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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K

ý

Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended October 31, 2009.Oro

Transition report under 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(State or other jurisdiction
of incorporation or organization)

94-3079392(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)

Securities
registered pursuant to Section 12(b) of the Act:None

Securities
registered pursuant to Section 12(g) of the Act:Common Stock, no par value

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
o No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes
o No ý

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 ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter)
is not contained herein and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ý

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 the 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 o (Do not check if a Smaller Reporting Company)

Smaller Reporting Company ý


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

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of such common equity, as of April 30, 2009 (the last business day of the registrant's most recently completed second fiscal
quarter): $48,664,591.

The
number of shares outstanding of each of the issuer's classes of common equity, as of January 27, 2010, was 3,514,974 shares of Common Stock, no par value.

DOCUMENTS
INCORPORATED BY REFERENCE

Portions
of the Registrant's definitive proxy statement relating to its 2010 Annual Meeting of Shareholders are incorporated by reference in Part III of this Annual Report on
Form 10-K where indicated.



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VERSANT CORPORATION  ANNUAL REPORT ON FORM 10-K  For the Fiscal Year Ended October 31, 2009    TABLE OF CONTENTS



Item No.

Name of Item

PagePART IItem 1.

Business

1Item 1A.

Risk Factors

11Item 1B.

Unresolved Staff Comments

21Item 2.

Properties

21Item 3.

Legal Proceedings

21Item 4.

Submission of Matters to a Vote of Security Holders

21PART IIItem 5.

Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities

22Item 6.

Selected Financial Data

25Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

26Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

55Item 8.

Financial Statements and Supplementary Data

56Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

94Item 9A(T)

Controls and Procedures

94Item 9B.

Other Information

95PART IIIItem 10.

Directors, Executive Officers and Corporate Governance

95Item 11.

Executive Compensation

95Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

95Item 13.

Certain Relationships and Related Transactions and Director Independence

95Item 14.

Principal Accountant Fees and Services

95Item 15.

Exhibits and Financial Statement Schedules

95SIGNATURES

96CERTIFICATIONS


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Without limitation, Versant Object Database, Versant® , FastObjects, Versant JDO, Versant Open Access, Vedding, Vildcard, Vitness, Vhistle, Vhisper,
Vorkout, reVind, Varehouse, db4o, db4objects and other Versant product names referred to herein are trademarks of Versant in the United States and/or other countries. All other corporate or trade
names or service marks referred to in this report are the names or marks of their respective owners in the United States and/or other countries.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-K 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. These forward-looking statements include, among other things, statements regarding the Company's expected
future financial performance, assets, liquidity and trends anticipated for the Company's business. These statements are based on the Company's current expectations, assumptions, estimates and
projections about the Company's business, the Company's industry and the market for the Company's goods and services, which are based on information that is reasonably available to the Company as of
the date of this report. Forward-looking statements 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.

We caution investors that forward-looking statements are only predictions, forecasts or estimates based upon our current expectations about future events. The
forward-looking statements are not guarantees or assurances of our future performance and are subject to significant risks and uncertainties that are inherently difficult to assess and predict,
particularly in light of the continuing recessionary environment in the United States and global economies. Consequently, our actual future results and performance may differ materially from the
results and performance anticipated by any forward-looking statements due to these risks and uncertainties. Some of the important risks and factors that could cause our results and performance to
differ from results or performance anticipated by this report are discussed in Item 1A of this report, "Risk Factors"which you should read carefully. We undertake no
obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise or occur after the date of this report or for any other reason. Readers are
urged to carefully review and consider the various disclosures made by Versant in this report and in our other reports filed with the Securities and Exchange Commission that attempt to advise
interested parties of risks and factors that may affect our business.

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PART I



Item 1.    Business

Overview of the Company

We are a leading provider of object-oriented data management software that forms a critical component of the infrastructure of
enterprise computing. We design, develop, market and support object-oriented database management system products that companies use to solve complex data management and data integration problems. We
also provide related product support, training, and consulting services to assist users of our products in developing and deploying software applications based on our products. We operate our business
within a single operating segment that we refer to as "Data Management".

Our
mission is to be a preferred vendor of core data management solutions to world-class enterprises whose businesses require the successful management of large and complex bodies of
data. To achieve this goal our general strategy has been to develop and offer powerful, scalable and highly reliable data management solutions capable of handling a wide array of challenging
applications for sophisticated customers in many industries. For example, we market our products to companies in the telecommunications and defense industries, as well as to customers in several
vertical markets including technology, financial services, transportation and health care. Our software has been used in strategic distributed applications such as network modeling and management,
fault diagnosis, fraud prevention, service activation and assurance, and customer billing, scheduling and other applications. We strive to continually improve our core data management products and
related tools to make our solutions both more useful and increasingly dependable. In our research and development efforts we also strive to make our products usable and accessible by customers using
different computing or software platforms, in order to expand the markets and industries we serve.

We
were incorporated in California in August 1988 under the name Object Sciences Corporation and completed our initial public offering of our common stock under the name of Versant
Object Technology Company in July 1996. The name of the company was changed to Versant Corporation on July 15, 1998. In March 2004, we acquired Poet Holdings, Inc. (Poet) through a
merger. Prior to that merger, Poet was a provider of object-oriented data management software headquartered in the United States, whose stock was publicly traded on the Frankfurt Stock Exchange. In
June 2004, we acquired the JDO Genie product line and its customers from JDO Genie (PTY) Ltd., a privately held South African company and in July 2004, we acquired FastObjects, Inc., a
private company that held North American distribution rights with respect to Poet's FastObjects database management product. In September 2004, we sold Poet's Catalog solutions business. In August of
2005, we effected a 1-for-10 reverse split of our outstanding common stock. In February 2006, we sold our WebSphere consulting business. On December 1, 2008 we acquired
the assets of the database software business of privately-held Servo Software, Inc. (formerly named db4objects, Inc.), which included an open source object database software
solution targeting the embedded device market. Our principal executive offices are located at 255 Shoreline Drive, Suite 450, Redwood City, California 94065 and our telephone number is
(650) 232-2400.

Our
website URL is www.versant.com. Other than as expressly set forth in this annual report, the information contained in, or referred to on, our website is
not a part of this annual report.

We
conduct most of our administrative operations from our U.S headquarters in Redwood City, California and the offices of our German subsidiary, Versant GmbH. Our research and
development activities are primarily conducted by our German subsidiary, Versant GmbH, which is headquartered in Hamburg, Germany. In September 2009, a restructuring plan was undertaken to
consolidate the Company's research and development efforts into one location in Germany and to close its facility in India.

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In
fiscal 2007 we liquidated the operations of our former U.K. subsidiary and transferred its operations to our offices in Germany.

Industry Background

Computerized data management has evolved significantly over the past few decades. As business computing became more sophisticated,
network and hierarchical databases emerged in the 1970s to serve growing business data requirements. In the 1980s, these types of databases were largely superseded by relational database technology,
which continues to be a widely prevalent database technology today. The mid to late 1980s saw the emergence of object-oriented software programming. In object-oriented programming, smaller software
building blocks called "objects", which can perform specific functions, are aggregated with other objects in order to create larger software systems. With the advent of object-oriented software
programming, it became possible to incorporate the unique features and advantages of object-based software into database management solutions. Our principal products are object-based database
management software solutions, which we believe have advantages over relational database technology. In particular, we believe that object-based database management solutions are especially well
suited for successfully addressing the complex and challenging data management and analytical requirements of companies who need to rapidly source, update, analyze and use very large changing bodies
of complex data for a wide variety of business applications.

Certain Industry Terms

For reference purposes we have listed below certain well-known technical terms often used in our data management industry
to assist readers in better understanding the information provided in this report:



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Overview of Our Products and Services

We provide sophisticated data management solutions designed to address complex data management needs. Our Versant Object Database
product is used primarily by larger enterprises which have significant large-scale data management requirements, such as technology providers, telecommunications carriers, government defense agencies,
defense contractors, healthcare companies and companies in the financial services and transportation industries. Since the incorporation of Poet's FastObjects solution into our product line in March
2004, we expanded the scope of our solutions to also address the data management needs of smaller systems. With our acquisition of db4o in December 2008, we added a database solution for the embedded
space which we plan to continue to develop and support.

The
data management needs of our customers usually involve many business functions, ranging from usage and management of the customer's internal 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, yield management, and a host of other problems that require an application specific data management solution.

In
addition to our product offerings, to assist users in their development and deployment of applications based on the Versant Object Database, FastObjects and db4o, we offer a variety
of related services, including consulting, training, and technical support services. We also provide customers with maintenance and support services with respect to our products.

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Benefits of Versant Solutions

Our products provide customers the following benefits for specialized data management:



Products

Versant Object Database (VOD)

VOD, an eighth generation object database management system, is Versant's flagship product and is designed to support
multi-user, commercial applications in distributed computing environments. VOD enables users to store, manage, and distribute information that often cannot be administered effectively
through traditional database technologies, including the following types of information:



enable
the construction of applications that integrate diverse systems and add new functionality, often making this functionality available over the Internet.

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The
object-oriented, balanced client-server architecture of VOD provides the basis for high-performance, scalable distributed applications. We believe that VOD's performance
is superior compared to relational database management systems, particularly for complex data applications, for which VOD has the capability of processing a wide variety of abstract data types in a
highly concurrent, high performance manner. We also believe that use of VOD allows our customers to reduce the time they need to develop applications for their data management systems and improves
their system performance.

VOD
is designed to integrate up to 65,000 databases connected over a like number of locations on a variety of hardware and software platforms. Each database has a theoretical storage
capacity of 4.6 million terabytes, an amount far beyond the actual capacity of most existing operating systems. VOD implements a variety of database features, including two-phase
commitment for distributed transaction integrity and "database triggers" to monitor changing events and data and to notify users and applications when specified events occur. In addition,
on-line management utilities enable routine maintenance to be performed while the database is running. These include utilities to perform backup operations, manage log files, dynamically
evolve database schema, add, delete and compress volumes on disk storage and related functions. These utilities provide multiple levels of administrative access and application security.

Version
8.0 of VOD includes our core object database management system, C++, Java and .NET language interfaces (proprietary JVI and standards-based JDO), and XML for import and export of
data into the database. By bundling these components with VOD, we believe we are enhancing the solution that we are offering, thereby making it easier for customers to deploy applications requiring
these components.

As
part of the VOD family of solutions, we also offer a range of add-on options that a customer can use in situations requiring advanced capabilities, including the
following:



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FastObjects

FastObjects is an object database management system designed to provide minimal administration and to work natively with the customer's
product. The primary target application for our FastObjects product line is for use as an embedded data management system to be integrated in a customer's products. FastObjects is used in a vast range
of applications, including medical devices, vending machines, telecom equipment, and defense systems. The majority of FastObjects installations are now running under the Microsoft Windows Operating
System.

db4o

db4o is an open source object database that enables Java and .NET developers to store and retrieve any application object with only one
line of code, eliminating the need to predefine or maintain a separate, rigid data model. The db4o product targets embedded applications and embedded operating system deployments.

Services

We derived approximately 50% of our revenues from services in fiscal 2009, predominantly from maintenance services. Our services
include maintenance and support programs for our data management products, consulting services and the development of customer-specific extensions to our products.

Maintenance Services.We provide maintenance and technical support services for our products that are generally available at an annual
fee that
varies depending on the type and level of support the customer requires. Maintenance and support contracts, which typically have twelve-month terms, are offered concurrently with the initial license
of our product and entitle a customer to telephone support, product upgrades, and documentation updates. For additional fees, customers may purchase a special support package that provides dedicated
support engineers and telephone support available for 24 hours per day and seven days a week. Maintenance contracts are typically renewable annually and typically are paid for in advance for
all products, but in some instances maintenance and support fees are paid in arrears. For the support of older versions of our products, we offer specific obsolescence support options.

Professional Services.We also provide a variety of training and consulting services to assist customers in the design, development,
training and
management of applications that are built based on our core products. Training services are offered for a variety of Versant-specific and other object-related technologies and range from beginning to
advanced levels. Consulting services are available for analysis and design assistance, mentoring and technical information transfer, application coding, design reviews and performance analysis. In
addition, we provide custom development services to customers that request unique or proprietary product extensions.

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Our Customers

We categorize our customers into two broad groups, End-Users and Value Added Resellers ("VARs"). End-Users are
companies who use our products internally and do not redistribute our products outside their corporate organizations. VAR customers, on the other hand, include traditional Value Added Resellers,
Systems Integrators, OEMs and other vendors who redistribute Versant products to third party customers, either individually 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, typically sold on a per
seat basis, authorize a customer to develop an application program that uses our software product. Under a deployment license, a customer is permitted to deploy an application that it has developed
under a development license from us. End-Users generally purchase deployment licenses based on the number of central processing units (CPUs) accessing the server that will run the
application using our database management system. For certain applications, we offer deployment licenses priced on a per user basis. Pricing of Versant Object Database and FastObjects varies according
to several factors, including the number of CPUs/Cores per server on which the applications run, and the number of users that are able to access the server at any particular time. Customers may elect
to simultaneously purchase development and deployment licenses for their
projects, or instead may initially purchase only a development license and purchase a deployment license later when their applications developed on our software are completed. Pricing of db4o also
varies according to several factors, including the number of CPUs/Cores per server on which the applications run, and the number of users that are able to access the server at any particular time.
However, due to the open source nature of the db4o product, for db4o at this time we only offer use/deployment licenses (and not development licenses).

VARs
and distributors purchase development licenses from us on a per seat basis and on terms similar to those of development licenses that we sell directly to End-Users. VARs
are authorized to sublicense directly to the End-User deployment copies of our data management products, which are either bundled or embedded in the VARs' applications. VARs are required
to report the distribution of our software to us and are charged a royalty that is based either on the number of copies of the application software that are distributed or computed as a percentage of
the selling price charged by the VAR to its end-user customers. These royalties may be prepaid in full or paid upon deployment.

Frequently
a significant portion of our total revenues have been derived from a limited number of large organizations who tend to change from year to year. In fiscal year 2009, no one
customer accounted for 10% or more of our total revenues for the fiscal year or in any fiscal quarter as we experienced smaller average license transactions in fiscal 2009. However, previously we have
experienced higher customer concentration. For example, in fiscal 2008, one customer accounted for 23% of our total revenues for the first quarter; two customers accounted for 15% and 14%,
respectively, of our total revenues for the second quarter of fiscal 2008; and two customers accounted for 22% and 11%, respectively, of our total revenues for the third quarter of fiscal 2008;
although no one customer accounted for 10% or more of our total revenues for the fourth quarter of fiscal 2008 or for fiscal 2008. Two customers accounted for 14% and 8%, respectively, of our total
revenues for fiscal 2007 and one customer accounted for 21% of our total revenues for the quarter ended October 31, 2007.

Our Vertical Markets

Versant Object Database and FastObjects are licensed for development or deployment, or both, and db4o is licensed only for deployment,
in a wide range of applications. A substantial amount of our sales is for applications in the telecommunications, technology, defense, healthcare and financial services sectors. Many of our customers
have licensed multiple copies of our products for use in different applications.

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Our
future performance will depend in significant part on there being an increase in the use and sales of the Versant Object Database and FastObjects in telecommunications, technology,
defense, healthcare, online gaming and financial market applications and the continued acceptance of our products within these industries.

Sales and Marketing

Sales Channels.We market and sell our products principally through our direct sales force and through value-added resellers, systems
integrators,
and distributors.

Direct Sales.Our direct sales organization is based in our corporate offices in Redwood City, California and Hamburg, Germany, and in
some regional
and other offices in the U.S. and Europe. The direct sales organization includes field sales personnel, who are responsible for account management, and systems engineers, who answer technical
questions and assist customers in running benchmarks against competitive products and in developing prototype applications.

Indirect Sales.Part of our sales strategy is to further develop indirect distribution channels, such as value-added resellers and
systems
integrators who address new markets or industries. Systems integrators may integrate our products with their own or those of other vendors, in order to provide a complete solution to their customers.
Under their agreements with Versant, value-added resellers and systems integrators are typically not subject to any minimum purchase or resale requirements and can cease marketing our products at any
time. Some of our value-added resellers and systems integrators offer products they produced by themselves or by other vendors, which may in some cases compete with our products.

Marketing.The primary objective of our marketing efforts is to build increased visibility for Versant and its products and to generate
sales leads
for our business. Our marketing programs have included our efforts at cultivating media and analyst relations, fostering valuable investor communications, speakers' programs, online marketing,
partner-marketing programs, sponsoring database technology scholarship programs at the university level, participation in conferences and tradeshows and in some cases
preparation of white papers or other marketing / advertising initiatives targeting a discrete industry or market. Our products are typically marketed through (i) development licenses, which
entitle the customer to develop applications that use a Versant software product, and (ii) deployment licenses, which entitle the customer to sell and market product applications developed
through use of our software.

Sales Process.The cycle for a complete sale of our products to new and large enterprise customers can often exceed six months and may
extend to a
year or beyond. For existing customers with successfully deployed applications, sales cycles for new applications of our core products are generally shorter. During the sales cycle, meetings involving
both Versant technical and management staff are conducted frequently at the prospective customer's site and at our headquarters. As part of their product selection process, our prospective customers
typically perform a detailed technical evaluation or benchmark of our object-based technologies, often directly comparing them to competitive products. Upon completion of the evaluation, a customer
that chooses our solution may purchase one or more development licenses, depending upon the number of their programmers who will develop and build the customer's application. Development licenses
enable the customer to develop applications that use our software. Additionally, a customer may purchase technical support, training courses and consulting services. Our customers may also purchase
deployment licenses from us that enable them to deploy applications developed under a Versant development license. In some cases our customers purchase deployment licenses at the same time they
purchase development licenses. In other cases customers may instead defer their purchase of deployment licenses and related maintenance until they complete the application development under their
development license (a process that typically takes at least six months and can exceed one year).

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Shipping and Backlog.Our software may be either physically or electronically delivered to the customer. If physically delivered, our
software
product is shipped from either our Redwood City or Hamburg facilities and is delivered to the customer upon receipt of an approved order and a signed license agreement. We typically do not have a
material backlog of unfilled license orders at any given time, and we do not consider backlog to be a meaningful indicator of our future performance.

International Sales and Marketing.Our international sales are primarily recorded by our subsidiary in Germany, which sells our
products through
distributors and value-added resellers, as well as directly to end-users. In fiscal 2009, we partnered with a distributor in China to access potential long-term growth
opportunities in that geographic region. For fiscal 2009, our international revenues derived from customers outside North America made up approximately 62% of
our total revenues, compared to 63% for fiscal 2008 and 54% for fiscal 2007. Risks particularly associated with our international sales are discussed below in Item 1A under the risk factor
captioned "International Operations pose unique risks".

Competition

Our software products compete with products of companies offering object and relational database management systems. Our competitors,
especially Oracle and Progress Software, have longer operating histories, significantly greater financial, technical, marketing, service and other resources, significantly greater name recognition,
broader product offerings, larger and more established distribution channels and a larger installed base of customers than does Versant. In addition, many of our competitors have
well-established relationships with our current and potential customers and may offer broader suites of products with a wide array of complementary applications which may incentivize
customers to purchase these competitors' data management products. We may not be able to compete successfully against current or future competitors, and competitive pressures could have a material
adverse effect on the business, pricing, operating results and financial condition of the company.

Research and Development

Our research and development expenses consist primarily of personnel and related expenses, including payroll and employee benefits,
expenses for facilities and payments made to outside software development contractors and, to a lesser degree, depreciation of capital equipment. Currently our research and development activities are
conducted primarily in Hamburg, Germany. In fiscal 2009, fiscal 2008 and fiscal 2007, our research and development expenses were $4.0 million, $4.1 million and $3.4 million,
respectively.

Intellectual Property and Other Proprietary Rights

We consider our products as proprietary. We attempt to protect our technology by relying primarily on a combination of copyright and
trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect our proprietary technology. For example, we license our software pursuant to signed license agreements
and, to a lesser extent, "shrink-wrap" licenses displayed in evaluation downloads and in software installation screens, which impose certain restrictions on the licensee's ability to
utilize our software. In addition, we take steps to avoid disclosure of our trade secrets, such as requiring persons with access to our
proprietary information to execute non-disclosure agreements, and we restrict access to our software source code. We seek to protect our software, documentation and other written materials
under trade secret and copyright laws, which afford only limited protection. We were awarded a United States patent (No. 5,822,759) for our proprietary cache system used within our product
suites, which expires in 2015. We also have certain trademarks and service marks for certain of our products and services.

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Employees

As of October 31, 2009, we and our subsidiaries had a total of 79 full time employees, of whom 18 were based in the United
States, 40 in Europe, and 21 in India, although we are in the process of closing our facility in India. As of October 31, 2009, 45 employees were engaged in engineering and technical services,
14 were engaged in sales and marketing, 2 were engaged in the services organization, and the remaining 18 were engaged in general administration and finance. To the best of our knowledge, none of our
employees is represented by a labor union. We have not experienced any organized work stoppage to date and believe that our relationship with our employees is generally good.

Our
future performance depends mostly upon the continued service of our key technical, sales, and senior management personnel. The loss of the services of one or more of our key
employees could have a material adverse effect on our business, operating results and financial condition.

Restructuring

In September 2009, a restructuring plan was undertaken to consolidate the Company's research and development efforts into one location
in Germany in order to streamline operations, create management efficiencies and increase productivity. The Company committed to closing its research and development facility in Pune, India and
winding down the affairs of its subsidiary, Versant India Private Limited. The Company expects the restructuring to be substantially completed during the second fiscal quarter ending April 30,
2010. See Note 12 of our "Notes to Consolidated Financial Statements" in Item 8 of this report for more information regarding this transaction.

As
part of restructuring efforts we undertook in fiscal 2006, in order to refocus the Company on its core object database management business, in February 2006, we sold our WebSphere
consulting business in exchange for a one-time cash payment plus certain contingent payments payable over a 24-month period following the close of the transaction. As a result,
we have reflected the results of operations of our WebSphere consulting practice for fiscal 2008 and fiscal 2007 as discontinued operations. Therefore, reported revenues for these periods no longer
include any revenues from the WebSphere consulting practice. The results from the discontinued WebSphere operations, however, are reported as net income from discontinued operations, net of income
taxes. See Note 15 of our "Notes to Consolidated Financial Statements" in Item 8 of this report for more information regarding this transaction.

Investor Information

We are subject to the informational requirements of the Securities Exchange Act of 1934, or the "Exchange Act" pursuant to which we
file our periodic reports on Forms 10-Q, 10-K, 8-K, proxy statements and other information with the Securities and Exchange Commission, or "the SEC". These
reports, proxy statements and other information may be obtained by visiting the Public Reference Room of the SEC at 100 F Street, NE, Room 1580, Washington, DC 20549. Information on the
operation of the SEC's Public Reference Room may be obtained by calling the SEC at 1(800) SEC-0330. In addition, the SEC maintains an Internet site (at http://www.sec.gov) that
contains reports, proxy and information statements and other information regarding issuers that file electronically.

Information
regarding our revenues, net income, total assets and other financial information for our fiscal years ended October 31, 2009, 2008 and 2007 can be found in
Item 8 of this report on Form 10-K, which is incorporated here by reference.

Financial
and other information about Versant can also be accessed at our Investor Relations website. The address of Versant's website is: (www.versant.com).
We make available, free of charge, copies of our annual reports, annual reports on Forms 10-K, quarterly reports on Forms 10-Q, current reports on
Form 8-K and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after filing such
materials with the SEC.

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Item 1A.    Risk Factors.

This annual report on Form 10-K contains forward-looking statements regarding the Company that involve risks and uncertainties,
including, but not limited to, those set forth below in this Item 1A, that could cause our actual results of operations and financial condition to differ materially from those contemplated in
the forward-looking statements. The risks and uncertainties set forth below should be carefully considered when evaluating our business and prospects.

