UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                   FORM 10-QSB


             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES ACT OF 1934 FOR THE QUARTER ENDED
                               SEPTEMBER 30, 1998


                         Commission file number 0-28610

                                 XOX CORPORATION
           (Name of small business issuer as specified in its charter)

        Delaware                                                 93-0898539
(State or jurisdiction of                                     (I.R.S. Employer
incorporation or organization)                               Identification No.)

               7640 West 78th Street, Bloomington, Minnesota 55439
                                 (612) 946-1191
          (Address and telephone number of principal executive offices
                        and principal place of business)

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 periods 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 issuer's classes of
common stock, as of the latest practical date:

Common Stock, $.025 Par Value - 3,072,401 shares outstanding as of October 15,
1998.

Transitional Small Business Disclosure Format (check one): Yes ___ No _X_


                                     page 1

<PAGE>


PART 1
FINANCIAL INFORMATION

Item 1. Financial Statements

<TABLE>
<CAPTION>

XOX Corporation                                              September 30,    December 31,
Balance Sheets                                                   1998             1997
U.S. Dollars                                                  Unaudited
                                                             ------------     ------------
<S>                                                          <C>              <C>         
Current Assets:
      Cash and cash equivalents                              $  1,011,427     $    687,039
      Accounts receivable                                         108,936          279,888
      Prepaid expenses                                             32,750           22,719
                                                             ------------     ------------
Total current assets                                            1,153,113          989,646

Property and equipment
      Furniture and fixtures                                       81,691           81,691
      Computer equipment                                          393,002          393,002
                                                             ------------     ------------
                                                                  474,693          474,693

      Less accumulated depreciation                               409,237          363,889
                                                             ------------     ------------
           Net property and equipment                              65,456          110,804

License agreements, net of amortization of $62,292
      and $100,625 at September 30, 1998 and December 31,          14,375           52,708
      1997, respectively

Investment in joint venture                                       127,799           80,532
                                                             ------------     ------------
Total assets                                                    1,360,743        1,233,690
                                                             ============     ============

Current liabilities
      Accounts payable                                            151,523          184,005
      Accrued expenses                                              8,710          118,442
                                                             ------------     ------------
Total current liabilities                                         160,233          302,447

Deferred revenue                                                  219,976          118,465

Long-term liabilities
      Long-term debt related parties                              496,249          632,005
      Accrued payroll taxes                                        17,701           25,783
      Other accrued liabilities                                    63,771           78,771
                                                             ------------     ------------
Total long-term liabilities                                       577,722          736,559

Stockholders' equity:
      Common stock                                                 76,821           76,298
      Additional paid-in capital                               12,696,744       12,677,471
      Accumulated deficit                                     (12,370,752)     (12,677,550)
                                                             ------------     ------------
Total stockholders' equity                                        402,813           76,219
                                                             ------------     ------------

Total liabilities and stockholders' equity                   $  1,360,743     $  1,233,690
                                                             ============     ============
</TABLE>

See note to Financial Statements


                                     page 2

<PAGE>


PART 1
FINANCIAL INFORMATION

Item 1. Financial Statements

<TABLE>
<CAPTION>
                                              For the Three Months Ended      For the Nine Months Ended
XOX CORPORATION                                      September 30,                   September 30,
Statement of Operations                          1998            1997            1998            1997
U.S. Dollars                                  Unaudited       Unaudited       Unaudited       Unaudited
                                             -----------     -----------     -----------     -----------
<S>                                          <C>              <C>              <C>              <C>         
Net revenues
      Customer support and consulting        $   166,742     $   163,735     $   392,221     $   349,219
      Maintenance                                 87,761                     $   417,290              --
      Royalties, Licenses, Products              308,611          35,404         809,811         325,312
                                             -----------     -----------     -----------     -----------
                                                 563,114         199,139       1,619,322         674,531

Operating expenses
      Research and development                   189,666         254,491         641,484         944,513
      Selling, general and administrative        216,664         328,741         720,172       1,152,204
                                             -----------     -----------     -----------     -----------
                                                 406,330         583,232       1,361,656       2,096,717

Income (loss) from operations                    156,784        (384,093)        257,666      (1,422,186)

Interest income                                    8,475          16,756          20,773          68,277
Interest expense                                  (8,723)        (10,781)        (28,291)        (35,011)
Miscellaneous                                        184              --          11,426
Gain on Debt Repayment                                                            12,974
Share of joint venture net Income (loss)              --          19,650          32,249          39,512
                                             -----------     -----------     -----------     -----------

