<PAGE>

                                    UNITED STATES 
                          SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
                                          
                                 ------------------
                                          
                                     FORM 10-Q
                                          
                                     (Mark One)

/X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
     EXCHANGE ACT OF 1934
     FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998

                                         OR

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     FOR THE TRANSITION PERIOD               TO

                          Commission file number: 0-21010
                                          
                           Centura Software Corporation
               (Exact name of registrant as specified in its charter)

              CALIFORNIA                                94-2874178
   (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                 Identification Number)
975 ISLAND DRIVE, REDWOOD SHORES, CALIFORNIA              94065
  (Address of principal executive offices)              (Zip Code)

     Registrant's telephone number, including area code: (650) 596-3400

     Securities registered pursuant to Section 12(b) of the Act:
                                        NONE
     Securities registered pursuant to section 12(g) of the Act:
                      COMMON STOCK, $.01 PAR VALUE PER SHARE

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

     As of July 31, 1998, there were 29,598,725 shares of the Registrant's 
Common Stock outstanding.

<PAGE>

                                           CENTURA SOFTWARE CORPORATION
                                  FORM 10-Q for the Quarter Ended June 30, 1998

                                                       INDEX
<TABLE>
<CAPTION>
                                                                                                               Page 
                                                                                                              Number
                                                                                                              ------
<S>                                                                                                           <C>
PART I    FINANCIAL INFORMATION
          Item 1. Financial Statements and Supplementary Data
                 a)   Condensed consolidated balance sheets at June 30,  1998 and December 31, 1997 . . . .      1
                 b)   Condensed consolidated statements of operations 
                      for the three months and six months ended June 30, 
                      1998 and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      2
                 c)   Condensed consolidated statements of cash flows  
                      for the six months ended June 30, 1998 and  
                      1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      3
                 d)   Notes to condensed consolidated financial 
                      statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4-7
          Item 2.  Management's Discussion and Analysis of Financial 
                   Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . .   8-15
PART II   OTHER INFORMATION
          Item 1.     Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     16
          Item 2.     Changes in Securities and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . .     16
          Item 3.     Defaults in Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .     16
          Item 4.     Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . .  17-18
          Item 5.     Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     18
          Item 6.     Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . .     18
</TABLE>

<PAGE>

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
                                          CENTURA SOFTWARE CORPORATION
                                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                                  (Unaudited)
                                     (in thousands, except per share data)


                                                                        June 30,           December 31,
                                                                          1998                1997
                                                                        --------           ------------
<S>                                                                     <C>                <C>
                                           ASSETS   
Current Assets:
     Cash and cash equivalents . . . . . . . . . . . . . . . . . . . .    $ 7,262             $ 3,974
     Accounts receivable, less allowances of $1,526 and $1,621 . . . .      9,829              11,744
     Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . .        204                 259
     Other current assets. . . . . . . . . . . . . . . . . . . . . . .      2,840               3,089
                                                                          -------             -------
         Total current assets. . . . . . . . . . . . . . . . . . . . .     20,135              19,066
Property and equipment, at cost, net of accumulated depreciation . . .      3,023               3,511
Capitalized software, at cost, net of accumulated amortization . . . .      2,131               2,573
Long-term investments. . . . . . . . . . . . . . . . . . . . . . . . .      1,377               1,263
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,610               1,787
                                                                          -------             -------
     Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . .    $28,276             $28,200
                                                                          -------             -------
                                                                          -------             -------
                        LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
     Subordinated Notes Payable. . . . . . . . . . . . . . . . . . . .    $     -             $10,000
     Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . .      3,452               4,244
     Accrued compensation and related expenses . . . . . . . . . . . .      1,586               1,521
     Short-term borrowings . . . . . . . . . . . . . . . . . . . . . .      1,836               1,581
     Other accrued liabilities . . . . . . . . . . . . . . . . . . . .      1,524               5,334
     Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . .     13,139              14,618
                                                                          -------             -------
         Total current liabilities . . . . . . . . . . . . . . . . . .     21,537              37,298
Other long-term liabilities. . . . . . . . . . . . . . . . . . . . . .        856                 856
                                                                          -------             -------
          Total liabilities. . . . . . . . . . . . . . . . . . . . . .     22,393              38,154
Shareholders' Equity (Deficit):
     Preferred stock, no par value; 2,000 shares
     authorized; none issued  . . . . . . . . . . . . . . . . . . . .           -                   -
     Common stock, par value $.01 per share; 60,000
     shares authorized; 29,592 shares and
     15,784 shares issued and outstanding. . . . . . . . . . . . . .       85,775               70,636
     Cumulative translation adjustment . . . . . . . . . . . . . . . .       (520)                (484)
     Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . .    (79,372)             (80,106)                        
                                                                          -------              -------
          Total shareholders' equity (deficit) . . . . . . . . . . . .      5,883               (9,954)
                                                                          -------              -------
          Total liabilities and shareholders' equity (deficit) . . . .    $28,276              $28,200
                                                                          -------              -------
                                                                          -------              -------

                          The accompanying notes are an integral part of these 
                               condensed consolidated financial statements.
</TABLE>


                                       1

<PAGE>
<TABLE>
<CAPTION>
                                                    CENTURA SOFTWARE CORPORATION

                                          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  
                                                          (Unaudited)
 
                                              (in thousands, except per share data)



                                                                                 Three Months                Six Months
                                                                                Ended June 30,              Ended June 30,
                                                                            ----------------------      -------------------
                                                                              1998          1997          1998        1997 
                                                                            -------        -------      -------     -------
<S>                                                                         <C>            <C>          <C>         <C>
Net revenues:
     Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $ 7,982        $11,790      $16,566     $21,304
     Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        5,065          4,314        9,253       8,400
                                                                            -------        -------      -------     -------
         Net revenues. . . . . . . . . . . . . . . . . . . . . . . . .       13,047         16,104       25,819      29,704     
Cost of revenues:. . . . . . . . . . . . . . . . . . . . . . . . . . .                                                     
     Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          903          1,301        2,185       2,667
     Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1,067          2,272        2,163       4,391
                                                                            -------        -------      -------     -------
         Cost of revenues. . . . . . . . . . . . . . . . . . . . . . .        1,970          3,573        4,348       7,058
                                                                            -------        -------      -------     -------
            Gross profit . . . . . . . . . . . . . . . . . . . . . . .       11,077         12,531       21,471      22,646     
Operating expenses:. . . . . . . . . . . . . . . . . . . . . . . . . .                                                     
     Sales and marketing . . . . . . . . . . . . . . . . . . . . . . .        6,941          7,387       12,768      14,010
     Research and development. . . . . . . . . . . . . . . . . . . . .        1,357          2,718        2,901       5,421
     General and administrative. . . . . . . . . . . . . . . . . . . .        1,797          1,764        3,507       3,457
     Acquisition expense . . . . . . . . . . . . . . . . . . . . . . .            -            270            -         531     
                                                                            -------        -------      -------     -------
         Total operating expenses. . . . . . . . . . . . . . . . . . .       10,095         12,139       19,176      23,419     
                                                                            -------        -------      -------     -------
            Operating income (loss). . . . . . . . . . . . . . . . . .          982            392        2,295        (773)    
Other income (expense):
     Interest income . . . . . . . . . . . . . . . . . . . . . . . . .           91             41          138          96
     Interest expense. . . . . . . . . . . . . . . . . . . . . . . . .         (113)          (210)        (314)       (424)
     Imputed value of warrants issued in connection with debt 
     conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . .         (549)             -         (990)          -
     Foreign currency gain (loss). . . . . . . . . . . . . . . . . . .         (117)            78         (281)       (653)    
                                                                            -------        -------      -------     -------
Income (loss) before income taxes. . . . . . . . . . . . . . . . . . .          294            301          848     $(1,754)
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . .          106             25          114          35
                                                                            -------        -------      -------     -------
Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . . . .      $   188        $   276      $   734     $(1,789)
                                                                            -------        -------      -------     -------
                                                                            -------        -------      -------     -------
 Basic net income (loss) per share . . . . . . . . . . . . . . . . . .      $  0.01        $  0.02      $  0.03     $ (0.12)
                                                                            -------        -------      -------     -------
                                                                            -------        -------      -------     -------
 Basic weighted average common shares  . . . . . . . . . . . . . . . .       29,566         15,289       25,220      15,256
                                                                            -------        -------      -------     -------
                                                                            -------        -------      -------     -------
 Diluted net income (loss) per share . . . . . . . . . . . . . . . . .      $  0.01        $  0.02      $  0.03     $ (0.12)
                                                                            -------        -------      -------     -------
                                                                            -------        -------      -------     -------
 Diluted weighted average common shares  . . . . . . . . . . . . . . .       30,875         16,069       25,898      15,256
                                                                            -------        -------      -------     -------
                                                                            -------        -------      -------     -------
                                      The accompanying notes are an integral part of these 
                                          condensed consolidated financial statements.
</TABLE>
                                      2

