70	$	0.52	$	1.92	$	1.50
Shares used in per share calculation:
Basic	3,729		3,648		3,704		3,624
Diluted	3,806		3,734		3,781		3,696
Non-cash stock-based compensation included in the above expenses:
Cost of revenues	$	14	$	16	$	42	$	45
Sales and marketing	$	51	$	24	$	153	$	64
Research and development	$	43	$	9	$	124	$	28
General and administrative	$	119	$	52	$	308	$	133

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)

	Nine Months Ended
	July 31,			July 31,
	2008			2007
Cash flows from operating activities:
Net income	$	7,256		$	5,546
Adjustments to reconcile net income to net cash provided by operating activities:
Net income from discontinued operations, net of income taxes	(98		)	(232		)
Depreciation and amortization	236			244
Amortization of intangible assets	237			237
Stock-based compensation	627			270
Provision (recovery) of bad debt allowance	(1		)	4
Changes in assets and liabilities:
Accounts receivable	(999		)	(628		)
Other assets	(359		)	(35		)
Accounts payable	187			113
Accrued liabilities and other liabilities	(229		)	—
Deferred revenues	(162		)	464
Deferred rent	(4		)	(61		)
Net cash provided by operating activities	6,691			5,922
Cash flows from investing activities:
Purchases of property and equipment	(172		)	(616		)
Net cash used in investing activities	(172		)	(616		)
Cash flows from financing activities:
Proceeds from sale of common stock, net	775			447
Principal payments under capital lease obligations	(8		)	(13		)
Net cash provided by financing activities	767			434
Effect of foreign exchange rate changes on cash and cash equivalents	937			289
Net increase in cash and cash equivalents from operating, investing and financing activities	8,223			6,029
Net increase in cash and cash equivalents from discontinued operations	98			232
Cash and cash equivalents at beginning of period	19,086			8,231
Cash and cash equivalents at end of period	$	27,407		$	14,492

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 contained in this report 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 and nine months ended July 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 income for the three and nine months ended July 31, 2008 totaled $227,000 and $627,000 respectively; the amount of stock-based compensation expense related to the Company’s equity incentive plan (“Equity Incentive Plan”) and directors stock option plan (“Director Plan”) was $186,000 and $541,000, respectively; and related to the Company’s employee stock purchase plan (“ESPP”) was $41,000 and $86,000, respectively. Stock-based compensation expense recognized in the consolidated statements of income for the three and nine months ended July 31, 2007 totaled $101,000 and $270,000, respectively; the amount of stock-based compensation expense related to the Company’s stock option plans was $72,000 and $196,000, respectively; and related to the Company’s ESPP was $29,000 and $74,000, 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				Nine Months Ended
	July 31,		July 31,		July 31,		July 31,
	2008		2007		2008		2007
Net income from continuing operations	$	2,658	$	1,873	$	7,158	$	5,314
Net income from discontinued operations, net of income taxes	—		61		98		232
Net income	$	2,658	$	1,934	$	7,256	$	5,546
Calculation of basic net income per share:
Weighted average - common shares outstanding	3,729		3,648		3,704		3,624
Net income from continuing operations	$	0.71	$	0.51	$	1.93	$	1.47
Net income from discontinued operations, net of income taxes	—		0.02		0.03		0.06
Net income per share, basic	$	0.71	$	0.53	$	1.96	$	1.53
Calculation of diluted net income per share:
Weighted average - common shares outstanding	3,729		3,648		3,704		3,624
Dilutive securities - common stock options and shares subject to repurchase	77		86		77		72
Weighted average - common shares outstanding and potentially dilutive common shares	3,806		3,734		3,781		3,696
Net income from continuing operations	$	0.70	$	0.50	$	1.89	$	1.44
Net income from discontinued operations, net of income taxes	—		0.02		0.03		0.06
Net income per share, diluted	$	0.70	$	0.52	$	1.92	$	1.50