Current economic conditions may harm our business and results of operations.Global economic conditions and financial markets
have continued to be
challenging in the enterprise software market, and national and global economies and financial markets continue to experience a deep recession stemming from a multitude of factors, including adverse
credit conditions, slower economic activity, concerns about failures or the instability of major financial institutions and other businesses, inflation and deflation, continuing high rates of
unemployment, reduced corporate profits and capital spending, adverse business conditions and liquidity concerns and other factors. Economic growth in the U.S. and many other countries has slowed and
may slow further. The severity of these economic and financial market conditions and the length of time they may persist are unknown. During challenging economic times and in tight credit markets,
many prospective customers may delay or reduce technology purchases. This has resulted, and could continue to result in, reductions in sales of our products, longer sales cycles, smaller sales levels,
difficulties in collection of accounts receivable, slower adoption of new technologies and increased price competition. Continued softness in corporate information technology spending would have a
direct impact on our business and any of these events would likely materially harm our business, including decreasing our revenues, decreasing cash provided by operating activities and negatively
impacting our liquidity. We cannot predict the duration of these economic conditions or the impact they will have on our customers or business.

We are dependent on a limited number of products, especially Versant Object Database or "VOD".Most of our license revenues to
date have been derived
from our VOD product, its predecessors and related products that add to or extend the capabilities of VOD. Consequently, if our ability to generate revenues from VOD were negatively impacted, our
business, cash flows and results of operations would be materially and adversely affected. Many factors could negatively impact our ability to generate revenues from Versant Object Database, including
without limitation softness in demand in the North American or European markets for enterprise software, the current downturn in the global economy and any slowness in the U.S. or European economies
or in key industries we serve, such as the
telecommunications and defense industries, the success of competitive products of other vendors, reduction in the prices we can obtain for our products due to competitive or economic factors, the
adoption of new technologies or standards that make our products technologically obsolete and customer reluctance to invest in object-oriented technologies. Although we have taken steps to diversify
our product line through our 2004 acquisition of Poet and its FastObjects data management product and our December 2008 acquisition of db4o, we still expect that sales of VOD will continue to be very
critical to our revenues for the foreseeable future. Accordingly, any significant reduction in revenue levels from our VOD product can be expected to have a material negative impact on our business
and results of operation.

Our products face significant competition from larger competitors.Our VOD, FastObjects and db4o products compete with products
of other companies
that offer database management systems. We face substantial competition from substantially larger and well-established relational database management companies including Oracle, Computer
Associates, Sybase, IBM, and Microsoft. We also face competition from object database companies including Progress Software Corporation and Objectivity. Additionally, some of our prospective customers
might attempt to build specialized data storage capability themselves using their own internal engineering resources, sometimes starting with low level operating system functionality, and other times
utilizing lower level data storage routines that are commercially available, such as Oracle Berkeley DB, a simplified database without query processing

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capability.
Many of our competitors have longer operating histories, significantly greater financial, technical, marketing, service and other resources, better and wider name recognition broader
suites of product offerings, stronger sales and distribution channels and a much larger installed base of customers than ours. In addition, many of our competitors have well-established
relationships with our current and potential customers. Our competitors may be able to devote greater resources to the development, promotion, and sale of their products. They may also have more
direct access to corporate decision-makers of key customers based on their previous relationships with these customers. Our competitors may also be able to respond more quickly to new or emerging
technologies and changes in customer requirements, and may have the competitive advantage of being able to sell products competitive to ours through package sales of a suite of a variety of products
for different applications that we do not offer. We may not be able to compete successfully against our current or future competitors, and competitive pressures could cause us to lose revenues or
lower the prices for our products to increase or maintain our sales revenues, or to take other market-responsive actions, any of which could have a material adverse effect on our business, operating
results and financial condition.

Reduced demand for our products and services may prevent us from achieving targeted revenues and profitability.Our revenues and
our ability to
achieve and sustain profitability depend on continuing or increasing the level of overall demand for the software products and services we offer. Reduced demand for our product line may result from
competition offered by competitors or alternative technologies, negative customer perception of our object-oriented technology or other causes, including
economic conditions that adversely affect the industries of our most significant customers, such as the defense and telecommunications industries. In addition, we have experienced continued hesitancy
on the part of our existing and potential customers to commit to new products or services from us, particularly in our North American markets. Any significant reduction in the demand for our products
could have a material adverse effect on our business and results of operations.

Our customer concentration increases the potential volatility of our operating results.Due to the nature of our products a
significant portion of
our total revenues has been, and we believe will continue to be, derived from a limited number of significant orders placed by large organizations. Although in fiscal year 2009, no one customer
accounted for 10% or more of our total revenues in any fiscal quarter, previously we have experienced higher customer concentration. For example, in fiscal 2008, one customer accounted for 23% of our
total revenues for the first quarter; two customers accounted for 15% and 14%, respectively, of our total revenues for the second quarter of fiscal 2008; two customers accounted for 22% and 11%,
respectively, of our total revenues for the third quarter of fiscal 2008; although no one customer accounted for 10% or more of our total revenues for fiscal 2008. Two customers accounted for 14% and
8%, respectively, of our total revenues for fiscal 2007 and one customer accounted for 21% of our total revenues for the quarter ended October 31, 2007. The timing of large orders and their
fulfillment has caused, and in the future is likely to cause, material fluctuations in our operating results, particularly on a quarterly basis. In addition, our major customers tend to change from
year to year. The loss of any one or more of our major customers, or our inability to replace a customer making declining purchases with a new customer of comparable significance, could each have a
material adverse effect on our business.

Our quarterly revenue levels are not predictable.Our revenues have fluctuated (in some cases significantly) on a quarterly
basis, and we expect this
trend to continue. For example, in fiscal 2009, our quarterly revenues fluctuated from a high of $5.6 million in the first quarter of 2009 to a low of

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$4.0 million
in the second quarter of 2009. These quarterly fluctuations result from a number of factors, including but not limited to the following:



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Our future revenues are substantially dependent upon our installed customers continuing to license Versant products and renew their maintenance agreements for our products. Our
future
professional services and maintenance revenues are dependent on future sales of our software products.We depend heavily on our installed customer
base for future revenues from licenses of additional products or upgrades of existing products and related fees from the renewal of maintenance and support agreements. If our existing customers do not
purchase additional products, upgrade existing products or renew their maintenance and support agreements with us, this could materially and adversely affect our business and future quarterly and
annual operating results. The terms of our standard license arrangements provide for a one-time license fee and a prepayment of one year of software maintenance and support fees. Our
maintenance agreements are generally renewable annually at the option of the customer, and there are no minimum payment obligations or obligations to license additional software. Therefore, our
current customers may not necessarily generate significant maintenance revenues in future periods if they choose not to renew our maintenance services. This risk may be increased in the case of
long-term customers who have not upgraded our products which they license. In addition, our customers may choose not to purchase additional products, upgrades or professional services. Our
professional services and maintenance revenues are also dependent upon the continued use of our products by our installed customer base. Consequently, any downturn in our software license revenues
would likely have a corresponding negative impact on the growth of our professional service revenues.

We depend on successful technology development.We believe that it will be necessary for us to continue to incur significant
research
and development expenditures in order for us to remain competitive. While we believe our research and development expenditures will improve our product lines, because of the uncertainty of software
development projects and risks posed by the current economic downturn, these expenditures will not necessarily result in successful product introductions or sustained revenue levels. Uncertainties
affecting the success of software development project introductions include technical difficulties, delays in the introductions of new products, market conditions, competitive products, and customer
acceptance of and demand for new products and the operating systems they run on. We also face certain challenges in integrating third-party technology embedded in our products. These challenges
include the technological challenges of integration, which may result in development delays, and uncertainty regarding the economic terms of our relationship with our third-party technology providers,
which may result in delays of the commercial release of new products. In addition, if we are required to adopt cost-conservation measures, we may be compelled to reduce the amounts of our
investment in research and development activities, which could adversely affect our ability to maintain the competitiveness of our existing products, our ability to develop new products, and our
future research and development capabilities. Failure to continue to timely develop technologies and products necessary for us to remain competitive is likely to have a material and adverse effect on
our business.

Our products have a lengthy sales cycle.The sales cycle for our VOD, FastObjects and db4o products varies substantially from
customer to customer. This sale cycle often exceeds six months and can sometimes extend to a year or more, especially for sales to defense sector customers. Due in part to the critical and strategic
nature of our products and the expenditures associated with their purchase, our potential customers are typically very cautious in making decisions to acquire our products. In order for us to
influence our customers' decision to license our products generally requires us to provide a significant level of education to prospective customers regarding the uses and benefits of our products,
and we frequently commit to provide that education without any charge or reimbursement. Generally, pre-sales support efforts, such as assistance in performing benchmarking and application
prototype development, are also conducted with no charge to customers. Because of the lengthy sales cycle for our products and the relatively large average dollar size of our individual licenses, a
lost or delayed sales transaction could potentially have a significant negative impact on our operating results for a particular fiscal period.

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We may not be able to manage our costs effectively given the unpredictability of our revenues.We expect to continue to maintain
a
relatively high percentage of fixed expenses. Inasmuch as we completed a restructuring in fiscal 2005 and 2006 to significantly reduce our operating expenses and in fiscal 2007 reduced the rent
expense for our U.S. headquarters, we might be unable to further reduce certain fixed expenses in order to accommodate any revenue reductions. Consequently, if our forecasted revenue does not
materialize, our business, financial condition and results of operations will be materially harmed.

We rely on revenues from the telecommunications and defense industries; and these industries are characterized by complexity, intense competition and changes in purchasing
cycles.Historically, we have been highly dependent upon the telecommunications industry and, more recently, we are also becoming increasingly
dependent upon the defense industry for sales of VOD. Our success in these markets depends, to a large extent, on the general economic conditions affecting these industries, our ability to compete
with other technology providers of solutions that directly compete with, or provide alternatives to, our products, our ability to develop products that can successfully interoperate in different
computing environments and whether our existing and potential customers believe we have the expertise and financial stability necessary to provide effective solutions and support in these markets on
an ongoing basis. If these conditions, among others, are not satisfied, we may not be successful in generating additional opportunities in these markets. The defense industry may experience new cycles
of lower available technology budgets compared to previously high levels of U.S. defense spending for operations in Iraq and Afghanistan, or changes in budgetary and spending priorities as a result of
the new U.S. presidential administration. As previously noted, the current global economy is in a recession and, in the past, general economic downturns have also adversely affected our ability to
generate revenues from customers in the telecommunications, defense and other industries. In addition, the types of applications and commercial products for the telecommunications and defense markets
are continuing to develop and are rapidly changing, and these markets are characterized by an increasing number of new entrants whose products may compete with ours. As a result, we cannot predict the
future growth of (or whether there will be future growth in) these markets, and demand for object-oriented databases applications in these markets may not develop or be sustainable. We also may not be
successful in attaining a significant share of these markets due to competition and other factors, such as our limited size and working capital. Moreover, potential customers in these markets
generally develop sophisticated and complex applications that require substantial consulting expertise to implement and optimize. There can be no assurance that we can hire and retain adequate skilled
personnel to provide such ongoing consulting services.

We rely on a substantial portion of our revenues being generated through our international operations and will continue to do so in the
future.A large portion of our revenues is derived from customers located outside North America, and it is critical for us to maintain these
international revenues. Following our 2004 acquisition of Poet, which had a strong European presence, international revenues have represented a larger percentage of our total revenues than they had
prior to that time. Consequently, we maintain a significant portion of our workforce in Germany and must conduct our operations internationally and maintain a significant presence in international
markets. For fiscal 2009, international revenues derived from customers outside North America made up approximately 62% of our total revenues for the fiscal year, compared to 63% for fiscal 2008 and
54% for fiscal 2007. Our North American revenues were 38% of total revenues for fiscal 2009, compared to 37% for fiscal 2008 and 46% for fiscal 2007. Most of our non-North American
revenues are derived from Northern Europe, but we recently have taken initial steps to develop a new distribution channel in China in an effort to expand our customer base and future revenues. We have
substantially less experience in the sale and marketing of our products and services in China and there can be no assurance that our efforts to develop new customers there will be successful or will
not result in increased sales and marketing costs that may not generate corresponding revenue, which would adversely affect our operating results. We expect international revenues to continue to be
critical to our operations and cash flows.

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International Operations pose unique risks.Our international operations are subject to a number of unique risks in addition to
the
risks faced by our domestic operations. These risks include, but are not limited to the following areas:



In
addition, in light of increasing concerns about global security and terrorism, and the recent global economic downturn, there may be additional risks of disruption to our
international sales activities. Any prolonged disruption in the markets in which we derive significant revenues may potentially have a material adverse impact on our revenues and results of
operations.

Efforts to expand and diversify our product line may adversely affect our operating results and may not result in the development of successful new
products.In order to sustain our revenues, we may need to develop new products to expand and diversify our product offerings beyond our core
products, VOD, FastObjects and db4o. However expanding our product line will likely require substantial marketing, research and development and sales expenditures, and in some cases product
acquisition costs, with no assurance that we will receive incremental additional revenue from such new products. To develop successful new products typically requires us to incur significant marketing
expenditures to determine the viability of new products and applications and target customers, as well as substantial research and development expenditures and additional sales expense associated with
selling new products to new customers. A significant portion of such expenses would likely be incurred well in advance of our recognition of any revenues from such new products, and thus could
adversely affect our results of operations and cash flows for certain fiscal periods before we derive any significant revenues from such new products. In addition, there can be no assurance that any
new products will be accepted in the marketplace or generate meaningful amounts of revenue or net income. Failure to develop successful new products may adversely affect our ability to successfully
market other products and our future
revenues. Consequently, the Company must act carefully when making product or technology development decisions. In December 2008 we acquired the db4o database assets of Servo Software, with the
objective of giving us a new product, as well as access to new customers and additional revenue opportunities. However the financial costs of this acquisition and associated operational costs has
adversely affected our results of operations for fiscal year 2009 and may continue to do so.

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In order to be successful, Versant must attract, retain and motivate key employees, for whom competition is intense; and failure to do so could seriously harm the
Company, particularly given the smaller size of our executive management team.In order to effectively execute our business strategy, we must attract, retain and motivate our
executives and other key employees, including those in managerial, sales and technical positions. Our future performance depends in significant part upon the continued service of our key technical,
sales and senior management personnel. The loss of the services of one or more of our key employees could have a material adverse effect on our business, particularly so given the relatively smaller
size of our executive management team, which currently consists of Jochen Witte, our President and Chief Executive Officer, and Jerry Wong, our Vice President Finance, Chief Financial Officer and
Secretary. In December 2008, the employment of our Executive VP of Field Operations, who was based in Germany, terminated and that officer's duties have been partially assumed by Jochen Witte,
Versant's President and Chief Executive Officer, which has increased his responsibilities. In May 2009 we hired a manager to assume responsibility for our North American sales team. Our future success
also depends on our continuing ability to attract, train and motivate highly qualified technical, sales and managerial personnel. Constraints on our ability to offer compensation at levels that may be
offered by larger competitors and other circumstances may adversely affect our ability to attract and retain key management in the future. We must continue to motivate our employees and keep them
focused on the achievement of our strategies and goals. We now employ a sizable German workforce subject to German employment law, which generally provides greater financial protection to terminated
employees than does United States law. Consequently, failure to retain our German employees may cause us to incur significant severance costs, which could adversely affect our operating results and
financial condition.

Our personnel, management team and operations are located in different countries and as a result, we may experience difficulty in coordinating our activities and
successfully implementing Company goals.Following our 2004 merger with Poet, we acquired significant operations and personnel in Europe, and now have approximately 40
employees based in Europe whose activities must be well coordinated with those of our U.S. workforce and our other employees. Our management team resides in both our U.S. headquarters in Redwood City,
California, where our Chief Financial Officer is located, and in our offices in Hamburg, Germany, where our Chief Executive Officer resides. The significant geographic dispersion of our management
team and our workforce may make it more difficult for us to successfully manage our long-term objectives, coordinate activity across the Company, and integrate our operations and business
plans and causes us to incur certain additional travel and other expenses to maintain communications between our various offices.

We are subject to litigation and the risk of future litigation.During fiscal 2006, we settled a litigation that commenced in the
last quarter of fiscal 2004 when we were sued by Systems America, Inc., a privately held company, in an action which alleged that, prior to our acquisition of a smaller
privately-held company in November 2002, persons associated with that company misappropriated trade secrets and confidential information of Systems America, unfairly competed with Systems
America with respect to its customer relationships, and infringed Systems America's trademarks and trade names. Additionally, during fiscal 2008, we settled another related litigation in which a prior
customer was seeking indemnification from us for costs the customer had incurred in defending a suit brought against it by Systems America Inc., which alleged that a Versant product that was
discontinued in 2004 infringed Systems America's intellectual party. Litigation can be expensive to defend, can consume significant amounts of management time and can result in judgments or
settlements that could have adverse effects on our results of operations, financial condition and cash reserves.

We will incur increased costs to comply with certain requirements of the Sarbanes-Oxley Act of 2002 and regulations relating to corporate governance matters and public
disclosure.The provisions of the Sarbanes-Oxley Act of 2002, related rules adopted or proposed by the SEC and by the NASDAQ Stock Market and
recent accounting pronouncements, including accounting rules regarding the expensing of stock options and accounting for uncertainty in income taxes, have increased our costs to evaluate the

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implications
of these laws, regulations and standards and comply with their requirements. Compliance with these will increase our general and administrative expenses in fiscal 2010 when we again
become subject to the assessment and auditor attestation provisions regarding internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act. In addition, to maintain
high standards of corporate governance and public disclosure, we intend to invest resources to comply with existing requirements and standards.

Although we believe we currently have adequate internal control over financial reporting, we are required to assess our internal control over financial reporting
on an annual basis, and any future adverse results from such assessment could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock
price.Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX 404"), and the rules and regulations promulgated by the SEC to implement SOX 404, we are required
to furnish an annual report in our Form 10-K regarding the effectiveness of our internal control over financial reporting. The report's assessment of our internal control over
financial reporting as of the end of our fiscal year must include disclosure of any material weaknesses in our internal control over financial reporting identified by management. Management's
assessment of internal control over financial reporting requires management to make subjective judgments and, because this requirement to provide a management report has only been in effect since
2004, some of our judgments will be in areas that may be open to interpretation. Therefore, we may have difficulties in assessing the effectiveness of our internal controls, and our auditors, who will
be required in the future, to issue an attestation report along with our management report, may not agree with management's assessments.

Although
we currently believe our internal control over financial reporting is effective, the effectiveness of our internal controls is subject to the risk that our controls may become
inadequate. If we are unable to assert that our internal control over financial reporting is effective (or if our auditors are unable to provide an attestation report regarding the effectiveness of
our internal controls, or qualify such report or fail to provide such report in a timely manner), we could lose investor confidence in the accuracy and completeness of our financial reports, which
would have an adverse effect on our stock price.

Adoption and application of accounting regulations and related interpretations and policies regarding revenue recognition could cause us to defer recognition of revenue or
recognize
lower revenues and profits.Although we use standardized license agreements designed to meet current revenue recognition criteria under generally
accepted accounting principles, we must often negotiate and revise terms and conditions of these standardized agreements, particularly in multi-element or multi-year transactions. As our
transactions increase in complexity with the sale of larger, multi-product, multi-year licenses, negotiation of mutually acceptable terms and conditions with our customers can extend the
sales cycle for our products and, in certain situations, may require us to defer recognition of revenue on such licenses. We believe that we are in compliance with ASC 985-605, Software, Revenue Recognition; however, these future, more complex, multi-element, multi-year license transactions, which may require
additional accounting analysis to account for them accurately, could lead to unanticipated changes in our current revenue accounting practices and may contain terms affecting the timing of our revenue
recognition.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.Under Section 382
of
the Internal Revenue Code of 1986, as amended, if a corporation undergoes an "ownership change" (generally defined as a greater than 50% change (by value) in its equity ownership over a three year
period), the corporation's ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes (such as research tax credits) to offset its
post-change income may be limited. We may experience ownership changes in the future as a result of shifts in our stock ownership which are beyond our control. As a result, if we earn net
taxable income, our ability to use our pre-change net operating loss carryforwards to offset United States federal taxable income may be subject to limitations, which could potentially
result in increased tax liability to us in the future.

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Failure to adequately protect our intellectual property could impair our ability to successfully compete.Despite our efforts to
protect our proprietary rights, third parties may attempt to misappropriate or copy
aspects of our products, obtain or wrongfully use information we regard as proprietary or use or make unauthorized copies of our products or technologies in violation of license agreements. Policing
unauthorized use of our products is difficult and enforcing our proprietary rights is potentially expensive. In addition, the laws of many jurisdictions do not protect our proprietary rights to as
great an extent as do the laws of the United States. Shrink-wrap licenses may be wholly or partially unenforceable under the laws of certain jurisdictions and copyright and trade secret
protection for software may be unavailable or very difficult to effectively enforce in certain foreign countries. Our means of protecting our proprietary rights may not be adequate, and our
competitors may independently develop similar technologies, which they could then market and sell to our customers, which could have an adverse impact on our revenues.

We may be subject to claims of intellectual property infringement.Developers of software such as the Company are frequently
subject
to infringement claims as the number of products, competitors and patents in our industry sector grows. Intellectual property infringement litigation can also arise from acquisitions by the Company of
businesses or assets. For example, in 2004 we were the subject of a suit alleging that a company we purchased misappropriated intellectual property and the plaintiff in this litigation also brought an
action against one of our customers on related facts, which resulted in that customer making a claim for indemnification against us. Although these suits were settled, any claim of this type, whether
meritorious or not, could be time-consuming, could result in significant litigation expenses, could cause product shipment delays and require us to enter into royalty or licensing
agreements or pay amounts in settlement of the claims or pursuant to judgments. If any of our products or technologies were found to infringe third-party rights, royalty or licensing agreements to use
such third-party rights might not be available on terms acceptable to us, or at all, and we might be enjoined from marketing an infringing product or technology, each of which circumstances could have
a material adverse effect on our business, operating results and financial condition.

We may engage in future acquisitions of businesses or assets that could dilute our shareholders and cause us to incur debt or assume contingent
liabilities.As part of our strategy, we may from time to time review opportunities to buy other businesses or technologies that would complement
our current products, expand the breadth of our markets or enhance our technical capabilities, or that may otherwise offer us growth opportunities. In the event of any future acquisitions, we
potentially might take any or all of the following actions:



Such
acquisitions also involve numerous risks, including the following:



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For
example, in December 2008 we acquired from privately-held Servo Software Inc., for cash, assets associated with Servo Software's db4o open source database solution
for the embedded device market. We acquired these assets with the objective of expanding our product line and obtaining access to new customers and additional revenue opportunities. However this
acquisition continues to be subject to many of the risks of acquisitions outlined above, including the fact that this product may generate losses for future fiscal periods and adversely affect our
results of operations. In addition, the db4o business employees are located in many different countries, and thus, we face additional challenges in integrating these new personnel and retaining them.
The loss of any of the db4o team members who joined us following the acquisition could adversely affect our business and financial objectives for this acquisition and result in additional costs.

There
can be no assurance that we will be able to successfully integrate the db4o business or any other businesses, products or technologies that we might purchase in the future.

Our common stock is listed on the NASDAQ Capital Market.The listing of our common stock on The NASDAQ Capital Market may be
perceived as a negative by investors and may adversely affect the liquidity and trading price of our common stock. We may be unable to list our common stock on The NASDAQ Global Market System, or
NGMS.

Charges to earnings resulting from our acquisition of businesses or assets may adversely affect the market value of our common
stock.In accordance with U.S. generally accepted accounting principles, we account for our merger with Poet, our acquisition of
FastObjects, Inc. and our fiscal 2009 acquisition of the db4o assets of Servo Software using the purchase method of accounting, which result in charges to earnings that could have a material
adverse effect on the market value of our common stock. Under the purchase method of accounting, we have allocated the total estimated purchase price of Poet, FastObjects and db4o to net tangible
assets and amortizable intangible assets based on their fair values as of the respective dates of the closing of these acquisitions, and recorded the excess of the purchase price over those fair
values as goodwill. We will incur additional amortization expense over the useful lives of certain intangible assets acquired in connection with these acquisitions, which will extend into
future fiscal years. In addition, to the extent the value of goodwill or intangible assets is impaired we may be required to incur material charges relating to the impairment of those assets. Such
amortization and potential impairment charges could have a material impact on our results of operations.