<PAGE>

                                       CENTURA SOFTWARE CORPORATION

                               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                               (Unaudited)

                                              (in thousands)
<TABLE>
<CAPTION>
                                                                          Six Months Ended June 30,
                                                                          -------------------------
                                                                             1998           1997
                                                                          --------        ---------
<S>                                                                        <C>            <C>
Cash flows from operating activities:
     Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . .     $   734        $(1,789)
     Adjustments to reconcile net loss to net cash provided by (used 
       in) operating activities:                                   
         Depreciation and amortization . . . . . . . . . . . . . . . .       1,813          2,704
         Provision for doubtful accounts, sales returns and 
         allowances. . . . . . . . . . . . . . . . . . . . . . . . . .         (95)           504
         Issuance of stock warrants  . . . . . . . . . . . . . . . . .         990            102 
         Changes in assets and liabilities:
            Accounts receivable. . . . . . . . . . . . . . . . . . . .       2,010          4,153
            Inventory. . . . . . . . . . . . . . . . . . . . . . . . .          55            189
            Other current assets . . . . . . . . . . . . . . . . . . .         249         (1,060)
            Other assets . . . . . . . . . . . . . . . . . . . . . . .         113           (272)
            Accounts payable and accrued liabilities . . . . . . . . .      (2,286)        (1,497)
            Deferred revenue . . . . . . . . . . . . . . . . . . . . .      (1,479)        (4,096)
            Other long-term liabilities. . . . . . . . . . . . . . . .           -            392 
                                                                           -------        -------
             Net cash provided by  (used in) operating activities. . .       2,104           (670)
            
Cash flows from investing activities:
     Maturities of investments . . . . . . . . . . . . . . . . . . . .           -          1,746
     Purchase of investments . . . . . . . . . . . . . . . . . . . . .        (114)            (1)
     Acquisitions of property and equipment. . . . . . . . . . . . . .        (407)        (2,853)
     Capitalization of software costs. . . . . . . . . . . . . . . . .        (362)          (454)
     Proceeds from sale of property and equipment. . . . . . . . . . .           -            462
     Capitalization of intangibles and other assets. . . . . . . . . .         (50)          (129)
                                                                           -------        -------
             Net cash provided by (used in) investing activities . . .        (933)        (1,229)
            
Cash flows from financing activities:
     Repayment of note payable . . . . . . . . . . . . . . . . . . . .           -           (180)
     Proceeds from short term borrowings . . . . . . . . . . . . . . .         255              - 
     Proceeds from issuance of common stock, net . . . . . . . . . . .       1,898            214 
                                                                           -------        -------
             Net cash provided by financing activities . . . . . . . .       2,153             34 
Effect of exchange rate changes on cash and cash equivalents . . . . .         (36)             8 
                                                                           -------        -------
Net increase (decrease) in cash and cash equivalents . . . . . . . . .       3,288         (1,857)
Cash and cash equivalents at beginning of period . . . . . . . . . . .       3,974          6,669
                                                                           -------        -------
Cash and cash equivalents at end of period . . . . . . . . . . . . . .      $7,262         $4,812
                                                                           -------        -------
                                                                           -------        -------


                        The accompanying notes are an integral part of these 
                             condensed consolidated financial statements.
</TABLE>


                                       3

<PAGE>
                          CENTURA SOFTWARE CORPORATION

               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     METHOD OF PREPARATION.  The condensed consolidated balance sheet as of 
June 30, 1998, the condensed consolidated statements of operations for the 
three and six month periods ended June 30, 1998 and 1997, and cash flows for 
the six month periods ended June 30, 1998 and 1997 have been prepared by 
Centura Software Corporation (the "Company") without audit. In the opinion of 
management, all adjustments necessary for a fair statement of the financial 
position, results of operations, and cash flows have been made for all 
periods presented. The financial data should be reviewed in conjunction with 
the audited financial statements and notes thereto included in the Company's 
Annual Report on Form 10-K for the year ended December 31, 1997. The results 
of operations for the three and six month periods ended June 30, 1998, are 
not necessarily indicative of the operating results to be expected for the 
full year. 

     The December 31, 1997 balance sheet was derived from audited financial 
statements, but does not include all disclosures required by generally 
accepted accounting principles.   Such disclosures are contained in the 
Company's Annual Report on Form 10K.

     DERIVATIVE INSTRUMENTS.  During the first quarter of 1997, the Company 
recognized a loss of $731,000 attributed to foreign currency fluctuations on 
net assets denominated in foreign currencies. As a result, the Company enters 
into short-term forward contracts to reduce the risks associated with such 
foreign currency fluctuations. For the quarter ended June 30, 1998, the 
Company recognized a loss of $117,000 related to foreign currency 
fluctuations. At June 30, 1998, the Company had $5,831,000 in forward 
contracts denominated in five currencies; German Deutsche Marks, British 
Pound Sterling, Netherland Guilders, Italian Lira and Australian Dollars. The 
carrying value of the instruments approximate their fair value as the Company 
records entries to "mark-to-market" the respective contracts on a monthly 
basis. The respective gains and losses from forward contracts are included in 
other income (expense). 

      NET INCOME (LOSS) PER SHARE.  Basic earnings per share is computed 
using the weighted average number of shares of common stock. Diluted earnings 
per share is computed using the weighted average number of shares of common 
stock, common equivalent shares outstanding during the period. Common 
equivalent shares consist of stock options and warrants (using the treasury 
stock method).  Common equivalent shares are excluded from the computation if 
their effect is antidilutive.

     Antidilutive options and warrants to purchase 1,065,217 and 442,633 were 
outstanding at June 30, 1998 and June 30, 1997, respectively. Debt 
convertible to 5,765,087 shares of common stock was outstanding at June 30, 
1997, and was antidilutive. No such debt was outstanding as of June 30, 1998.

The following is a reconciliation of the computation for basic and diluted 
EPS:


                                       4

<PAGE>

<TABLE>
<CAPTION>
                                                      Three Months        Three Months        Six Months         Six Months
                                                         Ended               Ended              Ended               Ended
                                                     June 30, 1998       June 30, 1997      June 30, 1998       June 30, 1997
                                                     -------------       -------------      -------------       -------------
                                                                       (in thousands, except per share data)
<S>                                                      <C>                 <C>                <C>                <C>
Net income (loss)                                          $188                $276               $734             $(1,789)
                                                     -------------       -------------      -------------       -------------
Shares calculation
    Average basic shares outstanding                     29,566              15,289             25,220              15,256
Effect of dilutive securities
    Options                                               1,309                 780                678                   -
                                                     -------------       -------------      -------------       -------------
    Total shares used to compute
    diluted earnings per share                           30,875              16,069             25,898              15,256
                                                     -------------       -------------      -------------       -------------
Earnings (loss) per basic share                           $0.01               $0.02              $0.03              $(0.12)
                                                     -------------       -------------      -------------       -------------
                                                     -------------       -------------      -------------       -------------
Earnings (loss) per diluted share                         $0.01               $0.02              $0.03              $(0.12)
                                                     -------------       -------------      -------------       -------------
                                                     -------------       -------------      -------------       -------------
</TABLE>

        REVENUE RECOGNITION. In October 1997, the American Institute of 
Certified Public Accountants ("AICPA") issued Statement of Positions No 97-2 
("SOP 97-2"), "Software Revenue Recognition", which the Company has adopted 
for transactions entered into beginning January 1, 1998. SOP 97-2 provides 
guidance for recognizing revenue on software transactions and supersedes SOP 
91-1 "Software Revenue Recognition". 

        In March 1998, the AICPA issued Statement of Position No. 98-4 ("SOP 
98-4") "Deferral of the Effective Date of a Provision of SOP 97-2, Software 
Revenue Recognition". SOP 98-4 defers, for one year, the application of 
certain passages in SOP 97-2 which limit what is considered vendor-specific 
objective evidence ("VSOE") necessary to recognize revenue for software 
licenses on multiple-element arrangements when undelivered elements exist.  
Additional guidance is expected to be provided prior to adoption of the 
deferred provision of SOP 97-2. The Company will determine the impact, if 
any, the further guidance will have on current revenue recognition practices 
when issued. 

