FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  
[ X ]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
       1934 [FEE REQUIRED]

       For the Fiscal Year ended:  July 31, 1996

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
                             
       For the transition period from                     to
                                      ------------------      ----------------

                         Commission file number 0-11485
                                                -------


                         ACCELR8 TECHNOLOGY CORPORATION
                  --------------------------------------------
                 (Name of small business issuer in its charter)

           Colorado                                   84-1072256
-------------------------------                   -------------------
  (State or Other Jurisdiction                       (I.R.S. Employer
of Incorporation or Organization)                 Identification No.)


                     303 East Seventeenth Avenue, Suite 108
                             Denver, Colorado 80203
                 ----------------------------------------------
                (Mailing Address of principal executive offices)

Registrant's telephone number, including area code:  (303) 484-1900
                                                      
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
                                (Title of class)

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

Indicate  by check  mark if there  is no  disclosure  of  delinquent  filers  in
response to Item 405 of Regulation S-B contained in this form, and no disclosure
will be contained,  to the best of issuer'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.   Yes  _____  No    X
                               
As of October 31, 1996, the aggregate market value for the 11,655,650  shares of
the  Common  Stock,  no  par  value  per  share,  held  by  non-affiliates   was
approximately $20,397,388.

The number of shares of common stock of the registrant outstanding as of October
31, 1996, were 21,970,000.

                       Documents incorporated by reference
                                      None



<PAGE>

                                TABLE OF CONTENTS

PART I ............................................................     PAGE

  Item 1.  Business ...............................................       1
  Item 2.  Properties .............................................      11
  Item 3.  Legal Proceedings ......................................      11
  Item 4.  Submission of Matters to a Vote of Security Holders ....      11
                

 PART II

  Item 5.  Market for Registrant's Common Equity and Related 
           Stockholder Matters .....................................     11
  Item 6.  Selected Financial Data .................................     12
  Item 7.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations .....................     12
  Item 8.  Financial Statements and Supplementary Data  ............     16
  Item 9.  Changes in and Disagreements With
           Accountants on Accounting and Financial Disclosure ......     16
                                  

 PART III

  Item 10. Directors and Executive Officers of the Registrant ......     16
  Item 11. Executive Compensation ..................................     18
  Item 12. Security Ownership of Certain
           Beneficial Owners and Management ........................     21
  Item 13. Certain Relationships and Related  Transactions .........     22
               


PART IV

  Item 14. Exhibits, Financial Statement Schedules,
           and Reports on Form 8-K ..................................    22

GLOSSARY ............................................................    23
        
SIGNATURES ..........................................................    25



                                       -i-
               

<PAGE>

                                     PART I


            CERTAIN TERMS USED IN THIS FORM 10-K ARE DEFINED IN THE
                         GLOSSARY BEGINNING AT PAGE 23

Item 1 - Business
-----------------

Introduction

     Accelr8 Technology  Corporation is a leading provider of software tools and
consulting services for the conversion from DEC's VAX/VMS Legacy Systems to UNIX
open  Client/Server  environments.  VAX/VMS  Legacy  Systems  use a  Proprietary
computer  operating  system which is not  compatible  with other  manufacturers'
hardware and software. In contrast, UNIX is a powerful, open architecture system
which  is  compatible  with a wide  range of  hardware  platforms  and  software
applications, including COTS. The Company believes that UNIX has become the most
widely used Client/Server  operating system, and that the trend to Client/Server
Open  Systems such as the systems  offered by UNIX and NT will  continue for the
foreseeable future.

     In order to  attain  the  advantages  of the UNIX  operating  system  while
preserving  their  investment in existing  software  applications,  many VAX/VMS
users will  undertake  complex  conversions to the UNIX  operating  system.  The
Company's consulting services and software conversion tools enable the Company's
clients to analyze and implement  their UNIX  conversions  in a predictable  and
cost-effective  manner.  The Company's  clients include a number of Fortune 1000
companies  and  government  agencies,  including  Electronic  Data Systems Corp.
("EDS"), Proctor & Gamble, Kellogg Co., McDonnell Douglas Corp., Delta Air Lines
Corp., Daimler Benz AG, the United States Army and the United States Navy.

     The Company is currently engaged in the development of additional  software
tools which will complement its existing suite of conversion tools and services.
The Company has commenced  development  of software tools that are to be used in
converting  VAX/VMS  Legacy  Systems  to  Microsoft   Corporation's  Windows  NT
operating  system running on DEC Alpha  servers.  The Company has also completed
preliminary development of a software tool that identifies Year 2000 Problems in
the VAX/VMS environment.  The Year 2000 Problem is expected to create widespread
system failures due to the use of computer  programs that rely on two-digit date
codes to perform computations and other decision-making functions.

Background

     In the 1970's many  businesses  and  governmental  organizations  relied on
mainframe  and  minicomputers  for critical  business  functions.  Each hardware
manufacturer sought to establish a competitive  advantage by developing "closed"
environments  which were  compatible  only with the  manufacturer's  Proprietary
equipment and software  applications.  Thus a customer was locked into a mission
critical   application   environment  which  would  only  operate  on  a  closed
Proprietary system, which ultimately became known as "Legacy Systems."

     Management believes that there has been a trend away from purchasing all of
a company's  hardware and software  from one vendor.  This trend was  originally
started by the federal government as a means to ensure competitive pricing among
vendors, and is now being followed by most  commercial/private  sector entities.
Under this  approach  bids are  obtained  from many  suppliers,  and one company
generally acts as the primary contractor.

     Management  believes that large hardware  manufacturers,  like IBM and DEC,
can no  longer  control  the  entire  purchasing  decision  for  large  computer
enterprises  without  including  an element of  competitive  price and  offering
access to open architecture  systems such as UNIX or NT. Further, end users have
realized  that  dependence  on a single  supplier  is  non-economic  in terms of
performance  increases at reasonable prices. In more recent years the trend away
from a single vendor has been accelerated by  technological  advances which make
possible  widely  distributed  Client/Server  environments.  Local area  Network
servers  or "LANS" can be  installed  on a variety  of  equipment  and allow for
application development in standard languages such as UNIX.

                                      -1-
<PAGE>

     Mid-range computers are either older Legacy Systems or newer "Open Systems"
servers.  Legacy  Systems  are almost  always  provided  by a single  vendor and
feature a Proprietary  operating  system,  while the newer, Open Systems servers
are supplied by numerous  vendors and usually  specify one of several  different
versions of the UNIX operating system.  One of the most popular legacy computers
has been  manufactured  by DEC and is called the VAX  hardware  system.  The VAX
Proprietary  operating  system is called  VMS.  While  many  different  hardware
manufacturers  have licensed the right to resell the UNIX operating  system from
AT&T,  the major  suppliers of hardware  that  feature  UNIX as their  operating
system are HP, SUN, SGI, IBM and DEC.

     Management  believes that within the computer user  community  Open Systems
are considered  more desirable than VAX/VMS  systems for the following  reasons:
(i)  UNIX   systems   offer   significant   upgraded   power   at   lower   cost
(price/performance)  than older VAX/VMS systems; (ii) UNIX systems are viewed as
being  "open"  since  they are  compatible  with a  variety  of  hardware  types
(Interoperability);  (iii) Industry-wide standards allow UNIX supported software
applications to run unchanged across a wide variety of hardware platforms;  (iv)
UNIX has become the new de-facto  development  environment for new applications;
and (v) significant savings can be realized from reduced maintenance overhead.

     As  a  result  of  these  UNIX  characteristics,  VAX/VMS  users  requiring
increased  performance  from  their  older,  existing  Proprietary  system,  may
consider  the  Company's  conversion  services to UNIX for: (i)  preserving  the
already  sizable  investment  in  existing  VAX/VMS  applications;  (ii)  a cost
effective  approach to maintaining user  productivity;  (iii) avoiding expensive
user re-training on a new operating system; (iv) allowing competitive bidding of
hardware and software for best price and service from several  vendors;  and (v)
extending the usable life of older systems.

     The Company believes that the primary deterrent to switching from a VAX/VMS
Legacy  System to a newer UNIX system is the  cost/risk of rewriting a critical,
dependable legacy application program to run in a new and different environment.
Uncertainty as to outcome, lack of available personnel to undertake the task, as
well as the costly re-training  process associated with learning a new operating
system,  have contributed to users and information  technology managers delaying
the decision to make the  transition  to faster,  less  expensive,  Open Systems
hardware platforms. Adding to the crisis, in many cases, the original developers
of the code are no longer  available for  consultation as to design goals and/or
specifications. It therefore becomes necessary to evaluate, condense and convert
old code to new  operating  system  environments.  While most  users,  given the
option, would elect to re-host their familiar software application to the faster
environment  of UNIX,  the  uncertainty  of a  conversion  causes slow  decision
making.

     The Company has sought to address  VAX/VMS  users'  conversion  concerns by
offering a service  called  "Situational  Analysis"  that  provides  the user an
accurate  assessment of code (line count, system calls, etc.) and gives the user
a rating of  "Portability"  as to the degree of  difficulty  in moving  critical
legacy  applications  in advance of doing the  conversion.  This service assists
customers  with the  conversion  decision,  and  allows  the  Company  to become
sufficiently familiar with the customer's application to offer a fixed price bid
for the conversion.

     In general, the limited functionality of many existing tools, together with
the inability of some organizations to fully utilize available  technology,  has
created  increasing  demand  for  integrated  software   development  tools  and
professional  services to help organizations fully utilize available  technology
and improve  their own  maintenance  and  redevelopment  processes.  The Company
believes that the developing  Client/Server market will create additional demand
for software tools and professional services that enable organizations to reduce
the cost of maintenance and redevelopment of existing systems and redeploy these
resources for Client/Server  implementation.  In addition,  the Company believes
that  organizations  will seek to reuse  existing  DEC VAX/VMS  applications  in
Client/Server environments to leverage their existing systems investment.

                                      -2-
<PAGE>

Market Opportunity

     Based on published data from DEC and related industry analysts, the Company
estimates that there were in excess of 600,000 VAX/VMS systems installed at over
60,000 sites.  Recent figures from DEC suggest that over 450,000 VAX/VMS systems
remain in operation  today.  Most computer  manufacturers,  employing the latest
advances in "reduced  instruction  set computing"  ("RISC") chip  technology are
selling UNIX Operating Systems. UNIX systems are less costly and provide greater
Interoperability  than DEC's  VAX/VMS  Legacy  Systems.  For this  reason,  UNIX
platforms are gaining  substantial  market share in DEC's  traditional  markets,
including  the  engineering  and  scientific  industry  segments.  The Company's
software  products  are  designed to meet the needs of those  industry  segments
wishing to convert their existing software and data from VAX/VMS systems to UNIX
systems. The Company has also completed preliminary  development of a conversion
tool set that will provide for conversion  from VAX/VMS systems to the NT system
running on DEC Alpha servers.

     Additionally,  many third-party  software  application  solution providers,
driven by market demand to offer their solutions on UNIX Operating Systems, have
utilized the Company's tools to convert their old VAX/VMS software  applications
to the UNIX environment.

     The Company has targeted several segments of the engineering and commercial
sectors.  These  include  aerospace,  telecommunications,  banking and financial
services,  defense  and  government  contractors,  pharmaceutical  firms,  large
manufacturers,  oil and gas  producers  and  distribution  and  warehousing  for
consumer  goods.  Major UNIX hardware  vendors,  including DEC,  Hewlett Packard
("HP"),  IBM, SUN Micro  Systems  ("SUN") and Silicon  Graphics,  Inc.  ("SGI"),
include the Company's  products in their  materials for UNIX systems.  DEC lists
the  Company's  products  in its price book as well as in the  General  Services
Administration  ("GSA") and Software  Enterprise  Workstation  Program  ("SEWP")
schedules.

     In February 1992, DEC introduced a new generation of computers named Alpha.
Alpha runs DEC's Proprietary operating system VMS as well as an industry version
of UNIX called DEC UNIX and Microsoft Corporation's Windows NT operating system.
While this  system  provides  VMS on a RISC  platform,  many  industry  analysts
believe that current DEC  customers  will want to move to DEC UNIX or NT running
on Alpha. In order to preserve their VAX/VMS applications, these users will need
to convert  VAX/VMS  applications to either DEC UNIX or NT. DEC is not currently
providing  products  to convert  from  VAX/VMS  systems  to Alpha.  Accordingly,
management believes that Alpha presents a significant market opportunity for the
Company.

