<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                    FORM 10-Q


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


For the quarter ended June 30, 1998      Commission File Number      0-26358


                            COMPUTRON SOFTWARE, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                 DELAWARE                              13-2966911
        (State or other jurisdiction of    (I.R.S. Employer Identification No.)
        incorporation or organization)


             301 Route 17 North
            Rutherford, New Jersey                      07070
    (Address of principal executive offices)          (Zip Code)

                                 (201) 935-3400
              (Registrant's telephone number, including area code)

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



 Number of shares outstanding of the issuer's common stock as of August 3, 1998


              Class                             Number of Shares Outstanding
----------------------------------------        -----------------------------
 Common Stock, par value $0.01 per share                 23,794,355


<PAGE>


                            COMPUTRON SOFTWARE, INC.


                                      INDEX
<TABLE>
<CAPTION>

                                                                              Page
PART I   FINANCIAL INFORMATION                                               Number
                                                                            --------
<S>                                                                         <C>
         Item 1.  Financial Statements

                  Consolidated Balance Sheets
                   December 31, 1997 and June 30, 1998.......................... 3
                  Consolidated Statements of Operations
                   Three and six months ended June 30, 1997 and 1998............ 4
                  Consolidated Statements of Cash Flows
                   Six months ended June 30, 1997 and 1998...................... 5
                  Notes to Consolidated Interim Financial Statements............ 6
         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations...........................10

PART II  OTHER INFORMATION

         Item 1.  Legal Proceedings.............................................24

         Item 4.  Submission of Matters to a Vote of Securities Holders.........24

         Item 6.  Exhibits and Reports on Form 8-K..............................25

SIGNATURES

         Signatures.............................................................26

</TABLE>


                                       2


<PAGE>



                            COMPUTRON SOFTWARE, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

<TABLE>
<CAPTION>

                                                                    December 31,  June 30,
                                                                       1997         1998
                                                                    -----------  ----------
                                                                                 Unaudited
<S>                                                                  <C>         <C>
                                ASSETS                                
Current assets:
 Cash and cash equivalents                                           $  6,280    $  2,415
 Short-term investments                                                   193         188
 Restricted cash                                                        6,124       5,985
 Accounts receivables, less reserves of $3,056 at
   December 31, 1997 and $2,579 at June 30, 1998                       11,420      12,454
 Prepaid expenses and other current assets                              3,230       3,071
                                                                     --------    --------

   Total current assets                                                27,247      24,113
                                                                     --------    --------
Equipment and leasehold improvements, at cost:
 Computer and office equipment                                         11,844      12,649
 Furniture and fixtures                                                 1,298       1,506
 Leasehold improvements                                                   592         967
                                                                     --------    --------
                                                                       13,734      15,122
 Less--accumulated depreciation and amortization                        9,670      10,948
                                                                     --------    --------

                                                                        4,064       4,174
                                                                     --------    --------
Capitalized software development costs, net of
 accumulated amortization of $3,734 at December 31, 1997 and            1,429       1,076
 $4,087 at June 30, 1998 
Goodwill, net of accumulated amortization of $1,072 at 
December 31, 1997 and $1,328 at June 30, 1998                           1,732       1,450
Other assets                                                            1,126         890
                                                                     --------    --------
                                                                     $ 35,598    $ 31,703
                                                                     --------    --------
                                                                     --------    --------

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
 Current portion of long-term debt and capital leases                      71       1,691
 Accounts payable                                                       4,375       4,818
 Accrued expenses                                                      10,956      10,538
 Deferred revenue                                                       9,078       9,987
                                                                     --------    --------
   Total current liabilities                                           24,480      27,034
                                                                     --------    --------
Long-term liabilities:
Long-term debt and capital leases, less current portion                    23       3,075
                                                                     --------    --------

Common stock subject to repurchase                                      5,000       5,000
                                                                     --------    --------
Commitments and contingencies 
Stockholders' equity (deficit):
 Preferred stock, $.01 par value, authorized 5,000
  shares, no shares issued and outstanding                                 --          --
 Common stock, $.01 par value, authorized 50,000 shares;
  23,777 shares and 23,794 shares issued and
  outstanding at December 31, 1997 and June 30, 1998, respective          238         238
 Additional paid-in capital                                            69,373      69,396
 Accumulated deficit                                                  (63,016)    (72,454)
 Cumulative translation adjustment                                       (500)       (586)
                                                                     --------    --------

   Total stockholders' equity (deficit)                                 6,095      (3,406)
                                                                     --------    --------
                                                                     $ 35,598    $ 31,703
                                                                     --------    --------
                                                                     --------    --------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       3


<PAGE>


                            COMPUTRON SOFTWARE, INC.
                           CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)
                                   (Unaudited)


<TABLE>
<CAPTION>


                                                  Three Months Ended       Six Months Ended
                                                 ---------------------    -------------------
                                                 June 30,     June 30,    June 30,   June 30,
                                                   1997        1998        1997        1998
                                                --------    ---------   ---------   ---------
<S>                                            <C>          <C>         <C>         <C>
Revenues:
 License fees                                   $  4,883    $  3,360    $ 10,512    $  7,379
 Services                                         11,923      11,460      23,085      22,464
                                                --------    --------    --------    --------
  Total revenues                                  16,806      14,820      33,597      29,843
                                                --------    --------    --------    --------

Operating expenses:
     Cost of license fees                            606         796         887       1,810
     Cost of services                              6,871       7,127      13,433      14,262
     Sales and marketing                           3,427       4,110       8,381       8,359
     Research and development                      2,365       2,375       4,796       5,011
     General and administrative                    3,964       4,264       7,793       8,568
     Restructuring costs                            --         1,311        --         1,311
                                                --------    --------    --------    --------
        Total operating expenses                  17,233      19,983      35,290      39,321
                                                --------    --------    --------    --------
Operating loss                                      (427)     (5,163)     (1,693)     (9,478)
                                                --------    --------    --------    --------
Other income (expense):
     Costs related to class action litigation     (1,281)        (18)     (2,273)        (40)
     Other income                                    255         131         548         263
     Other expense                                   (32)       (183)        (64)       (183)
                                                --------    --------    --------    --------
        Other income (expense), net               (1,058)        (70)     (1,789)         40
                                                --------    --------    --------    --------
Net loss                                        $ (1,485)   $ (5,233)   $ (3,482)   $ (9,438)
                                                --------    --------    --------    --------
                                                --------    --------    --------    --------
Basic and diluted net loss per
        common share                            $  (0.07)   $  (0.22)   $  (0.17)   $  (0.40)
                                                --------    --------    --------    --------
                                                --------    --------    --------    --------
Weighted average basic and diluted
        common shares outstanding                 20,818      23,791      20,814      23,784
                                                --------    --------    --------    --------
                                                --------    --------    --------    --------

