UNITED STATES 
                         SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
                             __________________________
                                    FORM 10-KSB

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
     SECURITIES EXCHANGE ACT OF 1934
     For the fiscal year ended December 31, 1998
                                         OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
     SECURITIES AND EXCHANGE ACT OF 1934

                     Commission File Number: 0-26008

                                MYSOFTWARE COMPANY
                 2197 E. Bayshore Road, Palo Alto, California 94303
                                 (650) 473-3600


Incorporated in                   I.R.S. Employer Identification No.
Delaware                                       7-0195362
--------                                       ----------

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act: Common Stock

Indicate by check mark whether the registrant: (1) has filed all reports 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 by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulations S-K is not contained herein, and will not be contained, 
to the best of the registrant's knowledge, in definitive proxy of information
statements incorporated by reference in Part III of this Form 10-KSB. [ X ]

Based on the closing price of $18.50 on February 28, 1999, the aggregate 
market value of the common stock held by non-affiliates of the registrant as
of February 28, 1999 was $62,824,372. 
The number of shares outstanding of the registrant's common stock as of 
December 31, 1998, was 4,458,950.

                         DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement dated April 12, 1999 to be 
delivered to stockholders in connection with the Notice of Annual Meeting of
Shareholders to be held on May 19, 1999, are incorporated by reference into 
Part III.

<PAGE>

                                  TABLE OF CONTENTS

                                                                   Page No.
                                        PART 1
Item 1. Business                                                       3

Item 2. Properties                                                    16

Item 3. Legal Proceedings                                             16



                                        PART II


Item 5. Market for Registrant's Common Stock and Related Stockholder 
        Matters                                                       17

Item 6. Management's Discussion and Analysis of Financial Condition 
        and Results of Operations                                     17

Item 7. Financial Statements and Supplementary Data                   21

Item 7a. Quantitative and Qualitative Disclosure About Market Risk    21


                                        PART III


Item 9.	Directors and Executive Officers of the Registrant            22

Item 10. Executive Compensation                                       22

Item 11. Securities of Ownership of Certain Beneficial Owners and 
         Management                                                   23

Item 12. Certain Relationships and Related Transactions               23

Item 13. Exhibits, Financial Statement Schedules, and Reports on 
         Form 8-K                                                     23

Signatures                                                            24

Financial Statements                                                  26

Exhibits                                                              44


<PAGE>


                                      PART I

ITEM 1. BUSINESS

MySoftware Company (the "Company" or "MySoftware") designs, markets, and 
supports a family of leading task-specific software applications, 
annuity-based products and Internet services for small businesses, including 
home-based businesses. MySoftware provides users with easy-to-learn and 
easy-to-use direct marketing solutions, including tools for downloading 
on-line prospects lists, on-line file back-up, managing mail lists and saving
on direct mail postage. MySoftware also provides graphic tools and 
productivity tools for creating brochures, stationery, postcards, labels, and
invoices and estimates. Headquartered in Palo Alto, California, the Company 
was founded in 1986 and completed its initial public offering in June 1995.  

In addition to retail software products, MySoftware offers complementary 
annuity-based products and Internet services to its customers, particularly 
in the area of direct marketing, where MySoftware has established a leading 
market position. With an increasing number of small businesses relying on 
direct marketing to grow their businesses, MySoftware is positioned to meet 
the on-line list prospecting, mailing management needs of this important 
market.  Current services include address correction, available through 
subscriptions to MyAddressChecker CD-ROM, on-line file back-up, available 
through www.myfilebackup.com, and on-line prospects download, available 
through www.myprospects.com, offering customers added value and creating the 
opportunity for long-term relationships with MySoftware. 