Our stock price is volatile.Our revenues, operating results and stock price have historically been and may continue to be
subject to
significant volatility, particularly on a quarterly basis. We have previously experienced revenues and earnings results that were significantly below levels expected by investors, which have had an
immediate and significant adverse effect on the trading price of our common stock. This may occur again in the future. Additionally, as a significant portion of our revenues are often realized late in
a fiscal quarter, we may not be aware of any revenues shortfall until late in a quarter, which, when announced, could result in an even more immediate and adverse effect on the trading price of our
common stock. In addition, we have a relatively smaller number of holders of our stock and the market for our common stock is characterized by relatively small sales volumes, which contributes to the
volatility of our stock price and its sensitivity to larger trades of stock. In December 2008, our Board of Directors approved a stock repurchase program under which the Company repurchased
$3.2 million worth of our outstanding common shares. In November 2009, our Board of Directors approved a new stock repurchase program pursuant to which the Company is authorized to potentially
repurchase up to $5.0 million of its common stock in fiscal year 2010. Repurchases of our shares will reduce the number of our outstanding common shares and might incrementally increase the
potential for volatility in our stock by reducing the potential volumes at which our common shares may trade in the public markets.

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The Company may face risks associated with the trend of increased shareholder activism.Publicly traded companies have
increasingly
become subject to campaigns by investors seeking to increase short-term shareholder value by advocating corporate actions such as financial restructuring, increased borrowing, special
dividends, stock repurchases or even sales of assets or the entire company. Given the Company's market capitalization and other factors, it is possible that shareholders may in the future attempt to
effect such changes or acquire control over the Company. Responding to proxy contests and other actions by activist shareholders would be costly and time-consuming, disrupting our
operations and diverting the attention of our Board of Directors and senior management from the pursuit of business strategies, which could adversely affect the Company's results of operations and
financial condition.

Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.Our
worldwide operations could be subject to natural disasters and other business disruptions, which could seriously harm our revenue and financial condition and increase our costs and
expenses. Our corporate headquarters Redwood City, California, is located near major earthquake faults. The ultimate impact on us and our general infrastructure of being located near major earthquake
faults is unknown, but our revenue, profitability and financial condition could suffer in the event of a major earthquake or other natural disaster. Losses and interruptions could also be caused by
earthquakes, power shortages, telecommunications failures, water shortages, tsunamis, floods, typhoons, fires, extreme weather conditions, medical epidemics such as the recent flu outbreak and other
natural or manmade disasters.

Item 1B.    Unresolved Staff Comments.

None.

Item 2.    Properties.

Our principal administrative, sales and marketing operations are headquartered at an approximately 6,800 square foot
office facility we lease that is located at 255 Shoreline Drive, Suite 450, Redwood City, California 94065. Our current lease of this facility commenced in June 2007 and was extended in
September 2009 for a total term of 72 months ending in May 2013.

Our
international subsidiary in Hamburg, Gmbh has entered into a lease for new office space commencing in December 2009 for a term of 60 months. Our prior Hamburg office lease
expired by its terms as of December 31, 2009. Our international subsidiary in Pune, India, which is currently winding down its affairs, has an office lease which expires as of
February 28, 2010. We believe that all of our current facilities are in reasonably good operating condition and will be adequate for our requirements for the next several years. Based on
current commercial real estate market conditions, we believe that we will be able to lease alternative comparable facilities in Germany or in the U.S. if required to do so.

Item 3.    Legal Proceedings.

We may from time to time be subject to legal proceedings in the ordinary course of business. Currently, we are not
subject to any material legal proceedings required to be disclosed under this Item 3.

Item 4.    Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of our security holders during the fourth quarter of fiscal 2009.

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PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Price Range of Common Stock

Our common stock is listed on the Nasdaq Capital Market (formerly the Nasdaq SmallCap Market) under the symbol "VSNT." Our common stock
commenced trading on the Nasdaq National Market on July 18, 1996. From July 19, 1999 until March 7, 2000, our common stock was traded on the Nasdaq SmallCap Market. From
March 8, 2000 until September 30, 2002, our common stock was traded on the Nasdaq National Market. Our common stock has been traded on the Nasdaq Capital Market since October 1,
2002. We requested that listing of our common stock be transferred to the Nasdaq Capital Market as of October 1, 2002 since at that time it seemed unlikely that, in the near term, we would
continue to be able to satisfy the then-applicable listing criteria of the Nasdaq National Market System.

The
following table lists the high and low bid prices of our common stock reported on the Nasdaq Capital Market for the periods indicated during the last two fiscal years.

Fiscal year ended October 31, 2009

High

LowFourth quarter

$
19.59

$
14.86Third quarter

$
15.99

$
13.34Second quarter

$
17.69

$
11.90First quarter

$
16.70

$
11.50Fiscal year ended October 31, 2008Fourth quarter

$
30.50

$
14.99Third quarter

$
33.44

$
24.02Second quarter

$
31.14

$
23.46First quarter

$
30.32

$
18.66


Shareholders

There were approximately 86 holders of record of our common stock as of January 27, 2010. We believe that a significant number
of beneficial owners of our common stock hold their shares in street name.

Dividend Policy

We have neither declared nor paid any cash dividends on our common stock in the past. We currently intend to retain future earnings, if
any, to fund development and growth of our business and, therefore, do not at this time anticipate that we will declare or pay cash dividends on our common stock in the foreseeable future.

Recent Sales of Unregistered Securities

Versant made no issuances of unregistered securities in fiscal 2009.

22

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Table of Contents

Issuer Purchases of Equity Securities

On December 1, 2008, Versant's Board of Directors approved a stock repurchase program authorizing Versant to repurchase up to
$5.0 million worth of its outstanding common shares from time to time on the open market, in block trades or otherwise. The stock repurchase program expired by its terms on October 31,
2009. Versant acquired 222,688 common shares
on the open market for approximately $3.2 million at an average purchase price of $14.52 per share under this stock repurchase program.

The
stock repurchase activity under our stock repurchase program during the three months and fiscal year ended October 31, 2009 is summarized in the following table:

Total
Number of
Shares
Purchased

Average
Price(1)
Paid
Per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum
Approximate
Dollar Value
That May Yet
Be Purchased
Under the Plans
or ProgramsPeriod:August 1, 2009August 31, 2009


1,678

$
14.95


1,678

$
1,995,907September 1, 2009September 30, 2009


14,633

$
15.65


14,633

$
1,766,901October 1, 2009October 31, 2009




$





$
1,766,901Three months ended October 31, 2009


16,311

$
15.58


16,311December 1, 2008July 31, 2009


206,377

$
14.43


206,377Fiscal year 2009 stock repurchase activity


222,688

$
14.52


222,688


---

On November 30, 2009 our Board of Directors approved a new stock repurchase program pursuant to which the Company is authorized to
repurchase up to $5.0 million of its common stock in fiscal year 2010. The stock repurchase program is currently scheduled to expire upon the earlier of October 31, 2010, or such time as
Versant has expended $5.0 million to repurchase outstanding common shares under the program; however the program may be suspended, discontinued, or extended at any time by the Company.

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Table of Contents

Stock Price Performance Graph and Cumulative Total Return

The graph below compares the cumulative total stockholder return on Versant common stock with the cumulative total return on the Nasdaq
Composite Index and the Nasdaq Computer and Data Processing Index for each of the last five fiscal years ended October 31, 2009, assuming an investment of $100 at the beginning of such period
and the reinvestment of any dividends. The comparisons in the graphs below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*  Among Versant Corporation, The NASDAQ Composite Index  And The NASDAQ Computer & Data Processing Index

GRAPHIC



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Table of Contents



Item 6.    Selected Financial Data

The following selected consolidated financial data are qualified by reference to, and should be read in conjunction with, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" contained in Item 7 of this report and the Consolidated Financial Statements and related Notes of Versant included in
Item 8 of this report. The selected consolidated balance sheet data as of October 31, 2009 and 2008 and selected consolidated statements of income data for the years ended
October 31, 2009, 2008 and 2007, are derived from our audited consolidated financial statements included elsewhere in this report. The selected consolidated balance sheet data as of
October 31, 2007, 2006 and 2005 and the selected consolidated statements of operations data for the years ended October 31, 2006 and 2005 were derived from audited consolidated financial
statements not included in this report. Our historical results are not necessarily indicative of our future results.

Fiscal Year Ended October 31,2009

2008

2007

2006

2005Consolidated statements of operations data:Total revenues

$
18,150

$
25,298

$
21,150

$
16,745

$
15,746Gross profit

$
15,919

$
23,116

$
19,112

$
13,654

$
12,475Income (loss) from operations(1)(2)(3)(4)(5)

$
4,045

$
9,951

$
7,664

$
3,515

$
(15,451
)Net income (loss) from continuing operations before income taxes

$
4,277

$
10,822

$
8,196

$
3,992

$
(14,934
)Net income (loss) from continuing operations(6)

$
4,839

$
9,391

$
7,329

$
3,602

$
(14,971
)Net income (loss)

$
4,839

$
9,489

$
7,633

$
4,301

$
(14,554
)Per Share Data:Net income (loss) from continuing operations, basic

$
1.33

$
2.52

$
2.01

$
1.01

$
(4.23
)Net income (loss) from continuing operations, diluted

$
1.32

$
2.48

$
1.98

$
1.01

$
(4.23
)Net income (loss), basic

$
1.33

$
2.54

$
2.09

$
1.20

$
(4.11
)Net income (loss), diluted

$
1.32

$
2.51

$
2.06

$
1.20

$
(4.11
)


October 31,2009

2008

2007

2006

2005Consolidated balance sheets data:Cash and cash equivalents

$
27,812

$
27,234

$
19,086

$
8,231

$
3,958Total assets(7)

$
41,373

$
38,561

$
30,466

$
20,261

$
16,246Total long-term liabilities

$
272

$
374

$
674

$
770

$
897Total stockholders' equity(8)

$
36,257

$
33,154

$
23,165

$
13,792

$
8,988


(1)In
fiscal 2005, charges of approximately $12.9 million related to impairment of goodwill and intangible assets were recorded.(2)Restructuring
charges of approximately $139,000, $218,000 and $638,000 were recorded in fiscal 2009, 2006 and 2005, respectively.(3)In
fiscal 2007, a loss on the liquidation of a foreign subsidiary of approximately $245,000 was recorded.(4)Beginning
in fiscal year 2006, we determined stock-based compensation expense in accordance with ASC 718.(5)In
fiscal 2008, a charge of $800,000 to settle litigation was recorded in operating expenses.(6)In
fiscal 2009, we released approximately $939,000 of the valuation allowance against our net deferred tax assets.(7)In
fiscal 2009, we acquired the assets of db4o for approximately $2.4 milllion.(8)In
fiscal 2009, we repurchased 222,688 shares of Versant common stock for approximately $3.2 million.


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Table of Contents

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

As indicated in the paragraph above in Item 1 of this report, this Form 10-K
(including this Item 7) contains certain forward-looking statements within the meaning of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. These
forward-looking statements include, among other things, statements regarding the Company's expected future financial performance, assets, liquidity and trends anticipated for the Company's business.
These statements are based on the Company's current expectations, assumptions, estimates and projections about the Company's business, the Company's industry and the market for the Company's goods and
services, which are based on information that is reasonably available to the Company as of the date of this report. Forward-looking statements 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.

We caution readers that these forward-looking statements are not assurances of our future performance or financial condition and are subject to and involve
significant known and unknown risks, uncertainties and other factors that may cause the Company's actual operating results, financial condition, levels of activity, performance or achievement to be
materially different from any future operating results, financial condition, levels of activity, performance or achievements that are expressed, estimated, 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 in Item 1A of this report under the heading "Risk Factors." Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other
reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business, financial performance or financial condition.
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 high performance, object-oriented database management solutions 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
end-user customers typically use our products 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 customers 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 administration costs and deliver
products and services with a significant competitive edge.

Our
Data Management business is currently comprised of the following key products:



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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, 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 the FastObjects solution into our product line following our March 2004 merger with Poet Holdings, Inc., we expanded the scope of our solutions to also address the data management needs of
smaller business systems. By our recent acquisition of db4o in December 2008, we further expanded the scope of our solutions to include the embedded market.

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 and can be adapted for use with many different applications.

In
addition to our product offerings, we provide maintenance and technical support services to assist users in using our products. We also offer a variety of consulting and training
services to assist users in developing and deploying applications based on Versant Object Database, FastObjects and db4o.

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:



Continued Adverse Global Economic Conditions Are Negatively Impacting Our Business

The national and global economies and financial markets have continued to experience a severe downturn stemming from a multitude of
factors, including adverse credit conditions, slower economic activity, concerns about failures or the instability of major financial institutions and other businesses, inflation and deflation, high
rates of unemployment, reduced corporate profits and capital spending, adverse business conditions, liquidity concerns and other factors. As a result of these conditions, the United States and global
economies are in a significant recession, which may continue for a significant length of time. The severity of these economic and financial market conditions and the length of time they may persist
are unknown.

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Table of Contents

Our
business has been negatively affected by these ongoing worldwide economic conditions. It is unclear when the macroeconomic environment may improve. During fiscal year 2009, our
selling environment remained very challenging, causing customers to delay or reduce technology purchases or to make smaller investments in our solutions. We are seeing continuing pressures on our
customers' budgets, and while facing uncertainty and cost pressures in their own businesses, some of our customers are deferring purchases of our products. The difficult and uncertain economic
conditions caused some of our customers to face financial challenges during fiscal 2009 and they may continue to face such challenges for the foreseeable future. The current economic downturn in our
customers' industries has contributed to the recent substantial reduction in our revenue, particularly our license revenue, and could continue to harm our business, operating results and financial
condition.

Financial Highlights for Fiscal 2009



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Table of Contents

Fiscal 2009 and Beyond

During fiscal 2009, we focused our sales and marketing efforts on our data management products, (Versant Object Database, FastObjects
and db4o) and on related maintenance, consulting and training services. Versant Object Database was the key focus of our marketing efforts and the major source of our license and service revenues in
fiscal 2009.

We
again expect to derive most of our revenues in fiscal 2010 from Versant Object Database, FastObjects and db4o licenses and related services.

On
December 1, 2008 we acquired the assets of the database software business of privately-held Servo Software, Inc. (formerly db4objects, Inc.) for
$2.4 million in cash. db4o is an open source object database software solution targeting the embedded device market. It is distributed under free open source licenses to a large, open source
community of approximately 60,000 registered members located around the world, and in some cases is licensed on a fee-bearing basis to certain customers for redistribution.

Like
many other software companies, we do not operate with a significant backlog of orders. Our license revenues, in particular, are difficult to forecast. The outlook into the Company's
anticipated performance in fiscal 2010 is more uncertain than in prior years, due principally to the recent significant worldwide recession. In addition, Versant has plans to increase its sales and
marketing spending levels by approximately 20% in fiscal 2010 compared to the prior fiscal year. The Company expects to recognize benefits from these additional sales and marketing expenditures over
the medium term, and currently expects its total revenues in fiscal year 2010 to be essentially unchanged from its fiscal year 2009 total revenues of $18.2 million. Due to the projected
increased spending in sales and marketing and anticipated SOX 404 compliance costs, the Company is currently projecting income from operations of approximately $2.8 million for fiscal year
2010. Without limitation, the estimates, forecasts and other statements in this paragraph are forward-looking statements.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amount of
our assets and liabilities at the date of our financial statements and of our revenues and expenses during the reporting period covered by our financial statements. We base these estimates and
judgments on information reasonably available to us, such as our historical experience and trends, industry, economic and seasonal fluctuations and on our own internal projections that we derive from
that information. Although we believe our estimates to be reasonable under the circumstances, there can be no assurances that such estimates will be accurate given that the application of these
accounting policies necessarily involves the exercise of subjective judgment and the making of assumptions regarding many future variables and 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 accounting principles generally accepted in the United States of America ("GAAP"), as set
forth in:



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Our
revenues consist mainly of 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 fair 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:



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.

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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 in which the license fees are based on the number of computers connected to the server that will
run the application using our product, or for certain applications, are based on the number of users.. 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 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 VAR, 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.

On
occasion, at a customer's request, we perform engineering work to port our products to an unsupported platform, to customize our software for specific functionality, or to perform
other non-routine technical assignments for a customer. In these instances, we recognize revenues in accordance with ASC 605-35,
Construction-Type and Production-Type Contracts, and use either the time and material percentage of completion method or the completed contract method
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:



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Table of Contents

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

We account for purchases of acquired companies in accordance with ASC 805,Business
Combinations, and allocate the cost of the acquired companies to the identifiable tangible and intangible assets acquired according to their respective fair values as of the
date of completion of the acquisition, with the remaining amount being classified as goodwill. 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.

In
accordance with ASC 350, IntangiblesGoodwill and Other,we test for any goodwill impairment within our single Data
Management operating segment and reporting unit. All our goodwill reflected in the financial statements included in this report has been aggregated from, and acquired in connection with, the following
acquisitions:



Financial
Accounting Standards Board ("FASB") guidance requires that goodwill be tested for impairment at the reporting unit level, at least annually and more frequently upon the
occurrence of certain events. We use the market approach to assess the fair value of our assets and this value is compared with the carrying value of those assets to test for impairment. The total
fair value of our assets is estimated by summing the fair value of our equity (as indicated by Versant's publicly traded share price and shares outstanding plus an estimated control premium) less our
liabilities. Under this approach, if the estimated fair value of our assets is greater than their carrying value, then there is no goodwill impairment. If the estimated fair value of our assets is
less than their carrying value, then we allocate the reporting unit's estimated fair value to its assets and liabilities as though the reporting unit had just been acquired in a business combination.
The impairment loss is the amount, if any, by which the implied fair value of goodwill allocable to the reporting unit is less than that reporting unit's goodwill carrying amount and would be recorded
in operating results during the period of such impairment.

Identifiable
intangibles are currently amortized using the straight-line method over five years in relation to the JDO Genie (PTY) Ltd acquisition, six years in
relation to the FastObjects, Inc. acquisition, seven years in relation to our acquisition of Poet, nine years in relation to the acquisition of the db4o customer relationships, and five years
for other db4o related acquired intangible assets.

We
performed our annual valuation and analysis of goodwill in October 2009, October 2008 and October 2007. We did not perform impairment tests related to our intangible assets during
fiscal 2009, fiscal 2008 and fiscal 2007, as there were no triggering events which might indicate impairment. As a result, we determined that the value of our goodwill and intangible assets had been
fairly recorded in

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Table of Contents

our
financial statements, and therefore no impairment charges were recorded against our goodwill and intangible assets in fiscal 2009, fiscal 2008 and fiscal 2007.

Income Taxes

We account for income taxes using the asset and liability method provided by ASC 740,Income
taxes.We estimate our income taxes in each of the jurisdictions in which we operate and account for income taxes payable as part of the preparation of our consolidated
financial statements. This process involves estimating our actual current tax expense as well as assessing temporary differences resulting from differing treatment of items, such as depreciation and
amortization, for financial and tax reporting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheet to the extent deemed
realizable. We assess the likelihood that, and the extent to which, our deferred tax assets will be realized and establish a valuation allowance to reduce deferred tax assets to an amount for which
realization is more likely than not. If we establish or release a valuation allowance, or increase or decrease it in a given period, then we must increase or decrease the tax provision in our
statements of income.

Significant
management judgment is required in determining any valuation allowance recorded against our net deferred tax assets. Based upon our operating results in recent years and
through October 31, 2009 as well as an assessment of our expected future results of operations, we determined that it had become more likely than not that we would realize a portion of our net
deferred tax assets in Germany. As a result, during the fourth quarter of 2009, we released $939,000 of our valuation allowance. Due to uncertainties related to our ability to utilize the balance of
our deferred tax assets, we have maintained a valuation allowance at October 31, 2009 of $36.4 million. As of October 31, 2008, we had established a full valuation allowance of
$37.1 million for our deferred tax assets.

As
required by ASC 740,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.

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 longer subject to U.S. federal, state and local, or foreign tax
examinations by tax authorities for tax years before 2004.

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

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Table of Contents

Results of Operations

The following table sets forth the historical results of operations for Versant for our three fiscal years ended October 31,
2009, 2008 and 2007, expressed as a percentage of total revenues.

Percentage of
Revenues
Fiscal Year Ended
October 31,2009

2008

2007Revenues:License


50
%

63
%

60
%Maintenance


49


36


39Professional services


1


1


1Total revenues


100


100


100Cost of revenues:License


1


1


1Amortization of intangible assets


2


1


1Maintenance


8


6


7Professional services


1


1


1Total cost of revenues


12


9


10Gross profit


88


91


90Operating expenses:Sales and marketing


22


14


16Research and development


22


16


16General and administrative


20


22


21Loss on the liquidation of a foreign subsidiary








1Restructuring


1





Total operating expenses


65


52


54Income from operations


23


39


36Interest and other income, net


1


4


3Income from continuing operations before income taxes


24


43


39Income tax benefit (expense)


3


(6
)

(4
)Net income from continuing operations


27


37


35Net income from discontinued operations, net of income taxes





1


1Net income


27
%

38
%

36
%


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Table of Contents

Revenues

Total Revenues:The following table summarizes our total revenues (in thousands, except percentages) for fiscal 2009, 2008 and
2007:

Fiscal Year Ended October 31,

Fiscal 2009 vs 2008
Increase (Decrease)

Fiscal 2008 vs 2007
Increase (Decrease)2009

2008

2007

In Dollars

Percentage

In Dollars

PercentageTotal revenues

$
18,150

$
25,298

$
21,150

$
(7,148
)

(28
%)
$
4,148


20
%


Total
revenues are comprised of license fees and fees for maintenance, training, consulting, technical and other support services. Fluctuations in our total revenues can be attributed to
changes in economic and industry conditions, product and customer mix, general trends in information technology spending, changes in geographic mix, and the corresponding impact of changes in foreign
currency exchange rates. Further, product life cycles impact revenues periodically as old contracts expire 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 15 of our "Notes To Consolidated Financial Statements" in
Item 8 of this report for more information regarding this transaction.

Our
total revenues decreased by $7.1 million (or 28%) in fiscal 2009 compared to fiscal 2008. This decrease resulted primarily from a decrease of $6.9 million (or 43%) in
license revenues in fiscal 2009 compared to fiscal 2008. The decrease in total revenues also included approximately $1.2 million resulting from unfavorable foreign currency exchange rate
fluctuations comprising 17% of the $7.1 million decrease in total revenues. We believe factors that caused our license revenues to decrease in fiscal 2009 included the adverse global economic
conditions, the relative absence of larger license transactions, fewer license transactions and the stronger U.S. Dollar as compared to the Euro in fiscal 2009, which resulted in lower consolidated
revenues in fiscal 2009 compared to fiscal 2008. Maintenance revenues remained relatively stable in fiscal 2009 over fiscal 2008, decreasing by $208,000 (or 2%).

Our
total revenues increased by $4.1 million (or 20%) in fiscal 2008 compared to fiscal 2007. This increase resulted primarily from a 26% increase in license revenues and a 10%
increase in maintenance revenues in fiscal 2008 compared to fiscal 2007, and included approximately $1.7 million of revenues (comprising 42% of the $4.1 million increase in total
revenues) resulting from favorable foreign currency exchange rate fluctuations. We believe factors that caused our license revenues to increase in fiscal 2008 over fiscal 2007 included continuing
increased maturity and focus of our sales organization, increased acceptance and success of our VAR customers' applications with end-users, the overall reputation and acceptance of our
products in the vertical markets we serve (including telecommunications and defense), and the strong Euro as compared to the U.S. Dollar in fiscal 2008, which resulted in higher consolidated revenues
in fiscal 2008. Maintenance revenues increased in fiscal 2008 over fiscal 2007 primarily as a result of the increased license revenues in the same period.

No
one customer accounted for 10% or more of our total revenues in fiscal 2009 and fiscal 2008 and for the quarters ended October 31, 2009 and October 31, 2008. One
customer accounted for 14% of our total revenues for fiscal 2007 and one customer accounted for 21% of our total revenues for the quarter ended October 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

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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. The outlook into the Company's anticipated performance in fiscal 2010 is much
more uncertain than in prior years, due principally to the significant worldwide recession.

We
are currently expecting our total revenues for fiscal 2010 to be at a similar level as in fiscal 2009. Therefore, for fiscal year 2010 we currently forecast total revenues of between
$17 million and $19 million.