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       4


<PAGE>

                            COMPUTRON SOFTWARE, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                (In thousands, except share and per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                                        Six Months Ended    Six Months Ended
                                                                         June 30, 1997        June 30, 1998
                                                                        ----------------    ----------------
<S>                                                                     <C>                 <C>
Cash flows from operating activities:
Net loss                                                                   $ (3,482)            $(9,438)
Adjustments to reconcile net loss to net
    cash flows provided by (used in) operating activities-
                Depreciation and amortization                                 1,732               1,919
Changes in current assets and liabilities
                Restricted cash                                               1,788                 139
                Accounts receivable                                           7,912              (1,114)
                Prepaid expenses and other current assets                      (191)                151
                Accounts payable and accrued expenses                        (3,367)                101
                Deferred revenue                                             (3,777)                982
                                                                            --------            -------
Net cash flows provided by (used in) operating activities                       615              (7,260)
                                                                            --------            -------
Cash flows from investing activities:
                Other assets                                                    192                 229
                Purchase of equipment and leasehold improvements               (762)             (1,460)
                Short-term investments                                         (762)                  2
                                                                           --------             -------
Net cash flows used in investing activities                                  (1,332)             (1,229)
                                                                           --------             -------

Cash flows from financing activities:
                Proceeds from exercise of stock options                          12                  23
                Proceeds from long term debt                                   --                 5,000
                Repayment of notes payable                                   (1,402)                 --
                Payments of long term debt and capital lease obligations       (472)               (325)
                Decrease in liabilities related to acquisitions                (754)                 --
                                                                           --------             -------
Net cash flows provided by (used in) financing activities                    (2,616)              4,698
                                                                           --------             -------
Foreign currency exchange rate effects                                          143                 (74)
                                                                            --------            -------
Net decrease in cash and cash equivalents                                    (3,190)             (3,865)
Cash and cash equivalents, beginning of period                               19,730               6,280
                                                                            --------            -------
Cash and cash equivalents, end of period                                   $ 16,540             $ 2,415
                                                                            --------            -------
                                                                            --------            -------

Supplemental disclosures of cash flow information and noncash financing
activities:
                Cash paid during the period for -
                               Interest                                    $     12             $    86
                                                                            --------            -------
                                                                            --------            -------
                               Income taxes                                $     67             $    40
                                                                            --------            -------
                                                                            --------            -------

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.



                                       5


<PAGE>


                            COMPUTRON SOFTWARE, INC.
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)

(1)  OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

The Company designs, develops, markets and supports client/server financial,
workflow, plant maintenance and archival data management software solutions to
manage mission-critical applications in large organizations operating across a
broad range of industries worldwide.

Basis of Presentation:

The accompanying unaudited consolidated financial statements include the
accounts of Computron Software, Inc. and its wholly owned foreign subsidiaries
located in Australia, Canada, France, Germany, Poland, Singapore, South Africa
and the United Kingdom (collectively, the "Company"). These consolidated
financial statements have been prepared by the Company in accordance with
generally accepted accounting principles and in the opinion of management,
contain all adjustments, consisting only of those of a normal recurring nature,
necessary for a fair presentation of these consolidated financial statements.

These consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the Company's
1997 Annual Report on Form 10-K filed with the Securities and Exchange
Commission.

The results of operations for the three and six months ended June 30, 1998, are
not necessarily indicative of results to be expected for any future periods.

(a)  Revenue Recognition

The Company recognizes revenue in accordance with Statement of Position 97-2
"Software Revenue Recognition" ("SOP 97-2"). Revenue from non-cancelable
software licenses is recognized when contract negotiations are complete,
delivery has occurred, the fee is fixed or determinable and collectibility is
probable. Post contract support (maintenance) service fees are typically billed
separately and are recognized on a straight line basis over the life of the
applicable agreement. The Company recognizes service revenues from consulting
and implementation services, including training, provided by both its own
personnel and by third parties, upon performance of the services. The Company
recognizes revenue from certain contracts, generally those with fixed prices,
using the percentage of completion method. Anticipated losses, if any, are
charged to operations in the period such losses are determined.

The adoption in 1998 of SOP 97-2, which is effective for transactions entered
into in fiscal years beginning after December 15, 1997, did not have a
significant impact on the Company's revenue recognition policies.


                                       6


<PAGE>


                            COMPUTRON SOFTWARE, INC.
         NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (continued)
                 (In thousands, except share and per share data)

(b)  Cash and Cash Equivalents

Cash equivalents are stated at cost, which approximates market, and consist of
short-term, highly liquid investments with original maturities of less than
three months.

(c)  Reclassification

Certain reclassifications have been made to prior periods to conform to the
current period presentation.

(2)  REVOLVING LINE OF CREDIT AND LONG-TERM DEBT

On March 31, 1998, the Company entered into a Loan and Security Agreement
("Agreement") which provides for maximum borrowings of up to $10 million. Upon
signing, the Company borrowed $5 million pursuant to a three year term loan. The
term loan bears interest at prime plus 1.5%, and is repayable in 36 monthly
installments beginning May 1, 1998. The Company currently has available the
lesser of $5 million or 85% of eligible receivables under a revolving line of
credit pursuant to the Agreement.

Borrowings under the revolving line of credit will bear interest at prime plus
1.25%. The Agreement provides for yearly fees as follows: (i) $111 in year one,
$86 in years two and three and (ii) an unused revolving line of credit fee of
 .375% per annum. The agreement is secured by substantially all domestic assets
of the Company together with a pledge of 65% of the stock of its foreign
subsidiaries, and contains certain financial and restrictive covenants, which
were amended as of June 30, 1998.

(3)  CONTINGENCIES

On March 6, 1998, the District Court issued a final order approving a settlement
in the class action securities litigation, In re Computron Software, Inc.
Securities Litigation, Master File No. 96-1911 (AJL), brought against the
Company and certain of its present and former officers and directors in the
United States District Court for the District of New Jersey.

The overall settlement includes consideration totaling $15 million for the
benefit of class members, including consideration from the Company, and payments
from certain of its present and former officers and directors, its former
auditors, and the insurance companies that provided Computron with directors and
officers liability insurance. In return for the payments by the insurance
companies, the settlement also resolves a separate lawsuit brought by the
Company against the insurance companies. As its share of the settlement, the
Company has paid $1 million in cash, and will issue 1 million shares of Common
Stock of the Company.


