<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 March 31, 1997

                                      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.
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         (Exact name of registrant as specified in its charter)
                                       
                Delaware                                 93-1064214
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    (State or other jurisdiction of                    (IRS Employer
     incorporation or organization)                  Identification No.)
                                       
 850 SW 35th Street, Corvallis, Oregon                      97333
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(Address of principal executive offices)                  (Zip Code)

                                (541) 754-3010
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            (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 March 31, 1997 
                -----                          ----------------------------- 
    Common Stock, $0.001 par value                         7,647,188

                                       1.

<PAGE>
                                       
                           ROGUE WAVE SOFTWARE, INC.
                                  FORM 10-Q

                                    INDEX


                                                                       Page No.
                                                                       --------

PART I - FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements:

              Condensed Consolidated Balance Sheets at March 31, 1997 
              and September 30, 1996..........................................3

              Consolidated Statements of Operations for the three and six
              months ended March 31, 1997 and 1996............................4

              Consolidated Statements of Cash Flows for the
              six months ended March 31, 1997 and 1996........................5

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

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations..................................7

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings...................................................15

Item 6.  Exhibits and Reports on Form 8-K....................................15

SIGNATURES...................................................................16

                                       2.

<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. - Consolidated Financial Statements:
                                       
                           ROGUE WAVE SOFTWARE, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)

                                       
                                                March 31,       September 30,
                                                  1997              1996
                                                --------          --------
                                              (Unaudited)
                 ASSETS:
Current assets: 
     Cash and cash equivalents                  $ 30,934           $ 1,714
     Accounts receivable, net                      3,892             4,527
     Prepaid and other current assets                716               981
                                                --------          --------
          Total current assets                    35,542             7,222

Furniture, fixtures and equipment, net             3,041             2,718
Other assets, net                                  2,161               254
                                                --------          --------
Total assets                                    $ 40,744          $ 10,194
                                                --------          --------
                                                --------          --------


 LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
     Accounts payable                            $ 1,037             $ 637
     Accrued expenses                              2,776               805
     Deferred revenue                              4,565             2,881
     Current portion of long-term obligations        218               217
                                                --------          --------
          Total current liabilities                8,596             4,540


Long-term obligations, less current portion          428               322
                                                --------          --------
          Total liabilities                        9,024             4,862
                                                --------          --------

Mandatorily redeemable preferred stock                --             4,664
                                                --------          --------

Stockholders' equity:
     Common stock                                      8                 4
     Additional paid-in capital                   30,775               676
     Shareholder note receivable                     (13)              (13)
     Retained earnings                               949                24
     Cumulative translation adjustment                 1               (23)
                                                --------          --------
          Total stockholders' equity              31,720               668
                                                --------          --------
          Total liabilities and 
            stockholders' equity                $ 40,744          $ 10,194
                                                --------          --------
                                                --------          --------
                                       
                            See accompanying notes.

                                       3.

<PAGE>
                                       
                           ROGUE WAVE SOFTWARE, INC.
                   CONSOLIDATED STATEMENTS OF OPERATIONS
             (in thousands, except per share data, unaudited)

                                       
                                        Three months ended     Six months ended
                                             March 31,              March 31, 
                                        ------------------    ------------------
                                         1997      1996        1997      1996
                                         ----      ----        ----      ----
Revenue:
     License revenue                    $ 5,125    $ 3,697    $ 9,610   $ 6,430
     Service and maintenance revenue      1,787        950      3,181     1,754
                                        -------    -------    -------   -------
          Total revenue                   6,912      4,647     12,791     8,184
                                        -------    -------    -------   -------

Cost of revenue:
     Cost of license revenue                438        242        780       461
     Cost of service and 
       maintenance revenue                  595        343      1,097       637
                                        -------    -------    -------   -------
          Total cost of revenue           1,033        585      1,877     1,098
                                        -------    -------    -------   -------
          Gross profit                    5,879      4,062     10,914     7,086
                                        -------    -------    -------   -------

