<PAGE>

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

                                    FORM 10-Q

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

For Quarterly Period Ended December 31, 2000

                                      OR

         [_]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                THE SECURITIES AND 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, 2001
               -----                         -------------------------------
     Common Stock, $0.001 par value                    10,909,166
<PAGE>

                           ROGUE WAVE SOFTWARE, INC.
                                   FORM 10-Q

                                     INDEX

<TABLE>
<CAPTION>
                                                                                                   Page No.
                                                                                                   -------
<S>                                                                                                <C>
PART I - FINANCIAL INFORMATION

Item 1.     Consolidated Financial Statements:

               Condensed Consolidated Balance Sheets at September 30, 2000
               and December 31, 2000...................................................................  3

               Condensed Consolidated Statements of Operations for the Three
               Months Ended December 31, 1999 and 2000.................................................  4

               Condensed Consolidated Statements of Cash Flows for the Three Months
               Ended December 31, 1999 and 2000........................................................  5

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

Item 2.     Management's Discussion and Analysis of Financial

            Condition and Results of Operations.......................................................   9

Item 3.     Quantitative and Qualitative Disclosures About Market Risk................................  20

PART II - OTHER INFORMATION

Item 6.     Exhibits and Reports on Form 8-K..........................................................  21

SIGNATURES............................................................................................  23
</TABLE>

                                      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>
                                                                                 September 30,       December 31,
                                                                                     2000               2000
                                                                                 ------------       -------------
                                                                                                      (unaudited)
                                   ASSETS
<S>                                                                              <C>                <C>
Current assets:
   Cash and cash equivalents...................................................   $ 21,823           $   16,244
   Short term investments......................................................     11,703               16,804
   Accounts receivable, net....................................................     12,101               12,536
   Prepaid expenses and other current assets...................................      1,499                1,367
   Deferred income taxes.......................................................      1,603                1,701
                                                                                  --------           ----------
      Total current assets.....................................................     48,729               48,652

Equipment, net.................................................................      5,208                5,172
Intangibles resulting from business acquisitions, net..........................        822                  659
Other assets, net..............................................................        860                  905
                                                                                  --------           ----------
      Total assets.............................................................   $ 55,619           $   55,388
                                                                                  ========           ==========


                     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable............................................................   $    880           $      333
   Accrued expenses............................................................      5,746                5,651
   Deferred revenue............................................................     11,700               11,732
                                                                                  --------           ----------
      Total current liabilities................................................     18,326               17,716

Stockholders' equity:
   Common stock................................................................         11                   11
   Additional paid-in capital..................................................     40,801               40,801
   Accumulated deficit.........................................................    ( 3,419)             ( 3,056)
   Accumulated other comprehensive loss .......................................      ( 100)                 (84)
                                                                                  --------           ----------
      Total stockholders' equity...............................................     37,293               37,672
                                                                                  --------           ----------
      Total liabilities and stockholders' equity...............................   $ 55,619           $   55,388
                                                                                  ========           ==========
</TABLE>

                             See accompanying notes.

                                      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,
                                                                                   1999          2000
                                                                                   ----          ----
<S>                                                                            <C>              <C>
Revenue:
   License revenue.....................................................        $  6,812         $ 6,788
   Service and maintenance revenue.....................................           5,804           7,507
                                                                               --------         -------
      Total revenue....................................................          12,616          14,295
                                                                               --------         -------

Cost of revenue:
   Cost of license revenue.............................................             444             259
   Cost of service and maintenance revenue.............................           1,927           2,917
                                                                               --------         -------
      Total cost of revenue............................................           2,371           3,176
                                                                               --------         -------
      Gross profit.....................................................          10,245          11,119
                                                                               --------         -------
Operating expenses:
   Product development.................................................           3,655           3,794
   Sales and marketing.................................................           5,572           6,099
   General and administrative..........................................           1,348           1,148
   Acquisition, relocation and goodwill amortization costs.............             601              --
                                                                               --------         -------
      Total operating expenses.........................................          11,176          11,041
                                                                               --------         -------
      Income (loss) from operations....................................            (931)             78
Other income, net......................................................             335             482
                                                                               --------         -------
      Income (loss) before income taxes................................            (596)            560
Income tax expense (benefit)...........................................             (89)            196
      Net income (loss)................................................        $   (507)        $   364
                                                                               ========         =======