Business Strategy

     The Company's objective is to enhance its position as a leading provider of
integrated  solutions which will meet the conversion needs of VAX/VMS users. Key
elements of the Company's strategy include:

     Continue  Emphasis on  Consulting  Services  and  Establishment  of UNIX/NT
Conversion  Teams.  The Company intends to continue to emphasize the sale of its
integrated  consulting  services  in  conjunction  with its suite of  conversion
software tools. The Company will establish up to ten three-man  conversion teams
in order to perform UNIX and NT conversion  projects.  The conversion teams will
be comprised of software  engineers to be recruited.  The conversion  teams will
allow the  Company to  effectively  staff  conversion  projects  as the  Company
achieves its anticipated growth (of which there can be no assurance).


                                      -3-
                

<PAGE>

     Develop New  Products  and  Services.  The  Company  intends to continue to
develop  software  tools and  consulting  services  which  address the needs and
problems  encountered  in conversion of VAX/VMS  Legacy Systems as well as other
information technology  environments.  To accomplish the foregoing,  the Company
intends to allocate substantial  resources to the completion and introduction of
software  tools  to  be  used  in  converting   VAX/VMS  Legacy  Systems  to  NT
environments  running on DEC's Alpha, as well as software  solutions to the Year
2000  Problem  for  VAX/VMS  users.  Management  believes  that  the  successful
development  of  complementary  products and services  will allow the Company to
leverage its products and services into new and significantly larger markets.

     Outsourcing. The Company intends to position its software so that it may be
licensed by large outsourcing providers such as EDS, Lockheed Martin Corp., ISSC
and others,  thereby  increasing its license fees and  consulting  service fees.
Outsourcing offers organizations a complete  information  technology system on a
contract basis. Many larger  corporations have undertaken this approach in order
to reduce personnel costs and operating  overhead.  The outsourcing  provider is
generally able to provide the services on a more cost effective basis because of
economies of scale and volume  purchases  that are not  available to the typical
user. The Company assists the outsourcing provider (EDS and others) in obtaining
such cost savings by providing a quick and efficient  assessment of the presence
of Proprietary  systems, and the opportunity for efficient conversion from those
systems.  The Company can enable the rapid  transition  to Open Systems  thereby
reducing hardware and software maintenance costs for the outsourcing provider.

     Expand  International  Marketing  Activities.  In  fiscal  1995  and  1996,
revenues derived from international  clients totaled  approximately  $96,547 and
$318,393,  respectively.  The  Company's  international  clients  have  included
Daimler Benz, Renault V.I. and Alcatel.  The Company will continue to expand its
international  marketing activities to increase its market penetration in Europe
and Asia.

     Secure  Additional  Consulting  Projects.  In the course of performing UNIX
conversion  services,  the Company's  software  engineers and technical  support
staff establish close relationships with the information technology personnel of
client organizations.  Through these relationships,  the Company will attempt to
secure  additional  consulting  projects  which are within the  expertise of the
Company's  staff.  Such  projects  may, but need not, be related to the client's
UNIX  conversion  needs.  The Company  believes  that this strategy will enhance
client relationships while generating profitable consulting fees.

     Target Large  Corporations  and Government  Agencies.  The Company believes
that there are in excess of 450,000  VAX/VMS  systems  currently  in  operation.
These  systems are  generally  operated  by large  corporations  and  government
agencies. The Company will continue to identify and direct its marketing efforts
to  organizations  which  have  extensive  information  technology  environments
supported by substantial budgets.

     Investment in or Acquisition of Complementary  Businesses,  Technologies or
Product  Lines.  The  Company  intends to evaluate  opportunities  for growth or
expansion of its business through  investment in or acquisition of complementary
businesses,   technologies   or  product   lines.   Management   believes   that
opportunities  to  expand  will be  available  to the  Company  and  intends  to
investigate  opportunities  that are consistent with the Company's core business
and its expertise.

Services and Products

     Services.  The Company historically focused its marketing and sales efforts
on selling its various software conversion tools on a "stand-alone" basis. Since
fiscal  1995,  the Company  has  focused  its  efforts on selling an  integrated
package  consisting of both software  tools and the  consulting  services of its

                                      -4-

<PAGE>

highly trained and experienced  personnel.  Management believes that this change
in strategy better addressed clients needs for conversion  services.  Management
believes  that the  dramatic  increase in  revenues in fiscal 1995 and 1996,  as
compared to fiscal 1994, is directly attributable to this change in strategy and
the Company intends to continue this strategy in the future.

     The Company now offers a full  spectrum of services that are carried out by
the  Company's  personnel,  who  are  experts  in  both  the  VAX/VMS  and  UNIX
environments.  The  Company's  personnel  use Accelr8  tools that  automatically
identify and diagnose  difficult areas in porting an  application.  This enables
them to implement conversion  techniques that ensure successful  conversions and
porting. The Company offers the following services:

1)   Situational Analysis: The Company's personnel use automated tools and their
     expertise  to scan the  customer's  code while  on-site  at the  customer's
     facility.  Within four weeks,  a written report is provided to the customer
     identifying  the porting  issues and their  solution  options.  The code is
     rated on a scale of one to five as to its Portability.  If requested by the
     customer,  a bid to conduct the  conversion on a fixed-price  basis is also
     provided.

2)   Implementation  Planning:  The Company's analysts work with the customer to
     select the appropriate solutions for their conversion issues. These answers
     are  assembled  into a project plan that is used by the project  manager to
     control and synchronize the conversion effort as well as measure progress.

3)   Application Port: The Company's analysts perform the code conversion. Where
     suitable,  the Company  performs  automatic  conversion using the Company's
     tools,  as well as  engineering of modules which must be redesigned to work
     on UNIX.  This is  followed  by complete  testing  and  certification.  The
     Company's  service  can be  contracted  as a  turnkey  port or as part of a
     cooperative team effort with the customer's personnel.

4)   Implementation  Assistance:  In addition to industry  standard  support and
     update  contracts,  the Company  offers both on-site and  off-site  porting
     assistance  agreements.  A  foreign  customer  may  contract  for  off-site
     telephone support.

5)   Custom Programming: Programming is done on either a fixed price or time and
     materials  basis for the  purpose of  Re-engineering  and  modernizing  old
     Legacy  Code or for  porting  custom  applications  that run in front of or
     after COTS applications.

6)   Training:  Including VMS Users Introduction to UNIX, Application Conversion
     using Tools and existing systems investments.

7)   Code Audit  Measurement  and Analysis:  The Company  measures  adherence to
     external and internal  coding  standards as a means to prevent  significant
     deviation from standard coding practices.

     Products.  Accelr8's  products  are part of a  sophisticated  tool set that
assists in the following  tasks:  (i)  comprehensive  analysis of Legacy Code to
determine  Portability to Open Systems;  (ii) thorough analysis and planning for
conversion; (iii) performance of actual conversion, if required by the customer;
(iv) creation of quality  assurance  models for the  enforcement of external and
internal standards applicable to new target  environments;  and (v) planning and
implementation   for  modernization  and   Re-engineering   databases  and  user
interfaces.

     The Company has developed a unique  analyzer tool called Open NAVIG8,  that
quickly and  accurately  examines  large  quantities of Legacy Code,  eventually
organizing and prioritizing the individual  modules that need to be moved.  This
porting  process is then performed  using the actual porting tools that automate
up to 95% of the conversions.

                                      -5-
<PAGE>

     The  Company's  conversion  process  relies on Company  owned and developed
tools to provide a level of  "transparency" to both VAX/VMS and UNIX users, thus
preserving  user  productivity  while accessing the higher  power/lower  cost of
UNIX.  Additionally,  the  conversion  tools support users as they learn UNIX at
their own pace and enable  large batch jobs to be moved to the new,  faster UNIX
platform, thereby freeing up the VAX to perform other tasks more efficiently.

     Other Company software  features  include the ability to share  information
between  UNIX and  VAX/VMS  systems and to  transfer  files and  records  over a
Network.  The  Company's  conversion  offerings are available on a wide range of
UNIX  systems,  including  SGI, HP, Sun, DEC and IBM.  Features are discussed in
greater  detail  below  as  each  of the  Company's  products  and  services  is
individually described.

     While Open NAVIG8 tools introduce the client to the Company's competencies,
the  rendering  of  conversion  services  is the core  business  that  generates
revenues.  The Company believes that clients  experience  greater value from the
modernization  and  Re-engineering  process if their  personnel  are involved in
understanding what has been done to change the computer environment.  Therefore,
various phases of the conversion  process are deployed at the customer site with
client  personnel as  observers.  Additionally,  the Company  conducts  training
classes for the client end user groups in the operation of the new  environment.
Ongoing  training and software  updates are a component of gross revenue in each
services contract.

     After delivery of a new environment,  the Company will offer a service that
measures,  on a regular  interval,  the adherence to either external or internal
coding  standards.  This "code  auditor"  service  has been driven by the United
States Defense  Department  objective of prevention of future Legacy Code chaos.
The Company believes that private industry will also move to this objective.

     Accelr8's products-Open NAVIG8, Open LIBR8 and Open ACCLIM8-embody the core
technological  advantages and  competencies of Accelr8;  however,  the following
groups of tools are integral to all conversion projects.



                                       -6-
                   
<PAGE>
User  Productivity
Tools ............  are  designed  to  provide  the user  with  familiar  screen
                    formats and command scripts thereby preserving  productivity
                    while  learning  a  new  operating  system  (UNIX/NT).   The
                    Company's User Productivity Tools include:

  Open DCL .......  VMS command line interface (recall/editing);  login shell
  nu TPU .........  VAX-style editor for UNIX (TPU, EDT, WPS modes)
  Open SUBMIT ....  VAX to UNIX batch submission utility
                    _________________________________________________

Porting Tools ....  are   designed   to  move  and   support   old  Legacy  Code
                    applications in UNIX or NT environments,  providing the same
                    original  functionality  on the  new  target  platform.  The
                    Company's Porting Tools include:


  Open COBOL .....   VAX COBOL source code converter and linker
  Open ACCLIM8 ...   Pre-compiler for VAX Fortran; indexed file support
  Open BASIC .....   Re-targetable BASIC to C Compiler; VAX BASIC compatibility
  Open PASCAL ....   VAX Pascal to C Translator
  C/Fix ..........   Translator for VMS specific C constructs(sold with LIBR8)
  Ada Bindings ...   Source code interface routines for all Ada Compilers and
                     LIBR8
  Open LIBR8 .....   VMS runtime library support (ast, qio, event flags,
                     mailboxes, etc)
  Open RMS .......   UNIX equivalent of VMS I/O calls. (sold with LIBR8)
  Open SMG .......   VAX compatible Screen Management facility for Open Systems
  FMS/UNIX .......   FMS for UNIX; FMS Editor (100% compatibility) sold
                     separately
  Open DCL ........  Command language interpreter; VMS-style error handling
                ________________________________________________

  Analysis &
  Programming
  Standards Tools   are designed to provide analysis and code auditing standards
                    and capabilities in a work bench environment, Legacy Code is
                    easily  examined and  reconstructed  to meet any user stated
                    rules. The Company's Analysis & Programming  Standards Tools
                    include:

  Open NAVIG8 ....  Analyzer - Documents  conversion barriers Auditor - Guidance
                    and  standards  for  portability  2000  - Year  2000  impact
                    analysis for VMS users.

New Product Offerings

     In addition to VAX/VMS to UNIX conversions, the Company believes that there
is a large  opportunity in both the government and commercial  sector to provide
two  additional  services:  Year  2000  Impact  Analysis  for the DEC  installed
computer  base and  conversion  services/tools  for  VAX/VMS  to NT  conversions
running on Alpha servers.

     The Year 2000 Problem arises from the  widespread use of computer  programs
that rely on two-digit date codes to perform  computations  and decision  making
functions.  Many of these  computer  programs  may fail due to an  inability  to
interpret date codes properly.  For example, such programs may misinterpret "00"
as the year 1900 rather than 2000. While DEC claims that VAX  minicomputers  and
other computers  using the VMS operating  system are designed to use four digits
to express dates, DEC customers may be using third party software  packages that

                                      -7-

<PAGE>

do not use four digit  dates.  The Company  intends to provide  Year 2000 Impact
Analysis  services by using a Company owned and  developed  tool to identify the
variables in the code that are most likely to hold date information. A prototype
of this tool is under development.

