<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-Q


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

                 For Quarterly Period Ended December 31, 2001

                                      OR

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


                        Commission File Number: 0-28900


                           Rogue Wave Software, Inc.
            (Exact name of registrant as specified in its charter)

           Delaware                                         93-1064214
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                           Identification No.)

5500 Flatiron Parkway, Boulder, Colorado                       80301
(Address of principal executive offices)                     (Zip Code)


                                (303) 473-9118
             (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
                                         -----     -----

Indicate the number of shares outstanding of each of the registrant's classes of
Common Stock, as of the latest practicable date.

           Class                                Outstanding at January 31, 2002
Common Stock, $0.001 par value                             10,820,000
<PAGE>

                           ROGUE WAVE SOFTWARE, INC.
                                   FORM 10-Q

                                     INDEX



                                                                        Page No.
                                                                        --------

PART I - FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements:

         Condensed Consolidated Balance Sheets at December 31, 2001
         and September 30, 2001....................................         3

         Condensed Consolidated Statements of Operations and Other
         Comprehensive Income (Loss) for the Three Months Ended
         December 31, 2001 and 2000................................         4

         Condensed Consolidated Statements of Cash Flows for the
         Three Months Ended December 31, 2001 and 2000.............         5

         Notes to Condensed Consolidated Financial Statements......         6

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations.......................        11

         Factors That May Affect Future Results....................        17

Item 3.  Quantitative and Qualitative Disclosures About Market
         Risk......................................................        22

PART II - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K..........................        23

SIGNATURES.........................................................        26

                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS


                           ROGUE WAVE SOFTWARE, INC.
                                AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                           DECEMBER 31,           SEPTEMBER 30,
                                                                               2001                    2001
                                                                         --------------          --------------
                               ASSETS                                    (unaudited)
<S>                                                                      <C>                     <C>
Current assets:
   Cash and cash equivalents.........................................         $13,841                 $17,047
   Short-term investments............................................          17,264                  17,150
   Accounts receivable, net..........................................          10,971                  12,193
   Prepaid expenses and other current assets.........................           1,092                     940
   Deferred income taxes.............................................           2,728                   2,828
                                                                              -------                 -------
   Total current assets..............................................          45,896                  50,158
Deferred income taxes................................................           1,395                     789
Equipment, net.......................................................           4,619                   5,114
Other assets, net....................................................             625                     776
                                                                              -------                 -------
   Total assets......................................................         $52,535                 $56,837
                                                                              =======                 =======

               LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable..................................................         $   526                 $   821
   Accrued expenses..................................................           6,627                   6,927
   Deferred revenue..................................................          10,084                  11,801
                                                                              -------                 -------
   Total current liabilities.........................................          17,237                  19,549
                                                                              -------                 -------
Stockholders' equity:
   Common stock......................................................              11                      11
   Additional paid-in capital........................................          40,677                  41,573
   Accumulated deficit...............................................          (4,988)                 (4,030)
   Accumulated other comprehensive loss..............................            (402)                   (266)
                                                                              -------                 -------
   Total stockholders' equity........................................          35,298                  37,288
                                                                              -------                 -------
   Total liabilities and stockholders' equity........................         $52,535                 $56,837
                                                                              =======                 =======
</TABLE>

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

                                       3
<PAGE>

                           ROGUE WAVE SOFTWARE, INC.
                                AND SUBSIDIARIES

          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER
                          COMPREHENSIVE INCOME (LOSS)

                (IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)

<TABLE>
<CAPTION>
                                                                               THREE MONTHS ENDED
                                                                                   DECEMBER 31,
                                                                             ------------------------
<S>                                                                          <C>              <C>
                                                                               2001             2000
                                                                             -------          -------
Revenue:
 License revenue.................................................            $ 6,070          $ 6,788
 Service and maintenance revenue.................................              5,876            7,507
                                                                             -------          -------
   Total revenue.................................................             11,946           14,295
                                                                             -------          -------
Cost of revenue:
 Cost of license revenue.........................................                169              259
 Cost of service and maintenance revenue.........................              2,006            2,917
                                                                             -------          -------
   Total cost of revenue.........................................              2,175            3,176
                                                                             -------          -------
   Gross profit..................................................              9,771           11,119
                                                                             -------          -------
Operating expenses:
 Product development.............................................              3,244            3,794
 Sales and marketing.............................................              6,037            6,099
 General and administrative......................................              1,628            1,148
 Severance and goodwill amortization.............................                562               --
                                                                             -------          -------
   Total operating expenses......................................             11,471           11,041
                                                                             -------          -------
   Income (loss) from operations.................................             (1,700)              78
Other income, net................................................                260              482
                                                                             -------          -------
   Income (loss) before income taxes.............................             (1,440)             560
Income tax expense (benefit).....................................               (484)             196
                                                                             -------          -------
   Net income (loss).............................................            $  (956)         $   364
                                                                             =======          =======
Basic and diluted income (loss) per share........................             $(0.09)           $0.03
                                                                             =======          =======
Shares used in basic per share calculation.......................             10,916           10,909
Shares used in diluted per share calculation.....................             10,916           10,972

   Net income (loss).............................................            $  (956)         $   364

Other comprehensive income (loss):
 Foreign currency translation losses.............................               (136)             (85)
                                                                             -------          -------
   Total other comprehensive income (loss).......................            $(1,092)         $   279
                                                                             =======          =======
</TABLE>

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

                                       4
<PAGE>

                           ROGUE WAVE SOFTWARE, INC.
                                AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                           (IN THOUSANDS, UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED
                                                                                         DECEMBER 31,
                                                                                      ----------------------
                                                                                        2001          2000
                                                                                      --------      --------
<S>                                                                                   <C>            <C>
Cash flows from operating activities:
   Net income (loss)...........................................................       $  (956)       $   364
   Adjustments to reconcile net income (loss) to net cash from (used in)
   operating activities:
   Depreciation and amortization...............................................           987            916
   Loss on disposal of assets..................................................            45             --
   Changes in assets and liabilities:
    Accounts receivable........................................................         1,280           (435)
    Prepaid expenses and other current assets..................................          (154)           230
    Deferred income taxes......................................................          (506)            --
    Other noncurrent assets....................................................            48            (48)
    Accounts payable and accrued expenses......................................          (662)          (841)
    Deferred revenue...........................................................        (1,757)            32
                                                                                      -------        -------
      Net cash from (used in) operating activities.............................        (1,675)           218
                                                                                      -------        -------
Cash flows from investing activities:
    Short-term investments.....................................................          (114)        (5,101)
    Equipment acquisitions.....................................................          (363)          (712)
                                                                                      -------        -------
      Net cash used in investing activities....................................          (477)        (5,813)
                                                                                      -------        -------
Cash flows from financing activities:
    Treasury stock purchase....................................................          (939)            --
                                                                                      -------        -------
      Net cash from financing activities.......................................          (939)            --
                                                                                      -------        -------
Effect of exchange rate changes on cash and cash equivalents...................          (115)            16
                                                                                      -------        -------
      Net change in cash and cash equivalents..................................        (3,206)        (5,579)
Cash and cash equivalents at beginning of period...............................        17,047         21,823
                                                                                      -------        -------
Cash and cash equivalents at end of period.....................................       $13,841        $16,244
                                                                                      =======        =======
</TABLE>