        COMPREHENSIVE INCOME (LOSS).  The Company has adopted Statement of 
Financial Accounting Standards No. 130, "Reporting Comprehensive Income."  
This Statement requires that all items recognized under accounting standards 
as components of comprehensive earnings be reported in an annual financial 
statement that is displayed with the same prominence as other annual 
financial statements. This Statement also requires that an entity classify 
items of other comprehensive earnings by their nature in an annual financial 
statement. Other comprehensive earnings consist of currency translation 
adjustments. Annual financial statements for prior periods will be 
reclassified, as required. The Company's total comprehensive earnings were as 
follows:

<TABLE>
<CAPTION>
                                            Three Months        Three Months        Six Months          Six Months
                                               Ended               Ended              Ended               Ended
                                           June 30, 1998       June 30, 1997      June 30, 1998       June 30, 1997
                                           -------------       -------------      -------------       -------------
                                                                       (in thousands)
<S>                                        <C>                 <C>                <C>                 <C>
Net income(loss)                                $188                $276               $734             $(1,789)
Other comprehensive loss (gain)                  (25)                 77                 36                  (8)
                                                ----                ----               ----             -------
Total comprehensive income (loss)                213                $199                698              (1,781)
                                                ----                ----               ----             -------
                                                ----                ----               ----             -------
</TABLE>

        RECENT ACCOUNTING PRONOUNCEMENTS. In September 1997, the Financial 
Accounting Standards Board issued Statement of Financial Accounting Standards 
No. 131, "Disclosures About Segments of An Enterprise and Related 
Information" ("SFAS 131"). SFAS 131 revises information regarding the 
reporting of operating segments. It also establishes standards for related 
disclosures about products and services, geographic areas and major 
customers. The Company will adopt SFAS 131 for the fiscal year ending 
December 31, 1998 and does not expect such adoption to have a material effect 
on the consolidated financial statements. 

    In April 1998, the American Institute of Certified Public Accountants 
issued Statement of Position 98-1 "Accounting for the Costs of Computer 
Software Developed or Obtained for Internal Use" ("SOP 98-1").  SOP 98-1 
provides guidance on capitalization of the costs incurred for computer 
software developed or obtained for internal use. It also provides guidance 
for determining whether computer software is internal-use software and on 
accounting for the proceeds of computer software originally developed or 
obtained for internal use and then subsequently sold to the public.  The 
Company


                                       5

<PAGE>

has not yet determined the impact, if any, of adopting this statement.  The 
disclosures prescribed by SOP 98-1 will be effective for the Company's 
consolidated financial statements for the fiscal year ending December 31, 
1999.

    In June 1998, the Financial Accounting Standards Board (FASB) issued 
Statement No. 133, "Accounting for Derivative Instruments and Hedging 
Activities" (SFAS 133).  SFAS 133 establishes accounting and reporting 
standards for derivative instruments, embedded in other contracts, and for 
hedging activities. It requires that an entity recognize all derivatives as 
either assets or liabilities in the statement of financial position and 
measure those instruments at fair value.  The accounting for changes in the 
fair value of a derivative depends on the intended use of the derivative and 
the resulting designation.  The company will adopt SFAS 133 in the first 
quarter of the fiscal year ending December 31, 2000 and has not yet evaluated 
the impact of adoption and its effects on the Company's results of 
operations, financial position, capital resources or liquidity.

        RECLASSIFICATIONS.  In order to conform to the condensed consolidated 
balance sheet and statement of cash flows for the six months ended June 30, 
1998, certain reclassifications have been made to the condensed consolidated 
balance sheet at December 31, 1997 and statement of cash flows for the six 
months ended June 30, 1997. 

2. LITIGATION

        On September 17, 1997, Technology Venture (Software) Holdings 
Limited, formerly known as Eagerquest Investments Limited ("Eagerquest") 
filed suit against the Company in the United States District Court for the 
Central District of California alleging that the Company acted improperly 
with respect to its contract with Eagerquest for the distribution of the 
Company's products in the territories of Hong Kong and China and that the 
Company's actions illegally damaged Eagerquest. While the formal settlement 
document has not yet been signed, the Company has reached an agreement in 
principle with Eagerquest to resolve outstanding differences and to dismiss 
the lawsuit. The Company does not believe this will have an adverse material 
affect on the Company's financial situation or business prospects.

       Other than the above, there are currently no material pending legal 
proceedings against the Company or any of its subsidiaries.  The Company 
operates in an environment, however, where litigation may occur in the course 
of its normal business operations.  In the complex and volatile industry in 
which the Company operates, disputes, litigation, regulatory proceedings and 
other actions are a necessary risk of doing business.  There can be no 
assurance that the Company will not participate in such legal proceedings and 
that the costs and charges will not have material adverse impact on the 
Company's future success.

3. SHORT-TERM BORROWINGS

       In January 1998, the Company entered into a $5,000,000 asset based 
loan facility with Coast Business Credit, the "Facility."  The loan provides 
for borrowings of up to $5,000,000, secured by the Company's accounts 
receivable, combined with a $500,000 capital equipment facility.  The 
Facility bears interest at 1.75% above the Bank of America Reference Rate, 
and provides for the ability to reduce interest cost based on the achievement 
of certain financial covenants.  The Facility matures in January 2000 and 
provides for the ability to extend the agreement for one year at the option 
of the Company.  The facility replaces an accounts receivable factoring 
agreement entered into by the Company in June 1997.   As of June 30, 1998 
there was $1,836,000 drawn against the $5,000,000 loan facility.

4. CONVERSION OF NOTE PAYABLE 

       In February 1998, Computer Associates, Inc. ("CA"), and Newport 
Acquisition Company, LLP ("NAC") entered into a Note Purchase and Sale 
Agreement (with the Company's consent) and the Company and NAC entered into a 
Note Conversion Agreement (the "Agreements"). Under the terms of the 
Agreements, a promissory note, plus accrued interest, in the amount of 
$12,251,000, payable to CA (the "CA Note") was acquired by NAC, and 
immediately converted into 11,415,094 shares of the Company's common stock 
(the "Shares").  In February 1998, in connection with the Agreements, the 
Company entered into a Warrant Purchase Agreement with CA wherein the Company 
sold and issued to CA, at an issuance price of $.001 per share, a warrant to 
purchase 500,000 shares of the Company's common stock.  The warrant is 
exercisable at $1.906 per share and expires on February 27, 2004. The 
warrants were valued at $300,000 using a risk-free rate of 5.5% and a 
volatility factor of 65% and the related charge is included in other income 
(expense) in the first quarter of 1998.


                                       6

<PAGE>

        Also, in consideration of services rendered in connection with the 
Conversion of Note Payable, the Company issued to Rochon Capital Group, Ltd. 
warrants to purchase 283,019 shares of the Company's common stock at an 
exercise price of $2.12 (the "Rochon Conversion Warrants"). The Rochon 
Conversion Warrants expire on February 27, 2003. The warrants were valued at 
$141,000.

       Included  with the Note Conversion Agreement is an Investor Rights 
Agreement ("IRA") between the Company and NAC that carries certain 
anti-dilution rights for two years.   In June 1998, the Company and NAC 
entered into an agreement to amend the IRA.  The amendment included 
modifications to the IRA that limit NAC's anti-dilution rights related to 
certain transactions, including the grant of stock options to employees and 
shares that may be issued as consideration in connection with certain 
strategic transactions, such as, an acquisition, asset purchase, or license 
agreement.  In consideration for these modifications, the Company issued to 
NAC warrants to purchase up to 893,320 shares of common stock at an exercise 
price of $1.81 and up to 300,000 shares of common stock at an exercise price 
of $2.09, both expiring on June 11, 2003.  The warrants for the 893,320 
shares were valued at $393,800 by an independent specialty investment banking 
firm, using a modified Black Scholes method with a risk free rate of 5.51% 
and a volatility factor of 62.77%. The warrants for the 300,000 shares were 
valued at $155,300 by an independent specialty investment banking firm, using 
a modified Black Scholes method with a risk-free rate of 5.48% and a 
volatility factor of 62.77%.  The related charges are included in other 
income (expense) in the second quarter of 1998.

5. PRIVATE PLACEMENT

        In February 1998, pursuant to the terms of Stock Purchase Agreements, 
the Company completed a private placement of 2,330,191 shares of the 
Company's common stock (the "Private Placement"), resulting in gross proceeds 
to the Company of $2,470,000.  In connection with the Private Placement the 
Company issued warrants to purchase 582,548 shares of the Company's common 
stock.  The warrants are exercisable at $1.25 per share and expire on 
February 28, 2003.  Also, in consideration of services rendered in connection 
with the Private Placement, the Company issued to Rochon Capital Group, Ltd. 
warrants to purchase 71,698 shares of the Company's common stock at an 
exercise price of $2.12 (the "Rochon Private Placement Warrants"). The Rochon 
Private Placement Warrants expire on February 27, 2003.  The Company 
registered the foregoing shares and warrants under the Securities Act of 
1933, as amended on a Form S-3 declared effective on May 18, 1998.

                                      7

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

       This Quarterly Report on Form 10-Q contains certain forward-looking 
statements within the meaning of Section 27A of the Securities Act of 1933 
and Section 21E of the Securities Exchange Act of 1934. Actual results could 
differ materially from those projected in the forward-looking statements as a 
result of certain of the risk factors set forth below and elsewhere in this 
Quarterly Report on Form 10-Q. In evaluating the Company's business, 
prospective investors should carefully consider the following factors in 
addition to the other information presented in this report. 

       The following discussion should be read in conjunction with the 
unaudited condensed consolidated financial statements and notes thereto 
included in Part I-Item 1 of this Quarterly Report, and the audited 
consolidated financial statements and notes thereto, and Management's 
Discussion and Analysis of Financial Condition and Results of Operations 
included in the Company's Annual Report on Form 10-K for the year ended 
December 31, 1997.