Operating expenses:
     Product development                  1,592      1,486      3,076     2,410
     Sales and marketing                  2,978      2,101      5,455     3,707
     General and administrative             749        500      1,454       972
                                        -------    -------    -------   -------
          Total operating expenses        5,319      4,087      9,985     7,089
                                        -------    -------    -------   -------
          Income (loss) from operations     560        (25)       929        (3)
Other income, net                           342         43        452        57
                                        -------    -------    -------   -------
          Income before income taxes        902         18      1,381        54
Income tax expense                          298          4        456        11
                                        -------    -------    -------   -------
          Net income                      $ 604       $ 14      $ 925      $ 43
                                        -------    -------    -------   -------
                                        -------    -------    -------   -------
Net income per common share              $ 0.07     $ 0.00     $ 0.11    $ 0.01
                                        -------    -------    -------   -------
                                        -------    -------    -------   -------

Shares used in per share calculation      8,896      6,066      8,116     6,775

                                       
                           See accompanying notes.

                                       4.

<PAGE>
                                       
                           ROGUE WAVE SOFTWARE, INC.
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                           (in thousands unaudited)

                                       
                                                        Six Months Ended
                                                           March 31,
                                                  -----------------------------
                                                      1997             1996
                                                    --------         --------
Cash flows from operating activities:
     Net income                                        $ 925             $ 43

     Adjustments to reconcile net income to net 
       cash from operating activities:
     Depreciation and amortization                       706              361
     Changes in assets and liabilities:
          Accounts receivable                          1,698           (1,198)
          Prepaid and other current assets               460              (58)
          Other assets                                  (109)            (110)
          Accounts payable and accrued expenses        1,240             (199)
          Deferred revenue                               982              531
                                                    --------         --------
               Net cash from operating activities      5,902             (630)
                                                    --------         --------

Cash flows from investing activities:
     Purchase of furniture, fixtures, and equipment     (793)            (531)
     Purchase of business, net of cash acquired       (1,245)              --
                                                    --------         --------
               Net cash from investing activities     (2,038)            (531)
                                                    --------         --------

Cash flows from financing activities:
     Payments on long-term obligations                  (105)             (72)
     Net proceeds from issuance of mandatorily 
       redeemable preferred stock                         --            3,523
     Proceeds from issuance of common stock, net      25,627               --
     Stock issuance costs                               (248)              --
     Proceeds from exercise of stock options              60               24
                                                    --------         --------
               Net cash from financing activities     25,334            3,475
                                                    --------         --------
Effect of exchange rate on cash and cash equivalents      22               (2)
                                                    --------         --------
               Net change in cash and 
                    cash equivalents                  29,220            2,312
Cash and cash equivalents at beginning of period       1,714            1,010
                                                    --------         --------
Cash and cash equivalents at end of period          $ 30,934          $ 3,322
                                                    --------         --------
                                                    --------         --------

                                       
                           See accompanying notes.

                                       5.

<PAGE>
                                       
                           ROGUE WAVE SOFTWARE, INC.
                                    NOTES TO
                      CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1.  Basis of Presentation
    The accompanying financial statements have been prepared in conformity 
    with generally accepted accounting principles. However, 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 the Company's audited consolidated 
    financial statements for the year ended September 30, 1996, as included 
    in the Company's Registration Statement on Form SB-2 (Registration No. 
    333-13517) filed with the Securities and Exchange Commission.

2.  Net Income Per Common Share
    Net income per common share is computed using the weighted average 
    number of common and dilutive common equivalent shares assumed to be 
    outstanding during the period. Common equivalent shares consist of 
    options to purchase common stock.

3.  Use of Estimates in the Preparation of Financial Statements
    The preparation of financial statements in conformity with generally 
    accepted accounting principles requires management to make estimates and 
    assumptions that affect the reported amounts of assets and liabilities 
    and disclosure of contingent assets and liabilities at the date of the 
    financial statements and the reported amounts of revenue and expenses 
    during the reporting period. Actual results could differ from those 
    estimates.

