SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                               ------------------


                                    FORM 8-K

                                 CURRENT REPORT
                       PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

        Date of Report (Date of earliest event reported): August 21, 1998

                                VERSATILITY INC.
             (Exact name of registrant as specified in its charter)


         DELAWARE                     0-21793                 52-1214354
      (State or other        (Commission File Number)    (IRS Employer Id. No.)
      jurisdiction of
       incorporation)

   11781 Lee Jackson Memorial Highway, Seventh Floor, Fairfax, Virginia 22033
               (Address of principal executive offices)             (Zip Code)

       Registrant's telephone number, including area code: (703) 591-2900
 ---------------------------------------------------------------------------




<PAGE>


Item 5. Other Events.

          On August 21,  1998,  Versatility  Inc., a Delaware  corporation  (the
"Company"),   entered  into  an  Agreement  and  Plan  of  Merger  (the  "Merger
Agreement") with Oracle Corporation,  a Delaware corporation ("Parent"), and AQX
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Parent (the  "Purchaser"),  which  provides for the merger (the "Merger") of the
Purchaser with and into the Company with the Company continuing as the surviving
corporation (the "Surviving  Corporation").  Pursuant to the terms of the Merger
Agreement,  at the effective time of the Merger (the "Effective Time"), (i) each
share of Common  Stock,  par value $.01 per share,  of the Company  (the "Common
Stock")  outstanding  immediately prior to the Effective Time (other than shares
held by the Company,  the  Purchaser  or Parent  (which will be  cancelled)  and
shares for which  appraisal  rights under  Delaware law are  perfected)  will be
converted  into a right to  receive a cash  payment  in the  amount of $1.50 per
share and (ii) each share of Common  Stock,  par value $0.001 per share,  of the
Purchaser  outstanding  prior to the Effective  Time will be converted  into the
right to receive one share of the common  stock,  par value $0.01 per share,  of
the Surviving Corporation.

          The  closing  of the  Merger  is  subject  to a number  of  conditions
precedent,  including,  without  limitation,  (i) the  receipt  of all  required
government approvals, (ii) the approval of the Merger by the stockholders of the
Company,  (iii) the retention of certain key employees of the Company,  (iv) the
receipt of final court  approval of the  settlement  of the putative  securities
class  actions  filed in the  United  States  District  Court  for the  Southern
District  of New York and the  United  States  District  Court  for the  Eastern
District of Virginia on terms  consistent  with the Memorandum of  Understanding
Concerning  Settlement Terms dated July 9, 1998 and the expiration of all rights
to appeal such settlement,  and (v) the absence of any instituted and continuing
(or in the case of (c) below, threatened) action, suit or proceeding against the
Company,  Parent,  the  Purchaser  or any officer,  director,  employee or other
person that the Company is obligated to indemnify, by any governmental entity or
third party (a) directly relating to the Merger Agreement, the License Agreement
(defined below), or any intellectual  property of the Company, (b) who is or was
a stockholder of the Company or in a derivative action on behalf of the Company,
or (c) which could  reasonably be expected to have a material  adverse effect on
the Company and its subsidiaries, taken as a whole.

          In connection with the Merger Agreement,  certain  stockholders of the
Company  owning  in  excess of 50% of the  outstanding  shares  of Common  Stock
entered  into Support  Agreements  ("Support  Agreements")  with the Company and
Parent,  whereby the  stockholders (i) agreed to vote all shares of Common Stock
in favor of the Merger and against any action by the Company  that would  breach
the Merger  Agreement or impair or delay the consummation of the Merger and (ii)
granted to designees of Parent an irrevocable proxy to vote such shares in favor
of the Merger and as agreed in the Support  Agreements.  The Support  Agreements
terminate  upon the  earlier of the  Effective  Time or the  termination  of the
Merger Agreement.

          In connection  with the Merger  Agreement,  the Company entered into a
Technology  License Agreement (the "License  Agreement") with Parent whereby the
Company  agreed to grant to Parent a irrevocable,  non-exclusive  license of the
Company's  computer software and related technology (the  "Technology").  Parent

<PAGE>

will pay the  Company  a  sublicense  fee  equal  to 30% of the net fees  Parent
receives for sublicenses of the Technology,  of which $2,000,000 will be prepaid
in three  equal  monthly  installments  commencing  on  September  1,  1998 (the
"Prepaid  License  Fee").  In the event that  Parent  breaches  the terms of the
Merger  Agreement,  fails to pay the  sublicense  fee when  due,  or the  Merger
Agreement is  terminated as a result of the Company  accepting a superior  offer
than that  presented  in the Merger  Agreement,  the Company may  terminate  the
License  Agreement upon repayment of the Prepaid License Fee paid to the Company
in excess of $360,000.