Results of Operations:

    NET PRODUCT REVENUES.  Net product revenues decreased 32% to $8.0 million 
for the quarter ended June 30, 1998, from $11.8 million for the quarter ended 
June 30, 1997. The decrease in net product revenues is primarily attributable 
to decreased sales of Centura tools products while SQLBase database revenues 
remained approximately constant.  International sales accounted for $3.7 
million or 46% and $7.5 million or 64% of net product revenues for the 
quarters ended June 30, 1998 and 1997, respectively.   The decline in 
international sales is primarily attributable to decreased sales in Europe 
and the Asia-Pacific region as compared with the second quarter of 1997. For 
the three month period ended June 30, 1998, one customer comprised 
approximately 29% of the Company's net product revenues.

    Net product revenues decreased 22% to $16.6 million for the six months 
ended June 30, 1998, from $21.3 million for the six months ended June 30, 
1997. International sales accounted for $8.4 million or 51% and $13.7 million 
or 64% of net product revenues for the six months ended June 30, 1998 and 
1997, respectively. The decrease in international sales is primarily due to 
decreased sales in Europe.  SQLBase product revenues increased approximately 
6% in the first half of 1998 as compared with the six month period ended June 
30, 1997. For the six month period ended June 30, 1998, one customer 
comprised approximately 18% of the Company's net product revenues.

    NET SERVICE REVENUES.  Net service revenues increased 17% to $5.1 million 
for the quarter ended June 30, 1998, from $4.3 million for the quarter ended 
June 30, 1997. The increase was primarily due to increased sales of 
license maintenance support. International sales accounted for 53% and 48% of 
total net service revenues for the quarters ended June 30, 1998 and 1997, 
respectively. Net service revenues were $9.3 million and $8.4 million for the 
six months ended June 30, 1998 and 1997, respectively.  International sales 
accounted for 52% in the first half of 1998 and 42% in the first half of 1997.

     COST OF PRODUCT REVENUES.  Cost of product revenues includes the cost of 
subcontracted production and the amortization of capitalized software. Cost 
of product revenues decreased 31% to $0.9 million in the 1998 second quarter, 
principally due to a reduction in the amortization of capitalized software as 
compared with the 1997 second quarter.  Cost of product revenues decreased 
18% to $2.2 million over the six month period ended June 30, 1998 as compared 
with the same period in the prior year. The decrease was primarily due to a 
reduction in the amortization of capitalized software in the SQLBase  product 
line.  Cost of product revenues as a percentage of product revenues remained 
constant at 11% for the quarters ended June 30, 1998 and 1997. Cost of 
product revenues as a percentage of product revenues was also constant at 13% 
for the six months ended June 30, 1998 and 1997, respectively. 

    In accordance with Statement of Financial Accounting Standards No. 86, 
"Accounting for the Costs of Computer Software to be Sold, Leased or 
Otherwise Marketed", the Company capitalizes internal development costs on a 
project when the technological feasibility of such project has been 
determined. The Company ceases capitalizing such expenses when the products 
derived from the project are released for sale. The capitalized costs are 
then amortized ratably over the useful life of the products, generally 
estimated to be two to three years. Amortization of capitalized software 
costs, which include the software purchased from third parties, were $298,000 
and $804,000 for the three and six month periods ended June 30, 1998 compared 
with $644,000 and $1,237,000 for the same periods in 1997. 

    COST OF SERVICE REVENUES.  Cost of service revenues consists primarily of 
personnel costs related to product license maintenance, training and 
technical support. Cost of service revenues decreased to $1.1 million from 
$2.3 million for the three month periods ended June 30, 1998 and 1997, 
respectively.  For the six months ending June 30, 1998 and 1997, cost of 
services revenues were $2.2 million and $4.4 million, respectively.  Cost of 
service revenues as a percentage of net service revenues was 21% and 53% for 
the quarters ended June 30, 1998 and 1997, respectively, and 23% and 52% for 
the six months ended June 30, 1998 and 1997, respectively.  These decreases 
were due principally to a reduction of the Company's work force, outsourcing 
of front end telephone support, and the streamlining of operations which took 
effect in the third quarter of 1997.


                                      8

<PAGE>

    SALES AND MARKETING EXPENSES.  Sales and marketing expenses were $6.9 
million, or 53% of net revenues, for the quarter ended June 30, 1998, 
compared with $7.4 million, or 46% of net revenues, for the quarter ended 
June 30, 1997. For the six months ended June 30, 1998, sales and marketing 
expenses were $12.8 million, or 49% of net revenues, compared with $14.0 
million or 47% of net revenues for the six months ended June 30, 1997.  The 
reduction in sales and marketing expense reflects the Company's commitment to 
control spending, while continuing its worldwide marketing efforts.

    RESEARCH AND DEVELOPMENT EXPENSES.  The table below sets forth gross 
research and development expenses, capitalized software development costs, 
and net research and development expenses in dollar amounts and as a 
percentage of net revenues for the periods indicated:

<TABLE>
<CAPTION>
                                                                     Three Months               Six Months 
                                                                        Ended                     Ended 
                                                                       June 30,                  June 30,
                                                                --------------------        -------------------
                                                                 1998          1997          1998         1997
                                                                ------        ------        ------       ------
                                                                                   (in thousands)
<S>                                                             <C>           <C>           <C>          <C>
Gross research and development expenses. . . . . . . . . . .    $1,690        $2,856        $3,263       $5,875
Capitalized internal software development costs. . . . . . .      (333)         (138)         (362)        (454)
                                                                ------        ------        ------       ------
Net research and development expenses. . . . . . . . . . . .    $1,357        $2,718        $2,901       $5,421
                                                                ------        ------        ------       ------
                                                                ------        ------        ------       ------
                                                                                    
 As a Percentage of Net Revenues:
    Gross research and development expenses. . . . . . . . .        13%           18%           13%          20%
    Net research and development expenses. . . . . . . . . .        10%           17%           11%          18%
</TABLE>

    GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative expenses 
was approximately constant for the quarters ended June 30, 1998 and 1997, 
respectively, and $3.5 million  and $4.0 million for the six months ended 
June 30, 1998 and 1997, respectively. 

    OTHER INCOME (EXPENSE), NET.  Other income (expense), net is comprised of 
interest income, interest expense, and gains or losses on foreign currency 
transactions. For the quarter ended June 30, 1998 other income (expense), net 
was $(0.7) million, compared to $(0.1) million for the quarter ended June 30, 
1997. This was primarily attributable to the imputed value of warrants of 
$0.5 million issued in connection with the Company's conversion of debt 
during the first quarter of 1998 and the subsequent amendment to the debt 
conversion agreement in the second quarter of 1998.  (See Note 4 of the Notes 
to Condensed Consolidated Financial Statements).

    For the six months ended June 30, 1998 other income (expense), net was 
$(1.4) million, compared to $(1.0) million for the six months ended June 30, 
1997. This was primarily attributable  to the imputed value of warrants of 
$(1.0) million issued in connection with the Company's conversion of debt 
during the first quarter of 1998, offset by $0.4 million reduced foreign 
currency losses due to the purchase of foreign currency forward contracts in 
the principal currencies in which the Company conducts business.

    PROVISION FOR INCOME TAXES.  The provision for income taxes was $0.1 
million for both the quarter ended June 30, 1998 and for the first six months 
of 1998, and was insignificant for the corresponding periods of 1997.  The 
provision primarily relates to foreign withholding taxes. Due to the 
availability of net operating loss carryforwards arising in prior years, no 
provision for U.S. income taxes was made for the three and six month periods 
ended June 30, 1998 and 1997. 

    YEAR 2000 ISSUE.  The Company has commenced, for all of its information 
systems, a year 2000 date conversion project to address all necessary code 
changes, testing and implementation of mission critical applications. The 
"Year 2000 Issue" arises because most computer systems and programs were 
designed to handle only a two-digit year, as opposed to a four digit year.   
Management has not completed its assessment of all of the potential Year 2000 
compliance expenses and the related potential effect on the Company's 
earnings. 

LIQUIDITY AND CAPITAL RESOURCES:

    In the first quarter of 1998 the Company completed a note payable 
conversion and private placement of common

                                      9
<PAGE>

stock, as described in Notes 4 and 5 of the Notes to the Condensed 
Consolidated Financial Statements. Together with the net income for the 
period, this resulted in a net increase in shareholder's equity of $15.0 
million at the end of the first quarter of 1998. 