     Microsoft Corporation's Windows NT operating system is the newest operating
system from  Microsoft  Corporation.  DEC has announced a strategic  partnership
with Microsoft to offer its VAX  minicomputer  customers a seamless  environment
where  Open VMS,  DEC UNIX and NT will be  supported  on DEC's  Alpha  platform.
Management  believes  that DEC has no plans to  assist  users of its  older  VAX
minicomputers  in  moving  their  VAX  applications  to  the  new  NT  operating
environment.  The Company plans to port all of its UNIX conversion  tools to the
NT  environment,  thus  enabling  VAX/VMS  users to operate  their  existing VAX
applications  on an NT  operating  system.  The Company has begun to develop the
software tools for the NT conversion opportunity;  however, a substantial amount
of work remains to be done to complete this project.  The Company intends to (i)
complete  development of the conversion system;  (ii) hire additional  technical
and marketing personnel to support sales of this conversion  service;  and (iii)
market, advertise and promote this product and service.

Customers

     The  Company's  software  tools have been sold to over 600  customers.  The
Company's  customers are  principally  users of VAX/VMS  Legacy Systems that are
either commercial  enterprises or government or quasi-government  agencies.  Set
forth below is a partial list of the Company's customers.

Commercial Enterprises                                  United States Government
------------------------------------------------------  ------------------------

Lockheed Martin Corp.       McDonnell Douglas Corp.              NASA
Delta Air Lines Inc.        Proctor & Gamble                     U.S. Army
Kellogg Co.                 General Instrument Corp.             U.S. Air Force
Alcatel Alsthom Cie
  Generale Europe           Daimler Benz AG                      U.S. Navy
Union Carbide Corp.         Telos Corp.
RGTI                        Loral Corp.
Renault V.I.                Electronic Data Systems Corp.
Mack Trucks

     Union  Carbide Corp. & RGTI  (sellers of warehouse  distribution  software)
have embedded the Company's  software in their UNIX solutions,  thereby yielding
the potential for substantial  run-time  license fees for the Company during the
current fiscal year.

Marketing and Distribution

     The  Company  has  historically   utilized  several  marketing   approaches
including direct  advertising,  press releases,  trade shows,  Company sponsored
seminars, speaking engagements and independent software vendor catalog listings.
The Company's sales personnel  contact the leads generated by these  activities.
Recently,  the Company  decreased  its  advertising  in trade  publications  and
terminated  direct mail  advertising.  Management  believes that advertising the
Company's  services and products  electronically  on the Company's web page is a
more cost  effective  and  efficient  method of reaching  the  Company's  target
market.  The Company  will  continue to  emphasize  attendance  at trade  shows,
Company and vendor sponsored seminars, press releases,  speaking engagements and
independent  software  vendor  catalog  listings in its marketing  efforts.  The
Company's international sales represented 15% of the Company's total revenues in
fiscal 1996 as compared to 7% of fiscal  1995  revenues.  Management  intends to
direct a significant  portion of its marketing  efforts  toward  further  market
penetration in international  markets, with its primary emphasis upon Europe and
Asia.

                                      -8-

<PAGE>

     The  Company's  on-site  personnel  often  have the  opportunity  to market
additional  Company  services to existing  customers.  The Company's  conversion
teams have and will  continue to focus upon  educating  customers as to the full
range of the Company's products and services,  and to providing solutions to the
customers' problems.

     The Company  also  attends  hardware  vendor  sales  events,  such as those
sponsored  by  HP  and  DEC,  for  industry  group  segments,  including  TELCOS
(telecommunication   companies),   government   entities,   and   pharmaceutical
companies.  Company representatives  follow-up on contacts made at these events,
and where appropriate  schedule on-site visits with potential  customers.  While
on-site with customers and potential  customers Accelr8's  representatives  work
closely  with  technical  personnel  in Denver for  instant  and direct  help in
addressing  the  customers'  problems and needs.  Management  believes that this
coordinated approach between the field sales persons and the technical personnel
in Denver has led to greater  sales,  and the Company  intends to continue  this
practice.

Research and Development

     The Company  conducts its research and  development at its  headquarters in
Denver,  Colorado.  The Company  believes that the continued  development of new
products and  enhancement  of existing  products is essential to  maintaining  a
competitive position in the marketplace. The Company expended $33,038 on Company
sponsored  research and  development  during  fiscal 1996,  and $129,959  during
fiscal  1995.  This  decrease  occurred  because  technical  personnel  normally
involved in research  and  development  also  provided a  substantial  amount of
technical assistance in connection with the Company's  consulting services.  For
the year ended July 31, 1996, $193,621 of cost of service represented assistance
from these technical personnel with consulting projects. Management is committed
to a strong  research and  development  program,  and intends to continue  these
expenditures  at levels  necessary  to allow the  Company  to  maintain a strong
competitive position.

Production

     The Company's  production  facilities  are located at its  headquarters  in
Denver,  Colorado, and are primarily used for software development and extensive
testing  and  quality  control of  software  products.  The Company has a verbal
understanding  relating to expansion of its facilities,  and anticipates  hiring
additional technical,  marketing, sales and managerial personnel during the next
12 months.

     The  Company  does  not  believe  that,  for the  foreseeable  future,  the
Company's  products will be subject to any  significant  fluctuations  in supply
costs.  Componentry  and systems  used to develop  products  and the actual tape
cassettes on which software is placed can be obtained from a variety of vendors,
none of which  holds a  controlling  position  within the  market.  The  Company
believes  that it has the ability to fill any  anticipated  future  sales orders
received.

Competition

     Management  is  aware  of two  companies  that  compete  directly  with the
Company.  BBC of Boston,  Massachusetts,  has a product  available that directly
competes  with the  Company's  Open DCL  product.  Sector 7,  formerly  known as
Software  Translations,  of Austin,  Texas, offers a limited software conversion
tool set for moving from VMS to UNIX.  While  Sector 7 has focused on moving VAX
BASIC applications to UNIX, its technology  overlaps with the Company's Open DCL
and Open LIBR8 products.  Management  believes that the Company offers a broader
range  of  products  and  services  than  either  of these  competitors,  and is
therefore able to compete successfully against them.

                                      -9-

<PAGE>

     Although  DEC does not  offer  its own  products  for  conversion  from its
VAX/VMS Legacy Systems to UNIX, should DEC choose to do so, the Company could be
materially  and  adversely  affected.  At this point,  DEC has not announced any
products that compete directly with the Company's products.  However, DEC offers
all of the Company's tools in the Digital Price Book and as a  specification  in
the SEWP contract to NASA, as well as the GSA federal purchasing schedule.

Intellectual Property

     The Company  relies on a  combination  of  copyright,  trademark  and trade
secret laws, employee and third party disclosure agreements,  license agreements
and other  intellectual  property  protection methods to protect its Proprietary
rights.  The Company protects the source code version of its products as a trade
secret  and  as an  unpublished  copyrighted  work.  The  Company's  Proprietary
software products are generally  licensed to customers on a "right to use" basis
pursuant to a perpetual, nontransferable license that generally restricts use to
the customer's  internal  purposes and to a specific  computer platform that has
been assigned a "key code." However, it may be possible for unauthorized parties
to copy or reverse engineer certain portions of the Company's products or obtain
and use information the Company  regards as Proprietary.  The Company  currently
has no patents and existing  copyright  and trade secret laws offer only limited
protection.  Further,  the laws of some  foreign  countries  do not  protect the
Company's  Proprietary  rights to the same  extent as do the laws of the  United
States. The Company has been and may be required from time to time to enter into
source code escrow agreements with certain  customers,  providing for release of
source  code in the event the  Company  files  bankruptcy  or ceases to continue
doing  business.  Although the Company's  competitive  position may be adversely
affected  by  unauthorized  use  of its  Proprietary  information,  the  Company
believes  that the ability to fully  protect its  intellectual  property is less
significant  to the  Company'  s  success  than are other  factors,  such as the
knowledge,  ability and  experience  of its  employees  and its ongoing  product
development and customer support activities.  There can be no assurance that the
protections put in place by the Company will be adequate.

     There can be no assurance  that third parties will not assert  infringement
or other  claims  against the  Company  with  respect to any  existing or future
products,  or that licenses  would be available if any Company  technology  were
successfully  challenged by a third party, or if it became  desirable to use any
third-party technology to enhance the Company's products.  Litigation to protect
the  Company's  Proprietary  information  or to  determine  the  validity of any
third-party claims could result in significant expense to the Company and divert
the efforts of the Company's technical and management personnel,  whether or not
such litigation is determined in favor of the Company.

     While the Company has no knowledge  that it is infringing  the  Proprietary
rights of any third party,  there can be no assurance  that such claims will not
be asserted in the future with respect to existing or future products.  Any such
assertion  by a third party  could  require  the  Company to pay  royalties,  to
participate in costly  litigation and defend licensees in any such suit pursuant
to indemnification  agreements, or to refrain from selling an alleged infringing
product or service.

Employees

     The  Company  has 13  full-time  employees  at its  facilities  in  Denver,
Colorado,  including one administrative employee, three sales and administrative
employees and nine scientific and technical  employees.  The Company anticipates
hiring up to 30 additional  employees to staff its conversion teams,  additional
sales and marketing personnel and a senior  accounting/financial  manager during
the 12 months. There are no collective  bargaining  agreements,  and the Company
considers its relations with its employees to be good.

                                      -10-

<PAGE>

Item 2 - Properties
-------------------

     The Company currently leases  approximately 3,796 square feet of office and
research  facility  space at 303 E. 17th  Avenue,  Suite 108,  Denver,  Colorado
80203,  at a monthly rental of  approximately  $3,385.  The Company has a verbal
understanding  to lease  approximately  2,400  additional  square feet of office
space that is  immediately  adjacent to its present space at a monthly rental of
approximately $2,150 for a 36-month term. Management anticipates entering into a
lease  agreement for this space before the end of the calendar year.  Management
also anticipates  extending the lease on its existing space for 36 months at the
same rental cost that it currently pays at that time. The additional  space will
be  needed  to  provide  office  space for the  additional  technical  and sales
personnel  that the Company  anticipates  hiring during the next 12 months.  The
Company's  existing facility is adequate for the present number of employees and
the  additional  2,400  square  feet of  space is  expected  to be  adequate  to
accommodate the projected increase in personnel.

Item 3 - Legal Proceedings
--------------------------

     The Company is not a party to any legal  proceedings,  nor does  management
believe that any such proceedings are contemplated.

Item 4 - Submission of Matters To a Vote of Security Holders
------------------------------------------------------------

     No  matters  were  submitted  by the  Company  to a vote  of the  Company's
shareholders through the substitution of proxies or otherwise, during the fourth
quarter of the fiscal year covered by this report.


                                     PART II
                                     -------

Item 5 - Market For Registrant's Common Equity and Related Stockholder Matters
------------------------------------------------------------------------------

     The Company's Common Stock is traded in the over-the-counter  market on the
Nasdaq Electronic Bulletin Board under the symbol "ACLY."

     The table set forth below presents the range, on a quarterly basis, of high
and low bid  prices  per  share of  Common  Stock as  reported  by the  National
Quotation  Bureau,  Inc. The quotations  represent prices between dealers and do
not include  retail  markup,  markdown or  commissions  and may not  necessarily
represent actual transactions.

              Quarter Ended             High Bid          Low Bid
              -------------             --------          -------
         Fiscal 1995
         -----------
            October 31, 1994              .0625            .02
            January 31, 1995              .04              .02
            April 30, 1995                .055             .02
            July 31, 1995                 .14              .02

         Fiscal 1996
         -----------
            October 31, 1995              .14              .12
            January 31, 1996              .16              .11
            April 30, 1996                .375             .20
            July 31, 1996                1.00              .35

                                      -11-

<PAGE>

     The  closing  bid price of the Common  Stock as of October  28,  1996,  was
$1.9375 per share. The Company had  approximately  141 shareholders of record as
of July 31, 1996, which does not include  shareholders  whose shares are held in
street or nominee names.

     Holders  of common  stock  are  entitled  to  receive  dividends  as may be
declared by the Board of Directors out of funds legally available therefore.  No
dividends  have  been  declared  to date by the  Company,  nor does the  Company
anticipate declaring and paying cash dividends in the foreseeable future.

