<PAGE>   1
================================================================================



                       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
    Exchange Act of 1934

For the period ended MARCH 31, 1998

                                       OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

COMMISSION FILE NUMBER 0-21402


                         INTERLINQ SOFTWARE CORPORATION
             (Exact name of registrant as specified in its charter)


                 WASHINGTON                                   91-1187540
      (State or other jurisdiction of                      (I.R.S. Employer
       incorporation or organization)                    Identification No.)

                               11255 KIRKLAND WAY
                               KIRKLAND, WA 98033
                    (Address of principal executive offices)

                                 (425) 827-1112
              (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 report), and (2) has been subject to such filing
requirements for the past 90 days.

                   Yes [X]                          No [ ]


As of May 13, 1998, there were 5,114,746 shares of the Registrant's Common Stock
outstanding.



================================================================================
<PAGE>   2


PART I.   FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


                         INTERLINQ SOFTWARE CORPORATION
                                 BALANCE SHEETS


                                     ASSETS

<TABLE>
<CAPTION>
                                                           MARCH 31,          JUNE 30,
                                                             1998               1997
                                                          -----------        -----------
                                                          (UNAUDITED)
<S>                                                       <C>                <C>        
CURRENT ASSETS:
    Cash and cash equivalents                             $ 9,600,834        $ 7,793,761
    Short-term investments                                  4,291,778          6,037,545
    Accounts receivable, net                                2,418,458          1,602,220
    Inventory                                                  43,054             55,246
    Prepaid expenses                                          472,210            408,909
    Deferred income taxes                                     279,500            267,660
                                                          -----------        -----------
           Total current assets                            17,105,834         16,165,341
                                                          -----------        -----------

Property and equipment, at cost                             6,165,751          5,836,895
    Less accumulated depreciation and amortization          5,196,429          4,364,628
                                                          -----------        -----------
           Net property and equipment                         969,322          1,472,267
                                                          -----------        -----------

Capitalized software costs, net                             3,497,487          3,358,016
Other assets                                                   34,879             70,899
                                                          -----------        -----------
                                                          $21,607,522        $21,066,523
                                                          ===========        ===========
</TABLE>



                                       2
<PAGE>   3


                         INTERLINQ SOFTWARE CORPORATION
                                 BALANCE SHEETS


                      LIABILITIES AND SHAREHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                      MARCH 31,          JUNE 30,
                                                        1998               1997
                                                     -----------        -----------
                                                     (UNAUDITED)
<S>                                                  <C>                <C>        
CURRENT LIABILITIES:
    Accounts payable                                 $   342,922        $   235,895
    Accrued compensation and benefits                    927,907            555,402
    Other accrued liabilities                            532,926            498,276
    Customer deposits                                    409,297            199,636
    Deferred software support fees                     3,262,808          3,052,822
                                                     -----------        -----------
           Total current liabilities                   5,475,860          4,542,031
                                                     -----------        -----------

NONCURRENT LIABILITIES:
    Deferred rent and other lease obligations                 --            160,443
    Deferred software support fees                         2,075              6,746
    Deferred income taxes                                336,700            306,950
                                                     -----------        -----------
           Total noncurrent liabilities                  338,775            474,139
                                                     -----------        -----------

SHAREHOLDERS' EQUITY:
    Common stock                                          51,132             54,165
    Additional paid-in capital                         9,002,580         10,343,087
    Retained earnings                                  6,739,175          5,653,101
                                                     -----------        -----------
           Total shareholders' equity                 15,792,887         16,050,353
                                                     -----------        -----------
                                                     $21,607,522        $21,066,523
                                                     ===========        ===========
</TABLE>



                                       3
<PAGE>   4


                         INTERLINQ SOFTWARE CORPORATION
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED                    NINE MONTHS ENDED
                                                   MARCH 31,                            MARCH 31,
                                           1998               1997               1998               1997
                                        -----------        -----------        -----------        -----------
<S>                                     <C>                <C>                <C>                <C>        
NET REVENUES:
    Software license fees               $ 2,616,383        $ 1,718,494        $ 6,315,918        $ 5,282,052
    Software support fees                 1,753,098          1,496,104          5,181,074          4,471,347
    Other                                   417,478            318,961          1,300,401            875,559
                                        -----------        -----------        -----------        -----------
        Total net revenues                4,786,959          3,533,559         12,797,393         10,628,958
                                        -----------        -----------        -----------        -----------