NOTE 4.OTHER COMPREHENSIVE INCOME

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

Comprehensive income for the three and nine month periods ended July 31, 2008 and July 31, 2007, is as follows (in thousands):

	Three Months Ended					Nine Months Ended
	July 31,			July 31,		July 31,		July 31,
	2008			2007		2008		2007
Net income, as reported	$	2,658		$	1,934	$	7,256	$	5,546
Foreign currency translation adjustment	(79		)	27		794		268
Comprehensive income	$	2,579		$	1,961	$	8,050	$	5,814

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. 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 and nine month periods ended July 31, 2008 and July 31, 2007 by each geographic region (in thousands):

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	Three Months Ended				Nine Months Ended
	July 31,		July 31,		July 31,		July 31,
	2008		2007		2008		2007
Revenues by region:
North America	$	1,470	$	3,043	$	6,250	$	7,469
Europe	4,341		2,059		10,379		7,480
Asia	489		146		2,676		640
Total	$	6,300	$	5,248	$	19,305	$	15,589

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

		As of July 31,		As of October 31,
		2008		2007
Total long-lived assets by region:
North America		$	246	$	282
Europe		456		460
Asia		286		201
	Total	$	988	$	943

NOTE 6.SETTLEMENT OF LITIGATION

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. A prior customer of the Company sought indemnification from us for alleged infringement of intellectual property rights related to a product that we discontinued in 2004. The customer’s indemnification claims included seeking recovery of costs it incurred in defending a now settled suit brought against the customer by a third party who had asserted that such third party’s intellectual property rights had been infringed. The Company and this prior customer reached a settlement agreement with respect to this pending litigation on June 3, 2008, for a cash settlement payment of $800,000 and a full mutual release of claims. The Company had previously recorded a contingency reserve for this litigation of approximately $63,000 in the fiscal quarter ended January 31, 2007. As a result of this settlement, an additional charge of $800,000 was recorded to general and administrative expenses for the fiscal quarter ended April 30, 2008 which is reflected in the accompanying condensed consolidated statement of income for the nine months ended July 31, 2008 to reflect this settlement. A payment of $62,500 was made to the customer during the fiscal quarter ended April 30, 2008, and a settlement payment of $800,000 was made to the customer during the fiscal quarter ended July 31, 2008.

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 consulting 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 and nine months ended July 31, 2008 and July 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, which are instead 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 was 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. This 24-month period expired on January 31, 2008. Consequently no further royalties were payable from Sima to Versant for periods after Versant’s fiscal quarter ended January 31, 2008. Accordingly, for the three months ended July 31, 2008, Versant did not record any royalties from Sima; although for the nine months ended July 31, 2008, Versant recorded $98,000 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 pre-acquisition 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. The Company is currently assessing the impact of SFAS 141R on its consolidated financial statements.

In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, (“SFAS 160”). 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, SFAS 160 revises the accounting for both increases and decreases in a parent’s controlling ownership interest. SFAS 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 its consolidated financial statements.

In September 2006, the FASB issued Statement No. 157, Fair Value Measurements, (“SFAS 157”). This statement clarifies the definition of fair value and the method 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 beginning November 1, 2008 and the Company believes SFAS 157 will not have a material impact on its financial statements.

In February 2007, the FASB issued Statement 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

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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 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 beginning November 1, 2008. 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 and general economic conditions, including potential changes in currency exchange rates. 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 in turn are based on information that is reasonably available to the Company as of the date of this report. Forward-looking statements included in this Report on Form 10-Q may 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, we offer a variety of services, including consulting, training and technical support services to assist users in developing and deploying applications based on Versant Object Database and FastObjects.

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 these 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 statements of income.