Net Income (loss)                            $   156,720     ($  358,468)    $   306,797     ($1,349,408)
                                             ===========     ===========     ===========     ===========

Basic income (loss) per share                       0.05           (0.12)           0.10           (0.46)
                                             ===========     ===========     ===========     ===========

Diluted net income (loss) per share                 0.04              --            0.09              --
                                             ===========     ===========     ===========     ===========

Weighted average number of shares
      outstanding                              3,072,401       2,952,931       3,066,576       2,941,666
                                             ===========     ===========     ===========     ===========

Weighted average number of shares
  assuming dilution                            3,597,350       2,952,931       3,397,421       2,941,666
                                             ===========     ===========     ===========     ===========
</TABLE>

See note to Financial Statements


                                     page 3

<PAGE>


PART 1
FINANCIAL INFORMATION

Item 1. Financial Statements

<TABLE>
<CAPTION>
                                                                         For the Nine Months Ended
XOX CORPORATION                                                                September 30,
Statement of Cash Flows                                                     1998            1997
U.S. Dollars                                                             Unaudited       Unaudited
                                                                        -----------     -----------
<S>                                                                       <C>            <C>    
OPERATING ACTIVITIES
              Net Income (loss)                                             306,797      (2,470,841)
              Adjustments to reconcile net loss to net cash
                   used in operating activities
                   Depreciation                                              45,348          18,699
                   Amortization                                              38,333          57,500
                   Loss on disposal of property and equipment                    --          74,466
                   Share of joint venture net (gain)/loss                   (32,249)        (39,512)
                   Fair value of options granted for service                     --         241,742
                   Write-off note receivable due to impairment                   --         161,000
                   Gain on extinguishment of debt                           (12,974)
                   Changes in other operating assets and liabilities
                        Accounts receivable                                 170,952         (85,912)
                        Prepaid expenses                                    (10,031)         68,238
                        Accounts payable                                    (73,155)        (25,390)
                        Accrued interest                                      8,710              --
                        Accrued liabilities                                 (77,765)         32,854
                        Deferred revenue                                    101,511          52,798
                                                                        -----------     -----------
Net cash used in operating activities                                       465,477      (1,914,358)

INVESTING ACTIVITIES
Purchase of property and equipment                                               --         (70,333)
Working capital advances to XOX-Asia                                        (15,018)             --
Advance under note receivable                                                    --        (149,000)
                                                                        -----------     -----------
Net cash used in investing activities                                       (15,018)       (219,333)

FINANCING ACTIVITIES
Net proceeds from issuance of common stock                                       --         151,800
Payments on notes payable                                                  (126,071)        (51,621)
                                                                        -----------     -----------

Net cash provided (used) by financing activities                           (126,071)        100,179
                                                                        -----------     -----------

Net increase (decrease) in cash and cash equivalents                        324,388      (2,033,512)
Cash and cash equivalents at beginning of period                            687,039       2,720,551
                                                                        -----------     -----------
Cash and cash equivalents at end of period                                1,011,427         687,039
                                                                        ===========     ===========
</TABLE>

See note to Financial Statements


                                     page 4

<PAGE>


                                     Part 1


                              FINANCIAL INFORMATION

                    Item 1. Financial Statements (continued)

                                 XOX Corporation

                          Note to Financial Statements

                               September 30, 1998

Note 1 - Basis of Presentation

The financial statements have been prepared by XOX Corporation, without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
The information furnished in the financial statements includes normal recurring
adjustments and reflect all adjustments which are, in the opinion of management,
necessary for a fair presentation of such financial statements. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and accompanying
notes included in the Company's annual report to the Securities and Exchange
Commission on Form 10-KSB for the fiscal year ended December 31, 1997.

Note 2 - Earnings (Loss) per share
<TABLE>
<CAPTION>

                                      Three months ended             Nine months ended
                                         September 30                     September
                                      1998           1997            1998           1997
                                   ---------------------------------------------------------
<S>                                <C>            <C>            <C>            <C>         
Net income (loss)                  $  156,720     $ (358,468)    $  306,797     $(1,349,408)
Denominator for earnings
  (loss) per share:                
Weighted average shares             3,072,401      2,952,931      3,066,576       2,941,666
Effect of dilutive securities
  options and warrants                524,949              -        330,845               -
                                   ---------------------------------------------------------
                                    3,597,350      2,952,931      3,397,421       2,941,666
                                   =========================================================
Basic earnings (loss) per share    $   .05          $(.12)          $.10           $(.46)
Diluted earnings (loss) per share  $   .04          $(.12)          $.09           $(.46)
--------------------------------------------------------------------------------------------
</TABLE>

                                     page 5


<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

This report, other than historical financial information, contains
forward-looking statements that involve risks and uncertainties. These
forward-looking statements will likely be impacted by factors outside the
Company's control and may differ materially from actual future events or
results. There are a number of important factors that could cause actual results
to differ materially from those anticipated by any forward-looking information.
A description of risks and uncertainties relating to XOX Corporation and its
industry and other factors which could affect the Company's financial results
are included in the Company's Securities and Exchange Commission filings.

