<PAGE>   1
                       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, 1997              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                                 (Zip Code)
     executive offices)

                                 (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 July 23, 1997


                Class                               Number of Shares Outstanding
---------------------------------------             ----------------------------
Common Stock, par value $0.01 per share                      20,836,780
<PAGE>   2
                            COMPUTRON SOFTWARE, INC.


                                      INDEX


<TABLE>
<CAPTION>
                                                                              PAGE
PART I     FINANCIAL INFORMATION                                             NUMBER
<S>                                                                          <C>

           Item 1. Financial Statements

                   Consolidated Balance Sheets
                     December 31, 1996 and June 30, 1997 ..................     3
                   Consolidated Statements of Operations
                     Three and six months ended June 30, 1996 and 1997 ....     5
                
                   Consolidated Statements of Cash Flows
                     Six months ended June 30, 1996 and 1997 ..............     6
                   Notes to Consolidated Interim Financial Statements .....     7

           Item 2. Management's Discussion and Analysis of Financial           
                     Condition and Results of Operations ..................    10

PART II    OTHER INFORMATION

           Item 1. Legal Proceedings ......................................    27

           Item 6. Exhibits and Reports on Form 8-K .......................    27

SIGNATURES

           Signatures .....................................................    28
</TABLE>


                                        2
<PAGE>   3
                            COMPUTRON SOFTWARE, INC.
                           CONSOLIDATED BALANCE SHEETS
                      (In thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                  December 31,    June 30,
                                                                                     1996          1997
                                                                                    -------       -------
<S>                                                                                 <C>           <C>
ASSETS
Current Assets:
      Cash and cash equivalents                                                     $19,730       $16,540
      Short-term investments                                                          1,073         1,835
      Restricted cash                                                                 3,081         1,293
      Accounts receivable, less reserves of $5,084 and $4,141 at December 31,
           1996 and June 30, 1997,
           respectively                                                              20,340        12,428
      Prepaid expenses and other current assets                                       1,988         2,179
                                                                                    -------       -------
                Total current assets                                                 46,212        34,275
                                                                                    -------       -------

Equipment and leasehold improvements, at cost:
      Computer and office equipment                                                  10,249        10,789
      Furniture and fixtures                                                          1,436         1,362
      Leasehold improvements                                                            300           479
                                                                                    -------       -------
                                                                                     11,985        12,630
      Less - accumulated depreciation and amortization                                7,598         8,634
                                                                                    -------       -------
                                                                                      4,387         3,996
                                                                                    -------       -------


Capitalized software development costs, less
      amortization of $3,095 and $ 3,410
      in 1996 and 1997, respectively                                                  2,068         1,753
Goodwill, less amortization of $535 and $860 in
      1996 and 1997, respectively                                                     2,580         2,083
Other assets                                                                          1,446         1,254
                                                                                    -------       -------
                                                                                    $56,693       $43,361
                                                                                    =======       =======
</TABLE>

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


                                        3
<PAGE>   4
                            COMPUTRON SOFTWARE, INC.
                           CONSOLIDATED BALANCE SHEETS
                      (In thousands, except per share data)
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                                    December 31,      June 30,
                                                                        1996            1997
                                                                      --------        --------
<S>                                                                   <C>             <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Current portion of long-term debt                               $    506        $     72
      Accounts payable                                                   3,975           4,437
      Accrued expenses                                                  17,420          12,837
      Note payable                                                       1,402              --
      Deferred revenue                                                  18,551          14,774
                                                                      --------        --------
           Total current liabilities                                    41,854          32,120
                                                                      --------        --------

Long-term liabilities:
      Long-term debt, less current portion                                  97              59
                                                                      --------        --------

Contingencies (Note 3)

Stockholders' equity:
      Preferred stock, $.01 par value, authorized 5,000 shares,
           no shares issued and outstanding                                 --              --
      Common stock, $ .01 par value, authorized 50,000
           shares;  20,801 shares issued and outstanding
           at December 31, 1996, and 20,836 shares
           at June 30, 1997                                                208             208
      Additional paid-in capital                                        63,879          63,891
      Accumulated deficit                                              (49,371)        (52,853)
      Cumulative translation  adjustment                                    26             (64)
                                                                      --------        --------
           Total stockholders' equity                                   14,742          11,182
                                                                      --------        --------
                                                                      $ 56,693        $ 43,361
                                                                      ========        ========
</TABLE>