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 balance sheets 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 industry trends, 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 by us 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 of the fair value 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 generally 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 the case of a prepaid deployment license. 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 that we sell 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 the application software that

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are distributed 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 of 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 July 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 statements of income to total revenues:

	Three Months Ended				Nine Months Ended
	July 31,		July 31,		July 31,		July 31,
	2008		2007		2008		2007
	(unaudited)				(unaudited)
Revenues:
License	63	%	56	%	64	%	60	%
Maintenance	36		42		35		39
Professional services	1		2		1		1
Total revenues	100		100		100		100
Cost of revenues:
License	1		1		1		1
Amortization of intangible assets	1		2		1		2
Maintenance	6		7		6		7
Professional services	0		1		1		1
Total cost of revenues	8		11		9		11
Gross profit	92		89		91		89
Operating expenses:
Sales and marketing	14		16		14		16
Research and development	16		15		16		16
General and administrative	19		20		22		21
Total operating expenses	49		51		52		53
Income from operations	43		38		39		36
Interest and other income, net	4		2		3		2
Income from continuing operations before taxes	47		40		42		38
Provision for income taxes	5		4		5		4
Net income from continuing operations	42		36		37		34
Net income from discontinued operations, net of income taxes	0		1		1		2
Net income	42	%	37	%	38	%	36	%

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Revenues

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

	Three Months Ended									Nine Months Ended
	July 31,		July 31,		Change					July 31,		July 31,		Change
	2008		2007		Amount			Percentage		2008		2007		Amount		Percentage
	(unaudited)									(unaudited)
Revenues:
License revenues	$	3,943	$	2,925	$	1,018		35	%	$	12,330	$	9,373	$	2,957	32	%
Maintenance revenues	2,305		2,225		80			4	%	6,764		6,019		745		12	%
Professional services revenues	52		98		(46		)	-47	%	211		197		14		7	%
Total	$	6,300	$	5,248	$	1,052		20	%	$	19,305	$	15,589	$	3,716	24	%

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 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 income 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 20%) for the three months ended July 31, 2008 over the corresponding period in fiscal 2007. This increase resulted primarily from an approximate $1.0 million (or 35%) increase in license revenues for the three months ended July 31, 2008 compared to the corresponding period in fiscal 2007, and included approximately $611,000 of revenues (comprising 58% of the $1.1 million increase in total revenues) resulting from favorable foreign currency fluctuations.

Our total revenues increased by $3.7 million (or 24%) for the nine months ended July 31, 2008 over the corresponding period in fiscal 2007. This increase resulted primarily from an approximate $3.0 million (or 32%) increase in license revenues and an approximate $745,000 (or 12%) increase in maintenance revenues for the nine months ended July 31, 2008 compared to the corresponding period in fiscal 2007, and included approximately $1.6 million of revenues (comprising 44% of the $3.7 million increase in total revenues) resulting from favorable foreign currency fluctuations.

Significant customers who contributed 10% or more of our total revenues included two telecommunications customers who together contributed approximately 33% of total revenues in the third quarter of fiscal 2008, and one telecommunications customer who also accounted for approximately 12% of our total revenues for the nine months ended July 31, 2008. Two telecommunications customers together accounted for approximately 31% of our total revenues in the third quarter of fiscal 2007 and one telecommunications customer accounted for approximately 12% of our total revenues for the nine months ended July 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 critical 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 over future fiscal periods.

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

License revenues were $3.9 million for the three months ended July 31, 2008, an increase of $1.0 million (or 35%) from $2.9 million reported for the comparable period in fiscal 2007. The higher license revenues for the three months ended July 31, 2008 were mainly attributable to two significant license agreements with two telecommunications customers totaling approximately $1.9 million and included favorable foreign currency fluctuations of approximately $422,000; however these increases in license revenues for the three months ended July 31, 2007 were partially offset by approximately $1.0 million of license revenues from one customer in the telecommunications sector recognized in the three months ended July 31, 2007 that were not repeated in the three months ended July 31, 2008.

