<PAGE>

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

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

      For the transition period from _______________ to _______________.
                                       
                                       
                                       
                        Commission file number 0-13244
                                       
                                       
                                       
                             GATEFIELD CORPORATION
            (Exact name of registrant as specified in its charter)
                                       
                                       
                                       
DELAWARE                                                              41-1404495
(State of incorporation)                    (I.R.S. Employer Identification No.)
                                       
                                       
47100 BAYSIDE PARKWAY, FREMONT, CALIFORNIA                                94538
(Address of principal executive offices)                              (Zip Code)
                                       
                                       
  Registrant's telephone number, including area code:         (510) 623-4400



  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  X    No    .
                                                   ---      ---

  Indicate the number of shares outstanding of each of the issuer's classes 
of common stock, as of the latest practicable date.

        Title of Each Class                      Outstanding at October 23, 1997
        -------------------                      -------------------------------

Common stock, par value $0.10 per share                     35,537,756

<PAGE>
                             GATEFIELD CORPORATION
                                       
                                     INDEX
                                       
                                       
                                                                           Page
                                                                          Number

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

          Condensed Consolidated Balance Sheets as of September 30, 1997
            and December 31, 1996                                             2


          Condensed Consolidated Statements of Operations for the Three
            and Nine Months Ended September 30, 1997 and September 30, 1996   3


          Condensed Consolidated Statements of Cash Flows for the Nine
            Months Ended September 30, 1997 and September 30, 1996            4


          Notes to Condensed Consolidated Financial Statements, 
            September 30, 1997                                                5


Item 2. Management's Discussion and Analysis of Results of Operations
         and Financial Condition                                              8


PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings                                                   10

Item 6.  Exhibits and Reports on Form 8-K                                    10

Exhibit 11.  Computation of Earnings per Share                               11

SIGNATURE                                                                    12


                                       1
<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                             GATEFIELD CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (unaudited)


                                                     September 30,  December 31,
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)                     1997           1996
--------------------------------------------------------------------------------
ASSETS
Current assets             
  Cash and cash equivalents                          $   2,103       $   1,703
  Short-term investment                                     98             100
  Account receivable, less allowance for doubtful
    accounts of $612 in 1997 and $1,337 in 1996          4,774          12,088
  Inventories, net                                       1,050           2,664
  Other current assets                                     462             956
                                                     ---------       ---------
    Total assets                                         8,487          17,511

Property and equipment, net                              2,495           5,101
Purchased technology, net                                    -           2,776
Other assets                                               333           4,139
                                                     ---------       ---------
    Total assets                                     $  11,765       $  29,527
                                                     ---------       ---------
                                                     ---------       ---------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities                                  
  Bank financing                                     $      89       $   3,203
  Current portion of long-term obligations                 386           1,958
  Accounts payable                                       4,180           5,715
  Accrued expenses                                       4,551           5,345
  Deferred revenues                                      1,840           2,530
                                                     ---------       ---------
    Total current liabilities                           11,046          18,751

Subordinated convertible debenture notes                     -           7,342
Long-term obligations                                      213             719
Other long-term liabilities                                 28             146
                                                     ---------       ---------
    Total liabilities                                   11,287          26,958
Commitments and contingencies                                -               -
Stockholders' equity
  Preferred stock
    $0.10 par value; 2,000,000 shares authorized;
    shares issued and outstanding: none in 1997              -               -
  Common stock                                               -
    $0.10 par value; 40,000,000 shares authorized;
    shares issued and outstanding: 35,527,074 in
    1997 and 23,226,444 in 1996                          3,553           2,323
  Additional paid-in capital, Preferred stock                -               -
  Additional paid-in capital, Common stock              64,563          55,784
  Accumulated translation adjustments                     (162)            (48)
  Accumulated deficit                                  (67,476)        (55,490)
                                                     ---------       ---------
    Total stockholders' equity                             478           2,569
                                                     ---------       ---------
    Total liabilities and stockholders' equity       $  11,765       $  29,527
                                                     ---------       ---------
                                                     ---------       ---------