    At June 30, 1998, the Company had a deficit working capital position of 
$1.4 million, including a liability for deferred revenues of $13.1 million. 
Excluding deferred revenues, working capital would have been $11.7 million.  
This represents  an increase in working capital of $16.8 million from 
December 31, 1997.  Net cash provided by operating activities for the six 
months ended June 30, 1998 was $2.1 million, which resulted primarily from a 
decrease in accounts receivable, depreciation and amortization, net income 
and issuance of stock warrants, partially offset by decreases in accounts 
payable and accrued liabilities (principally comprised of interest on the CA 
Note), and deferred revenue.  Cash used in investing activities totaled $0.9 
million which related primarily to the purchases of property and equipment 
and capitalization of software development costs.  Cash from financing 
activities totaled $2.2 million of which $1.9 million is primarily from the 
private placement and $0.3 million is proceeds from short-term borrowings.

        At June 30, 1998 the Company had $5.8 million in unsecured foreign 
currency contracts, denominated in various currencies, as part of a program 
to hedge the financial exposure arising from foreign denominated monetary 
assets and liabilities.

       The deferred product and support revenues of $13.1 million at June 
30, 1998 reflects a delay in recognition of revenue in accordance with 
Generally Accepted Accounting Principles and requires minimal use of future 
resources of the Company.

        The Company believes that expected cash flows from operations and 
existing cash balances, will be sufficient to meet the Company's currently 
anticipated working capital and capital expenditure requirements for the next 
12 months. The Company may, however, choose to raise cash for operational or 
other needs sometime in the future.  If the Company needs further financing, 
there can be no assurance that it will be available on reasonable terms or at 
all.  Any additional equity financing will result in dilution to the 
Company's shareholders.

       The Company's capital requirements also may be affected by 
acquisitions of businesses, products and technologies that are complementary 
to the Company's business, which the Company may consider from time to time. 
The Company regularly evaluates such opportunities. Any such transaction, if 
consummated, may further reduce the Company's working capital or require the 
issuance of equity. 

FACTORS THAT MAY AFFECT FUTURE RESULTS:

    CHANGES IN STRATEGIC DIRECTION: RESTRUCTURING.  In efforts to stem losses 
and maximize return on the Company's core assets and technologies, the 
Company has restructured its operations and announced changes in strategic 
direction several times in recent financial periods.  The first of these 
changes, which began in December 1995, encompassed a change in the Company's 
name from Gupta Corporation to Centura Software Corporation and the 
identification of a flagship product bearing the name CENTURA.  In early 
1997, the Company refocused its marketing and sales efforts away from RDBMS 
and development tools products to a middleware connectivity product and a 
related Merger Agreement with Infospinner, Inc. ("InfoSpinner"). In the 
second half of 1997, however, the Company restructured and refocused 
operations on its core competencies, products and technologies and severed 
its distribution arrangement with Infospinner. There can be no assurance that 
the restructuring efforts the Company has engaged in to date will be 
successful or that the Company will be able to sustain profitability on a 
quarterly or annual basis.  In addition, there can be no assurance that the 
Company's management will not deem it appropriate to undertake other major 
restructuring efforts or changes in strategic direction in the future or to 
what degree any of these efforts will result in improved operational 
performance, if at all.   

       RECENT CHANGES IN SENIOR MANAGEMENT.  In the fourth quarter of 1997, 
the Company announced significant changes in senior management.  Such changes 
included the election and appointment of Scott R. Broomfield as Chief 
Executive Officer, the appointment of John W. Bowman as Chief Financial 
Officer, Kathy Lane as Senior Vice President of Marketing, and the election 
of Messrs. Jack King, Philip Koen  and Earl Stahl to the Company's Board of 
Directors, and the retirement of Samuel M. Inman, III, Earl Stahl and Richard 
Gelhaus from their positions as officers of the Company.  In February 1998 
the Company announced the election of Messrs. William D. Nicholas and Peter 
Micciche to the Board of Directors and the appointment of Scott R. Broomfield 
to the position of Chairman & CEO.  There can be no assurance that the new 
management team will be successful in the execution of its objectives or that 
the successful execution of these objectives will result in improved 
operating results or financial position of the Company. 

        DEPENDENCE ON KEY PERSONNEL.  The Company's future performance is 
substantially dependent on the performance of its executive officers and key 
product development, technical, sales, marketing and management personnel.  
The Company does not have employment or non-competition agreements with any 
of its employees. The loss of the services of any executive officer or other 
key technical or management personnel of the Company for any reason could 
have a material adverse effect on the business, operating results and 
financial condition of the Company.  In addition, the Company is in the 
process of recruiting a Chief Technology Officer.  The Company considers this 
position critical to the success of its ongoing competitive position in 
defined markets and operations. There can be no assurance that an appropriate 
individual will be

                                      10
<PAGE>

located to fill this position on a timely basis on terms reasonable to the 
Company, or at all. 

       The future success of the Company also depends on its continuing 
ability to identify, hire, train, motivate and retain other highly qualified 
technical and managerial personnel.  Competition for such personnel is 
intense and there can be no assurance that the Company will be able to 
attract, assimilate or retain other highly qualified technical and managerial 
personnel in the future. The inability to attract and retain the necessary 
technical and managerial personnel could have a material and adverse effect 
upon its business, operating results and financial condition.

       RECENT COMPANY LOSSES; FLUCTUATIONS IN QUARTERLY RESULTS.  The Company 
has experienced in the past and may in the future continue to experience 
significant fluctuations in quarterly operating results.  The Company 
reported a loss of $0.6 million for fiscal year 1997, a profit of $2.0 
million for 1996, and a loss of $44.1 million for 1995.  There can be no 
assurance that the restructuring efforts the Company has engaged in to date 
will be successful or that the Company will be able to sustain profitability 
on a quarterly or annual basis.  Many of the  Company's product licensing 
arrangements are subject to revenue recognition on a per-unit deployed basis 
as the Company's deferred obligation to such customers is gradually 
extinguished.  Revenue recognition in such cases is therefore dependent upon 
the business activities of the Company's customers and the timely and 
accurate reporting of such activities to the Company, which makes 
predictability of the related revenue extremely uncertain. In addition, 
quarterly operating results of the Company will depend on a number of other 
factors that are difficult to forecast, including, general market demand for 
the Company's products; the size and timing of individual orders during a 
quarter; the Company's ability to fulfill such orders; introduction, 
localization or enhancement of products by the Company; delays in the 
introduction and/or enhancement of products by the Company and its 
competitors; market acceptance of new products; reviews in the industry press 
concerning the products of the Company or its competitors; software "bugs" or 
other product quality problems; competition and pricing in the software 
industry; sales mix among distribution channels; customer order deferrals in 
anticipation of new products; reduction in demand for existing products and 
shortening of product life cycles as a result of new product introductions; 
changes in operating expenses; changes in the Company's strategy; personnel 
changes; foreign currency exchange rates; mix of products sold; inventory 
obsolescence; product returns and rotations; and general economic conditions. 
Sales of the Company's products also may be negatively affected by delays in 
the introduction or availability of new hardware and software products from 
third parties.  The Company's financial results also may vary as a result of 
seasonal factors including year and quarter end purchasing and the timing of 
marketing activities, such as industry conventions and tradeshows.

    DILUTIVE AND POTENTIAL DILUTIVE EFFECT TO SHAREHOLDERS.  In February 
1998, Computer Associates, Inc. ("CA"), and Newport Acquisition Company, LLP 
("NAC") entered into a Note Purchase and Sale Agreement and the Company and 
NAC entered into a Note Conversion Agreement (the "Agreements").  Under the 
terms of the Agreements, a  promissory note, plus accrued interest, in the 
amount of $12,251,000, payable to CA (the "CA Note") was acquired by NAC, and 
immediately converted into 11,415,094 shares of the Company's common stock 
(the "Shares"). In February 1998, in connection with the Agreements, the 
Company entered into a Warrant Purchase Agreement with CA wherein the Company 
sold and issued to CA, at an issuance price of $.001 per share, a warrant to 
purchase 500,000 shares of the Company's common stock.  The warrant is 
exercisable at $1.906 per share and expires on February 27, 2004. The 
warrants were valued at $300,000 using a risk-free rate of 5.5% and a 
volatility factor of 65% and the related charge is included in other income 
(expense) in the first quarter of 1998.

       Also, in consideration of services rendered in connection with the 
Conversion of Notes Payable, the Company issued to Rochon Capital Group, Ltd. 
warrants to purchase 283,019 shares of the Company's common stock at an 
exercise price of $2.12 (the "Rochon Conversion Warrants"). The Rochon 
Conversion Warrants expire on February 27, 2003. The warrants were valued at 
$141,000.

    Included  with the Note Conversion Agreement is an Investor Rights 
Agreement ("IRA") between the Company and NAC that carries certain 
anti-dilution rights for two years.   In June 1998, the Company and NAC 
entered into an agreement to amend the IRA.  The amendment included 
modifications to the IRA that limit NAC's anti-dilution rights related to 
certain transactions, including the grant of stock options to employees and 
shares that may be issued as consideration in connection with certain 
strategic transactions, such as, an acquisition, asset purchase, or license 
agreement.  In consideration for these modifications, the Company issued to 
NAC warrants to purchase up to 893,320 shares of common stock at an exercise 
price of $1.81 and up to 300,000 shares of common stock at an exercise price 
of $2.09, both expiring on June 11, 2003.  The warrants for the 893,320 
shares were valued at $393,800 by an independent specialty investment banking 
firm, using a modified Black Scholes method with a risk free rate of 5.51% 
and a volatility factor of 62.77%. The warrants for the 300,000 shares were 
valued at $155,300 by an independent specialty investment banking firm, using 
a modified Black Scholes method with a risk-free rate of 5.48% and a 
volatility factor of 62.77%.  The related charges are included in other 
income (expense) in the second quarter of 1998.