4.  Stockholders' Equity
    On November 21, 1996, the Company completed a public offering of 
    2,363,890 shares of common stock which generated net proceeds of 
    approximately $25.6 million after deducting applicable issuance costs 
    and expenses. On December 3, 1996 the Company's underwriters exercised 
    their over-allotment option resulting in the issuance of an additional 
    3,750 shares of common stock which generated net proceeds of 
    approximately $41,850 after deducting applicable issuance costs and 
    expenses. The net proceeds are expected to be used for working capital 
    and general corporate purposes, including the expansion of general sales 
    and customer support and possible future acquisitions of technologies, 
    products or businesses.

5.  Acquisition
    On February 15, 1997, the Company acquired 100% of the outstanding stock 
    of PVI Precision Software GmbH (Precision) for $2 million in cash. 
    Precision is a European distributor of Rogue Wave software products and 
    other companies' software products in Germany, the United Kingdom, 
    France, and the Benelux countries. The acquisition has been accounted 
    for under the purchase method and accordingly, the accompanying 
    financial statements include Precision's results beginning with the 
    acquisition date. 

                                       

                                       6.

<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 ENTITLED "FACTORS 
THAT MAY AFFECT FUTURE RESULTS," AND THOSE DISCUSSED UNDER THE CAPTION 
"RISK FACTORS" IN THE COMPANY'S REGISTRATION STATEMENT ON FORM SB-2 (NO. 
333-13517). 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 was founded in 1989 to provide reusable software parts 
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 
("Inmark"), 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. 

     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 and shipment of the product if no significant contractual 
obligations remain and collection of the resulting receivable is 
probable. Allowances for credit risks and for estimated future returns 
are provided for 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 
upon completion of the related activity. For all periods presented, the 
Company has recognized revenue in accordance with Statement of Position 
91-1, 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 OEMs, VARs, 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 licenses. The Company makes all of its 
products available for sale and distribution over the Internet to 
customers in the United States. 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% of total 
revenue in the second quarter of fiscal 1997. 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 
100% of the outstanding stock of PVI Precision Software GmbH 
"Precision". Precision is a European distributor of Rogue Wave software 
products and other companies' software products in Germany, the United 
Kingdom, France, and the Benelux countries. The Company anticipates 
establishing or acquiring similar organizations in other locations in 
Europe, and possibly in Asia. The Company expects that international 
license and service and maintenance 

                                       

                                       7.

<PAGE>
                                       

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 channesl. There can be no assurance, however, 
that the Company will be able to maintain or increase international market 
demand for its products. To date, other than revenue gernerated by the 
Company's European subsidiaries, the Company's international revenue has 
been denominated in United States dollars. As a result of recent 
fluctuations in international exchange rates, the Company's Board of 
Directors has authorized the Company to enter into forward foreign exchange 
contracts to minimize the transaction risk associated with such fluctuations. 
Although exposure to currency fluctuations to date has been insignificant, 
there can be no assurance that the Company will not experience a material 
adverse impact on its financial condition and results of operations from 
fluctuations in foreign currencies in the future.

RESULTS OF OPERATIONS

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

                                       Three months ended     Six months ended
                                            March 31,             March 31,
                                       ------------------    ------------------
                                         1997      1996        1997      1996
                                        ------    ------      ------    ------
Revenue:
    License revenue                        74%       80%         75%       79%
    Service and maintenance revenue        26%       20%         25%       21%
                                        ------    ------      ------    ------
        Total revenue                     100%      100%        100%      100%
                                        ------    ------      ------    ------

Cost of revenue:
    Cost of license revenue                 6%        5%          6%        6%
    Cost of service and 
      maintenance revenue                   9%        8%          9%        8%
                                        ------    ------      ------    ------
       Total cost of revenue               15%       13%         15%       14%
                                        ------    ------      ------    ------
       Gross profit                        85%       87%         85%       86%
                                        ------    ------      ------    ------

Operating expenses:
    Product development                    23%       32%         24%       29%
    Sales and marketing                    43%       45%         43%       45%
    General and administrative             11%       11%         11%       12%
                                        ------    ------      ------    ------
        Total operating expenses           77%       88%         78%       86%
                                        ------    ------      ------    ------
        Income (loss) from operations       8%       (1%)         7%        0%
Other income, net                           5%        1%          4%        1%
                                        ------    ------      ------    ------
        Income before income taxes         13%        0%         11%        1%
Income tax expense                          4%        0%          4%        0%
                                        ------    ------      ------    ------
        Net income                          9%        0%          7%        1%
                                        ------    ------      ------    ------
                                        ------    ------      ------    ------

                                       

                                       8.