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                       2
<PAGE>

                                       
                             GATEFIELD CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED        NINE MONTHS ENDED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                           SEPTEMBER 30,            SEPTEMBER 30,
--------------------------------------------------------------------------------------------------------------
                                                                1997         1996         1997          1996
<S>                                                        <C>          <C>         <C>            <C>
Revenues
  Product                                                    $  1,844     $  2,294     $  4,020      $ 11,105
  Service                                                       2,573        3,701        8,297        11,418
                                                             --------     --------     --------      --------
    Total revenues                                              4,417        5,995       12,317        22,523
                                                             --------     --------     --------      --------

Cost of revenues
  Product                                                       2,782        3,053        6,029         5,983
  Service                                                       1,659        2,189        4,933         6,666
                                                             --------     --------     --------      --------
    Total cost of revenues                                      4,441        5,242       10,962        12,649
                                                             --------     --------     --------      --------
    Gross profit (loss)                                           (24)         753        1,355         9,874
                                                             --------     --------     --------      --------

Operating expenses
  Sales and marketing                                             648        3,467        6,892        10,886
  Research and development                                      1,751        4,271        6,550        12,699
  General and administrative                                    1,800        2,738        2,750         4,450
                                                             --------     --------     --------      --------
    Total operating expenses                                    4,199       10,476       16,192        28,035
                                                             --------     --------     --------      --------
Operating loss                                                 (4,223)      (9,723)     (14,837)      (18,161)
                                                             --------     --------     --------      --------

Other income (expense)
  Interest expense, net                                           (12)      (1,469)        (867)       (2,089)
  Other income, net                                              (110)        (147)       3,874           (72)
                                                             --------     --------     --------      --------
    Total other income (expense)                                 (122)      (1,643)       3,007        (2,161)
                                                             --------     --------     --------      --------
Net loss                                                     $ (4,345)    $(11,366)    $(11,830)     $(20,322)
                                                             --------     --------     --------      --------
                                                             --------     --------     --------      --------
Net loss per share                                           $  (0.13)    $  (0.56)    $  (0.42)     $  (1.01)
                                                             --------     --------     --------      --------
                                                             --------     --------     --------      --------
Weighted average common shares outstanding                     32,884       20,404       28,460        20,083
                                                             --------     --------     --------      --------
                                                             --------     --------     --------      --------
</TABLE>

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       3
<PAGE>
                                       
                             GATEFIELD CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (unaudited)
<TABLE>
<CAPTION>
                                       
                                                             Nine Months Ended September 30,
(IN THOUSANDS)                                                     1997          1996
---------------------------------------------------------------------------------------------
<S>                                                         <C>              <C>
Operating activities
  Net loss                                                      $(11,830)      $(20,322)
  Reconciliation to net cash used in operating activities
    Depreciation and amortization                                  3,435          3,223
    Subordinated convertible debt interest capitalized, net          438          1,725
    Sales under capital leases                                     1,143           (724)
    Gain on sale of LightSpeed                                      (445)             -
    Gain on sale of QSS                                           (3,321)             -
    Loss on sale of EDA                                              504              -
    Changes in assets and liabilities
      Accounts receivable                                          5,373          7,409
      Inventories                                                   (384)        (1,599)
      Other assets                                                 1,009           (695)
      Accounts payable and accrued expenses                       (4,744)         3,737
      Deferred revenues                                             (693)          (537)
                                                                --------       --------
       Net cash used in operating activities                      (9,515)        (7,783)
                                                                --------       --------
Investing activities
  Property and equipment purchases, net                           (1,404)        (1,797)
  Increase in capitalized software                                  (150)        (1,554)
  Proceeds from sale of LightSpeed, net                            5,000              -
  Proceeds from sale of QSS, net                                   3,500              -
  Proceeds from sale of EDA, net                                   4,450              -
                                                                --------       --------
       Net cash provided by (used in) investing activities        11,396         (3,351)
                                                                --------       --------
Financing activities
  Proceeds from issuance of convertible debenture notes            3,500         10,000
  Proceeds from sales of Common Stock                                170            413
  Bank financing, net                                             (3,114)         1,500
  Decrease in debt obligation                                     (2,196)          (342)
                                                                --------       --------
       Net cash provided by (used in) financing activities        (1,640)        11,571
                                                                --------       --------