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

                                       5
<PAGE>

                           ROGUE WAVE SOFTWARE, INC.
                                    NOTES TO
                  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                (IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)


1.   Basis of Presentation

        The accompanying unaudited financial statements have been prepared in
  conformity with generally accepted accounting principles. Certain information
  or footnote disclosures normally included in financial statements prepared in
  accordance with generally accepted accounting principles have been condensed
  or omitted, pursuant to the rules and regulations of the Securities and
  Exchange Commission.  In the opinion of management, the statements include all
  adjustments necessary (which are of a normal and recurring nature) for the
  fair presentation of the results of the interim periods presented.  These
  financial statements should be read in conjunction with Rogue Wave Software,
  Inc.'s ("Rogue Wave" or the "Company") consolidated financial statements and
  notes thereto (the "Consolidated Financial Statements") for the year ended
  September 30, 2001, included in the Company's annual report on Form 10-K.  The
  interim results presented are not necessarily indicative of results for any
  subsequent quarter or for the fiscal year ending September 30, 2002.

2.   Revenue Recognition

        The Company derives revenues from licensing its software products and
  providing related maintenance and support, and training and consulting
  services.  License revenue is recognized according to the criteria of SOP
  97-2, as amended. Revenue is recognized upon execution of a license agreement
  or signed written contract with fixed or determinable fees, shipment or
  electronic delivery of the product, and collection of the resulting receivable
  is probable. Maintenance and service revenue includes maintenance revenue that
  is deferred and recognized ratably over the maintenance period. Service
  revenue, including training and consulting services, is recognized as services
  are performed. In instances where the Company enters into customized software
  consulting contracts, the fees are recognized using the percentage of
  completion method of contract accounting in accordance with SOP No. 81-1,
  "Accounting for Performance of Construction-Type and Certain Product-Type
  Contracts".

3.   Basic and Diluted Earnings (Loss) Per Share

        Basic earnings (loss) per share for the three months ended December 31,
  2001 and 2000 is computed on the basis of the weighted average number of
  common shares outstanding. Diluted earnings (loss) per share is computed on
  the basis of the weighted average number of common shares outstanding plus the
  effect of outstanding stock options using the "treasury stock" method unless
  the impact is anti-dilutive. The difference between basic earnings per share
  and diluted earnings per share is due to the effect of outstanding stock
  options. For the three months ended December 31, 2000, the dilutive effect of
  outstanding options was 63 shares. As a result of the net loss incurred for
  the three months ended December 31, 2001, all options are anti-dilutive and,
  accordingly, the number of shares used in computing the basic and diluted
  shares is the same. For the three months ended December 31, 2001, options to
  acquire 55 shares were excluded from the calculation because of their anti-
  dilutive effect.

                                       6
<PAGE>

        Calculation of basic and diluted income (loss) per share is as follows:

<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED
                                                                              DECEMBER 31,
                                                                          -------------------------
                                                                             2001             2000
                                                                           -------          -------
<S>                                                                       <C>              <C>
Numerator:
 Net income (loss)................................................         $  (956)         $   364
                                                                           =======          =======
Denominator:
 Historical common shares outstanding for basic and diluted
  income (loss) per share at beginning of period..................          11,090           10,909
 Weighted average number of common equivalent shares purchased
  during the period...............................................            (174)              --
                                                                           -------          -------
 Denominator for basic and diluted income (loss) per share -
  weighted average shares.........................................          10,916           10,909
                                                                           =======          =======
 Incremental common shares attributable to shares issuable under
  equity incentive plans (Treasury Stock Method)..................              --               63
                                                                           -------          -------
 Denominator for diluted net income (loss) per share - weighted
  average shares..................................................          10,916           10,972
                                                                           =======          =======
 Basic and diluted earnings (loss) per share......................          $(0.09)           $0.03
                                                                           =======          =======
</TABLE>

4.   Common Stock Repurchase

        In September 2001, the Board of Directors authorized the Company to
  repurchase up to an aggregate of $5.0 million or 2.5 million shares of its
  Common Stock. At December 31, 2001, the Company had repurchased 312,700 shares
  for $939, at prices ranging from $2.50 - $3.48 per share.

5.   Restructuring and Severance

  Stingray

        In early May 2001, as part of an ongoing effort to optimize its
  corporate organizational structure and in conjunction with continuing cost
  containment programs, the Company restructured its Stingray business unit. As
  part of this restructuring, during the three months ended June 30, 2001, the
  Company recognized a restructuring charge of $621, related primarily to
  severance costs associated with the termination of approximately 50 employees
  as well as certain closure costs, including those related to facility lease
  costs. In the fourth fiscal quarter of 2001, the Company incurred additional
  restructuring costs of $456 as a result of an asset impairment charge and
  finalization of severance costs; resulting in a total of $1,077 restructuring
  charge in fiscal year 2001. The asset impairment charge was the result of the
  Company's review of its furniture and fixtures in the Stingray facility. The
  carrying amount of the assets prior to the asset impairment charge was $402
  and the Company plans to dispose of the assets before the end of fiscal 2002.
  The Stingray products, which primarily consist of development tools for
  Windows Programmers, will continue to be sold and supported by the Company.

                                       7
<PAGE>

        The following table summarizes restructuring costs by primary component
  and related reserve at December 31, 2001. The remaining restructuring reserve
  of $111 at December 31, 2001 is expected to be paid by March 31, 2002.

<TABLE>
<CAPTION>
                                                      EMPLOYEE
                                                    SEVERANCE &      SITE CLOSURE
                                                      RELATED            COSTS           OTHER          TOTAL
                                                  -----------------------------------------------------------------
<S>                                                <C>               <C>               <C>            <C>
Stingray restructuring estimate at
  May 31, 2001............................            $ 432              $154           $ 35          $ 621
Cash payments.............................             (314)               --            (29)          (343)
                                                      -----              ----           ----          -----
Balance at June 30, 2001..................              118               154              6            278
Cash payments.............................              (84)              (69)            (6)          (159)
Adjustments for revised estimates.........              132                --             --            132
                                                      -----              ----           ----          -----
Balance at September 30, 2001.............              166                85             --            251
Cash payments.............................              (55)              (84)            --           (139)
Adjustments for revised estimates.........               (1)               --             --             (1)
                                                      -----              ----           ----          -----
Balance at December 31, 2001..............            $ 110              $  1           $ --          $ 111
                                                      =====              ====           ====          =====
</TABLE>

  Severance

        During the three months ended December 31, 2001, the employment of two
  senior managers was terminated. As a result, the Company recognized and
  reserved approximately $505 in severance costs for the three months ended
  December 31, 2001.