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License revenues were $12.3 million for the nine months ended July 31, 2008, an increase of approximately $3.0 million (or 32%) from $9.4 million reported for the comparable period in fiscal 2007. The higher license revenues for the nine months ended July 31, 2008 were mainly attributable to several significant license transactions with four telecommunications customers together totaling approximately $5.3 million and included favorable foreign currency fluctuations of approximately $1.1 million; however, these increases in license revenues for the nine months ended July 31, 2007 were partially offset by approximately $2.2 million of license revenues from two customers in the telecommunications sector recognized in the nine months ended July 31, 2007 that were not repeated in the nine months ended July 31, 2008.

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 $2.3 million for the three months ended July 31, 2008, an increase of $80,000 (or 4%) from $2.2 million reported for the comparable period in fiscal 2007.

Maintenance revenues were $6.8 million for the nine months ended July 31, 2008, an increase of $745,000 (or 12%) from $6.0 million reported for the comparable period in fiscal 2007. The increase in maintenance revenues for the nine months ended July 31, 2008 was due primarily to incremental maintenance revenues of approximately $516,000 recognized in the first nine months of fiscal 2008 related to license revenue growth from both U.S. and European based customers over the past year, and back maintenance and maintenance revenues of approximately $240,000 derived from a European based telecommunications customer, and included favorable foreign currency fluctuations of approximately $526,000.

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 $52,000 for the three months ended July 31, 2008, a decrease of $46,000 (or 47%) from $98,000 reported for the comparable period in fiscal 2007. Professional services revenues were $211,000 for the nine months ended July 31, 2008, an increase of $14,000 (or 7%) from $197,000 reported for the comparable period in fiscal 2007.

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

	Three Months Ended													Nine Months Ended
	July 31,													July 31,
			Percentage				Percentage		Change							Percentage				Percentage		Change
Revenues by geographic area:	2008		of revenues		2007		of revenues		Amount			Percentage		2008		of revenues		2007		of revenues		Amount			Percentage
	(unaudited)													(unaudited)
North America	$	1,470	23	%	$	3,043	58	%	$	(1,573	)	-52	%	$	6,250	32	%	$	7,469	48	%	$	(1,219	)	-16	%
Europe	4,341		69	%	2,059		39	%	2,282			111	%	10,379		54	%	7,480		48	%	2,899			39	%
Asia	489		8	%	146		3	%	343			235	%	2,676		14	%	640		4	%	2,036			318	%
Total	$	6,300	100	%	$	5,248	100	%	$	1,052		20	%	$	19,305	100	%	$	15,589	100	%	$	3,716		24	%

International revenues (revenues from the European and Asian regions) represented approximately 77% of our total revenues for the three months ended July 31, 2008, as compared to 42% for the comparable period in fiscal 2007.

International revenues represented approximately 68% of our total revenues for the nine months ended July 31, 2008, as compared to 52% for the comparable period in fiscal 2007.

For the three months ended July 31, 2008, the increase in international revenues was due primarily to two significant license transactions with two European based telecommunications customers totaling approximately $1.9 million, and to a lesser degree, due to the closing of a license transaction for approximately $360,000 with an Asia Pacific customer, and included approximately $611,000 of revenues resulting from favorable foreign currency fluctuations.

For the nine months ended July 31, 2008, the increase in international revenues was due primarily to license transactions with two European based telecommunications customers totaling approximately $2.6 million, and three significant license transactions totaling approximately $1.9 million with two Asia Pacific telecommunications customers, and included approximately $1.6 million of revenues resulting from favorable foreign currency fluctuations.

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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 continue to experience a somewhat stronger demand for our products in Europe as compared to our other geographic markets.

A variety of factors may impact Versant’s future revenues, including the potential strengthening of the U.S. dollar (which would have the effect of reducing portions of our revenue resulting from favorable currency exchange fluctuations) and the generally more difficult economic environment currently being experienced in the U.S. and Europe, which may impact demand for our products and services.