Effect of exchange rate changes on cash and cash equivalents         159            154
                                                                --------       --------

Net change in cash and cash equivalents                              400            591

Cash and cash equivalents, beginning of period                     1,703          3,722
                                                                --------       --------

Cash and cash equivalents, end of period                        $  2,103       $  4,313
                                                                --------       --------
                                                                --------       --------
Supplemental disclosure of cash flow information
  Noncash activities
    Common Stock issued in connection with the acquisition
      of all the outstanding shares of Attest Software, Inc.    $      -       $  2,400
    Common Stock exchanges for convertible debentures           $  7,342       $    700
    Preferred Stock exchanges for convertible debentures        $  3,971       $      -
    Common Stock exchanges for Preferred Stock                  $  1,207       $      -

</TABLE>

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                       4
<PAGE>
                                       
                             GATEFIELD CORPORATION
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)
                              September 30, 1997
                                       
1.  BASIS OF PRESENTATION

    The accompanying unaudited condensed consolidated financial statements
    contain all adjustments of a normal recurring nature that are, in the 
    opinion of management, necessary to present fairly the financial position 
    and results of operations of GateField Corporation, formerly known as Zycad 
    Corporation, (the Company).  Interim results of operations are not 
    necessarily indicative of the results to be expected for the full year.  
    The Company's interim fiscal quarter ended on September 30, 1997 and 1996, 
    respectively.  The condensed consolidated financial statements should be 
    read in conjunction with the financial statements and the notes thereto for 
    the year ended December 31, 1996, included in the Company's 1996 Annual 
    Report on Form 10-K.
  
2.  NET LOSS PER SHARE

    Net loss per share is computed using the weighted average number of common
    shares outstanding.  Common share equivalents have not been included in the
    net loss per share calculation because the effect would be anti-dilutive.
  
    Pursuant to Accounting Principles Board Opinions No. 15, "Earnings Per 
    Share" (APB No. 15), dividends payable on preferred stock, whether to be 
    paid in cash or common stock, reduce income available to common stockholders
    in the calculation of earnings per share.  Accordingly, the assured 
    incremental yield imbedded in the conversion terms' discount from fair value
    is accounted for as a dividend to the preferred stockholder.  The dividend 
    is recognized in the earnings per share calculation on a pro rata basis over
    the period beginning with the issuance of the preferred stock to the first 
    date that conversion can occur (see Exhibit 11).
  
3.  INVENTORIES

    Inventories consisted of:

                                                    September 30,    December 31
    (IN THOUSANDS)                                      1997            1996
    ----------------------------------------------------------------------------
  
    Raw materials and work in process                 $  422           $2,045
    Finished goods                                       628              619
                                                      ------           ------
                                                      $1,050           $2,664
                                                      ------           ------
                                                      ------           ------

4.  SUBORDINATED CONVERTIBLE DEBENTURES

    In May 1996, the Company sold a total of $10,000,000 of subordinated
    convertible debenture notes (the Notes) to institutional investors as part 
    of a private placement.  The Notes accrue interest at an annual rate of 6%,
    beginning on the date of issue, with the principal due and payable three
    years from the date of issue if and to the extent that the Notes are not
    previously converted.  The Notes are convertible at the option of the
    noteholders (subject to the maximum share limitations set forth below) into
    the Company's Common Stock at a price equal to 80% to 85% of the average
    closing bid price for the Common Stock on the Nasdaq National Market for the
    five trading days prior to the date of conversion.  In addition, the 
    investors received warrants to purchase up to 59,500 additional shares of 
    the Company's stock at $10.00 per share, subject to certain conditions.  At
    September 30, 1997, there was no outstanding balance on the Notes and
    approximately 10,109,000 shares of Common Stock had been converted.