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


                                        4
<PAGE>   5
                            COMPUTRON SOFTWARE, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                      Three Months Ended               Six Months Ended
                                                   ------------------------        ------------------------
                                                   June 30,        June 30,        June 30,        June 30,
                                                     1996            1997            1996            1997
                                                   --------        --------        --------        --------
<S>                                                <C>             <C>             <C>             <C>
Revenues:
    License fees                                   $  4,185        $  4,883        $  6,535        $ 10,512
    Services                                          9,042          11,923          14,361          23,085
                                                   --------        --------        --------        --------
      Total revenues                                 13,227          16,806          20,896          33,597
                                                   --------        --------        --------        --------

Operating expenses:
    Cost of license fees                                214             606           1,257             887
    Cost of services                                  6,960           6,871          10,863          13,433
    Sales and marketing                               6,671           3,427          12,427           8,381
    Research and development                          2,876           2,365           5,818           4,796
    General and administrative                        3,962           3,964           6,662           7,793
    Costs related to class action litigation            166           1,281             166           2,273
                                                   --------        --------        --------        --------
      Total operating expenses                       20,849          18,514          37,193          37,563
                                                   --------        --------        --------        --------
Operating loss                                       (7,622)         (1,708)        (16,297)         (3,966)
                                                   --------        --------        --------        --------
Other income (expense):
    Other income                                        601             255           1,239             548
    Other expense                                       (33)            (32)            (65)            (64)
                                                   --------        --------        --------        --------
      Other income (expense), net                       568             223           1,174             484
                                                   --------        --------        --------        --------
Loss before income taxes                             (7,054)         (1,485)        (15,123)         (3,482)
Income tax provision                                     32              --              32              --
                                                   --------        --------        --------        --------
Net loss                                           $ (7,086)       $ (1,485)       $(15,155)       $ (3,482)
                                                   ========        ========        ========        ========

Net loss per common
    and common stock equivalent                    $  (0.34)       $  (0.07)       $  (0.73)       $  (0.17)
                                                   ========        ========        ========        ========

Weighted average number of
      common and common equivalent
      shares                                         20,774          20,818          20,774          20,814
                                                   ========        ========        ========        ========
</TABLE>

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


                                        5
<PAGE>   6
                            COMPUTRON SOFTWARE, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 (In thousands, except share and per share data)
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                                          Six Months Ended   Six Months Ended
                                                                            June 30, 1996      June 30, 1997
                                                                            -------------      -------------
<S>                                                                         <C>                <C>
Cash flows from operating activities:                                                        
Net loss                                                                       $(15,155)          $ (3,482)
Adjustments to reconcile net loss to net                                                     
    cash flows provided by (used in) operating activities -                                  
             Depreciation and amortization                                        1,400              1,732
             Provision for doubtful accounts                                        477                  0
Changes in current assets and liabilities net of effect of acquisitions:                     
             Restricted cash                                                     (1,250)             1,788
             Accounts receivable                                                     68              7,912
             Prepaid expenses and other current assets                             (110)              (191)
             Accounts payable and accrued expenses                                  734             (3,367)
             Deferred revenue                                                     1,495             (3,777)
                                                                               --------           --------
Net cash flows provided by (used in) operating activities                       (12,341)               615
                                                                               --------           --------
                                                                                             
Cash flows from investing activities:                                                        
             Other assets                                                            87                192
             Capitalized software development costs                                (848)                --
             Purchase of equipment and leasehold improvements                    (1,361)              (762)
             Net cash paid for acquisitions in France and Germany                (1,373)                --
             Cash paid for acquisition costs                                       (111)                --
             Short-term investments                                              (4,946)              (762)
                                                                               --------           --------
Net cash flows used in investing activities                                      (8,552)            (1,332)
                                                                               --------           --------
                                                                                             
Cash flows from financing activities:                                                        
             Proceeds from exercise of stock options                                 72                 12
             Repayment of notes payable                                            (507)            (1,402)
             Payments of long term debt                                            (174)              (472)
             Decrease in liabilities related to acquisitions                       (500)              (754)
                                                                               --------           --------
Net cash flows used in financing activities                                      (1,109)            (2,616)
                                                                               --------           --------
Foreign currency exchange rate effects                                             (209)               143
                                                                               --------           --------
Net decrease in cash and cash equivalents                                       (22,211)            (3,190)
Cash and cash equivalents, beginning of period                                   45,119             19,730
                                                                               --------           --------
Cash and cash equivalents, end of period                                       $ 22,908           $ 16,540
                                                                               ========           ========
                                                                                             
Supplemental disclosures of cash flow information                                            
and noncash financing activities:                                                            
             Cash paid during the period for -                                               
                         Interest                                              $     78           $     12
                                                                               ========           ========
                         Income taxes                                          $     59           $     67
                                                                               ========           ========
</TABLE>

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


                                        6
<PAGE>   7
                            COMPUTRON SOFTWARE, INC.
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(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, Hong Kong, Poland, Singapore, and
the United Kingdom (collectively, the "Company"). These 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 financial statements.