<PAGE>
                                       
REVENUE

     Total revenue for the three and six months ended March 31, 1997 was $6.9 
million and $12.8 million, respectively, versus $4.6 million and $8.2 million 
for the three and six months ended March 31, 1996, representing an increase 
of 50% and 56%, respectively. License revenue for the three and six months 
ended March 31, 1997 were $5.1 million and $9.6 million, respectively, versus 
$3.7 million and $6.4 million for the three and six months ended March 31, 
1996, representing and increase of 38% and 50%, respectively. License revenue 
increased primarily as a result of an increase in the number of licenses sold 
to existing and new customers, reflecting additional product offerings, an 
expanding market, increased market awareness and expansion of the Company's 
direct sales organization. In particular, the Company introduced its 
Threads.h++, Inter.Net.h++, and Jchart products in the first half of fiscal 
1997.

     Service and maintenance revenue for the three and six months ended March 
31, 1997 was $1.8 million and $3.2 million, respectively, versus $950,000 and 
$1.8 million for the three and six months ended March 31,1996, representing 
an increase of 89% and 78%, respectively. The increase in service and 
maintenance revenue was generally attributable to the growing installed base 
of the Company's products and the associated increase in demand for support 
and maintenance services. 

COST OF REVENUE

     Cost of license revenue for the three and six months ended March 31, 
1997 were $438,000 and $780,000 respectively versus $242,000 and $461,000 for 
the three and six months ended March 31, 1996, representing an increase of 
81% and 69%, respectively. As a percentage of total revenue cost of license 
revenue was 6% and 6% for the three and six months ended March 31, 1997 
versus 5% and 6% for the three and six months ended March 31, 1996. The 
increases were primarily the result of higher royalties paid to third parties 
associated with Precision's revenue mix and an increase in the number of 
licenses sold. The Company expects that the cost of license revenue will 
increase in dollar amount for the remainder of the year.

     Cost of service and maintenance revenue for the three and six months 
ended March 31, 1997 were $595,000 and $1.1 million, respectively, versus 
$343,000 and $637,000 for the three and six months ended March 31, 1996 
representing an increase of 73% and 73% respectively. As a percentage of 
total revenue cost of service and maintenance revenue was 9% and 9% for the 
three and six months ended March 31, 1997 versus 8% and 8% for the three and 
six months ended March 31, 1996. The increases were primarily the result of 
expenses associated with the development of training programs, utilization of 
training and mentoring consultants and the hiring of additional product 
support personnel.

OPERATING EXPENSES

     Product development expense for the three and six months ended March 31, 
1997 were $1.6 million and $3.1 million, respectively, versus $1.5 million 
and $2.4 million for the three and six months ended March 31, 1996 
representing an increase of 7% and 29%, respectively. As a percentage of 
total revenue product development expenses were 23% and 24% for the three and 
six months ended March 31, 1997 versus 32% and 29% for the three and six 
months ended March 31, 1996. The increase in product 

                                       

                                       9.

<PAGE>
                                       
development expense was primarily attributable to the hiring of additional 
product development personnel. The decrease in product development expenses 
as a percent of revenue was primarily due to the rapid growth in revenues. 
The Company anticipates that it will continue to devote substantial resources 
to product development and that product development expenses will increase in 
dollar amount through fiscal 1997 as the Company continues to increase its 
product development capacity, although the Company does not believe such 
expenses will increase as a percentage of total revenue.

     Sales and marketing expense for the three and six months ended March 31, 
1997 were $3.0 million and $5.5 million, respectively, versus $2.1 million 
and $3.7 million for the three and six months ended March 31, 1996 
representing an increase of 43% and 49%, respectively. As a percentage of 
total revenue, sales and marketing expenses were 43% and 45% in each 
respective period. The increases were primarily due to the addition of sales 
personnel through the acquisition of Precision, commissions and related costs 
required in sales and marketing to expand the Company's sales channels. The 
decrease in sales and marketing expenses as a percent of revenue was 
primarily due to the rapid growth in revenues. 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.