6. Foreign Exchange Contracts

        The Company accounts for foreign exchange contracts under Statement of
  Financial Accounting Standards ("SFAS") No. 133 "Accounting for Derivative
  Instruments and Hedging Activities," as amended by SFAS No. 137 and SFAS No.
  138, which establishes accounting and reporting standards for derivative
  instruments, including foreign exchange forward contracts.

        The Company enters into foreign exchange forward contracts to hedge
  certain operational and balance sheet exposures, primarily intercompany
  royalty fees, from changes in foreign currency exchange rates. At inception,
  such contracts are designated as cash flow hedges. To achieve hedge
  accounting, contracts must reduce the foreign currency exchange rate risk
  otherwise inherent in the amount and duration of the hedged exposure and
  comply with established company risk management policies. The Company does not
  enter into any derivative transactions for speculative purposes. Hedging
  contracts generally mature within 60 to 425 days.

        When hedging the intercompany receivable exposure, the effective portion
  of the derivative's gain or loss is initially reported as a component of other
  comprehensive income and subsequently reclassified into earnings in the period
  in which earnings are impacted by the variability of the cash flow of the
  hedged item. The ineffective portion of the gain or loss is reported in
  current period earnings immediately. The realized gains and losses are
  recorded in "Other income-net" in the statement of operations.

        The notional amount of foreign exchange contracts outstanding at
  December 31, 2001 was $909 with a fair value of $4. The fair value of the
  forward contracts is estimated based on quoted exchange rates at December 31,
  2001. The effective or unrealized gain related to the outstanding contracts
  was $6 and the ineffective or realized gain was $11 at December 31, 2001. Also
  during the

                                       8
<PAGE>

  three months ended December 31, 2001 and 2000, certain foreign currency
  contracts matured resulting in a total realized net gain of $4 and $64,
  respectively.

7.   Worldwide Operations

        Revenue by geographic area for the three months ended December 31, 2001
  and 2000 was 69% and 70% in the United States, 22% and 29% in Europe, and 9%
  and 1% in Japan, respectively.

        Information regarding worldwide operations is as follows:

<TABLE>
<CAPTION>
                                                        UNITED
                                                        STATES    EUROPE     JAPAN     ELIMINATIONS     TOTAL
                                                       --------   -------   --------   -------------   --------
<S>                                                    <C>        <C>       <C>        <C>             <C>
December 31, 2001, and for the quarter then ended:
 Revenue to unaffiliated customers..................   $ 8,234    $2,599     $1,113         $    --    $11,946
 Intercompany transfers.............................     1,372        --         --          (1,372)        --
                                                       -------    ------     ------         -------    -------
  Net revenue.......................................     9,606     2,599      1,113          (1,372)    11,946
 Operating income (loss)............................    (2,007)      (71)       378              --     (1,700)
 Long-lived assets..................................     4,299       320         --              --      4,619

December 31, 2000, and for the quarter then ended:
 Revenue to unaffiliated customers..................   $ 9,971    $4,212     $  112         $    --    $14,295
 Intercompany transfers.............................     1,680        --         --          (1,680)        --
                                                       -------    ------     ------         -------    -------
  Net revenue.......................................    11,651     4,212        112          (1,680)    14,295
 Operating income (loss)............................      (794)      914        (42)             --         78
 Long-lived assets..................................     4,646       475         51              --      5,172
</TABLE>

8.   New Accounting Pronouncements

        On June 30, 2001, the Financial Accounting Standards Board ("FASB")
  issued SFAS 141, "Business Combinations", and SFAS 142, "Goodwill and Other
  Intangible Assets".  Major provisions of these Statements are as follows:  all
  business combinations initiated after June 30, 2001 must use the purchase
  method of accounting; the pooling of interests method of accounting is
  prohibited except for transactions initiated before July 1, 2001; intangible
  assets acquired in a business combination must be recorded separately from
  goodwill if they arise from contractual or other legal rights or are separable
  from the acquired entity and can be sold, transferred, licensed, rented or
  exchanged, either individually or as part of a related contract, asset or
  liability; goodwill and intangible assets with indefinite lives are not
  amortized but are tested for impairment annually, except in certain
  circumstances, and whenever there is an impairment indicator and all acquired
  goodwill must be assigned to reporting units for purposes of impairment
  testing and segment reporting.  Effective with adoption, goodwill will no
  longer be subject to amortization.  SFAS 142 will be effective for the Company
  for fiscal year beginning October 1, 2002.  Management does not believe
  adoption of these statements will have a material impact on the Company's
  financial position, results of operations or cash flows.

        In August 2001, the FASB issued SFAS 143, "Accounting for Asset
  Retirement Obligations".  SFAS 143 requires entities to record the then fair
  value of a liability for legal obligations associated with the retirement
  obligations of tangible long-lived assets in the period in which it is
  incurred and the corresponding cost capitalized by increasing the carrying
  amount of the related asset.  The liability will continue to be accreted to
  the fair value at the time of settlement over the useful life of the asset
  with the capitalized cost being depreciated over the useful life of the
  related asset.  If the liability is settled for an amount other than the
  recorded amount, a gain or loss is recognized.  The standard is effective for
  the Company beginning fiscal year October 1, 2002.  Management does not

                                       9
<PAGE>

  believe that this statement will have a material impact on the Company's
  financial position, results of operations, or cash flows.

        In October 2001, the FASB issued SFAS 144, "Accounting for the
  Impairment or Disposal of Long-Lived Assets." SFAS 144 supersedes SFAS 121,
  "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
  to Be Disposed Of," and replaces the accounting and reporting provisions for
  segments of a business to be disposed of under Accounting Principles Board
  ("APB") Opinion No. 30, "Reporting Results of Operations--Reporting the
  Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
  Infrequently Occurring Events and Transactions." SFAS 144 maintains the
  requirement that an impairment loss be recognized for a long-lived asset to be
  held and used if its carrying value is not expected to be recoverable from its
  undiscounted cash flows. SFAS 144 requires that long-lived assets to be
  disposed of, other than by sales, be considered held and used until actually
  disposed of and requires that depreciable lives be revised in accordance with
  APB Opinion No. 20, "Accounting Changes." SFAS 144 also requires that long-
  lived assets to be disposed of by sale be measured at the lower of carrying
  amount or fair value less selling costs, but retains the requirement to report
  discontinued operations separately from continuing operations and extends that
  reporting to a component of an entity that has either been disposed of or is
  classified as held for sale. The provisions of SFAS 144 are effective for the
  Company for the fiscal year beginning October 1, 2002. Management does not
  believe adoption of this statement will have a material impact on the
  Company's financial position, results of operations or cash flows.

                                       10
<PAGE>

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

     Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in this section, as well as in
the section "Risk Factors" and "Business" in the Company's Annual Report on Form
10-K for the year ended September 30, 2001. Readers are cautioned not to place
undue reliance on these forward-looking statements, which reflect management's
analysis only as of the date hereof. The Company undertakes no obligation to
publicly release the results of any revision to these forward-looking
statements, which may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events. The following
discussions should be read in conjunction with our condensed consolidated
financial statements and the notes thereto.