These consolidated financial statements should be read in conjunction with the
financial statements and related notes included in the Company's 1996 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, 1997, are
not necessarily indicative of results to be expected for any future periods.


(a) REVENUE RECOGNITION

The Company recognizes revenue from non-cancelable software licenses upon
product shipment, provided collection is probable and no significant vendor and
post-contract customer obligations remain at the time of shipment. License fees
for contracts which contain uncertainties regarding collection or contain
significant vendor obligations are deferred and recognized when collection is
deemed probable and/or such obligations have been satisfied. The Company
accounts for insignificant vendor obligations by deferring a portion of the
revenue and recognizing it when the related services are performed. 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.


                                        7
<PAGE>   8
                            COMPUTRON SOFTWARE, INC.
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(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.

(2) RESTATED FINANCIAL RESULTS

The Company has restated its consolidated financial statements for each of the
four years ended December 31, 1995, and certain unaudited quarters therein, and
for each of the three unaudited quarters ended September 30, 1996. In the
opinion of management, all material adjustments necessary to correct the
financial statements have been recorded.

A summary of the impact of such restatements on the unaudited financial
statements for the three and six month periods ended June 30, 1996, is as
follows:

<TABLE>
<CAPTION>
                                 THREE MONTHS ENDED         SIX MONTHS ENDED
                                    JUNE 30, 1996             JUNE 30, 1996
                                    -------------             -------------
                               Previously       As       Previously       As
                                Reported     Restated     Reported     Restated
                                --------     --------     --------     --------
<S>                             <C>          <C>          <C>          <C>     
Total Revenue                   $ 13,875     $ 13,227     $ 23,253     $ 20,896
Loss from operations              (7,254)      (7,622)     (14,278)     (16,297)
Net Loss                          (6,718)      (7,086)     (13,136)     (15,155)
Net Loss per share                  (.32)        (.34)        (.63)        (.73)
</TABLE>


(3) CONTINGENCIES

During 1996, the Company and certain of its current and former officers and
directors were named as defendants in six class action civil suits. 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). A
Fourth Amended Consolidated Class Action Complaint was filed on May 28, 1997, on
behalf of all purchasers of Computron Common Stock during the period from August
24, 1995, to January 27, 1997. The complaint asserts claims under Sections 11
and 15 of the Securities Act of 1933, Sections 10 (b) and 20 (a) of the
Securities Exchange Act of 1934, as amended, Rule 10b-5 of the Securities and
Exchange Commission promulgated thereunder, and seeks unspecified compensatory
damages, attorneys' fees and costs. The Court has set a discovery cut-off date
for all non-expert discovery of November 28, 1997, and for all expert discovery
of December 31, 1997. The Court has scheduled trial for February 10, 1998.
Additionally, the Court has entered a stipulated order certifying the plaintiff
class to include purchasers of Computron Common Stock from August 24, 1995, to
January 27, 1997, including certain subclasses therein. The Company intends to
vigorously defend itself against the suits.


                                        8
<PAGE>   9
Since discovery only recently commenced, the Company is unable to assess the
likelihood of an adverse result in the case. There can be no assurances as to
the outcome of the case. The inability of the Company to resolve the claims that
are the basis for the case or to prevail in any related litigation could result
in the Company being required to pay substantial monetary damages for which the
Company may not be adequately insured, which could have a material adverse
effect on the Company's business, financial condition and results of
operations. In any event, the Company's defense of such litigation, even if the
outcome is favorable to the Company, has resulted, and will continue to result,
in substantial costs to the Company.                

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.


                                        9
<PAGE>   10
                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 1996 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 Maintenance and Work
Management Software.

During 1996, the Company acquired the Financial Services Division of Generale de
Service Informatique (GSI) based in Paris, France, and portions of the business
and 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, changes in
customers' budgets, competitive conditions in the industry and general economic
conditions.


                                       10
<PAGE>   11
Following the December 31, 1994, audit, the Company received a management letter
from its independent public accountants that identified material weaknesses in
the Company's internal control environment. During 1995, the Company experienced
significant turnover of its senior financial and accounting personnel which
management believes delayed the implementation of certain improvements and
resulted in material weaknesses in these same areas. Upon completion of the
December 31, 1995, audit, the Company again received a management letter from
its independent public accountants that identified material weaknesses similar
to those included in the 1994 management letter. In addition, the independent
public accountants recommended that the Company implement an internal accounting
control plan, approved by the Audit Committee of the Board of Directors, which
addresses these weaknesses and reorganize and upgrade the contracts
administration processes, procedures, controls and personnel to ensure proper
revenue recognition and financial reporting.