        Also in February 1998, pursuant to the terms of Stock Purchase 
Agreements, the Company completed a private placement of 2,330,191 shares of 
the Company's common stock (the "Private Placement"), resulting in gross 
proceeds to the Company of $2,470,000. In connection with the Private 
Placement the Company issued warrants to purchase 582,548 shares of the 
Company's common stock.  The warrants are exercisable at $1.25 per share and 
expire on February 28, 2003.  Also, in consideration of services rendered in 
connection with the Private Placement, the Company issued to Rochon Capital 
Group, Ltd. warrants to purchase 71,698 shares of the Company's common stock 
at an exercise price of $2.12 (the "Rochon Private

                                     11
<PAGE>

Placement Warrants"). The Rochon Private Placement Warrants expire on 
February 27, 2003.  The Company registered the foregoing shares and warrants 
under the Securities Act of 1933, as amended on a Form S-3 declared effective 
on May 18, 1998. 

       STOCK OPTION PLANS. From time to time, the Company issues shares of 
common stock pursuant to its 1992 Employee Stock Purchase Plan and pursuant 
to options granted under its 1995 Incentive Stock Option Plan, 1998 Employee 
Stock Option Plan (for non-officer employees) and 1996 Directors' Stock 
Option Plan. Additional options remain outstanding and are exercisable 
pursuant to the Company's 1986 Incentive Stock Option Plan, which terminated 
in July 1996.  In addition, the Company has issued non-plan options to the 
Company's Chief Executive Officer, Chief Financial Officer and Sr. Vice 
President of Marketing, exercisable for a total of 1,500,000 shares.  

       NEW PRODUCT RISKS; RAPID TECHNOLOGICAL CHANGE.  The markets for the 
Company's software products and services are characterized by rapid 
technological developments, evolving industry standards, swift changes in 
customer requirements and computer operating environments, and frequent new 
product introductions and enhancements.  As a result, the success of the 
Company depends substantially upon its ability to continue to enhance 
existing products, develop and introduce in a timely manner, new products 
incorporating technological advances and meet increasing customer 
expectations, all on a timely and cost-effective basis.  To the extent one or 
more competitors introduce products that better address customer needs, the 
Company's businesses could be adversely affected. The Company's success will 
also depend on the ability of its primary products, SQLBASE, CENTURA TEAM 
DEVELOPER, SQLWINDOWS, CENTURA NET.DB, and SQLHOST,  to perform well with 
existing and future leading, industry-standard application software products 
intended to be used in connection with RDBMS.  Any failure to deliver these 
products as scheduled or their failure to achieve early market acceptance as 
a result of competition, technological change, failure of the Company to 
timely release new versions or upgrades,  failure of such upgrades to achieve 
market acceptance or otherwise, could have a material adverse effect on the 
business, operating results and financial condition of the Company.  In 
addition, commercial acceptance of the Company's products and services could 
be adversely affected by critical or negative statements or reports by 
industry and financial analysts concerning the Company and its products, or 
other factors such as the Company's financial performance.  If the Company is 
unable to develop and introduce new products or enhancements to existing 
products in a timely manner in response to changing market conditions or 
customer requirements, its business, operating results and financial 
condition could be materially and adversely affected. 

       The Company depends substantially upon internal efforts for the 
development of new products and product enhancements.  The Company has in the 
past experienced delays in the development of new products and product 
versions, which resulted in loss or delays of product revenues, and there can 
be no assurance that the Company will not experience further delays in 
connection with its current product development or future development 
activities.  Also, software products as complex as those offered by the 
Company may contain undetected errors when first introduced or as new 
versions are released. The Company has in the past discovered software errors 
in certain of its new products and enhancements, respectively, after their 
introduction.  Although the Company has not experienced material adverse 
effects resulting from any such errors to date, there can be no assurance 
that errors will not be found in new products or releases after commencement 
of commercial shipments, resulting in adverse product reviews and a loss of 
or delay in market acceptance, which could have a material adverse effect 
upon the Company's business, operating results and financial condition. 

       From time to time, the Company or its competitors may announce new 
products, product versions, capabilities or technologies that have the 
potential to replace or shorten the life cycles of the Company's existing 
products.  The Company has historically experienced increased returns of a 
particular product version following the announcement of a planned release of 
a new version of that product.  The Company provides allowances for 
anticipated returns, and believes its existing policies result in the 
establishment of allowances that are adequate, and have been adequate in the 
past, but there can be no assurance that product returns will not exceed such 
allowances in the future. The announcement of currently planned or other new 
products may cause customers to delay their purchasing decisions in 
anticipation of such products, which could have a material adverse effect on 
business, operating results and financial condition of the Company. 

       YEAR 2000 ISSUE:  The "Year 2000 Issue" arises because most computer 
systems and programs were designed to handle only a two-digit year, as 
opposed to a four digit year.  When the year 2000 begins these computers may 
interpret "00" as the year 1900 and could either stop processing date-related 
computations or could process them incorrectly. As customers and potential 
customers of the Company begin to devote incremental resources to this issue, 
resources previously allocated to other information systems requirements may 
be redirected to address the Year 2000 issue. To the extent that the 
Company's products are not selected as part of a customer's overall Year 2000 
solution, redirection of these customer resources could have a material 
adverse effect on the Company's results of operations and financial 
condition. In addition, the Year 2000 Issue creates risk for the Company from 
unforeseen problems in its internal computer systems and from third parties 
with which the Company interacts. Such failures of the Company's and/or third 
parties' computer systems could have material impact on the Company's ability 
to conduct its business, and to process and account for the transfer of funds 
electronically.

       While the Company has begun the implementation of Year 2000 related 
upgrades appropriate for the Company's internal systems and equipment and 
Year 2000 compliance issues in the systems of customers, vendors and other 
related parties, there can be no assurance that problems will not arise as a 
result of the Year 2000 issue.


                                      12

<PAGE>

        EMBEDDABLE DATABASE MARKET. Since database capacity is often 
indicative of differences in customer application, segments within the PC 
client/server market in which the Company competes can generally be 
distinguished and segregated by the target capacity of the database utilized. 
The Company generally markets its database products in environments utilizing 
capacity ranging from small, Smart Device environments to those of multiple 
Gigabytes. Competitors of the Company, including Microsoft, Sybase, Pervasive 
and Oracle, generally have product offerings which compete with the Company's 
products in some or all of these capacity ranges.  In addition, some of these 
competitors are providers of sophisticated database software, originally 
designed and marketed primarily for use with mainframes and minicomputers, 
which, if successfully re-configured to provide similar functionality in PC 
client/server, or smaller capacity environments, could materially and 
adversely impact the Company's revenues, results of operations and financial 
condition. 

       COMPETITION. The market for client/server system software is intensely 
competitive and rapidly changing.  The Company's products are specifically 
targeted at the emerging portion of this market relating to embeddable PC and 
Web client/server software, and the Company's current and prospective 
competitors offer a variety of solutions to address this market segment. 

       TOOLS AND CONNECTIVITY MARKETS.  The Company faces competition from 
providers of software specifically developed for the PC client/server market, 
such as Oracle, Sybase, Microsoft, Inprise and Forte, and connectivity 
software competitors, such as IBI Systems, Inc. and Sybase.  The Company also 
faces potential competition from vendors of applications development tools 
based on 4GLs (generation languages) or CASE (Computer Aided Software 
Engineers) technologies. With the emergence of the World Wide Web as an 
important platform for application development and deployment and a variety 
of newly created tools that export Java-TM- program language connectivity, 
additional competitors or potential competitors have emerged.

       The principal competitive factors affecting the market for the 
Company's products include, breadth of distribution and name recognition, 
product architecture, performance, functionality, price, product quality, 
customer support.  The Company experienced increased competition during 1997, 
1996, and 1995, resulting in loss of market share.  The Company must continue 
to introduce enhancements to its existing products and offer new products on 
a timely basis in order to remain competitive.  However, even if the Company 
introduces such products in this manner, it may not be able to compete 
effectively because of the significantly larger resources available to many 
of the Company's competitors.  There can be no assurance that the Company 
will be able to compete successfully or that competition will not have a 
material adverse effect on the Company's business, operating results and 
financial condition.  See "Competition".