OVERVIEW

     Rogue Wave was founded in 1989, and is a leading provider of object-
oriented software technology.  Customers around the world rely on Rogue Wave
products to build comprehensive application solutions.  Rogue Wave believes that
application development efforts are most effective when businesses are able to
concentrate on the domain specific application capabilities that enables them to
differentiate themselves from their competitors.  Rogue Wave offers proven
software components and frameworks that enhance developer productivity for
implementing common application functionality.  The Company's software also
handles the complex architectural issues key to successful application
implementation, but which most often fall outside a company's in-house
development expertise.  Rogue Wave is committed to providing products and
services that reduce the effort, time to market, and overall project risk
associated with the development of comprehensive application solutions.

     To date, the Company's revenue has been derived from licenses of its
software products and related maintenance, training and consulting services.
License revenue is recognized upon execution of a license agreement or signed
written contract with fixed or determinable fees, shipment or electronic
delivery of the product, and when collection of the resulting receivable is
probable.  Allowances for credit risk and for estimated future returns are
provided upon shipment.  Returns to date have not been material.  Service and
maintenance revenue consists of fees that are charged separately from the
product licenses.  Maintenance revenue consists of fees for ongoing support and
product updates and is recognized ratably over the term of the contract, which
is one to three years.  Service revenue consists of training and consulting
services and, when appropriate, is recognized utilizing the percentage of
completion revenue recognition method.  The Company's revenue recognition
policies are in compliance with SOP 97-2, as amended, and 98-9, related to
Software Revenue Recognition.

     The Company's products are marketed to information technology development
managers, independent software vendors, value added resellers, original
equipment manufacturers and professional programmers in all industry and
geography segments.  The Company's products are designed to enable customers to
construct robust applications faster, with higher quality, and lower risk,
resulting in significant cost savings.  These products provide customers with
greater independence from hardware platforms, operating systems and other
vendor-specific dependencies.

                                       11
<PAGE>

THE ROGUE WAVE STRATEGY AND BUSINESS MODEL

     Rogue Wave's strategic objective is to provide technology and services that
allow customers to optimize productivity when building software solutions to
address their business requirements.  Simply, the Company strives to create
products that efficiently and effectively align underlying information
technology with a customers' application of that technology.

     The Company's history is rich in object oriented C++, the language of
choice for large scale, business critical applications. As described below,
during fiscal 2001, Rogue Wave announced the launch of the SourcePro C++ product
line, reflecting a substantive alteration to the Company's core products and
business model.  Additionally, the Company has made significant investment in
Java and XML initiatives.  Most recently, Rogue Wave has initiated the pursuit
of two new technologies, the first addressing the Web integration needs of the
C++ developer and the second involving an Internet shared memory space for
transparent collaborative applications, providing an area on the Internet where
XML documents can be written or read, subject to appropriate security
constraints.

     Evolution of the market place has created the need for higher order
solutions.  Customers are less interested in atomic software components and more
interested in technology suites and frameworks that address a higher percentage
of their needs.  Customer purchasing practices have migrated away from the
individual developer, with a greater focus on project, division or enterprise
requirements.  As a result, during fiscal 2001, Rogue Wave began migrating from
concentrating on the sale of individual developer licenses to a business model
centered on the deployment of the customers' finished applications.  In order to
minimize the impact on long-term customers, existing licensing models were
maintained for historical products while introducing the new license model for
new customer contracts.  The transition is expected to be completed in fiscal
2002.

Rogue Wave(R) SourcePro(TM) C++ Product Launch

     Effective May 1, 2001, Rogue Wave announced the launch of the SourcePro C++
product line, reflecting a substantive alteration to the Company's core products
business model.  The SourcePro C++ products, which integrate the majority of
formerly offered Rogue Wave C++ component technology as well as adding features
not previously available, are designed to provide more comprehensive solutions
while optimizing the use of the Company's core C++ products.  SourcePro C++ is
comprised of four products: SourcePro Core, SourcePro DB, SourcePro Net and
SourcePro Analysis.  Pricing of the SourcePro C++ products is based on a
customer value model, which considers scope of deployment, including operating
systems, in contrast to the historically employed "license per developer"
approach.  Overall, the new model allows customers greater flexibility in their
utilization of the Company's products.  Adoption of the new core business model,
including the transition to the new SourcePro C++ product line, and pricing
strategy is not expected to have an adverse impact on the Company's business,
financial condition or results of operations.

Large Scale Object Solutions

     Large Scale Object Solutions ("LSOS") is a set of technologies targeted at
customers with specific needs: running very high throughput systems deployed
against a relational database.  LSOS offers services such as a hierarchical
object model, object history, object reconciliation, and a method for storing
objects on relational databases in order to maximize performance.  While our
first implementation is in the financial industry addressing single day trade
settlements (T+1) challenges, LSOS is a horizontal framework, usable in many
industries.  Our objective is to expand into additional financial application
projects, then branch out in other industries.

                                       12
<PAGE>

International Operations

     Rogue Wave continues to develop its worldwide presence.  International
revenue accounted for approximately 31% and 30% for the three months ended
December 31, 2001 and 2000, respectively.  Since 1996, the Company has expanded
its European operations with distribution channels in the United Kingdom,
Germany, France, Italy and the Benelux countries.  In 2000, the Company
established offices in Japan and Hong Kong.  The Company anticipates further
expansion in foreign countries, including the Australian and Asian markets, and
expects that international license and service and maintenance revenue will
account for an increasing portion of its total revenue in the future.  The
Company has committed and continues to commit significant management time and
financial resources to developing direct and indirect international sales and
support channels.  There can be no assurance, however, that the Company will be
able to maintain or increase international market demand for its products.

     The majority of the Company's international revenue is generated primarily
by the Company's European subsidiaries.  The Company has entered into forward
foreign exchange contracts to reduce certain risks associated with currency
fluctuations.  Although exposure to currency fluctuations to date has been
insignificant, to the extent international revenue is denominated in local
currencies, foreign currency translations may contribute to significant
fluctuations in, and could have a material adverse effect upon, the Company's
business, financial condition and results of operations.  See "Factors That May
Affect Future Results."

                                       13
<PAGE>

RESULTS OF OPERATIONS

     The following table sets forth for the periods indicated the percentage of
net revenue represented by certain line items in the Company's Condensed
Consolidated Statements of Operations.