Basic and Diluted earnings (loss) per share............................        $  (0.05)        $  0.03
                                                                               ========         =======
Shares used in basic per share calculation.............................          10,195          10,909
Shares used in diluted per share calculation...........................          10,195          10,972

      Net income (loss)................................................        $   (507)        $   364

Other comprehensive income (loss)
   Foreign currency translation loss...................................            (173)            (85)
                                                                               --------         -------
      Total comprehensive income (loss)................................        $   (680)        $   279
                                                                               ========         =======
</TABLE>

                             See accompanying notes.

                                      4.
<PAGE>

                           ROGUE WAVE SOFTWARE, INC.
                               AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                           (in thousands, unaudited)

<TABLE>
<CAPTION>
                                                                                               Three Months Ended
                                                                                                  December 31,
                                                                                              1999           2000
                                                                                              ----           ----
<S>                                                                                        <C>          <C>
Cash flows from operating activities:
   Net income (loss)...................................................................    $     (507)  $      364
   Adjustments to reconcile net income (loss) to net cash from operating activities:
       Depreciation and amortization...................................................         1,239          916
       Changes in assets and liabilities:
         Accounts receivable...........................................................         2,319         (435)
         Prepaid expenses and other current assets.....................................          (101)         230
         Other noncurrent assets.......................................................            14          (48)
         Accounts payable and accrued expenses.........................................          (773)        (841)
         Deferred revenue..............................................................           (53)          32
                                                                                           ----------   ----------
            Net cash from operating activities.........................................         2,138          218
                                                                                           ----------   ----------
Cash flows from investing activities:

    Short term investments.............................................................            --       (5,101)
    Equipment acquisitions.............................................................          (409)      (  712)
                                                                                           ----------   ----------
            Net cash used in investing activities......................................          (409)      (5,813)
                                                                                           ----------   ----------
Cash flows from financing activities:
    Proceeds from exercise of stock options............................................         1,471           --
                                                                                           ----------   ----------
            Net cash from financing activities.........................................         1,471           --
                                                                                           ----------   ----------
Effect of exchange rate changes on cash................................................          (165)          16
                                                                                           ----------   ----------
            Net change in cash and cash equivalents....................................         3,035       (5,579)
Cash and cash equivalents at beginning of period.......................................        27,664       21,823
                                                                                           ----------   ----------
Cash and cash equivalents at end of period.............................................    $   30,699   $   16,244
                                                                                           ==========   ==========
</TABLE>

                             See accompanying notes.

                                      5.
<PAGE>

                           ROGUE WAVE SOFTWARE, INC.
                                   NOTES TO
                  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

1.   Basis of Presentation

     The accompanying 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 ("SEC"). 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 the Company's audited consolidated financial statements and notes
     thereto (the "Consolidated Financial Statements") for the year ended
     September 30, 2000, 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 year ending September 30, 2001.

2.   Revenue Recognition

     The Company's revenue is recognized according to the criteria of the
     American Institute of Certified Public Accountants Statements of Position
     97-2, as amended, and 98-9, relating to software revenue recognition.
     License revenue is recognized upon the execution of a license agreement or
     signed written contract with fixed or determinable fees, shipment or
     electronic delivery of the product, and determination that collection of
     the resulting receivable is probable. Maintenance and service revenue
     includes maintenance revenue that is deferred and recognized over the
     maintenance period. Service revenue that includes training and consulting
     is recognized as services are performed. The percentage of completion
     revenue recognition method is used for customized software consulting
     contracts.

3.   Basic and Diluted Earnings Per Share

     Basic earnings (loss) per share 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 62,773.