The Company places significant emphasis on consumer marketing techniques in 
developing products and building brand awareness.  The Company primarily 
distributes its packaged products through the retail channel in computer 
software and office supply stores throughout the United States and Canada.  
The Company has also added new distribution methods, including direct, 
original equipment manufacturer ("OEM"), international and Internet channels.
In addition to retail software products, annuity-based direct marketing 
products and Internet prospecting services, the Company also offers 
complementary paper products and receives commissions from the sales of such 
products by third parties.

IDC/Link reports that there are approximately 22 million small businesses and
home businesses in the United States. According to IDC/LINK, 
income-generating home offices are expected to grow over 27% from 1995 to 
1999, with the fastest growth expected in those companies with fewer than 10 
employees. According to a Home Office Computing (1997) survey, the top three 
challenges facing small businesses are getting new business, promoting their 
businesses and growing their businesses. In sum, there is a need to address 
the #1 concern of over 67% of small business professionals: How do I quickly 
and profitably grow my business?  The Company's internal research indicates 
that small businesses are concerned about projecting a professional image in 
their sales and marketing materials and in other communications with 
customers.  The Company's research also indicates that many small businesses 
perceive opportunities for improvement in the delivery and management of 
prospect lists and mailings.  

Historically, small businesses have lacked the tools to obtain on-line 
prospects lists, create professional-quality marketing materials and to mail 
their materials effectively, or they have relied on costly third-party 
providers. Today, small businesses are adopting new office productivity 
technologies in growing numbers.  Penetration of computers in the small 
business market increased from 40% in 1989 to 80% in 1998, according to 
IDC/LINK.  In addition, penetration of Internet access in the small business 
market increased from 20% in 1996 to 44% in 1998, according to IDC/LINK. 
Moreover, the availability of low cost, high resolution laser and inkjet 
printers, including color printers, has made it possible to produce 
professional-looking materials directly from personal computers.  As a result,
small businesses are increasingly using their computers to find their 
prospects, combine text, data, and color graphics to produce high-quality 
marketing materials on their own desktops and to mail these materials via the
United States Postal Service ("USPS") to their prospects.

To serve this market, a number of companies have begun to offer marketing and
communications products as well as all kinds of on-line services targeted 
towards small businesses.  These companies include Dun and Bradstreet Corp. 
("D&B") and infoUSA, which provide targeted mailing lists; D&B, infoUSA, 
iMarketinc, and I-Rent-America, which offer on-line data download; 
PaperDirect, Inc. ("PaperDirect"), and Geographics, Inc., ("Geographics"), 
which provide pre-printed papers; Pitney Bowes, Inc. ("Pitney Bowes"), which 
provides their Personal Post Office, a desktop postage meter for small 
businesses including home-based businesses; and Kinko's Copies and Alpha 
Graphics, Inc. which provide production services. Although various general 


<PAGE>


purpose software applications,such as word processing, database, and desktop 
publishing applications, have a broad range of features and can be used to 
perform many of the sales and marketing tasks desired by small businesses, 
these applications are often complex and relatively difficult to use.  
Accordingly, the Company believes that there is a substantial opportunity for
offering direct marketing solutions, from on-line prospecting data download 
to task-specific software designed to provide cost-effective, easy-to-learn, 
and easy-to-use solutions, to busy, results-oriented small business users.

Company Strategy

The Company's core strategy is to help its users to turn their PCs into 
direct marketing powerhouses and transition the Company from a primarily 
retail software company to a direct marketing solution company. MySoftware's 
core software products and services address the sales and marketing needs of 
small businesses: attracting new business, communicating with customers, and 
managing customer lists. In order to address this growing market, the Company
has focused on becoming the leading seller in its core categories, including 
on-line prospecting, mailing, brochures, labeling, business cards, and 
invoices/estimates.  Key elements of the Company's strategy are summarized 
below.  