<TABLE>
<CAPTION>

                                                                                   THREE MONTHS ENDED
                                                                                       DECEMBER 31,
                                                                                  -----------------------
                                                                                   2001              2000
<S>                                                                               <C>                <C>
Revenue:
 License revenue.....................................................                51%               47%
 Service and maintenance revenue.....................................                49                53
                                                                                   ----              ----
   Total revenue.....................................................               100               100
                                                                                   ----              ----
Cost of revenue:
 Cost of license revenue.............................................                 1                 2
 Cost of service and maintenance revenue.............................                17                20
                                                                                   ----              ----
   Total cost of revenue.............................................                18                22
                                                                                   ----              ----
   Gross profit......................................................                82                78
                                                                                   ----              ----
Operating expenses:
 Product development.................................................                27                26
 Sales and marketing.................................................                50                43
 General and administrative..........................................                14                 8
 Severance and goodwill amortization.................................                 5                --
                                                                                   ----              ----
   Total operating expenses..........................................                96                77
                                                                                   ----              ----
   Income (loss) from operations.....................................               (14)                1
Other income, net....................................................                 2                 3
                                                                                   ----              ----
   Income (loss) before income taxes.................................               (12)                4
Income tax expense (benefit).........................................                (4)                1
                                                                                   ----              ----
   Net income (loss).................................................               (8)%                3%
                                                                                   ====              ====

</TABLE>

Revenue

     Total revenue for the three months ended December 31, 2001 and 2000 was
$11.9 million and $14.3 million, respectively, representing a decrease of 16%.
License revenue decreased $718 or 11% compared to the same quarter last year.
The decrease in license revenue is due to the expected softness in overall
demand primarily resulting from a weakened economy and a lengthening of the
sales cycle for the SourcePro products, launched in May 2001.

     Service and maintenance revenue for the three months ended December 31,
2001 and 2000 was $5.9 million and $7.5 million, respectively, representing a
decrease of $1.6 million or 22%.  The decrease in service and maintenance
revenue was primarily attributable to the decrease in revenue received from two
significant customized consulting contracts signed in the first quarter of 2001.
Although the initial projects were comprised entirely of consulting revenue, the
Company expects future sales of the finished resulting application to increase
license revenue.

                                       14
<PAGE>

Cost of Revenue

     Cost of license revenue consists primarily of amortization of purchased
software, materials, packaging and freight expense.  Cost of license revenue for
the three months ended December 31, 2001 and 2000 was $169 and $259,
respectively, representing a decrease of $90 or 35%.  The decrease in cost of
license revenue during the three months ended December 31, 2001 is primarily the
result of a decrease in the number of manuals produced due to an increase in
product offerings delivered through the Internet versus physically shipped as
well as a decrease in purchased software amortization costs.

     Cost of service and maintenance revenue consists primarily of personnel
related and facilities costs incurred in providing customer support and training
services as well as third party costs incurred in providing training and
consulting services.  Cost of service and maintenance revenue for the three
months ended December 31, 2001 and 2000 was $2.0 million and $2.9 million,
respectively, representing a decrease of $911 or 31%.  The decrease in the three
months ended December 31, 2001 cost of service and maintenance revenue was due
primarily to a decrease in the utilization of third-party consulting services
and the additional costs associated with two significant customized software
consulting contracts entered into in the first quarter of fiscal 2001.  The
Company expects that the cost of such revenue will increase as a percentage of
total revenue in fiscal 2002.

Operating Expenses

     Product development expenses for the three months ended December 31, 2001
and 2000 were $3.2 million and $3.8 million, respectively, representing a
decrease of $550 or 14%.  As a percent of revenue, product development expense
for the three months ended December 31, 2001 and 2000 was 27% and 26%,
respectively.  While the Company anticipates that it will continue to devote
substantial resources to product development and that product development
expenses will continue to increase, the Company does not believe such expenses
will increase as a percentage of total revenue for fiscal 2002.  All costs
incurred in the research and development of software products and enhancements
to existing products have been expensed as incurred.

     Sales and marketing expenses for the three months ended December 31, 2001
and 2000 were $6.0 million and $6.1 million, respectively, representing a
decrease of $62 or 1%.  As a percentage of total revenue, sales and marketing
expenses were 50% and 43%, respectively. The current fiscal year decreases in
sales and marketing expense is due to the decrease in sales and marketing
personnel and related costs.  While the Company expects that sales and marketing
expenses will grow, the Company does not believe such expenses will increase as
a percentage of total revenue for fiscal 2002.

     General and administrative expenses for the three months ended December 31,
2001 were $1.6 million as compared to $1.1 million for the three months ended
December 31, 2000, representing an increase of $480 or 48%.  Overall, general
and administrative expenses increased when compared to the same period in the
prior fiscal year, as a result of a decrease of approximately $575 in certain
reserves in the first quarter of fiscal 2001, following the resolution of
various potential employment and product distribution contract issues. Expenses
are not expected to vary significantly as a percentage of total revenue for
fiscal 2002.

     Severance and goodwill expenses totaling approximately $562 were recognized
during the three months ended December 31, 2001.  The Company incurred severance
of $505 for the termination of two senior managers and approximately $57 related
to goodwill amortization.

                                       15
<PAGE>

Other Income, Net

     Other income for the three months ended December 31, 2001 and 2000
primarily consists of interest income on the Company's cash, cash equivalents
and short-term investments. The decrease in other income of $222 or 46% for the
three months ended December 31, 2001, compared to the three months ended
December 31, 2000, is primarily due to a decrease in investments and interest
rates during the current fiscal quarter as compared to the same fiscal quarter
last year.

Income Tax Expense (Benefit)

     Income taxes for the three month period ended December 31, 2001 are
provided during interim periods based on the expected tax rate for the year.
The provision for income taxes for the three month period ended December 31,
2001, is based on an estimated annual effective tax rate of approximately 34%,
which is applied to the income (loss) before income taxes and includes federal,
state and foreign income taxes.

     The Company has recorded a deferred tax asset of $4,123 reflecting the
benefit of $6,274 loss carryforwards and various tax credits and temporary
differences, which expire in varying amounts between 2003 and 2021.  Realization
is dependent on generating sufficient taxable income prior to expiration of the
loss carryforwards.  Although realization is not assured, management believes it
is more likely than not that all of the deferred tax asset will be realized.

LIQUIDITY AND CAPITAL RESOURCES

     The decrease in cash flows from operations during the three months ended
December 31, 2001 compared to the three months ended December 31, 2000 was
primarily due to the net loss and a decrease in deferred revenue. The decrease
in deferred revenue is due to the timing of the completion of contracts with a
decrease in new maintenance, support and service revenue signed in the first
quarter of 2002 compared to the preceding quarters.

     The Company's investing activities consist primarily of the purchase and
sale of short-term investments and purchases of equipment.  During the three
months ended December 31, 2001, net cash used in investing activities was $477
million, which included the purchase of short-term investments of $114 and the
purchase of equipment of $363.

     In September 2001, the Board of Directors authorized the Company to
repurchase up to an aggregate of $5.0 million or 2.5 million shares of its
Common Stock.  At December 31, 2001, the Company had repurchased 312,700 shares
for $939 at prices ranging from $2.50 - $3.48 per share.

     The Company believes that expected cash flows from operations combined with
existing cash and cash equivalents and short-term investments will be sufficient
to meet its cash requirements for the foreseeable future.  See "Factors That May
Affect Future Results."

                                       16
<PAGE>

FACTORS THAT MAY AFFECT FUTURE RESULTS

     In evaluating the Company's business, investors should carefully consider
the following factors in addition to the other information presented in this
report.