          As a condition  precedent to the  execution  of the Merger  Agreement,
Parent  and  each  of  Paul  Zoukis,   James  Dellamore  and  Marcus  Heth  (the
"Executives") entered into Non-Competition Agreements which have an initial term
of two years from the Effective Time and terminate  upon the  termination of the
Merger  Agreement.  In addition,  Parent  delivered to each of the  Executives a
letter  indicating  its  intent  to  offer  employment  to such  persons  at the
Effective Time.

          In  connection  with the Merger  Agreement,  the  Company,  Parent and
Silicon Valley Bank, a California  chartered  bank (the "Bank"),  entered into a
Loan Modification and Extension of Forbearance Agreement (the "Loan Modification
Agreement") whereby,  pursuant to the terms of the Loan Modification  Agreement,
the Bank agreed to forebear from exercising remedies available to it as a result
of the Company's existing defaults under the loan agreements with the Bank until
the earlier of December 31, 1998 and the consummation of the Merger.  The Bank's
continuing  forbearance  will  terminate  upon  the  termination  of the  Merger
Agreement.  The Bank also  agreed to allow the  Company and Parent to enter into
the License Agreement,  to waive the anti-dilution  provisions applicable to its
warrant  to  purchase  100,000  shares  of Common  Stock  during  the  period of
forbearance  and to terminate its Warrant  Agreement  upon  consummation  of the
Merger.  The  Company  agreed to deposit  into an account at the Bank any refund
that the  Company may  receive  from the  Internal  Revenue  Service  and/or the
Commonwealth  of Virginia and agreed to withdraw  such funds only  pursuant to a
cash plan approved by the Bank.

          On August 20, 1998, the Board of Directors of the Company approved the
Merger  Agreement  and the Merger and  recommended  that it be  submitted to the
stockholders of the Company for their  approval.  The Company will file with the
Securities and Exchange  Commission a proxy statement that will be mailed to the
stockholders  in  connection  with a  special  stockholders  meeting  called  to
consider and vote upon the Merger.

          The  foregoing  descriptions  of the  Merger  Agreement,  the  form of
Support Agreement,  the License Agreement,  and the Loan Modification  Agreement
are qualified in their entirety by the text of the Merger Agreement, the form of
Support Agreement,  the License Agreement,  and the Loan Modification  Agreement
which are attached  hereto as Exhibits 2.1, 10.1,  10.2 and 10.3,  respectively,
and are incorporated herein by reference.

<PAGE>

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

     (c)  Exhibits.

 Exhibit
 Number   Description

 2.1      Agreement and Plan of Merger dated as of August 21, 1998, by and among
          Versatility Inc., Oracle Corporation and AQX Acquisition Corporation

 10.1     Form of Support Agreement

 10.2     License Agreement dated as of August 21, 1998, by and between 
          Versatility Inc. and Oracle Corporation

 10.3     Loan Modification and Extension of Forbearance Agreement dated August 
          20, 1998 by and among Versatility Inc., Oracle Corporation and Silicon
          Valley Bank


<PAGE>


                                   SIGNATURES

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

                                             VERSATILITY INC.

Dated: August 24, 1998                       By:  /s/ Kenneth T. Nelson
                                                  -----------------------
                                                  Kenneth T. Nelson
                                                  Chief Financial Officer




<PAGE>



                                  EXHIBIT INDEX

 Exhibit
 Number   Description

 2.1      Agreement and Plan of Merger dated as of August 21, 1998, by and among
          Versatility Inc., Oracle Corporation and AQX Acquisition Corporation

 10.1     Form of Support Agreement

 10.2     License Agreement dated as of August 21, 1998, by and between 
          Versatility Inc. and Oracle Corporation

 10.3     Loan Modification and Extension of Forbearance Agreement dated August 
          20, 1998 by and among Versatility Inc., Oracle Corporation and Silicon
          Valley Bank
[{"type": "8-K", "sequence": "1", "description": "VERSATILITY INC.", "secsgml_size_bytes": 10092}]
{"company-data": {"conformed-name": "VERSATILITY INC", "cik": "0001023393", "assigned-sic": "7372", "irs-number": "521214354", "state-of-incorporation": "DE", "fiscal-year-end": "0430"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-21793", "film-number": "98696911"}, "business-address": {"street1": "11781 LEE JACKSON MEMORIAL HWY", "street2": "SUITE 600", "city": "FAIRFAX", "state": "VA", "zip": "22033", "phone": "7035912900"}, "mail-address": {"street1": "11781 LEE JACKSON MEMORIAL HWY", "street2": "SUITE 600", "city": "FAIRFAX", "state": "VA", "zip": "22033"}}
SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               ------------------