                                       7

<PAGE>


                            COMPUTRON SOFTWARE, INC.
         NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (continued)
                 (in thousands, except share and per share data)

Class members will receive a non-transferable right to resell the stock received
in the settlement to a business trust formed by the Company at a price of $5.00
per share. In March 1998, the trust was capitalized by a contribution of $5
million from the Company's restricted cash, which will be used to pay the claims
of any class members who receive stock in the settlement and exercise their
right to resell such stock to the trust according to the terms of the
Stipulation of Settlement.

The exercise period during which class members may resell these shares to the
trust will be December 1, 1998 to December 21, 1998, or later period if all
necessary court proceedings have not been completed by November 1, 1998. The
resale right will expire at the end of the exercise period, or earlier as to any
shares issued in the settlement that are sold by class members prior to the
final day of the exercise period. The resale right will also expire earlier than
the exercise period if the closing price of the Company's Common Stock is higher
than $5.00 per share for 20 consecutive trading days. The Company recorded a
charge to operations of $6 million during the quarter ended September 30, 1997,
reflecting the Company's share of the settlement costs, excluding legal fees.

Historically, the Company has been involved in other disputes and/or litigation
encountered in its normal course of business. The Company believes that the
ultimate outcome of these proceedings will not have a material adverse effect on
the Company's business, financial condition and results of operations or cash
flows.

(4)  Comprehensive Income (Loss)

Effective January 1, 1998 the Company adopted SFAS No. 130, a new accounting
rule on reporting comprehensive income (loss). The rule requires reporting of
comprehensive income (loss), which includes net income (loss) and all other
non-owner changes in equity (deficit) during a period as follows:

<TABLE>
<CAPTION>


                                                    Three Months Ended              Six Months Ended
                                                         June 30,                       June 30,
                                                 --------------------------    ---------------------------
                                                    1997           1998           1997            1998
                                                 -----------    -----------    -----------     -----------
<S>                                              <C>            <C>             <C>            <C>
Net loss                                           $(1,485)       $(5,233)       $(3,482)        $(9,438)
Cumulative translation adjustment                      604             94            (90)            (86)
                                                 -----------    -----------    -----------     -----------
Comprehensive loss                                 $  (881)       $(5,139)       $(3,572)        $(9,524)
                                                 -----------    -----------    -----------     -----------
                                                 -----------    -----------    -----------     -----------

</TABLE>


(5)   Basic and Diluted Net Loss Per Common Share

Basic and diluted net loss per common share is presented in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
No. 128"). SFAS No. 128 provides for new accounting principles used in the
calculations of earnings (loss) per share and was effective for financial
statements for both interim and annual periods ended after December 15, 1997.
The Company has restated the net loss per common share for all periods presented
to give effect to SFAS No. 128.


                                       8

<PAGE>



                            COMPUTRON SOFTWARE, INC.
         NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (continued)
                 (in thousands, except share and per share data)

Basic net loss per common share is based on the weighted average number of 
shares of common stock outstanding during the period. Diluted net loss per 
common share is the same as basic net loss per common share since the effect 
of stock options, warrants, and contingently issuable shares in connection 
with the December 1997 private placement of common stock is antidilutive.

                                       9


<PAGE>



                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

Overview

This Report contains statements of a forward-looking nature relating to future
events or the future financial performance of the Company. Investors are
cautioned that such statements are only predictions and that actual events or
results may differ materially. In evaluating such statements, investors should
specifically consider the various factors identified in this Report and in the
Company's 1997 Annual Report on Form 10-K filed with the Securities and Exchange
Commission which could cause actual results to differ materially from those
indicated by such forward-looking statements, including the matters set forth
under the caption "Certain Factors That May Affect Future Results and Financial
Condition and the Market Price of Securities" below.

The Company was founded in 1978 as a developer of custom financial software for
mission-critical applications in large organizations, primarily financial
institutions. In the early 1980's, the Company developed financial software for
legacy platforms and introduced sophisticated enterprise-wide financial
software. Identifying the need for client/server financial software applications
in the late 1980's, the Company commenced the re-architecture of its financial
software and began the development and deployment of new product, specifically a
workflow and document management product. In 1993, the Company introduced
Computron Financials and Computron Workflow, the client/server versions of its
financial and workflow products. Computron COOL was introduced in the latter
half of 1993. Since 1994, the Company has released versions of its products with
the capability to interoperate with popular RDBMS software. During the fourth
quarter of 1995, the Company acquired the rights to its Yorvik Software.

During 1996, the Company acquired the Financial Services Division of Generale de
Service Informatique (GSI) based in Paris, France, and certain assets of AT&T
Istel and Co., GMBH, in Essen, Germany. These operations primarily provide
software services in their respective countries.

The Company's revenues are derived from license fees and services. Revenues for
services and training are recognized upon performance of the services. The
Company's license agreements generally do not provide a right of return.
Historically, the Company's backlog has not been substantial, since products are
generally shipped as orders are received.

The Company has experienced, and may in the future experience, significant
fluctuations in its quarterly and annual revenues and results of operations. The
Company believes that domestic and international operating results will continue
to fluctuate significantly in the future as a result of a variety of factors,
including the timing of revenue recognition related to significant license
agreements, the lengthy sales cycle for the Company's products, the proportion
of revenues attributable to license fees versus services, the utilization of
third parties to perform services, the amount of revenue generated by resales of
third party software, changes in product mix, demand for the Company's products,
the size and timing of individual license transactions, the introduction of new
products and product enhancements by the Company or its competitors, 



                                       10
<PAGE>



changes in customers' budgets, competitive conditions in the industry and
general economic conditions.

Following the audits of the Company's consolidated financial statements for
1994, 1995 and 1996 the Company received management letters from its former
independent public accountants, which enumerated material weaknesses in the
Company's financial and accounting processes, controls, reporting systems and
procedures. The Company's former independent public accountants highlighted the
Company's need for additional financial and accounting personnel with software
industry experience.

In response to the management letters and recent operating results, during 1997
the Company hired senior executives with significant experience in the software
industry, and improved financial and accounting processes, controls, reporting
systems and procedures, which eliminated all material weaknesses.

The Company incurred net losses of $8.6 million for 1995, $31.8 million for
1996, and $13.6 million for 1997, and reported a net loss of $9.4 million for
the six months ended June 30, 1998. As of June 30, 1998, the Company had an
accumulated deficit of $72.5 million. There can be no assurance that the Company
will be profitable in the future.

In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 131 establishes standards
for the way public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about reporting segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
SFAS 131 is effective for financial statements for fiscal years beginning after
December 15, 1997, and the Company will comply beginning with year-end 1998
results. Financial statement disclosures for prior periods are required to be
restated. The Company is in the process of evaluating the disclosure
requirements. The adoption of SFAS 131 will have no impact on the Company's
consolidated results of operations, financial position or cash flows.