        INTERNET SOFTWARE MARKET.  The market for Internet software in 
general, and the segments of such market addressed by the Company's products 
in particular, are relatively new.  The future financial performance of the 
Company will depend in part on the continued expansion of this market and 
these market segments and the growth in the demand for other products 
developed by the Company, as well as increased acceptance of the Company's 
products by MIS professionals.  There can be no assurance that the Internet 
software market and the relevant segments of the market will continue to 
grow, that the Company will be able to respond effectively to the evolving 
requirements of the market and market segments, or that MIS professionals 
will accept the Company's products. If the Company is not successful in 
developing, marketing, localizing and selling applications that gain 
commercial acceptance in these markets and market segments on a timely basis, 
the Company's business, operating results and financial condition could be 
materially and adversely affected.  See "Industry Overview".

        DEPENDENCE UPON DISTRIBUTION CHANNELS.  The Company relies on 
relationships with value-added resellers and independent third party 
distributors for a substantial portion of its sales and revenues.  Some of 
the Company's resellers and distributors also offer competing products.  Most 
of the Company's resellers and distributors are not subject to any minimum 
purchase requirements, they can cease marketing the Company's products at any 
time, and they may from time to time be granted stock exchange or rotation 
rights. Moreover, the introduction of new and enhanced products may result in 
higher product returns and exchanges  from distributors and resellers.  Any 
product returns or exchanges in excess of recorded allowances could have a 
material adverse effect on the Company's business, operating results and 
financial condition. The Company also maintains  strategic relationships with 
a number of vertical software vendors and other technology companies for 
marketing or resale of the Company's products.  Any termination or 
significant disruption of the Company's relationship with a major portion of 
its resellers or distributors, or the failure by such parties to renew 
agreements with the Company, could materially and adversely affect the 
Company's business, operating results and financial condition.  Since 1994 
the Company has reduced its resources devoted to North American corporate 
sales and also decreased its expenditures on corporate and product marketing. 
Failure of the Company to successfully implement, support and manage its 
sales strategies could have a material adverse effect on the Company.

       The distribution channels through which client/server software 
products are sold have been characterized by rapid change, including 
consolidations and financial difficulties of distributors, resellers and 
other marketing partners including certain of the Company's current 
distributors.  The bankruptcy, deterioration in financial condition or other 
business difficulties of a distributor or retailer could render the Company's 
accounts receivable from such entity uncollectible, and this could result in 
a material adverse effect on the Company's business, operating results and 
financial condition.  There can be no assurance that distributors will 
continue to purchase the Company's products or provide the Company's products 
with adequate promotional support.  Failure of distributors to do so could 
have a material and adverse effect on the Company's business, operating 
results and financial condition. 


                                      13

<PAGE>

        In a number of international markets the Company has entered into 
quasi-exclusive, multi-year agreements with independent companies that have 
also licensed the use of the Company's name. These agreements are in place to 
increase the Company's opportunities and penetration in such markets where 
the rapid adoption of client/server technologies is anticipated.  While the 
Company believes that to date these agreements have increased the Company's 
penetration in such markets, there can be no certainty that this performance 
will continue nor that these relationships will remain in place.  The 
Company's future cost of maintaining its business in these markets could 
increase substantially if these agreements are not renewed.  

        DEPENDENCE ON THIRD PARTY ORGANIZATIONS.  The Company is increasingly 
dependent on the efforts of third party "partners", including consultants, 
system houses and software developers to implement, service and support the 
Company's products.  These third parties increasingly have opportunities to 
select from a very broad range of products from the Company's competitors, 
many of whom have greater resources and market acceptance than the Company.  
In order to succeed, the Company must actively recruit and sustain 
relationships with these third parties.  There can be no assurance that the 
Company will be successful in recruiting new partners or in sustaining its 
relationships with its existing partners.

       INTERNATIONAL SALES AND OPERATIONS.  International sales represented 
58%, 60% and 61% of the Company's net revenues for  the years ended December 
31,1997, 1996 and 1995, respectively.  A key component of the Company's 
strategy is continued expansion into international markets, and the Company 
currently anticipates that international sales, particularly in new and 
emerging markets, will continue to account for a significant percentage of 
total revenues.  The Company will need to retain effective distributors, and 
hire, retain and motivate qualified personnel internationally to maintain 
and/or expand its international presence.  There can be no assurance that the 
Company will be able to successfully market, sell, localize and deliver its 
products in these international markets.  In addition to the uncertainty as 
to the Company's ability to sustain or expand its international presence, 
there are certain risks inherent in doing business on an international level, 
such as unexpected changes in regulatory requirements and government 
controls, problems and delays in collecting accounts receivable, tariffs, 
export license requirements and other trade barriers, difficulties in 
staffing and managing foreign operations, longer payment cycles, political 
and economic instability, fluctuations in currency exchange rates, seasonal 
reductions in business activity during summer months in Europe and certain 
other parts of the world, restrictions on the export of critical technology, 
and potentially adverse tax consequences, which could adversely impact the 
success of international operations.  Sales of the Company's products are 
denominated both in local currencies of the respective geographic region and 
in US dollars, depending upon the economic stability of that region and 
locally accepted business practices.  Accordingly, any increase in the value 
of the US dollar relative to local currencies in these markets may negatively 
impact revenues, results of operations and financial condition.  An increase 
in the relative value of the US dollar would serve to increase the relative 
foreign currency cost to the customer of a US dollar denominated purchase, 
which may negatively affect the Company's sales in foreign markets. In 
addition, the US dollar value of a sale denominated in a region's local 
currency decreases in proportion to relative increases in the value of the US 
dollar.  In addition, effective copyright and trade secret protection may be 
limited or unavailable under the laws of certain foreign jurisdictions.  
There can be no assurance that one or more of such factors will not have a 
material adverse effect on the Company's international operations and, 
consequently, on the Company's business, operating results and financial 
condition.  

       PROPRIETARY RIGHTS.  The success and ability of the Company to compete 
is dependent in part upon the Company's  proprietary technology.  While the 
Company relies on trademark, trade secret and copyright laws to protect its 
technology, the Company believes that factors such as the technological and 
creative skills of its personnel, new product developments, frequent product 
enhancements, name recognition and customer support are more essential to 
establishing and maintaining a technology leadership position.  The Company 
has one patent with respect to its SQLWINDOWS and CENTURA TEAM DEVELOPER 
products. The Company believes that the ownership of patents is not 
necessarily a significant factor in its business and that its success does 
not depend on the ownership of patents, but primarily on the innovative 
skills, technical competence and marketing abilities of its personnel.  Also, 
there can be no assurance that others will not develop technologies that are 
similar or superior to the Company's technology.  The source code for the 
Company's  proprietary software is protected both as a trade secret and as a 
copyrighted work.  Despite these precautions, it may be possible for a third 
party to copy or otherwise obtain and use their products or technology 
without authorization, or to develop similar technology independently.  In 
addition, effective copyright and trade secret protection may be unavailable 
or limited in certain foreign countries.  The Company intends to apply for 
new patents as appropriate opportunities and need becomes evident.

       The Company generally enters into confidentiality or license 
agreements with its employees, consultants and vendors, and generally 
controls access to and distribution of its software, documentation and other 
proprietary information.  Despite efforts to protect proprietary rights, 
unauthorized parties may attempt to copy aspects of the Company's products or 
to obtain and use information that is regarded as proprietary.  Policing such 
unauthorized use is difficult.  There can be no assurance that the steps 
taken by the Company will prevent misappropriation of the Company's  
technology or that such agreements will be enforceable.  In addition, 
litigation may be necessary in the future to enforce intellectual property 
rights, to protect trade secrets or to determine the validity and scope of  
the proprietary rights of others.  Such litigation could result in 
substantial costs and diversion of resources and could have a material 
adverse effect on the Company's business, operating results and financial 
condition. 


                                      14

<PAGE>

       There can be no assurance that third parties will not claim 
infringement by the Company with respect to current or future products, and 
the Company expects that it will increasingly be subject to such claims as 
the number of products and competitors in the client/server and Internet 
connectivity software market grows and the functionality of such products 
overlaps with other industry segments.  In the past, the Company has received 
notices alleging that its products infringe trademarks of third parties.  The 
Company has historically dealt with and will in the future continue to deal 
with such claims in the ordinary course of business, evaluating the merits of 
each claim on an individual basis.  There are currently no material pending 
legal proceedings against the Company regarding trademark infringement.  Any 
such third party claims, whether or not they are meritorious, could result in 
costly litigation or require the Company to enter into royalty or licensing 
agreements.  Such royalty or license agreements, if required, may not be 
available on terms acceptable to the Company, or at all.  If the Company was  
found to have infringed upon the proprietary rights of third parties, it 
could be required to pay damages, cease sales of the infringing products and 
redesign or discontinue such products, any of which could have a material 
adverse effect on the Company's business, operating results and financial 
condition.

    LEGAL PROCEEDINGS.  Other than as described in Item 1 of Part II hereof, 
there are currently no material pending legal proceedings against the Company 
or any of its subsidiaries, other than ordinary routine litigation incidental 
to the business of the Company. The Company operates, however, in a complex 
and volatile industry in which disputes, litigation, regulatory proceedings 
and other actions are a necessary risk of doing business. There can be no 
assurance that the Company will not participate in such legal proceedings and 
that the costs and charges will not have a material adverse impact on the 
Company's future success.