OUR FUTURE OPERATING RESULTS ARE DIFFICULT TO PREDICT AND ACTUAL FINANCIAL
RESULTS MAY VARY FROM OUR EXPECTATIONS, WHICH COULD HAVE AN ADVERSE EFFECT ON
OUR STOCK PRICE.

     Our future operating results are difficult to predict due to a variety of
factors, many of which are outside of our control.  These factors include:

 .    overall economic conditions of the US and the rest of the world;
 .    demand for our products and services;
 .    level of product and price competition;
 .    size, type and timing of individual license transactions;
 .    delay or deferral of customer implementations;
 .    our success in expanding our direct sales force and indirect distribution
     channels;
 .    timing of new product introductions and product enhancements;
 .    levels of international sales;
 .    changes in our pricing policy or that of our competitors;
 .    publication of opinions about us, our products and object-oriented,
     component technology by industry analysts;
 .    our ability to retain key employees and hire new employees;
 .    our ability to develop and market new products and control costs; and
 .    our ability to effectively deploy our new strategy including our new
     business model.

     One or more of the foregoing factors may cause our operating expenses to be
disproportionately high during any given period or may cause our net revenue and
operating results to fluctuate significantly.  Based on the preceding factors,
we may experience a shortfall in revenue or earnings or otherwise fail to meet
public market expectations, which could materially adversely affect our
business, financial condition and the market price of our Common Stock.

OUR OPERATING RESULTS IN ONE OR MORE FUTURE PERIODS MAY FLUCTUATE SIGNIFICANTLY
AND COULD CAUSE OUR STOCK PRICE TO BE VOLATILE.

     We generally ship orders as received, which means that quarterly revenue
and operating results depend substantially on the volume and timing of orders we
receive during the quarter.  Sales volume is difficult to forecast due to a
number of reasons, many of which are outside our control.  Such reasons include:

 .    lack of a reliable means to assess overall customer demand;
 .    historically we have earned a substantial portion of our revenue in the
     last weeks, or even days, of each quarter;
 .    larger customer orders are subject to long sales cycles and are frequently
     delayed; and
 .    our service and maintenance revenue tends to fluctuate as consulting
     contracts are undertaken, renewed, completed or terminated.

                                       17
<PAGE>

     We base operating expenses on anticipated revenue trends and a high
percentage of these expenses are relatively fixed.  As a result, a delay in the
recognition of revenue from a limited number of transactions could cause
significant variations in operating results from quarter to quarter and could
lead to significant losses.  Accordingly, operating results and growth rates for
any particular quarter or other fiscal period may not be indicative of future
operating results.  Furthermore, fluctuations in our quarterly operating results
may result in volatility in the price of our Common Stock in the future.

OUR FAILURE TO MANAGE PLANNED GROWTH COULD ADVERSELY AFFECT OUR ABILITY TO
INCREASE REVENUE.

     Our business has evolved significantly in recent years, placing a strain on
our management systems and resources.  To manage future growth, we must continue
to improve our financial and management controls, reporting systems and
procedures on a timely basis and expand, train and manage our employee work
force.  If we fail to manage our growth effectively, our business, financial
condition and results of operations could be materially and adversely affected.

FAILURE TO ATTRACT AND RETAIN KEY EMPLOYEES WILL ADVERSELY AFFECT OUR BUSINESS.

     Our future performance depends significantly upon the continued service of
our key technical, sales and senior management personnel, none of whom is bound
by an employment agreement.  We believe that the technological and creative
skills of our personnel are essential to establishing and maintaining a
leadership position, particularly in light of the fact that our intellectual
property, once sold to the public market, is easily replicated.  The loss of the
services of one or more of our executive officers or key technical personnel may
have a material adverse effect on our business.

     Our future success also depends on our continuing ability to attract and
retain highly qualified technical, sales and managerial personnel.  In the past,
we have experienced some difficulty in attracting key personnel.  Competition
for such personnel is intense and there can be no assurance that we can retain
key employees or that we can attract, assimilate or retain other highly
qualified personnel in the future.

VARIABILITY OF OUR SALES CYCLES MAKE IT DIFFICULT TO FORECAST QUARTERLY REVENUE
AND OPERATING RESULTS, MAKING IT LIKELY THAT PERIOD-TO-PERIOD COMPARISONS ARE
NOT NECESSARILY MEANINGFUL AS AN INDICATOR OF FUTURE RESULTS.

     We distribute our products primarily through two different direct sales
channels, a telesales force and a field sales force, each of which is subject to
a variable sales cycle.  Products sold by our telesales force may be sold after
a single phone call or may require several weeks of education and negotiation
before a sale is made.  As such, the sales cycle associated with telesales
typically ranges from a few days to two months.  On the other hand, the purchase
of products from our field sales force is often an enterprise-wide decision and
may require the sales person to provide a significant level of education to
prospective customers regarding the use and benefits of our products.  For these
and other reasons, the sales cycle associated with the sale of our products
through our field sales force typically ranges from two to six months and is
subject to a number of significant delays over which we have little or no
control.  As a result, quarterly revenue and operating results are variable and
are difficult to forecast, and we believe that period-to-period comparisons of
quarterly revenue are not necessarily meaningful and should not be relied upon
as an indicator of future revenue.

                                       18
<PAGE>

WE FACE RISKS INVOLVING FUTURE BUSINESS ACQUISITIONS.

     We frequently evaluate strategic opportunities available to us and may in
the future pursue additional acquisitions of complementary technologies,
products or businesses.  Future acquisitions of complementary technologies,
products or businesses will result in the diversion of management's attention
from the day-to-day operations of our business and may include numerous other
risks, including difficulties in the integration of the operations, products and
personnel of the acquired companies.  Future acquisitions may also result in a
dilutive issuance of equity securities, the incurrence of debt, and amortization
expenses related to intangible assets.  Our failure to successfully manage
future acquisitions may have a material adverse effect on our business and
financial results.

DOING BUSINESS OUTSIDE THE UNITED STATES INVOLVES NUMEROUS FACTORS THAT COULD
NEGATIVELY AFFECT OUR FINANCIAL RESULTS.

     A significant portion of our revenue is derived from international sources.
To service the needs of these customers, we must provide worldwide product
support services.  We have expanded, and intend to continue expanding, our
international operations and plan to enter additional international markets.
This will require significant management attention and financial resources that
could adversely affect our operating margins and earnings.  We may not be able
to maintain or increase international market demand for our products.  If we do
not, our international sales will be limited, and our business, operating
results and financial condition could be materially and adversely affected.

     Our international operations are subject to a variety of risks, including
(1) foreign currency fluctuations, (2) economic or political instability, (3)
shipping delays and (4) various trade restrictions.  Any of these risks could
have a significant impact on our ability to deliver products on a competitive
and timely basis.  Significant increases in the level of customs duties, export
quotas or other trade restrictions could also have an adverse effect on our
business, financial condition and results of operations.  In situations where
direct sales are denominated in a foreign currency, any fluctuation in foreign
currency or the exchange rate may adversely affect our business, financial
condition and results of operations.

WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY OR OPERATE
OUR BUSINESS WITHOUT INFRINGING ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.