                                       11
<PAGE>


Results of Operations

The following table sets forth, for the periods indicated, certain operating
data as a percentage of total revenues:

<TABLE>
<CAPTION>

                                                           Three Months Ended             Six Months Ended
                                                                June 30,                       June 30,
                                                          1997            1998           1997           1998
                                                       -----------     -----------    -----------    -----------
<S>                                                   <C>              <C>           <C>            <C>
Revenues:
  License fees...................................          29.1%           22.7%          31.3%          24.7%
  Services.......................................          70.9            77.3           68.7           75.3
                                                       -----------     -----------    -----------    -----------
     Total revenues..............................         100.0           100.0          100.0          100.0


Operating expenses:
  Cost of license fees...........................           3.6             5.4            2.6            6.1
  Cost of services...............................          40.9            48.1           40.0           47.8
  Sales and marketing ...........................          20.4            27.7           24.9           28.0
  Research and development ......................          14.1            16.0           14.3           16.8
  General and administrative ....................          23.5            28.8           23.2           28.7
  Restructuring costs............................             -             8.8              -            4.4
                                                       -----------     -----------    -----------    -----------
     Total operating expenses....................         102.5           134.8          105.0          131.8
                                                       -----------     -----------    -----------    -----------

Operating loss..................................           (2.5)          (34.8)          (5.0)         (31.8)
Costs related to class action litigation.........          (7.6)           (0.1)          (6.8)          (0.1)
Other income (expense) ..........................           1.3            (0.4)           1.4            0.3
                                                       -----------     -----------    -----------    -----------
            Net loss.............................          (8.8)%         (35.3)%        (10.4)%        (31.6)%
                                                       -----------     -----------    -----------    -----------

</TABLE>


Total Revenues

Total revenues decreased 11.8% and 11.2% for the three and six months ended June
30, 1998, compared to the corresponding prior year periods. The decrease was
primarily attributable to a decrease in license fees.

The Company derived approximately $6.5 million and $14.4 million, or 44.0 % and
48.3 % of its total revenues, from customers outside of the United States for
the three and six months ended June 30, 1998, respectively, compared to $8.0
million and $15.2 million, or 47.5% and 45.2%, respectively, for the
corresponding prior year periods. The Company expects that revenues from
customers outside the United States will continue to represent a significant
percentage of its total revenues in the future. Most of the Company's
international license fees and services revenue are denominated in foreign
currencies. With respect to the Company's sales that are US dollar-denominated,
decreases in the value of foreign currencies relative to the US dollar could
make the Company's products less price competitive.


                                       12

<PAGE>


License Fees

License fees include revenues from software license agreements entered into
between the Company and its customers with respect to both the Company's
products and third party products resold by the Company. License fees decreased
31.2% and 29.8% for the three and six months ended June 30, 1998, respectively,
as compared to the prior year periods. The decrease for the six month period was
attributed to a $3.5 million license contract in 1997 from one customer, which
represented 33.3% of total license revenues during the six months ended June 30,
1997.

Services Revenue

Services revenue includes fees from software maintenance agreements, training,
installation and consulting services. Maintenance fees are billed separately and
are recognized ratably over the period of the maintenance agreement. Training,
installation and consulting service revenues are recognized as the services are
performed. Services revenue declined by approximately 3.9% and 2.7% for the
three and six months ended June 30, 1998 due to declines in legacy product
service revenues in the Company's France operations, as compared to the
corresponding previous periods.

Cost of License Fees

Cost of license fees consists primarily of amortization of capitalized software
development costs, amounts paid to third parties with respect to products resold
by the Company in conjunction with licensing of the Company's products and, to a
lesser extent, the costs of product media, duplication, manuals and shipping.

The dollar cost of license fees increased during the three and six months ended
June 30, 1998, as compared to the corresponding prior year period, primarily as
a result of increased third party products resold by the Company.

Cost of Services

Cost of services consists primarily of personnel costs for product quality
assurance, training, installation, consulting and customer support. These costs
include training third party service and support organizations for the Company's
products.

For the three and six months ended June 30, 1998, cost of services as a
percentage of services revenue increased compared to the three and six months
ended June 30, 1997, primarily as a result of the Company focusing on product
delivery and quality assurance processes, which increased the number of service
personnel working on product delivery and quality assurance.

Sales and Marketing

Sales and marketing expenses consist primarily of salaries, commissions, bonuses
and travel and promotional expenses.

Sales and marketing expenses increased for the three months ended June 30, 1998
as compared to the prior year period, primarily due to increased marketing
program costs, increased personnel costs and increased sales and marketing
activities in the Company's foreign locations.





                                       13
<PAGE>


Research and Development

Research and development expenses consist primarily of personnel costs, and
costs of software for development purposes, and costs of outside consultants
hired by the Company to assist its product development efforts. Research and
development expenses are generally charged to operations as incurred. However,
certain software development costs are capitalized in accordance with Statement
of Financial Accounting Standards No. 86. Such capitalized software development
costs are generally amortized on a straight line basis over periods not
exceeding three years.

Research and development expenses increased 0.4% and 4.5%, respectively during
the three and six months ended June 30, 1998, as compared to the prior year
periods. The Company has not capitalized software development costs in either
1997 or 1998. The rate of capitalization of software development costs may
fluctuate depending on the mix and stage of development of the Company's product
development and engineering projects.

General and Administrative

General and administrative expenses consist primarily of administrative, 
executive and financial personnel costs, and outside professional fees. 
General and administrative expenses increased 7.6% and 9.9% for the three and 
six months ended June 30, 1998, as compared to prior year periods, primarily 
due to increases in payroll and related costs attributed to an increase in 
finance and general management personnel as part of a plan to institute 
financial and management controls throughout the Company.

Restructuring Costs

During the three months ended June 30, 1998, the Company committed itself to a
plan whereby it eliminated 32 positions in the United States rendered redundant
through a reengineering process, and eliminated 16 positions outside the United
States servicing legacy products. Accordingly, the Company recorded a charge to
operations totaling approximately $1.3 million, reflecting the termination costs
of those personnel. As of June 30, 1998, the Company has $1.1 million included
in accrued expenses related to such terminations.

Other Income (Expense)

Other income (expense) net increased to ($70) thousand and $40 thousand for the
three and six months ended June 30, 1998, respectively, compared to ($1.1)
million and ($1.8) million for the comparable prior year periods primarily due
to the settlement of the class action litigation (Note 3), offset by interest
expense on Company borrowings and lower invested balances of cash, cash
equivalents and short term investments.