                                      15
<PAGE>

PART II  

OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     On September 17, 1997, Technology Venture (Software) Holdings Limited, 
formerly known as Eagerquest Investments Limited ("Eagerquest") filed suit 
against the Company in the United States District Court for the Central 
District of California alleging that the Company acted improperly with 
respect to its contract with Eagerquest for the distribution of the Company's 
products in the territories of Hong Kong and China and that the Company's 
actions illegally damaged Eagerquest. While the formal settlement document 
has not yet been signed, the Company has reached an agreement in principle 
with Eagerquest to resolve outstanding differences and to dismiss the 
lawsuit. The Company does not believe this will have an adverse material 
affect on the Company's financial situation or business prospects.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

     (a)  SECURITIES SOLD.  On February 28, 1998 the Company issued and sold 
to purchasers in a Private Placement 2,330,191 shares of the Company's Common 
Stock (the "PP Shares") and warrants exercisable for 1,082,548 shares of the 
Company's Common Stock (the "PP Warrants").  The Company also issued and sold 
to Computer Associates International, Inc. ("CA") a warrant exercisable for 
500,000 shares of the Company's Common Stock (the "CA Warrant").  The Company 
also converted a convertible promissory note plus accrued interest 
(collectively, the "Note") held by Newport Acquisition Company No. 2, LLC 
("NAC") into 11,415,094 shares of the Company's Common Stock. (the "NAC 
Shares").  The Company also issued to Rochon Capital Group, Ltd. ("Rochon"), 
its financial advisor, warrants exercisable for a total of 354,717 shares of 
the Company's Common Stock (the "Rochon Warrants") in partial consideration 
for Rochon's services in connection with the foregoing transactions.  

     (b)  UNDERWRITERS AND OTHER PURCHASERS.  There were no underwriters for 
the foregoing transactions.  The PP Shares and PP Warrants were offered only 
to a group of accredited investors.  The CA Warrant was offered only to CA, 
an accredited investor.  The NAC Shares were offered only to NAC, an 
accredited investor.  The Rochon Warrants were offered only to Rochon, an 
accredited investor.

     (c)  CONSIDERATION.  The PP Shares and PP Warrants were sold for an 
aggregate offering price of $2,470,502.  The CA Warrant was sold for an 
aggregate offering price of $500.  The NAC Shares were sold in consideration 
of NAC's cancellation of the Note in the aggregate principal amount of 
$10,000,000 plus accrued interest through February 27, 1998 of $2,251,771.

     (d)  EXEMPTION FROM REGISTRATION CLAIMED.  The foregoing transactions 
were exempt from registration under the Securities Act of 1933, as amended 
(the "Act") pursuant to Rule 506 of Regulation D, which provides an exemption 
for sales without regard to the dollar amount of the offering, provided that 
there are no more than 35 purchasers, and the sale satisfies all terms and 
conditions of Rules 501 and 502 under the Act.

     (e)  TERMS OF CONVERSION OR EXERCISE.  The PP Warrants are exercisable 
at a price of $1.25 per share and expire on February 28, 2003. The CA Warrant 
is exercisable at a price of $1.906 per share and expires on February 27, 
2004. The Rochon Warrants are exercisable at a price of $2.12 per share and 
expire on February 27, 2003.

ITEM 3.   DEFAULTS IN SENIOR SECURITIES _ NOT APPLICABLE

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 

                                      16
<PAGE>

     The Company held it's Annual Meeting of shareholders on June 17, 1998. 
There were present at the meeting, in person or represented by proxy, the 
holders of 26,441,900 shares of  Common Stock, which represented 
approximately 89.5% of the outstanding shares of Common Stock entitled to 
vote. The matters voted on at the meeting and the votes cast were as follows:

     1.   All Management's nominees for directors were elected as listed 
below:

<TABLE>
<CAPTION>
    Name of Nominee                                             Votes Cast
    ---------------                                             ----------
    <S>                                             <C>         <C>
    Scott R. Broomfield  . . . . . . . . . . .      For         26,304,774
                                                    Withheld       137,126

    Samuel M. Inman, III . . . . . . . . . . .      For         25,897,490
                                                    Withheld       544,410

    Jack King. . . . . . . . . . . . . . . . .      For         26,295,592
                                                    Withheld       146,308

    Philip Koen  . . . . . . . . . . . . . . .      For         26,296,892
                                                    Withheld       145,008

    Peter Micciche . . . . . . . . . . . . . .      For         26,293,108
                                                    Withheld       148,792

    William D. Nicholas  . . . . . . . . . . .      For         26,301,892
                                                    Withheld       140,008

    Earl M. Stahl. . . . . . . . . . . . . . .      For         26,283,933
                                                    Withheld       157,967
</TABLE>

     2.   The approval of an amendment to the Company's 1995 Stock Option 
Plan to increase the number of shares of Common Stock reserved for issuance 
thereunder by 1,000,000 shares to an aggregate of 3,000,000 shares. There 
were 17,322,660 shares of Common Stock voting in favor, 629,248 shares of 
Common Stock voting against, 407,006 shares of Common Stock abstaining and 
8,082,986 non-votes.

     3.   The approval of amendments to the Company's 1996 Directors Stock 
Option Plan: (i) to increase the number of shares of Common Stock reserved 
for issuance thereunder by 500,000 shares to an aggregate of 1,000,000 
shares; (ii) to increase the number of shares underlying stock options 
granted to each nonemployee director from 50,000 to 100,000 shares; and (iii) 
to reduce the number of years over which new nonemployee director option 
grants will vest from four (4) years to three (3) years.  There were 
17,286,164 shares of Common Stock voting in favor, 699,569 shares of Common 
Stock voting against, 373,181 shares of Common Stock  abstaining and 
8,082,986 non-votes.

     4.   The approval of an amendment to the Company's 1992 Employee Stock 
Purchase Plan to increase the number of shares of Common Stock reserved for 
issuance thereunder by 1,000,000 shares to an aggregate of 1,400,000 shares. 
There were 17,856,364 shares of Common Stock voting in favor, 404,457 shares 
of Common Stock voting against, 98,093 shares of Common Stock abstaining and 
8,082,986 non-votes.

     5.   The approval of (i) a change in the Company's state of 
incorporation from California to Delaware by  means of a merger of the 
Company with and into a wholly owned Delaware subsidiary of the Company, (ii) 
assumption of the Company's employee benefit plans and stock option and 
purchase plans by the Delaware subsidiary and (iii) revisions in the 
Company's indemnification agreements with its officers and directors to 
conform such agreements to Delaware law; provided that (i) the Certificate of 
Incorporation and Bylaws of the Delaware subsidiary permit the Company's 
shareholders to act by written consent and (ii) the Bylaws of the Delaware 
subsidiary permit any shareholder or group of shareholders of the Company 
holding at least 20% of the outstanding capital stock of the Company to call 
special stockholder meetings in accordance with the Delaware General 
Corporation Law and the Company's Bylaws.  There were 17,134,834 shares of 
Common Stock voting in favor, 1,129,845 shares of Common Stock voting 
against, 76,742 shares of Common Stock  abstaining and 8,100,479 non-votes.

     6.   The ratification of the appointment of Price Waterhouse LLP (now 
PricewaterhouseCoopers LLP) as the


                                      17

<PAGE>

Company's independent public accountants for the fiscal year ending December 
31, 1998. There were 26,312,643 shares of Common Stock voting in favor, 
97,059 shares of Common Stock voting against, 32,198 shares of Common Stock  
abstaining and 0 non-votes.

ITEM 5.   OTHER INFORMATION _ NOT APPLICABLE

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Exhibits:

               27.1  Financial Data Schedule

        (b)  The Company filed the following report on Form 8-K during the
             quarter ended June 30, 1998:

             Report Date:  June 13, 1998 (filed June 30, 1998)          
             Item 5:  Other Events

             The Company announced that it had successfully completed its 
             1998 Annual Shareholder's Meeting and had reached agreement 
             with Newport Acquisition Company No. 2, LLC ("NAC") to amend the 
             Investor Rights Agreement ("IRA") dated February 27, 1998 
             between the Company and NAC.  Pursuant to such amendment, 
             certain terms of NAC's antidilution protection were modified 
             and the Company agreed to accelerate registration of 
             approximately 11.4 million shares of the Company's Common 
             Stock held by NAC and warrants held by NAC exercisable for 
             approximately 1.2 million shares of the Company's Common 
             Stock.    


                                      18

<PAGE>

SIGNATURE

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


                                   CENTURA SOFTWARE CORPORATION
                                   By:
                                   ___________________________________________
August 14, 1998                    John W. Bowman
                                   Senior Vice President Of Finance And
                                   Operations, Chief Financial Officer
                                   (Principal Financial and Accounting Officer)


                                      19