     General and administrative expense for the three and six months ended 
March 31, 1997 were $749,000 and $1.5 million, respectively, versus $500,000 
and $972,000 for the three and six months ended March 31, 1996 representing 
an increase of 50% and 54%, respectively. The increase in general and 
administrative expenses were primarily due to increased staffing, investment 
in infrastructure and associated expenses necessary to manage and support the 
Company's growing operations. The Company believes that during the near term 
its general and administrative expenses will continue to grow in absolute 
dollars as a result of additional anticipated expansion.

OTHER INCOME, NET

     Other income increased as a result of higher interest income due to 
higher investment balances resulting from the infusion of cash from the 
Company's initial public offering and cash generated from operations. 

INCOME TAX EXPENSE

     The Company's effective tax rate for the second quarter and first half 
of fiscal 1997 was 33%, compared to 22.2% and 20.4% for the second quarter 
and first half of fiscal 1996, respectively. The higher effective tax rates 
in fiscal 1997 were primarily due to the decrease in research and 
experimentation tax credits. The Company anticipates its fiscal 1997 
effective tax rate will be approximately 33% percent; however, this rate 
could change based on a change in the percentage of total revenue derived 
from international sources. 

LIQUIDITY AND CAPITAL RESOURCES

     The Company completed an initial public offering of common stock on 
November 21, 1996 with net proceeds of approximately $25.6 million. The 
common stock is trading on the Nasdaq National Market under the symbol RWAV. 
The Company generated cash flows from operating activities of $5.9 million in 
the six months ended March 31, 1997 versus ($630,000) for the six months 
ended March 31, 1996. The increase in cash flows from operations was due 
primarily to increase in net income, decrease in accounts receivable, and 
increases in accounts payable, accrued expenses and deferred revenues.

                                       

                                       10.

<PAGE>
                                       
FACTORS THAT MAY AFFECT FUTURE RESULTS

     IN EVALUATING THE COMPANY'S BUSINESS, PROSPECTIVE INVESTORS SHOULD 
CAREFULLY CONSIDER THE FOLLOWING FACTORS IN ADDITION TO THE OTHER INFORMATION 
PRESENTED IN THIS REPORT.

     UNCERTAINTY OF FUTURE OPERATING RESULTS; FLUCTUATIONS IN QUARTERLY 
OPERATING RESULTS. Prior growth rates in the Company's revenue and net income 
should not be considered indicative of future operating results. Future 
operating results will depend upon many factors, including the demand for the 
Company's products, the level of product and price competition, the length of 
the Company's sales cycle, the size and timing of individual license 
transactions, the delay or deferral of customer implementations, the budget 
cycles of the Company's customers, the Company's success in expanding its 
direct sales force and indirect distribution channels, the timing of new 
product introductions and product enhancements, the mix of products and 
services sold, levels of international sales, activities of and acquisitions 
by competitors, the timing of new hires, changes in foreign currency exchange 
rates, and the ability of the Company to develop and market new products and 
control costs. A significant portion of the Company's revenue has been, and 
the Company believes will continue to be, derived from relatively large 
orders, and the timing of such orders has caused and may continue to cause 
material fluctuations in the Company's operating results, particularly on a 
quarterly basis. The Company gernerally ships orders as received and as a 
result typically has little or no backlog. Quarterly revenue and operating 
results therefore depend on the volume and timing of orders received during 
the quarter, which are difficult to forecast. In addition, the Company has 
historically earned a substantial portion of its revenue in the last days of 
each quarter. To the extent this trend continues, the failure to achieve such 
revenue during the last days of any given quarter will have a material 
adverse effect on the Company's business, financial condition and results of 
operations. Furthermore, due to all of the foregoing factors, it is likely 
that in some future period the Company's operating results will be below the 
expectations of public market analysts and investors. In such event, the 
price of the Company's Common Stock would likely be materially adversely 
affected.