Item 6 - Selected Financial Data
--------------------------------

     The following  selected  financial data should be read in conjunction  with
the financial  statements and related notes thereto appearing  elsewhere in this
Form 10-K and "Management's  Discussion and Analysis of Financial  Condition and
Results of Operations." The selected financial data as of July 31, 1995 and 1996
and for each of the three  years in the  period  ended  July 31,  1996 have been
derived from the financial  statements of the Company which have been audited by
the Company's independent auditors and are included elsewhere in this Form 10-K.
The selected  financial  data for each of the two years in the period ended July
31, 1993 have been derived from the audited financial  statements of the Company
not  included  herein.  The  selected  financial  data  provided  below  is  not
necessarily  indicative  of  the  future  results  of  operations  or  financial
performance of the Company.

<TABLE>
<CAPTION>


                                                                            Year Ended July 31,
                                                 --------------------------------------------------------------------------
Statement of Operations Data:                      1992             1993             1994           1995          1996
                                                   ----             ----             ----           ----          ----  
                                                                       (in thousands except per share data)
<S>                                              <C>             <C>            <C>              <C>            <C>   
Revenue:
    Product license and customer support fees   $        626    $        769    $        415    $        751   $        684
    Resale of purchased software                        --                37             150             338            338
    Consulting fees                                     --                71              41             294          1,075
    Other revenues                                      --              --                83            --             --
  Total revenue                                          626             877             689           1,383          2,097
  Income (loss) from operations                         (225)            (20)           (269)            370          1,114
  Net income (loss)                                     (218)            (10)           (262)            382          1,193
  Net income (loss) per share                          (.011)          (.000)          (.012)           .015           .044
  Weighted average shares outstanding             19,826,668      21,970,000      21,970,000      26,364,000     26,935,508
</TABLE>


                                                      July 31,
                                               -----------------------
                                               1995              1996
                                               ----              ----
Balance Sheet Data:                         
  Working capital                              $500             $1,704
  Current assets                                731              2,011
  Current liabilities                           231                307
  Total assets                                  978              2,317
  Total liabilities                             231                377
  Shareholders' equity                          747              1,940



Item 7 - Management's Discussion and Analysis of FinancialCondition and Results 
         of Operations
--------------------------------------------------------------------------------

Overview

     The Company began to develop software conversion tools for VAX/VMS users to
convert  to UNIX  environments  in  1987.  The  Company's  total  revenues  have
increased  from $688,885 in fiscal 1994 to  $2,097,011  in fiscal 1996,  and net
income has  increased  from a loss of ($261,750) in fiscal 1994 to $1,192,780 in


                                      -12-

<PAGE>

fiscal  1996.  The growth in  revenues  and net income  reflects  the  Company's
decision in fiscal 1994 to develop specialized  consulting services which can be
delivered  with the  Company's  software  tools  as an  integrated  solution  to
clients'  conversion  needs.  The Company's  consulting  services  accounted for
approximately  51% of 1996 revenues.  The growth in revenues and net income also
reflects  the  Company's  success in  establishing  international  sales,  which
accounted for  approximately 15% of total revenues in fiscal 1996 as compared to
7% of total revenues in fiscal 1995. Future revenues from sales of the Company's
products  and  services  are  dependent  upon  users of VAX/VMS  Legacy  Systems
continuing  to elect  to  convert  their  data  and  applications  to UNIX or NT
environments.

     The Company  derives its revenue  primarily  from  software  license  fees,
software  maintenance fees and professional service fees. The Company's software
is licensed to primarily Fortune 1,000 companies and governmental  organizations
worldwide.

     Professional  services are provided in conjunction  with software  products
and also are sold  separately  if required by the  customer.  In  addition,  the
Company  realizes  license  revenue from sales of software by licensees who have
embedded the Company's software in their software pursuant to run time licenses.
The Company's  products and services are marketed through its sales force,  both
domestically and internationally.

     Revenue is recognized  for  consulting  services as services are performed.
Revenue  is  recognized  on  product  licensing   agreements  when  the  Company
substantially completes its obligations under the agreement and the customer has
accepted the product.  Revenue is recognized  for customer  support  services on
maintenance  agreements  using  the  straight-line  method  over the term of the
agreement.  In connection with its software business, the Company functions as a
value-added reseller of computer software,  in that it licenses certain software
from unaffiliated  third parties that is included within certain of its software
products.   The  Company  recognizes  revenue  when  the  computer  software  is
delivered.

Results of Operations

     The following table sets forth, for the periods  indicated,  the percentage
of net sales  represented by certain items included in the Company's  Statements
of Operations:

                                            Fiscal year ended July 31,
                                           ---------------------------
                                            1994       1995      1996
                                           ------     ------    ------
Total revenues                             100.00%    100.00%   100.00%
Cost of services                            19.40      10.69     14.86
Cost of software purchased for resale       10.17       7.32      5.61
General and administrative                  43.94      19.12      9.34
Marketing and advertising                   43.37      26.70     15.50
Research and development                    22.10       9.40      1.57
                                            ------    ------    ------
Income (loss) from operations              (38.98)     26.77     53.12
Interest income                              0.98       0.89      2.07
Income tax benefit                           0.00       0.00      1.69
                                           ------     ------    ------
Net income (loss)                          (38.00%)    27.66%    56.88%
                                            ======    ======    ======


Year Ended July 31, 1996 Compared to Year Ended July 31, 1995

     Total  revenues  for the year  ended July 31,  1996,  were  $2,097,011,  an
increase of  $714,475,  or 51.68%,  as compared to the year ended July 31, 1995.
Consulting fees for the year ended July 31, 1996, were  $1,074,744,  an increase
of  $780,614,  or 265.40% as  compared  to the year  ended  July 31,  1995,  and
represented  51.25% of total  revenues.  This increase  primarily  resulted from
management's  continued  emphasis  in fiscal  1996 on  marketing  of  consulting

                                      -13-

<PAGE>

services with less emphasis on marketing of products alone.  Management  expects
this trend to continue in the future.  Product license and customer support fees
for the year ended July 31, 1996, were $683,997, a decline of $66,587, or 8.87%,
as compared to the year ended July 31, 1995. This decline is consistent with the
emphasis  on  consulting  noted  above.  Revenues  from the resale of  purchased
software for the year ended July 31, 1996,  were $338,270,  an increase of $448,
or 0.13%, as compared to the year ended July 31, 1995.

     During the year ended July 31, 1996,  sales to the Company's  three largest
customers were $239,025, $282,100 and $353,075,  representing 11.40%, 13.45% and
16.84% of the Company's revenues, respectively. In comparison, sales to a single
customer  represented 10.88% of total revenues for the year ended July 31, 1995.
The loss of a major  customer  could have a significant  impact on the Company's
financial performance in any given year.

     Cost of  services  for the year  ended  July 31,  1996,  was  $311,534,  an
increase of $163,791,  or 110.86%,  as compared to the year ended July 31, 1995.
Cost of  services as a  percentage  of revenues  from both  consulting  fees and
product  license and customer  support fees  increased  from 14.14% for the year
ended July 31, 1995 to 17.71% for the year ended July 31,  1996.  This  increase
occurred principally because of the increased concentration of Company resources
and personnel in delivery of consulting services.

     Cost of software purchased for resale for the year ended July 31, 1996, was
$117,737,  an increase of $16,471 or 16.27%,  as compared to the year ended July
31, 1995. This increase was directly  related to the increased sales of products
and related consulting services.

     General and  administrative  expenses for the year ended July 31, 1996 were
$195,802,  a decrease of $68,563,  or 25.93%, as compared to the year ended July
31, 1995. This decrease was principally due to reduced salary cost that resulted
from the departure of a senior executive who was not replaced.

     Marketing  and  advertising  expenses for the year ended July 31, 1996 were
$324,962,  a decrease of $44,203,  or 11.97%, as compared to the year ended July
31, 1995. This decrease was  principally  due to decreased  advertising in trade
publications  and termination of direct mail  advertising.  Management  believes
that  advertising  the  Company's  services and products  electronically  on the
Company's web page is a more cost  efficient  and effective  method to reach the
Company's target markets.

     Research  and  development  expenses  for the year ended July 31, 1996 were
$33,038,  a decrease of $96,921,  or 74.58%,  as compared to the year ended July
31, 1995. This decrease resulted because technical  personnel  normally involved
in  research  and  development   provided  a  substantial  amount  of  technical
assistance in connection with the Company's  consulting  services.  For the year
ended July 31, 1996,  $193,621 of cost of service  represented  assistance  from
these technical personnel with consulting projects.

     Interest income for the year ended July 31, 1996, was $43,342,  an increase
of 250.78%,  as compared to the year ended July 31, 1995. This increase resulted
from  increased cash flows from  operations,  that could be invested in interest
bearing instruments.

     As a result of these factors,  operating income for the year ended July 31,
1996, was $1,113,938,  an increase of $743,900,  or 201.03%,  as compared to the
year ended July 31,  1995.  Net  income  for the year ended July 31,  1996,  was
$1,192,780,  an increase of $810,386,  or 211.92%, as compared to the year ended
July 31, 1995.

Year Ended July 31, 1995 Compared to Year Ended July 31, 1994

     Total  revenues  for the year  ended July 31,  1995,  were  $1,382,536,  an
increase of $693,651,  or 100.69%,  as compared to the year ended July 31, 1994.
Consulting fees for the year ended July 31, 1995, were $294,130,  an increase of

                                      -14-
<PAGE>

$252,980,  or  614.78%  as  compared  to the  year  ended  July  31,  1994,  and
represented  21.27% of total  revenues.  This increase  primarily  resulted from
management's  emphasis in fiscal 1995 on marketing of  consulting  services with
less  emphasis on  marketing  of products  alone.  Product  license and customer
support fees for the year ended July 31,  1995,  were  $750,584,  an increase of
$335,577,  or 80.86%, as compared to the year ended July 31, 1994. Revenues from
the  resale  of  purchased  software  for the year  ended  July 31,  1995,  were
$337,822,  an increase of  $188,129,  or 125.68%,  as compared to the year ended
July 31, 1994.

     During the year ended July 31, 1995, 10.88% of the Company's  revenues were
derived  from  sales  to a single  customer.  In  comparison,  sales to a single
customer  represented 14.96% of total revenues for the year ended July 31, 1994.
The  termination  or loss of a single large  customer  could have a  significant
impact on the Company's financial performance in any given year.

     Cost of  services  for the year  ended  July 31,  1995,  was  $147,743,  an
increase of  $14,108,  or 10.56%,  as compared to the year ended July 31,  1994.
Cost of  services as a  percentage  of revenues  from both  consulting  fees and
product license and customer support fees decreased to 14.14% for the year ended
July 31, 1995 from 29.30% for the year ended July 31, 1994.

     Cost of software purchased for resale for the year ended July 31, 1995, was
$101,266,  an increase of $31,182 or 44.49%,  as compared to the year ended July
31, 1994. This increase was directly  related to the increased sales of products
and related consulting services.

     General and  administrative  expenses for the year ended July 31, 1995 were
$264,365,  a decrease of $38,298,  or 12.65%, as compared to the year ended July
31, 1994. This decrease was largely due to reduced salary costs.

     Marketing  and  advertising  expenses for the year ended July 31, 1995 were
$369,165,  an increase of $70,405, or 23.57%, as compared to the year ended July
31, 1994. This increase was  principally  due to increased  advertising in trade
publications,  increased  use of  specific  product  literature  and direct mail
advertising.

     Research  and  development  expenses  for the year ended July 31, 1995 were
$129,959,  a decrease of $22,286,  or 14.64%, as compared to the year ended July
31, 1994. This decrease resulted because technical  personnel  normally involved
in  research  and  development   provided  a  substantial  amount  of  technical
assistance in connection with the Company's  consulting  services.  For the year
ended July 31,  1995,  $21,187 of cost of service  represented  assistance  from
these technical personnel with consulting projects.

     Interest income for the year ended July 31, 1995, was $12,356,  an increase
of 83.00% as compared to the year ended July 31, 1994.  This  increase  resulted
from  increased  cash flow from  operations,  that could be invested in interest
bearing instruments.

     As a result of these factors,  operating income for the year ended July 31,
1995, was $370,038, an increase of $638,540, or 237.82%, as compared to the year
ended July 31, 1994.  Net income for the year ended July 31, 1995, was $382,394,
an increase  of  $644,144,  or  246.09%,  as compared to the year ended July 31,
1994.