COST OF REVENUES:
    Software license fees                   460,531            366,191          1,275,742          1,080,278
    Software support fees                   661,788            482,314          1,788,906          1,359,319
    Other                                   209,348            176,203            660,794            529,671
                                        -----------        -----------        -----------        -----------
        Total cost of revenues            1,331,667          1,024,708          3,725,442          2,969,268
                                        -----------        -----------        -----------        -----------
        Gross profit                      3,455,292          2,508,851          9,071,951          7,659,690
                                        -----------        -----------        -----------        -----------

OPERATING EXPENSES:
    Product development                     387,654            552,437          1,161,859          1,590,762
    Sales and marketing                   1,440,171          1,082,026          4,018,322          3,028,222
    General and administrative              979,567            788,797          2,696,311          2,391,057
                                        -----------        -----------        -----------        -----------
        Total operating expenses          2,807,392          2,423,260          7,876,492          7,010,041
                                        -----------        -----------        -----------        -----------
        Operating income                    647,900             85,591          1,195,459            649,649

Net interest and other income               176,406            165,513            551,893            533,282
                                        -----------        -----------        -----------        -----------
    Income before income taxes              824,306            251,104          1,747,352          1,182,931
Income tax expense                          303,994             90,582            661,278            425,855
                                        -----------        -----------        -----------        -----------
    Net income                          $   520,312        $   160,522        $ 1,086,074        $   757,076
                                        ===========        ===========        ===========        ===========


Net income per share - Basic            $       .10        $       .03        $       .21        $       .13
Net income per share - Diluted          $       .10        $       .03        $       .20        $       .13

Weighted average common shares            5,117,018          5,485,628          5,212,108          5,710,450
Weighted average common and
    common equivalent shares              5,287,921          5,660,071          5,342,757          5,853,981
</TABLE>



                                       4
<PAGE>   5


                         INTERLINQ SOFTWARE CORPORATION
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                      NINE MONTHS ENDED
                                                              -------------------------------
                                                               MARCH 31,           MARCH 31,
                                                                 1998                1997
                                                              -----------         -----------
<S>                                                           <C>                 <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                 $ 1,086,074         $   757,076
      Adjustments to reconcile net income to net cash
        provided by operating activities:
           Depreciation and amortization                          857,027             834,406
           Amortization of capitalized software costs           1,128,426             932,833
           Deferred income tax expense                             17,910                  --
           Change in operating assets and liabilities:
             Accounts receivable                                 (816,238)            379,199
             Inventory and prepaid expenses                       (51,109)           (128,749)
             Other assets                                          36,020                  --
             Accounts payable                                     107,027             115,682
             Accrued compensation and benefits, other
                accrued liabilities and deferred rent             246,712              10,757
             Customer deposits                                    209,661              88,664
             Deferred software support fees                       205,315             431,340
                                                              -----------         -----------
                Net cash provided by operating activities       3,026,825           3,421,208
                                                              -----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment                           (354,082)           (443,803)
   Purchases of source code                                            --            (232,773)
   Capitalized software costs                                  (1,267,897)           (681,395)
   Proceeds from sales and maturities of short-term
      investments                                               1,745,767           3,021,497
   Change in other assets                                              --             (75,000)
                                                              -----------         -----------
                Net cash provided by investing activities         123,788           1,588,526
                                                              -----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of common stock                          18,560               5,758
   Repurchase of common stock                                  (1,362,100)         (2,561,125)
                                                              -----------         -----------
                Net cash used in financing activities          (1,343,540)         (2,555,367)
                                                              -----------         -----------
                Net increase in cash and cash equivalents       1,807,073           2,454,367
   Cash and cash equivalents at beginning of period             7,793,761           6,511,041
                                                              -----------         -----------
   Cash and cash equivalents at end of period                 $ 9,600,834         $ 8,965,408
                                                              ===========         ===========
</TABLE>



                                       5
<PAGE>   6

                         INTERLINQ SOFTWARE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 1998
                                   (UNAUDITED)


1.   Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine-month period ended March 31, 1998, are not
necessarily indicative of the results for the year ending June 30, 1998. The
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997.

