<PAGE>
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                                 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 SEPTEMBER 30, 1997
 
   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)
 
<TABLE>
<S>                                            <C>
                 CALIFORNIA                                     94-2874178
(State or other jurisdiction of incorporation     (I.R.S. Employer Identification Number)
              or organization)
              975 ISLAND DRIVE,                                    94065
         REDWOOD SHORES, CALIFORNIA                             (Zip Code)
  (Address of principal executive offices)
</TABLE>
 
         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 October 31, 1997, there were 15,780,042 shares of the Registrant's Common
Stock outstanding.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                          CENTURA SOFTWARE CORPORATION
               FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1997
 
                                     INDEX
 
<TABLE>
<CAPTION>
                                                                                                             PAGE
                                                                                                            NUMBER
                                                                                                          -----------
<S>         <C>                                                                                           <C>
PART I      FINANCIAL INFORMATION
            Item 1. Financial Statements and Supplementary Data
            a)  Condensed consolidated balance sheets at September 30, 1997 and December 31, 1996.......           1
            b)  Condensed consolidated statements of operations for the three months and nine months
                ended September 30, 1997 and 1996.......................................................           2
            c)  Condensed consolidated statements of cash flows for the nine months ended September 30,
                1997 and 1996...........................................................................           3
            d)  Notes to condensed consolidated financial statements....................................         4-6
            Item 2. Management's Discussion and Analysis of Financial Condition and Results of
              Operations................................................................................        7-16
PART II     OTHER INFORMATION
            Item 1. Legal Proceedings...................................................................          17
            Item 2. Changes in Securities...............................................................          17
            Item 3. Defaults in Senior Securities.......................................................          17
            Item 4. Submission of Matters to a Vote of Security Holders.................................          17
            Item 5. Other Information...................................................................          17
            Item 6. Exhibits and Reports on Form 8-K....................................................          17
</TABLE>
<PAGE>
                                     PART I
                             FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                          CENTURA SOFTWARE CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                                      SEPTEMBER 30,  DECEMBER 31,
                                                                                          1997           1996
                                                                                      -------------  ------------
<S>                                                                                   <C>            <C>
                                                                                       (UNAUDITED)
                                       ASSETS
Current Assets:
  Cash and cash equivalents.........................................................    $   3,825     $    6,669
  Short-term investments............................................................       --              2,065
  Accounts receivable, less allowances of $2,888 and $2,826.........................        8,868         13,574
  Other current assets..............................................................        4,289          3,516
                                                                                      -------------  ------------
    Total current assets............................................................       16,982         25,824
Property and equipment, at cost, net of accumulated depreciation....................        4,474          3,622
Capitalized software, at cost, net of accumulated amortization......................        3,001          4,226
Long-term investments...............................................................          976          1,221
Other assets........................................................................        2,169          1,812
                                                                                      -------------  ------------
    Total assets....................................................................    $  27,602     $   36,705
                                                                                      -------------  ------------
                                                                                      -------------  ------------
 
                       LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
  Current portion of long-term debt.................................................    $  10,188     $      336
  Accounts payable..................................................................        5,467          5,683
  Accrued compensation and related expenses.........................................        1,699          2,484
  Other accrued liabilities.........................................................        4,901          4,313
  Accrued litigation expenses.......................................................          209          6,733
  Deferred revenue..................................................................       15,524         21,891
                                                                                      -------------  ------------
    Total current liabilities.......................................................       37,988         41,440
Long-term debt, less current portion................................................       --             10,032
Other long-term liabilities.........................................................          856          2,156
                                                                                      -------------  ------------
    Total liabilities...............................................................       38,844         53,628
Shareholders' Deficit:
  Common stock, par value $.01 per share; 60,000 shares authorized; 15,709 shares
    and 13,728 shares issued and outstanding........................................       70,298         63,047
  Cumulative translation adjustment.................................................         (404)          (513)
  Accumulated deficit...............................................................      (81,136)       (79,457)
                                                                                      -------------  ------------
    Total shareholders' deficit.....................................................      (11,242)       (16,923)
                                                                                      -------------  ------------
    Total liabilities and shareholders' deficit.....................................    $  27,602     $   36,705
                                                                                      -------------  ------------
                                                                                      -------------  ------------
</TABLE>
 
  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.
 