                                    FORM 8-K

                                 CURRENT REPORT
                       PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

        Date of Report (Date of earliest event reported): August 21, 1998

                                VERSATILITY INC.
             (Exact name of registrant as specified in its charter)

         DELAWARE                     0-21793                 52-1214354
      (State or other        (Commission File Number)    (IRS Employer Id. No.)
      jurisdiction of
       incorporation)

   11781 Lee Jackson Memorial Highway, Seventh Floor, Fairfax, Virginia 22033
               (Address of principal executive offices)             (Zip Code)

       Registrant's telephone number, including area code: (703) 591-2900
 ---------------------------------------------------------------------------
Item 5. Other Events.

          On August 21,  1998,  Versatility  Inc., a Delaware  corporation  (the
"Company"),   entered  into  an  Agreement  and  Plan  of  Merger  (the  "Merger
Agreement") with Oracle Corporation,  a Delaware corporation ("Parent"), and AQX
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Parent (the  "Purchaser"),  which  provides for the merger (the "Merger") of the
Purchaser with and into the Company with the Company continuing as the surviving
corporation (the "Surviving  Corporation").  Pursuant to the terms of the Merger
Agreement,  at the effective time of the Merger (the "Effective Time"), (i) each
share of Common  Stock,  par value $.01 per share,  of the Company  (the "Common
Stock")  outstanding  immediately prior to the Effective Time (other than shares
held by the Company,  the  Purchaser  or Parent  (which will be  cancelled)  and
shares for which  appraisal  rights under  Delaware law are  perfected)  will be
converted  into a right to  receive a cash  payment  in the  amount of $1.50 per
share and (ii) each share of Common  Stock,  par value $0.001 per share,  of the
Purchaser  outstanding  prior to the Effective  Time will be converted  into the
right to receive one share of the common  stock,  par value $0.01 per share,  of
the Surviving Corporation.

          The  closing  of the  Merger  is  subject  to a number  of  conditions
precedent,  including,  without  limitation,  (i) the  receipt  of all  required
government approvals, (ii) the approval of the Merger by the stockholders of the
Company,  (iii) the retention of certain key employees of the Company,  (iv) the
receipt of final court  approval of the  settlement  of the putative  securities
class  actions  filed in the  United  States  District  Court  for the  Southern
District  of New York and the  United  States  District  Court  for the  Eastern
District of Virginia on terms  consistent  with the Memorandum of  Understanding
Concerning  Settlement Terms dated July 9, 1998 and the expiration of all rights
to appeal such settlement,  and (v) the absence of any instituted and continuing
(or in the case of (c) below, threatened) action, suit or proceeding against the
Company,  Parent,  the  Purchaser  or any officer,  director,  employee or other
person that the Company is obligated to indemnify, by any governmental entity or
third party (a) directly relating to the Merger Agreement, the License Agreement
(defined below), or any intellectual  property of the Company, (b) who is or was
a stockholder of the Company or in a derivative action on behalf of the Company,
or (c) which could  reasonably be expected to have a material  adverse effect on
the Company and its subsidiaries, taken as a whole.

          In connection with the Merger Agreement,  certain  stockholders of the
Company  owning  in  excess of 50% of the  outstanding  shares  of Common  Stock
entered  into Support  Agreements  ("Support  Agreements")  with the Company and
Parent,  whereby the  stockholders (i) agreed to vote all shares of Common Stock
in favor of the Merger and against any action by the Company  that would  breach
the Merger  Agreement or impair or delay the consummation of the Merger and (ii)
granted to designees of Parent an irrevocable proxy to vote such shares in favor
of the Merger and as agreed in the Support  Agreements.  The Support  Agreements
terminate  upon the  earlier of the  Effective  Time or the  termination  of the
Merger Agreement.