Cost of Revenues

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

	Three Months Ended									Nine Months Ended
	July 31,		July 31,		Change					July 31,		July 31,		Change
Cost of revenues:	2008		2007		Amount			Percentage		2008		2007		Amount			Percentage
	(unaudited)									(unaudited)
Cost of license	$	75	$	73	$	2		3	%	$	233	$	215	$	18		8	%
Amortization of intangible assets	79		79		—			0	%	237		237		—			0	%
Cost of maintenance	354		377		(23		)	-6	%	1,103		1,153		(50		)	-4	%
Cost of professional services	18		33		(15		)	-45	%	74		93		(19		)	-20	%
Total	$	526	$	562	$	(36	)	-6	%	$	1,647	$	1,698	$	(51	)	-3	%

Total Cost of Revenues.  Total cost of revenues was $526,000 for the three months ended July 31, 2008, remaining at a relatively consistent level in absolute dollars compared to $562,000 for the comparable period in fiscal 2007, even though revenues for the three months ended July 31, 2008 increased by 20% over revenues for the corresponding period in fiscal 2007.

Total cost of revenues was $1.6 million for the nine months ended July 31 2008, remaining at a relatively consistent level in absolute dollars compared to $1.7 million for the comparable period in fiscal 2007, even though revenues for the nine months ended July 31, 2008 increased by 24% 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 $75,000 (or 2% of license revenues) for the three months ended July 31, 2008, remaining at a relatively consistent level compared to $73,000 (or 2% of license revenues) reported for the comparable period in fiscal 2007, even though license revenue for the three months ended July 31, 2008 increased by 35% over license revenues for the three months ended July 31, 2007.

Cost of license revenues was $233,000 (or 2% of license revenues) for the nine months ended July 31, 2008, an increase of $18,000 (or 8%) from $215,000 (or 2% of license revenues) reported for the comparable period in fiscal 2007. The increase in cost of license revenues for the nine months ended July 31, 2008 was primarily due to unfavorable foreign currency fluctuations of approximately $20,000.

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 for the three and nine months ended July 31, 2008 was consistent with the amounts incurred in the corresponding periods 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 cost of customer support personnel and related expenses, including payroll, employee benefits and allocated overhead.

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Cost of maintenance revenues was $354,000 (or 15% of maintenance revenues) for the three months ended July 31, 2008, decreasing slightly in absolute dollars compared to $377,000 (or 17% of maintenance revenues) for the comparable period in fiscal 2007, even though maintenance revenues for the three months ended July 31, 2008 increased by 4% over maintenance revenues for the corresponding period in fiscal 2007.

Cost of maintenance revenues was $1.1 million (or 16% of maintenance revenues) for the nine months ended July 31, 2008, a decrease of $50,000 (or 4%) from $1.2 million (or 19% of maintenance revenues) reported for the comparable period in fiscal 2007. The decrease was primarily due to a reduction in facility expenses of approximately $160,000 in our U.S. operations as a result of our occupying lesser square footage in our Redwood City facility than in our former Fremont offices. This decrease was partially offset by unfavorable foreign currency fluctuations of approximately $71,000 and an increase in salary and bonus expense of approximately $41,000 in our U.S. operations.

Cost of maintenance revenues as a percentage of maintenance revenues decreased by 2% and 3%, respectively, for the three and nine months ended July 31, 2008 from the corresponding periods in fiscal 2007. These decreases was primarily due to the fact that, during the three and nine months ended July 31, 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 periods 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 $18,000 (or 35% of professional services revenues) for the three months ended July 31, 2008 compared to $33,000 (or 34% of professional services revenues) reported for the corresponding period in fiscal 2007.

Cost of professional services revenues was $74,000 (or 35% of professional services revenues) for the nine months ended July 31, 2008 compared to $93,000 (or 47% of professional services revenues) reported for the corresponding period in fiscal 2007.