2.   Earnings per share

Effective for the quarter ended December 31, 1997, the Company adopted Statement
of Financial Accounting Standards No. 128 Earnings Per Share. In accordance with
Statement 128, the Company has presented basic earnings per share and diluted
earnings per share for all periods presented. Basic earnings per share is
computed by dividing net income by the weighted average common shares
outstanding. Diluted earnings per share is computed by dividing net income by
the weighted average common and common equivalent shares outstanding, which
reflects potential dilution from common stock equivalents. The dilutive effect
of outstanding options is computed using the treasury stock method. The
following table reconciles the weighted average common shares used in the
computation of basic earnings per share to the weighted average common and
common equivalent shares used in the computation of diluted earnings per share:

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED               NINE MONTHS ENDED
                                                       MARCH 31,                        MARCH 31,
                                                1998             1997             1998             1997
                                              ---------        ---------        ---------        ---------
<S>                                           <C>              <C>              <C>              <C>      
Weighted average common shares                5,117,018        5,485,628        5,212,108        5,710,450
Dilutive effect of outstanding options          170,903          174,443          130,649          143,531

                                              ---------        ---------        ---------        ---------
Weighted average common and
    common equivalent shares                  5,287,921        5,660,071        5,342,757        5,853,981
                                              =========        =========        =========        =========
</TABLE>



                                       6

<PAGE>   7

ITEM 2.


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


GENERAL

    Prior to the mid 1980's, mortgage loans in the United States were originated
in a manual and paper-intensive process. Then, beginning in the mid 1980's and
running through the mid 1990's, the mortgage lending industry implemented its
first wave of automation with PC-based software solutions for mortgage
originations. During this period of time, the Company experienced rapid revenue
and customer growth by providing its MortgageWare Loan Management System - a
robust, full-featured and cost-effective PC-based software solution. This first
wave of automation was accelerated and amplified from 1992 to early 1994 as
mortgage interest rates reached historically low levels and mortgage refinance
volumes soared. Then, in early 1994, the Federal Reserve raised interest rates.
This event immediately caused mortgage refinance volumes to plummet. As a
result, lenders found themselves with excess labor and mortgage processing
capacity. During the remainder of 1994 and for most of 1995, the Company
believes that the industry was then focused more on staff reduction, than adding
new automated loan management systems.

    Beginning in fiscal year 1996, and continuing into the first three quarters
of fiscal year 1998, mortgage lending rates have reflected a lending environment
that has experienced a high degree of volatility. In spite of this volatility,
the overall lending conditions have been considered favorable for the borrower
compared to most historical measures. With this overall favorable lending
environment, the Company believes that mortgage lending activity has increased,
driven by an increase in financing of home sales and, especially in the quarter
ended March 31, 1998, refinancing of existing mortgages. During the last half of
fiscal year 1997, the Company began to observe a shift in the mortgage
origination business. There appeared to be excess production capacity coupled
with a reduced profit margin. Over the last two quarters, it appears that most
of this excess production capacity has been fulfilled, yet profit margins
continue to be low.

     During the quarter ended March 31, 1998, the Company experienced increased
license fees due to a combination of lenders once again needing additional
production capacity and the immediate acceptance of MortgageWare TC by existing
and new customers. Looking forward, the Company believes that due to continued
lower profit margins, its customers are shifting their long-term purchasing
decisions to solutions that reduce unit costs and accordingly, increase profit
margins, rather than solely increasing production capacity. During fiscal years
1996 and 1997, the Company focused its product development effort to provide a
more diverse and integrated "enterprise" solution for the mortgage lending
industry. It is the Company's belief that this broader "enterprise" solution
will position the Company well for this recent change in the mortgage lending
industry. This broader product offering focuses more on reducing the cost of
originating, processing, and servicing a mortgage, than on solely increasing
production capacity.