Liquidity and Capital Resources

At June 30, 1998, the Company had cash, cash equivalents, restricted cash and
short-term investments of $8.6 million and working capital deficit of ($2.9)
million. On March 31, 1998, the Company signed a $10 million credit facility
pursuant to which it borrowed $5 million under a three year term loan (Note 2).
Borrowings under the Agreement are secured by substantially all domestic assets
of the Company including a pledge of 65% of the stock of the Company's foreign




                                       14
<PAGE>


subsidiaries. The Company is required to comply with quarterly and annual
financial statement reporting requirements, as well as certain financial
covenants, which were amended as of June 30, 1998. The ability to continue to
borrow under the Agreement is dependent upon future compliance with such
covenants. Management believes that the Company's projected operating results
over the next twelve months will result in compliance under the Agreement,
although there can be no assurance that such operating results will be achieved.
In addition, the Company has a facility, with a separate financial institution,
for $0.5 million of an outstanding letter of credit that matures on September 1,
1998.

The Company's operating activities provided (used) cash of $0.6 million and
($7.3) million for the six months ended June 30, 1997 and 1998, respectively.
Net cash used by operations in the six months ended June 30, 1998 was comprised
primarily of the net loss offset by an increase in deferred revenue. Net cash
provided by operations during the six months ended June 30, 1997 was comprised
of decreases in accounts receivable and restricted cash, offset by the net loss
and decreases in accounts payable and accrued expenses.

The Company's investing activities used cash of $1.3 million and $1.2 million
for the six months ended June 30, 1997 and 1998, respectively. The principal
uses during 1998 have been leasehold improvements and equipment purchases.

Cash provided (used) by financing activities was ($2.6) million and $4.7 million
during the six months ended June 30, 1997 and 1998, respectively and related
mainly to the issuance of long-term debt in 1998 and repayment of debt in 1997.

During the three months ended June 30, 1998, the Company executed a cost
reduction plan which included eliminating 32 positions in the United States
rendered redundant through a reengineering process, as well as eliminating 20
positions servicing legacy products outside the United States; bringing
previously outsourced training and documentation activities back in-house; and
refocusing its sales and marketing efforts on those industries where management
believes it maintains a competitive advantage.

Management believes that the result of these actions will be to reduce its
quarterly expense rate to levels experienced by the Company during the 1997
third quarter, without damaging its competitiveness.

The Company has no significant capital commitments. The Company's aggregate 
minimum operating lease payments for the remainder of 1998 and 1999 are 
expected to be approximately $4.0 million. The Company expects that its 
operating cash flow will be sufficient to fund the Company's working capital 
requirements through 1998. However, the Company's ability to achieve this 
result is affected by the extent of cash generated from operations and the 
pace at which the Company utilizes its available resources. Accordingly, the 
Company may in the future be required to seek additional sources of financing 
including the issuance of debt and/or sale of equity securities. No assurance 
can be given that any such additional sources of financing or guarantees will 
be available on acceptable terms or at all.

Certain Factors That May Affect Future Results and Financial Condition and the
Market Price of Securities



                                       15
<PAGE>


The Company's future business, results of operations and financial condition are
also dependent on the Company's ability to successfully develop, manufacture,
market and support its products in order to meet customer demands. Inherent in
this process are a number of factors that the Company must carefully manage in
order to be successful. A discussion of certain of these factors is discussed
below.

History of Operating and Net Losses

The Company generated a net loss of $31.8 million for 1996, $13.6 million for
1997 and reported a net loss for the six months ended June 30, 1998 of $9.4
million. The Company also incurred a net loss for each of the five years in the
period ended December 31, 1995. As of June 30, 1998, the Company had an
accumulated deficit of $72.5 million. There can be no assurance that the Company
will be profitable in the future.

Potential for Significant Fluctuations in Quarterly Operating Results;
Seasonality

The Company has experienced, and may in the future experience, significant
quarter to quarter fluctuations in revenues and results of operations. Such
fluctuations may result in volatility in the price of the Company's Common
Stock. Quarterly revenues and results of operations may fluctuate as a result of
a variety of factors, including the proportion of revenues attributable to
license fees versus services, the utilization of third parties to perform
services, the amount of revenue generated by resales of third party software,
changes in product mix, demand for the Company's products, the size and timing
of individual license transactions, the introduction of new products and product
enhancements by the Company or its competitors, changes in customer budgets,
competitive conditions in the industry and general economic conditions. Further,
the license of the Company's products generally involves a significant
commitment of capital by the customer and may be delayed due to time-consuming
authorization procedures within an organization. For these and other reasons,
the sales cycles for the Company's products are typically lengthy and subject to
a number of significant risks over which the Company has little or no control,
including customers' budgetary constraints and internal authorization reviews.
The Company has historically operated with little backlog, since its products
are generally shipped as orders are received. The Company has historically
recognized a substantial portion of its revenues in the last month of a quarter,
with these revenues frequently concentrated in the last week of the quarter.
License fees in any quarter are substantially dependent on orders booked and
shipped in the last month and last week of that quarter. Delays in the timing of
recognition of specific revenues may adversely and disproportionately affect the
Company's results of operations because a high percentage of the Company's
operating expenses are relatively fixed, planned expenditures are based
primarily on sales forecasts and only a small percentage of the Company's
operating expenses vary with its revenues. Accordingly, the Company believes
that period to period comparisons of results of operations are not necessarily
meaningful and should not be relied upon as an indication of future results of
operations. There can be no assurance that the Company will be profitable in any
future quarter.

The Company's business has experienced and is expected to continue to experience
significant seasonality, due in part to customer buying patterns. These
fluctuations are caused primarily by customer budgeting and purchasing patterns,
and by the Company's sales commission policies which generally compensate sales
personnel on the basis of quarterly and annual performance quotas. The Company
believes this pattern may continue in the future.



                                       16
<PAGE>



Due to the foregoing factors, the Company's operating results may be below the
expectations of public market analysts and investors, in some future quarter .
Such an event may have a material adverse effect on the price of the Company's
Common Stock. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

Litigation

During 1996, the Company and certain of its current and former officers and
directors were named as defendants in six civil suits filed as class actions on
behalf of individuals claiming to have purchased Computron Common Stock during
the time period from August 24, 1995, through January 27, 1997. The suits were
filed in the United States District Court for the District of New Jersey and
have been consolidated by court order into one suit captioned In re Computron
Software, Inc. Securities Litigation, Master File No-96-1911 (AJL). See "Item 3.
Legal Proceedings".

On March 6, 1998, the District Court issued a final order approving the
settlement of this class action securities litigation. See Footnote 3 to the
Consolidated Interim Financial Statements.