                                       1
<PAGE>
                          CENTURA SOFTWARE CORPORATION
 
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
                                  (UNAUDITED)
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                            THREE MONTHS          NINE MONTHS
                                                                        ENDED SEPTEMBER 30,   ENDED SEPTEMBER 30,
                                                                        --------------------  --------------------
                                                                          1997       1996       1997       1996
                                                                        ---------  ---------  ---------  ---------
<S>                                                                     <C>        <C>        <C>        <C>
Net revenues:
  Product.............................................................  $   9,371  $  10,414  $  30,675  $  33,002
  Service.............................................................      4,327      4,196     12,727     12,647
                                                                        ---------  ---------  ---------  ---------
    Net revenues......................................................     13,698     14,610     43,402     45,649
Cost of revenues:
  Product.............................................................        906      1,047      3,573      3,546
  Service.............................................................      1,868      2,323      6,259      6,780
                                                                        ---------  ---------  ---------  ---------
    Cost of revenues..................................................      2,774      3,370      9,832     10,326
                                                                        ---------  ---------  ---------  ---------
      Gross profit....................................................     10,924     11,240     33,570     35,323
Operating expenses:
  Sales and marketing.................................................      5,964      6,697     19,974     20,984
  Research and development............................................      2,512      2,813      7,933      8,370
  General and administrative..........................................      1,694      1,480      5,152      4,608
  Restructuring expense...............................................        563     --            563     --
  Acquisition expense.................................................     --         --            530     --
                                                                        ---------  ---------  ---------  ---------
    Total operating expenses..........................................     10,733     10,990     34,152     33,962
                                                                        ---------  ---------  ---------  ---------
      Operating income (loss).........................................        191        250       (582)     1,361
Other income (expense):
  Interest income.....................................................         90        141        186        335
  Interest expense....................................................       (293)      (211)      (717)      (397)
  Foreign currency gain (loss)........................................        132     --           (521)      (182)
                                                                        ---------  ---------  ---------  ---------
Income (loss) before income taxes.....................................        120        180     (1,634)     1,117
Provision for income taxes............................................         10         83         45        276
                                                                        ---------  ---------  ---------  ---------
Net income (loss).....................................................  $     110  $      97  $  (1,679) $     841
                                                                        ---------  ---------  ---------  ---------
                                                                        ---------  ---------  ---------  ---------
Net income (loss) per share...........................................  $    0.01  $    0.01  $   (0.11) $    0.07
                                                                        ---------  ---------  ---------  ---------
                                                                        ---------  ---------  ---------  ---------
Weighted average common shares and equivalents........................     15,464     12,760     15,327     12,720
                                                                        ---------  ---------  ---------  ---------
                                                                        ---------  ---------  ---------  ---------
</TABLE>
 
  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.
 
                                       2
<PAGE>
                          CENTURA SOFTWARE CORPORATION
 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                  (UNAUDITED)
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                         NINE MONTHS ENDED
                                                                           SEPTEMBER 30,
                                                                        --------------------
                                                                          1997       1996
                                                                        ---------  ---------
<S>                                                                     <C>        <C>
Cash flows from operating activities:
  Net (loss) income...................................................  $  (1,679) $     841
  Adjustments to reconcile net loss to net cash provided by (used in)
    operating activities:
    Depreciation and amortization.....................................      3,913      3,417
    Provision for doubtful accounts, sales returns and allowances.....         62       (420)
    Valuation of stock warrant issued in connection with factoring
      agreement.......................................................        102     --
  Changes in assets and liabilities:
    Accounts receivable...............................................      4,644      3,326
    Other current assets..............................................       (773)       (32)
    Other assets......................................................       (229)    --
    Accounts payable and accrued liabilities..........................     (2,105)    (7,944)
    Deferred revenue..................................................     (6,367)    (6,600)
    Accrued litigation expense........................................          9     --
    Other liabilities.................................................        392        552
                                                                        ---------  ---------
      Net cash used in operating activities...........................     (2,031)    (6,860)
Cash flows from investing activities:
  Maturities of investments...........................................      2,065      7,207
  Acquisitions of property and equipment..............................     (3,067)      (662)
  Capitalization of software costs....................................       (639)    (1,426)
  Proceeds from the sale of property and equipment....................        462
  Capitalization of intangibles and other assets......................       (179)      (125)
                                                                        ---------  ---------
      Net cash (used in) provided by investing activities.............     (1,358)     4,994
Cash flows from financing activities:
  Repayment of note payable...........................................       (180)      (243)
  Repayment of capital lease obligations..............................     --            (28)
  Proceeds from issuance of common stock, net.........................        616        448
                                                                        ---------  ---------
      Net cash provided by financing activities.......................        436        177
Effect of exchange rate changes on cash and cash equivalents..........        109        (72)
                                                                        ---------  ---------
Net decrease in cash and cash equivalents.............................     (2,844)    (1,761)
Cash and cash equivalents at beginning of period......................      6,669      9,865
                                                                        ---------  ---------
Cash and cash equivalents at end of period............................  $   3,825  $   8,104
                                                                        ---------  ---------
                                                                        ---------  ---------
</TABLE>
 
  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.
 
                                       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
September 30, 1997, the condensed consolidated statements of operations for the
three and nine month periods ended September 30, 1997 and 1996, and cash flows
for the nine month periods ended September 30, 1997 and 1996 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, 1996. The results of operations for
the three and nine month periods ended September 30, 1997, are not necessarily
indicative of the operating results to be expected for the full year.
 
    The December 31, 1996 balance sheet was derived from audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles.
 
    COMPUTATION OF NET INCOME (LOSS) PER SHARE.  Net income (loss) per share is
computed using the weighted average number of common and common equivalent
shares outstanding. Common stock equivalents (using the modified treasury stock
method) have been included in the computation when dilutive. Convertible
debentures, which are not common stock equivalents, are excluded in a fully
diluted calculation of earnings (loss) per share because their effect is
antidilutive.
 