                                      6.
<PAGE>

     The components of basic and diluted earnings (loss) per share were as
     follows (in thousands except per share amounts):

<TABLE>
<CAPTION>
                                                                             Three Months Ended
                                                                               December 31,
                                                                             1999           2000
                                                                             ----           ----
<S>                                                                        <C>            <C>
         Numerator:
            Net income (loss) available to common stockholders.........
                                                                           $  (507)       $   364
                                                                           =======        =======
         Denominator:
            Historical common shares outstanding for basic
              income (loss) per share at beginning of period...........     10,117         10,909
            Weighted average number of common equivalent shares
              issued during the period.................................         78             --
                                                                          --------        -------
            Denominator for basic income (loss) per share --
              weighted average shares..................................     10,195         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..............................     10,195         10,972
                                                                           =======        =======

            Basic earnings (loss) per share............................    $ (0.05)       $  0.03
                                                                           =======        =======
            Diluted earnings (loss) per share..........................    $ (0.05)       $  0.03
                                                                           =======        =======
</TABLE>


4.   Foreign Exchange Contracts

     Effective October 1, 2000, the Company adopted 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 inter-company 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 proportion 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, 1999 was $2.4 million. The notional amount of foreign exchange
     contracts outstanding at December 31, 2000 was

                                      7.
<PAGE>

     $2.3 million with a fair value of approximately $2.4 million. The fair
     value of the forward contracts is estimated based on quoted exchange rates
     at quarter end. The effective or unrealized gain related to the outstanding
     contracts was $73,895 and the ineffective or realized gain was $64,349 at
     December 31, 2000.

5.   Worldwide Operations

     Revenue by geographic area for the three months ended December 31, 2000 and
     1999 was 70% and 80% in the United States; 29% and 21% in Europe and 1% and
     0% 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, 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....................................     5,712      1,177         --             (203)       6,686

December 31, 1999, and for the quarter then ended:
   Revenue to unaffiliated customers....................   $ 9,975     $2,641       $ --         $     --      $12,616
   Intercompany transfers...............................       958         --         --             (958)          --
                                                           -------     ------      -----         --------      -------
     Net revenue........................................    10,933      2,641         --             (958)      12,616
   Operating income (loss)..............................    (1,167)       230         --               --         (937)
   Long-lived assets....................................    17,068      1,173         --             (114)      18,127
</TABLE>


6.   New Accounting Pronouncements

     The SEC issued Staff Accounting Bulletin ("SAB") 101, Revenue Recognition
     in Financial Statements, in December 1999. The SAB summarizes certain of
     the SEC staff's view in applying generally accepted accounting principals
     to revenue recognition in financial statements. In June 2000, the SEC
     issued SAB 101B, which delays the implementation date of SAB 101 until no
     later than the fourth fiscal quarter of fiscal years beginning after
     December 15, 1999. Based on the SEC's timeline, the Company will be
     required to comply with the guidelines in the fourth quarter of fiscal year
     2001. The Company does not believe the adoption of this SAB will have a
     material impact on the Company's financial position, results of operations
     or cash flows.

     In March 2000, the Financial Accounting Standards Board ("FASB") issued
     FASB interpretation No. ("FIN") 44, Accounting for Certain Transactions
     involving Stock Compensation, which clarifies the application of APB 25 for
     certain issues. The interpretation is effective July 1, 2000, except for
     the provisions that related to modifications that directly or indirectly
     reduce the exercise price of an award and the definition of an employee,
     which are effective after December 15, 1998. There was no impact from the
     adoption of this interpretation.

                                       8.
<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, 2000. 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.

Overview

         Rogue Wave Software, Inc. (`Rogue Wave" or the "Company") was founded
in 1989 to provide reusable software components for the development of
object-oriented software applications. The Company operated as a Subchapter S
corporation until June 1994. In October 1995, Rogue Wave merged with Inmark
Development Corporation, a privately held corporation specializing in the
development, distribution and support of an object-oriented graphical user
interface library written in the C++ programming language. In February 1998, the
Company merged with Stingray Software, Inc., a privately held corporation
specializing in the development and distribution of object-oriented development
tools for Windows programmers and is a leading provider of Visual C++ class
libraries. Both transactions were accounted for using the pooling-of-interests
method of accounting. In March 1999, the Company merged with NobleNet, Inc.
("NobleNet"), in a transaction utilizing the purchase method of accounting.
NobleNet specialized in building and marketing software products that allow
existing information technology systems to communicate and interoperate across
corporate networks and the Internet. The products were used to build
sophisticated, enterprise-wide, distributed applications that run on more than
40 platforms. Following the fourth quarter 2000 decision to discontinue
marketing of the Nouveau product line that was acquired as a part of the
NobleNet acquisition, the investment in NobleNet, which consisted primarily of
goodwill, was written off.