Upon completion of the December 31, 1996, audit, the Company received a
management letter which communicated material weaknesses similar to certain of
those included in the 1994 and 1995 management letters along with certain other
recommendations. In response to the independent public accountant's concerns and
as a result of turnover in its accounting and finance departments, the Company
has hired senior executives with software industry experience, including a Chief
Executive Officer, a Chief Financial Officer, a Vice President of Finance and
Administration, a Corporate Controller, several international Controllers and
Corporate Counsel. The Company expects to further strengthen the Company's
financial management and internal controls during the remainder of 1997.

The Company has restated its consolidated financial statements for each of the
four years in the period ended December 31, 1995, and certain unaudited quarters
therein and for each of the three unaudited quarters ended September 30, 1996.
The Company incurred net losses of $2.4 million for 1994, $8.6 million for 1995,
and $31.8 million for 1996, and reported a net loss of $ 3.5 million for the six
months ended June 30, 1997. As of June 30, 1997, the Company had an accumulated
deficit of $52.9 million. There can be no assurance that the Company will be
profitable in the future.


                                       11
<PAGE>   12
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,
                                        1996       1997       1996       1997
                                        -----      -----      -----      -----
<S>                                     <C>        <C>        <C>        <C>
Revenues:
  License fees .....................     31.6%      29.1%      31.3%      31.3%
  Services .........................     68.4       70.9       68.7       68.7
                                        -----      -----      -----      -----
     Total revenues ................    100.0      100.0      100.0      100.0

Operating expenses:
  Cost of license fees .............      1.6        3.6        6.0        2.6
  Cost of services .................     52.6       40.9       52.0       40.0
  Sales and  marketing .............     50.4       20.4       59.5       24.9
  Research and  development ........     21.7       14.1       27.8       14.3
  General and administrative .......     30.0       23.6       31.9       23.2
  Costs related to class action           1.3        7.6        0.8        6.8
    litigation .....................    -----      -----      -----      -----

     Total operating expenses ......    157.6      110.2      178.0      111.8

Operating loss .....................    (57.6)     (10.2)     (78.0)     (11.8)
Other income (expense) .............      4.3        1.3        5.6        1.4
                                        -----      -----      -----      -----
Loss before income taxes ...........    (53.3)      (8.9)     (72.4)     (10.4)
Income taxes (benefit)  ............      0.3         --        0.1         --
                                        -----      -----      -----      -----
          Net loss .................    (53.6)%     (8.9)%    (72.5)%    (10.4)%
                                        =====      =====      =====      =====
</TABLE>


TOTAL REVENUES

Total revenues increased 27.1% and 60.8% for the three and six months ended June
30, 1997, compared to the corresponding prior year periods. The increase was
attributable to an increase in both license fees and services revenue including
total revenues of $4.0 million from one customer which represented 11.9% of
total revenues during the six months ended June 30, 1997. Results of operations
for the three months ended June 30, 1997 include amounts associated with
operations in France and Germany which were acquired during the second and third
quarters of 1996, respectively.

The Company derived approximately $8.0 million and $15.2 million, or 47.5 % and
45.2 % of its total revenues, from customers outside of the United States for
the three and six months ended June 30, 1997, respectively, compared to $5.3
million, and $7.1 million, or 40.2% and 34.0%, 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. The Company does not currently hedge its foreign exchange exposure.
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>   13
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 increased
16.7 % and 60.9 % for the three and six months ended June 30, 1997,
respectively, as compared to the prior year periods. The increases were
attributable to increased demand for licenses, including license revenues of 
$3.5 million from one customer which represented 10.4% of total 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 increased 31.9 % and 60.7% for the three and six
months ended June 30, 1997, as compared to prior year periods. The increases
were attributable to increased training, consulting and maintenance services
which resulted from a larger installed base of the Company's products and
acquired operations in France and Germany which represented $2.8 million and
$5.7 million of service revenues during the three and six months ended June 30,
1997, compared to $2.0 million and $2.1 million for the comparable 1996 periods.
Absent the acquisition of operations in France and Germany, growth in service
revenue would have been 29.6% and 41.0% for the three and six months ending June
30, 1997, respectively, over the comparable prior year 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 months ended June 30,
1997, as compared to the corresponding prior year period, however, such costs
decreased during the six month period ended June 30, 1997. Cost of license fees
for the six months ended June 30, 1996, included amounts associated with third
party software resold to customers and for costs recorded on contracts, while
the associated license revenues were deferred due to uncertainties with respect
to collections. Cost of license fees for the three months ended June 30, 1997,
included increased costs associated with sales of third party software.