Revenues by Category:The following table summarizes our revenues by category (in thousands, except percentages) in fiscal 2009,
2008 and 2007:

Fiscal Year Ended October 31,

Fiscal 2009 vs 2008
Increase (Decrease)

Fiscal 2008 vs 2007
Increase (Decrease)2009

2008

2007

In Dollars

Percentage

In Dollars

PercentageTotal revenues by category:License

$
9,045

$
15,922

$
12,681

$
(6,877
)

(43
)%
$
3,241


26
%Maintenance


8,833


9,041


8,225


(208
)

(2
)

816


10Professional services


272


335


244


(63
)

(19
)

91


37Total

$
18,150

$
25,298

$
21,150

$
(7,148
)

(28
)%
$
4,148


20
%Percentage of revenues by category:License


50
%

63
%

60
%Maintenance


49


36


39Professional services


1


1


1Total


100
%

100
%

100
%


Fiscal
2009 Compared to Fiscal 2008

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

License
revenues were $9.0 million (or 50% of total revenues) for fiscal 2009, a decrease of approximately $6.9 million (or 43%) from $15.9 million (or 63% of total
revenues) reported for fiscal 2008. The reduced license revenues for fiscal 2009 were mainly attributable to fewer larger license transactions and included unfavorable foreign currency fluctuations of
approximately $677,000 comprising 10% of the $6.9 million decrease in license revenues. During fiscal year 2008 we derived approximately $5.3 million of revenues from several significant
license transactions with four telecommunications customers, whereas we did not have comparable license transactions of this scale during fiscal year 2009.

The
majority of our license revenues in fiscal 2009 continued to be transactions with existing VAR customers in the telecommunications industry, which was our largest vertical market in
fiscal 2009.

Maintenance revenues: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 $8.8 million (or 49% of total revenues) for fiscal 2009, a decrease of $208,000 (or 2%) from $9.0 million (or 36% of total revenues) reported for
fiscal 2008. The decrease in maintenance revenues for fiscal 2009 included unfavorable foreign currency fluctuations of approximately $544,000 (or 262% of the $208,000 decrease), back maintenance of
approximately

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$200,000
earned in fiscal 2008 that was not repeated in fiscal 2009, and the lapse of one project with one European telecom customer for $91,000, partially offset by back maintenance of $617,000
derived from two European customers in fiscal 2009.

Professional services revenues: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 $272,000 (or 1% of total revenues) in fiscal 2009, a decrease of $63,000 (or 19%) from $335,000 (or 1% of total revenues) reported in fiscal 2008.
This decrease in the absolute dollar amount of professional services revenues for fiscal 2009 compared to fiscal 2008 was attributable to decreases in consulting and training revenues in both the US
and the European operations and relates to the decrease in license transactions in fiscal 2009.

Fiscal
2008 Compared to Fiscal 2007

License revenues:License revenues were $15.9 million (or 63% of total revenues) for fiscal 2008, an increase of
approximately $3.2 million (or 26%) from $12.7 million (or 60% of total revenues) reported for fiscal 2007. The higher license revenues for fiscal 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 (comprising 34% of the $3.2 million increase in license revenues); however, these increases in license revenues for fiscal 2008 were partially offset by
approximately $2.3 million of license revenues from two customers in the telecommunications sector that were recognized in fiscal 2007 but not repeated in fiscal 2008.

The
majority of the growth in our license revenues in fiscal 2008 over fiscal 2007 was driven primarily by license transactions with existing VAR customers in the telecommunications
industry, which was our largest vertical market in fiscal 2008.

Maintenance revenues:Maintenance revenues were $9.0 million (or 36% of total revenues) for fiscal 2008, an
increase of $816,000 (or 10%) from $8.2 million (or 39% of total revenues) reported for fiscal 2007. The increase in maintenance revenues for fiscal 2008 was due primarily to favorable foreign
currency fluctuations of approximately $569,000 (comprising 70% of the $816,000 increase in maintenance revenues). Fiscal 2008 maintenance revenues also included incremental maintenance revenues over
the fiscal 2007 of approximately $528,000 recognized in fiscal 2008 from maintenance agreements attributable to license revenue growth from both U.S. and European based customers, and back maintenance
and maintenance revenues of approximately $340,000 derived from two European based telecommunications customers.

Professional services revenues:Professional services revenues were $335,000 (or 1% of total revenues) in fiscal 2008,
an increase of $91,000 (or 37%) from $244,000 (or 1% of total revenues) reported in fiscal 2007. This increase in the absolute dollar amount of professional services revenues for fiscal 2008 compared
to fiscal 2007 was mainly attributable to consulting revenues derived from our European operations.

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International revenues:The following table summarizes our total revenues by geographic area (in thousands, except percentages)
in fiscal 2009, 2008
and 2007:

Fiscal Year Ended October 31,

Fiscal 2009 vs 2008
Increase (Decrease)

Fiscal 2008 vs 2007
Increase (Decrease)2009

2008

2007

In Dollars

Percentage

In Dollars

PercentageTotal revenues by geographic area:North America

$
6,964

$
9,292

$
9,679

$
(2,328
)

(25
)%
$
(387
)

(4
)%Europe


10,656


13,275


10,672


(2,619
)

(20
)

2,603


24Asia


530


2,731


799


(2,201
)

(81
)

1,932


242Total

$
18,150

$
25,298

$
21,150

$
(7,148
)

(28
)%
$
4,148


20
%Percentage of revenues by geographic area:North America


38
%

37
%

46
%Europe


59


52


50Asia


3


11


4Total


100
%

100
%

100
%


Fiscal
2009 Compared to Fiscal 2008

Total
revenues decreased $7.1 million (or 28%) in fiscal 2009 compared to fiscal 2008. The decrease in total revenues occurred across geographic regions
as the global economy slowed. The decrease in absolute dollars from fiscal 2009 compared to fiscal 2008 was due to revenue decreases of $2.3 million in North America, $2.6 million in
Europe and $2.2 million in Asia. As a percentage of total revenues, international (non-North American) revenues remained stable representing approximately 62% and 63% of our total
revenues in fiscal 2009 and fiscal 2008, respectively.

Revenues from North America:The $2.3 million (or 25%) revenue decrease from North America in fiscal 2009
compared to fiscal 2008 was primarily due to fewer license transactions and the relative absence of larger license transactions, including the closing of license transactions with two customers
totaling approximately $1.9 million in fiscal 2008, while there were no such comparable transactions in fiscal 2009.

Revenues from Europe:The $2.6 million (or 20%) revenue decrease from Europe in fiscal 2009 compared to fiscal
2008 was due mainly to the closing of license transactions with a European based telecommunications customer totaling approximately $1.7 million in fiscal 2008, for which there were no
comparable transactions in fiscal 2009. The decrease in total revenues from Europe also included approximately $1.0 million resulting from unfavorable foreign currency exchange rate
fluctuations.

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.

Revenues from Asia:We also experienced a decrease of $2.2 million (or 81%) in revenues from our Asia
Pacific region during fiscal 2009, primarily due to three significant license transactions totaling approximately $1.9 million with two Asia Pacific telecommunications customers in fiscal 2008,
while there were no such comparable transactions in fiscal 2009.

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

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currently
being experienced in the global economy, which may negatively impact demand for our products and services.

Fiscal
2008 Compared to Fiscal 2007

Total
revenues increased $4.1 million (or 20%) in fiscal 2008 compared to fiscal 2007. The increase in total revenues was due primarily to a revenue
increase of $2.6 million in our European operations as a result of closing several significant transactions during fiscal 2008, and a revenue increase of $1.9 million from our Asia
Pacific region, offset by a decrease of 387,000 in our North American operations.

International
(non-North American) revenues represented approximately 63% and 54% of our total revenues in fiscal 2008 and fiscal 2007, respectively.

Revenues from North America:The $387,000 (or 4%) revenue decrease from North America in fiscal 2008 compared to fiscal
2007 was mainly due to an approximate decrease of $330,000 in license revenues from the defense sector.

Revenues from Europe:The $2.6 million (or 24%) revenue increase from Europe in fiscal 2008 compared to fiscal
2007 was due mainly to the closing of license transactions with two European based telecommunications customers totaling approximately $2.6 million in fiscal 2008, and included approximately
$1.7 million of revenues resulting from favorable foreign currency fluctuations.

Revenues from Asia:We also experienced an increase of $1.9 million (or 242%) in revenues from our Asia Pacific
region during fiscal 2008, primarily due to three significant license transactions totaling approximately $1.9 million with two Asia Pacific telecommunications customers.

Cost of Revenues

Cost of Revenues:The following table summarizes the cost of revenues (in thousands, except percentages) in fiscal 2009, 2008 and
2007:

Fiscal Year Ended October 31,

Fiscal 2009 vs 2008
Increase (Decrease)

Fiscal 2008 vs 2007
Increase (Decrease)2009

2008

2007

In Dollars

Percentage

In Dollars

PercentageTotal revenues

$
18,150

$
25,298

$
21,150

$
(7,148
)

(28
)%
$
4,148


20
%Cost of license revenues


273


309


142


(36
)

(12
)

167


118Amortization of intangibles


373


315


315


58


18





Cost of maintenance revenues


1,452


1,446


1,469


6


0


(23
)

(2
)Cost of professional services revenues


133


112


112


21


19





Total cost of revenues

$
2,231

$
2,182

$
2,038

$
49


2
%
$
144


7
%Gross margin

$
15,919

$
23,116

$
19,112

$
(7,197
)

(31
)%
$
4,004


21
%Gross margin percentage


88
%

91
%

90
%


Cost
of revenues was $2.2 million (or 12% of total revenues) in fiscal 2009, an increase of $49,000 (or 2%) from the cost of revenues of $2.2 million (or 9% of total
revenues) reported in fiscal 2008. This increase (discussed further below) was primarily due to an increase in the amortization of intangibles related to our acquisition of db4o of $95,000 and an
increase in the cost of maintenance revenues to support db4o of $58,000, partially offset by favorable foreign currency fluctuations of $96,000.

Cost
of revenues was $2.2 million (or 9% of total revenues) in fiscal 2008, an increase of $144,000 (or 7%) from the cost of revenues of $2.0 million (or 10% of total
revenues) reported in fiscal 2007.

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This
increase was primarily due to an increase in cost of license revenues of $167,000 (or 118%), and included unfavorable foreign currency fluctuations of approximately $106,000. The increase in cost
of license revenues of $167,000 in fiscal 2008 as compared to fiscal 2007 was primarily related to the reversal of warranty reserves upon expiration of the warranty period in our European operations
during fiscal 2007 that was not repeated in fiscal 2008. These warranty reserves were related to two consulting arrangements completed in fiscal 2006.

Gross
margin percentages (gross margin as a percentage of total revenues) remained relatively stable at 88% in fiscal 2009, 91% in fiscal 2008 and 90% in fiscal 2007.

Cost of license revenues:Cost of license revenues consists primarily of royalties and costs of third party products,
which we resell to our customers, as well as product media and shipping and packaging costs.

The
following table summarizes the cost of license revenues (in thousands, except percentages) in fiscal 2009, 2008 and 2007:

Fiscal Year Ended October 31,

Fiscal 2009 vs 2008
Increase (Decrease)

Fiscal 2008 vs 2007
Increase (Decrease)2009

2008

2007

In Dollars

Percentage

In Dollars

PercentageLicense:Revenues

$
9,045

$
15,922

$
12,681

$
(6,877
)

(43
)%
$
3,241


26
%Cost


273


309


142


(36
)

(12
)

167


118Margin

$
8,772

$
15,613

$
12,539

$
(6,841
)

(44
)%
$
3,074


25
%Margin percentage


97
%

98
%

99
%


Fiscal
2009 Compared to Fiscal 2008

Cost
of license revenues was $273,000 (or 3% of license revenues) in fiscal 2009, remaining relatively stable in both absolute dollars and as a percentage of
license revenues compared to $309,000 (or 2% of license revenues) in fiscal 2008. The decrease of $36,000 in fiscal 2009 was primarily attributable to favorable foreign currency fluctuations of
$18,000.

Fiscal
2008 Compared to Fiscal 2007

Cost
of license revenues was $309,000 (or 2% of license revenues) in fiscal 2008, and increased $167,000 (or 118%) from the cost of license revenues of
$142,000 (or 1% of license revenues) in fiscal 2007. The increase was primarily due to the reversal of warranty reserves upon expiration of the warranty period in our European operations during fiscal
2007 that was not repeated in fiscal 2008. These warranty reserves were related to two consulting arrangements completed in fiscal 2006.

Cost
of license revenues as a percentage of license revenues remained relatively stable at 2% in fiscal 2008 compared to 1% in fiscal 2007.

Cost of maintenance revenues:Cost of maintenance revenues consists primarily of salaries, bonuses and consulting fees
for customer support personnel and related expenses, including payroll, employee benefits and allocated overhead.

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The
following table summarizes the cost of maintenance revenues (in thousands, except percentages) in fiscal 2009, 2008 and 2007:

Fiscal Year Ended October 31,

Fiscal 2009 vs 2008 Increase (Decrease)

Fiscal 2008 vs 2007 Increase (Decrease)2009

2008

2007

In Dollars

Percentage

In Dollars

PercentageMaintenance:Revenues

$
8,833

$
9,041

$
8,225

$
(208
)

(2
)%
$
816


10
%Cost


1,452


1,446


1,469


6


0


(23
)

(2
)Margin

$
7,381

$
7,595

$
6,756

$
(214
)

(3
)%
$
839


12
%Margin percentage


84
%

84
%

82
%


Fiscal
2009 Compared to Fiscal 2008

Cost
of maintenance revenues was $1.5 million (or 16% of maintenance revenues) in fiscal 2009, remaining consistent in both absolute dollars and as a
percentage of maintenance revenues compared to $1.5 million (or 16% of maintenance revenues) in fiscal 2008. The slight increase of $6,000 in fiscal 2009 was primarily attributable to increased
consulting costs of approximately $58,000 related to db4o technical support services and an increase in allocated overhead in our domestic operations of $25,000, substantially offset by favorable
foreign currency fluctuations of $68,000.

Fiscal
2008 Compared to Fiscal 2007

Cost
of maintenance revenues was $1.4 million (or 16% of maintenance revenues) for fiscal 2008, representing a decrease of $23,000 (or 2%) from
$1.5 million (or 18% of maintenance revenues) reported in fiscal 2007. The overall cost of maintenance revenues in absolute dollars remained relatively consistent in these two fiscal years. The
slight decrease in absolute dollars of $23,000 was primarily due to a reduction in facility expenses of approximately $153,000 in our U.S. operations as a result of our occupying less 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 $77,000 and an increase in salary and
related expenses and bonus expense of approximately $45,000 in our U.S. operations.

Maintenance
margin percentage improved by 2% points in fiscal 2008 compared to fiscal 2007 primarily due to our providing increased maintenance and support services with approximately
the same number of personnel as we used to provide such services in fiscal 2007.

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

The
following table summarizes the cost of professional services revenues (in thousands, except percentages) in fiscal 2009, 2008 and 2007:

Fiscal Year Ended October 31,

Fiscal 2009 vs 2008
Increase (Decrease)

Fiscal 2008 vs 2007
Increase (Decrease)2009

2008

2007

In Dollars

Percentage

In Dollars

PercentageProfessional Services:Revenues

$
272

$
335

$
244

$
(63
)

(19
)%
$
91


37
%Cost


133


112


112


21


19





Margin

$
139

$
223

$
132

$
(84
)

(38
)%
$
91


69
%Margin percentage


51
%

67
%

54
%


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Table of Contents

Fiscal
2009 Compared to Fiscal 2008

Cost
of professional services revenues was $133,000 (or 49% of professional services revenues) in fiscal 2009, an increase of $21,000 (or 19%) compared to
$112,000 (or 33% of professional services revenues) in fiscal 2008.

Cost
of professional services as a percentage of professional services revenues is affected by the mix of services provided (i.e., training vs. consulting) and the travel costs
incurred. Versant provided more consulting service and fewer training classes in fiscal 2009 compared to fiscal 2008, and therefore incurred higher relative costs.

Fiscal
2008 Compared to Fiscal 2007

Cost
of professional services revenues was $112,000 (or 33% of professional services revenues) in fiscal 2008, consistent with the cost of professional
services revenues of $112,000 (or 46% of professional services revenues) in fiscal 2007.

In
Europe, there is a typical one-year warranty requirement for all of our products and services. Prior to our merger with Poet in March 2004, Poet Holdings, Inc.
provided for a reserve for such warranties that could be in excess of its regular maintenance programs. As of October 31, 2008, we continued to maintain a warranty reserve of approximately
$9,000 related to the FastObjects products in Europe.

The
professional services margin percentage improved by 13% points in fiscal 2008 compared to fiscal 2007 due to increased professional services revenues in fiscal 2008 with essentially
the same cost base for these services as fiscal 2007.

Amortization of Intangible Assets:The amortization of intangible assets in fiscal 2009 related to our fiscal 2004
acquisitions of Poet Holdings, Inc., FastObjects, Inc. and JDO Genie technology and our fiscal 2009 acquisition of db4o.

The
following table summarizes the amortization of intangible assets (in thousands, except percentages) in fiscal 2009, 2008 and 2007:

Fiscal Year Ended October 31,

Fiscal 2009 vs 2008 Increase (Decrease)

Fiscal 2008 vs 2007 Increase (Decrease)2009

2008

2007

In Dollars

Percentage

In Dollars

PercentageAmortization of intangible assets:Poet Holdings, Inc.

$
189

$
189

$
189

$




%
$




%JDO Genie (PTY), LTD


73


110


110


(37
)

(34
)




FastObjects, Inc.


16


16


16











db4o


95








95


100





Total amortization of purchased intangibles

$
373

$
315

$
315

$
58


18
%
$




%


Fiscal
2009 Compared to Fiscal 2008

Amortization
of intangible assets was $373,000 (or 4% of license revenues) in fiscal 2009, a $58,000 (or 18%) increase compared to $315,000 (or 2% of license
revenues) in fiscal 2008. The increase in fiscal 2009 was primarily due to amortization of the intangible assets acquired with the db4o business of $95,000, partially offset by a decrease of $37,000
as the JDO Genie intangible asset was fully amortized in the third quarter of fiscal 2009. We expect to incur quarterly amortization charges of approximately $77,000 for each of the first three
quarters of fiscal 2010 and $73,000 for the fourth quarter of fiscal 2010.

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Table of Contents

Fiscal
2008 Compared to Fiscal 2007

Amortization
of intangible assets was $315,000 (or 2% of license revenues) in fiscal 2008, which was consistent with the amount incurred in fiscal 2007.

Operating Expenses

Operating Expenses.The following table summarizes our operating expenses (in thousands, except percentages) for fiscal 2009,
2008 and 2007:

Fiscal Year Ended October 31,

Fiscal 2009 vs 2008
Increase (Decrease)

Fiscal 2008 vs 2007
Increase (Decrease)2009

2008

2007

In Dollars

Percentage

In Dollars

PercentageOperating expenses:Sales and marketing

$
4,101

$
3,620

$
3,392

$
481


13
%
$
228


7
%Research and development


3,969


4,066


3,410


(97
)

(2
)

656


19General and administrative


3,665


5,479


4,401


(1,814
)

(33
)

1,078


24Loss on the liquidation of a foreign subsidiary








245








(245
)

(100
)Restructuring


139








139


100





Total

$
11,874

$
13,165

$
11,448

$
(1,291
)

(10
)%
$
1,717


15
%


Fiscal
2009 Compared to Fiscal 2008

Total
operating expenses were $11.9 million (or 65% of total revenues) for fiscal year 2009 and $13.2 million (or 52% of total revenues) for
fiscal year 2008. The decrease of $1.3 million (or 10%) in total operating expenses in fiscal 2009 (discussed further below) resulted primarily from a $1.1 million decrease in our
general and administrative expenses, due to litigation settlement-related expenses incurred in fiscal 2008 not being repeated in fiscal 2009, a decrease of $530,000 in our general and administrative
expenses in fiscal 2009 related to SOX 404 compliance, and favorable foreign currency exchange fluctuations of $736,000, with these decreases partially offset by
increases in sales, marketing and research and development costs of $867,000 primarily related to db4o. However, due to the decrease in total revenues from fiscal 2008 to fiscal 2009, total operating
expenses represented a higher percentage of total revenues in fiscal 2009 than in fiscal 2008.

In
December 2008, we acquired db4o to further expand the scope of our solutions to include the embedded device market. Our results of operations thus include db4o transactions from the
acquisition date of December 1, 2008, or eleven months in fiscal 2009.

Sales and Marketing:Sales and marketing expenses consist primarily of personnel and 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 $4.1 million (or 22% of revenues) for fiscal year 2009 and $3.6 million (or 14% of total revenues) for fiscal year 2008. The $481,000 (or
13%) increase in absolute dollars for fiscal 2009 was primarily due to an expansion of our U.S. sales operations, including an approximate $301,000 increase in total compensation expense, recruiting,
higher facility costs attributable to additional personnel, travel and related costs associated with hiring two additional salespeople and a VP of Sales North America, and an increase of $177,000 in
marketing consulting fees. The year over year increase also includes db4o-related sales and marketing expenses for an approximate $107,000 of salary and related costs for one employee, $132,000 in
consulting fees and international distributor costs as well as $75,000 in advertising costs. These increases were partially offset by favorable foreign currency exchange fluctuations of $207,000. The
increase in sales and

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marketing
costs related to expansion of our U.S. sales efforts and an approximate $275,000 non-recurring separation payment made to the former Executive Vice President of Field Operations
in the first quarter of fiscal 2009, and were partially offset by reduced expenses in our European operations of approximately $367,000 in salary and related expenses attributable to the departure of
the Executive Vice President of Field Operations and two other sales and marketing personnel, and reduced trade show and collateral expenses of $88,000.

As
db4o was acquired on December 1, 2008, only eleven months of sales and marketing expenditures associated with db4o as described above are reflected in the Company's statement
of income for fiscal year 2009 and no db4o associated expenses are reflected for fiscal year 2008.

We
expect our sales and marketing expenses to increase moderately in fiscal 2010 over fiscal 2009 due to anticipated increases in sales personnel and marketing programs as, well as
expenses associated with our acquisition of db4o in December 2008, and we expect that sales and marketing expenses will 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, expenses for facilities and payments made to outside software development contractors.

Research
and development expenses were $4.0 million (or 22% of revenues) for fiscal 2009 and $4.1 million (or 16% of revenues) in fiscal 2008. The $97,000 (or 2%) decrease
in absolute dollars for research and development expenses in fiscal 2009 was due to favorable foreign currency exchange fluctuations of approximately $438,000, reduced costs of third party contractors
of approximately $140,000 and decreased operating costs of $90,000 as our Indian operations begin to wind down, with these decreases being partially offset by approximately $553,000 of increased
consulting and personnel costs related to db4o.

We
anticipate that we will continue to invest significant resources in research and development activities in the future to develop new products, advance the technology of our existing
products and develop new business opportunities, including research and development activities related to our acquisition of db4o in December 2008. We expect our research and development expenses to
remain relatively stable in fiscal 2010 compared to our research and development expense levels in fiscal 2009.

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

General
and administrative expenses were $3.7 million (or 20% of total revenues) in fiscal 2009 and $5.5 million (or 22% of total revenues) in fiscal 2008. The
$1.8 million (or 33%) decrease in absolute dollars in general and administrative expenses in fiscal 2009 was primarily due to a decrease of $1.1 million in expenses related to the
settlement of litigation occurring in fiscal 2008 and not repeated in fiscal 2009, an approximate $530,000 decrease in SOX 404 compliance costs including audit fees, consulting services and salary
related expenses, an approximate decrease of $192,000 in employee bonuses due to reduced revenue and net income levels, and favorable foreign currency exchange fluctuations of approximately $91,000,
with these decreases being partially offset by an $82,000 increase in share based compensation expense as a result of the higher average market value of stock option grants.

We
expect our general and administrative expenses in fiscal 2010 to increase moderately from fiscal 2009. We expect moderate cost increases related to compliance with Section 404
of the Sarbanes-Oxley Act of 2002 (the "Act") as our small company exemption from the attestation requirements of the Act lapses in fiscal 2010.

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Restructuring:On September 22, 2009, the Company committed to the implementation of a restructuring pursuant to
which it will be closing its research and development facility in Pune, India and winding down the affairs of its subsidiary, Versant India Private Limited. The restructuring plan was undertaken to
consolidate our research and development efforts into one location in Germany in order to streamline operations, create management efficiencies and increase productivity. We expect the restructuring
to be substantially completed during the second fiscal quarter ending April 30, 2010 and expect to incur total restructuring and other related charges ranging from $300,000 to $350,000.