    In February 1997, the Company completed a $3,500,000 private placement with
    investors whereby the Company issued 6% Subordinated Convertible Debentures
    (the Debentures) and Common Stock Purchase Warrants.  The Debentures accrue
    interest at an annual rate of 6%, beginning on the date of issue, with the
    principal due and payable three years from the date of issue, if and to the
    extent that the Debentures are not previously converted.  The Debentures are
    convertible at the option of the holder into the Company's Common Stock at a
    price equal to 78% to 83% of the lowest reported sales price for the Common
    Stock on the Nasdaq National Market for the five trading days prior to the
    date of conversion.  In addition, the investors received warrants to 
    purchase up to 500,000 additional shares of the Company's stock at $2.25 per
    share, subject to certain conditions.  On May 15, 1997, the Debentures were
    converted into 100,000 shares of the Company's 

                                       5
<PAGE>

    Convertible Preferred Stock having an aggregate stated value of $3,500,000 
    and warrants to purchase additional Convertible Preferred Stock having an 
    aggregate stated value of $1,500,000.  Expenses relating to the Subordinated
    Convertible Debentures and the Convertible Preferred Stock are approximately
    $438,000 relating to discount expense and $438,000 relating to accreted 
    dividends.  On August 25, 1997, in a transaction valued at $1,800,000, the 
    Company completed the redemption of all of the outstanding shares of the 
    Company's Convertible Preferred Stock.  There was no subordinated 
    convertible debt interest capitalized for the three months ended September 
    30, 1997 and $438,000 of subordinated convertible debt interest capitalized 
    for the nine months ended September 30, 1997.  At September 30, 1997, 51,972
    shares of Preferred Stock had been converted to approximately 4,547,000 
    shares of the Company's Common Stock at prices ranging from $0.367 to $0.606
    per share.

5.  PROFIT ON SALE OF ASSETS

    DISPOSITION OF THE VERIFICATION PRODUCT FAMILY
    On August 21, 1997, GateField Corporation (the Company), agreed to sell its
    assets relating to its verification business, without the maintenance and
    support business, to IKOS Systems, Inc. (IKOS) and Test Systems Strategies,
    Inc. (TSSI), a division of Credence Systems Corporation.  The Asset Purchase
    Agreement, as amended, with IKOS called for IKOS to buy all of rights, title
    and interest to the intangible assets of the XP and PXP hardware fault
    simulation product business for $2,200,000.  Under the terms of the
    agreement, IKOS paid $2,000,000 upon execution of the agreement and an
    additional $200,000 is due at a future date.  In an Asset Purchase Agreement
    valued at approximately $2,300,000, TSSI purchased substantially all of the
    assets of the Attest business, GateField's software fault and test products
    know as the TDX product line.  Under the terms of the agreement, TSSI paid
    $2,300,000 upon execution of the contract.  Information contained in the
    August 21, 1997 press release shown as Item 7, Exhibit 20.02 on the 
    Company's Form 8-K filed on September 5, 1997 further describes the sale of 
    the verification product family.

    The details of this transaction are as follows (in thousands):

        Proceeds from the sale of the verification business     $  4,450
        Assets disposed of                                        (3,571)
        Liabilities incurred                                      (1,383)
                                                                --------
           Loss on sale of the verification business            $   (504)
                                                                --------
                                                                --------


    DISPOSITION OF THE LIGHTSPEED PRODUCT FAMILY
    On April 15, 1997, GateField Corporation (the Company), agreed to sell its
    technology relating to its LightSpeed product family to IKOS Systems, Inc.
    (IKOS).  The purchase price was $5,000,000, of which $4,500,000 has been
    received as of June 30, 1997, and $500,000 is due upon completion of certain
    customer transition milestones.  The agreement called for IKOS to buy all of
    the software and hardware simulation technology related to the LightSpeed
    product, and for GateField to promote IKOS' logic verification products to
    its customers. GateField retained its GateField product Line. Information
    contained in the April 15, 1997 press release shown as Item 7, Exhibit 20.01
    on the Company's Form 8-K filed on April 30, 1997 further describes the sale
    of the LightSpeed product family.