Liquidity and Capital Resources

     The Company  has relied  principally  upon  internally  generated  funds to
finance its  operations  and growth.  During the year ended July 31,  1996,  the
liquidity  of  the  Company  improved  significantly  because  of a  substantial
increase in revenues  while  expenses  remained  relatively  stable from 1995 to
1996.  During the year ended July 31, 1996, cash and cash equivalents  increased
221.66% from $437,425 to $1,407,026.  The Company generated $1,075,515 cash from

                                      -15-

<PAGE>

operations  during the year ended July 31, 1996,  compared to $406,610 cash from
operations  generated during the year ended July 31, 1995.  Shareholders' equity
increased  159.69% from  $746,936 at July 31, 1995,  to  $1,939,716  at July 31,
1996.   The  primary   reasons  for  the  Company's   increased   liquidity  and
shareholders'  equity positions is the increased cash flow from  operations.  At
July  31,  1996,  the  Company  had  working  capital  of  $1,703,605  and  cash
equivalents  of  $1,407,026.  The Company is  planning a public  offering of its
Common  Stock  in  order to  generate  additional  funds  for  expansion  of the
Company's business.


Item 8 - Financial Statements and Supplementary Data
----------------------------------------------------

     The response to this item is submitted as a separate section of this report
beginning on page F-1.

Item 9 - Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure
--------------------------------------------------------------------------------
     
The Company has not had any  reported  or  material  disagreement  with its
accountants  on any matter of  accounting  principles,  practices  or  financial
statement disclosure.


                                    PART III

Item 10 - Directors and Executive Officers of the Registrant
------------------------------------------------------------

     Set forth below is certain information concerning the directors,  executive
officers and key employees of the Company as of the date hereof.

           Name                         Age            Position
           ----                         ---            --------
Directors and Executive Officers
Thomas V. Geimer                         49        Chairman of the Board of
                                                   Directors,
                                                   Secretary, Chief Financial
                                                   Officer,
                                                   Chief Executive Office
Harry J. Fleury                          49        President
David C. Wilhelm(1)                      77        Director
A. Alexander Arnold III(1)               54        Director
Key Employees
Timothy Fitzpatrick                      41        Vice President Sales and
                                                   Marketing
Dr. Franz Huber                          51        Chief Scientist
---------------
(1)   Members of the Audit and Compensation Committees

     Officers  are  appointed  by and  serve at the  discretion  of the Board of
Directors.  Each  director  holds  office  until  the  next  annual  meeting  of
shareholders  or until a successor has been duly elected and  qualified.  All of
the Company's  officers  devote their  full-time to the  Company's  business and
affairs.  There are no family  relationships  between any  directors,  executive
officers or key employees.

     Thomas V.  Geimer has been the  Chairman  of the Board of  Directors  and a
director of the Company since 1984. He currently  serves as the Chief  Executive
Officer,  Chief  Financial  Officer and Secretary of the Company.  Mr. Geimer is
responsible  for  development  of the Company's  business  strategy,  day to day
operations,  the accounting and finance  functions and federal  government sales
relationships.  Before assuming full-time  responsibilities at the Company,  Mr.
Geimer founded and operated an investment banking firm.

                                      -16-

<PAGE>

     Harry J. Fleury has served as President of the Company since June 1995. Mr.
Fleury is responsible for engineering  activities and strategies of the Company,
and for  international  sales.  From March 1993 until June 1995,  Mr. Fleury was
Vice President of  International  Sales of the Company with  responsibility  for
developing and directing  international  sales.  Prior to joining the Company in
1993,  Mr.  Fleury was employed by Digital  Equipment  Corporation  serving in a
variety of engineering  and management  positions for over 26 years.  Mr. Fleury
managed DEC's European, Asian and Pacific corporate engineering groups that were
responsible  for  service  capability  world wide,  for  internal  and  external
products and for  strategic,  operational  and tactical  direction.  Mr.  Fleury
received  an  electrical  engineering  degree  in 1967  from  Vermont  Technical
Engineering College.

     David C.  Wilhelm has been a director of the Company  since June 1988.  For
the  past  30  years,  Mr.  Wilhelm  has  been  President  of  Wilhelm  Co.,  an
agribusiness  company  principally  engaged in the cattle  feeding and commodity
business,  located in Denver,  Colorado.  Since  1972,  Mr.  Wilhelm  has been a
director of Colorado National Bank located in Denver, Colorado. Mr. Wilhelm is a
member of the  International  Executive  Service  Corp.,  and was  formerly  the
Director  of the  Colorado  Cattlemen's  Association.  Mr.  Wilhelm  received  a
Bachelor of Arts in American History from Yale University in 1942.

     A.  Alexander  Arnold  III has served as a director  of the  Company  since
September  1992.  For the past 25 years,  Mr.  Arnold  has  served as a Managing
Director of  Trainer,  Wortham & Co.,  Inc.,  a New York  City-based  investment
counselor firm, which Mr. Arnold  co-founded.  Mr. Arnold received a Bachelor of
Arts   degree  from   Rollins   College  in  1964  and  a  Masters  of  Business
Administration from Boston University in 1966.

     Timothy  Fitzpatrick has served as Vice President of Sales and Marketing of
the Company since 1992. Mr.  Fitzpatrick is responsible  for domestic  marketing
and  sales of the  Company's  products  and  services.  From  1989 to 1992,  Mr.
Fitzpatrick  was employed as Vice  President of Software  Translations,  Inc. He
also was  General  Manager  of  Datavision  (UK)  Ltd.  from  1987 to 1989.  Mr.
Fitzpatrick  received a Bachelor of Arts Degree in City  Planning  from Michigan
State University.

     Dr. Franz Huber has served as Chief  Scientist  of the Company  since 1988.
Dr.  Huber is  responsible  for the  design  and  development  of the  Company's
software products.  Prior to joining the Company,  Dr. Huber (i) taught Computer
Science at the  University of Colorado;  (ii) taught  Computer  Applications  in
Biomedical  Research at the  University of Colorado  Medical  Center;  and (iii)
worked for several  technology  companies in various  research and  development,
scientific and technical positions. Dr. Huber received his Ph.D. in Physics from
the University of Vienna, Austria in 1968.

Board Committees

     The Board of  Directors  maintains a  Compensation  Committee  and an Audit
Committee. The Compensation Committee is composed of Messrs. Arnold and Wilhelm,
the Company's non-management directors. The primary function of the Compensation
Committee is to review and make recommendations to the Board with respect to the
compensation, including bonuses, of the Company's officers and to administer the
Company's stock option plan. The Audit Committee is comprised of Messrs.  Arnold
and Wilhelm.  The  function of the Audit  Committee is to review and approve the
scope of audit procedures  employed by the Company's  independent  auditors,  to
review and  approve the audit  reports  rendered  by the  Company's  independent
auditors and to approve the audit fee charged by the independent  auditors.  The
Audit  committee  reports to the Board of Directors with respect to such matters
and recommends the selection of independent auditors.

                                      -17-

<PAGE>

Item 11 - Executive Compensation
--------------------------------

     Summary  Compensation  Table. The following table sets forth the annual and
long-term  compensation  for  services in all  capacities  to the Company in the
three fiscal years ended July 31, 1996, of Thomas V. Geimer and Harry J. Fleury,
who are the Company's most highly compensated  executive  officers,  and Timothy
Fitzpatrick a key employee of the Company.
 
<TABLE>
<CAPTION>
                   
                                                                                     Long Term
                                                   Annual Compensation              Compensation
                            ----------------------------------------------------    ------------ 
                                                                        Other        Number of
Name and                    Fiscal                                     Annual        Options
Principal Position          Year     Salary            Bonus        Compensation     Awarded
------------------          ----     ------            -----        ------------     -------
<S>                         <C>    <C>             <C>             <C>              <C>         
Thomas V.  Geimer           1996   $   70,458      $   37,500(1)   $     --         4,800,000(2)
  Chief Executive Officer   1995   $   64,250      $     --        $     --              --
  and Chief Financial       1994   $   62,130      $     --        $     --              --
  Officer

Harry J. Fleury             1996   $   61,000(3)   $   10,331      $     --              --
 President                  1995   $   50,846(3)   $    6,685                         400,000(4)
                            1994   $   20,961      $      755

Timothy Fitzpatrick         1996   $   57,885      $    44,030(5)  $     --
 Vice President             1995   $   55,000      $    23,657 
 Sales  and  Marketing      1994   $   55,000      $    17,832 
</TABLE>

-------------
(1)  Represents  deferred  compensation for Mr. Geimer pursuant to the Company's
     deferred  compensation plan, $37,500 of which vested during the last fiscal
     year, and $37,500 of which will vest during the current fiscal year.
(2)  Represents stock options and warrants to purchase an aggregate of 4,800,000
     shares at an  exercise  price of $0.06 per share that were  extended  until
     December 31, 1997.
(3)  Includes  sales  commissions  earned by Mr. Fleury on revenues from certain
     international sales.
(4)  Grant of employee  stock option to purchase  400,000  shares at an exercise
     price of $0.09  per  share,  200,000  of which  previously  vested  and the
     remaining 200,000 of which will vest in the future.
(5)  Represents  sales  commissions  earned by Mr.  Fitzpatrick on revenues from
     certain domestic sales.

     Option/Warrant  Values.  The following table provides  certain  information
concerning the fiscal year end value of unexercised  options or warrants held by
Mr. Fleury and Mr. Geimer,  each of whom served as the Company's chief executive
officer during a portion of 1996, and for Mr. Fitzpatrick.

                                      -18-

<PAGE>
<TABLE>
<CAPTION>


                                  Aggregated Option Exercises in 1996 Fiscal Year
                                         and Fiscal Year End Option Values

                    Shares                    Number of Unexercised        Value of Unexrcised
                  Acquired on   Value        Options at Fiscal Year       In-the-Money Options
Name               Exercise    Realized      End                          at Fiscal Year End(1)
----               --------    --------   --------------------------    -----------------------
                                            Exer-           Unexer-      Exer-        Unexer-
                                            cisable         cisable      cisable      cisable
                                            -------         -------      -------      -------
<S>                <C>         <C>        <C>              <C>          <C>          <C>      
Harry J. Fleury       __        __         200,000(2)      200,000(2)   $  194,000   $  194,000

Thomas V.  Geimer     __        __       4,800,000               0      $4,656,000            0

Timothy Fitzpatrick   __        __         500,000               0      $  485,000            0
</TABLE>
------------
(1)  Value  calculated by determining  the difference  between  closing  average
     price on July 31, 1996,  of $1.03 per share and the  exercise  price of the
     options or warrants.  Fair market value was not  discounted  for restricted
     nature of any stock purchased on exercise of these options or warrants.
(2)  Mr.  Fleury's  options were granted on June 1, 1995. A total of 200,000 (or
     50%) of the options have vested and,  subject to his  continued  employment
     with the Company, the remainder of his options will vest in the future.

Compensation Pursuant to Plans

     Employee  Retirement Plan. During fiscal year 1996, the Company established
a SARSEP-IRA  employee  pension  plan that covers  substantially  all  full-time
employees.  Under the plan,  employees  have the option to  contribute up to the
lesser  of  15%  of  their   compensation  or  $9,240.   The  Company  may  make
discretionary  contributions to the plan based on recommendations from the Board
of Directors.  For the year ended July 31, 1996, the Board did not authorize any
contributions.

     Deferred  Compensation Plan. In January of 1996, the Company  established a
deferred  compensation  plan for the Company's  employees.  The Company may make
discretionary  contributions  to the plan  based upon  recommendations  from the
Board of Directors.

     Options and Warrants.  A total of 1,900,000  shares of the Company's Common
Stock,  no par value,  have been issued and  reserved  for issuance to employees
pursuant to the  Company's  existing  non-qualified  stock option plan.  Options
currently  outstanding  held by  certain  of the  Company's  current  and former
employees allow for the purchase of the Company's  restricted  Common Stock at a
price of $.09 per share.  According  to the  governing  option  agreements,  the
options  vest  every 12 months in  one-quarter  increments  of the total  amount
granted,  over a four year period  beginning on the date they are  granted,  and
remain  exercisable  for three  years  following  the  original  date they vest.
Notwithstanding the foregoing,  the Company's Board of Directors during the 1994
fiscal year adopted a resolution providing that for so long as a recipient of an
option  grant  remains in the employ of the  Company,  the options held will not
expire and if the recipient's employment is terminated,  the holder will have up
to 90 days after  termination to exercise any vested but previously  unexercised
options.  All of the currently  outstanding options have vested,  except 200,000
options held by Mr. Fleury, the Company's current president,  and 50,000 options
held by  Joseph  Steger,  which  will  fully  vest in the  future.  All  options
previously  granted are  administered by the Company's  Board of Directors.  The
options  provide for adjustment of the number of shares  issuable in the case of
stock dividends or stock splits or  combinations  and adjustments in the case of
recapitalization, merger or sale of assets.