The
following table reflects the restructuring charges included in operating expenses for fiscal year 2009:

Severance, retention and related charges

$
32,043Impairment of fixed assets (non-cash charges)


61,005Impairment to other assets (non-cash charges)


41,719Other direct costs of closure


4,587$
139,354


There
were no restructuring charges during fiscal 2008 or 2007.

Fiscal 2008 Compared to Fiscal 2007

Total operating expenses were $13.2 million (or 52% of total revenues) in fiscal 2008 and increased $1.7 million (or 15%)
from $11.4 million (or 54% of total revenues) reported in fiscal 2007. The $1.7 million (or 15%) absolute dollar increase in total operating expenses for fiscal 2008 resulted primarily
from an increase in our general and administrative and research and development expenses and, to a lesser degree, from an increase in our sales and marketing expenses, discussed further below. This
increase also included an unfavorable foreign currency exchange fluctuation of $695,000. However total operating expenses in fiscal 2008 represented a lower percentage of total revenues than did total
operating expenses in fiscal 2007 due to higher total revenues in fiscal 2008.

Sales and Marketing:Sales and marketing expenses were $3.6 million (or 14% of revenues) in fiscal 2008, an
increase of $228,000 (or 7%), compared to $3.4 million (or 16% of total revenues) in fiscal 2007. The $228,000 increase in absolute dollars for fiscal 2008 was primarily due to an approximate
$184,000 increase in salary and related expenses as a result of the addition of three headcounts to the sales and marketing organization in our European operations, unfavorable foreign currency
exchange fluctuations of approximately $247,000, an approximate $131,000 increase in share based compensation expense, primarily due to a higher market price of our stock during fiscal 2008, and an
approximate $112,000 increase in marketing expenses related to advertising campaigns, trade shows and other marketing programs in both our European and U.S. operations. These increases were partially
offset by an
approximate $323,000 decrease in sales commission and bonus expense in our European operations due to over-performance of the sales targets in fiscal 2007 that were not repeated in fiscal
2008, and an approximate $115,000 decrease in facility expenses in our U.S. operations as a result of our occupying less square footage in our Redwood City facility than in our former Fremont offices.

Research and Development:Research and development expenses were $4.1 million (or 16% of revenues) for fiscal
2008, an increase of $656,000 (or 19%), compared to $3.4 million (or 16% of revenues) in fiscal 2007. The $656,000 increase in absolute dollars for research and development expenses in fiscal
2008 was mainly due to unfavorable foreign currency exchange fluctuations of approximately $338,000, an increase of approximately $257,000 as a result of using third party contractors for certain
research and development projects, an approximate $139,000 increase in share based compensation expense primarily due to a higher market price of our stock during fiscal 2008, an increase of two
personnel in our European operations resulting in an increase of approximately

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$120,000
in salary and payroll related expenses, and an increase in building rent expense in our Indian facility of approximately $92,000 from fiscal 2007. These increases were partially offset by a
decrease in research and development expenses due to headcount reductions of four personnel in our U.S. operations, resulting in a reduction of salary and payroll related expenses of approximately
$186,000 during fiscal 2008, and by a decrease of approximately $84,000 in our European operations due to the fact that in fiscal 2007 we transferred certain technical support personnel to research
and development projects, but did not do so in fiscal 2008.

General and Administrative:General and administrative expenses were $5.5 million (or 22% of total revenues) in
fiscal 2008, an increase of $1.1 million (or 24%), compared to $4.4 million (or 21% of total revenues) in fiscal 2007. The $1.1 million increase in absolute dollars in general and
administrative expenses in fiscal 2008 was primarily due to an $800,000 settlement of a litigation, an approximate $567,000 increase in SOX 404 related costs including audit fees, consulting services
and salary related expenses, an approximate $242,000 increase in share based compensation expense primarily as a result of a higher market price for our stock in fiscal 2008, and unfavorable foreign
currency exchange fluctuations of approximately $111,000. These increases were partially offset by an approximate $304,000 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 $219,000 decrease in bonus expense for one of our executive officers.

Loss on the liquidation of a Foreign Subsidiary:Loss on the liquidation of a foreign subsidiary reflects the
realization of accumulated foreign currency translation adjustments related to our former U.K. subsidiary, Versant Ltd., upon completion of its liquidation in fiscal 2007.

The
loss on the liquidation of a foreign subsidiary was $245,000 (or 1% of total revenues) in fiscal 2007. We elected to liquidate Versant Ltd., our subsidiary in the United
Kingdom, to reduce costs and centralize our European operations. The liquidation of Versant Ltd. was completed in the fourth quarter of fiscal 2007 and we recorded a $245,000 operating loss to
reflect the realization of accumulated foreign currency translation adjustments related to Versant Ltd.

Interest and Other Income, Net

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

The
following table summarizes our interest and other income, net (in thousands, except percentages) in fiscal 2009, 2008 and 2007:

Fiscal Year Ended October 31,

Fiscal 2009 vs 2008
Increase (Decrease)

Fiscal 2008 vs 2007
Increase (Decrease)2009

2008

2007

In Dollars

Percentage

In Dollars

PercentageInterest and other income, net:Interest income

$
267

$
880

$
531

$
(613
)

(70
)%
$
349


66
%Interest expense





(1
)

(5
)

1


100


4


80Foreign exchange loss


(35
)

(13
)

(90
)

(22
)

(169
)

77


86Other income





5


96


(5
)

(100
)

(91
)

(95
)Total

$
232

$
871

$
532

$
(639
)

(73
)%
$
339


64
%


Fiscal 2009 Compared to Fiscal 2008

Interest and other income, net was $232,000 (or 1% of total revenues) in fiscal 2009 compared to $871,000 (or 4% of revenues) in fiscal
2008. The absolute dollar decrease of $639,000 (or 73%) was

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primarily
due to a decrease of $566,000 in interest income from both our European and U.S. operations as a result of significantly reduced interest rates, and included unfavorable foreign currency
fluctuations of approximately $54,000.

Fiscal 2008 Compared to Fiscal 2007

Interest and other income, net was $871,000 (or 4% of total revenues) in fiscal 2008 compared to $532,000 (or 3% of revenues) in fiscal
2007. The absolute dollar increase of $339,000 (or 64%) was largely due to an increase of $349,000 in interest income from both our European and U.S. operations as a result of higher cash balances,
and included favorable foreign currency fluctuations of approximately $50,000. This increase was partially offset by the absence in fiscal 2008 of other income we recognized in the third quarter of
fiscal 2007 associated with the sale of excess furniture related to the relocation of our U.S. headquarters.

Provision for Income Taxes

Provision for income taxes primarily consists of corporate income taxes for our subsidiaries in Germany and India, and, to a lesser
extent, foreign withholding taxes and state income and franchise taxes in the U.S. The provision also reflects the release of the estimated realizable portion of the valuation allowance against the
net deferred tax assets.

The
following table summarizes our provision for (benefit from) income taxes (in thousands, except percentages) in fiscal 2009, 2008 and 2007:

Fiscal Year Ended October 31,

Fiscal 2009 vs 2008
Increase (Decrease)

Fiscal 2008 vs 2007
Increase (Decrease)2009

2008

2007

In Dollars

Percentage

In Dollars

PercentageProvision for (benefit from) income taxes:Foreign withholding taxes

$
54

$
253

$
51

$
(199
)

(79
)%
$
202


396
%Provision for income taxes Europe


(653
)

1,155


751


(1,808
)

(157
)

404


54Provision for income taxes India


14


19


15


(5
)

(26
)

4


27Federal, state and franchise taxes


23


4


50


19


475


(46
)

(92
)Total

$
(562
)
$
1,431

$
867

$
(1,993
)

(139
)%
$
564


65
%


In
evaluating our ability to utilize our deferred tax assets, we consider all available positive and negative evidence, including our past operating results in the most recent fiscal
years and our assessment of expected future results of operations on a jurisdiction by jurisdiction basis. As of October 31, 2008, a full valuation allowance was recorded against our net
deferred tax assets. Based on all the available evidence, we determined that it had become more likely than not that we would realize a portion of our net deferred tax assets in Germany. As a result,
we released approximately $939,000 of our valuation allowance in fiscal year 2009 which was recorded as a one-time income tax benefit. As of October 31, 2009, we have a remaining
valuation allowance of approximately $36.4 million against net deferred tax assets in the U.S. and foreign jurisdictions. Significant management judgment is required to determine when, in the
future, the realization of our net deferred tax assets will become more likely than not. The Company will continue to assess the realizability of the tax benefit available based on actual and
forecasted operating results.

As
of October 31, 2009, we had U.S. federal and state net operating loss carry forwards of approximately $69.9 million and $12.4 million, respectively, and U.S.
federal and state tax credit carry forwards of approximately $1.4 million and $700,000, respectively. The federal and state net operating loss carry forwards expire on various dates through
2029. The U.S. federal tax credit carry forwards expire on various dates through 2023, if not utilized. The state tax credit can be carried forward indefinitely. Additionally, at October 31,
2009, we had German net operating tax loss carry forwards of

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approximately
$31.4 million. The German tax code provides for certain annual statutory limitations related to the use of tax loss carry forward amounts. For each taxable year, we may utilize
German tax loss carry forwards fully up to the first million euros of taxable income, and thereafter, the tax loss carry forwards are limited to 60% of taxable income. The provision for income taxes
in Germany included approximately $285,000, $1.2 million and $751,000 for fiscal 2009, fiscal 2008 and fiscal 2007, respectively, attributable to taxable income related to our German operations
that were in excess of the allowable utilization of the tax loss carry forwards, and therefore, subject to corporate taxes.

Due
to "change in ownership" provisions of the Internal Revenue Code of 1986, the availability of net operating loss and tax carry forwards to offset federal taxable income in future
periods is subject to an annual limitation.

We
incurred foreign withholding taxes and state income and franchise taxes of approximately $77,000, $257,000 and $101,000 in fiscal 2009, fiscal 2008 and fiscal 2007, respectively,
which we have included in our income tax provision.

A
portion of deferred tax assets relating to net operating losses pertains to net operating loss carry forwards resulting from tax deductions upon the exercise of employee stock options
of approximately $1.6 million. When recognized, the tax benefit of these loss carry forwards will be accounted for as a credit to additional paid-in capital rather than a reduction
of income tax expense.

Income from Discontinued Operations, Net of Income Taxes

In February 2006, we sold our WebSphere consulting business to Sima Solutions, a privately held company, in exchange for a
one-time cash payment plus certain contingent payments during a 24-month period following the close of the transaction. As a result, we have reflected the results of operations
of the WebSphere consulting practice for fiscal 2008 and fiscal 2007 as income from discontinued operations, net of income taxes. (Our results for fiscal 2009 do not include any amounts from
discontinued operations since our rights
to receive revenues terminated in January, 2008.) Therefore, reported revenues for these periods no longer include any revenues from the WebSphere consulting practice.

The
following table summarizes our income from discontinued operations, net of income taxes (in thousands, except percentages) in fiscal 2009, 2008 and 2007:

Fiscal Year Ended October 31,

Fiscal 2009 vs 2008
Increase (Decrease)

Fiscal 2008 vs 2007
Increase (Decrease)2009

2008

2007

In Dollars

Percentage

In Dollars

PercentageIncome from discontinued operations, net of income taxes

$


$
98

$
304

$
(98
)

(100
)%
$
(206
)

(68
)%


Fiscal 2008 Compared to Fiscal 2007

Under the Asset Purchase Agreement dated February 1, 2006 between Sima Solutions and Versant, we were entitled to receive
contingent earn-out payments from Sima related to the WebSphere business for a 24-month period following the closing of the Agreement. This 24-month payment period
expired on January 31, 2008.

Income
from discontinued operations, net of income taxes was $98,000 in fiscal 2008 compared to $304,000 in fiscal 2007. Income from discontinued operations in fiscal 2008 and fiscal
2007 represented royalty payments from Sima during these two fiscal years.

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Liquidity and Capital Resources

Cash and Cash Equivalents

In fiscal 2009, we financed our operations and met our capital expenditure requirements primarily through cash flows from operations.
As of October 31, 2009, we had cash and cash equivalents of approximately $27.8 million, an increase of $578,000 over the $27.2 million of cash and cash equivalents we held at
October 31, 2008.

As
of October 31, 2009, $14.7 million of our $27.8 million in cash and cash equivalents at that date was held in foreign financial institutions, of which
$4.8 million was held in foreign currencies.

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

As of October 31, 2009Local Currency

U.S. DollarCash in foreign currency:Euros


€  2,936

$
4,347British Pound


£15


24Indian Rupee


Rs18,069


383Total




$
4,754


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 fiscal 2009 were comprised of $1.2 million of unfavorable foreign currency fluctuations on our revenues, $96,000 of favorable
foreign currency fluctuations on our cost of revenues, and $736,000 of favorable foreign currency fluctuations on our operating expenses, resulting in a net unfavorable effect of approximately
$409,000 in our operating income for fiscal 2009. 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 2010.

Our
exposure to foreign exchange risk is related to the magnitude of foreign net profits and losses denominated in euros, as well as our net position of monetary assets and monetary
liabilities in the euro. This exposure has 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 the euro against the U.S. dollar will
result in lower revenues when translated into U.S. dollars, our European operating expenditures will be lower as well. Additionally, we held approximately 83% of our total cash balances at
October 31, 2009 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 in the future if the payment or transfer of cash 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 time deposits and money market accounts; accordingly, our interest rate risk is not considered significant.

In
December 2008, we committed $2.6 million in cash (including $300,000 of contingent payments) to acquire the assets of the database software business of
privately-held Servo Software, Inc. (formerly db4objects, Inc.).

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On December 1, 2008, Versant's Board of Directors approved a stock repurchase program authorizing Versant to repurchase up to $5.0 million worth of
its outstanding common shares from time to time on the open market, in block trades or otherwise. The stock repurchase program expired by its terms on October 31, 2009. Versant acquired 222,688
common shares on the open market for approximately $3.2 million at an average purchase price of $14.52 per share under this stock repurchase program.

The
stock repurchase activity under the stock repurchase program during the three months and fiscal year ended October 31, 2009 is summarized as follows:

Total Number of
Shares Purchased

Average Price(1)
Paid Per Share

Total Number of
Shares Purchased
as Part of
Publicly Announced
Plans or Programs

Maximum
Approximate
Dollar Value That
May Yet Be
Purchased Under
the Plans or
ProgramsPeriod:August 1, 2009August 31, 2009


1,678

$
14.95


1,678

$
1,995,907September 1, 2009September 30, 2009


14,633

$
15.65


14,633

$
1,766,901October 1, 2009October 31, 2009




$





$
1,766,901Three months ended October 31, 2009


16,311

$
15.58


16,311December 1, 2008July 31, 2009


206,377

$
14.43


206,377Fiscal year 2009 stock repurchase activity


222,688

$
14.52


222,688


(1)Average
price paid per share is calculated on a settlement basis and excludes commission.


On November 30, 2009, our Board of Directors approved a new stock repurchase program pursuant to which the Company is authorized to
repurchase up to $5.0 million of its common stock in fiscal year 2010. The stock repurchase program is currently scheduled to expire upon the earlier of October 31, 2010, or such time as
Versant has expended $5.0 million to repurchase outstanding common shares under the program; however the program may be suspended, discontinued or extended at any time by the Company.

Taking
into consideration the cash outflows related to potential common stock repurchases and with our current and estimated revenues, collections and cost structure, we expect to
operate with a moderate negative cash flow in fiscal 2010.

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Cash Flows from Operating Activities

This table aggregates certain line items from our cash flow statements for the following fiscal years to present the key items
affecting our operating activities (in thousands):

Fiscal Year Ended October 31,2009

2008

2007Cash flows from operating activities:Net income

$
4,839

$
9,489

$
7,633Loss on the liquidation of a foreign subsidiary








245Net income from discontinued operations





(98
)

(304
)Non-cash adjustments


895


1,505


1,052Accounts receivable


778


(536
)

689Other assets


(75
)

(18
)

266Accounts payable, accrued liabilities and other liabilities


(632
)

(929
)

195Deferred revenues


(15
)

(748
)

324Deferred rent


(19
)

(7
)

(62
)Net cash provided by operating activities

$
5,771

$
8,658

$
10,038


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 payments
for personnel related expenditures and facilities costs.

Fiscal
2009

We
generated $5.8 million of cash flows from operations in fiscal 2009. This was primarily derived from $4.8 million in net income and a reduction in trade accounts
receivable of $778,000 partially offset by a $632,000 reduction in accounts payables and other liabilities.

Non-cash
adjustments were approximately $895,000, as reflected in our cash flow statement in fiscal 2009, which were primarily share based compensation expense of $970,000,
depreciation and amortization expense of $710,000 and restructuring charges of $135,000 partially offset by the deferred income tax benefit of $939,000. Non-cash adjustments may increase
or decrease in the future and, as a result, this might positively or negatively impact our future operating results, but they will not have a direct impact on our cash flows.

The
timing of payments to our vendors for accounts payable and collections from our customers for accounts receivable will impact our cash flows from 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 90 days net.

We
measure the effectiveness of our collection efforts by an analysis of our accounts receivable and our days sales outstanding (DSO). We calculate DSO by taking the ending accounts
receivable balances (net of bad debt allowance) divided by the average daily sales amount. Average daily sales amount is calculated by dividing the total quarterly revenue recognized net of changes in
deferred revenues by 91.25 days. Collection of accounts receivable and related DSO could fluctuate in future periods, due to the timing and amount of our revenues and the effectiveness of our
collection efforts. Our DSOs were 55 days, 51 days and 38 days for the three months ended October 31, 2009, October 31, 2008 and October 31, 2007,
respectively.

Our
working capital was $26.8 million as of October 31, 2009 compared to $25.4 million as of October 31, 2008.

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Fiscal
2008

We
generated $8.7 million of cash flows from operations in fiscal 2008. This was primarily derived from $9.5 million in net income offset by a $929,000 reduction in
accounts payables and other liabilities.

Non-cash
adjustments were $1.5 million, as reflected in our cash flow statement in fiscal 2008, which were primarily share based compensation expense of $921,000 and
depreciation and amortization expense of $638,000.

Our
working capital was $25.4 million as of October 31, 2008 compared to $15.3 million as of October 31, 2007.

Fiscal
2007

We
generated $10.0 million of cash flows from operations in fiscal 2007. This was primarily derived from $7.6 million in net income and a $955,000 reduction in accounts
receivables and other assets.

Non-cash
adjustments were $1.1 million, as reflected in our cash flow statement in fiscal 2007, which were primarily depreciation and amortization expense of $637,000
and share based compensation expense of $416,000.

Our
working capital was $15.3 million as of October 31, 2007 compared to $6.2 million as of October 31, 2006.

Cash Flows from Investing Activities

This table aggregates certain line items from our cash flow statements for the following fiscal years to present the key items
affecting our investing activities (in thousands):

Fiscal Year Ended October 31,2009

2008

2007Cash flows from investing activities:Acquisition of business

$
(2,383
)
$


$
Proceeds from sale of property and equipment








58Purchases of property and equipment


(164
)

(240
)

(735
)Net cash used in investing activities

$
(2,547
)
$
(240
)
$
(677
)


Our
primary uses of cash in investing activities have typically been for the purchases of property and equipment (mostly information technology related equipment). In fiscal year 2009,
the cash used in investing activities primarily relates to our acquisition of db4o for $2.4 million in December 2008.

Fiscal
2009

In
fiscal 2009, net cash used in investing activities was approximately $2.5 million, primarily attributable to the acquisition of db4o for $2.4 million and included
$164,000 for the purchase of property and equipment.

We
anticipate a moderate increase in our overall spending related to property and equipment in fiscal 2010 compared to fiscal 2009.

Fiscal
2008

In
fiscal 2008, net cash used in investing activities was approximately $240,000, which represented cash used for purchases of property and equipment.

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Fiscal
2007

In
fiscal 2007, net cash used in investing activities was approximately $677,000. This amount was comprised of the following:



Cash Flows from Financing Activities

This table sets forth certain line items from our cash flow from financing activities (in thousands) for the following fiscal years:

Fiscal Year Ended October 31,2009

2008

2007Cash flows from financing activities:Proceeds from sale of common stock

$
285

$
792

$
499Repurchases of common stock


(3,242
)




Principal payments under capital lease obligations


(4
)

(10
)

(15
)Net cash (used in) provided by financing activities

$
(2,961
)
$
782

$
484


Our
primary use of cash in financing activities has been the repurchase of common stock under our stock repurchase program announced in December 2008, partially offset by cash proceeds
from sales of common stock under our employee stock option and stock purchase plans.

Fiscal
2009

In
fiscal 2009, $3.0 million of cash was used in financing activities comprised of the following:



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. As of
October 31, 2009 we had approximately 368,000 shares available to issue under our current equity incentive and director plans. The timing of the issuance of options under these plans, the
duration and timing of their vesting schedules and their grant price will all impact the timing of any exercises and proceeds. Accordingly, we cannot estimate the amount of such proceeds at this time.

On
November 30, 2009 our Board of Directors approved a new stock repurchase program pursuant to which the Company is authorized to repurchase up to $5.0 million of its
common stock in fiscal year 2010. The stock repurchase program is currently scheduled to expire upon the earlier of October 31, 2010, or such time as Versant has expended $5.0 million to
repurchase outstanding common shares under the program; however the program may be suspended, discontinued or extended at any time by the Company.

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Our
former $3.0 million credit facility with a financial institution expired by its terms in June 2007, and we currently do not anticipate establishing another credit or loan
facility in fiscal 2010.

Fiscal
2008

In
fiscal 2008, $782,000 of cash was provided by financing activities comprised of the following:



Fiscal
2007

In
fiscal 2007, $484,000 of cash was provided by financing activities comprised of the following:



Commitments and Contingencies

Our principal commitments as of October 31, 2009 consist of obligations under operating leases for facilities and equipment
commitments.

As
reported in Note 6,Lease Obligationsof the Notes to Consolidated Financial Statements under Item 8 of Part II,
of this report, in September 2009 the Company entered into an amended lease agreement to extend the office facilities lease for its U.S. headquarters. The resulting change to future minimum lease
payments is reflected in our minimum commitments table below.

Our
minimum commitments under non-cancelable operating leases not recorded on our Consolidated Balance Sheet as of October 31, 2009 are as follows (in thousands):

Facilities Leases

Equipment Leases

TotalFiscal year ending October 31,2010

$
363

$
6

$
3692011


375





3752012


383





3832013


302





302Thereafter


199





199Total

$
1,622

$
6

$
1,628


In
December 2008, we acquired the assets of the database software business of privately-held Servo Software, Inc. (formerly db4objects, Inc.) for
$2.6 million, including $300,000 of contingent payments of which $100,000 was paid to Servo in May 2009 and $90,000 paid in
November 2009. An additional contingent payment of up to $90,000 to Servo may become payable in May 2010.

On
November 30, 2009 Our Board of Directors approved a new stock repurchase program pursuant to which the Company is authorized to repurchase up to $5.0 million of its
common stock in fiscal year 2010. The stock repurchase program is currently scheduled to expire upon the earlier of October 31, 2010, or such time as Versant has expended $5.0 million to
repurchase outstanding common shares under the program; however the program may be suspended, discontinued or extended at any time by the Company. Any repurchases made under the stock repurchase
program are expected to be funded from the Company's working capital.

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After
taking into account potential common stock repurchases under our current stock repurchase program, we believe that our existing cash and cash equivalents and cash forecast from
operations will be sufficient to finance our operations during the next twelve months.

A
$3.0 million credit facility we had with a financial institution expired by its terms in June 2007, and we currently do not anticipate establishing another credit or loan
facility in fiscal 2010.

Recent Accounting Pronouncements

For information with respect to new accounting pronouncements and the impact of these pronouncements on our consolidated financial
statements, see Note 2 of Notes to Consolidated Financial Statements under item 8 of this report.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.

Foreign currency exchange risk.

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 fiscal 2009 were comprised of $1.2 million of unfavorable foreign currency
fluctuations on our revenues, $96,000 of favorable foreign currency fluctuations on our cost of revenues, and $736,000 of favorable foreign currency fluctuations on our operating expenses, resulting
in a net unfavorable effect of approximately $409,000 in our operating income for fiscal 2009. 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 2010.

Our
exposure to foreign exchange risk is related to the magnitude of foreign net profits and losses denominated in euros, as well as our net position of monetary assets and monetary
liabilities in the euro. This exposure has 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 the euro against the U.S. dollar will
result in lower revenues when translated into U.S. dollars, our European operating expenditures will be lower as well. Additionally, we held approximately 83% of our total cash balances at
October 31, 2009 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.