                                       7
<PAGE>   8

NET REVENUES


Three months ended March 31,
<TABLE>
<CAPTION>
(In thousands)                1998          1997           Change
-----------------------------------------------------------------
<S>                          <C>           <C>             <C>
Software license fees        $2,616        $1,718            52%


Software support fees         1,753         1,496            17%


Other                           417           319            31%
-----------------------------------------------------------------
Total net revenues           $4,787        $3,534            35%
-----------------------------------------------------------------
</TABLE>

Net revenues consist of software license fees, software support fees and other
revenues (which include training and consulting fees, document fees, interest
income on contracts receivable and other miscellaneous sales), net of discounts
and sales returns.

   Software license fees increased by 52% for the quarter ended March 31, 1998,
compared to the quarter ended March 31, 1997. This period-to-period increase was
primarily due to a combination of an increase in software license fees for the
MortgageWare Loan Management System (as lenders added production capacity), the
immediate acceptance of MortgageWare TC, and to a lesser extent, increased sales
of the Company's newer products, MortgageWare Loan Servicing and MortgageWare
MarketLINQ.

   Software support fees increased by 17% for the quarter ended March 31, 1998,
compared to the quarter ended March 31, 1997. This period-to-period increase was
primarily due to a combination of an increase in the total installed software
value for the Company's customer base upon which software support fees are
calculated, as well as a low rate of attrition in the customer base. Due in part
to changes, from time to time, in government regulations applicable to
documentation required for residential mortgage lending, the vast majority of
the Company's customers purchase annual software support agreements. Because
software support fees are recognized ratably over the term of the annual support
agreement while software license fees are recognized on product shipment, the
percentage increase in software support fees compared to software license fees
is not directly proportional. The Company believes software support fees are
likely to continue to increase at a modest rate for the rest of fiscal year
1998.

   Other revenues increased by 31% for the quarter ended March 31, 1998,
compared to the quarter ended March 31, 1997. This period-to-period increase
resulted from an increase in demand for the Company's training and consultation
services. Consulting services assist customers in effectively implementing and
integrating the Company's product suite, thereby reducing the cost of
originating and processing a mortgage loan, as well as providing timely and
relevant information for its decision-makers. The Company expects its training
and consulting fees to increase during fiscal year 1998 compared to fiscal year
1997, reflecting an increased demand from both new and existing customers for an
integrated (enterprise) product suite.

   Looking forward, the Company anticipates an increasing contribution to
software license fees, and related increases to software support fees and other
revenues, from its newer products MortgageWare Loan Servicing, MortgageWare
InfoLINQ, and MortgageWare MarketLINQ. As discussed above, the Company believes
the overall lending environment to be favorable as of March 31, 1998, despite
experiencing a high degree of volatility. Nonetheless, there can be no assurance
that mortgage lending rates will not increase or continue to experience a high
amount 



                                       8

<PAGE>   9

of volatility. Such increases or continued volatility could have a material
adverse effect on the Company's revenues, profitability, and financial
condition. Even if lending rates stabilize, if such rates are perceived as being
too high, homeowners and potential homeowners may delay decisions that would
otherwise result in mortgage lending transactions. Such delays may have an
adverse effect upon the Company's customers, and upon the Company and its
operations.

COST OF REVENUES


<TABLE>
<CAPTION>
Three months ended March 31,
(In thousands)                     1998           1997          Change
------------------------------------------------------------------------
<S>                               <C>            <C>            <C>
Software license fees             $  461         $  366             26%

Percentage of software
  license fees                        18%            21%
------------------------------------------------------------------------

Software support fees             $  662         $  482             37%

Percentage of software
   support fees                       38%            32%
------------------------------------------------------------------------

Other                             $  209         $  176             19%

Percentage of other                   50%            55%
------------------------------------------------------------------------

Total cost of revenues            $1,332         $1,025             30%

Percentage of net revenues            28%            29%
------------------------------------------------------------------------
</TABLE>

Cost of software license fees includes the purchase and duplication of disks,
product documentation, and amortization of capitalized software development
costs. As a percentage of software license fees, cost of software license fees
decreased from 21% to 18% for the quarter ended March 31, 1998, compared to the
quarter ended March 31, 1997. This decrease was primarily due to software
license fees increasing at a higher rate than the cost of software license fees
that contain the relatively fixed component of amortization of capitalized
software development costs. Amortization of capitalized software development
costs increased to $403,000 in the quarter ended March 31, 1998, compared to
$313,000 for the same quarter in the previous year. The Company expects the
dollar amount of its amortization of capitalized software development costs to
increase for the remainder of fiscal year 1998.