Operating Expenses

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

	Three Months Ended								Nine Months Ended
	July 31,		July 31,		Change				July 31,		July 31,		Change
Operating expenses:	2008		2007		Amount		Percentage		2008		2007		Amount		Percentage
	(unaudited)								(unaudited)
Sales and marketing	$	898	$	877	$	21	2	%	$	2,696	$	2,511	$	185	7	%
Research and development	1,003		785		218		28	%	3,159		2,497		662		27	%
General and administrative	1,181		1,039		142		14	%	4,244		3,342		902		27	%
Total	$	3,082	$	2,701	$	381	14	%	$	10,099	$	8,350	$	1,749	21	%

Total Operating Expenses. Total operating expenses were $3.1 million for the three months ended July 31, 2008, an increase of $381,000 (or 14%) from $2.7 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 general administrative expenses, and included unfavorable foreign currency exchange fluctuations of approximately $226,000.

Total operating expenses were $10.1 million for the nine months ended July 31, 2008, an increase of $1.7 million (or 21%) from $8.4 million reported for the comparable period in 2007. This increase resulted primarily from an increase in our general and administrative expenses due to the settlement of a pending litigation in the second quarter of fiscal 2008, an increase in our research and development expenses and, to a lesser degree, from an increase in our sales and marketing expenses, and included unfavorable foreign currency exchange fluctuations of approximately $679,000.

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.

Sales and marketing expenses were $898,000 (or 14% of revenues) for the three months ended July 31, 2008 and $877,000 (or 16% of revenues) for the comparable period in fiscal 2007. The $21,000 (or 2%) increase in absolute dollars for the three months ended July 31, 2008 was primarily due to unfavorable foreign currency exchange fluctuations of approximately $83,000 and an

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approximate $33,000 increase in salary and related expenses as a result of one additional headcount in our European operations, and an approximate $22,000 increase in stock–based compensation expense primarily due to a higher recent market price of our stock. These increases were partially offset by an approximate $95,000 decrease in sales commission expense in our European operations due to over performance of the sales targets for the three months ended July 31, 2007 not repeated for the corresponding period in 2008, and an approximate $40,000 decrease in facility expenses in our U.S. operations as a result of our occupying lesser square footage in our Redwood City facility than in our former Fremont offices.

Sales and marketing expenses were $2.7 million (or 14% of revenues) for the nine months ended July 31, 2008 and $2.5 million (or 16% of revenues) for the comparable period in fiscal 2007. The $185,000 (or 7%) increase in absolute dollars for the nine months ended July 31, 2008 was primarily due to unfavorable foreign currency exchange fluctuations of approximately $229,000, and an approximate $55,000 increase in marketing expenses related to advertising campaigns, trade shows and other marketing programs in both our European and U.S. operations, and an approximate $24,000 increase in stock—based compensation expense primarily due to a higher recent market price of our stock. These increases were partially offset by an approximate $115,000 decrease in facility expenses in our U.S. operations as a result of our occupying lesser square footage in our Redwood City facility than in our former Fremont offices.

For the fourth quarter of fiscal 2008, we expect our quarterly sales and marketing expenses to be relatively consistent with our quarterly sales and marketing expense levels thus far in fiscal 2008, and to continue to represent a considerable percentage of our total operating expenditures in the future.

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 $1.0 million (or 16% of revenues) for the three months ended July 31, 2008 and $785,000 (or 15% of revenues) for the comparable period in fiscal 2007. The $218,000 (or 28%) increase in absolute dollars for the three months ended July 31, 2008 was mainly due to an increase of approximately $81,000 as a result of using third party contractors for certain research and development projects and unfavorable foreign currency exchange fluctuations of approximately $102,000.

Research and development expenses were $3.2 million (or 16% of revenues) for the nine months ended July 31, 2008 and $2.5 million (or 16% of revenues) for the comparable period in fiscal 2007. The $662,000 (or 27%) increase in absolute dollars for the nine months ended July 31, 2008 was mainly due to an increase of approximately $293,000 as a result of using third party contractors for certain research and development projects, unfavorable foreign currency exchange fluctuations of approximately $350,000, an increase in headcount of eight personnel in our European operations resulting in an increase of approximately $108,000 in salary and payroll related expenses from the corresponding period in fiscal 2007, and an increase in building rent expense in our Indian facility of approximately $96,000 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 $185,000 during the nine months ended July 31, 2008.