                                       13
<PAGE>   14
COST OF SERVICES

Cost of services consists primarily of personnel costs for training,
implementation, consulting and customer support. These costs include training
third party service and support organizations for the Company's products. The
following table sets forth, for the periods indicated, the relationship of cost
of services and services revenue:

<TABLE>
<CAPTION>
                                          Three Months Ended       Six Months Ended
                                                June 30,                June 30,
                                          ------------------       ----------------
                                            1996       1997        1996         1997
                                            ----       ----        ----         ----
                                             (In thousands, except percentage data)
<S>                                       <C>         <C>         <C>         <C>
Services revenue .....................    $ 9,042     $11,923     $14,361     $23,085
Cost of services .....................      6,960       6,871      10,863      13,433
Cost of services as a percentage
  of services revenue ................     77.0%       57.6%       75.6%       58.2%
</TABLE>

For the three and six months ended June 30, 1997, cost of services as a
percentage of services revenue decreased compared to the three and six months
ended June 30, 1996, primarily as a result of efficiencies obtained through the
outsourcing of training services and a significant increase in maintenance
revenue for which there are lower associated customer support costs as compared
to implementation, consulting activities.

SALES AND MARKETING

Sales and marketing expenses consist primarily of salaries and commissions as
well as travel and promotional expenses. The following table sets forth, for the
periods indicated, the relationship of sales and marketing expenses to total
license fee revenues:

<TABLE>
<CAPTION>
                                                        Three Months Ended           Six Months Ended
                                                             June 30,                    June 30,
                                                        ------------------           ----------------
                                                         1996        1997           1996          1997
                                                         ----        ----           ----          ----
                                                            (In thousands, except percentage data)
<S>                                                   <C>          <C>           <C>           <C>      
Sales and marketing expense ......................    $   6,671    $   3,427     $  12,427     $   8,381
Percentage increase (decrease) over the comparable
     period in the prior year ....................         25.4%       (48.6)%        38.8%        (32.6)%
Sales and marketing expense as a percentage
     of total license fee revenue ................        159.4%        70.2%        190.2%         79.7%
</TABLE>


Sales and marketing expenses decreased as a percentage of total license fee
revenue for the three and six months ended June 30, 1997, as compared to the
prior year periods, primarily due to a decrease in personnel of approximately
44% as of June 30, 1997, as compared to June 30, 1996, sales and marketing
programs initiated during the 1996 periods which were not repeated in 1997 and
an increase in license fee revenues during the 1997 periods.

RESEARCH AND DEVELOPMENT

Research and development expenses consist primarily of engineering personnel
costs, costs of third party equipment and 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


                                       14
<PAGE>   15
capitalized in accordance with Statement of Financial Accounting Standards No.
86. Such capitalized software development costs are generally amortized over
periods not exceeding three years.

Research and development expenses (net of capitalized software development
costs) decreased 17.8% and 17.6%, respectively during the three and six months
ended June 30, 1997, as compared to the prior year periods. The Company
capitalized software developments costs of $0.4 million and $0.8 million in the
three and six months ended June 30, 1996 and none in the 1997 periods. 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 represented 23.6% and 23.2% of total revenues for
the three and six months ended June 30, 1997, compared to 30.0% and 31.9% of
total revenues for the three and six months ended June 30, 1996. General and
administrative expenses increased 17.0% for the six months ended June 30, 1997,
as compared to prior year period ended June 30, primarily due to acquired
infrastructure in France and Germany. General and administrative
expenses for the three and six months ended June 30, 1997, include $1.5 million
and $2.6 million associated with the acquired operations in France and Germany,
compared to $0.4 million and $0.4 million for the comparable 1996 periods.
Absent the acquisition of operations in France and Germany, general and
administrative expenses would have decreased $1.1 million in both the three and
six month periods ended June 30, 1997, as compared to the corresponding prior
year periods.


COSTS RELATED TO CLASS ACTION LITIGATION

Litigation costs associated with the class action civil suits increased 
substantially during the three and six month periods ended June 30, 1997, 
as compared to the corresponding prior year periods due to the recent
commencement of discovery (see Note 3).