   Cost of software support fees includes salaries and other costs related to
providing telephone support, and the purchase, duplication and shipping of disks
associated with software updates. As a percentage of software support fees, cost
of software support fees increased from 32% to 38% for the quarter ended March
31, 1998, compared to the quarter ended March 31, 1997. This increase was
primarily due to increased payroll costs for the customer support group. Looking
forward, because the level of staffing and customer service expenses are related
to the size of the Company's customer base and the number of different products
offered and updated, the Company expects the dollar cost of software support
fees to increase in accordance with its customer base and expanded product
offering, and to remain flat or increase slightly as a percentage of software
support fees.

   Cost of other revenue includes the purchase and duplication of disks
associated with custom documents, the salaries and reimbursable expenses for the
customer service department employees who provide training and consulting
services, and the net cost of the Company's annual MortgageWare software users'
group meeting. As a percentage of other revenue, cost of other revenue decreased
from 55% to 50% for the quarter ended March 31, 1998, compared to the same
period the previous year. This decrease was primarily due to a higher
utilization rate of the Company's training group.



                                       9

<PAGE>   10

OPERATING EXPENSES


<TABLE>
<CAPTION>
Three months ended March 31,
(In thousands)                     1998           1997            Change
-------------------------------------------------------------------------
<S>                               <C>            <C>              <C>  
Product development               $  388         $  552            (30%)

Percentage of net revenues             8%            16%
-------------------------------------------------------------------------

Sales & marketing                 $1,440         $1,082             33%

Percentage of net revenues            30%            31%
-------------------------------------------------------------------------

General & administrative          $  980         $  789             24%

Percentage of net revenues            20%            22%
-------------------------------------------------------------------------
</TABLE>

Product development expenses include salaries for software developers and
analysts, facilities costs and expenses associated with computer equipment used
in software development. Product development expenses decreased by 30%, from
$552,000 to $388,000, for the quarter ended March 31, 1998, compared to the
quarter ended March 31, 1997. This decrease was primarily due to an increased
capitalization of software development costs associated with enhancements of
newer products released during fiscal year 1997 and was partially offset by an
increase in payroll costs associated with a tight labor market for technical
skills. The Company capitalized $515,000 and $278,000 of development
expenditures for the quarters ended March 31, 1998, and 1997, respectively. The
Company released MortgageWare InfoLINQ during the quarter ended March 31, 1997,
and released MortgageWare MarketLINQ during the quarter ended June 30, 1997.
Accordingly, the Company anticipates a higher sustained level of capitalized
development expenditures similar to the quarter ended March 31, 1998, for the
remainder of fiscal year 1998.

   Sales and marketing expenses include salaries, sales commissions, as well as
travel and facilities costs for the Company's sales and marketing personnel.
Sales and marketing expenses also include advertising and trade shows. As a
percentage of net revenues, sales and marketing expenses decreased from 31% to
30% for the quarter ended March 31, 1998, compared to the same period in the
previous year. Although the Company incurred increased costs for advertising and
other sales promotion activities, this decrease is primarily due to net revenue
increasing more than sales and marketing expenses.

   General and administrative expenses include costs related to finance,
purchasing, order fulfillment, administration and facilities. As a percentage of
net revenues, general and administrative expenses decreased from 22% to 20% for
the quarter ended March 31, 1998, compared to the same period the previous year.
Although the Company incurred increased payroll and benefit costs during the
quarter, this decrease is primarily due to net revenue increasing at a higher
rate than general and administrative expenses. As a percentage of net revenues,
the Company expects general and administrative expenses to hold steady or
decrease slightly for the remainder of fiscal year 1998.

NET INTEREST AND OTHER INCOME


<TABLE>
<CAPTION>
Three months ended March 31,
(In thousands)                   1998          1997         Change
--------------------------------------------------------------------
<S>                              <C>           <C>          <C>
Net interest and other
    income                        $176         $166            6%

Percentage of net revenues           4%           5%
--------------------------------------------------------------------
</TABLE>


Interest income was $182,000 and $172,000 for the quarters ended March 31, 1998,
and 1997, respectively. Interest income was similar between quarters as the
average investment portfolio and rate of return did not change significantly.