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 fourth quarter 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 $1.2 million (or 19% of revenues) for the three months ended July 31, 2008 and $1.0 million (or 20% of revenues) for the comparable period in fiscal 2007. The $142,000 (or 14%) increase in absolute dollars for the three months ended July 31, 2008 was primarily due to an approximate $134,000 increase in Sarbanes Oxley Section 404 internal control compliance (SOX 404) related audit fees, consulting services and salary related expenses, an approximate $60,000 increase in stock–based compensation expense primarily due to a higher recent market price of our stock, and unfavorable foreign currency exchange fluctuations of approximately $41,000. These increases were partially offset by an approximate $119,000 decrease in facility expenses in our U.S. operations as a result of our occupying lesser square footage in our Redwood City facility than in our former Fremont offices.

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General and administrative expenses were $4.2 million (or 22% of revenues) for the nine months ended July 31, 2008 and $3.3 million (or 21% of revenues) for the comparable period in fiscal 2007. The $902,000 (or 27%) increase in absolute dollars for the nine months ended July 31, 2008 was primarily due to an $800,000 settlement of a litigation, an approximate $197,000 increase in SOX 404 related audit fees, consulting services and salary related expenses, an approximate $146,000 increase in stock—based compensation expense as a result of a higher market price of our stock, and unfavorable foreign currency exchange fluctuations of approximately $101,000. These increases were partially offset by an approximate $310,000 decrease in facility expenses in our U.S. operations as a result of our occupying lesser square footage in our Redwood City facility than in our former Fremont offices, and an approximate $70,000 decrease in bonus expense for one of our executive officers.

For the fourth quarter of fiscal 2008, we anticipate moderate increases from the prior third quarter in our general and administrative expenses as a result of audit fees, consulting services and salary and related expenses due to Sarbanes Oxley Section 404 internal controls compliance and fiscal 2008 financial audit fees.

Interest and Other Income, Net

Interest and other income, net consists of interest income earned from our cash and cash equivalents, 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 $261,000 (or 4% of total revenues) for the three months ended July 31, 2008 and was $116,000 (or 2% of total revenues) for the comparable period in 2007. The increase in absolute dollars of $145,000 (or 125%) was mainly due to an increase in interest income from our European operations as a result of higher cash balances and favorable foreign currency exchange fluctuations.

Interest and other income, net was $591,000 (or 3% of total revenues) for the nine months ended July 31, 2008 and was $358,000 (or 2% of total revenues) for the comparable period in 2007. The increase in absolute dollars of $233,000 (or 65%) 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 favorable foreign currency exchange fluctuations. This increase was partially offset by the absence in fiscal 2008 of other income associated with the sale of excess furniture related to the relocation of our U.S. headquarters that was recognized in the nine months ended July 31, 2007.

Provision for Income Taxes

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

	Three Months Ended								Nine Months Ended
	July 31,		July 31,		Change				July 31,		July 31,		Change
Provision for income taxes	2008		2007		Amount		Percentage		2008		2007		Amount			Percentage
	(unaudited)								(unaudited)
Foreign withholding taxes	$	17	$	5	$	12	240	%	$	258	$	50	$	208		416	%
Provision for income taxes Europe	272		223		49		22	%	726		510		216			42	%
Provision for income taxes India	1		—		1		100	%	2		—		2			100	%
Federal, state and franchise taxes	5		—		5		100	%	6		25		(19		)	-76	%
Total	$	295	$	228	$	67	29	%	$	992	$	585	$	407		70	%

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 $272,000 and $726,000, respectively, for the three and nine months ended July 31, 2008. The Company’s tax provisions were based upon our projected fiscal 2008 effective tax rates.