         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 according to the criteria of SOP 97-2, as amended.
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 risks 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 typically 12 months. Service revenue consists of training and consulting
services and is recognized utilizing the percentage of completion revenue
recognition method. The Company's revenue recognition policies are in compliance
with the American Institute of Certified Public Accountants Statements of
Position 97-2, as amended, and 98-9, relating to Software Revenue Recognition.

         The Company markets its products primarily through its direct sales
force, and to a lesser extent through the Internet and an indirect channel
consisting of original-equipment-manufacturers, value added resellers dealers
and distributors. The Company's direct sales force consists of an inside
telesales group that focuses on smaller orders ($50,000 or less), and an outside
sales force that focuses on larger site

                                       9.
<PAGE>

licenses. The Company makes all of its products available for sale and
distribution over the Internet. Revenue through this channel has not been
significant to date, and there can be no assurance that the Company will be
successful in marketing its products through this channel.

         International revenue accounted for approximately 24%, 24% and 30% of
total revenue in fiscal 1999, 2000 and the three months ended December 31, 2000,
respectively. In January 1996, the Company established a wholly-owned subsidiary
in Germany to market and support the Company's products in Germany and
neighboring countries. In February 1997, the Company expanded its European
operations by acquiring Precision, a distributor of Rogue Wave software products
in Germany, the United Kingdom, France and the Benelux countries. In 1998, the
Company established a subsidiary in Italy. In 2000, the Company established
offices in Japan and Hong Kong. The Company anticipates further expansion in
foreign countries 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. International revenue has increased
during the current period as a result of the management reorganization and the
addition of sales personnel during fiscal 2000, which allowed for the successful
execution of Europe's revenue growth strategy. 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 by the
Company's European subsidiaries. To date, other than revenue generated by the
Company's European subsidiaries, the Company's international revenue has been
denominated in United States dollars. The Company has entered into forward
foreign exchange contracts to reduce certain risk 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 "Risk Factors
Related To Our Business - Doing business outside the United States involves
numerous factors that could negatively affect our financial results."

         During fiscal 2000, the Company determined that certain of its primary
products had reached a maturity phase due to rapid technological developments
coupled with the introduction of new products by competitors. The Company
identified a need to reposition itself in the marketplace and, therefore,
developed a new comprehensive business strategy to aggressively address this new
environment. The Company is focusing on optimizing the current C++ tools and
services and developing new products with a focus on an "end-to-end pervasive
computing solution."

                                      10.
<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,
                                                                   1999          2000
                                                                   ----          ----
<S>                                                                <C>           <C>
      Revenue:
         License revenue.......................................      54%           47%
         Service and maintenance revenue.......................      46            53
                                                                   ----          ----
            Total revenue......................................     100           100
                                                                   ----          ----
      Cost of revenue:
         Cost of license revenue...............................       4             2
         Cost of service and maintenance revenue...............      15            20
                                                                   ----          ----
             Total cost of revenue.............................      19            22
                                                                   ----          ----
            Gross profit                                             81            78
                                                                   ----          ----
      Operating expenses:
         Product development...................................      29            26
         Sales and marketing...................................      44            43
         General and administrative............................      11             8
         Acquisition, relocation and goodwill amortization ....       5            --
                                                                   ----          ----
            Total operating expenses...........................      89            77
                                                                   ----          ----
            Income (loss) from operations......................      (8)            1
      Other income, net........................................       3             3
                                                                   ----          ----
            Income before income taxes.........................      (5)            4
      Income tax expense (benefit) ............................      (1)            1
                                                                   ----          ----
             Net income (loss).................................      (4)%           3%
                                                                   ====          ====
</TABLE>


Revenue

         Total revenue for the three months ended December 31, 2000 was $14.3
million versus $12.6 million for the three months ended December 31, 1999,
representing an increase of 13%. License revenue for both the three months ended
December 31, 2000 and December 31, 1999 was $6.8 million. Although license
revenue was unchanged when comparing the two periods, the number of licenses
sold to existing and new customers decreased during the three month period
ending December 31, 2000 compared to the same period in 1999. This decrease was
offset by increases in license revenue from "cross platform deployment rights"
sales.