Provide a cost-efficient Web service for new customer prospecting at 
www.myprospects.com. MyProspects.com users can connect real-time via the 
Internet to 13 million U.S. business listings and a 112 million consumer 
listings compiled by Polk and Experian.  Detailed geographic and demographic 
selection criteria assists in generating prospecting lists targeting specific
customer demographics.  Small business users are the key targets for 
www.myprospects.com as they are constrained in the search for new customers 
by i) access to quality direct marketing list data, ii) overall data cost and
iii) time. Presently small business users do not have real time access to 
quality direct marketing prospecting data in small, inexpensive quantities 
due to the nature of the mainframe computing infrastructure of data compilers
such as Polk and Experian. By offering a Web-based new customer prospecting 
tool through www.myprospects.com, the Company can deliver new customer 
prospecting data in smaller quantities than currently available to the small 
business market in a cost effective, Internet efficient and timely framework.

Provide a line of fully featured, task-specific applications. The Company's 
target users are busy and results-oriented.  These users often find general 
purpose software programs cumbersome to learn and to use for a particular 
task.  By developing task-specific applications, MySoftware makes its 
products easy to learn and use, while incorporating all the capabilities 
needed to successfully perform a focused task.  Users can solve other small 
business marketing challenges by purchasing additional task-specific software 
from MySoftware's family of inter-related products.

Build product loyalty and brand name.  The Company believes that building the
MySoftware brand is important to its long-term success.  By offering a family
of related products that complement one another and have similar names and 
packaging, the Company aims to raise brand awareness and increase sales of 
each of its products.  MySoftware also conducts active brand marketing and 
communications campaigns, including public relations efforts, direct 
communications, advertising, and retailer promotions.  To further increase 
consumer exposure to its products, the Company establishes cooperative 
marketing arrangements with companies that offer complementary sales and 
marketing products.  To date, MySoftware has established such arrangements 
with Avery Dennison Corporation ("Avery"), American Express Company 
("American Express"), PaperDirect, Geographics, New England Business Systems,
Inc. ("NEBS"), Pitney Bowes, MindSpring Enterprises, Inc. ("MindSpring") and 
EarthLink Network, Inc.("EarthLink"). 

Focus on core product categories.  MySoftware focuses its marketing and 
development resources on three core product categories: Web prospecting, 
mailing and marketing communication.  The Company further leverages its 
leadership position in the mailing category by offering annuity-based 
mailing-related products and services. By maintaining this focus, the Company
believes that it will continue to be positioned to understand customer needs,
produce easy-to-learn and easy-to-use products, build its brand name, and 
lead the market in these categories. 

Focus on expanding channels of distribution.  Presently, the Company's 
distribution efforts for packaged software are primarily focused on the 
retail channel, since most small businesses and individuals purchase software
through retail outlets.  The Company actively seeks to increase its 
visibility in the retail channel by conducting periodic retail promotions, 
monitoring sell-through and inventory levels, designing its packaging for 
self-service selling environments, supporting retailers' advertising and 
promotional efforts, and conducting independent public relations and 
advertising efforts. In addition to retail distribution, the Company is 
actively expanding its direct channel and Web channel for its products and 
services offerings. The Company also distributes products through its OEM 
channel, through which it has formed partnerships with internationally known 
companies such as Pitney Bowes, Hewlett-Packard Company, Brother, Ameritech, 
US WEST, Acer and other industry leaders. Such relationships enable the 


<PAGE>


Company to generate additional revenues, expand its target market for 
annuity-based products and services, and build awareness of the MySoftware 
brand. 

Emphasize market-driven product development.  The Company employs extensive 
market research and user feedback to define, develop, and improve its 
products and services to meet customer needs more effectively.  MySoftware 
applies an integrated four-step consumer marketing process to define, 
develop, and improve its products.  These steps include: performing consumer 
research to identify user needs and behavior; incorporating the research to 
develop easy-to-learn, easy-to-use, fully featured, task-specific 
applications; conducting both pre- and post-release usability testing to 
validate these designs; and collecting customer support data and product 
returns feedback to drive future improvements.