    RECENT ACCOUNTING PRONOUNCEMENT.  In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS 128"). SFAS 128 is effective for the Company's
fiscal year ending December 31, 1997. Under SFAS 128, primary earnings per share
is replaced by basic earnings per share and fully diluted earnings per share is
replaced by diluted earnings per share. If the Company had adopted SFAS 128 for
the three and nine month periods ended September 30, 1997, the Company's loss
per share would have been as follows:
 
<TABLE>
<CAPTION>
                                                THREE MONTHS        NINE MONTHS
                                                    ENDED              ENDED
                                                SEPTEMBER 30,      SEPTEMBER 30,
                                                    1997               1997
                                              -----------------  -----------------
                                                 (UNAUDITED)        (UNAUDITED)
<S>                                           <C>                <C>
Basic income (loss) per share...............      $    0.01          $   (0.11)
Diluted income (loss) per share.............      $    0.01          $   (0.11)
</TABLE>
 
    In September 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("SFAS 130"). SFAS 130 establishes standards for the reporting of comprehensive
income and its components in a full set of general-purpose financial statements
for periods ending after December 15, 1997. Reclassification of financial
statements for earlier periods for comparative purposes is required. The Company
will adopt SFAS 130 in 1997 and does not expect such adoption to have a material
effect on the consolidated financial statements.
 
    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 beginning in 1998 and does not expect
such adoption to have a material effect on the consolidated financial
statements.
 
                                       4
<PAGE>
                          CENTURA SOFTWARE CORPORATION
 
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                                  (UNAUDITED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    RECLASSIFICATIONS.  In order to conform to the current period presentation,
certain reclassifications have been made to the condensed consolidated
statements of operations for the three and nine month periods ended September
30, 1996 and to the condensed consolidated statement of cash flows for the nine
months ended September 30, 1996.
 
2. LITIGATION
 
    On May 2, 1994, a lawsuit was filed against the Company and certain of its
officers and directors, by a holder of the Company's common stock, on his own
behalf and purportedly on behalf of a class of others similarly situated. The
lawsuit was subsequently amended, and alleged that the Company made false and
misleading statements and failed to disclose material information relating to
existing business conditions and the Company's prospects and that officers and
directors violated the insider trading laws. The plaintiff was seeking damages
of an unstated amount.
 
    The Company reached a binding settlement agreement with plaintiffs' counsel
in this lawsuit, and gained court approval on September 30, 1996. Under the
terms of the agreement, the Company would provide $3 million and 1,875,000
shares to a fund to be distributed among the members of the plaintiff class. The
Company also agreed to supplement this payment with up to 625,000 additional
shares in the event the value of its common stock was less than an average price
of $6.00 per share during certain twenty day trading periods specified by the
Court. The Company's directors and officers' liability insurer paid
approximately $2 million of the cash contribution to the settlement fund. The
Company paid the remaining cash settlement during 1996. The 1995 financial
statements include $15.3 million in litigation expense for the agreement and
associated legal expenses. As of March 31, 1997, the Company had distributed all
common stock shares as required by the settlement agreement.
 
    As of September 30, 1997, there were no pending actions, potential actions,
claims or proceedings against the Company that were likely to result in
potential damages that would have a material adverse impact on the Company's
financial statements. As noted in the section entitled "Factors That May Affect
Future Results" under Item 2 herein, the Company exists in a volatile legal and
regulatory environment and it is not possible to anticipate or estimate the
potential adverse impact of unknown claims or liabilities against the Company,
its officers and directors, and as such no estimate is made in the Company's
financial statements for such unknown claims or liabilities.
 
3. FACTORING AGREEMENT
 
    On June 26, 1997, the Company entered into a one year agreement to sell,
with recourse, certain accounts receivable. Under the terms of the agreement,
the Company may sell accounts receivable at an advance rate of eighty percent of
such eligible accounts receivable. Interest is calculated at the rate of 1.2%
per month based on the average daily balance outstanding. As of September 30,
1997 total eligible accounts receivable sold were $2.1 million. On June 30,
1997, in relation to this agreement, the Company issued a warrant to purchase
90,000 shares of common stock at an exercise price of $2.094 per share. The
warrant expires on September 30, 2002. The warrant was valued at $102,000 using
a risk-free rate of 6.33% and a volatility factor of 55%, and the related charge
is included in general and administrative expenses for the nine month period
ending September 30, 1997.
 
                                       5
<PAGE>
                          CENTURA SOFTWARE CORPORATION
 
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                                  (UNAUDITED)
 
4. TERMINATION OF MERGER AGREEMENT WITH INFOSPINNER INC.
 
    On January 6, 1997, the Company entered into a definitive agreement (the
"Agreement") to acquire InfoSpinner, Inc. ("InfoSpinner") of Richardson, Texas.
The completion of the transaction was subject to the approval of both companies'
shareholders as well as other legal requirements. In addition, under the terms
of the Agreement, either party had the right to terminate the transaction if the
merger had not been consummated by April 30, 1997. As of April 30, 1997, the
Company did not obtain the majority vote of the shareholders required for the
approval of the proposed merger, and as a result, the board of directors of
InfoSpinner elected to exercise its right to terminate the transaction.
 