                                      -19-


<PAGE>

     The Company  currently has  outstanding an aggregate of 4,800,000  warrants
and options held by Thomas V. Geimer,  Chairman of the Board of Directors of the
Company ("Affiliate's  Warrants").  The Affiliate's Warrants are exerciseable at
an  exercise  price of $.06 per  share.  The  Affiliate's  Warrants,  which were
originally  scheduled to expire at the close of calendar 1995, were extended for
two years and,  accordingly,  they are exercisable  until December 31, 1997. The
Affiliate's  Warrants are not redeemable.  The exercise price of the Affiliate's
Warrants and the number of shares of Common Stock to be obtained  upon  exercise
of the Affiliate's  Warrants are subject to adjustment in certain  circumstances
including (i) the payment of a stock  dividend;  (ii) a forward or reverse stock
split; (iii) a consolidation or combination involving the Common Stock; and (iv)
a reclassification or recapitalization involving the Common Stock.

     The Company has an incentive stock option plan (the "Qualified Plan") which
provides  for the grant of options to  purchase  an  aggregate  of not more than
700,000  shares  (whether  a  reverse  stock  split is  effected  or not) of the
Company's  Common Stock.  The purpose of the  Qualified  Plan is to make options
available to  management  and  employees of the Company in order to provide them
with a more direct stake in the future of the Company and to  encourage  them to
remain  with the  Company.  The  Qualified  Plan  provides  for the  granting to
management  and employees of  "incentive  stock  options"  within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the "Code").

     The  Company has a  non-qualified  stock  option  plan (the  "Non-Qualified
Plan")  which  provides for the grant of options to purchase an aggregate of not
more than 300,000  (whether a reverse  stock split is effected or  not)shares of
the Company's Common Stock. The purpose of the Non-Qualified  Plan is to provide
certain key employees, independent contractors, technical advisors and directors
of the  Company  with  options  in  order  to  provide  additional  rewards  and
incentives for contributing to the success of the Company. These options are not
incentive stock options within the meaning of Section 422 of the Code.

     The Qualified  Plan and the  Non-Qualified  Plan (the "Stock Option Plans")
will be administered by a committee (the "Committee")  appointed by the Board of
Directors  which  determines  the persons to be granted  options under the Stock
Option Plans and the number of shares subject to each option. No options granted
under the Stock Option Plans will be  transferable by the optionee other than by
will  or  the  laws  of  descent  and  distribution  and  each  option  will  be
exercisable,  during the lifetime of the optionee,  only by such  optionee.  Any
options  granted  to an  employee  will  terminate  upon  his  ceasing  to be an
employee, except in limited circumstances,  including death of the employee, and
where  the  Committee  deems it to be in the  Company's  best  interests  not to
terminate the options.

     The  exercise  price of all  incentive  stock  options  granted  under  the
Qualified Plan must be equal to the fair market value of such shares on the date
of grant as determined by the  Committee,  based on guidelines  set forth in the
Qualified Plan. The exercise price may be paid in cash or (if the Qualified Plan
shall meet the  requirements of rules adopted under the Securities  Exchange Act
of 1934) in Common Stock or a combination of cash and Common Stock.  The term of
each option and the manner in which it may be exercised  will be  determined  by
the Committee, subject to the requirement that no option may be exercisable more
than 10 years after the date of grant. With respect to an incentive stock option
granted  to a  participant  who owns more than 10% of the  voting  rights of the
Company's  outstanding capital stock on the date of grant, the exercise price of
the option must be at least  equal to 110% of the fair market  value on the date
of grant and the option may not be  exercisable  more than five years  after the
date of grant.

     No options have been granted to date under either the Qualified Plan or the
Non-Qualified  Plan.  The Stock  Option  Plans were  approved  by the  Company's
shareholders at a Special Shareholders Meeting held on November 8, 1996.

                                      -20-
<PAGE>

Compliance with Section 16(a) of the Exchange Act

     Mr.  Wilhelm,  a director  of the  Company,  failed to file Forms 4 for the
months of April,  May and July to report  purchases  of an  aggregate  of 85,300
shares in the open market.  The Company has received  representations  from each
other  person  that served  during  fiscal 1996 as an officer or director of the
Company  confirming  that there were no  transactions  that occurred  during the
Company's most recent fiscal year end which required the filing of a Form 5.

Item 12 - Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

                                                Shares Beneficially Owned
Name and Address                                -------------------------
of Beneficial Owner                             Number            Percent
-------------------                             ------            -------


Thomas V. Geimer(1), (2)                        5,000,000         18.68%

Harry J. Fleury(1), (3)                           775,000          3.46%

Timothy Fitzpatrick(1),(4)                        500,000          2.22%

Dr. Franz Huber(1),(4)                            500,000          2.22%

A. Alexander Arnold III(5)                      4,900,000         22.30%
845 Third Ave., 6th Flr
New York, NY  10021

David C. Wilhelm(6)                             1,295,000          5.89%
3130 E. Exposition Street
Denver, CO 80209

Solar Satellite (7)                             2,110,600           9.60%
Communication, Inc.
5650 Greenwood Plaza
Boulevard #107
Englewood, CO 80111

Officers and Directors                         11,970,000          44.06%
as a Group (4 persons)


-------------
(1)  The address for Messrs.  Geimer,  Fleury,  Fitzpatrick  and Huber is 303 E.
     17th Ave., #108, Denver, CO 80203.
(2)  Includes  4,800,000  shares  which  may be  purchased  by Mr.  Geimer  upon
     exercise of his  warrants and  options. 
(3)  Includes options to purchase 400,000 shares,  200,000 of which vested prior
     to this offering and 200,000 of which will vest in the future.
(4)  Represents  shares which may be acquired by Messrs.  Fitzpatrick  and Huber
     upon exercise of their options.
(5)  Represents  4,900,000 shares held by four trusts.  Mr. Arnold merely serves
     as trustee for each of those trusts but is not a beneficiary  of and has no
     pecuniary interest in any of those trusts.
(6)  Represents 1,295,000 shares held by the Jean C. Wilhelm Trust, of which Mr.
     Wilhelm is the lifetime beneficiary and trustee.
(7)  Solar  Satellite  Communications,  Inc. is not  affiliated  with any of the
     Company's   officers,   directors,   key  employees,   or  other  principal
     shareholders.  Based  upon its  review of  certain  reports  filed with the
     Securites and Exchange  Commission and certain other inquiries,  management
     believes that Solar Satellite is an inactive  company that is controlled by
     certain Japanese Nationals and a company controlled by those persons.

                                      -21-

<PAGE>

Item 13 - Certain Relationships and Related Transactions
--------------------------------------------------------

Certain Transactions

     During fiscal year 1996,  the Company  established a deferred  compensation
plan  for  the  Company's   employees.   The  Company  may  make   discretionary
contributions to the plan based on recommendations  from the Board of Directors.
As of July 31,  1996,  the  deferred  compensation  agreement  was funded in the
amount of $75,000 for Thomas V. Geimer,  and Mr. Geimer was vested in $37,500 of
this amount. The balance of $37,500 will vest during the current fiscal year.

     There were no other  transactions or series of transactions  for the fiscal
year ended July 31, 1996 nor are there any currently proposed  transactions,  or
series of the same to which the Company is a party, in which the amount involved
exceeds  $60,000 and in which,  to the  knowledge of the Company,  any director,
executive  officer,  nominee,  five  percent  shareholder  or any  member of the
immediate  family  of the  foregoing  persons,  have or will  have a  direct  or
indirect material interest.


                                     PART IV

Item 14 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K
--------------------------------------------------------------------------

(a) and (d)   Financial Statements and Schedules

     The  financial  statements  listed by the  Registrant  on the  accompanying
Financial  Statements  (see  pages F-1  through  F-10) are filed as part of this
Annual Report.

(b)           Reports on Form 8-K:  The Company has not filed a report on
              Form 8-K.

(c)           Exhibits - None.


                                      -22-

<PAGE>

                                   GLOSSARY OF TERMS

Client/Server         The model of interaction in distributed data processing in
                      which a program at one site sends a request to a program
                      at another site and awaits a response.  The requesting
                      program is called a client, and the answering program is
                      called a server.

COTS                  Acronym for "Commercial Off The Shelf" which means
                      hardware and/or software that is readily available for
                      purchase.

Compiler              A program that converts another program from some source
                      language (or programming language) to machine language
                      (object code).

DEC                   Acronym for "Digital Equipment Corporation."

Interoperability      The ability of software and hardware, on multiple
                      machines, from multiple vendors to communicate.

Legacy Code           Existing software, including proprietary applications,
                      out-dated commercial vendor applications, data bases and
                      element relationships, that have been in use for an
                      extended period of time, thus accumulating the "legacy" of
                      corporate memory, files and information system
                      functionality that may no longer adequately satisfy the
                      owner.

Legacy System         Existing hardware and network systems, especially
                      proprietary, closed mainframe environments or out-dated
                      architectures that have been in use for an extended period
                      of time, typically with limited functionality and limited 
                      or no compatibility with more modern systems.  DEC's VMS 
                      operating system is an example of a Legacy System.

Network               Hardware and software data communication systems.

NT                    Refers to the Windows NT operating system which is the
                      latest open system architecture for Windows developed by
                      Microsoft Corporation.

Open Systems          Computer and communications environments based on formal
                      and de facto interface standards.  Such interfaces should
                      not be controlled by a single vendor and must be freely 
                      available.  Systems built using these standard interfaces
                      provide portability of software across standard computer
                      platforms, Interoperability between systems and much 
                      greater choice and flexibility in systems procurement.

Operating System      The software which schedules tasks, allocates storage, 
                      handles the interface to hardware and presents a default 
                      interface to the user when no application program is 
                      running.

Portability           The ease with which a software application can be made to
                      run in a new environment.

Porting               The process or ability to electronically "port" or move 
                      data, files and software from one computer or Network 
                      environment to another computer or Network environment.

Proprietary           A product not conforming to open system standards, that
                      was typically developed by a particular hardware
                      manufacturer for its own computers.

Re-engineering        The examination and modification of a system to 
                      reconstitute it in a new form and the subsequent
                      implementation of the new form.



                                       23

<PAGE>

RISC                   Acronym for reduced instruction set computing.

UNIX                   A widely used multi-user, general purpose operating 
                       system.  A trademark of X/Open Company Limited, for an
                       operating system originally developed at the Bell 
                       Laboratories of AT&T in the late 1960's and early 1970's 
                       and subsequently enhanced by the University of California
                       at Berkeley, AT&T, the Open Software Foundation (OSF) 
                       and others.

VAX                    Virtual Address eXtension.  Digital Equipment 
                       Corporation's proprietary 32-bit minicomputer, 
                       considered one of the most successful designs in industry
                       history.

VAX/VMS                As used in this Prospectus shall refer to DEC's VAX 
                       minicomputers, which utilize DEC's VMS operating system.

VMS                    The brand name of the proprietary multi-user, multi-
                       tasking, virtual memory operating system provided by DEC
                       with its VAX minicomputers.

Workstation            A general purpose computer designed to be used by one 
                       person at a time and which offers higher performance than
                       normally found in a personal computer, especially with 
                       respect to graphics, processing power and the ability to 
                       carry out several tasks at the same time.
   
Year 2000 Problem      The Year 2000 Problem arises from the widespread use of 
                       computer programs that rely on two-digit date codes to 
                       perform computations and decision making functions. Many 
                       of these computer programs may fail due to an inability 
                       to properly interpret date codes. For example, such 
                       programs may misinterpret "00" as the year 1900 rather
                       than 2000.
    

                                       24
               

<PAGE>




<PAGE>


INDEPENDENT AUDITORS' REPORT

Accelr8 Technology Corporation:

We  have  audited  the  accompanying   balance  sheets  of  Accelr8   Technology
Corporation  as of July  31,  1996  and  1995,  and the  related  statements  of
operations,  shareholders' equity, and cash flows for each of the three years in
the  period  ended  July  31,  1996.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the  financial  position of the Company as of July 31, 1996 and 1995,
and the results of its operations and its cash flows for each of the three years
in the  period  ended  July  31,  1996 in  conformity  with  generally  accepted
accounting principles.