    The details of this transaction are as follows (in thousands):

        Proceeds from the sale of LightSpeed                    $  5,000
        Assets disposed of                                        (3,615)
        Liabilities incurred                                        (907)
                                                                --------
           Gain on sale of LightSpeed                           $    478
                                                                --------
                                                                --------

    SALE OF QUALITY SYSTEMS SOFTWARE, INC.
    In January 1996, GateField Corporation (the Company) and Quality Systems
    Software, Ltd. (QSS Ltd.), a U.K. company and owner of the DOORS technology,
    established a joint venture, QSS Inc., to continue the distribution
    operations of the DOORS technology and other products in the North American
    market. In January 1997, QSS Inc. was restructured so that QSS Ltd. became a
    subsidiary of QSS Inc.  The Company's ownership as a result of the QSS Inc.
    restructuring became 22% or approximately 2,420,000 shares.  On April 14,
    1997, the Company signed an agreement to sell its ownership in QSS Inc. for
    $3,500,000 cash.  The agreement was approved and finalized by the QSS Board
    of Directors on May 12, 1997.  The Company received full payment on May 13,
    1997.  Net gain on the sale of QSS was $3,321,000.

                                       6
<PAGE>

6.  RECENTLY ISSUED ACCOUNTING STANDARD

    In February 1997, the Financial Accounting Standards Board issued Statement
    of Financial Accounting Standards No. 128 (SFAS No. 128), "Earnings per
    Share".  The Company is required to adopt SFAS No. 128 in the fourth quarter
    of fiscal 1997 and will restate at that time earnings per share (EPS) data
    for prior periods to conform with SFAS No. 128.  Earlier application is not
    permitted.  SFAS No. 128 replaces current EPS reporting requirements and
    requires a dual presentation of basic and diluted EPS.  Basic EPS excludes
    dilution and is computed by dividing net income available to common
    stockholders by the weighted average of common shares outstanding for the
    period.  Diluted EPS reflects the potential dilution that could occur if
    securities or other contracts to issue common stock were exercised or
    converted into common stock.  Common share equivalents are not included in
    the diluted EPS calculation where they are anti-dilutive.  Earnings or net
    loss per share under SFAS No. 128 would not have been significantly 
    different than the net loss per share currently reported for the periods.

    In June 1997, the Financial Accounting Standards Board adopted Statements of
    Financial Accounting Standards No. 130 (Reporting Comprehensive Income),
    which requires that an enterprise report, by major components and as a 
    single total, the change in its net assets, during the period, from 
    non-owner sources; and No. 131 (Disclosures about Segments of an Enterprise 
    and Related Information), which establishes annual and interim reporting 
    standards for an enterprise's business segments and related disclosures 
    about its products, services, geographic areas, and major customers.  
    Adoption of these statements will not impact the Company's consolidated 
    financial position, results of operations or cash flows.  Both statements 
    are effective for fiscal years beginning after December 15, 1997, with 
    earlier application permitted.

7.  SUBSEQUENT EVENTS

    COMPANY NAME CHANGE TO GATEFIELD CORPORATION
    On October 10, 1997, the Company announced a change in its name to GateField
    Corporation (NASDAQ:GATE) from Zycad Corporation.  The change was approved 
    at a special meeting of stockholders held July 10, 1997.