RESULTS OF OPERATIONS

FISCAL YEAR 1998 QUARTER ENDING SEPTEMBER 30, 1998 COMPARED TO QUARTER ENDING
SEPTEMBER 30, 1997

Net revenues for the quarter ended September 30, 1998 increased approximately
292% to $563,114, from $199,139 reported for the same quarter in 1997. Net
revenues for the nine -month period ending September 30, 1998 increased
approximately 140% to $1,619,322 from $674,531 reported in nine-month period
ending September 30, 1997. The primary reason for the increase in both periods
is attributable to revenues earned from certain agreements the Company entered
into with Geoquest, a division of Schlumberger Technology Corporation (The
"Schlumberger Agreements"). As disclosed in the Company's Form 10-QSB-A filed
for the quarter ended June 30, 1998, under the Schlumberger Agreements, XOX
assigned a co-ownership interest in SHAPES, subject to certain limitations in
how XOX agreed to provide services to GeoQuest to maintain, support and enhance
SHAPES. The Schlumberger Agreements provide for payments of approximately $5.75
million to XOX Corporation over three years, with additional sums possible based
upon potential software dispositions. There is no restriction on the number of
years in which XOX will receive royalties based on the number of such software
dispositions made by Schlumberger. The Schlumberger Agreements were the subject
of a press release dated July 23, 1998. The Company anticipates that geosciences
will continue in fiscal year 1998 to represent the strongest niche market for
providing revenues to XOX.

To increase the Company's revenues in 1998, the current Board and management
previously disclosed its intention to broaden the scope of business
opportunities available to the Company. XOX intended on broadening its business
opportunities in several ways; through the sale of nonexclusive licenses, which
may include the ownership of source code through partnerships and strategic
alliances for the purpose of joint development and marketing of end user
products; through the continued sale of OEM licenses at increased prices, which
price may include negotiated royalties and development support and through
continuing its custom development and consulting business. The Schlumberger
Agreements directly relate to these previously stated intentions. Further, XOX
announced


                                     page 6

<PAGE>


in the first week of November, the entering into of a contract with Interpretive
Imaging, LLC, and an enhancement to a current Development-OEM Software License
Agreement between XOX Corporation and Seismic Micro-Technology.

In an attempt to achieve profitability in 1998, the Company's Board of Directors
and its management budgeted for reduced expenses and monthly cash expenditures
for 1998, thereby hoping to improve the ratio of operating expenses to sales.
These reductions were implemented and effective on January 1, 1998. The results
of these efforts, as well as others, continued to be reflected throughout the
third quarter of 1998, with operating expenses averaging $58,967 per month less
than the Company's operating expenses for the same quarter in 1997. Operating
expenses averaged $81,673 per month less than the nine month period ending
September 30,1997.

The Company's research and development expenses for the quarter ended September
30, 1998 decreased approximately 25% to $189,666 from $254,491 reported for the
same quarter in 1997. The Company's research and development expenses for the
quarter ended September 30, 1998 represented approximately 47% of the Company's
total operating expenses as compared to 44% of the Company's total operating
expense in the third quarter of 1997. For the nine-month period ending September
30, 1998, the Company's total research and development expenses decreased 32% to
$641,484 from the Company's total research and development expenses of $944,513
reported in the same period in 1997. The Company's total research and
development expenses for the nine-month period ending September 30, 1998,
represented 47% of the Company's total operating expenses as compared to 45% of
the Company's total operating expenses for the same period in 1997.

Selling, general, and administrative expenses for the quarter ended September
30, 1998 decreased approximately 34% to $216,664 from $328,741 reported for the
same quarter in 1997. Selling, general and administrative expenses represented
approximately 53 % of the Company's total operating expenses as compared to 56%
of the Company's operating expenses in the third quarter of 1997. For the
nine-month period ending September 30, 1998, selling, general, and
administrative expenses decreased 37 % to $720,172 from $1,152,204 reported the
same period in 1997. The Company's selling, general and administrative expenses
represented 53% of operating expenses as compared to 55% of the Company's total
operating expenses for the same period in 1997.