Historically, the Company has been involved in other disputes and/or litigation
encountered in its normal course of business. The Company believes that the
ultimate outcome of these proceedings will not have a material adverse effect on
the Company's business, financial condition and results of operations or cash
flows.

Management Changes

The Company experienced significant turnover of executive management during 1996
and early 1997. In February 1997, the Company added a number of key officers,
including its President and Chief Executive Officer and its Executive Vice
President and Chief Financial Officer, and later in 1997 added its Senior Vice
President of Operations and Senior Vice President of Sales and Marketing.
Failure to attract and maintain key management and employee personnel could have
material adverse effects on the quality of the Company's products, and the
Company's business and financial condition and results of operations.

Intense Competition

The financial applications and business software market is intensely competitive
and rapidly changing. A number of companies offer products similar to the
Company's products and target the same customers as the Company. The Company
believes its ability to compete depends upon many factors within and outside its
control, including the timing and market acceptance of new products and
enhancements developed by the Company and its competitors, product
functionality, performance, price, reliability, customer service and support,
sales and marketing efforts and product distribution. The primary competition
for Computron Financials is the financial applications software offered by
Oracle Corporation, PeopleSoft, Inc. and SAP AG. The principal competitors for
the Company's Computron Workflow and Computron COOL(TM) software are Eastman
Kodak Company ("Kodak"), which acquired the software division of Wang
Laboratories, Inc. ("Wang"), and FileNet Corporation. The principal competitors
for the Company's Computron Yorvik(TM) software are Project Software
Development, Inc. (PSDI), Indus International, Inc. (Indus) and others. The
Company has an agreement with Kodak pursuant to which Kodak has the right to
license Computron COOL software to third parties under its own 



                                       17
<PAGE>



private label and modify such software. Most of the Company's competitors are
substantially larger than the Company and have significantly greater financial,
technical, and marketing resources, and extensive direct and indirect channels
of distribution. As a result, they may be able to respond more quickly to new or
emerging technologies and changes in customer requirements, or to devote greater
resources to the development, promotion and sale of their products than the
Company. The Company's products also compete with products offered by other
vendors, and with proprietary software developed by third-party professional
service organizations and management information systems departments of
potential customers. Due to the relatively low barriers to entry in the software
market, the Company expects additional competition from other established and
emerging companies as the client/server applications software market continues
to develop and expand. The Company also expects that competition will increase
as a result of software industry consolidations. In addition, current and
potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their products to address the needs of the Company's prospective customers.
Accordingly, it is possible that new competitors or alliances among competitors
may emerge and rapidly acquire significant market share. Increased competition
is likely to result in price reductions, reduced gross margins and loss of
market share, any of which would have a material adverse effect on the Company's
business, results of operations and financial condition. There can be no
assurance that the Company will be able to compete successfully against current
or future competitors or that competitive pressures will not have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Business--Competition", in the Company's 1997 Annual Report on
Form 10-K.

Dependence on Principal Products

Substantially all of the Company's revenues are derived from the licensing of
Computron Financials, Computron Workflow, Computron COOL, Computron Yorvik and
fees from related services. These products and services are expected to continue
to account for substantially all of the Company's revenues for the foreseeable
future. Accordingly, the Company's future results of operations will depend, in
part, on achieving broader market acceptance of these products and services, as
well as the Company's ability to continue to enhance these products and services
to meet the evolving needs of its customers. A reduction in demand or increase
in competition in the market for financial applications or business software, or
decline in sales of such products and services, could have a material adverse
effect on the Company's business, results of operations and financial condition.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, in the Company's Annual Report on Form 10-K,
"Business--Products".

New Products and Rapid Technological Change; Risk of Product Defects,
Development Delays and Lack of Market Acceptance

The financial applications and business software market is characterized by
rapid technological change, changes in customer requirements, frequent new
product introductions and enhancements and emerging industry standards. Such
changes may or may not affect the Company's software performance, customization,
reporting functionality, or other business objectives, and may or may not render
the Company incapable of meeting future customer software demands. The
introduction of products embodying new technologies and emergence of new
industry standards can render existing products obsolete and unmarketable.
Accordingly, the life cycles of the Company's products are difficult to
estimate. The Company's future success 



                                       18
<PAGE>



will depend in part upon its ability to enhance its current products and to
develop and introduce new products that respond to evolving customer
requirements and keep pace with technological development and emerging industry
standards, such as new operating systems, hardware platforms, interfaces and
third party applications software. There can be no assurance that the Company
will be successful in developing and marketing product enhancements or new
products that respond to technological change, changes in customer requirements,
or emerging industry standards, that the Company will not experience
difficulties that could delay or prevent the successful development,
introduction and marketing of such products and enhancements, or that any new
products or enhancements that it may introduce will achieve market acceptance.
The inability of the Company, for technological or other reasons, to develop and
introduce new products or enhancements in a timely manner in response to
changing customer requirements, technological change or emerging industry
standards, would have a material adverse effect on the Company's business,
results of operations and financial condition.

Software products as complex as those offered by the Company often encounter
development delays and may contain undetected errors or failures when introduced
or when new versions are released. Such delays, errors or failures create a risk
that the software will not meet its stated functionality and could cause the
Company's future operating results to fall short of the published expectations
of certain public market financial analysts. From time to time, the Company
ports its products to various, new platforms, though no assurance can be given
concerning the successful development of the Company's software products on
these additional platforms or the performance characteristics of its
applications. In addition, the Company and its products and technologies rely
upon third-party products from hardware vendors, software vendors, RDBMS
vendors, tools vendors, reporting products, etc. Such dependencies may or may
not affect the Company's ability in the future to provide continued availability
and/or support for all Computron products. The Company has in the past
experienced delays in the development of software by third parties which
software is being licensed to and implemented by customers who are
simultaneously licensing and implementing the Company's products. Those delays
have resulted in delays in the development and shipment of the Company's
products. There can be no assurance that, despite testing by the Company and by
current and potential customers, errors will not be found in new products or
enhancements after commencement of commercial shipments, or that the Company
will not experience development delays, resulting in loss of or delay in market
acceptance of a new product or enhancement, which could have a material adverse
effect on the Company's business, results of operations and financial condition.
See "Business--Product Development," in the Company's 1997 Annual Report on Form
10-K.

