Neon Systems –

SUGAR LAND, Texas – Neon Systems Inc., a producer of software that integrates data, transactions and applications from a variety of computer systems, went public March 5, offering 2.7 million shares at $15 apiece, according the company’s Securities and Exchange Commission filing price.

The IPO, which left 8 million shares outstanding, was underwritten by Donaldson, Lufkin & Jenrette, Hambrecht & Quist and CIBC Oppenheimer. The estimated $40.5 million in proceeds will be used for general corporate purposes and to repay debt.

The single selling shareholder, which did not include venture investor JMI Equity Fund, offered 64,000 shares.

Neon Systems, founded in May 1991, manufactures computer networking software and client/server computer systems. The company’s three software products, Shadow Direct, Shadow Web Server and Shadow Enterprise Direct, are sold worldwide. Neon Systems’ clients include Boeing, Motorola, Texaco and Wells Fargo Bank.

The company has been profitable since 1996, earning $2.5 million in 1996 and $12 million in 1998.

John J. Moores, Chairman of the Board of JMI Services Inc., has served as the company’s Chairman of the Board of Directors since 1993. Charles E. Noel III and Norris van den Berg, general partners of JMI Partners, also serve as directors of Neon.

Neon Systems – Selected Financial

(in thousands, except per share data)

Years Ended March 31,

1996 1997 1998

Total revenue 2,466 7,186 12,203

Net income (loss) -598 816 1,161

Earnings loss per share 1.62 0.35 0.45