    STRATEGIC PARTNERSHIP WITH SIEMENS AKTIENGESELLSCHAFT
    In a joint press release on November 3, 1997, GateField Corporation (the
    Company) (NASDAQ:GATE) and Siemens Aktiengesellschaft (Siemens Semiconductor
    or Siemens) announced that they have engaged in a long-term strategic
    partnership that they believe will provide revolutionary solutions to 
    satisfy future system level integration and programmable logic device 
    customer needs. In a first step, Siemens has licensed GateField's 
    non-volatile and reprogrammable ProASIC-TM- technology to be embedded into 
    their system level integration (SLI) products.  Siemens agreed to pay the 
    Company $3,250,000 for the technology license, for 500,000 shares of 
    GateField common stock and for a five (5) year stock warrant to purchase up 
    to 9.9% of the issued and outstanding shares of common stock at an exercise 
    price of 80% of market price on the date of exercise with a minimum exercise
    price of $1.00, subject to stockholder approval.  Information contained in 
    the November 3, 1997 press release shown as Item 7, Exhibit 20.04 on the 
    Company's Form 8-K filed on November 14, 1997 further describes the terms of
    the long-term strategic partnership.

    STOCK PURCHASE AGREEMENT
    A two-phase, private placement agreement was signed on November 10, 1997
    between GateField Corporation (the Company) and Idanta Partners, Ltd.
    (Idanta).  Under the terms of the agreement, Idanta will purchase 1,000,000
    shares of the Company's Series B Convertible Preferred Stock, par value
    $0.10, for an aggregate purchase price of $4,582,500.  At Idanta's
    discretion, each share of Preferred Stock is convertible into 4.5825 shares
    of the Company's Common Stock.  In addition, Idanta is required under the
    Stock Purchase Agreement to purchase 4,582,500 shares of the Company's 
    Common Stock for an aggregate purchase price of $4,582,500, pending 
    stockholder approval of management proposals at the Company's 1997 Annual 
    Meeting of Stockholders to be held on December 15, 1997. On November 7, 1997
    the Company filed a Certificate of Correction to Certificate of Amendment to
    the Company's Certificate of Incorporation with the Secretary of State for 
    the State of Delaware correcting the number of authorized common stock to
    40,000,000 shares.  In the event the stockholders do not approve the
    proposals at the 1997 Annual Meeting of Stockholders, Idanta will have a
    warrant to purchase 1,000,000 shares of common stock at $1.00 per share.
    Information contained in the November 3, 1997 press release shown as Item 7,
    Exhibit 20.05 on the Company's Form 8-K filed on November 14, 1997 further
    describes the terms of this Stock Purchase Agreement.

                                       7
<PAGE>

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

This Management's Discussion and Analysis of Financial Condition and Results 
of Operations contains forward-looking statements that involve risks and 
uncertainties.  The Company's actual results may differ significantly from 
the results discussed in the forward-looking statements.  Factors that might 
cause such a difference include, but are not limited to, those discussed in 
the Company's Form 10-K for the year ended December 31, 1996, under the 
caption, "Business".

RESULTS OF OPERATIONS

REVENUES
Total revenues for the quarter ended September 30, 1997 were  $4.4 million, a 
decrease of $1.6 million compared to the quarter ended September 30, 1996. 
Product revenues for the third quarter of 1997 were $1.8 million, a decrease 
of $0.5 million compared to the third quarter of 1996, due primarily from the 
sale of the verification business and resultant decreased shipments of 
accelerator products.  Service revenues for the third quarter of 1997 were 
$2.6 million, a decrease of $1.1 million compared to the third quarter of 
1996, due to reduced maintenance revenues relating to older generation 
accelerator products and the sale of the verification business.

Total revenues for the nine months ended September 30, 1997 were $12.3 
million, compared to $22.5 million for the nine months ended September 30, 
1996, a decrease of $10.2 million.  This decrease is primarily related to 
decreases in product revenues.  Product revenues for the nine months ended 
September 30, 1997 were $4.0 million, compared to $11.1 million for the 
comparable period of 1996, a decrease of $7.1 million, relating directly to 
reduced shipments of the Company's accelerator product family.  Service 
revenues were $8.3 million for the nine months ended September 30, 1997, 
compared to $11.4 million for the comparable nine months ended September 30, 
1996, a decrease of $3.1 million, again attributable to reduced maintenance 
revenues relating to older generation accelerator products.