                                       10

<PAGE>   11

   As of March 31, 1998, the Company had no interest-bearing debt outstanding,
and anticipates no new debt financing in the foreseeable future. Accordingly,
the Company expects net interest and other income for the foreseeable future to
reflect net interest income.

INCOME TAXES


<TABLE>
<CAPTION>
Three months ended March 31,
(In thousands)          1998   1997    Change
----------------------------------------------
<S>                       <C>    <C>     <C> 
Income taxes             $304    $91     234%

Effective tax rate         37%    36%
----------------------------------------------
</TABLE>

The provision for income taxes includes federal and state income taxes currently
payable and deferred taxes arising from temporary differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax basis.

LIQUIDITY AND CAPITAL RESOURCES

   Working capital, which consists principally of cash, cash equivalents and
short-term investments was $11,630,000 as of March 31, 1998, compared to
$11,623,000 at June 30, 1997. Cash and cash equivalents increased by $1,807,000
for the nine months ended March 31, 1998. Additions to cash and cash equivalents
included $3,027,000 provided by operating activities. Principal uses of cash and
cash equivalents included $1,362,000 for the repurchase of common stock,
$1,268,000 of capitalized software costs, and the purchase of $354,000 of
property and equipment.

   Although the Company at March 31, 1998, has no material commitment for
additional capital expenditures, it expects to spend approximately $500,000 for
the fiscal year ending June 30, 1998, primarily for computer software and
equipment.

   Long-term cash requirements, other than normal operating expenses, are
anticipated for development of new software products and enhancement of existing
products; financing anticipated growth; and the possible acquisition of other
software products, technologies and businesses, and the possible repurchase of
the Company's common stock. The Company believes that its existing cash, cash
equivalents, short-term investments, and cash generated by operations will be
sufficient to satisfy its currently anticipated cash requirements for fiscal
year 1998.

FORWARD-LOOKING STATEMENTS

   When used in this discussion, the words "believes", "anticipates", and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. The Company undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements that may
be made to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.

NEW ACCOUNTING STANDARDS

   In October 1997, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of 



                                       11

<PAGE>   12

Position (SOP) 97-2, Software Revenue Recognition which supersedes SOP 91-1.
This SOP provides guidance on applying generally accepted accounting principles
in recognizing revenue on software transactions and is effective for
transactions entered into in fiscal years beginning after December 15, 1997. The
Company does not expect the impact of adoption of SOP 97-2 to be material.

YEAR 2000

The Company believes that the Year 2000 issue impacts its business operations on
three levels: (i) the products that the Company uses internally to conduct its
business, (ii) the products that it sells, and (iii) (indirectly) the software
products that its customers use to conduct their business. The Company has
initiated and continues to pursue the evaluation process on all three fronts.
The Company currently does not believe that the impact on the business with
regard to products used internally will be material. In addition, the Company
has already made significant strides with regard to the products that it sells,
and does not believe there are any material uncertainties or commitments in this
area. With regard to the software products that its customers use to conduct
their business, the Company does not believe it is possible to evaluate or
estimate the impact that significant deficiencies in these systems would have on
the business. However, to the extent its customers may be forced to make
signficant expenditures to address Year 2000 issues, the Company's customers may
elect to forgo purchasing the Company's products in order to devote resources to
address these issues.



                                       12
<PAGE>   13


    PART II.  OTHER INFORMATION



    ITEM 1.    LEGAL PROCEEDINGS

               None

    ITEM 2.    CHANGES IN SECURITIES

               None

    ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

               None

    ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

               None

    ITEM 5.    OTHER INFORMATION

               None

    ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

               Financial Data Schedule



                                       13
<PAGE>   14

SIGNATURES



Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



DATED:  May 13, 1998



                                     INTERLINQ SOFTWARE CORPORATION
                                     (Registrant)



                                     /s/ Stephen A. Yount
                                     --------------------
                                     Stephen A. Yount
                                     Vice President, Finance and Chief Financial
                                     Officer (Principal Financial and Accounting
                                     Officer)