OTHER INCOME (EXPENSE)

Other income, decreased to $0.2 million and $0.5 million for the three and
six months ended June 30, 1997, respectively, compared to $0.6 million and $1.2
million for the comparable prior year periods due to lower invested balances of
cash, cash equivalents and short-term investments.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1997, the Company had cash, cash equivalents, restricted cash and
short-term investments of $19.7 million and working capital of $2.2 million. As
of June 30, 1997, the Company maintained a $10 million line of credit with a
bank, secured by the pledge of $10 million in certificates of deposit. At June
30, 1997, the Company had no borrowings under the line of credit and there were
$1.3 million of outstanding letters of credit under this facility. The Company
was advised by the bank in March 1997 that it was in technical default
of the line of credit reporting covenants and cured these technical defaults in
June 1997. In July 1997, the Company entered into a fully secured $5 million
line of credit agreement with another bank, 


                                       15
<PAGE>   16
replacing its existing line. The line of credit expires in December 1998 and may
be used for borrowings or to secure letters of credit.

The Company's operating activities provided (used) cash of ($12.3) million and
$0.6 million for the six months ended June 30, 1996 and 1997, respectively. Net
cash used by operations in the six months ended June 30, 1996 was comprised
primarily of the net loss offset by an increase in deferred revenue and
depreciation and amortization. Net cash provided by operations during the six
months ended June 30, 1997 was comprised of decreases in accounts receivable
offset by the net loss, decreases in accounts payable, accrued expenses and
deferred revenue.

The Company's investing activities used cash of $8.6 million and $1.3 million
for the six months ended June 30, 1996 and 1997, respectively. The principal
uses of cash during 1996 were increases in short-term investments, capitalized
software costs and equipment purchases. The principal uses of cash during 1997
were increases in short-term investments, and equipment purchases.

Cash used by financing activities was $1.1 million and $2.6 million during the
six months ended June 30, 1996 and 1997, respectively and related mainly to the
repayment of debt.

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 1
of Part II. Legal Proceedings." Since discovery only recently commenced, the
Company is unable to assess the likelihood of an adverse result in the case.
There can be no assurances as to the outcome of the case. The inability of the
Company to resolve the claims that are the basis for the case or to prevail in
any related litigation could result in the Company being required to pay
substantial monetary damages for which the Company may not be adequately
insured, which could have a material adverse effect on the Company's business,
financial condition and results of operations. In any event, the Company's
defense of such litigation, even if the outcome is favorable to the Company, has
resulted, and will continue to result, in substantial costs to the Company.

The Company has no significant capital commitments. The Company's aggregate
minimum operating lease payments for the remainder of 1997 and 1998 are expected
to be approximately $3.8 million. The Company believes that its available cash
and cash equivalents, together with investment income and cash flows from
operations, will be sufficient to meet its cash requirements at least through
1997.

QUARTERLY RESULTS

The Company has experienced, and may in the future continue to experience,
significant quarter to quarter fluctuations in results of operations and
revenues. 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 lengthy sales cycle
for the Company's products, the proportion of revenue attributable to license
fees versus 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 


                                       16
<PAGE>   17
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, 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 relatively
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, and 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 compensate sale personnel
on the basis of quarterly and annual performance quotas. The Company believes
this pattern may continue in the future.

Due to the foregoing factors, it is likely that in some future quarter the
Company's operating results will be below the expectations of public market
analysts and investors. Such an event would have a material adverse effect on
the price of the Company's Common Stock.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION AND
THE MARKET PRICE OF SECURITIES

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 $8.6 million for 1995, $31.8 million for
1996 and reported a net loss for the six months ended June 30, 1997 of $3.5
million. The Company also incurred a net loss for each of the five years in the
period ended December 31, 1994. As of June 30, 1997, the Company had an
accumulated deficit of $52.9 million. There can be no assurance that the Company
will be profitable in the future.


                                       17
<PAGE>   18
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 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, 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 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, and planned expenditures, such as continued expansion of the Company's
sales force, 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 compensate sales personnel
on the basis of quarterly and annual performance quotas. The Company believes
this pattern may continue in the future.

Due to the foregoing factors, it is likely that in some future quarter the
Company's operating results will be below the expectations of public market
analysts and investors. Such an event would have a material adverse effect on
the price of the Company's Common Stock.