DELOITTE & TOUCHE LLP

Denver, Colorado
September 4, 1996



                                      F-l



<PAGE>



ACCELR8 TECHNOLOGY CORPORATION

BALANCE SHEETS
JULY 31, 1996 AND 1995
--------------------------------------------------------------------------------

ASSETS                                               1996             1995
        
CURRENT ASSETS:
  Cash and cash equivalents                     $ 1,407,026         $ 437,425
  Accounts receivable                               431,252           292,536
  Prepaid expenses and other                         49,695             1,170
  Deferred tax assets (Note 6)                      123,223
                                                -----------         ---------
      Total current assets                        2,011,196           731,131
                                                -----------         ---------

PROPERTY AND EQUIPMENT:
  Computer equipment                                209,735           248,620
  Furniture and fixtures                             11,231            11,231
                                                -----------         ---------
    Total property and equipment                    220,966           259,851
  Less accumulated depreciation                    (150,453)         (189,346)
                                                -----------         ---------
    Net property and equipment                       70,513            70,505
                                                -----------         ---------

SOFTWARE DEVELOPMENT COSTS, less accumulated
 amortization: 1996, $746,260; 1995, $650,023       160,321           176,015

OTHER ASSETS (Note 7)                                75,000
                                                -----------         ---------
TOTAL                                            $2,317,030         $ 977,651
                                                 ----------         ---------

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable                               $   52,091         $  60,141
  Income taxes payable                               18,000
  Salaries and payroll taxes                         20,316            30,773
  Product development advance payable (Note 2)       50,000            50,000
  Deferred consulting revenue                        91,724
  Deferred maintenance revenue                       75,460            89,801
                                                -----------         ---------
      Total current liabilities                     307,591           230,715
                                                -----------         ---------
DEFERRED TAX LIABILITIES (Note 6)                    69,723
                                                -----------         ---------

COMMITMENTS (Note 7)

SHAREHOLDERS' EQUITY (Note 3):

 Common stock, no par value; 55,000,000
  shares authorized; 21,970,000 shares
  issued and outstanding                         1,970,970         1,970,970
 Contributed capital                                41,449            41,449
 Accumulated deficit                               (72,703)       (1,265,483)
                                               -----------         ---------

   Shareholders' equity - net                    1,939,716           746,936
                                               -----------         ---------

TOTAL                                          $ 2,317,030         $ 977,651
                                               ===========         =========

See notes to financial statements.

                                      F-2

<PAGE>
<TABLE>
<CAPTION>



ACCELR8 TECHNOLOGY CORPORATION

STATEMENTS OF OPERATIONS
YEARS ENDED JULY 31,1996, 1995 AND 1994
------------------------------------------------------------------------------------------

                                                1996             1995               1994

<S>                                          <C>              <C>                <C>
REVENUES (Note 4):
  Consulting fees                           $ 1,074,744       $ 294,130          $  41,150
  Product license and customer
    support fees                                683,997         750,584            415,007
  Resale of purchased software                  338,270         337,822            149,693
  Other (Note 5)                                                                    83,035
                                            -----------       ---------          ---------
     Total revenues                           2,097,011       1,382,536            688,885
                                            -----------       ---------          ---------                 
 COSTS AND EXPENSES:
  Cost  of services                             311,534         147,743            133,635
  Cost of software purchased for resale         117,737         101,266             70,084
  General and administrative                    195,802         264,365            302,663
  Marketing and advertising                     324,962         369,165            298,760
  Research and development                       33,038         129,959            152,245
                                            -----------       ---------          ---------

     Total expenses                             983,073       1,012,498            957,387
                                            -----------       ---------          ---------
 INCOME (LOSS) FROM OPERATIONS                1,113,938         370,038           (268,502)
 
 INTEREST INCOME                                 43,342          12,356              6,752
                                            -----------       ---------          ---------
 INCOME (LOSS) BEFORE INCOME
  TAXES                                       1,157,280         382,394           (261,750)
                                            -----------       ---------          ---------
 INCOME TAX (PROVISION) BENEFIT
  (Note 6):
  Current                                       (18,000)
  Deferred                                       53,500
                                            -----------       ---------          ---------
  
    Total benefit                                35,500
                                           -----------        ---------          ---------
 NET INCOME (LOSS)                          $ 1,192,780       $ 382,394          $(261,750)
                                            ===========       =========          ========= 
                                                                             
 WEIGHTED AVERAGE SHARES
  OUTSTANDING                                26,935,508      26,364,000         21,970,000
                                             ==========      ==========         ==========


 NET INCOME (LOSS) PER SHARE                $      0.04       $    0.01          $   (0.01)
                                            ===========       =========          =========
</TABLE>

See notes to financial statements.

                                      F-3

<PAGE>

<TABLE>
<CAPTION>


ACCELR8 TECHNOLOGY CORPORATION

STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED JULY 31,1996, 1995 AND 1994
--------------------------------------------------------------------------------
                                  

                                       Common Stock           
                                   -----------------------     Contributed       Accumulated       Shareholders'
                                      Shares        Amount       Capital          Deficit           Equity-Net


<S>                                <C>           <C>             <C>            <C>                 <C>       
BALANCE, JULY 31, 1993              21,970,000   $1,970,970      $41,449        $(1,386,127)        $  626,292

Net loss                                                                           (261,750)          (261,750)
                                    ----------   ----------      -------        -----------         ----------

BALANCE, JULY 31, 1994              21,970,000    1,970,970       41,449         (1,647,877)           364,542

Net income                                                                          382,294            382,394
                                    ----------   ----------      -------        -----------         ----------

BALANCE, JULY 31, 1995              21,970,000    1,970,970       41,449         (1,265,483)           746,936

Net income                                                                        1,192,780          1,192,780
                                    ----------   ----------      -------        -----------         ----------
 
BALANCE, JULY 31, 1996              21,970,000   $1,970,970      $41,449        $   (72,703)        $1,939,716
                                    ==========   ==========      =======        ===========         ==========


</TABLE>





See notes to financial statements


                                      F-4

<PAGE>

<TABLE>
<CAPTION>


ACCELR8 TECHNOLOGY CORPORATION

STATEMENTS OF CASH FLOWS
YEARS ENDED JULY 31,1996, 1995 AND 1994
--------------------------------------------------------------------------------

                                                         1996                1995                 1994
<S>                                                   <C>                  <C>                 <C>   
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                  $ 1,192,780           $382,394            $(261,750)
  Adjustments to reconcile net income (loss)
   to net cash provided by (used in)
   operating activities:
   Marketing credits                                                                             (71,506)
   Depreciation and amortization                         121,600            139,072              150,821
   Deferred income tax benefit                           (53,500)
   Net change in assets and liabilities:
     Accounts receivable                                (138,716)          (108,984)             (59,701)
     Prepaid expenses and other                          (48,525)             6,705                  525
     Other assets                                        (75,000)
     Accounts payable                                     (8,050)            30,599               21,959
     Income taxes payable                                 18,000
     Salaries and payroll taxes                          (10,457)             8,001               18,267
     Deferred consulting revenue                          91,724
     Deferred maintenance revenue                        (14,341)             2,823               28,871
     Other payables                                                                              (10,365)                          
                                                     -----------         ----------           ----------  
        Net cash provided by (used in)
         operating activities                          1,075,515            460,610             (182,879)
                                                     -----------         ----------           ----------   
CASH FLOWS FROM INVESTING ACTIVITIES:
  Software development costs                             (80,543)          (108,510)            (83,853)
  Purchase of computer equipment                         (25,371)
  Purchase of furniture and fixtures                                                             (3,931)
                                                     -----------         ----------           ---------
       Net cash used in investing activities            (105,914)          (108,510)            (87,784)
                                                     -----------         ----------           ----------   
NET INCREASE (DECREASED) IN CASH
  AND CASH EQUIVALENTS                                   969,601            352,100            (270,663)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR                                      437,425             85,325             355,988
                                                     -----------          ---------            --------
CASH AND CASH EQUIVALENTS,
  END OF YEAR                                        $ 1,407,026           $437,425            $ 85,325
                                                     ===========           ========            ========
</TABLE>



SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES -
 In 1994, marketing  credits  earned and  equipment  valued at $71,506  were
 received in connection with a marketing program of a major customer (Note 5).

See notes to financial statements.

                                      F-5

<PAGE>

ACCELR8 TECHNOLOGY CORPORATION

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 1996, 1995 AND 1994
--------------------------------------------------------------------------------

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Business - Accelr8 Technology Corporation ("Accelr8" or the "Company") is a
     provider of software  tools and  consulting  services for the conversion of
     Digital  Equipment   Corporation   ("DEC")  legacy  systems  to  UNIX  open
     client/server environments.  The Company's consulting services and software
     conversion  tools enable the  Company's  customers to analyze and implement
     their UNIX  conversions in a predictable  and  cost-effective  manner.  The
     Company's clients include a number of Fortune 1000 companies and government
     agencies.

     Use of Estimates - The  preparation  of financial  statements in conformity
     with generally accepted  accounting  principles requires management to make
     estimates and  assumptions  that affect the reported  amounts of assets and
     liabilities  as of the date of the  financial  statements  and the reported
     amounts of  revenues  and  expenses  during the  reporting  period.  Actual
     results could differ from those estimates.

     Cash and Cash Equivalents - All highly liquid  investments with an original
     maturity of three months or less at time of purchase are  considered  to be
     equivalent to cash.

     Concentration  of Credit  Risk -  Financial  instruments  that  potentially
     subject the Company to  concentrations  of credit risk consist primarily of
     cash  equivalents  and  accounts  receivable.  The Company  places its cash
     equivalents with a high credit quality financial  institution.  The Company
     grants credit to domestic and international  clients in various industries.
     Exposure to losses on accounts receivable is principally  dependent on each
     client's   financial   position.   The  Company   performs  ongoing  credit
     evaluations of its client's financial condition.

     Property  and  Equipment - Property  and  equipment  are  recorded at cost.
     Maintenance and repairs are charged to expense as incurred and expenditures
     for major improvements are capitalized. Gains and losses from retirement or
     replacement are included in operations.

     Depreciation - Depreciation of property and equipment is computed using the
     straight-line  method over the estimated  useful life of the assets ranging
     from five to seven years.

     Software  Development Costs - Costs incurred internally to develop computer
     softsware products and the costs to acquire  externally  developed software
     products  (which  have no  alternative  future  use) to be sold,  leased or
     otherwise   marketed  are  charged  to  expense  until  the   technological
     feasibility  of the  product  has  been  established.  After  technological
     feasibility  has been  established  and until the product is available  for
     general release, software development, product enhancements and acquisition
     costs are capitalized.  Amortization of capitalized  costs is computed on a
     product-by-product  basis over (a) the period  equal to the future  revenue
     stream of the product  using the ratio that  current  revenues  bear to the
     total of current and future anticipated revenues of the product, or (b) the
     remaining  estimated  economic life of the product  (three years) using the
     straight-line  method,  whichever  method  results in the  greater  amount.
     Amortization  expense relating to software  development costs for the years
     ended July 31,  1996,  1995 and 1994 was $96,237,  $113,396  and  $130,762,
     respectively.

                                       F-6

<PAGE>

     Revenue  Recognition - Revenue is  recognized  for  consulting  services as
     services  are  performed.   Revenue  is  recognized  on  product  licensing
     agreements when the Company  substantially  completes its obligations under
     the  agreement  and the  customer  has  accepted  the  product.  Revenue is
     recognized for customer  support  services on maintenance  agreements using
     the straight-line method over the term of the agreement.

     In  connection  with its  software  business,  the Company  functions  as a
     value-added  reseller of computer software.  The Company recognizes revenue
     when the computer software is delivered.

     Deferred Revenue - Deferred  consulting revenues represent amounts received
     but not earned under consulting  agreements.  Deferred  maintenance revenue
     represents amounts received but not earned under maintenance agreements.

     Income Taxes - The Company  accounts for income  taxes in  accordance  with
     Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
     Income Taxes." The standard  generally  requires that deferred income taxes
     be recognized on temporary differences between the financial statements and
     income tax basis of assets and  liabilities  using  currently  enacted  tax
     rates.

     Earnings (Loss) Per Share - Earnings (loss) per share is computed using the
     weighted average number of common and common equivalent shares  outstanding
     during the period.  Common  stock  equivalents  include  stock  options and
     warrants.  Common stock  equivalents  were  excluded  from the earnings per
     share  calculation  for the year  ended  July  31,1994  because  they  were
     anti-dilutive.

     Reclassifications - Certain amounts in 1995 and 1994 have been reclassified
     to conform to the 1996 presentation.