    In addition to the Agreement, the companies also entered into a
distributorship agreement (the "Distributorship Agreement") on January 6, 1997,
which grants the Company the right to distribute InfoSpinner's Foresite Web
Integration Server on a worldwide basis.
 
5. SUBSEQUENT EVENT--TERMINATION OF DISTRIBUTORSHIP AGREEMENT WITH INFOSPINNER,
INC.
 
    On November 12, 1997, the Distributorship Agreement with InfoSpinner was
terminated. The Company anticipates that, in relation to the termination of the
Distributorship Agreement, monies previously paid to Infospinner, in the form of
prepaid royalties, amounting to $750,000 will not be recoverable and will be
charged to operations in the fourth quarter of 1997.
 
    Other than this charge, the Company does not anticipate that the termination
of the Distributorship Agreement will have a materially adverse effect on the
Company's business, operating results or financial condition.
 
            (The remainder of this page is intentionally left blank)
 
                                       6
<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, 1996.
 
RESULTS OF OPERATIONS:
 
    NET PRODUCT REVENUES.  Net product revenues decreased 10% to $9.4 million
for the quarter ended September 30, 1997, from $10.4 million for the quarter
ended September 30, 1996. The decrease in net product revenues is primarily
attributable to decreased sales of CENTURA products offset by increased sales of
SQLBASE. International sales accounted for $5.6 million or 59% and $7.5 million
or 72% of net product revenues for the quarters ended September 30, 1997 and
1996, respectively. The decline in international sales is primarily attributable
to decreased sales in the Asia-Pacific region as compared with the same period
last year.
 
    Net product revenues decreased 7% to $30.7 million for the nine months ended
September 30, 1997, from $33.0 million for the nine months ended September 30,
1996. International sales accounted for $19.2 million or 63% and $22.5 million
or 68% of net product revenues for the nine months ended September 30, 1997 and
1996, respectively. The decrease in international sales of $3.3 million is
primarily due to decreased sales in the Asia Pacific and Latin America areas,
caused primarily by disruption in distribution channels in Japan and the
termination of certain distributors in Brazil early in 1997 and by sluggish
sales in the Asia-Pacific area in general in the 1997 third quarter. The
distributor problems resulted in a disruption of sales activities in those
regions, and was the principal factor contributing to the overall decrease in
net product revenue over the nine month period as compared with the same period
in the prior year. Concurrently with the overall decrease in net product revenue
the Company recognized a continued shift in product revenue mix away from
SQLWINDOWS products to a greater proportion of SQLBASE and CENTURA products over
the nine month period. SQLBASE product revenue increased approximately 10% in
the current year as compared with the nine month period ended September 30,
1996. Increases in the Centura product revenue are primarily attributable to the
introduction of that product in May of 1996.
 
NET SERVICE REVENUES. Net service revenues increased 3% to $4.3 million for the
quarter ended September 30, 1997, from $4.2 million for the quarter ended
September 30, 1996. The increase was primarily due to increased technical
support revenue, partially offset by a reduction in customer training revenue.
International sales accounted for 50% and 44% of total net service revenues for
the quarters ended September 30, 1997 and 1996, respectively. Net service
revenues were $12.7 million and $12.6 million for the nine months ended
September 30, 1997 and 1996, respectively and international sales accounted for
45% and 41% over these periods.
 
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 13% to $0.9 million in the 1997 third quarter,
principally due to a decrease in product volume shipped, as compared with the
1996 third quarter. Cost of product revenues increased 1% to $3.6 million over
the nine month period ended September 30, 1997 as compared with the same period
in the prior year. The increase was primarily due to
 
                                       7
<PAGE>
the increased amortization of capitalized software related to the CENTURA
products, partially offset by reduced production costs associated with lower
shipment volumes. Cost of product revenues as a percentage of product revenues
remained constant at 10% for the quarters ended September 30, 1997 and 1996.
Cost of product revenues as a percentage of product revenues was 12% and 11% for
the nine months ended September 30, 1997 and 1996, 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 were $627,000 and $1,864,000 for the
three and nine month periods ended September 30, 1997 compared with $494,000 and
$1,162,000 for the same periods in 1996.
 
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 $1.9 million and $6.3 million
from $2.3 million and $6.8 million for the three and nine month periods ended
September 30, 1997 and 1996, respectively. Cost of service revenues as a
percentage of net service revenues was 43% and 55% for the quarters ended
September 30, 1997 and 1996, respectively, and 49% and 54% for the nine months
ended September 30, 1997 and 1996, respectively. These decreases were due
principally to a reduction of the Company's work force in the third quarter of
1997.
 
SALES AND MARKETING EXPENSES. Sales and marketing expenses were $6.0 million, or
44% of net revenues, for the quarter ended September 30, 1997, compared with
$6.7 million, or 46% of net revenues, for the quarter ended September 30, 1996.
For the nine months ended September 30, 1997, sales and marketing expenses were
$20.0 million, or 46% of net revenues, compared with $21.0 million or 46% of net
revenues for the nine months ended September 30, 1996. Decreases in sales and
marketing expenses reflect the effects of a reduction of the Company's work
force in the third quarter of 1997 and the Company's efforts to refocus
marketing expenditures in specific segments.
 