     Service and maintenance revenue tend to fluctuate as consulting 
contracts, which may extend over several months, are undertaken, renewed, 
completed or terminated. License fee revenue is difficult to forecast due to 
the fact that the Company's sales cycle, from initial evaluation to purchase, 
varies substantially from customer to customer. As a result of these and 
other factors, revenue for any quarter is subject to significant variation, 
and the Company believes that period-to-period comparisons of its results of 
operations are not necessarily meaningful and should not be relied upon as 
indications of future performance. Because the Company's operating expenses 
are based on anticipated revenue trends and because a high percentage of the 
Company's expenses are relatively fixed, 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 result in 
significant losses. To the extent such expenses precede, or are not 
subsequently followed by, increased revenue, the Company's operating results 
would be materially and adversely affected. Fluctuations in operating results 
may also result in volatility in the price of the Company's Common Stock.

     DEPENDENCE ON EMERGING MARKET FOR C++ AND JAVA. The Company's product 
lines are designed for use in object-oriented software application 
development, specifically the C++ programming language, and substantially all 
of the Company's revenue has been attributable to sales of products and 
related maintenance and consulting services related to C++ programming and 
development. The Company believes that while the market for object-oriented 
technology in general, and C++ tools and programming applications in 
particular, is growing, the Company's growth depends upon broader market 
acceptance of object-oriented technology and the C++ programming language. 
Even if broader market acceptance is 

                                       

                                       11.

<PAGE>
                                       
achieved, the object-oriented market may continue to be characterized by 
multiple software environments, many of which are not supported by the 
Company's products, and numerous competitors in the areas of tools, 
methodology and services. Furthermore, the C++ programming language is very 
complex. Should the C++ programming language lose market acceptance or be 
replaced by another programming language, the Company's business, financial 
condition and results of operations would be materially and adversely 
affected. The Company's financial performance will depend in part upon 
continued growth in the object-oriented technology and C++ markets and the 
development of standards that the Company's products address. There can be no 
assurance that the market will continue to grow or that the Company will be 
able to respond effectively to the evolving requirements of the market.

    The number of software developers using the C++ programming language is 
relatively small compared to the number of developers using more traditional 
software development technology. The adoption of the C++ programming language 
by software programmers who have traditionally used other technology requires 
reorientation to significantly different programming methods, and there can 
be no assurance that the acceptance of the C++ programming language will 
expand beyond the early adopters of the technology. Furthermore, there can be 
no assurance that potential corporate customers will be willing to make the 
investment required to retrain programmers to build software using C++ rather 
than structured or other object-oriented programming techniques. Many of the 
Company's customers have purchased only small quantities of the Company's 
products and there can be no assurance that these or new customers will 
broadly implement C++ programming or purchase additional products. 

     In addition, the Company has recently introduced several products for 
use in the Java market. The Company has spent and will continue to devote 
resources on the development of new and enhanced products that address the 
Java market. There can be no assurance that the Company will be successful in 
marketing its existing or future Java products or that the market for Java 
products will grow. If the Java market fails to grow, or grows more slowly 
than the Company currently anticipates, the Company's business, financial 
condition and results of operations could be materially and adversely 
affected.

     COMPETITION. The market for the Company's products is intensely 
competitive, subject to rapid change and significantly affected by new 
product introductions and other market activities of industry participants. 
The Company's products are targeted at the emerging market for C++ and Java 
software parts and programming tools, and the Company's competitors offer a 
variety of products and services to address this market. The Company believes 
that the principal competitive factors in this market are product quality, 
flexibility, performance, functionality and features, use of standards based 
technology, quality of support and service, company reputation and price. 
While price is less significant than other factors for corporate customers, 
price can be a significant factor for individual programmers. Certain of the 
Company's 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. Many of these companies have longer operating 
histories, significantly greater resources and name recognition and larger 
installed bases of customers than the Company. As a result, competitors may 
be able to respond more quickly to new or emerging technologies and changes 
in customer reqquirements, or to devote greater resources to the development, 
promotion and sale of their products than the Company.