Leverage core competencies.  MySoftware leverages its core competencies in 
product development and in sales and marketing through strategic use of 
third-party service providers.  The Company has chosen to use third-party 
providers to perform functions that it believes can be better or more 
effectively performed by a specialized organization.  These functions include
some portion of the software coding , assembly, customer technical support, 
telephone customer registration, and some aspects of direct communications to
consumers (such as fax and e-mail distribution).  MySoftware believes that 
this organizational approach allows it to achieve quality and flexibility and
to control costs, while maintaining effective control over its business 
operations.

Products

The Company's core products are a family of leading task-specific software 
applications that address the specific sales and marketing needs of small 
businesses, usually those with ten or fewer employees.  The Company provides 
users with powerful, easy-to-learn and easy-to-use solutions for creating 
customized, professional-quality mailing lists, brochures, labels, business 
cards, invoices/estimates, and other marketing communications materials.  The
Company also markets annuity-based mailing products and Web prospecting 
services that complement the Company's existing mailing software products. 
The Company backs its products with a 30-day money-back guarantee.  Most of 
MySoftware's core applications are available for Microsoft Windows 3.1, 
Windows 95 and Windows 98.  In addition, the Company introduced its first 
Web-based services in Q4 1998 to address its target users' needs in efficient
prospecting and back-up utilities.

MyDeluxeMailList / MyAddressChecker / MyMailList & Address Book / MyBusiness 
e-Mailer
MySoftware's initial mailing list product was introduced in September 1987.  
The advanced version introduced in June 1989, stores and organizes mailing 
list data that can be printed in a variety of forms, including mailing 
labels, envelopes, address books, and Rolodex cards, or used in conjunction 
with other MySoftware applications, such as MyAdvancedBrochures. 
MyDeluxeMailList, the updated version of the advanced mailing list 
application,  introduced in March 1995, includes Zip Look Up, a CD-ROM of 
every valid address in the United States, enabling users to correct their 
addresses and add ZIP+4 codes that help speed delivery of their mail.  Since 
then, MyDeluxeMailList has been updated periodically and runs on both Windows
95 and 98 format.  MyDeluxeMailList has a built-in database function that 
enables MySoftware's customers to maintain and sort mailing lists and other 
customer data.  MyAddressChecker, introduced in 1994, is USPS CASS-certified 
and enables users to qualify for Bulk Mail discounts from the Post Office.  
Users must subscribe to bi-monthly CD-ROM updates to continue to qualify for 
postal discounts, which can be as great as approximately 72%. The program 
verifies and corrects addresses against the national database of deliverable 
addresses maintained by the Post Office and supplies the appropriate ZIP+4 
codes necessary to print delivery point bar codes and to qualify for these 
discounts.  MyMailList & Address Book, introduced in December 1997, provides 
users with simple features to organize names and addresses, at a lower price 
point than the Company's other mailing products. MyBusiness e-Mailer, 
introduced in December 1998, is designed to help users to reach their 
customers efficiently and effectively. MyBusiness e-Mailer offers a fully 
featured mass email application with built-in database and works with most 
popular database programs to help users to reach their customers efficiently 
and effectively.

MyBrochures / MyAdvancedBrochures / MyProfessionalMarketingMaterials / 
MyBusinessPublisher 
MyBrochures was originally introduced in April 1994. MyAdvancedBrochures was 
introduced in September 1994.  MyAdvancedBrochures enables users to design 
and produce flyers, postcards, professional-looking color brochures, menus, 
newsletters, and invitations in a variety of formats and sizes.  All these 
brochure programs offer built-in templates, which can be easily customized to
suit users' needs. The Windows 95 version of the program was introduced in 
September 1995.  MyProfessional-MarketingMaterials, introduced in September 
1996, provides customers with more than 600 color printable designs, as well 
as the ability to design from more than 500 pre-printed specialty papers.  
MyBusinessPublisher was introduced in December 1998.  MyBusinessPublisher is 
an all-in-one solution for any marketing print and Web publishing needs.  
This product provides users with powerful and easy-to-use design and drawing 
tools.