     Stock Based Compensation - During 1995, the Financial  Accounting Standards
     Board issued SFAS No.123,  "Accounting for Stock Based  Compensation." SFAS
     No. 123 requires  that stock based  compensation  be either  recognized  or
     disclosed  in the  financial  statements.  The Company is required to adopt
     SFAS No.123 in its 1997 fiscal year.  Because the Company  intends to elect
     only the disclosure  provisions of SFAS No. 123, adoption of SFAS No.123 is
     not expected to have a material effect on the financial position or results
     of operations of the Company.

2. PRODUCT DEVELOPMENT ADVANCE PAYABLE

     On September 4, 1991, the Company entered into an assistance agreement with
     another  company  wherein  the  Company  received  an advance of $50,000 to
     assist in the development of a specific  software product which the Company
     was to own  exclusively.  Development of the software product was completed
     and the advance of $50,000  became  payable as of July 31, 1995. As of July
     31, 1996 the amount remains  outstanding and although the other company has
     the option of converting the outstanding balance to a note bearing interest
     at 11% payable  quarterly  over a two-year  period from date of conversion,
     they have not exercised the option.

3. SHAREHOLDERS' EQUITY

     Option Plan - The Company has reserved 3,900,000 shares of its common stock
     for issuance to employees  under an employee stock option plan. The options
     vest 25% each year over a four-year  period and are  exercisable  for three
     years after the date of vestiture. As of July 31,1995,1,900,000  options at
     $.07 per share were held by a former President of the Company which expired
     unexercised in December 1995.

                                       F-7

<PAGE>

     As of July 31,  1995,  the  Chairman  of the Board  held  other  options to
     purchase  4,800,000  shares of the Company's common stock at $.06 per share
     which were to expire as of December 31,  1995.  The term of the options was
     extended to December  31, 1997 in December  1995.  As of July 31,  1995,  a
     former  President of the Company held other  options to purchase  1,000,000
     shares  of the  Company's  common  stock at $.07 per  share  which  expired
     unexercised in December 1995.

     Warrants  outstanding  to purchase  150,000  shares of common stock expired
     unused in 1995.

     Change in options and warrants  outstanding  for the three years ended July
     31, 1996, 1995 and 1994 are summarized as follows:


<TABLE>
<CAPTION>

                                  Exercise          Employee         Exercise   Other Options
                                   Price             Options           Price      and Warrants

<S>                                <C>             <C>               <C>           <C>      
Balance, July 31, 1993            $.07-.09         3,925,000         $.06-.15      5,950,000
Expired/Cancelled                 $.09               (87,500)
                                                   ---------                       ---------

Balance, July 31, 1994            $.07-.09         3,837,500         $.06-.15      5,950,000
Issued                            $.09               400,000
Expired/Cancelled                 $.09              (387,500)        $.15           (150,000)
                                                   ---------                       ---------
Balance, July 31, 1995            $.07-.09         3,850,000         $.06-.07      5,800,000
Issued                            $.09                50,000         $.06          4,800,000
Expired/Cancelled                 $.07-.09        (2,000,000)        $.06-.07     (5,800,000)
                                                   ---------                       ---------
Balance, July 31, 1996            $.09             1,900,000         $.06          4,800,000
                                                   =========                       =========
Vested, July 31, 1996             $.09             1,662,500         $.06          4,800,000
                                                   =========                       =========


</TABLE>

4. REVENUES
  
     Revenue of $239,025 (11%),  $282,100 (13%),  and $353,075 (17%) in 1996 was
     derived from sales to three separate customers. Revenue of $150,381 (11%)in
     1995  and  $103,064  (15%)  in 1994  was  derived  from  sales  to a single
     customer.  The Company's  operations are located entirely within the United
     States.  However, in 1996, $318,393 (15%) of the Company's revenues were to
     foreign customers.

5.  MARKETING CREDITS

     In connection with a marketing program of a major customer, the Company was
     awarded marketing credits which can be used for cooperative  advertising or
     the purchase of computer  equipment.  When marketing  credits are exchanged
     for computer  equipment,  other  revenue is recognized to the extent of the
     fair value of the equipment  received.  Other revenue relating to marketing
     credits was $83,035 for the year ended July 31, 1994. No marketing  credits
     were awarded to the Company in 1995 or 1996.

6. INCOME TAXES

     During the year ended July 31,  1994,  the  Company  changed  its method of
     accounting  for income taxes to comply with the provisions of SFAS No. 109,
     "Accounting  for Income  Taxes."  Adoption of this  standard did not have a
     significant impact on the Company's financial statements and a cumulative

                                       F-8

<PAGE>


     effect adjustment was not required.  Prior to adoption of the new standard,
     the Company accounted for income taxes using the provisions of Statement of
     Financial Accounting Standards No. 96.

     The  following  items  comprise the Company's net deferred tax assets as of
     July 31:

                                                  1996                1995

 Deferred tax assets:
  Deferred income                              $ 63,530             $ 57,848
  Net operating loss (NOL) carryforwards         41,693              491,197
  Alternative minimum (AMT) tax credit
    carryforwards                                18,000
                                               --------             --------
      Total                                     123,223              549,045
  Valuation allowance                                               (472,889)
                                               --------             --------
      Total                                     123,223               76,156
 Deferred tax liabilities - 
   Depreciation and amortization                (69,723)             (76,156)
                                               --------             --------
 
 Net deferred tax assets                       $ 53,500             $      0
                                               ========             ========

     As of July  31,  1995,  the  Company  concluded  that  based  on  available
     evidence,  realization  of existing net operating  loss  carryforwards  was
     uncertain,  and  accordingly,  a valuation  allowance was recorded.  During
     fiscal 1996, the Company's  valuation  allowance  decreased $472,889 as the
     result of utilization of NOL carryforwards.

     A  reconciliation  of the  expected  income  tax  benefit  at  the  federal
     statutory income tax rate to the Company's actual income tax expense at its
     effective income tax rate for the year ended July 31 are as follows:

<TABLE>
<CAPTION>


                                                  1996              1995             1994


<S>                                                    <C>              <C>              <C> 
Federal statutory income tax rate                      34 %             34 %             34 %

Computed "expected" income taxes                $ 393,475        $ 130,014        $ (91,291)
Increase in taxes resulting from:
  State income taxes, net of federal
   tax benefit                                     38,190           12,237          (13,425)
  Change in valuation allowance                  (472,889)        (142,251)         104,716
  Other                                             5,724
                                                ---------        ---------        ---------
Income tax provision (benefit)                  $ (35,500)       $       0        $       0
                                                =========        =========        =========                             

</TABLE>


     As of July 31, 1996,  the Company has net operating loss  carryforwards  of
     $112,000  available  to offset  future  taxable  income  expiring  in 2010.
     Pursuant to the Tax Reform Act of 1986,  net operating  losses  utilized in
     future  income tax  returns  will be subject to  alternate  minimum tax and
     change in  ownership  regulations  which may limit the net  operating  loss
     carryforward  utilized in a given  fiscal  year.  The Company  also has AMT
     credit carryforwards of $ 18,000 available to offset future regular taxable
     income that may be carried forward indefinitely.

                                      F-9

<PAGE>

7. COMMITMENTS

     Operating  Leases - The Company has an operating lease agreement for office
     space  through July 31, 1996.  Total rent expense was $42,989,  $40,141 and
     $39,014 in 1996, 1995 and 1994, respectively.

     Employee  Retirement   Plan - During  the year  ended  July 31,  1996,  the
     Company   established  a  SARSEP-IRA  employee  pension  plan  that  covers
     substantially all full-time  employees.  Under the plan, employees have the
     option  to  contribute  up to the  lesser of 15% of their  compensation  or
     $9,240   annually  to  the  Plan.   The  Company  may  make   discretionary
     contributions  to  the Plan  based  on  recommendations from  the  Board of
     Directors.  For the year ended July 31, 1996,  the Board did not  authorize
     any contributions.

     Deferred  Compensation  Arrangement  - During the year ended July 31, 1996,
     the Company  established a deferred  compensation plan for key employees of
     the Company  using a "Rabbi"  Trust.  The  Company  may make  discretionary
     contributions  to the plan  based  on  recommendations  from  the  Board of
     Directors.  During fiscal 1996, the Company funded deferred compensation of
     $75,000 awarded to the Chairman of the Board with a deposit of $75,000 with
     the "Rabbi"  Trust.  The  Chairman  vests in the  $75,000  over the service
     period of January 1, 1996 through  January 31, 1997.  The funds are subject
     to the general claims of creditors and are included in other assets.


8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

     The disclosure of estimated fair value of financial  instruments is made in
     accordance with the requirements of SFAS No. 107,  "Disclosures  about Fair
     Value of Financial Instruments. "

     The  carrying  amounts  at July 31,  1996  for  cash and cash  equivalents,
     accounts receivable,  other assets,  accounts payable,  product development
     advance payable,  accrued expenses and deferred revenue  approximate  their
     fair values due to the short maturity of these instruments.

9. SUBSEQUENT EVENTS

     Stock  Option  Plans - The Company  has  proposed,  subject to  stockholder
     approval,  a decrease in the number of common shares  reserved for issuance
     from  3,900,000 to 1,900,000  under its existing  stock option plan and the
     adoption  of  an  incentive   stock  option  plan  for   employees   and  a
     non-qualified stock option plan for key employees, directors and others.

     Authorized  Shares and  Reverse  Stock  Split - The  Company  has  received
     stockholder  authorization  to  decrease  the number of  authorized  common
     shares from 55,000,000 to 11,000,000 and to effect a reverse stock split of
     its common stock ranging from  one-for-three to one-for-seven.  The Company
     has proposed and a  one-for-four  reverse  stock split of its common stock,
     which is to be effected on or about November 18, 1996.

                                      F-10

<PAGE>


     The  following is a pro forma  presentation  of the effects of the proposed
     one-for-four  reverse stock split on the number of common shares issued and
     outstanding  and  all  option,   warrant,  and  earnings  (los)  per  share
     information:


<TABLE>
<CAPTION>

<S>                                           <C>            <C>                <C>  
     Common stock - issued and outstanding                                      5,492,500

     Common stock reserved for issuance:
       Existing stock option plan                                                 475,000
       Proposed stock option plans:
        Incentive  stock option plan                                              700,000
        Non-qualified stock option plan                                           300,000


                                                  1996               1995         1994
     Earnings (loss) per share:

       Weighted average shares outstanding     6,733,877          6,591,000     5,492,500
                                               =========          =========     =========
       Net income (loss) per share             $    0.18          $    0.06     $   (0.05) 
                                               =========          =========     =========

</TABLE>

       Change in options and  warrants 
       outstanding  for the three years
       ended July 31, 1996, 1995 and 1994
       are summarized as follows:

<TABLE>
<CAPTION>

                                              Exercise           Employee      Exercise      Other Options
                                                Price             Options       Price         and Warrants

     <S>                                      <C>                 <C>           <C>             <C>    
       Balance, July 1993                      $.28-.36          981,250       $.24-.60        1,487,500
       Expired/Cancelled                       $.36              (21,875)
                                                                 -------                       ---------
       Balance, July 31, 1994                  $.28-.36          959,375       $.24-.60        1,487,600
       Issued                                  $.36              100,000
       Expired/Cancelled                       $.36              (96,875)      $.60              (37,500)
                                                                 -------                       ---------
       Balance,July 31, 1995                   $.28-.36          962,500       $.24-.28        1,450,000
       Issued                                  $.36               12,500       $.24            1,200,000
       Expired/Cancelled                       $.28-.36         (500,000)      $.24-.28       (1,450,000)
                                                                 -------                       ---------
       Balance, July 31, 1996                  $.36              475,000       $.24            1,200,000
                                                                 =======                       =========
       Vested, July 31, 1996                   $.36              415,625       $.24            1,200,000
                                                                 =======                       ==========
                                            

                                                   * * * * *

                                                      F- 11

</TABLE>
<PAGE>


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.


                                             ACCELR8 TECHNOLOGY CORPORATION



Date:                                       By:
      ----------------------------              -------------------------------
                                                Harry J. Fleury, President


     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.

 Date:  
      ------------------------             ------------------------------------
                                           Thomas V. Geimer, Secretary, Chief
                                           Executive Officer and Chief
                                           Financial Officer


 Date:
      ------------------------              -----------------------------------
                                            A. Alexander Arnold III


 Date:
       -----------------------              -----------------------------------
                                            David C. Wilhelm




                                      -25-