Delisting from Nasdaq and Market Illiquidity; No Assurance of Relisting on
Nasdaq

In January 1997, the Company announced that information had come to the
attention of the Board of Directors that may impact previously issued financial
statements and the Company's independent auditors withdrew their reports on the
Company's previously reported financial statements. The Nasdaq Stock Market
subsequently delisted the Company's Common Stock from quotation on the Nasdaq
National Market System ("Nasdaq"). Trading in the Common Stock of the Company is
now being conducted on the over-the-counter market in the "pink sheets" and on
the NASD's "Electronic Bulletin Board." Consequently, the liquidity of the
Company's Common Stock has been seriously impaired 


                                       18
<PAGE>   19
which may result in lower prices for the Company's Common Stock than might
otherwise be obtained and could also result in a larger spread between the bid
and asked prices for the Company's Common Stock.

In addition, since the Common Stock is delisted from trading on Nasdaq and the
trading price of the Common Stock is less than $5.00 per share, trading in the
Common Stock is also subject to the requirements of Rule 15g-9 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Under such
rule, broker/dealers who recommend such low-priced securities to persons other
than established customers and accredited investors must satisfy special sale
practice requirements, including a requirement that they make an individualized
written suitability determination for the purchaser and receive the purchaser's
written consent prior to the transaction. The Securities Enforcement Remedies
and Penny Stock Reform Act of 1990 also requires additional disclosure in
connection with any trades involving a stock defined as a penny stock
(generally, according to recent regulations adopted by the Securities and
Exchange Commission, any equity security not traded on an exchange or quoted on
Nasdaq that has a market price of less than $5.00 per share, subject to certain
exceptions), including the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith. Such requirement could severely limit the liquidity of the Company's
Common Stock.

The Company has restated its previously reported financial statements and the
independent auditors have reissued their reports. The Listing and Hearing Review
Committee of the Nasdaq Stock Market denied the Company's appeal of the decision
to delist the Company's stock from Nasdaq. The Company will continue its efforts
towards having its stock traded on a national market but there can be no
assurance that such efforts will be successful.

Litigation

During 1996, the Company and certain of its current and former officers and
directors were named as defendants in six class action civil suits. 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). A
Fourth Amended Consolidated Class Action Complaint was filed on May 28, 1997, on
behalf of all purchasers of Computron Common Stock during the period from August
24, 1995, to January 27, 1997. See Note 3 and "Item I of Part II, Legal
Proceedings" for further discussion.

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

During the past three years, the Company has experienced significant growth.
This growth has placed a significant strain on the Company's management,
administrative and operational resources and financial control systems.
Simultaneously, the Company has experienced significant turnover of executive
management. The Company has recently added a number of key officers, including
its President and Chief Executive Officer, Executive Vice President and Chief
Financial Officer and Vice President, Finance and Administration, in February
1997. The Company's future results of operations will depend in part on its
ability to strengthen its senior management group, 


                                       19
<PAGE>   20
and on the ability of its officers and key employees to improve its management,
administrative, operational and financial reporting systems and to expand,
train, manage and retain its employee base. The Company's inability to manage
these issues effectively could have a material adverse effect on the quality of
the Company's products, the Company's ability to retain key personnel and the
Company's business and financial condition and results of operations.

Reporting, Operating and Control Environment

Following the audits of the Company's consolidated financial statements for
1994 and 1995, the Company received management letters from its independent
public accountants which enumerated material weaknesses in the Company's
financial and accounting processes, controls, reporting systems and procedures.
The Company's independent public accountants highlighted the Company's need for
additional financial and accounting personnel with software industry
experience. In addition, the Company's independent public accountants noted (i)
the need for uniformity in the language of its contracts and recommended that
the Company standardize the terms of its license agreements and expand its
internal contract review and approval procedures, (ii) deficiencies in the
organization of customer and contract files and recommended that the Company
improve and standardize record keeping, (iii) the need for expanded and
formalized accounts receivable collection procedures, (iv) the need for
improved documentation and record keeping relating to consulting service
projects, and (v) the need to develop policies and procedures to accurately
identify the date when technological feasibility of developed software has been
attained and to improve the documentation and record keeping for capitalized
software development costs and to do so on a timely basis. In addition, the
1995 letter, recommended that the Company implement improved internal
accounting control procedures approved by the Audit Committee of the Board of
Directors and reorganize and upgrade the contracts administration processes,
procedures and personnel to ensure proper revenue recognition and financial
reporting.
        
Upon completion of the December 31, 1996, audit, the Company received a
management letter which communicated material weaknesses similar to certain of
those included in the 1994 and 1995 management letters along with other
recommendations. In response to the independent public accountant's concerns and
as a result of turnover in its accounting and finance departments, the Company
has hired senior executives with software industry experience, including a Chief
Executive Officer, a Chief Financial Officer, a Vice President of Finance and
Administration, a Corporate Controller, several international Controllers, and
Corporate Counsel. The Company expects to further strengthen the Company's
financial management and internal controls during the remainder of 1997.