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Item 8.    Financial Statements and Supplementary Data.

VERSANT CORPORATION  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS  AND OTHER INFORMATION

Report of Management on Internal Control over Financial ReportingReport of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of October 31, 2009 and 2008Consolidated Statements of Income for the Years Ended October 31, 2009, 2008 and 2007Consolidated Statements of Stockholders' Equity and Comprehensive Income for the Years Ended October 31, 2009, 2008
and 2007Consolidated Statements of Cash Flows for the Years Ended October 31, 2009, 2008 and 2007Notes to Consolidated Financial Statements:Note 1The Company and Basis of PresentationNote 2Summary of Significant Accounting PoliciesNote 3Fair Value MeasurementsNote 4Valuation and Qualifying Accounts and ReservesNote 5Acquisition, Goodwill and Intangible AssetsNote 6Lease ObligationsNote 7Stockholders' Equity and Income Per ShareNote 8Stock Repurchase ProgramNote 9Employee and Director Benefit PlansNote 10Share Based CompensationNote 11Settlement of LitigationNote 12RestructuringNote 13Liquidation of a Foreign SubsidiaryNote 14Income TaxesNote 15Discontinued OperationsNote 16Subsequent EventsNote 17Selected Quarterly Information


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REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of Versant is responsible for establishing and maintaining adequate internal control over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Versant's internal control over financial reporting is designed 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. Internal control over
financial reporting includes those policies and procedures that:



Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements due to human error, or the improper circumvention or overriding of
internal controls. In addition, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become
inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may change adversely over time.

Management
assessed the effectiveness of Versant's internal control over financial reporting as of October 31, 2009. In making its evaluation of the effectiveness of Versant's
internal control over financial reporting, management used the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO").

Based
on its assessment of internal control over financial reporting, Versant's management has concluded that, as of October 31, 2009, Versant's internal control over financial
reporting was effective 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.

This
annual report does not include an attestation report of the Company's independent registered public accounting firm regarding the effectiveness of internal control over financial
reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to temporary rules of the Securities Exchange Commission that
permit the Company to provide only management's report in this annual report.

/s/ Jerry WongJerry Wong
Vice President, Finance and Chief Financial Officer
January 29, 2010/s/ Jochen WitteJochen Witte
President and Chief Executive Officer
January 29, 2010


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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board
of Directors and Stockholders of Versant Corporation and Subsidiaries:

We
have audited the accompanying consolidated balance sheets of Versant Corporation and Subsidiaries (collectively, the "Company") as of October 31, 2009 and 2008, and the related
consolidated statements of income, stockholders' equity and comprehensive income and cash flows for each of the three years in the period ended October 31, 2009. These financial statements are
the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Versant Corporation and Subsidiaries at
October 31, 2009 and 2008, and the consolidated results of their operations and their cash flows for each of the three years in the period ended October 31, 2009 in conformity with
accounting principles generally accepted in the United States of America.

/s/
Grant Thornton LLP
San Francisco, California
January 29, 2010

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VERSANT CORPORATION AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS(in thousands, except for share amounts)

October 31,
2009

October 31,
2008ASSETSCurrent assets:Cash and cash equivalents

$
27,812

$
27,234Trade accounts receivable, net of allowance for doubtful accounts of $36 and $16 at October 31, 2009 and 2008, respectively


2,251


2,801Deferred income taxes


939


Other current assets


633


399Total current assets


31,635


30,434Property and equipment, net


488


670Goodwill


8,410


6,720Intangible assets, net


802


565Other assets


38


172Total assets

$
41,373

$
38,561LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable

$
154

$
371Accrued liabilities


1,215


1,542Deferred revenues


3,475


3,120Total current liabilities


4,844


5,033Deferred revenues


177


317Other long-term liabilities


95


57Total liabilities


5,116


5,407Stockholders' equity:Common stock, no par value, 7,500,000 shares authorized, 3,552,946 shares issued and outstanding at October 31, 2009, and 3,746,581 shares issued and
outstanding at October 31, 2008


95,730


97,717Accumulated other comprehensive income, net


434


183Accumulated deficit


(59,907
)

(64,746
)Total stockholders' equity


36,257


33,154Total liabilities and stockholders' equity

$
41,373

$
38,561


See
accompanying notes to consolidated financial statements.

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VERSANT CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF INCOME(in thousands, except for per share amounts)

Fiscal Year EndedOctober 31,
2009

October 31,
2008

October 31,
2007Revenues:License

$
9,045

$
15,922

$
12,681Maintenance


8,833


9,041


8,225Professional services


272


335


244Total revenues


18,150


25,298


21,150Cost of revenues:License


273


309


142Amortization of intangible assets


373


315


315Maintenance


1,452


1,446


1,469Professional services


133


112


112Total cost of revenues


2,231


2,182


2,038Gross profit


15,919


23,116


19,112Operating expenses:Sales and marketing


4,101


3,620


3,392Research and development


3,969


4,066


3,410General and administrative


3,665


5,479


4,401Loss on the liquidation of a foreign subsidiary








245Restructuring


139





Total operating expenses


11,874


13,165


11,448Income from operations


4,045


9,951


7,664Interest and other income, net


232


871


532Income from continuing operations before income taxes


4,277


10,822


8,196Income tax benefit (expense)


562


(1,431
)

(867
)Net income from continuing operations


4,839


9,391


7,329Net income from discontinued operations, net of income taxes





98


304Net income

$
4,839

$
9,489

$
7,633Basic income per share:Net income from continuing operations

$
1.33

$
2.52

$
2.01Net income from discontinued operations, net of income taxes

$


$
0.02

$
0.08Net income per share, basic

$
1.33

$
2.54

$
2.09Diluted income per share:Net income from continuing operations

$
1.32

$
2.48

$
1.98Net income from discontinued operations, net of income taxes

$


$
0.03

$
0.08Net income per share, diluted

$
1.32

$
2.51

$
2.06Shares used in per share calculation:Basic


3,626


3,729


3,649Diluted


3,663


3,783


3,708Non-cash share based compensation included in the above expenses:Cost of revenues

$
59

$
58

$
65Sales and marketing

$
137

$
221

$
90Research and development

$
218

$
178

$
39General and administrative

$
556

$
464

$
222


See accompanying notes to consolidated financial statements.

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VERSANT CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY  AND COMPREHENSIVE INCOME(in thousands,
except for share amounts)

Common



Accumulated
Other
Comprehensive
IncomeAccumulated
Deficit

Total
Stockholders'
Equity

Total
Comprehensive
IncomeShares

AmountBalance at October 31, 2006


3,596,968

$
95,089

$
(81,818
)
$
521

$
13,792ESPP


29,468


183








183Exercise of stock options


45,488


316








316Non-cash share based compensation expense





416








416Net income








7,633





7,633


7,633Foreign currency translation adjustments











825


825


825Total comprehensive income
















$
8,458Balance at October 31, 2007


3,671,924

$
96,004

$
(74,185
)
$
1,346

$
23,165Adjustment to retained earnings related to ASC §740








(50
)




(50
)ESPP


18,984


290








290Exercise of stock options


55,673


502








502Non-cash share based compensation expense





921








921Net income








9,489





9,489


9,489Foreign currency translation adjustments











(1,163
)

(1,163
)

(1,163
)Total comprehensive income
















$
8,326Balance at October 31, 2008


3,746,581

$
97,717

$
(64,746
)
$
183

$
33,154Repurchases of common stock


(222,688
)

(3,242
)







(3,242
)ESPP


15,691


164








164Exercise of stock options


13,362


121








121Non-cash share based compensation expense





970








970Net income








4,839





4,839


4,839Foreign currency translation adjustments











251


251


251Total comprehensive income
















$
5,090Balance at October 31, 2009


3,552,946

$
95,730

$
(59,907
)
$
434

$
36,257


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VERSANT CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)

Fiscal Year Ended October 31,2009

2008

2007Cash flows from operating activities:Net income

$
4,839

$
9,489

$
7,633Adjustments to reconcile net income to net cash provided by operating activities:Net income from discontinued operations, net of income taxes





(98
)

(304
)Loss on the liquidation of a foreign subsidiary








245Deferred income tax benefit


(939
)




Depreciation and amortization


337


323


322Amortization of intangible assets


373


315


315Share based compensation


970


921


416Restructuring charges


135





Provision for (recovery of) bad debt allowance


19


(54
)

(1
)Changes in assets and liabilities:Trade accounts receivable


778


(536
)

689Other assets


(75
)

(18
)

266Accounts payable


(233
)

224


(1
)Accrued liabilities and other long-term liabilities


(418
)

(1,160
)

134Deferred revenues


(15
)

(748
)

324Net cash provided by operating activities


5,771


8,658


10,038Cash flows from investing activities:Acquisition of business


(2,383
)




Proceeds from sale of property and equipment








58Purchases of property and equipment


(164
)

(240
)

(735
)Net cash used in investing activities


(2,547
)

(240
)

(677
)Cash flows from financing activities:Proceeds from issuance of common stock


285


792


499Repurchases of common stock


(3,242
)




Principal payments under capital lease obligations


(4
)

(10
)

(15
)Net cash (used in) provided by financing activities


(2,961
)

782


484Effect of foreign exchange rate changes on cash and cash equivalents


315


(1,150
)

706Net increase in cash and cash equivalents from operating, investing and financing activities


578


8,050


10,551Net increase in cash and cash equivalents from discontinued operationsoperating activities





98


304Cash and cash equivalents at beginning of period


27,234


19,086


8,231Cash and cash equivalents at end of period

$
27,812

$
27,234

$
19,086Supplemental disclosures of cash flows information:Cash paid for:Interest

$


$
1

$
5Income taxes

$
713

$
1,806

$
150


See accompanying notes to consolidated financial statements

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VERSANT CORPORATION AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        October 31, 2009

NOTE 1.    THE COMPANY AND BASIS OF PRESENTATION

Versant Corporation (with its subsidiaries, collectively referred to in this report as "Versant" or "the Company") was incorporated in California in August 1988. Versant is a leading
provider of object-oriented data management software that forms a critical component of the infrastructure of enterprise computing. The Company designs, develops, markets and supports
object-oriented database management system products to solve complex data management and data integration problems of enterprises. Versant also provides related product support, training and
consulting services to assist users in the use of its products and in development and deployment of software applications based on its products. The Company operates its business within a single
operating segment referred to as Data Management. Versant's principal executive offices are located in Redwood City, California. Versant has international operations in Germany and India and markets
its software products and related maintenance services directly through telesales and field sales organizations in North America and Germany and indirectly through distributors and resellers
worldwide.

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



The consolidated financial statements include 100% 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 Financial Accounting Standards Board (FASB) guidance pursuant to Accounting
Standards Codification (ASC) 810,Consolidation. All significant intercompany accounts and transactions among consolidated companies have been
eliminated in consolidation.

The
financial position and operating results of foreign operations are consolidated using the local currency as their functional currency. Local currency assets and liabilities are
translated into U.S. dollars at the rates of exchange on the balance sheet date, and local currency revenues and expenses are translated using rates that approximate the average rates of exchange
during the period. Resulting translation gains or losses are included in the accompanying consolidated statement of stockholders' equity as a component of accumulated other comprehensive income.



The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America
("GAAP"), requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.



Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less at the time of
purchase. The Company's cash and other cash equivalents at October 31, 2009 and October 31, 2008 consisted of deposits in banks, short-term time deposits and money market
funds. As of October 31, 2009 and 2008 cash balances held in foreign financial institutions were $14.7 million and $9.5 million, respectively.

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VERSANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



The Company's financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash
and cash equivalents and trade accounts receivable. The Company maintains its cash and cash equivalents, with balances which may exceed insured limits, with financial institutions and invests in
highly rated short-term securities. The Company maintains an allowance for doubtful accounts as an estimate of the inability of its customers to make required payments. The allowance was
$36,000 and $16,000 at October 31, 2009 and October 31, 2008, respectively. The amount of the Company's allowance is based on historical experience and an analysis of its accounts
receivable balances. Credit losses to date have been within management's expectations. However, actual results could differ from such estimates.



Property and equipment are stated at cost less accumulated depreciation, computed using the straight-line method based on
the estimated useful lives of the assets, generally ranging from three to five years. Depreciation commences upon placing the asset in service. Each capital lease is recorded at the lesser of the fair
value of the leased asset at the inception
of the lease or the present value of the minimum lease payments as of the beginning of the lease term. Leased assets are amortized on a straight-line basis over the estimated useful life
of the asset or the lease term. Leasehold improvements are amortized over the shorter of the useful life or the remaining lease term. The Company reviews its property and equipment for impairment
periodically or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The
following table summarizes the breakdown of the Company's property and equipment as of October 31, 2009 and October 31, 2008 (in thousands):

As of October 31,2009

2008Property and equipment:Computer equipment

$
1,508

$
1,344Furniture and Fixtures


555


483Software


749


649Leasehold improvements


60


60Capital lease and other assets


35


352,907


2,571Less: accumulated depreciation and amortization


(2,419
)

(1,901
)Total

$
488

$
670


Total
depreciation expense for fiscal 2009, fiscal 2008 and fiscal 2007 was $337,000, $323,000, and $322,000, respectively.

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VERSANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Goodwill represents the excess of the purchase price of an acquired business over the fair value of the identifiable assets acquired
and liabilities assumed in business combinations. As required by ASC 350,IntangiblesGoodwill and Other, the Company evaluates its goodwill
for impairment on an annual basis.

In
accordance with ASC 350, Goodwill, we test for any goodwill impairment within our single Data Management operating segment and
reporting unit. FASB guidance requires that goodwill be tested for impairment at the reporting unit level, at least annually and more frequently upon the occurrence of certain events. The Company uses
the market approach to assess the fair value of its assets and this value is compared with the carrying value of those assets to test for impairment. The total fair value of the Company's assets is
estimated by summing the fair value of its equity (as indicated by the Versant publicly traded share price and shares outstanding plus an estimated control premium) less its liabilities. Under this
approach, if the estimated fair value of the Company's assets is greater than their carrying value, then there is no goodwill impairment. If the estimated fair value of the Company's assets is less
than their carrying value, an allocation would be made of the reporting unit's estimated fair value to its assets and liabilities as though the reporting unit had just been acquired in a business
combination. The impairment loss is the amount, if any, by which the implied fair value of goodwill allocable to the reporting unit is less than that reporting unit's goodwill carrying amount and
would be recorded in operating results during the period of such impairment.

Versant
performed its annual evaluations of the Company's goodwill based on the requirements of ASC 350 in October 2009, October 2008 and October 2007. As a result of these impairment
tests and valuation analysis, Versant determined that no impairment charges against the Company's goodwill were required in fiscal 2009, fiscal 2008 and fiscal 2007.

Purchased
intangible assets other than goodwill are amortized over their useful lives unless these lives are determined to be indefinite. Purchased intangible assets with definite lives
are carried at cost less accumulated amortization. Identifiable intangibles are currently amortized using the straight-line method over useful lives ranging from
5-9 years. Intangible assets consist of acquired technology, customer relationships and trade names. Versant tests and evaluates its intangible assets for impairment whenever
indicators of potential impairment are identified.

In
fiscal 2009, fiscal 2008 and fiscal 2007, there were no triggering events to indicate impairment of Versant's intangible assets, and the Company did not perform impairment tests and
valuation analysis of its intangible assets. Versant determined that the value of the Company's intangible assets had been fairly recorded in its financial statements, and therefore, no impairment
charges against the Company's intangible assets related to the Company's Poet, FastObjects, JDO Genie and db4o acquisitions were recorded in fiscal 2009, fiscal 2008 and fiscal 2007.

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VERSANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



We recognize revenues in accordance with GAAP, as set forth in:



The
Company's revenues consist mainly of 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.

Versant
uses the residual method to recognize revenues when a license agreement includes one or more elements to be delivered by the Company at a future date. If there is an undelivered
element under the license arrangement, the Company defers 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, the Company defers 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
fair value of such undelivered elements. Versant typically does 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:



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. The Company's license fees are generally non-cancelable and non-refundable. Also, the Company's 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

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VERSANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 the
Company a report 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.

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

Versant
licenses its 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 Versant's software product. Prior to an End-User customer being able to deploy an application
that it has developed under the Company's development license, it must purchase deployment licenses based on the number of computers connected to the server that will run the application using
Versant's product or, for certain applications, the number of users. 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 Versant of a nonrefundable amount for future deployment.

VARs
and distributors purchase development licenses from Versant on a per seat basis on terms similar to those of development licenses that the Company sells directly to
End-Users. VARs are authorized to sublicense deployment copies of Versant's 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 Versant's software and are charged a royalty that is either based on the number of copies of the application software that 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 VAR, and (ii) as to other license arrangements, at the time the VAR provides a royalty report to Versant for sales made by the VAR during a given period.

Revenues
from the Company's resale of third-party products or services are recorded at total contract value with the corresponding cost included in the cost of sales when Versant acts 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 the Company does 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.

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VERSANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

On
occasion, at a customer's request, Versant performs engineering work to port the Company's products to an unsupported platform, to customize its software for specific functionality,
or other non-routine technical assignment. In these instances, Versant recognizes revenues in accordance with ASC 605-35, Construction-Type
and Production-Type Contracts, and uses either the time and material percentage of completion method or the completed contract method for recognizing revenues. The
Company uses the percentage of completion method if it can make reasonable and dependable estimates of labor costs and hours required to complete the work in question. The Company periodically reviews
these estimates in connection with the work performed and rates actually charged and recognizes 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:



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, Versant defers
all revenues until such time as the work is fully completed.

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



The functional currencies of the Company's foreign subsidiaries are their respective local currencies. The Company translates the
assets and liabilities of international subsidiaries into the U.S. dollar at the current exchange rates in effect on the balance sheet date and revenues and expenses are translated using rates that
approximate the average rates of exchange during the period. Gains and losses from translation adjustments are included in stockholders' equity on the consolidated balance sheets captioned as
accumulated other comprehensive income, net.



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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The
following table summarizes the breakdown of comprehensive income for the years ended October 31, 2009, October 31, 2008 and October 31, 2007 (in thousands):

Fiscal Year Ended October 31,2009

2008

2007Net income, as reported

$
4,839

$
9,489

$
7,633Foreign currency translation adjustment


251


(1,163
)

825Other comprehensive income

$
5,090

$
8,326

$
8,458




The Company recognizes warranty and indemnification obligations under ASC 460,
Guarantees.This FASB guidance requires a guarantor to recognize and disclose a liability for obligations it has undertaken in relation to the issuance of the guarantee.

The
Company's software license agreements generally include certain provisions for indemnifying customers against liabilities if the Company's software products infringe upon a third
party's intellectual property rights. The Company has not provided for any reserves for such warranty liabilities.

The
Company's software license agreements also generally include a warranty that the Company's software products will substantially operate as described in the applicable program
documentation. The Company also warrants that services the Company performs will be provided in a manner consistent with industry standards. To date, Versant has not incurred any material costs
associated with these product and service performance warranties, and as such the Company has not provided for any reserves for any such warranty liabilities in its U.S. operating results.

In
Europe, there is typically a one-year warranty period for all of the Company's products and services. In fiscal 2006, pursuant to consulting engagements with certain
European customers, Versant recorded a $128,000 warranty reserve based on historical experience and expected need at that time in its consolidated financial statements. These warranty reserves were
subsequently reversed during the fourth quarter of fiscal 2007 upon expiration of the one-year warranty period. As of October 31, 2009, Versant has provided no warranty reserve
balance in its consolidated financial statements.



Deferred revenue represents amounts billed to customers under certain maintenance, software and service contracts for which the revenue
earning process has not been completed and revenue has not

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NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

been
recognized. Deferred revenues are recognized as revenue ratably over the life of the contract or when the service is rendered and the Company has satisfied all other revenue recognition criteria.

As of October 31,2009

2008Deferred revenue:Short-term deferred maintenance

$
3,475

$
3,120Long-term deferred maintenance


177


317$
3,652

$
3,437




The breakdown of short-term accrued liabilities for the fiscal years ended October 31, 2009 and October 31,
2008 were as follows:

As of October 31,2009

2008Accrued liabilities:Payroll and related

$
737

$
923Taxes payable


1


226Deferred rent


10


17Other


467


376$
1,215

$
1,542




Software development costs are included in research and development and are expensed as incurred. After technological feasibility is
established, material software development costs are capitalized in accordance with ASC 985-20,Software, Costs of Software to Be Sold, Leased or
Marketed.The time period between achieving technological feasibility, which Versant has defined as the establishment of a working model, which typically occurs when the beta
testing commences, and the general availability of such software has generally been short, and therefore to date, software development costs qualifying for capitalization have been insignificant. No
software development costs have been capitalized for the periods ended October 31, 2009, October 31, 2008 and October 31, 2007.



The Company uses the asset and liability method of accounting for income taxes based on ASC 740,Income
Taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial
statement carrying amounts and the tax basis of existing assets and liabilities. The Company records a valuation allowance to reduce deferred tax assets to an amount for which realization is more
likely than not.

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October 31, 2009

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In
July 2006, FASB issued guidance which clarifies the accounting for income taxes by prescribing a comprehensive model for the financial statement recognition, measurement, presentation
and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The Company adopted this guidance on its income tax positions on November 1, 2007 and the adoption
of the new guidance 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 2004.

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.

The
Company applies the net basis of income statement presentation for taxes collected from customers and remitted to government authorities.



The Company maintains share based compensation plans which allow for the issuance of stock options and restricted common stock to
executives, directors and certain employees. The Company also maintains an employee stock purchase plan ("ESPP") that provides for the issuance of shares to all eligible employees of the Company at a
discounted price.

Under
the fair value recognition guidance of ASC 718,Compensation, Stock Compensation,share based compensation cost is estimated at the
grant date based on the fair value of the award and is recognized as expense over the requisite service period of the award. The Company uses the Black-Scholes model to value option awards.

Determining
the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, expected terms and forfeiture rates. The expected
volatility rates are estimated based on historical and implied volatilities of our common stock. The expected term represents the average time that options that vest are expected to be outstanding
based on the vesting provisions and our historical exercise, cancellation and expiration patterns. We estimate pre-vesting forfeitures when recognizing share based compensation expense
based on historical rates and forward-looking factors. We update these assumptions at least on an annual basis and on an interim basis if significant changes to the assumptions are warranted.



The Company's employee savings and retirement plan is qualified under Section 401(k) of the United States Internal Revenue Code.
Employees may make voluntary, tax-deferred contributions to the 401(k) Plan up to the statutorily prescribed annual limit. No matching contributions to employees' voluntary contributions
to the 401(k) plan were made by the Company in fiscal years 2009, 2008 and 2007.

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October 31, 2009

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Restructuring charges are recognized and measured according to the provisions of ASC 420,Exit or Disposal Cost
Obligations,which requires a liability for a cost associated with an exit or disposal activity to be recognized at its fair value in the period in which the liability is
incurred, except for a liability for one-time termination benefits that is incurred over time. Restructuring charges include employee termination and related costs, contract termination
costs, and other costs directly associated with exit activities, including impairment of property and other assets. Costs for such activities are estimated by management after evaluating detailed
analyses of the cost to be incurred.



ASC 280,Segment Reportingestablishes 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 method for determining what information to report is based on the way management organizes the operating segments within the Company for making operating decisions and
assessing financial performance. The Company's chief operating decision-maker is considered to be the Company's chief executive officer (CEO). The CEO reviews financial information presented on an
entity level basis accompanied by non-aggregated information about revenues by product type and certain information about geographic regions for purposes of making operating decisions and
assessing financial performance. The entity level financial information is identical to the information presented in the accompanying statements of income. Therefore, the Company has determined that
it operates in a single operating segment, Data Management.

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

The
following tables summarize revenues and long-lived assets by each geographic region (in thousands):

Fiscal Year Ended October 31,2009

2008

2007Total revenues by geographic area:North America

$
6,964

$
9,292

$
9,679Europe


10,656


13,275


10,672Asia


530


2,731


799Total

$
18,150

$
25,298

$
21,150


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



As of October 31,2009

2008Total long-lived assets by geographic area:North America

$
164

$
229Europe


287


383Asia


75


230Total

$
526

$
842




In September 2009, new guidance was issued related to the revenue recognition of multiple element arrangements. The new guidance states
that if vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, companies
will be required to develop a best estimate of the selling price to separate deliverables and allocate arrangement consideration using the relative selling price method. The new guidance is effective
for Versant for revenue arrangements entered into or materially modified beginning on November 1, 2011. Early adoption is permitted and we are currently evaluating the impact this guidance may
have on our results of operations, financial position and cash flows.