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>
                                                        1997       1996       1997       1996
                                                      ---------  ---------  ---------  ---------
                                                          THREE MONTHS          NINE MONTHS
                                                             ENDED                 ENDED
                                                         SEPTEMBER 30,         SEPTEMBER 30,
                                                      --------------------  --------------------
<S>                                                   <C>        <C>        <C>        <C>
Gross research and development expenses.............  $   2,697  $   2,888  $   8,572  $   9,796
Capitalized internal software development costs.....       (185)       (75)      (639)    (1,426)
                                                      ---------  ---------  ---------  ---------
Net research and development expenses...............  $   2,512  $   2,813  $   7,933  $   8,370
                                                      ---------  ---------  ---------  ---------
                                                      ---------  ---------  ---------  ---------
As a Percentage of Net Revenues:
  Gross research and development expenses...........         20%        20%        20%        21%
  Net research and development expenses.............         18%        19%        18%        18%
</TABLE>
 
    The decrease in gross research and development expenses, and capitalized
internal software development costs primarily reflects expanded development
efforts related to the CENTURA product in the first half of 1996.
 
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses were at
$1.7 million and $5.2 million compared with $1.5 million and $4.6 million for
the three and nine month periods ended September 30, 1997 and 1996,
respectively. Increases in general and administrative expenses over the prior
 
                                       8
<PAGE>
year are related primarily to the relocation of the Company's corporate
facilities, which was completed in the third quarter of 1997.
 
OTHER INCOME (EXPENSE), NET. Other income (expense), net is comprised of
interest income, interest expense, and gains or losses on foreign currency
transactions. Other income (expense), net, was $(0.1) million for both the
September 30, 1997 and 1996 quarters. This was primarily attributable to a
reduction in interest income, resulting from a decrease in funds available for
investment, compared with the prior year, offset by foreign currency gain in the
1997 third quarter.
 
    For the nine months ended September 30, 1997 other income (expense), net was
$(1.1) million, compared to $(0.2) million for the nine months ended September
30, 1996. This was primarily attributable to a reduction in interest income
resulting from decreased funds available for investment as compared with the
prior year and increased foreign currency losses resulting primarily from the
strengthening of the United States Dollar against the British Pound and German
Mark between December 31, 1996 and March 31, 1997.
 
PROVISION FOR INCOME TAXES. The provision for income taxes was insignificant for
the quarter ended September 30, 1997, and for the nine months ended September
30, 1997 and was $0.1 million and $0.3 million for the quarter and nine months
ended September 30, 1996. The provision primarily relates to foreign withholding
taxes. Due to the availability of net operating loss carryforwards arising in
prior years, no provision for income taxes was made for the three and nine month
periods ended September 30, 1997 and 1996.
 
LIQUIDITY AND CAPITAL RESOURCES:
 
    At September 30, 1997, the Company had a deficit working capital position of
$21.0 million due principally to deferred revenues of $15.5 million, and
principal and interest of $11.9 million related to an unsecured floating rate
convertible subordinated note. The Company believes that expected cash flows
from operations and existing cash balances, may not be sufficient to meet the
Company's currently anticipated working capital and capital expenditure
requirements during the next 12 months without the successful implementation of
cost reduction and restructuring programs which commenced in the third quarter
of 1997 and which are anticipated to be fully implemented in the fourth quarter
of 1997. There can be no assurance that such cost reduction and restructuring
programs can be implemented without adversely and disproportionately impacting
revenues and operating results. The Company is exploring several options to
raise cash for operational or other needs. There can be no assurance that
financing will be available on reasonable terms or at all. Any additional equity
financing may result in dilution to the Company's shareholders.
 
    Net cash used in operating activities for the nine months ended September
30, 1997 resulted primarily from the recognition of revenues for which cash had
been received in prior periods, net operating losses, and decreases in accounts
payable and accrued liabilities. These uses of cash were offset, in part, by the
sale of certain accounts receivable under a factoring agreement, non cash
charges for depreciation and amortization and increases in accounts payable and
accrued liabilities. Cash used in investing activities totaled $1.4 million due
primarily to purchases of property and equipment, which were funded, in part, by
maturities of short-term investments.
 
    On June 26, 1997, the Company entered into a one year agreement to sell,
with recourse, certain accounts receivable. Under the terms of the agreement,
the Company may sell accounts receivable at an advance rate of eighty percent of
such eligible accounts receivable. Interest is calculated at the rate of 1.2%
per month based on the average daily balance outstanding. As of September 30,
1997 total eligible accounts receivable sold were $2.1 million. On June 30,
1997, in relation to this agreement, the Company issued a warrant to purchase
90,000 shares of common stock at an exercise price of $2.094 per share. The
warrant expires on September 30, 2002. The warrant was valued at $102,000 using
a risk-free rate of 6.33%
 
                                       9
<PAGE>
and a volatility factor of 55%, and the related charge is included in general
and administrative expenses for the nine month period ending September 30, 1997.
 