         Service and maintenance revenue for the three months ended December 31,
2000 was $7.5 million versus $5.8 million for the three months ended December
31, 1999, representing an increase of 29%. The increase in service and
maintenance revenue was primarily attributable to increased sales volume of the
Company's support and maintenance services related to the Company's core
products as well as two new customized software consulting contracts totaling
$5.2 million of which $2.1 million was recognized as current period revenue.

                                      11.
<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, 2000 was $259,000 versus $444,000 for the
three months ended December 31, 1999, representing a decrease of 42%. As a
percentage of total revenue, cost of license revenue was 2% and 4% for the three
months ended December 31, 2000, and 1999, respectively. The decrease in cost of
license revenue is primarily the result of a decrease in the number of manuals
produced due to a decline in new product offerings as well as a decrease in
purchased software amortization. The Company expects that the cost of license
revenue as a percentage of total revenue will decrease in fiscal 2001.

         Cost of service and maintenance revenue consists primarily of
personnel-related and facilities cost 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, 2000 was $2.9 million versus $1.9 million for the
three months ended December 31, 1999, representing an increase of 51%. As a
percentage of total revenue, cost of service and maintenance revenue was 20% for
the three months ended December 31, 2000 versus 15% for the three months ended
December 31, 1999. The increase in cost of service and maintenance revenue was
due primarily to additional product support personnel, an increase in the
utilization of third-party consulting services and the additional costs
associated with the two new customized software consulting contracts. The
Company expects that the cost of such revenue will increase as a percentage of
total revenue in fiscal 2001.

Operating Expenses

         Product development expenses for the three months ended December 31,
2000 were $3.8 million versus $3.7 million for the three months ended December
31, 1999, representing an increase of 4%. As a percentage of total revenue,
product development expenses were 27% for the three months ended December 31,
2000 versus 29% for the three months ended December 31, 1999. The decrease in
product development expenses as a percentage of revenue is due primarily to the
slower growth of revenue relative to the growth in development. 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 2001.

         Sales and marketing expenses for the three months ended December 31,
2000 were $6.1 million versus $5.6 million for the three months ended December
31, 1999, representing an increase of 9%. As a percentage of total revenue,
sales and marketing expenses were 43% and 44% for the three months ended
December 31, 2000, and 1999, respectively. The increase in sales and marketing
expense reflects the hiring of additional sales and marketing personnel and
related costs, as well as increased costs associated with expanded promotional
activities. While the Company expects that sales and marketing expenses will
continue to grow, the Company does not believe such expenses will increase as a
percentage of total revenue for fiscal 2001.

         General and administrative expenses for the three months ended December
31, 2000 were $1.1 million versus $1.3 million for the three months ended
December 31, 1999, representing a decrease of 15%. The decrease in general and
administrative expenses was, in part, due to a decrease of $575,000 in certain
reserves as a result of the resolution of various potential employment and
product distribution contract issues. This decrease was mitigated, to a certain
extent, by an increase in staffing, investment in infrastructure and associated
expenses necessary to manage and support the Company's growing operations.
Although the Company believes that its general and administrative expenses will
increase in

                                      12.
<PAGE>

absolute dollars, such expenses are not expected to significantly vary as a
percentage of total revenues for fiscal 2001.

         As a result of the Company obsoleting the Nouveau product line, which
was acquired through the acquistion of NobleNet in March 1999, the Company
recorded an impairment charge at September 30, 2000 to writeoff the remaining
goodwill related to the NobleNet acquition. Therefore, no goodwill amortization
expense was recognized for the three month period ended December 31, 2000.

Other Income, Net

         Other income for the three months ended December 31, 2000 and December
31, 1999, primarily consists of interest income on the Company's short-term
investments. The increase in other income of 44% for the three months ended
December 31, 2000, compared to the three months ended December 31, 1999, is
primarily due to an increase in interest rates and the recognized gain of
$73,895 on foreign exchange forward contracts. See Note 4 of Notes to Condensed
Consolidated Financial Statements.

Income Tax Expense (Benefit)

         Income taxes are provided on an interim basis at the expected tax rate
for the year. The provision for income taxes for the three month period ended
December 31, 2000, is based on an estimated annual effective tax rate of 35%
which is applied to the income before income taxes and includes federal, state
and foreign income taxes.