GROSS PROFIT
The total gross profit was break-even for the quarter ended September 30, 1997
compared to $0.8 million for the quarter ended September 30, 1996.  The loss
from product revenues at the gross profit level for the third quarter of 1997
was $0.9 million, compared to the third quarter of 1996 gross profit of $0.8
million.  Gross profit from service revenues was $0.9 million for the third
quarter of 1997, compared to $1.5 million during the third quarter of 1996.

Total gross profit was $1.4 million for the nine months ended September 30, 
1997, as compared to $9.9 million for the comparable period of 1996.  During 
the nine months of 1997, loss from product revenues at the gross profit level 
was $2.0 million, compared to gross profit of $5.1 million during the first 
nine months of 1996.  Gross profit from service revenues was $3.4 million, 
compared to $4.8 million for the first nine months of 1996.  This decrease in 
gross profit from product revenues for both the three months and nine months 
ended September 30, 1997 as compared to 1996 was primarily due to decreased 
product revenues that are necessary to support fixed overhead expenses during 
the same periods.

OPERATING EXPENSES

SALES AND MARKETING
Sales and marketing expenses were $0.6 million for the quarter ended September
30, 1997, compared to $3.5 million for the quarter ended September 30, 1996.
Sales and marketing expenses were $6.9 million for the nine months ended
September 30, 1997, compared to $10.9 million for the nine months ended
September 30, 1996, a decrease of $4.0 million.  The decrease in sales and
marketing expenses was due primarily to decreased spending as a result of cost-
saving measures and as well as reduced staffing levels.

RESEARCH AND DEVELOPMENT
Research and development expenses were $1.8 million for the quarter ended
September 30, 1997, compared to $4.3 million for the quarter ended September
30, 1996 and $6.6 million for the nine months ended September 30, 1997,
compared to $12.7 million for the nine months ended September 30, 1996.  This
decrease in 1997 as compared to 1996 was mainly due to decreased staffing
levels in 1997 as projects and activities associated with the development and
introduction of LightSpeed were not continued into 1997.  Additionally,
research and development expenses related to the development of high density
Programmable ASIC products decreased in 1997 as the product moved into the
production mode.

                                       8
<PAGE>

GENERAL AND ADMINISTRATIVE
General and administrative expenses for the quarter ended September 30, 1997
were $1.8 million, compared to $2.7 million for the quarter ended September 30,
1996 and $2.8 million for the nine months ended September 30, 1997, compared to
$4.5 million for the nine months ended September 30, 1996.  The decrease in
general and administrative expenses in 1997 was primarily related to decreased
staffing levels as compared to 1996.

OTHER INCOME AND EXPENSES
Interest expense was $0.0 million for the quarter ended September 30, 1997,
compared to $1.5 million for the quarter ended September 30, 1996.  Interest
expense for the nine months ended September 30, 1997 was $0.9 million and
compared to $2.1 million for the nine months ended September 30, 1996.  The
overall decrease in interest income in both the three month period and the nine
month period ending September 30, 1997 as compared to the comparable periods in
1996 was primarily due to a decrease of $1.6 million of interest expense
related to the Subordinated Convertible Debentures recorded in the second and
third quarter of 1996.  See Note 4 of Notes to Condensed Consolidated Financial
Statements.

Other income was $0.1 million for both the three months ended September 30,
1997 and 1996, respectively, and $3.9 million and $0.0 million for the nine
months ended September 30, 1997 and 1996, respectively.  This increase for both
the quarter and year ended September 30, 1997 was mainly attributable to the
proceeds on the sale of the verification product family, the LightSpeed product
family and the sale of the Company's interest in QSS.  See Note 5 of Notes to
Condensed Consolidated Financial Statements.