    During March 1995, the Company entered into an unsecured floating rate
convertible subordinated note and related agreement (the "CA Agreement") with
Computer Associates International, Inc. ("CA") for $10.0 million. The note
matures on May 1, 1998 and is convertible into common stock at the Company's
option on the maturity date for a number of shares based on the market price of
the Company's common stock at the time of conversion. Interest on the note is
the one-month LIBOR plus 1.25% and is payable quarterly. At the Company's option
interest payments may be deferred until the principal is due. Material covenants
of the Company under the CA Agreement include the Company's agreement to: pay
and discharge its material obligations and liabilities, including tax
obligations; continue to engage in business of the same general type currently
conducted; refrain from declaring any dividend or from repurchasing or redeeming
its common stock or indebtedness; refrain from consolidating or merging (except
where the Company is the surviving corporation and incurs no event of default
under such note); refrain from incurring senior or PARI PASSU indebtedness or
from creating or incurring encumbrances or liens, other than certain permitted
liens on its properties. The agreement also requires the Company to maintain a
minimum market capitalization of $40.0 million commencing on (and including)
November 1, 1997, and continuing through the duration of the note (the "Minimum
Market Capitalization Requirement"). If the Company does not meet the Minimum
Market Capitalization Requirement, the Company will lose the option to convert
the note into common stock, and all outstanding principal and interest will be
due and payable on the conversion date, May 1, 1998. As of November 13, 1997,
the Company did not meet the Minimum Market Capitalization Requirement as set
forth in the CA Agreement.
 
    Since mid 1996, the Company has been engaged in a series of ongoing
discussions, correspondence, hearings and appeals with NASD officials in
connection with its continued listing on the Nasdaq National Market and its
failure to comply with certain Nasdaq minimum net worth requirements. The
Company will need to raise additional equity financing to meet these
requirements. Although the Company is taking full advantage of the Nasdaq
hearing and appeals process, there can be no assurance that the Company will be
able to satisfy such requirements, and that the Company will not be delisted for
continued noncompliance with these requirements. Such delisting would have a
material adverse effect on the price of the Company's Common Stock and the
levels of liquidity currently available to shareholders on the Nasdaq National
Market.
 
    Additional financing will be required to meet NASDAQ minimum net worth
requirements, fund continuing operations, as well as, to pay the unsecured
floating rate convertible subordinated note and related outstanding interest
with CA.
 
    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 considers 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
 
RECENT COMPANY LOSSES; FLUCTUATIONS IN QUARTERLY RESULTS.  The Company has
experienced in the past and expects in the future to continue to experience
significant fluctuations in quarterly operating results. There can be no
assurance that the restructuring of the Company's business strategies and
tactics, commenced in the third quarter of 1997, will be successful or that the
Company will be able to achieve or sustain any such profitability on a quarterly
or annual basis.
 
    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
 
                                       10
<PAGE>
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.
 
    Although the Company has operated historically with little or no backlog of
traditional boxed product shipments, it has experienced a seasonal pattern of
product revenue decline between the fourth quarter and the succeeding first
quarter, contributing to lower worldwide product revenues and operating results
during such quarters. It has generally realized lower European product revenues
in the third quarter as compared to the rest of the year. The Company has also
experienced a pattern of recording a substantial portion of its revenues in the
third month of a quarter. As a result, product revenues in any quarter are
dependent on orders booked in the last month. Because the Company's staffing and
other operating expenses are based in part on anticipated net revenues, a
substantial portion of which may not be generated until the end of each quarter,
delays in the receipt or shipment of orders, including delays that may be
occasioned by failures of third party product fulfillment firms to produce and
ship products, or the actual loss of product orders can cause significant
variations in operating results from quarter to quarter. The Company may be
unable to adjust spending in a timely manner to compensate for any unexpected
revenue shortfall. Accordingly, any significant shortfall in sales of the
Company's products in relation to the Company's expectations could have an
immediate adverse impact on the Company's business, operating results and
financial condition. To the extent that the Company's expenses precede or are
not subsequently followed by increased net revenues, its business, operating
results and financial condition could be materially and adversely affected. Due
to the foregoing factors, it is likely that the Company's operating results for
some future quarter will fall below the expectations of securities analysts and
investors. In such event, the trading price of the Company's common stock could
be materially and adversely affected.
 
NEED FOR ADDITIONAL EQUITY FINANCING. The Company will need to seek additional
equity financing to meet NASDAQ minimum net worth requirements, continuing
operations, as well as, pay the unsecured floating rate convertible subordinated
note and related outstanding interest with CA. Furthermore, the Company must
achieve a reasonable operating performance to satisfy its current and future
financing needs. There can be no assurance that financing will be available on
reasonable terms or at all. Any additional equity financing may result in
dilution to the Company's shareholders.
 