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 are 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 software are


                                       20
<PAGE>   21
products offered by Eastman Software (formerly Wang Software) and FileNet
Corporation. The Company has entered into an agreement with Eastman pursuant to
which Eastman has the right to license Computron COOL software to third parties
under its own 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 established, 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.


                                       21
<PAGE>   22
Dependence on Principal Products

Substantially all of the Company's revenues are derived from the licensing of
Computron Financials, Computron Workflow, Computron COOL, Maintenance and Work
Management 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 business, results
of operations and financial condition.

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. 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 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. 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.


                                       22
<PAGE>   23
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 contract, copyright and trademark law, trade secrets,
confidentiality agreements and contractual provisions 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 under limited circumstances which may
increase the likelihood of misappropriation or other misuse of the Company's
software. In 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"
in the United States. In addition, the Company has certain common law rights in
relation to its other trademarks, service marks and product names. Although the
Company believes that its trademarks and service marks are distinct, there can
be no assurances that the Company will be able to protect its trademarks and
service marks.

The Company is not aware 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.

Risks Associated with International Operations

The Company derived approximately $9.1 million, $14.2 million, and $21.3 million
or 28.0%, 26.9%, and 39.2% of its total revenues, from customers outside of the
United States in 1994, 1995, and 1996, respectively. The company derived
approximately $7.1 million and $15.2 million or 34.0% and 45.2% of its total
revenues, from customers outside of the United States for the six months ended
June 30, 1996, and 1997, 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 international markets. The Company intends to
continue to expand its operations outside of the United States and enter
additional international markets, which will require significant management


                                       23
<PAGE>   24
attention and financial resources. During 1996, the Company acquired certain
operations, customers and products of AT&T ISTEL, in Essen, Germany, and the
Financial Software Service Division of Generale de Service Informatique, in
Paris, France. 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 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.

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 retain 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.

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,
results of operations and financial condition.

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 


                                       24
<PAGE>   25
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, the Company may be forced to
expend significant time and development resources 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.

Control by Existing Stockholders

At December 31, 1996, the Company's senior management, directors and affiliates
together beneficially owned approximately 65.6 % of the outstanding shares of
Common Stock. 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 earning estimates 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 of the securities of 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

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 


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<PAGE>   26
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.


                                       26
<PAGE>   27
                            COMPUTRON SOFTWARE, INC.

                                     Part II

                                Other Information

ITEM 1. LEGAL PROCEEDINGS

During 1996, the Company and certain of its current and former officers and
directors were named as defendants in six class action civil suits. 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). A
Fourth Amended Consolidated Class Action Complaint was filed on May 28, 1997, on
behalf of all purchasers of Computron Common Stock during the period from August
24, 1995, to January 27, 1997. The complaint asserts claims under Sections 11
and 15 of the Securities Act of 1933, Sections 10 (b) and 20 (a) of the
Securities Exchange Act of 1934, as amended, Rule 10b-5 of the Securities and
Exchange Commission promulgated thereunder, and seeks unspecified compensatory
damages, attorneys' fees and costs. The Court has set a discovery cut-off date
for all non-expert discovery of November 28, 1997, and for all expert discovery
of December 31, 1997. The Court has scheduled trial for February 10, 1998.
Additionally, the Court has entered a stipulated order certifying the plaintiff
class to include purchasers of Computron Common Stock from August 24, 1995, to
January 27, 1997, including certain subclasses therein. The Company intends to
vigorously defend itself against the suits.

Since discovery only recently commenced, the Company is unable to assess the
likelihood of an adverse result in the case. There can be no assurances as to
the outcome of the case. The inability of the Company to resolve the claims that
are the basis for the case or to prevail in any related litigation could result
in the Company being required to pay substantial monetary damages for which the
Company may not be adequately insured, which could have material adverse effect
on the Company's business, financial condition and results of operations. In any
event, the Company's defense of such litigation, even if the outcome is
favorable to the Company, has resulted, and will continue to result, in
substantial costs to the Company.

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 6. EXHIBITS AND REPORTS ON FORM 8-K

        a) Exhibits - None
        b) Reports on Form 8-K - None


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<PAGE>   28
                            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 7, 1997                By: /s/ Michael R. Jorgensen
                                       -----------------------------------
                                       Michael R. Jorgensen
                                       Executive Vice President, Chief
                                       Financial Officer,  and Treasurer 
                                       (Principal Financial and Accounting
                                       Officer)


                                       28