     We rely primarily on a combination of copyright, trademark and trade secret
laws, confidentiality procedures and contractual provisions to protect our
proprietary rights.  We also believe that factors such as the technological and
creative skills of our personnel, new product developments, frequent product
enhancements, name recognition and reliable product maintenance are essential to
establishing and maintaining a technological leadership position.  We seek to
protect our software, documentation and other written materials under trade
secret and copyright laws, which afford only limited protection.  Despite our
efforts to protect our proprietary rights, unauthorized parties may attempt to
copy aspects of our products or to obtain and use information that we regard as
proprietary.  The nature of many of our products requires the release of the
source code to customers.  As such, policing unauthorized use of our products is
difficult, and while we are unable to determine the extent to which piracy of
our products exists, software piracy can be expected to be a persistent problem.
In addition, the laws of some foreign countries do not protect our proprietary
rights as fully as do the laws of the United States.  There can be no assurance
that our means of protecting our proprietary rights in the United States or
abroad will be adequate or that competition will not independently develop
similar technology.

     Although we do not believe that we are infringing any proprietary rights of
others, third parties may claim that we have infringed their intellectual
property rights.  Furthermore, former employers of

                                       19
<PAGE>

our former, current or future employees may assert claims that such employees
have improperly disclosed to us the confidential or proprietary information of
such former employers. Any such claims, with or without merit, could (1) be time
consuming to defend, (2) result in costly litigation, (3) divert management's
attention and resources, (4) cause product shipment delays or (5) require us to
pay money damages or enter into royalty or licensing agreements. A successful
claim of intellectual property infringement against us and our failure or
inability to license or create a workaround for such infringed or similar
technology may materially and adversely affect our business, operating results
and financial condition.

     Our license agreements with our customers typically contain provisions
designed to limit our exposure to potential product liability claims.  It is
possible, however, that the limitation of liability provisions contained in our
license agreements may not be effective under the laws of certain jurisdictions.
A successful product liability claim brought against us could have a material
adverse effect upon our business, operating results and financial condition.

OUR BUSINESS WILL SUFFER IF OUR PRODUCTS CONTAIN DEFECTS OR DO NOT FUNCTION AS
INTENDED, WHICH WOULD CAUSE OUR REVENUE TO DECLINE.

     Software products frequently contain errors or failures, especially when
first introduced or when new versions are released.  Also, new products or
enhancements may contain undetected errors, or "bugs," or performance problems
that, despite testing, are discovered only after a product has been installed
and used by customers.  Errors or performance problems could cause delays in
product introduction and shipments or require design modifications, either of
which could lead to a loss in revenue.  Our products are typically intended for
use in applications that may be critical to a customer's business.  As a result,
we expect that our customers and potential customers have a greater sensitivity
to product defects than the market for software products generally.  Despite
extensive testing by us and by current and potential customers, errors may be
found in new products or releases after commencement of commercial shipments,
resulting in loss of revenue or delay in market acceptance, diversion of
development resources, the payment of monetary damages, damage to our
reputation, or increased service and warranty costs, any of which could have a
material adverse effect on our business and results of operations.

WE CANNOT PREDICT WHETHER THE MARKET ACCEPTANCE FOR C++ AND VISUAL C++/MFC WILL
CONTINUE TO GROW.

     Our product lines are designed for use in object-oriented software
application development.  To date, a substantial majority of our revenue has
been attributable to sales of products and related maintenance and consulting
services associated with C++ programming and development.  We believe that,
while the market for object-oriented technology is maturing, optimization of the
C++ solutions through realignment of products and services coupled with the
pursuit of unsaturated markets in Asia, Europe, Australia and Latin America,
will serve to enhance future revenue.  However, object-oriented programming
languages are very complex and the number of software developers using them is
relatively small compared to the number of developers using other software
development technology.  Our financial performance will depend in part upon
continued growth in object-oriented technology and markets and the development
of standards that our products address.  There can be no assurance that the
market will continue to grow or that we will be able to respond effectively to
the evolving requirements of the market.

                                       20
<PAGE>

OUR MARKET IS HIGHLY COMPETITIVE AND, IF WE ARE UNABLE TO COMPETE SUCCESSFULLY,
OUR ABILITY TO GROW OUR BUSINESS OR EVEN MAINTAIN REVENUE AND EARNINGS AT
CURRENT LEVELS WILL BE IMPAIRED.

     Our products target the markets for Visual C++/MFC and Visual Basic/ActiveX
software parts and programming tools.  Direct competitors in the C++ market
include Microsoft (with its MFC),  ILOG and several privately held companies.
Microsoft is a particularly strong competitor due to its large installed base
and the fact that it bundles its MFC library with its own and other C++
compilers.  Microsoft may decide in the future to devote more resources to or
broaden the functions of MFC in order to address and more effectively compete
with the functionality of our products.

     Software applications can also be developed using software parts and
programming tools in environments other than C++.  Indirect competitors with
such offerings include Microsoft, Borland, Oracle and Powersoft.  Many of these
competitors have significantly greater resources, name recognition and larger
installed bases of customers than we do.  These potential competitors have well-
established relationships with current and potential customers and have the
resources to enable them to more easily offer a single vendor solution.  Like
our current competitors, many of these companies have longer operating
histories, significantly greater resources and name recognition and larger
installed bases of customers than we do.  As a result, these potential
competitors 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 us.

     We also face competition from systems integrators and our customers'
internal information technology departments.  Many systems integrators possess
industry specific expertise that may enable them to offer a single vendor
solution more easily, and already have a reputation among potential customers
for offering enterprise-wide solutions to software programming needs.  Systems
integrators may market competitive software products in the future.

     There are many factors that may increase competition in the market for
object-oriented software parts and programming tools, including (1) entry of new
competitors, (2) alliances among existing competitors and (3) consolidation in
the software industry.  Increased competition may result in price reductions,
reduced gross margins or loss of market share, any of which could materially
adversely affect our business, operating results and financial condition.  If we
cannot compete successfully against current and future competitors or overcome
competitive pressures, our business, operating results and financial condition
may be adversely affected.

WE OPERATE IN AN INDUSTRY WITH RAPIDLY CHANGING TECHNOLOGY AND, IF WE DO NOT
SUCCESSFULLY MODIFY OUR PRODUCTS TO INCORPORATE NEW TECHNOLOGIES, THEY MAY
BECOME OBSOLETE AND SALES WILL SUFFER.

     The software market in which we compete is characterized by (1) rapid
technological change, (2) frequent introductions of new products, (3) changing
customer needs and (4) evolving industry standards.  To keep pace with
technological developments, evolving industry standards and changing customer
needs, we must support existing products and develop new products.  We may not
be successful in developing, marketing and releasing new products or new
versions of our products that respond to technological developments, evolving
industry standards or changing customer requirements.  We may also experience
difficulties that could delay or prevent the successful development,
introduction and sale of these enhancements.  In addition, these enhancements
may not adequately meet the requirements of the marketplace and may not achieve
any significant degree of market acceptance.  If release dates of any future
products or enhancements are delayed, or if these products or enhancements fail
to achieve market acceptance when released, our business, operating results and
financial condition could be materially adversely affected.  In addition, new
products or enhancements by our competitors may cause customers

                                       21
<PAGE>

to defer or forgo purchases of our products, which could have a material adverse
effect on our business, financial condition and results of operations.