The increase in revenues and the reductions in the operating expenses improved
the Company's ratio of operating expenses to revenues and resulted in net income
of $156,720 for the quarter ending September 30, 1998 and $306,797 for the nine
month period ending September 30,1998. This compares to a net loss of $358,468
and $1,349,408 for the same time periods in 1997. Thus, the Company net income
per share for the quarter ending September 30,1998 was $.05 and net income per
share for the nine months ending September 30,1998 was $.10 compared to a net
loss per share of $.12 for the quarter ending September 30, 1997 and $.46 for
the nine month period ending September 30,1997. The third quarter net income per
share of $.05 was below the second


                                     page 7

<PAGE>


quarter net income per share of $.08 due to requirements to recognize a portion
of the income derived from the Schlumberger agreement in the second quarter.
Despite recognizing a portion of this income in the second quarter year to date,
net income for the quarter ended June 30, 1998 increased from $.05 to $.10 per
share for the quarter ended September 30, 1998.

Interest income in the quarter ended September 30, 1998 of approximately $8,475
resulted primarily from the investment of the surplus cash realized from the
Company's 1998 earnings in money market accounts and short-term commercial
paper.

During the fourth quarter of 1998, the Company believes that operating results
could continue to vary substantially from the first three-quarters of 1998. At
its current stage of operations, the Company's quarterly revenues and results of
operations may be materially affected by the timing of the development,
introduction and market acceptance of the Company's and its licensees' products.


LIQUIDITY AND CAPITAL RESOURCES

The completion of the Company's initial public offering of its Units in
September 1996, and a partial exercise of the underwriter's over-allotment
option in November 1996, provided the Company with net proceeds of approximately
$4,997,000. This financing transaction gave the Company the necessary cash
infusion to pay down some debt and to continue to pursue its business strategy.

Cash and cash equivalents were $1,011,427 at September 30, 1998, compared to
$687,039 at December 31, 1997 and $1,024,474 at September 30, 1997. The
Company's working capital was $992,880 at September 30,1998, compared to working
capital of $687,199 at December 31, 1997 and working capital of $1,348,254 at
September 30, 1997. The Company's accounts receivables were $108,936 on
September 30,1998, compared to accounts receivables of $249,024 at September 30,
1997, and $279,888 at December 31, 1997.

In December 1996, the Company made an equity investment of $41,020 in IIS-XOX,
in exchange for a 47.5% interest in the joint venture. The Company's 47.5% share
of equity in earnings of the joint venture for the period ended March 31, 1998
amounted to $32,249 resulting in an investment shown on the balance sheet of
$112,781 at September 30, 1998, in accordance with the equity method of
accounting. At present, the Company has reached an agreement to exit the joint
venture. The final dissolution, which should occur during the fourth quarter of
1998, is not anticipated to have material impact on the earnings of the Company.
During the quarter ended September 30,1998, the Company advanced $15,108 in
working capital to XOX-India a wholly owned subsidiary that the Company is in
the process of establishing in India.


                                     page 8

<PAGE>


During the quarter ended September 30, 1998, the Company re-paid $126,071 of
notes payable. The Company anticipates making additional payments in 1999 on
long term notes that have a variable re-payment plan dependent on the Company
attaining after tax profits equal to or greater than the Company's after tax
profits in 1998.

The Company currently estimates that it will make capital expenditures in 1998
of approximately $20,000 for computer equipment.

The Company estimates that its current cash balance and the cash to be generated
from customer revenues will be sufficient to fund its operations and capital
needs through at least July 31, 2001. At its current stage of business
development, the Company's quarterly revenues and results of operations may be
materially affected by, among other factors, development and introduction of
products, time to market, market acceptance, demand for the Company's products,
reviews in the press concerning the products of the Company or its competitors
and general economic conditions. Many of these factors are not within the
control of the Company. As a result, there can be no assurance that the Company
will be sufficiently funded through the fourth quarter of 1998.


YEAR 2000

The Company is aware of the Year 2000 issue. During the past several months, the
Company has performed an internal analysis on its primary software product,
(SHAPES) and has begun to assess the readiness of the Company's other products,
its internal computer systems and third party equipment and software for
handling such Year 2000 issues. The Company believes that the SHAPES product is
currently Year 2000 compliant. During the next several months, the Company, its
software engineers and its technical support staff expect to perform an extended
analysis on vendor supplied modules. While the Company cannot give any
assurances that these vendor modules will be Year 2000 compliant, the Company
expects to be able to successfully address and implement any necessary changes
to ensure Year 2000 compliance.