We incurred foreign withholding taxes of approximately $17,000 and $5,000, respectively, for the three months ended July 31, 2008 and 2007, and approximately $258,000 and $50,000, respectively, for the nine months ended July 31, 2008 and 2007, which we have included in our income tax provision. The increase of approximately $208,000 in foreign withholding taxes for the nine months ended July 31, 2008 over the comparable period in fiscal 2007 was mainly attributable to withholding taxes related to one significant license agreement with an Asia Pacific customer during the first quarter of fiscal 2008.

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We record a valuation allowance to reduce our tax assets to an amount for which realization is deemed more likely than not. We have recorded a valuation allowance for all of our deferred tax assets as of July 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 July 31, 2008. As of July 31, 2008, we had cash and cash equivalents of approximately $27.4 million, an increase of $8.3 million over the $19.1 million of cash and cash equivalents we held at October 31, 2007.

As of July 31, 2008, $18.9 million of our $27.4 million in cash and cash equivalents on 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 July 31, 2008					As of October 31, 2007
Cash in foreign currency:	Local Currency			U.S. Dollar		Local Currency			U.S. Dollar
	(unaudited)
Euros	€	11,827		$	18,428	€	6,924		$	9,978
British Pound	£	21		41		£	48		99
Indian Rupee	Rs.		10,141	239		Rs.		4,445	113
Total				$	18,708				$	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 nine months of fiscal 2008 was comprised of approximately $1.6 million of favorable foreign currency fluctuations on our revenues, $98,000 of unfavorable foreign currency fluctuations on our cost of revenues, and $679,000 of unfavorable foreign currency fluctuations on our operating expenses, resulting in a net favorable effect of approximately $823,000 in our statement of income for the nine months ended July 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 32% 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.

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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). 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 53 days and 65 days for the three months ended July 31, 2008 and July 31, 2007, respectively.

Our working capital was $24.7 million as of July 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 nine months ended July 31, 2008, $172,000 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.

For the nine months ended July 31, 2008, $767,000 of cash was provided by financing activities, consisting of cash inflows of $775,000 due to proceeds from the sale of common stock under our Equity Incentive and Employee Stock Purchase Plans, reduced by principal payments of $8,000 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 July 31, 2008, we had approximately 204,036 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 July 31, 2008 consist of obligations under operating leases for facilities and equipment commitments.

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

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	Rental		Equipment
	Leases		Leases		Total
Three months ending October 31, 2008	$	143	$	6	$	149
Fiscal year ending October 31,
2009	574		16		590
2010	216		6		222
Thereafter	—		—		—
Total	$	933	$	28	$	961

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.

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 nine months of fiscal 2008 was comprised of approximately $1.6 million of favorable foreign currency fluctuations on our revenues, $98,000 of unfavorable foreign currency fluctuations on our cost of revenues, and $679,000 of unfavorable foreign currency fluctuations on our operating expenses, resulting in a net favorable effect of approximately $823,000 in our statement of income for the nine months ended July 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.

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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 32% 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 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 July 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.

24

PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS

(a)Exhibits

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

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	File Date	Filed with this 10-Q
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 to Section 906 of the Sarbanes-Oxley Act of 2002					X
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.

25

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:	/s/ Jerry Wong
September 12, 2008
	Jerry Wong
	Vice President, Finance
	Chief Financial Officer
	(Duly Authorized Officer and Principal
	Financial and Chief Accounting Officer)
	/s/Jochen Witte
	Jochen Witte
	President and Chief Executive Officer (Duly Authorized Officer and Principal Executive Officer)

26

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: September 12, 2008
By	/s/ Jochen Witte
	Jochen Witte
	President and Chief Executive Officer

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: September 12, 2008
By	/s/ Jerry Wong
	Jerry Wong
	Vice President, Finance and Chief Financial Officer

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 July 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

September 12, 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.

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 July 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

September 12, 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.