ITEM 3. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's market risk exposure is the potential loss arising from
changes in interest rates and its impact on short-term investments and foreign
currency exchange rate fluctuations.

     As of December 31, 2001, the Company had short-term investments of $17.3
million, of which $11.9 million were held to maturity and $5.4 million were held
available for sale.  All investments have maturities of less than 360 days when
acquired.  Short-term investments consist primarily of highly rated credit and
highly liquid corporate notes and commercial paper.  A reasonable reduction in
overall interest rates would not have a material effect on the fair value of the
investments or the financial position of the Company.

     Exposure to variability in foreign currency exchange rates is managed
primarily through the use of natural hedges, whereby funding obligations and
assets are both managed in the local currency.  In addition, the Company will
from time to time enter into foreign currency exchange agreements to manage its
exposure arising from fluctuating exchange rates, primarily in the Euro.  The
Company does not enter into any derivative transactions for speculative
purposes.  The sensitivity of earnings and cash flows to variability in exchange
rates is assessed by applying an appropriate range of potential rate
fluctuations to the Company's assets, obligations and projected results of
operations denominated in foreign currencies.  Based on the Company's overall
foreign currency rate exposure at December 31, 2001, movements in foreign
currency rates would not materially affect the financial position of the
Company.  At December 31, 2001, the Company had outstanding short-term forward
exchange contracts to exchange Euros for U.S. dollars in the amount of $909.
See Note 6 of Notes to Condensed Consolidated Financial Statements.

                                       22
<PAGE>

PART II - OTHER INFORMATION

ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K

EXHIBIT
NUMBER              DESCRIPTION OF DOCUMENT
-------             -----------------------
2.1(1)  Agreement and Plan of Reorganization between Registrant, Inmark
        Development Corporation and RW Acquisitions, Inc., dated as of September
        19, 1995.

2.2(2)  Agreement and Plan of Merger between the Registrant and Rogue Wave
        Software, Inc., an Oregon corporation, dated as of November 21, 1996.

2.3(3)  Agreement and Plan of Merger and Reorganization among Rogue Wave
        Software, Inc., a Delaware corporation, SR Acquisition Corp., a North
        Carolina corporation, Stingray Software, Inc., a North Carolina
        corporation and the shareholders of Stingray Software, Inc., dated as of
        January 19, 1998.

2.4(4)  Articles of Merger and Plan of Merger dated February 27, 1998 filed with
        the Secretary of State of North Carolina on February 27, 1998.

2.5(6)  Agreement and Plan of Merger and Reorganization among Rogue Wave
        Software, Inc., a Delaware corporation, NN Acquisition Corp., a Delaware
        corporation, NobleNet, Inc., a Delaware corporation and Steve Lemmo, as
        agent for the stockholders of NobleNet, dated as of February 11, 1999.

2.6(6)  Certificate of Merger and Plan of Merger dated March 1, 1998, filed with
        the Secretary of State of the State of Delaware on March 1, 1999.

3.1(2)  Amended and Restated Certificate of Incorporation of Rogue Wave
        Software, Inc., a Delaware corporation.

3.2(1)  Bylaws of Rogue Wave Software, Inc., a Delaware corporation.

4.1(1)  Reference is made to Exhibits 3.1 and 3.2.

4.2(1)  Specimen Stock Certificate.

4.3(1)  Amended and Restated Investors' Rights Agreement between the Registrant
        and certain investors, dated November 10, 1995, as amended June 27,
        1996.

4.4(5)  Form of Registration Rights Agreement between Rogue Wave Software, Inc.
        and the former shareholders of Stingray Software, Inc. and the former
        shareholders of Stingray Software, Inc.

10.1(8) Registrant's 1996 Equity Incentive Plan.

10.2(9) Amended and Restated Employee Stock Purchase Plan, dated June 6, 1996,
        as amended January 25, 2000.

                                       23
<PAGE>

10.3(1)    Form of Indemnity Agreement to be entered into between the Registrant
           and its officers and directors.

10.4(1)    Lease Agreement between Registrant and the State of Oregon, dated May
           1, 1996.

10.5(1)    Lease Agreement between the Registrant and the Landmark, dated April
           22, 1996.

10.6(7)    Home Loan Agreement between Registrant and Michael Scally, dated
           January 7, 1998.

10.7(7)    Home Loan Agreement between Registrant and Robert Holburn, dated
           February 2, 1998.

10.8(10)   Separation & Release Agreement between Registrant and Michael Ernst,
           dated November 15, 1999.

10.9(10)   Separation & Release Agreement between Registrant and Robert Holburn,
           dated January 3, 2000.

10.10(10)  Separation & Release Agreement between Registrant and Michael
           Foreman, dated May 1, 2000.

10.11(10)  Separation & Release Agreement between Registrant and Harold Julsen,
           dated December 6, 2000.

10.12(10)  1997 Equity Incentive Plan, as amended on January 18, 2001.

10.13(11)  Separation & Release Agreement between Registrant and John D.
           Iacobucci, dated October 9, 2001.
_________________

(1)  Filed as an Exhibit to the Registrant's Registration Statement on Form SB-
     2, as amended (No. 333-13517)

(2)  Filed as an Exhibit to the Registrant's quarterly report on Form 10Q for
     the quarter ended December 31, 1996.

(3)  Filed as Exhibit 2.1 to the Registrant's Form 8-K dated February 27, 1998,
     and filed on March 9, 1998.

(4)  Filed as Exhibit 2.2 to the Registrant's Form 8-K dated February 27, 1998,
     and filed on March 9, 1998.

(5)  Filed as Exhibit 4.1 to the Registrant's Form 8-K dated February 27, 1998,
     and filed on March 9, 1998.

(6)  Filed as an Exhibit to the Registrant's Form 8-K dated March 1, 1999 and
     filed on March 9, 1999.

(7)  Filed as an Exhibit to the Registrant's annual report on Form 10-K for the
     year ended September 30, 1998.

                                       24
<PAGE>

(8)  Filed as an Exhibit to the Registrant's Proxy Statement on Schedule 14! And
     filed on December 10, 1998.

(9)  Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q for
     the quarter ended December 31, 1999.

(10) Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q for
     the quarter ended December 31, 2000.

(11) Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q for
     the quarter ended December 31, 2001.

Items 1, 2, 3, 4 and 5 are not applicable and have been omitted.

                                       25
<PAGE>

                                   SIGNATURES

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.


                                ROGUE WAVE SOFTWARE, INC.
                                (Registrant)



Date:  February 13, 2002        /s/ Merle A.Waterman
                                ----------------------------------------
                                MERLE A. WATERMAN
                                VICE PRESIDENT, CHIEF FINANCIAL OFFICER
                                AND SECRETARY

                                       26