Dependence on Proprietary Rights; Risks of Infringement

The Company's success is heavily dependent upon its proprietary technology. The
Company regards its software as proprietary, and relies primarily on a
combination of contractual provisions and trade secrets, copyright and trademark
law to protect its proprietary rights. The Company has no patents or patent
applications pending, and existing trade secrets and copyright laws afford only
limited protection. Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to copy aspects of the Company's
products or to obtain and use information that the Company regards as
proprietary. Policing unauthorized use of the Company's products is difficult,
and while the Company is unable to determine the extent to which piracy of its
software products exists, software piracy can be expected to be a persistent
problem. The Company makes source code available to certain of its customers
which may increase the likelihood of misappropriation or other misuse of the
Company's software. In 



                                       19
<PAGE>


addition, the laws of some foreign countries do not protect the Company's
proprietary rights to the same extent as do the laws of the United States. There
can be no assurance that the steps taken by the Company to protect its
proprietary rights will be adequate or that the Company's competitors will not
independently develop technologies that are substantially equivalent or superior
to the Company's technologies.

The Company has obtained a Federal registration for its trademark "Computron",
and its application for a Federal registration for its trademark "Yorvik" is
pending in the United States. In addition the Company has certain U.S. common
law rights, and rights under foreign laws in relation to its trademarks, service
marks and product names. Although the Company believes that the trademarks and
service marks it uses are distinct, there can be no assurance that the Company
will be able to register or protect such trademarks and service marks.

The Company does not believe that any of its products, trademarks or other
proprietary rights infringe the proprietary rights of third parties. However,
there can be no assurance that third parties will not assert infringement claims
against the Company in the future with respect to current or future products. As
the number of software products in the industry increases and the functionality
of these products further overlap, the Company believes that software developers
may become increasingly subject to infringement claims. Any such claims, with or
without merit, can be time consuming and expensive to defend, cause product
shipment delays or require the Company to enter into royalty or licensing
agreements. Such royalty and license agreements, if required, may not be
available on terms acceptable to the Company, or at all, which could have a
material adverse effect on the Company's business, results of operations and
financial condition. See "Business--Intellectual Property," in the Company's
1997 Annual Report on Form 10-K.

Security Risks

The Company's products provide security features designed to protect its users'
data from unauthorized retrieval or modification. Its built in security features
utilize the capabilities of its own applications, the client operating system
software, as well as the security features contained in the RDBMS platforms on
which the applications run. Computron's systems add additional capabilities to
those provided by the underlying security systems. Though the Company is not
aware of any violations of its application security architecture within its
installed base, and its security features are subject to constant review and
enhancement, no assurances can be given concerning the successful implementation
of security features and their effectiveness within a customer's operating
environment. In the event of an actual security breach, there may be a material
adverse effect on the Company's business, results of operations, and financial
condition.

Risks Associated with International Operations

The Company derived approximately $14.2 million, $21.3 million and $29.4 million
or 26.9%, 39.2% and 43.4% of its total revenues, from customers outside of the
United States in 1995, 1996, and 1997, respectively. The Company derived
approximately $15.2 million and $14.4 million or 45.2% and 48.3% of its total
revenues from customers outside the United States for the six months ended June
30, 1997 and 1998, respectively. The Company expects that such revenues will
continue to represent a significant percentage of its total revenues in the
future. The Company believes that its continued growth and profitability will
require expansion of its sales in 



                                       20
<PAGE>


international markets. There can be no assurance, however, that the Company will
be able to maintain or increase international market demand for its products and
services. Most of the Company's international license fees and services revenue
are denominated in foreign currencies. The Company does not currently hedge its
foreign exchange exposure. With respect to the Company's sales that are U.S.
dollar-denominated, decreases in the value of foreign currencies relative to the
U.S. dollar could make the Company's products less price competitive. Additional
risks inherent in the Company's international business activities generally
include unexpected changes in regulatory requirements, tariffs and other trade
barriers, costs of localizing products for foreign countries, lack of acceptance
of localized products in foreign markets, longer accounts receivable payment
cycles, difficulties in managing international operations, potentially adverse
tax consequences, restrictions on repatriation of earnings, reduced legal
protection of the Company's intellectual property, and the burdens of complying
with a wide variety of foreign laws. There can be no assurance that such factors
will not have a material adverse effect on the Company's future international
revenues and, consequently, on the Company's business, results of operations and
financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Expansion of Indirect Channels

An integral part of the Company's strategy is to expand indirect marketing
channels using systems integrators and to increase the proportion of the
Company's customers licensed through such indirect channels. The Company is
currently investing, and intends to continue to invest, significant resources to
develop indirect marketing channels. There can be no assurance that the Company
will be able to attract and maintain relationships with systems integrators that
will be able to market the Company's products effectively and will be qualified
to provide timely and cost-effective customer support and service. The Company's
agreements with such third parties are generally not exclusive and many of those
third parties also market competitive products. In many cases, these agreements
may be terminated by either party at any time without cause. The inability to
attract and retain systems integrators could have a material adverse effect on
the Company's business, results of operations and financial condition. See
"Business--Sales and Marketing" and "Strategic Alliances, " in the Company's
1997 Annual Report on Form 10-K.

Reliance on Certain Relationships

The Company relies on relationships with a number of consultants, systems
integrators and software and hardware vendors to enhance its product development
and marketing and sales efforts, to implement the Company's software products
and to support its customers. These relationships, many of which are not the
subject of formal written agreements, provide marketing and sales leads to the
Company's direct sales force, assistance in the Company's product development
process and assistance in the service and implementation of the Company's
products. There can be no assurance that these companies, most of which have
significantly greater financial and marketing resources than the Company, will
not develop or market software products which compete with the Company's
products in the future or will not otherwise discontinue their relationships
with or support of the Company. The failure by the Company to maintain its
existing relationships, or to establish new relationships in the future, because
of a divergence of interests, acquisition of one or more of these third parties
or other reason, could have a material adverse effect on the Company's business,
product development, results of operations, and financial condition.



                                       21
<PAGE>


The Company also licenses software from third parties which is incorporated into
its products. These licenses expire from time to time. In addition, the Company
generally does not have access to source code for the software supplied by these
third parties. Certain of these third parties are small companies that do not
have extensive financial and technical resources. If any of these relationships
were terminated or if any of these third parties were to cease doing business or
terminate the support of these products, the Company may be forced to expend
significant time and development resources to try to replace the licensed
software. Such an event would have a material adverse effect upon the Company's
business, results of operations and financial condition. See
"Business--Strategic Alliances," and "Intellectual Property," in the Company's
1997 Annual Report on Form 10-K.

Control by Existing Stockholders

The Company's executive officers, directors and affiliates together beneficially
own approximately 58% of the outstanding shares of Common Stock as of March 6,
1998. As a result, these stockholders are able to exercise control over matters
requiring stockholder approval, including the election of directors, and
mergers, consolidations and sales of all or substantially all of the assets of
the Company. This may prevent or discourage tender offers for the Company's
Common Stock unless the terms are approved by such stockholders.