NASDAQ COMPLIANCE. Since mid 1996, the Company has been engaged in a series of
ongoing discussions, correspondence, hearings and appeals with NASD officials in
connection with its continued listing on the Nasdaq National Market and its
failure to comply with certain Nasdaq minimum net worth requirements. The
Company will need to raise additional equity financing to meet these
requirements. Although the Company is taking full advantage of the Nasdaq
hearing and appeals process, there can be no assurance that the Company will be
able to satisfy such requirements, and that the Company will not be delisted for
continued noncompliance with these requirements. Such delisting would have a
material adverse effect on the price of the Company's Common Stock and the
levels of liquidity currently available to shareholders on the Nasdaq National
Market.
 
VOLATILITY OF THE COMPANY'S COMMON STOCK PRICE. The market for the Company's
common stock is highly volatile. The trading price of the Company's common stock
fluctuated widely in 1996 and the first nine months in 1997 and may continue to
be subject to wide fluctuations in response to quarterly variations in
 
                                       11
<PAGE>
operating and financial results, announcements of new products or customer
contracts by the Company or its competitors, litigation and other factors. Any
shortfall in revenue or earnings from levels expected by securities analysts or
others could have an immediate and significant adverse effect on the trading
price of the Company's common stock in any given period. Additionally, the
Company may not learn of, or be able to confirm, revenue or earnings shortfalls
until late in the fiscal quarter or following the end of the quarter, which
could result in an even more immediate and adverse effect on the trading of the
Company's common stock. Finally, the Company participates in a highly dynamic
industry, which often results in significant volatility of its common stock
price.
 
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 its existing products,
develop and introduce in a timely manner, new products incorporating
technological advances and meet increasing customer expectations. To the extent
one or more competitors introduce products that better address customer needs,
the Company's business could be adversely affected. The Company currently
markets the following primary products: SQLBASE, CENTURA, SQLWINDOWS and
SQLHOST. Its strategy is centered on the successful delivery and ongoing market
acceptance of its SQLBASE and CENTURA products. The release of the CENTURA line
of products occurred in May 1996. The Company's success will also depend on the
ability of its products 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, the 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.
 
    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.
 
                                       12
<PAGE>
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
except Sam Inman, the Company's CEO and President. 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 spite of recent and anticipated future restructuring and down-sizing, 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 the Company
has experienced difficulty in identifying and hiring qualified engineering and
software development personnel. 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.
 
HIGHLY COMPETITIVE MARKETS. The markets for software products such as the
Company's products are intensely competitive, subject to rapid change and
characterized by constant demand for new product features, pressure to
accelerate the release of new products and product enhancements and to reduce
prices. A number of companies currently offer products that compete directly or
indirectly with one or more of the Company's products. Competitors of the
Company include, among others, providers of sophisticated database software,
including Sybase, Pervasive Software and Microsoft. The Company also faces
competition from providers of PC-based software products, including Microsoft
and Borland. These competitors offer database server products and front-end
tools designed for stand-alone PCs but may currently or may in the future offer
additional integrated PC client/server software. In addition, the Company faces
competition from providers of software specifically developed for the PC
client/server market, including front-end tools offered by Sybase's Powersoft
Division, Microsoft, and Forte, and connectivity software competitors, such as
IBI Systems, Inc. and Sybase's Micro DecisionWare Division. The Company also
faces potential competition from vendors of applications development tools based
on 4GLs or CASE technologies. With the emergence of the World Wide Web as an
important platform for application development and deployment, additional
competitors or potential competitors have emerged.
 
    Many of the Company's competitors or potential competitors have longer
operating histories and significantly greater financial, managerial, technical,
and marketing resources, as well as greater name recognition and a larger
installed base, than the Company. A variety of potential actions by any of these
competitors, including a reduction of product prices, increased promotion,
announcement or accelerated introduction of new or enhanced products or
features, acquisitions of software applications or technologies from third
parties, the formation of strategic alliances, product giveaways or product
bundling could have a material adverse effect on the business, operating results
and financial condition of the Company. The Company's products experienced
increased competition in 1995, 1996 and 1997, resulting in loss of market share.
Present or future competitors may be able to develop products comparable or
superior to those offered by the Company or adapt more quickly to new
technologies or evolving customer requirements. Such competition has in the past
and may again in the future result in price reductions and/or loss of market
share and has in the past and may again in the future have a material adverse
effect on the Company's business, operating results and financial condition. In
particular, while the Company is currently developing additional product
enhancements that it believes address customer requirements, there can be no
assurance that the development or introduction of these additional product
enhancements will be successfully completed on a timely basis or that these
product enhancements will achieve market acceptance. Accordingly, there can be
no assurance that the Company will be able to continue to compete effectively in
its markets, that competition will not intensify or that future competition will
not have a material adverse effect on the Company's business, operating results
and financial condition.
 
                                       13
<PAGE>
MARKET ACCEPTANCE OF PC CLIENT/SERVER SYSTEMS. Substantially all of the
Company's revenues have been derived from the licensing of software products for
PC client/server systems. Licenses of such products are expected to continue to
account for substantially all of the Company's revenues for the foreseeable
future. With the increasing focus on enterprise-wide systems, some customers may
opt for solutions that favor mainframe or mini-computer solutions. Accordingly,
some companies may abandon use of PC client/server systems, which could have a
material adverse effect on the Company's future success.
 