          In connection  with the Merger  Agreement,  the Company entered into a
Technology  License Agreement (the "License  Agreement") with Parent whereby the
Company  agreed to grant to Parent a irrevocable,  non-exclusive  license of the
Company's  computer software and related technology (the  "Technology").  Parent
will pay the  Company  a  sublicense  fee  equal  to 30% of the net fees  Parent
receives for sublicenses of the Technology,  of which $2,000,000 will be prepaid
in three  equal  monthly  installments  commencing  on  September  1,  1998 (the
"Prepaid  License  Fee").  In the event that  Parent  breaches  the terms of the
Merger  Agreement,  fails to pay the  sublicense  fee when  due,  or the  Merger
Agreement is  terminated as a result of the Company  accepting a superior  offer
than that  presented  in the Merger  Agreement,  the Company may  terminate  the
License  Agreement upon repayment of the Prepaid License Fee paid to the Company
in excess of $360,000.

          As a condition  precedent to the  execution  of the Merger  Agreement,
Parent  and  each  of  Paul  Zoukis,   James  Dellamore  and  Marcus  Heth  (the
"Executives") entered into Non-Competition Agreements which have an initial term
of two years from the Effective Time and terminate  upon the  termination of the
Merger  Agreement.  In addition,  Parent  delivered to each of the  Executives a
letter  indicating  its  intent  to  offer  employment  to such  persons  at the
Effective Time.

          In  connection  with the Merger  Agreement,  the  Company,  Parent and
Silicon Valley Bank, a California  chartered  bank (the "Bank"),  entered into a
Loan Modification and Extension of Forbearance Agreement (the "Loan Modification
Agreement") whereby,  pursuant to the terms of the Loan Modification  Agreement,
the Bank agreed to forebear from exercising remedies available to it as a result
of the Company's existing defaults under the loan agreements with the Bank until
the earlier of December 31, 1998 and the consummation of the Merger.  The Bank's
continuing  forbearance  will  terminate  upon  the  termination  of the  Merger
Agreement.  The Bank also  agreed to allow the  Company and Parent to enter into
the License Agreement,  to waive the anti-dilution  provisions applicable to its
warrant  to  purchase  100,000  shares  of Common  Stock  during  the  period of
forbearance  and to terminate its Warrant  Agreement  upon  consummation  of the
Merger.  The  Company  agreed to deposit  into an account at the Bank any refund
that the  Company may  receive  from the  Internal  Revenue  Service  and/or the
Commonwealth  of Virginia and agreed to withdraw  such funds only  pursuant to a
cash plan approved by the Bank.

          On August 20, 1998, the Board of Directors of the Company approved the
Merger  Agreement  and the Merger and  recommended  that it be  submitted to the
stockholders of the Company for their  approval.  The Company will file with the
Securities and Exchange  Commission a proxy statement that will be mailed to the
stockholders  in  connection  with a  special  stockholders  meeting  called  to
consider and vote upon the Merger.

          The  foregoing  descriptions  of the  Merger  Agreement,  the  form of
Support Agreement,  the License Agreement,  and the Loan Modification  Agreement
are qualified in their entirety by the text of the Merger Agreement, the form of
Support Agreement,  the License Agreement,  and the Loan Modification  Agreement
which are attached  hereto as Exhibits 2.1, 10.1,  10.2 and 10.3,  respectively,
and are incorporated herein by reference.
Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

     (c)  Exhibits.

 Exhibit
 Number   Description

 2.1      Agreement and Plan of Merger dated as of August 21, 1998, by and among
          Versatility Inc., Oracle Corporation and AQX Acquisition Corporation

 10.1     Form of Support Agreement

 10.2     License Agreement dated as of August 21, 1998, by and between 
          Versatility Inc. and Oracle Corporation

 10.3     Loan Modification and Extension of Forbearance Agreement dated August 
          20, 1998 by and among Versatility Inc., Oracle Corporation and Silicon
          Valley Bank
SIGNATURES

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

                                             VERSATILITY INC.

Dated: August 24, 1998                       By:  /s/ Kenneth T. Nelson
                                                  -----------------------
                                                  Kenneth T. Nelson
                                                  Chief Financial Officer
EXHIBIT INDEX

 Exhibit
 Number   Description

 2.1      Agreement and Plan of Merger dated as of August 21, 1998, by and among
          Versatility Inc., Oracle Corporation and AQX Acquisition Corporation

 10.1     Form of Support Agreement

 10.2     License Agreement dated as of August 21, 1998, by and between 
          Versatility Inc. and Oracle Corporation

 10.3     Loan Modification and Extension of Forbearance Agreement dated August 
          20, 1998 by and among Versatility Inc., Oracle Corporation and Silicon
          Valley Bank