     The Company also faces competition from systems integrators and internal 
development efforts. 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. There can be no 
assurance that these third parties, many of which have significantly greater 
resources than the Company, will not market competitive software products in 
the future. It is also possible that new competitors or alliances among 
competitors will emerge and rapidly 

                                       

                                       12.

<PAGE>

acquire significant market share. The Company also expects that competition 
will increase as a result of software industry consolidation. Increased 
competition may result in price reductions, reduced gross margins and loss of 
market share, any of which could materially and adversely affect the 
Company's business, operating results and financial condition. There can be 
no assurance that the Company will be able to compete successfully against 
curent and futrue competitors or that competitive pressures faced by the 
Company will not materially and adversely affect its business, financial 
condition and results of operations.

     MANAGEMENT OF GROWTH. The Company is experiencing a period of transition 
and aggressive product introductions that has placed, and may continue to 
place, a significant strain on its resources, including its personnel. 
Expansion of the Company's product lines, additional product development and 
product introductions, or acquisitions of other technologies or companies, 
when added to the day-to-day activities of the Company, will place a further 
strain on the Company's resources and personnel. The Company's acquisition of 
Inmark Development Corporation in October 1995 has also resulted in the 
Company's product development team being distributed in three separate sites 
across the country. Managing this distribution requires a significant amount 
of attention from management, particularly the Vice President, Development 
and the Chief Technology Officer, to ensure that the Company's development 
efforts are timely, consistent and well integrated. 

     Furthermore, the Company believes that its ability to achieve 
significant revenue growth in the future will depend in large part on its 
success in recruiting and training sufficient direct sales personnel and 
establishing and maintaining relationships with its outside sales 
representatives. Although the Company is currently investing, and plans to 
continue to invest, significant resources to expand its direct sales force 
and to develop distribution relationships with outside sales representatives, 
the Company has at times experienced and continues to experience difficulty 
in recruiting qualified sales personnel and in establishing necessary sales 
representative relationships. The Company believes that the hiring and 
retaining of qualified individuals at all levels in the Company is essential 
to the Company's ability to manage growth successfully, and there can be no 
assurance that the Company will be successful in attracting and retaining the 
necessary personnel. If Company management is unable to effectively manage 
growth, the Company's business, financial condition and results of operations 
will be materially and adversely affected.

    RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW PRODUCTS. The market for 
software development tools is characterized by rapid technological advances, 
changes in customer requirements and frequent new product introductions and 
enhancements. The Company must respond rapidly to developments related to 
hardware platforms, operating systems and applicable programming languages. 
Such developments will require the Company to continue to make substantial 
product development investments. Any failure by the Company to anticipate or 
respond adequately to technological developments and customer requirements, 
or any significant delays in product development or introduction, could 
result in a loss of competitiveness or revenue. 

     The Company's future success will depend on its ability to continue to 
enhance its current product line and to continue to develop and introduce new 
products that keep pace with competitive product introductions and 
technological developments, satisfy diverse and evolving customer 
requirements and otherwise achieve market acceptance. There can be no 
assurance that the Company will be successful in continuing to develop and 
market on a timely and cost-effective basis fully functional product 
enhancements or new products that respond to technological advances by 
others, or that its enhanced and new products will achieve market acceptance. 
In addition, the Company has in the past experienced delays in the 
development, introduction and marketing of new or enhanced products. Such 
delays were primarily associated with increasing product functionality and 
implementing new customer requirements. To date, 

                                       

                                       13.

<PAGE>
                                       
such delays have not resulted in a material adverse effect on the Company's 
business, financial condition and results of operations. There can be no 
assurance that the Company will not experience similar delays in the future. 
Any failure by the Company to anticipate or respond adequately to changes in 
technology and customer preferences, or any significant delays in product 
development or introduction, would have a material adverse effect on the 
Company's business, financial condition and results of operations.