FACTORS AFFECTING FUTURE RESULTS
The Company continues to seek improvement in operating results through 
introduction of new products.  However, there can be no assurance that the 
Company will be successful in its efforts.  In the future, the Company's 
operating results may be impacted by a number of factors, including 
cancellation or delays of customer orders, interruption or delays in the 
supply of key components, changes in customer base or product mix, seasonal 
patterns of capital spending by customers, new product announcements by the 
Company or its competitors, pricing pressures and changes in general economic 
conditions. Historically, a significant portion of the Company's shipments 
have been made in the last month of each quarter.  As a result, a shortfall 
in revenue compared to expectation may not evidence itself until late in the 
quarter. Additionally, the timing of expenditures for research and 
development activities and sales and marketing programs, as well as the 
timing of orders by major customers, may cause operating results to fluctuate 
between quarters and between years.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically used internally generated funds, public and 
private offerings of common stock, sale and leaseback arrangements and bank 
financing and credit lines to finance its business.  Cash used in operations 
was $9.5 million for the first nine months of 1997 compared to cash used in 
operations of $7.8 for the first nine months of 1996.  This increase in cash 
used in operations in 1997 compared to 1996 was primarily due to increased 
depreciation and amortization for the write off of capitalized software, 
partially offset by the net gain on sales of business units. See Note 5 of 
Notes to Condensed Consolidated Financial Statements. Net cash provided by 
investing activities was $11.4 million at September 30, 1997 compared to net 
cash used in investing activities of $3.4 million at September 30, 1996.  
This increase in net cash provided by investing activities is primarily due 
to cash receipts from the sale of the LightSpeed product family and the sale 
of the Company's interest in QSS.  Net cash used in financing activities was 
$1.6 million at September 30, 1997, compared to net cash provided by 
financing activities of $11.6 million at September 30, 1996.  The decrease in 
net cash provided by financing activities from 1996 to 1997 was primarily due 
to decreased levels of debenture offerings in 1997, as well as reduced levels 
of bank debt and financing obligations in 1997.

At September 30, 1997 the Company had cash and cash equivalents of $2.1 
million and a working capital deficit of $(2.6) million.  The Company has a 
$5.0 million revolving credit facility that bears interest at the bank's 
prime rate (currently 8.5%) plus 2.25%, which expires on January 31, 1999, of 
which $0.1 million was outstanding at September 30, 1997.  This line of 
credit carries a borrowing limit of up to 80% of the Company's eligible 
accounts receivable. The Company continues to work with certain vendors to 
facilitate extended trade terms, thus reducing the Company's immediate cash 
requirements to meet established payments and other normal, recurring period 
expenses.

The Company continues to work on attaining revenue projections through 1997 
and by relying on the new credit line, together with sources of additional 
liquidity such as private or public offerings, equipment lease lines and the 
sale of certain company assets, which the Company expects to meet short-term 
liquidity needs.  Should additional funding be required, however, there can 
be no assurance that such funding will be available on acceptable terms as 
and when required by the Company.  See Note 7 of Notes to Condensed 
Consolidated Financial Statements.

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<PAGE>

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

Exhibit 3.4    Certificate of Correction to Certificate of Amendment to the
               Certificate of Incorporation.

Exhibit 3.5    Certificate of Amendment of Certificate of Incorporation.

Exhibit 11     Computation of Earnings per Share

Exhibit 27.1   Article 5 of Regulation S-X, Financial Data Schedule for
               GateField Corporation for the quarter ended September 30, 1997

(b)  Reports on Form 8-K:

GateField Corporation's Current Report on Form 8-K filed November 14, 1997, 
reporting on the Strategic Partnership with Siemens and the Stock Purchase 
Agreement with Idanta Partnership, Ltd.

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<PAGE>                                 
                                   SIGNATURE


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

                                      GATEFIELD CORPORATION



                                      /s/  Stephen A. Flory
                                      ---------------------
                                      Stephen A. Flory
                                      Vice President and Chief Financial Officer


Dated:  November 14, 1997

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