In June 2009, the FASB issued the FASB Accounting Standards Codification ("Codification"). The Codification has become the single
source of authoritative generally accepted accounting principles ("GAAP") recognized by the FASB to be applied by nongovernmental entities in the United States. Rules and interpretive releases of the
Securities and Exchange Commission ("SEC") under the authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The Codification was effective for
financial statements issued for interim and annual periods ending after September 15, 2009 (October 31, 2009 for the Company). The Codification superseded all existing
non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification is
non-authoritative. The adoption of the Codification did not have any impact on the Company's financial position, results of operations, or cash flows.



In May 2009, new guidance under ASC 855,Subsequent Events, was issued which
establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The guidance
is effective for interim and annual periods ending after June 15, 2009 (July 31, 2009 for the Company) and did not have a material impact on the financial statements. The Company has
evaluated subsequent events through the date of this filing.

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October 31, 2009

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



In April 2008, the FASB issued authoritative guidance used to determine the useful life of intangible assets. This guidance amends the
factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. This change is intended to improve the consistency
between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset. The requirement for determining useful lives must be applied
prospectively to intangible assets acquired after the effective date and the disclosure requirements must be applied prospectively to all intangible assets recognized as of, and subsequent to, the
effective date. The guidance is effective for all fiscal years beginning after December 15, 2008 (November 1, 2009 for the Company) and interim periods within those years, with earlier
adoption prohibited. The Company does not expect the adoption of this guidance to have a material impact on its financial position, results of operations, or cash flow.



In December 2007, new guidance was issued providing greater consistency in the accounting and financial reporting of business
combinations. It requires the acquiring entity in a business combination to recognize all assets acquired and liabilities assumed in the transaction, establishes the acquisition-date fair
value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to disclose the nature and financial effect of the business combination. The guidance is
effective for all fiscal years beginning after December 15, 2008 (November 1, 2009 for the Company) and interim periods within those years, with earlier adoption prohibited. We do not
expect that the adoption of this new guidance will have an impact on our historical consolidated financial position, cash flows or results of operations.

In
April 2009, additional guidance was issued which requires that assets acquired and liabilities assumed in a business combination that arise from contingencies to be recognized at fair
value, if fair value can be determined during the measurement period. This new rule specifies that an asset or liability should be recognized at time of acquisition if the amount of the asset or
liability can be reasonably estimated and that it is probable that an asset existed or that a liability had been incurred at the acquisition date. This new rule is effective for all fiscal years
beginning after December 15, 2008 (November 1, 2009 for the Company).



In June 2009, new guidance was issued which requires an enterprise to determine whether its variable interest or interests give it a
controlling financial interest in a variable interest entity. The primary beneficiary of a variable interest entity is the enterprise that has both (1) the power to direct the activities of a
variable interest entity that most significantly impacts the entity's economic performance, and (2) the obligation to absorb losses of the entity that could potentially be significant to the
variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. The guidance also requires ongoing reassessments of
whether an enterprise is the primary beneficiary of a variable interest entity. The guidance is effective at the start of a Company's first fiscal year beginning after November 15, 2009
(November 1, 2010 for the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Company).
We do not expect that the adoption of this new guidance will have an impact on our historical consolidated financial position, cash flows and results of operations.



In September 2006, the FASB issued guidance under ASC 820,Fair Value Measurements and
Disclosures, which defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value and expands disclosures about fair value
measurements. This topic does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the
information. This guidance is effective for fiscal years beginning after November 15, 2007 (November 1, 2008 for the Company). We adopted ASC 820 for financial assets and liabilities in
the first quarter of 2009. Adoption of ASC 820 had no material effect on our financial statements.

In
August 2009, the FASB issued additional guidance regarding fair value measurements. This guidance provides clarification for circumstances in which a quoted price in an active market
for the identical liability is not available. In these circumstances, a reporting entity is required to measure fair value using one or more of the following methods: (1) a valuation technique
that uses a) the quoted price of the identical liability when traded as an asset or b) quoted prices for similar liabilities or similar liabilities when traded as assets and/or
(2) a valuation technique that is consistent with U.S. GAAP (e.g. an income approach or market approach). This guidance also clarifies that when estimating the fair value of a
liability, a reporting entity is not required to include inputs relating to the existence of transfer restrictions on that liability. This guidance is effective for fiscal years and fiscal quarters
beginning after August 26, 2009 (November 1, 2009 for the Company). The adoption of this standard is not anticipated to have any impact on our financial position or results of
operations.

NOTE 3.    FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received from selling an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at
fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as
inherent risk, transfer restrictions, and risk of nonperformance.

The
FASB guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair
value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Statement 157 establishes
three levels of inputs that may be used to measure fair value:



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 3.    FAIR VALUE MEASUREMENTS (Continued)



Financial Assets Measured at Fair Value on a Recurring Basis

Our significant financial assets measured at fair value on a recurring basis consisted of the following types of instruments as of
October 31, 2009 (Level 1, 2 and 3 inputs are defined above):

Fair Value Measurements Using Input TypeLevel 1

Level 2

Level 3(in thousands)Assets:Money market funds

$
12,945

$


$
Time deposits


13,366





Total

$
26,311

$


$



Our
valuation techniques used to measure the fair values of our money market funds and time deposits were derived from quoted market prices, as all of these instruments have original
maturities within 90 days from our date of purchase, and active markets for these instruments exist.

NOTE 4.    VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

Versant evaluates and revises its bad debt allowance as part of its quarter end process at each subsidiary and corporate level. The Company's management assigns a risk factor and
percentage of risk to each account receivable, the collection of which is considered non-routine. The Company also assigns a general reserve to all its overdue accounts, excluding the
non-routine items.

The
following table summarizes the activities in the Company's allowance for doubtful accounts (in thousands):

Fiscal Year Ended October 31,2009

2008

2007Allowance for doubtful accounts:Beginning balance

$
16

$
68

$
62Adjustments to provision


20


(52
)

6Ending balance

$
36

$
16

$
68


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 5.    ACQUISITION, GOODWILL AND INTANGIBLE ASSETS



On December 1, 2008, the Company acquired the assets of the database software business of privately-held Servo
Software, Inc. or "Servo" (formerly known as db4objects, Inc.) pursuant to an asset purchase agreement between Versant and Servo dated December 1, 2008 (the "db4o Purchase
Agreement"). The acquisition of the db4o assets allows Versant to provide an open source object database software solution targeting the embedded device market. Our results of operations include db4o
transactions from the acquisition date of December 1, 2008.

The
total purchase price of $2,383,201 consists of the following:

a)    Initial
cash payment of $2,100,000 made in December 2008; and

b)    Direct
transaction costs of $183,201; and

c)     Contingent
deferred payment of $100,000 due June 1, 2009.

Under
the terms of the db4o Purchase Agreement, in consideration of its acquisition of the assets of the db4o business, Versant paid Servo the above-mentioned closing payment of
$2,100,000 in cash, agreed to pay up to a maximum of an additional $300,000 payable in three contingent deferred
payments of up to $100,000 each during the 18-month period immediately following the December 1, 2008 acquisition date and assumed certain liabilities of Servo under certain
contracts included among the db4o assets. The three contingent deferred payments of up to $100,000 each are payable on the dates that are six months, twelve months and eighteen months, respectively,
following the December 1, 2008 acquisition date. The Company made the first contingent deferred payment of $100,000 to Servo on May 29, 2009, and the second payment of $90,000 on
November 30, 2009. Each of these contingent payments is subject to adjustment and reduction if certain former key service providers to Servo cease, for certain reasons, to be employed by or to
provide services to Versant as a full-time employee or a full-time independent contractor. Consequently, the remaining contingent deferred payment amount is subject to
reduction dependent on the retention of these identified key service providers.

Under
the purchase method of accounting, the total purchase price for the db4o assets was allocated to db4o's net tangible and identifiable intangible assets based on their estimated
fair values as of the acquisition date, with the excess of the purchase price over these aggregate fair values recorded as goodwill. The fair value assigned to identifiable intangible assets acquired
is determined using the income approach, which values each intangible asset based upon the estimated impact on the Company's expected future after-tax cash flows and discounts the net
changes in the Company's expected future after-tax cash flows to present value. The discount was based on an analysis of the

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October 31, 2009

NOTE 5.    ACQUISITION, GOODWILL AND INTANGIBLE ASSETS (Continued)

weighted-average
cost of capital for the industry. The Company's allocation of the purchase price for the db4o assets and liabilities is summarized below:

Tangible net assets acquired

$
83,400Customer relationships


210,000Developed technology


300,000Trade name


100,000Goodwill


1,689,801$
2,383,201


Purchased
identifiable intangible assets are amortized on a straight-line basis over their useful lives. The estimated useful economic lives of the acquired customer
relationships, developed technology and trade name are nine, five and five years, respectively. The weighted average amortization period of the db4o intangible assets is 6.4 years. Changes to
the allocation of the purchase price for the acquisition may occur as additional information (such as contingent payments) becomes available.

db4o's
results of operations for periods prior to this acquisition were not material to the Company's condensed consolidated statements of income and, accordingly, pro forma financial
information has not been presented.



The following table presents goodwill balances and acquisitions of, and adjustments to, goodwill during the fiscal year ended
October 31, 2009 (in thousands):

Net carrying
amount as of
October 31,
2008

Goodwill
acquired

Net carrying
amount as of
October 31,
2009Goodwill:Versant Europe

$
241

$


$
241Poet Holdings, Inc.


5,752





5,752FastObjects, Inc.


677





677JDO Genie (PTY), LTD


50





50db4o





1,690


1,690Total

$
6,720

$
1,690

$
8,410


Goodwill
is subject to at least an annual assessment for impairment, applying a fair-value based test. Versant conducted its annual impairment test in October 2009 and
determined there was no impairment.

The
goodwill acquired in the db4o acquisition will be deductible for tax purposes based upon a 15 year tax life.

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October 31, 2009

NOTE 5.    ACQUISITION, GOODWILL AND INTANGIBLE ASSETS (Continued)



The Company's intangible assets' balances as of October 31, 2009 and October 31, 2008 are as follows (in thousands):

As of October 31, 2009

As of October 31, 2008Intangible assets:

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
AmountPoet Holdings, Inc. Developed Technology & Customer Relationships (Amortized over 7 years)

$
1,919

$
1,643

$
276

$
1,919

$
1,454

$
465JDO Genie (PTY), LTD. Developed Technology (Amortized over 5 years)


550


550


0


550


477


73db4o-Developed Technology (Amortized over 5 years)


300


55


245








db4o-Customer Relationships (Amortized over 9 years)


210


21


189








FastObjects, Inc. Customer Relationships (Amortized over 6 years)


148


137


11


148


121


27db4o-Trade Name (Amortized over 5 years)


100


19


81








Total

$
3,227

$
2,425

$
802

$
2,617

$
2,052

$
565


Aggregate amortization expense for intangible assets was $373,000, $315,000 and $315,000, respectively, for the fiscal years ended
October 31, 2009, October 31, 2008 and October 31, 2007, respectively.

The
projected amortization of the Company's existing intangible assets as of October 31, 2009 is as follows (in thousands):

AmortizationFiscal year ending October 31,2010

$
3042011


1902012


1032013


103Thereafter


102Total

$
802


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 6.    LEASE OBLIGATIONS

Versant's principal commitments as of October 31, 2009 consist of obligations under operating leases for facilities and equipment commitments.

Versant
leases office space for its U.S. headquarters in Redwood City, California and also leases field office space in Hamburg, Germany and Pune, India under multi-year
operating lease agreements.

On
July 17, 2009, the Company entered into an Office Building Lease with DIC DP Hamburg Halenreie Gmbh, pursuant to which the Company has leased approximately 10,200 square feet
in an office facility located in Hamburg, Germany. The lease has a term of sixty months, which commenced in December 2009. The total rent payable over the full sixty month lease term will be
approximately $885,000.

On
September 3, 2009, the Company and CA-Shorebreeze Limited Partnership entered into the First Amendment (the "Amendment") of an Office Building Lease executed
between the parties on March 23, 2007. The Amendment extends the term of the Company's lease of approximately 6,800 square feet in an office facility located in Redwood City, California for an
additional term of three years to May 31, 2013. The total rent payable over the thirty-six month extended lease term will be approximately $553,000.

Consolidated
rent expense in fiscal years ended October 31, 2009, 2008 and 2007, was approximately $507,000, $550,000, and $735,000, respectively.

The
Company's future annual minimum commitments as of October 31, 2009 under non-cancelable operating leases are listed as follows (in thousands):

Facilities Leases

Equipment Leases

TotalFiscal year ending October 31,2010

$
363

$
6

$
3692011


375





3752012


383





3832013


302





302Thereafter


199





199Total

$
1,622

$
6

$
1,628


NOTE 7.    STOCKHOLDERS' EQUITY AND INCOME PER SHARE

Basic and diluted net income per common share has been computed using the weighted average number of shares of common stock outstanding during the period, less shares subject to
repurchase.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 7.    STOCKHOLDERS' EQUITY AND INCOME PER SHARE (Continued)

The
following table presents the calculation of basic and diluted net income per share (in thousands, except per share amounts):

Fiscal Year Ended October 31,2009

2008

2007Net income from continuing operations

$
4,839

$
9,391

$
7,329Net income from discontinued operations, net of income taxes





98


304Net income

$
4,839

$
9,489

$
7,633Calculation of basic net income per share:Weighted average common shares outstanding


3,626


3,729


3,649Net income from continuing operations

$
1.33

$
2.52

$
2.01Net income from discontinued operations, net of income taxes

$


$
0.02

$
0.08Net income per share, basic

$
1.33

$
2.54

$
2.09Calculation of diluted net income per share:Weighted average common shares outstanding


3,626


3,729


3,649Dilutive effect of employee and director stock options


37


54


59Weighted average common shares outstanding andpotentially dilutive common shares


3,663


3,783


3,708Net income from continuing operations

$
1.32

$
2.48

$
1.98Net income from discontinued operations, net of income taxes

$


$
0.03

$
0.08Net income per share, diluted

$
1.32

$
2.51

$
2.06


The
computation of diluted net income per share does not include shares that are anti-dilutive under the treasury stock method because their exercise prices are higher than
the average market value of Versant's stock during the period. For the years ended October 31, 2009, 2008 and 2007, 182,000, 22,000 and 34,000 potentially dilutive shares, respectively, were
excluded from the computation of diluted net income per share.

NOTE 8.    STOCK REPURCHASE PROGRAM

On December 1, 2008, Versant's Board of Directors approved a stock repurchase program authorizing Versant to repurchase up to $5.0 million worth of its outstanding common
shares from time to time on the open market, in block trades or otherwise. The stock repurchase program expired by its terms on October 31, 2009. Versant acquired 222,688 common shares on the
open market for approximately $3.2 million at an average purchase price of $14.52 per share under the stock repurchase program.

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VERSANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 8.    STOCK REPURCHASE PROGRAM (Continued)

On
November 30, 2009 Versant's Board of Directors approved a new stock repurchase program pursuant to which the Company is authorized to repurchase up to $5.0 million of
its common stock in fiscal year 2010. The stock repurchase program is currently scheduled to expire upon the earlier of October 31, 2010, or such time as Versant has expended
$5.0 million to repurchase outstanding common shares under the program; however the program may be suspended, discontinued or extended at any time by the Company.

NOTE 9.    EMPLOYEE AND DIRECTOR BENEFIT PLANS

Versant has, or had during fiscal 2009, the following option plans in place:



The
2005 Equity Incentive Plan was approved by Versant's shareholders in August 2005 to replace the Company's 1996 Equity Incentive Plan. Upon adoption of the 2005 Equity Incentive Plan,
the Company immediately terminated use of the 1996 Equity Incentive Plan. Under the 2005 Equity Incentive Plan, the Company is authorized to grant stock options, restricted stock awards and stock
bonuses. These options are generally granted to its employees with a three-year vesting schedule in which 25% of the option vests and becomes exercisable nine months from the grant date
and the remaining 75% vests ratably, on a monthly-basis thereafter over the remaining 27 months of the vesting schedule. All options granted to employees under the Company's 2005 Equity
Incentive Plan expire no later than ten years after the grant date.



Although
the 1996 Equity Incentive Plan has since expired by its terms, options to purchase a total of 14,197 shares originally granted under this Plan were still outstanding as of
October 31, 2009.



The
2005 Directors' Stock Option Plan was approved by Versant's shareholders in August 2005 to replace the Company's 1996 Directors' Stock Option Plan. Upon adoption of the 2005
Directors' Stock Option Plan, the Company immediately terminated use of the 1996 Directors' Stock Option Plan. Under the 2005 Directors' Stock Option Plan, Versant grants 4,000 options as an initial
grant to new directors on the Board who are not employees of the Company or of a parent, subsidiary or affiliate of the Company ("Outside Directors") and grants 4,000 additional options to each
Outside Director as an annual succeeding grant thereafter. Both initial and succeeding option grants vest 50% on the first and second anniversaries of the option grant. The options granted under the
2005 Directors' Stock Option Plan must expire no later than ten years after the grant date.



As
of October 31, 2009, a total of 18,488 options remain outstanding under Versant's 1996 Directors' Stock Option Plan. Versant ceased granting options under its 1996 Directors'
Stock Option Plan in August 2005 and no further options will be granted under the 1996 Directors' Stock Option Plan.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 9.    EMPLOYEE AND DIRECTOR BENEFIT PLANS (Continued)



Versant
acquired all of Poet's stock option plans in connection with our March 2004 acquisition of Poet. As of October 31, 2009, a total of 21,094 options remain outstanding under
these Poet plans. No further options will be granted under any of Poet's option plans.



The
2005 Employee Stock Purchase Plan was approved by Versant's shareholders in August 2005 to replace the Company's 1996 Employee Stock Purchase Plan. Upon adoption of the 2005 Employee
Stock Purchase Plan, the Company immediately terminated use of the 1996 Employee Stock Purchase Plan and ceased to issue stock under the 1996 Employee Stock Purchase Plan, and instead thereafter
issued stock under the 2005 Employee Stock Purchase Plan. The number of common shares initially reserved under the 2005 Employee Stock Purchase Plan was equal to the number of shares that were
reserved and available for issuance under the 1996 Employee Stock Purchase Plan on the date of the approval of the new plan.

Under
the Employee Stock Purchase Plan, employees may defer up to 10% of their compensation to purchase shares of our common stock at a purchase price equal to 85% of the lower of the
fair market value per share of our common stock on the commencement date of the applicable six month offering period or the applicable purchase date. As of October 31, 2009, approximately
61,000 shares were available for future issuance.

Shares Reserved for Future Issuance

As of October 31, 2009, the Company had reserved shares of common stock for the following purposes:

Employee stock purchase plan


61,259Stock options available for grant


306,916Unexercised stock options


385,842Balance as of October 31, 2009


754,017


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 9.    EMPLOYEE AND DIRECTOR BENEFIT PLANS (Continued)

Stock Option Activities

The stock option activities in fiscal years 2009, 2008 and 2007 were as follows:

Options available for grant

Number of options outstanding

Weighted average exercise priceBalance as of October 31, 2006


193,234


184,590

$
16.89Authorized


200,000





Granted


(108,866
)

108,866


14.57Exercised/expired


(34,422
)

(45,488
)

6.94Canceled


12,486


(12,486
)

35.80Balance as of October 31, 2007


262,432


235,482

$
16.75Authorized


50,000





Granted


(127,100
)

127,100


22.40Exercised/expired


(1,201
)

(55,673
)

9.01Canceled


3,585


(3,585
)

29.64Balance as of October 31, 2008


187,716


303,324

$
20.40Authorized


220,000





Granted


(153,050
)

153,050


13.55Exercised/expired


(4,920
)

(13,362
)

9.09Canceled


57,170


(57,170
)

17.88Balance as of October 31, 2009


306,916


385,842

$
18.45


NOTE 10.    SHARE BASED COMPENSATION

Beginning in fiscal 2006, Versant has accounted for share-based compensation costs in accordance with ASC 718,Compensation, Stock
Compensation. Under the fair value recognition guidance of ASC 718, share based compensation cost is estimated at the grant date based on the fair value of the award and is
recognized as expense over the requisite service period of the award. The Company utilizes the Black-Scholes option pricing model to estimate the fair value of employee stock option compensation at
the date of grant. This model requires the use of assumptions, including expected volatility, expected term, risk-free interest rate and dividend yield, some of which require significant
management judgment. Further, the Company estimates forfeiture rates for those options granted which are not expected to vest. Changes in these inputs and assumptions can materially affect the measure
of estimated fair value of our share-based compensation. The estimated fair value is charged to earnings on a straight-line basis over the vesting period of the underlying awards, which
are generally three years under the Company's Equity Incentive Plans and two years under the Directors Stock Option Plans. While the estimate of fair value and the associated charge to earnings
materially impacts the Company's results of operations, it has no impact on its cash position.

Versant
employs historical volatility over a period equal to the expected term of the options as the basis for estimating expected volatility. The Company, however, takes into account
all available current information to determine the expected volatility. As of October 31, 2009, Versant uses historical volatility as the best estimate of the future volatility of its common
stock.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 10.    SHARE BASED COMPENSATION (Continued)

Versant
bases the expected term of its options on historical exercise data, while considering other factors that could possibly impact the future life of the options. As of
October 31, 2009, the Company determined that the estimated expected life of an employee share option granted under the Company's Equity Incentive Plan was 3.1 years. The expected life
for the options granted under the Directors' Plans to the board members who are not full time employees of Versant is 5.75 years. Versant used the
simplified method allowed by SEC Staff Accounting Bulletin Nos.107 and 110 to arrive at this calculation. Under the simplified method, the expected term is equal to vesting term plus original
contractual term divided by two.

Versant
uses the Treasury Constant Maturities rates reported by The Federal Reserve to approximate the risk free interest rate. Versant has not distributed any dividends to its common
stockholders and does not expect to do so in the near future.

Versant
uses historical forfeiture data, modified by any available relevant information to arrive at the estimated forfeiture rate. ASC 718 requires that forfeitures be estimated at the
time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Versant applies the forfeiture rate to the unvested portion of the option valuation
and performs a true up if the actual forfeiture rate is different from the one applied in prior periods. As of October 31, 2009, Versant uses an 8% expected forfeiture rate for employee stock
options.

Versant
estimates the fair value of employee rights to purchase shares under its employee stock purchase plan, or "ESPP", using the Black-Scholes Option Pricing Model.

The
purchase price of shares which employees may acquire under the Company's ESPP, at any purchase period, is 85% of the lesser of either of the following: the fair market value of the
shares on the offering date or the fair market value of the shares on the purchase date. Versant records compensation expense based on the estimated fair value of the shares granted under the ESPP.

Versant
does not expect to realize any current tax benefits in fiscal 2009 related to stock options or shares issued under its ESPP. Versant currently provides a full valuation allowance
for its domestic deferred tax assets and accordingly, a valuation allowance is also provided for any tax effects of share based compensation expense.