    LIMITED INTERNATIONAL SALES AND MARKETING EXPERIENCE. The Company opened 
its first international sales office in Germany in January 1996. In February 
1997, the Company expanded its European operations by acquiring 100% of the 
outstanding stock of PVI Precision Software GmbH (Precision). Precision is a 
European distributor of Rogue Wave software products and other companies' 
software products in Germany, the United Kingdom, France, and the Benelux 
countries. As of March 31, 1997, there were 29 employees located outside the 
United States. International revenue accounted for approximately 19% and 24% 
of the Company's total revenue in fiscal 1996 and the first half of fiscal 
1997, respectively. The Company believes that in order to increase sales 
opportunities and profitability it will be required to expand its 
international operations. 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. To the extent that the Company is unable to 
do so in a timely manner, the Company's international revenue would be 
limited, and the Company's business, financial condition and results of 
operations would be materially and adversely affected.

     RISKS INHERENT IN INTERNATIONAL OPERATIONS. International operations are 
subject to inherent risks, including the impact of possible recessionary 
environments in economies outside the United States, costs of localizing 
products for foreign markets, longer receivables collection periods and 
greater difficulty in accounts receivable collection, unexpected changes in 
regulatory requirements, difficulties and costs of staffing and managing 
foreign operations, reduced protection for intellectual property rights in 
some countries, potentially adverse tax consequences, and political and 
economic instability. There can be no assurance that the Company will be able 
to sustain or increase international revenue from licenses or from 
maintenance and service, or that the foregoing factors will not have a 
material adverse effect on the Company's future international revenue and, 
consequently, on the Company's business, financial condition and results of 
operations. The Company's direct international revenue is generally 
denominated in local currencies. As a result of recent fluctuations in 
international exchange rates, the Company's Board of Directors has authorized 
the Company to enter into forward exchange contracts to minimize the risks 
associated with such fluctuations. Although exposure to currency fluctuations 
to date has been insignificant, there can be no assurance that fluctuations 
in currency exhcange rates in the future will not have a material adverse 
impact on international revenue and thus the Company's business, financial 
condition and results of operations.

     FUTURE ACQUISITIONS. The Company frequently evaluates strategic 
opportunities available to it and may in the future pursue acquisitions of 
complementary technologies, products or businesses. Future acquisitions of 
complementary technologies, products or businesses by the Company will result 
in the diversion of management's attention from the day-to-day operations of 
the Company's business and may include numerous other risks, including 
difficulties in the integration of the operations, products and personnel of 
the acquired companies. Future acquisitions by the Company may also result in 
dilutive issuances of equity securities, the incurrence of debt and 
amortization expenses related to goodwill and other intangible assets. 
Failure of the Company to successfully manage future acquisitions may have a 
material adverse effect on the Company's business, financial condition and 
results of operations. 

                                       

                                       14.

<PAGE>
                                       
PART II - OTHER INFORMATION

Item 1. - LEGAL PROCEEDINGS

     On December 15, 1995, the Company filed suit in the Circuit Court of 
Benton County (Oregon) against Eugene O. Cho, former Vice President of 
Marketing, seeking a declaration of the rights of the parties in connection 
with shares of Common Stock of the Company. The Company claimed that the 
formula controlling the vesting of the subject shares was inadvertently 
misstated and sought reformation of that agreement to reflect the true intent 
of the parties, such that, effective upon the termination of Mr. Cho in May 
1995, the Company was entitled to repurchase 92,763 shares of Common Stock of 
the Company at $0.15 per share. On March 26, 1997, the Circuit Court of 
Benton County ruled in favor of the Company and dismissed all counterclaims 
filed by Eugene O. Cho.

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

(a)  Exhibits:

     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.
     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.
     10.1(1) Registrant's 1996 Equity Incentive Plan.
     10.2(1) Registrant's Employee Stock Purchase Plan.
     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(1) Loan and Security Agreement between the Registrant and Silicon   
             Valley Bank, dated October 16, 1996.
     10.7(1) Collateral Assignment, Patent Mortgage and Security Agreement    
             between the Registrant and Silicon Valley Bank, dated            
             October 16, 1996.
     27.1    Financial Data Schedule.

     (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.

ITEMS 2, 3, 4, AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.

                                       

                                       15.

<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: May 12, 1997                     /S/ ROBERT M. HOLBURN, JR.
                                       ----------------------------------------
                                       ROBERT M. HOLBURN, JR.
                                       CHIEF FINANCIAL OFFICER