Liquidity and Capital Resources

         The decrease in cash flows from operations for the three months ended
December 31, 2000 compared to the three months ended December 31, 1999, was
primarily due to an increase of $2.7 million in accounts receivable resulting
primarily from the difference in the timing of the sale of products completed
during the comparable 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, 2000, net cash used by investing activities was $5.8
million, which included the purchase of short-term investments of $5.1 million.
Short-term investments primarily consist of commercial paper with original
maturities of 180 days or less which are held as securities available for sale.

         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 - Risks Related To Our Business."

Factors That May Affect Future Results - Risks Related To Our Business

         In evaluating the Company's business, prospective 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.

                                      13.
<PAGE>

         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:

 .  the demand for our products and services;
 .  the level of product and price competition;
 .  the size, type and timing of individual license transactions;
 .  the delay or deferral of customer implementations;
 .  our success in expanding our direct sales force and indirect distribution
   channels;
 .  the 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 adopted in fiscal 2000.

         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.

         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
will likely 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 (1) improve our financial and

                                      14.
<PAGE>

management controls, reporting systems and procedures on a timely basis and (2)
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 business is highly dependent on the ability of our management team
to work effectively to meet the demands of our anticipated growth. Several
members of our senior management, including our Chief Executive Officer, Chief
Technical Officer, Marketing and Business Development Vice President and
Managing Director of Europe have been employed by us for a relatively short
period of time. These individuals have not previously worked together as a
management team. The failure of our management team to work together effectively
could prevent efficient decision-making by our executive team, affecting product
development and sales and marketing efforts, which would negatively impact our
operating results.

         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 makes 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.

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

                                      15.
<PAGE>

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 dilutive issuance of equity securities, the
incurrence of debt and amortization expenses related to goodwill and other
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 companies, 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 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 its 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 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 and (5) require us to
pay

                                      16.
<PAGE>

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.

Factors That May Affect Future Results - Risk Related To Our Industry

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, specifically the C++, Visual C++/MFC language. To date,
a substantial majority of our revenue has been attributable to sales of products
and related maintenance and consulting services related to 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 and
Latin America, will serve to enhance future revenue. 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.

                                      17.
<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 C++, Visual C++/MFC and Visual
Basic/ActiveX software parts and programming tools. Direct competitors in the
C++ market include Microsoft (with its Microsoft Foundation Classes, "MFC"),
IBM, 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.

     In the distributed application development market, we face competition from
a variety of CORBA vendors; including Iona, Inprise, BEA, IBM, and others. In
this market, we expect basic connectivity to be bundled with a variety of
offerings from these vendors, as well as Sun Microsystems (with a free Java ORB)
and Microsoft (with connectivity bundled into its offerings).

     Software applications can also be developed using software parts and
programming tools in environments other than C++. Indirect competitors with such
offerings include Microsoft (with its ActiveX technology), Inprise, Oracle and
Powersoft (a subsidiary of Sybase). Many of these competitors have significantly
greater resources, name recognition and larger installed bases of customers than
we do. In addition, several database vendors, such as Informix, Oracle and
Sybase are increasingly developing robust software parts for inclusion with
their database products and may begin to compete with us in the future. 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

                                      18.
<PAGE>

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

                                      19.
<PAGE>

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.

     As of December 31, 2000, short-term investments of $17.4 million were held
available for sale with maturities of less than 180 days. Short-term investments
consist primarily of high credit and highly liquid corporate commercial paper
and money market funds. A substantial change in overall interest rates would not
have a material affect on the financial position of the Company.

     Exposure to variability in foreign currency exchange rates is managed
primarily through the use of cash flow hedges. See Note 4 of Notes to Condensed
Consolidated Financial Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations.

                                      20.
<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(1)    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.

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.

                                      21.
<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      Separation & Release Agreement between Registrant and Michael Ernst,
          dated November 15, 1999.

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

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

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

10.12     1997 Equity Incentive Plan, as amended on January 18, 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 10-Q
       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.

   (8) Filed as an Exhibit to the Registrant's Proxy Statement on Schedule 14A
       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.

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

                                      22.
<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:    January 31, 2001                    /s/ Merle Waterman
                                             -----------------------------------
                                             MERLE WATERMAN
                                             CHIEF FINANCIAL OFFICER

                                      23.