COMPONENTIZED MARKETS. The advent of so-called componentized software may alter
the way in which customers buy software. As specific software functionality can
be bundled into smaller units or objects rather than in broad, highly functional
products such as the Company's development tools, customers may be less willing
to buy such broad, highly functional products. If such a trend continues, there
can be no assurance that the Company will be able to repackage and efficiently
distribute its products in such componentized packages. The costs and efforts
necessary to package and distribute such components are largely unknown. Failure
of the Company to introduce componentized products successfully and cost-
effectively could have a material adverse effect on the Company's business,
operating results and financial condition.
 
INTERNET SOFTWARE MARKET. The market for Internet software products 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 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.
 
DEPENDENCE UPON DISTRIBUTION CHANNELS. The Company relies on relationships with
value-added resellers and 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, can cease marketing the Company's
products at any time, and may from time to time be granted stock exchange or
rotation rights. The introduction of new and enhanced products may result in
higher product returns and exchanges. 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 any 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. The Company
expects to rely increasingly on third-party channels for sales of packaged
product while focusing its corporate sales efforts on larger opportunities.
Failure of the Company to successfully implement, support and manage the 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, which 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
 
                                       14
<PAGE>
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.
 
    In certain rapidly growing client/server markets such as Japan and Korea,
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 these 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. 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. 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 products. The Company believes that the
ownership of patents is not presently 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.
 
                                       15
<PAGE>
    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.
 
    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.
 
MANAGEMENT OF POTENTIAL GROWTH; INTEGRATION OF POTENTIAL ACQUISITIONS. In recent
years, the Company has experienced both expansion and contraction of its
operations each of which has placed significant demands on the Company's
administrative, operational and financial resources. To manage future growth, if
any, the Company must continue to improve its financial and management controls,
reporting systems and procedures on a timely basis and expand, train and manage
its work force. There can be no assurance that the Company will be able to
perform such actions successfully. The Company intends to continue to invest in
improving its financial systems and controls in connection with higher levels of
operations. Although the Company believes that its systems and controls are
adequate for the current level of operations, the Company anticipates that it
may need to expand and upgrade its financial systems to improve operational and
business information efficiencies and to manage any future growth. The Company's
failure to do so could have a material adverse effect upon the Company's
business, operating results and financial condition. In the future, the Company
may make acquisitions of complementary companies, products or technologies.
Managing such acquisitions entails numerous operational and financial risks,
including difficulties in assimilating acquired operations and products,
diversion of management's attention to other business concerns, amortization of
acquired intangible assets and potential loss of key employees or customers of
acquired operations. There can be no assurance that the Company will be able to
effectively achieve growth, or manage any such growth, and failure to do so
could have a material adverse effect on the Company's operating results.
 
LEGAL PROCEEDINGS. 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.
 
                                       16
<PAGE>
                                    PART II
                               OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
    On May 2, 1994, a lawsuit was filed against the Company and certain of its
officers and directors, by a holder of the Company's common stock, on his own
behalf and purportedly on behalf of a class of others similarly situated. The
lawsuit was subsequently amended, and alleged that the Company made false and
misleading statements and failed to disclose material information relating to
existing business conditions and the Company's prospects and that officers and
directors violated the insider trading laws. The plaintiff was seeking damages
of an unstated amount.
 
    The Company reached a binding settlement agreement with plaintiffs' counsel
in this lawsuit, and gained court approval on September 30, 1996. Under the
terms of the agreement, the Company would provide $3 million and 1,875,000
shares to a fund to be distributed among the members of the plaintiff class. The
Company also agreed to supplement this payment with up to 625,000 additional
shares in the event the value of its common stock was less than an average price
of $6.00 per share during certain twenty day trading periods specified by the
Court. The Company's directors and officers' liability insurer paid
approximately $2 million of the cash contribution to the settlement fund. The
Company paid the remaining cash settlement during 1996. The 1995 financial
statements include $15.3 million in litigation expense for the agreement and
associated legal expenses. As of March 31, 1997, the Company has distributed all
common stock shares as required by the settlement agreement.
 
    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.
 
ITEM 2. CHANGES IN SECURITIES--NOT APPLICABLE
 
ITEM 3. DEFAULTS IN SENIOR SECURITIES--NOT APPLICABLE
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
ITEM 5. OTHER INFORMATION
 
    In September 1997, Mr. Doug Domerque resigned as Vice President of North
American Sales. Mr. Michael Moore has been promoted from Vice President,
International Sales to Sr. Vice President, Worldwide Sales.
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K--NOT APPLICABLE
 
                                       17
<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.
 
<TABLE>
<S>                                          <C>        <C>
                                             CENTURA SOFTWARE CORPORATION
 
                                             By:                  /s/ RICHARD A. GELHAUS
                                                        ------------------------------------------
Date: November 14, 1997                                             Richard A. Gelhaus
 
                                                           SENIOR VICE PRESIDENT OF FINANCE AND
                                                            OPERATIONS, CHIEF FINANCIAL OFFICER
                                                            (PRINCIPAL FINANCIAL AND ACCOUNTING
                                                                         OFFICER)
</TABLE>
 
                                       18