Reliance on Key Personnel

The Company's future success will depend to a significant extent upon a number
of key management and technical personnel. The loss of the services of one or
more key employees could have a material adverse effect on the Company's
business. The Company is a party to employment agreements with certain key
personnel. In addition, the Company is the beneficiary of key-person life
insurance on the lives of certain key personnel. The Company believes that its
future success will also depend in large part upon its ability to attract and
retain highly skilled technical, management, sales and marketing personnel.
Competition for such personnel is intense, and the services of qualified
personnel are difficult to obtain and replace. There can be no assurance that
the Company will be successful in attracting and retaining the personnel
necessary to develop, market, service and support its products and conduct its
operations successfully. The inability of the Company to attract, hire,
assimilate and retain such personnel, or to increase revenues at a rate
sufficient to absorb the resulting increased expenses, would have a material
adverse effect on the Company's business, results of operations and financial
condition.

Possible Volatility of Stock Price

The trading price of the Company's Common Stock has been, and, in the future
could be, subject to significant fluctuations in response to variations in
quarterly operating results, the gain or loss of significant contracts, changes
in estimates of operating results by analysts, announcements of technological
innovations or new products by the Company or its competitors, general
conditions in the software and computer industries and other events or factors.
In addition, the stock market in general has experienced extreme price and
volume fluctuations which have affected the market price from many companies in
industries similar or related to that of the Company and which have been
unrelated to the operating performance of such companies. These market
fluctuations may adversely affect the market price of the Company's Common
Stock.

Anti-Takeover Effect of Certain Charter and By-Law Provisions and Delaware Law



                                       22
<PAGE>


The Company's Fourth Amended and Restated Certificate of Incorporation
authorizes the Board of Directors to issue, without stockholder approval,
5,000,000 shares of Preferred Stock with voting, conversion and other rights and
preferences that could materially and adversely affect the voting power or other
rights of the holders of Common Stock. Although the Company has no current plans
to issue any shares of Preferred Stock, the issuance of Preferred Stock or of
rights to purchase Preferred Stock could be used to discourage an unsolicited
acquisition proposal. In addition, the possible issuance of Preferred Stock
could discourage a proxy contest, make more difficult the acquisition of a
substantial block of the Company's Common Stock or limit the price that
investors might be willing to pay in the future for shares of the Company's
Common Stock. Certain provisions of the Company's by-laws and of Delaware law
applicable to the Company could delay or make more difficult a merger, tender
offer or proxy contest involving the Company.



                                       23
<PAGE>



                            COMPUTRON SOFTWARE, INC.
                                     Part II
                                Other Information

Item 1. Legal Proceedings

On March 6, 1998 the District Court issued a final order approving a settlement
in the class action securities litigation, In re Computron Software, Inc.
Securities Litigation, Master File No. 96-1911 (AJL), brought against the
Company and certain of its present and former officers and directors in the
United States District Court for the District of New Jersey.

The overall settlement includes consideration totaling $15 million for the
benefit of class members, including consideration of $6 million from the
Company, and payments from certain of its present and former officers and
directors, its former auditors, and the insurance companies that provided
Computron with directors and officers liability insurance. In return for the
payments by the insurance companies, the settlement also resolves a separate
lawsuit brought by the Company against the insurance companies. As its share of
the settlement, the Company has paid $1 million in cash, and will issue 1
million shares of Common Stock of the Company.

Class members will receive a non-transferable right to resell the stock received
in the settlement to a business trust formed by the Company at a price of $5.00
per share. The trust was capitalized by a contribution of $5 million by the
Company in March of 1998, which will be used to pay the claims of any class
members who receive stock in the settlement and exercise their right to resell
such stock to the trust according to the terms of the Stipulation of Settlement.
The exercise period during which class members may resell these shares to the
trust will be December 1, 1998 to December 21, 1998, or a later period if all
necessary court proceedings have not been completed by November 1, 1998. The
resale right will expire at the end of the exercise period, or earlier, as to
any shares issued in the settlement that are sold by class members prior to the
final day of the exercise period. The resale right will also expire earlier than
the exercise period if the closing price of Computron's Common Stock is higher
than $5.00 per share for 20 consecutive trading days. The Company recorded a
charge to operations of $6 million during the quarter ended September 30, 1997,
reflecting the Company's share of the settlement costs, excluding legal fees.

Historically, the Company has been involved in other disputes and/or litigation
encountered in its normal course of business. The Company believes that the
ultimate outcome of these proceedings will not have a material adverse effect on
the Company's business, financial condition and results of operations or cash
flows.

Item 4. Submission of Matters to a Vote of Securities Holders

At the Company's Annual Meeting of Stockholders on June 10, 1998 the
Stockholders voted to (i) approve the Company's 1998 Stock Option Plan to
reserve for issuance 1,500,000 shares of Common Stock, (17,200,756 votes for,
172,808 votes against, 30,390 votes abstained) and (ii) ratify the appointment
of KPMG Peat Marwick LLP as the Company's independent auditors for 1998
(21,520,484 votes for, 52,387 votes against, 18,490 votes abstained).

Further, at the Annual Meeting of Stockholders held on June 10, 1998, the
following directors were nominated and elected by the votes indicated:



                                       24
<PAGE>

<TABLE>
<CAPTION>

                                            Votes For                      Votes Withheld
                                            ---------                      --------------
<S>                                        <C>                             <C>
Elias Typaldos                              21,523,163                          68,198
John A. Rade                                21,523,163                          68,198
Gennaro Vendome                             21,523,163                          68,198
Gregory Kopchinsky                          21,523,163                          68,198
Robert Migliorino                           21,523,163                          68,198
Michel Berty                                21,523,163                          68,198
William E. Vogel                            21,523,163                          68,198
Edwin T. Brondo                             21,523,163                          68,198

</TABLE>

Item 6. Exhibits and Reports on Form 8-K
        a) Exhibits
            Exhibit 10.27 - 1998 Stock Option Plan
            Exhibit 10.28 - Amendment to the Loan and Security Agreement
            with Foothill Capital Corporation. 
            Exhibit 27 - Financial Data Schedule (Edgar filing only).
        b) Reports on Form 8-K - None






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<PAGE>


                            COMPUTRON SOFTWARE, INC.


                                    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.



                            COMPUTRON SOFTWARE, INC.




Date: August 13, 1998   By:  :/s/    Michael R. Jorgensen
                             --------------------------------------------------
                             Michael R. Jorgensen
                             Executive Vice President, Chief Financial Officer,
                             Treasurer and Secretary (Principal Financial and
                             Accounting Officer)



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