The
fair values of each option granted and each share issued under the ESPP are estimated on the date of grant, using the Black-Scholes Option Pricing Model, based on the following
weighted average assumptions:

Stock Options

ESPPFiscal Year Ended October 31,

Fiscal Year Ended October 31,2009

2008

2007

2009

2008

2007Assumptions:Volatility

56%73%

57%88%

71%107%

59%65%

48%52%

52%80%Expected life (in years)

2.45.75 years

2.35.75 years

2.25.75 years

6 months

6 months

6 monthsWeighted average risk-free interest rate

0.82%2.58%

2.32%3.22%

4.17%4.85%

0.29%0.45%

2.01%3.31%

4.76%5.00%Dividend yield














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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 10.    SHARE BASED COMPENSATION (Continued)

Share based compensation expense recognized in the consolidated statements of income related to the stock option plans and the ESPP for fiscal
2009, fiscal 2008 and fiscal 2007 was as follows:

Fiscal year ended October 31,2009

2008

2007Stock-based compensation expense:Stock Options

$
933

$
807

$
320ESPP


37


114


96Total

$
970

$
921

$
416


The
following table summarizes the changes in stock option activities under the Company's equity-based compensation plans during fiscal 2009 and fiscal 2008:

Fiscal Year Ended October 31,2009

2008Shares in thousands

Weighted average exercise price

Shares in thousands

Weighted average exercise priceStock option activity:Outstanding at the beginning of the period


303

$
20.40


235

$
16.75Granted


153


13.55


127


22.40Exercised


(13
)

9.10


(56
)

9.01Forfeited and expired


(57
)

17.88


(3
)

29.64Outstanding at the end of the period


386

$
18.45


303

$
20.40Options exercisable at the end of the fiscal year


264

$
19.69


184

$
21.73


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VERSANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 10.    SHARE BASED COMPENSATION (Continued)

The
following table summarizes significant ranges of outstanding and exercisable options as of October 31, 2009:

Options Outstanding

Options ExercisableNumber
outstanding at
October 31, 2009
(in thousands)

Weighted
average
remaining
contractual life

Weighted
average
exercise price

Number
outstanding at
October 31, 2009
(in thousands)

Weighted
average
remaining
contractual life

Weighted
average
exercise priceExercise Prices:From $3.00 to $6.00


24


4.66

$
4.39


24


4.66

$
4.39From $6.13 to $9.20


26


5.85


7.02


26


5.85


7.02From $10.20 to $16.00


175


8.53


12.98


89


7.90


12.42From $17.19 to $40.00


153


7.64


22.37


117


7.50


22.73From $42.00 to $122.20


7


0.78


96.26


7


0.78


96.26From $465.50 to $1,287.00


1


0.28


629.80


1


0.28


629.80386


7.60

$
18.45


264


7.02

$
19.69Options expected to vest as of October 31, 2009


378


7.57

$
18.49Aggregate intrinsic value of options (in thousands)

$
1,590







$
1,117Aggregate intrinsic value of shares expected to vest (in thousands)

$
1,569


The aggregate intrinsic value of stock options outstanding and exercisable, and vested or expected to vest, at October 31, 2009 was based
on the closing price of our common stock on October 31, 2009 of $18.44 per share.

The
summary of the status of Versant's nonvested shares as of October 31, 2009 and changes during the fiscal year ended October 31, 2009 is as follows:

Shares
(in thousands)

Weighted average
grant date
fair valueNonvested shares:Nonvested at October 31, 2008


143

$
9.62Granted


153


5.52Vested


(100
)

8.90Forfeited


(50
)

6.82Nonvested at October 31, 2009


146

$
7.54


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VERSANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 10.    SHARE BASED COMPENSATION (Continued)

Additional
information related to the fair value of Versant's stock options as of October 31, 2009, 2008 and 2007 is as follows:

Fiscal Year Ended October 31,2009

2008

2007(in thousands, except for per share amounts)Weighted average grant date fair valueof options granted (per share)

$
5.52

$
10.67

$
8.33Total fair value of options granted

$
844

$
1,376

$
908Total fair value of shares vested

$
898

$
747

$
240Total intrinsic value of options exercised

$
89

$
1,139

$
581


The
total unrecognized compensation costs related to non-vested options were $951,000 at October 31, 2009 and will be recognized over a weighted average period of
approximately 1.5 years. Future stock option grants and the intrinsic value of ESPP shares will increase the unrecognized compensation, whereas quarterly amortization and the vesting of the
existing stock option grants will reduce it.

NOTE 11.    SETTLEMENT OF LITIGATION

Versant's software license agreements generally include certain provisions for indemnifying customers against liabilities if the Company's software products infringe upon a third party's
intellectual property rights. A former customer of the Company sought indemnification from Versant for alleged infringement of intellectual property rights related to a product that Versant
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 former 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 consolidated statement of income for fiscal 2008 to reflect this settlement. A payment of $62,500 was made to the former customer
during the fiscal quarter ended April 30, 2008, and a settlement payment of $800,000 was made to the former customer during the fiscal quarter ended July 31, 2008.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 12.    RESTRUCTURING

In the fourth quarter of fiscal year 2009, the Company committed to the implementation of a restructuring plan pursuant to which it will be closing its research and development facility
in Pune, India and winding down the affairs of its subsidiary, Versant India Private Limited ("Versant India"). The restructuring plan was undertaken to consolidate the Company's research and
development efforts into one location in Germany in order to streamline operations, create management efficiencies and increase productivity. The Company expects the restructuring to be substantially
completed during the second fiscal quarter ending April 30, 2010 and expects to incur total restructuring and other charges ranging from $300,000 to $350,000.

The
following table reflects the type and amount of these restructuring charges included in operating expenses for fiscal year 2009:

Severance, retention and related charges

$
32,043Impairment of fixed assets (non-cash charges)


61,005Impairment to other assets (non-cash charges)


41,719Other direct costs of closure


4,587$
139,354


The
following table reflects the restructuring charges included in accrued liabilities on the consolidated balance sheets:

Restructuring accrual balance as of October 31, 2008

$
Provision for employee termination costs


32,043Restructuring accrual balance as of October 31, 2009

$
32,043


NOTE 13.    LIQUIDATION OF A FOREIGN SUBSIDIARY

In fiscal 2007, Versant elected to liquidate Versant Ltd., its subsidiary in the United Kingdom, to reduce costs and centralize European operations. The liquidation of
Versant Ltd. was completed in the fourth quarter of fiscal 2007.

Upon
the completion of the liquidation of Versant Ltd. in October 2007, Versant recorded a $245,000 operating loss to reflect the realization of accumulated foreign currency
translation adjustments related to Versant Ltd. A corresponding amount was recorded to eliminate accumulated other comprehensive loss, a component of equity, previously recorded in
Versant Ltd.'s balance sheet. This loss represents the net unrealized foreign currency translation losses accumulated from changes in exchange rates and the related effects from the translation
of assets and liabilities of Versant Ltd.

NOTE 14.    INCOME TAXES

The Company accounts for income taxes pursuant to the provisions of ASC 740, Income Taxes, which requires an asset and liability approach
to accounting for income taxes. Deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and the tax basis of assets and liabilities
and are measured using the enacted statutory tax rates in

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 14.    INCOME TAXES (Continued)

effect
at the balance sheet date. The Company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding realizability exists.

Income
before provision for income tax expense (benefit) consisted of the following (in thousands):

Fiscal Year Ended October 31,2009

2008

2007United States

$
(1,015
)
$
2,050

$
2,404International


5,292


8,870


6,096$
4,277

$
10,920

$
8,500


The
provision for income tax expense (benefit) consisted of the following (in thousands):

Fiscal Year Ended October 31,2009

2008

2007Current:Federal

$


$


$
State


24


4


50Foreign


299


1,174


766Foreign withholding


54


253


51Total current


377


1,431


867Deferred:Federal








State








Foreign


(939
)




Total deferred


(939
)




Total provision for income tax expense (benefit)

$
(562
)
$
1,431

$
867


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VERSANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 14.    INCOME TAXES (Continued)

The
provision for income tax expense (benefit) differs from the amount estimated by applying the statutory federal income tax rate (35%) to income before taxes as follows (in thousands):

Fiscal Year Ended October 31,2009

2008

2007Federal Tax at statutory rate

$
1,497

$
3,822

$
2,975State tax at statutory rate, net of federal benefit


(138
)

491


442Change in valuation allowance


(711
)

(8,387
)

(2,636
)Foreign tax differential


(1,299
)

959


(10
)Foreign tax dividend





2,650


Decrease in tax credits





1,853


Other


89


43


96$
(562
)
$
1,431

$
867


The
components of the net deferred tax asset were as follows (in thousands):

As of October 31,2009

2008Deferred tax assets:Net operating loss carryforwards

$
35,307

$
35,331Tax credit carryforwards


1,815


1,756Other


255


6237,377


37,149Valuation allowance


(36,438
)

(37,149
)Net deferred tax asset

$
939

$



At
October 31, 2009, the Company had federal and state net operating loss carry forwards of $69.9 million and $12.4 million, respectively, and federal and state tax
credit carry forwards of $1.4 million and $700,000, respectively. The federal and state net operating loss carry forwards expire on various dates through 2029. The federal tax credit carry
forwards expire on various dates through 2023. The state tax credit can be carried forward indefinitely. Additionally, at October 31, 2009, the Company had German net operating tax loss carry
forwards of approximately $31.4 million. The German tax code provides for certain annual statutory limitations related to the use of tax loss carry forward amounts. For each taxable year, the
Company may utilize German tax loss carry forwards fully up to the first million euros of taxable income, and thereafter, the tax loss carry forwards are limited to 60% of taxable income.

In
evaluating Versant's ability to utilize its deferred tax assets, management of the Company considers all available positive and negative evidence, including past operating results in
the most recent fiscal years and an assessment of expected future results of operations on a jurisdiction by jurisdiction basis. As of October 31, 2008, a full valuation allowance was recorded
against the Company's net deferred tax assets. Based on all the available evidence, management concluded that it had become more likely than not that a portion of net deferred tax assets in Germany
would be

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 14.    INCOME TAXES (Continued)

realized.
As a result, Versant released approximately $939,000 of the valuation allowance in fiscal year 2009 which was recorded as an income tax benefit. As of October 31, 2009, the Company
has a remaining valuation allowance of approximately $36.4 million against net deferred tax assets in the U.S. and foreign jurisdictions. Significant management judgment is required to
determine when, in the future, it will become more likely than not that additional net deferred tax assets will be realized. Management will continue to assess the realizability of the tax benefit
available based on actual and forecasted operating results. Management does not anticipate significant changes to its uncertain tax positions through October 31, 2010.

Due
to "change in ownership" provisions of the Internal Revenue Code of 1986, the availability of net operating loss and tax credit carry forwards to offset federal taxable income in
future periods is subject to an annual limitation.

A
portion of deferred tax assets relating to net operating losses pertains to net operating loss carry forwards resulting from tax deductions upon the exercise of employee stock options
of approximately $1.6 million. When recognized, the tax benefit of these loss carry forwards will be accounted for as a credit to additional paid-in capital rather than a reduction
of income tax expense.

The
Company adopted the provisions of ASC 740,Income taxesrelated to uncertain tax positions on November 1, 2007. During the year
ended October 31, 2009, the amount of unrecognized tax benefits decreased $71,000 due to the completion of a foreign income tax examination covering fiscal years 2006 and 2007.

A
reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Balance as of October 31, 2008

$
1,700Additions for current year tax positions


Additions for prior years tax positions


Reductions for prior years tax positions


Settlements


(71
)Balance as of October 31, 2009

$
1,629


If
recognized, $1.3 million of these unrecognized tax benefits would affect the effective tax rate.

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 2004.

NOTE 15.    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 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 31, 2009

NOTE 15.    DISCONTINUED OPERATIONS (Continued)

consulting
practice. In connection with Versant's sale of its WebSphere assets, certain employees of Versant, who formerly worked in Versant's WebSphere Practice, joined Sima.

The
WebSphere transaction, based on ASC 360-10-35,Impairment or Disposal of Long-Lived Assets, met
the criteria of a long-lived asset (disposal group) held for sale at the end of the first quarter ended January 31, 2006. As a result, Versant has reflected the results of
operations of its WebSphere consulting practice for fiscal 2008 and fiscal 2007 as discontinued operations. Therefore, reported revenues for these periods no longer include any revenues from the
WebSphere consulting practice. The results from the discontinued WebSphere operations, however, are reported as net income from discontinued operations, net of income taxes.

Under
the Sale Agreement between Versant and Sima, the Company was entitled to receive contingent payments from Sima related to the WebSphere business for a 24-month period
following the closing of the 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.

During
fiscal 2008 and fiscal 2007, Versant recorded $98,000 and $304,000 respectively, in royalty payments from WebSphere as income from discontinued operations.

Our
results for fiscal 2009 do not include any amounts related to the Websphere sale transaction as Versant's rights to receive revenues terminated in January 2008.

NOTE 16.    SUBSEQUENT EVENTS

On November 30, 2009, Versant's Board of Directors approved a new stock repurchase program pursuant to which the Company is authorized to repurchase up to $5.0 million of
its common stock in fiscal year 2010. The stock repurchase program is currently scheduled to expire upon the earlier of October 31, 2010, or such time as Versant has expended
$5.0 million to repurchase outstanding common shares under the program; however the program may be suspended, discontinued or extended at any time by the Company. Any repurchases made under the
stock repurchase program are expected to be funded from the Company's working capital.

NOTE 17.    SELECTED QUARTERLY INFORMATION (unaudited)

Summarized quarterly supplemental consolidated financial information for fiscal 2009 and 2008 is as follows (in thousands, except per share amounts):

Fiscal 2009 Quarters Ended

Fiscal 2008 Quarters EndedOctober 31,

July 31,

April 30,

January 31,

October 31,

July 31,

April 30,

January 31,Revenues

$
4,139

$
4,433

$
3,959

$
5,619

$
5,993

$
6,300

$
6,721

$
6,284Cost of revenues


549


573


532


577


535


526


552


570Gross profit


3,590


3,860


3,427


5,042


5,458


5,774


6,169


5,714Operating expenses


3,015


2,884


2,609


3,366


3,066


3,082


4,035


2,981Income from operations


575


976


818


1,676


2,392


2,692


2,134


2,733Net income from continuing operations


1,610


891


776


1,562


2,233


2,658


1,977


2,523Income from discontinued operations, net of income tax




















16


82Net income

$
1,610

$
891

$
776

$
1,562

$
2,233

$
2,658

$
1,993

$
2,605Net income per shareBasic

$
0.45

$
0.25

$
0.21

$
0.42

$
0.60

$
0.71

$
0.54

$
0.71Diluted

$
0.45

$
0.25

$
0.21

$
0.42

$
0.59

$
0.70

$
0.53

$
0.69


93

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Table of Contents

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A(T).    Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

Our management (with the participation of our Chief Executive Officer and our Chief Financial Officer) evaluated the effectiveness of
our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of
October 31, 2009, the end of the fiscal period covered by this report on Form 10-K. Securities and Exchange Commission, or 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 in the reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time period 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 filed under the Exchange Act 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 the Chief Executive Officer and the Chief Financial
Officer, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to
ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the
Commission's rules and forms.

A
control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, because of
the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been or will be detected. These
inherent limitations include the fact that there are resource constraints, and that the benefits of controls must be considered relative to their costs.

Management's Report on Internal Control over Financial Reporting.

The information required to be furnished pursuant to this item is set forth under the caption "Report of Management on Internal Control
Over Financial Reporting" in Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.

Changes in Internal Control over Financial Reporting.

There
was no change in our internal control over financial reporting that occurred during the fourth quarter of 2009 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.

The
certifications of Versant's Chief Executive Officer and Chief Financial Officer attached as Exhibit 31.01 and Exhibit 31.02 to this Annual Report on
Form 10-K include, in paragraph 4 of such certifications, information concerning Versant's disclosure controls and procedures and internal control over financial reporting.
Such certifications should be read in conjunction with the information contained or incorporated by reference in this Item 9A(T) for a more complete understanding of the matters covered by such
certifications. The certifying officers have worked to design, or caused to be

94

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Table of Contents

designed,
disclosure controls and procedures, for the purpose of ensuring that material information relating to Versant, including its consolidated subsidiaries, is made known to them by other
personnel of Versant on a timely basis and internal control over financial reporting designed 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. These disclosure controls and procedures and internal control over financial reporting were
designed and adopted in good faith for these purposes, but it is recognized that these procedures must be continually evaluated and can always merit further improvement.

Item 9B.    Other Information.

None

PART III

Item 10.    Directors, Executive Officers and Corporate Governance

The Board has adopted a Code of Conduct and Ethics that applies to Versant's principal executive officer, principal financial officer,
principal accounting officer and all other employees of the Company. This Code of Conduct and Ethics is posted on our website at http://www.versant.com. We intend to
satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to, or waiver from, a provision of this Code of Conduct and Ethics by posting such
information on our website at http://www.versant.com on the investors' relations page.

The
remainder of the information required for this Item 10 is incorporated by reference from our Proxy Statement to be filed in connection with our 2010 Annual Meeting of
Shareholders.

Item 11.    Executive Compensation

The information required for this Item is incorporated by reference from our Proxy Statement to be filed in connection with our 2010
Annual Meeting of Shareholders.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required for this Item is incorporated by reference from our Proxy Statement to be filed in connection with our 2010
Annual Meeting of Shareholders.

Item 13.    Certain Relationships and Related Transactions and Director Independence

The information required for this Item is incorporated by reference from our Proxy Statement to be filed in connection with our 2010
Annual Meeting of Shareholders.

Item 14.    Principal Accountant Fees and Services

The information required for this Item is incorporated by reference from our Proxy Statement to be filed in connection with our 2010
Annual Meeting of Shareholders.

Item 15.    Exhibits and Financial Statement Schedules

The exhibit list in the "Exhibit Index" is incorporated herein by reference as the list of exhibits required as part of this report.

95

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Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 CORPORATIONDated:
January 29, 2010

/s/ JERRY WONG Jerry Wong
Vice President, Finance
Chief Financial Officer
(Duly Authorized Officer,
Principal Financial Officer and
Principal Accounting Officer)/s/ JOCHEN WITTE Jochen Witte
President and Chief Executive Officer
(Duly Authorized Officer and Principal
Executive Officer) and Director


96

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Table of Contents

POWER OF ATTORNEY

By signing this Form 10-K below, I hereby appoint each of Jochen Witte and Jerry Wong as my
attorneys-in-fact to sign all amendments to this Form 10-K on my behalf, and to file this report on Form 10-K (including all exhibits and
other documents related to the Form 10-K) with the Securities and Exchange Commission. I authorize each of my attorneys-in-fact to (1) appoint a
substitute attorney-in-fact for himself and (2) perform any actions that he believes are necessary or appropriate to carry out the intention and purpose of this Power of
Attorney. I ratify and confirm all lawful actions taken, directly or indirectly, by my attorneys-in-fact and by any properly appointed substitute
attorneys-in-fact.

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.

Name

Title

DatePRINCIPAL EXECUTIVE OFFICER:/s/ JOCHEN WITTE Jochen Witte

President and Chief Executive Officer and Director

January 29, 2010PRINCIPAL FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER:/s/ JERRY WONG Jerry Wong

Vice President, Finance and Chief Financial Officer

January 29, 2010ADDITIONAL DIRECTORS:/s/ UDAY BELLARY Uday Bellary

Director

January 29, 2010/s/ WILLIAM HENRY DELEVATI William Henry Delevati

Director

January 29, 2010/s/ HERBERT MAY Herbert May

Director

January 29, 2010/s/ BERNHARD WOEBKER Bernhard Woebker

Director

January 29, 2010


97

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Table of Contents

EXHIBIT INDEX

Incorporated by ReferenceExhibit
No.

Exhibit Description

Form

File No.

Filing
Date

Exhibit

Filed
Herewith2.01

Agreement and Plan of Merger with Poet Holdings, Inc. dated September 27, 2003 by and among the Registrant, Puma Acquisition Inc. and Poet Holdings Inc. 

8-K

000-28540

09/29/03

99.12.02

Amendment to Agreement and Plan of Merger, dated as of January 20, 2004, by and among the Registrant, Poet Holdings, Inc. and Puma Acquisition, Inc.

S-4/A

333-110444

2/2/04

2.22.03

Share Purchase and Transfer Agreement dated as of September 13, 2004 between Poet Software GmbH and ems ePublishing AG and attached list of annexes thereto (translated to English from the original German text).


8-K

000-28540

9/17/04

2.012.04

Asset Purchase Agreement as of February 1, 2006 between Versant Corporation and Sima Solutions

8-K

000-28540

02/7/06

2.013.01

Amended and Restated Articles of Incorporation of the Registrant, filed with the California Secretary of State on March 18, 2004

S-8

333-113871

03/24/04

4.013.02

Certificate of Amendment of Amended and Restated Articles of Incorporation of the Registrant, filed with the California Secretary of State on August 22, 2005

8-K

000-28540

8/26/05

3.13.03

Registrant's Amended and Restated Bylaws

8-K

000-28540

3/02/07

3.0110.01

Registrant's 2005 Equity Incentive Plan, as amended**

S-8

333-159931

06/12/09

99.0110.02

Forms of Stock Option Agreements and Stock Option Exercise Agreements under Registrant's 2005 Equity Incentive Plan**

S-8

333-130601

12/22/05

99.0210.03

Registrant's 2005 Directors' Stock Option Plan, as amended**

S-8

333-159931

06/12/09

99.0510.04

Forms of Stock Option Grants and Stock Option Exercise Agreements under Registrant's 2005 Directors Stock Option Plan**

S-8

333-130601

12/22/05

99.0410.05

Registrant's 2005 Employee Stock Purchase Plan, as amended **

8-K

000-28540

06/12/09

99.0310.06

Forms of Enrollment Form and Subscription Agreement under Registrant's 2005 Employee Stock Purchase Plan**

S-8

333-130601

12/22/05

99.0610.07

Registrant's 1996 Directors Stock Option Plan, as amended as of July 30, 2003, and related documents**

S-8

333-107956

08/14/03

4.0610.08

Registrant's 1996 Employee Stock Purchase Plan, as amended as of August 17, 2004 and related documents**

10-K

000-28540

2/15/05

10.0210.09

Registrant's 1996 Equity Incentive Plan, as amended as of April 18, 2002, and related documents**

S-8

333-87922

05/09/02

4.0510.10

Poet Holdings, Inc. Amended and Restated 1995 Stock Plan and Forms of Stock Option Agreement and Exercise Notice thereunder**

S-8

333-113871

3/24/04

4.0510.11

Poet Holdings, Inc. 1999 Director Option Plan and Forms of Director Option Agreement and Director Option Exercise Notice thereunder**

S-8

333-113871

3/24/04

4.06


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Table of Contents

Incorporated by ReferenceExhibit
No.

Exhibit Description

Form

File No.

Filing
Date

Exhibit

Filed
Herewith10.12

Poet Holdings, Inc. 2001 Non Statutory Stock Option Plan and Forms of Stock Option Agreement and Exercise Notice thereunder**

S-8

333-113871

3/24/04

4.0710.13

Form of Letter from Registrant to option holders of Poet Holdings, Inc., regarding assumption of options by Registrant**

S-8

333-113871

3/24/04

99.0110.14

Form of Indemnity Agreement entered into by Registrant with each of its directors and executive officers

10-K

000-28540

2/15/05

10.0910.15

Form of Amendment to Versant Corporation Stock Option Agreement**

SB-2



7/16/9610.16

Joint Employment Agreement and Managing Director Service Contract with CEO**

10-Q

000-28540

09/09/09

10.0310.17

Retention Incentive Agreement with Chief Financial Officer**

10-Q

000-28540

09/09/09

10.0410.18

Registration Rights Agreement dated December 28, 1998 between the Registrant and the parties listed on the Schedule of Investors attached thereto

10-KSB

000-28540

03/31/99

10.3510.19

Supplement dated June 28, 1999 to Registration Rights Agreement among the Registrant and the parties listed on the Schedule of Investors attached thereto

8-K

000-28540

07/13/99

10.0410.20

Office Building Lease dated March 23, 2007, between Versant Corporation and CA-Shorebreeze Limited Partnership

10-Q

000-28540

6/13/07

10.0110.21

Separation Agreement between Thomas Huben and Versant Gmbh dated as of December 2, 2008**

10-Q

000-28540

03/13/09

10.0110.22

First Amendment dated September 3, 2009 to Office Building Lease dated March 23, 2007, between Versant Corporation and CA-Shorebreeze Limited Partnership

10-Q

000-28540

09/09/09

10.0110.23

English Summary of Office Building Lease dated July 17, 2009 between Versant Gmbh and DIC DP Hamburg Halanreie Gmbh q

10-Q

000-28540

09/09/09

10.0221.01

Subsidiaries of the Registrant









ý23.01

Consent of Grant Thornton LLP, Independent Registered Accounting Firm









ý31.01

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002









ý31.02

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002









ý32.01

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002









ý32.02

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









ý


Pursuant
to Item 601(b)(2) of Regulations of S-K, certain annexes, exhibits and schedules to this Exhibit have been omitted but
will be furnished supplementally to the Commission upon request.qThis
exhibit is an English summary of a foreign language document pursuant to Rule 306 of
Regulation S-T.**Management
contract or compensatory plan.


---