The Company is also in the process of addressing its administrative dependence
on software packages. Management intends on corresponding with its outside
vendors and third party suppliers to inquire about the Year 2000 readiness of
their respective products or services. To the extent that such vendors and
suppliers can ensure Year 2000 compliance, the Company anticipates continued use
and dependence on such third parties. However, there can be no assurance that
these outside vendors and third party suppliers will be able to become Year 2000
compliant, which could have an adverse effect on the Company.

XOX is committed to being Year 2000 compliant and realizes the impact to our
customers if the Company is unable to continue developing, maintaining and
supplying


                                     page 9

<PAGE>


SHAPES software. The Company is in the early stages of developing contingency
plans in areas that may be impacted by Year 2000 related computer failure and
expects to have these plans in place by the year end 1999.

To date, the Company has not incurred any significant expenditures associated
with becoming Year 2000 compliant. As management continues the assessment, the
Company may find it necessary to incur additional costs to become Year 2000
compliant. However, the Company cannot give any assurance that it will in fact
be able to be Year 2000 compliant, or that other problems or costs associated
with the Year 2000 issue will not arise.


                                    page 10

<PAGE>


                                     PART II

                                OTHER INFORMATION


Item 1.  Legal Proceedings

         None

Item 2.  Changes in Securities


USE OF PROCEEDS FROM REGISTERED SECURITIES

1.   The effective date of the registration statement for which this information
     is reported was September 11, 1996.

2.   The following is a reasonable estimate of, the amount of net offering
     proceeds to the issuer used for each of the purposes listed below. An "x"
     has been placed to the left of any amount that is an estimate.

                        DIRECT OR INDIRECT PAYMENTS TO DIRECTORS, OFFICERS,
                        GENERAL PARTNERS OF THE ISSUER OR THEIR ASSOCIATES; TO
                        PERSONS OWNING TEN PERCENT OR MORE OF ANY CLASS OF
                        EQUITY SECURITIES OF THE ISSUER; AND TO AFFILIATES OF
                        THE DIRECT OR INDIRECT ISSUER PAYMENTS TO OTHERS
                                            (A)                 (B)

(01) Construction of plant, building
     and facilities

(02) Purchase and installation of
     machinery and equipment                                 $115,139

(03) Purchase of real estate

(04) Acquisition of other business(s)

(05) Repayment of indebtedness            $652,982           $434,751

(06) Working capital                x                        $661,784

Temporary investment (specify)



(07) Money Market                   x                      $1,011,427


                                    page 11

<PAGE>


Other purposes (specify)

(11) Purchase of software                                     $85,000

(12) Sales and marketing                                   $1,010,902

(13) Research and development                              $2,187,769

(14) IMETRIX Loan                                            $161,000

Item 3.  Defaults Upon Senior Securities

         None

Item 4.  Submission of Matters to a Vote of Security Holders

         None


                                    page 12

<PAGE>


Item 5.  Other Information

         Effective September 18, 1998, John Sherbin II resigned as a member of
         the XOX Corporation Board of Directors due to his resignation as Chief
         Financial Officer of ANSYS, Inc. Mr. Sherbin had been the
         representative of ANSYS, Inc. on the Company's Board of Directors.

         Concurrent with Mr. Sherbin's departure, the Company's Board of
         Directors voted to appoint Paul Johnson, who is Senior Vice President
         of Production Creation for ANSYS, Inc., as a new member of the
         Company's Board of Directors.

         In addition, Mr. Peter Dahl and Mr. Craig Gagnon have been appointed to
         the Company's Board of Directors, effective November 11, 1998. Mr. Dahl
         is currently the Vice President and Chief Operating Officer of
         BankWindsor and Mr. Gagnon is currently a partner at Oppenheimer, Wolff
         & Donnelly.

Item 6.  Exhibits and Reports on Form 8-K

         (a)   Exhibits

               (i)  Those exhibits required to be furnished in response to this
                    item other than Exhibit 27, were furnished in connection
                    with the Company's Registration Statement on Form SB2, File
                    No. 333-05112-C, as filed with the Securities and Exchange
                    Commission and as amended, and other reports filed under the
                    Securities Exchange Act of 1934, all of which are
                    incorporated here in by reference.
               (ii) Exhibit 27.6 - Financial Data Schedule

         (b)   Reports on Form 8-K

               None


In accordance with the requirements of the Exchange Act, the Company caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

                                         XOX Corporation


October 30,1998
                                         By /s/ Steven B. Mercil
                                            Steven B. Mercil
                                            Chief Financial Officer


                                    page 13