<PAGE>


MyAdvancedLabelDesigner / MyDeluxeLabelDesigner / MyLabels 
MySoftware's initial labeling product was introduced in March 1988. 
MyAdvancedLabelDesigner, introduced in May 1992, enables users to design and 
print professional-looking, color labels in  standard and custom sizes, 
including mailing and shipping labels, name cards, Rolodex cards, file 
folders, cassette and video tape labels, and more.  Text, data, and graphics 
can be entered directly into MyAdvancedLabelDesigner or imported from other 
applications such as dBase, Paradox, and Access.  Labels can be enhanced with 
special design elements including color, rotated text, and clip art.  In 
March 1996, the Company introduced the Windows 95 version of 
MyAdvancedLabelDesigner, which supports ten different label brands and more 
than 500 label sizes. MyLabels was introduced in March 1996 to provide 
similar features to a more value-conscious consumer. 

MyAdvancedInvoices & Estimates / ProVenture Billing Solution 
MySoftware's initial invoice product was introduced in December 1990.  The 
Advanced version, introduced in August 1993, is an invoicing, estimating, and
cash management application.  The program easily produces professional-looking 
invoices and estimates on plain paper or on a variety of pre-printed forms.  
The application also produces a variety of sales and accounts-receivable 
reports designed to assist small businesses in analyzing financial and 
accounting aspects of their businesses.  The current version of 
MyAdvancedInvoices is embedded with Windows 95 code base and offers enhanced 
usability features. ProVenture Billing Solution was introduced in June 1997 
and was designed to help customers manage the entire billing process. It 
offers enhanced tracking capabilities, such as the Tracker window that 
automatically notifies the user when a customer is overdue.  MySoftware also 
sells pre-printed invoice, estimate, and statement forms for use with all 
software products in its invoicing/estimating category.  The Company 
contracts with a third party to manage its private-label forms business and 
shares in the sales revenues and marketing costs of the business. There can 
be no assurance that this arrangement can be maintained or will benefit the 
Company.

MyProfessionalBusinessCards / ProVenture Custom Business Stationery
In April 1995, the Company introduced MyProfessionalBusinessCards. 
MyProfessionalBusinessCards gives small business owners a tool for creating 
professional-looking business cards in minutes.  This program gives small 
business owners the flexibility to design and print small quantities of 
customized business cards for any occasion. MyProfessionalBusinessCards is 
available in both Windows 3.1 and Windows 95 versions. The Company introduced
Custom Business Stationery in May 1997. This product is designed to create 
custom, matching, professional-quality business cards, letterhead, and 
envelopes. Custom Business Stationery also gives customers the ability to 
import logos in 15 different formats and to maintain a database of employees 
or contacts.

ProVenture Budget Titles
During 1998, the Company introduced a total of 12 budget products under its 
ProVenture brand name. These budget products address the same marketing and 
mailing needs to end-users like its core products except with fewer features 
and are offered at a lower prices at retail. The twelve budget products that 
were introduced in 1998 were Business Cards, Label Maker, Mail List, DataBase,
Brochures, Stationery, Invoices & Estimates, Postcards, Newsletters, 
Presentation & Charts, Address Book, and WebPage Designer.

Web Products and Services
The Company launched its Web site, www.myprospects.com in December 1998 to 
enable users to select and download qualified customers from the Internet. 
With www.myprospects.com, users can connect with more than 13 million USA 
business listings and more than 180 million consumer records compiled by the 
leading companies in the Direct Marketing industry in a cost-effective and 
time-efficient way.  In addition to the prospecting service, the Company also
launched another Web site, www.myfilebackup.com to provide users with safe 
and secure off-site storage, automatic file backups, and unlimited access to 
their files from any PC in the world with Internet access.

Other Products
The Company sells a simple database program, MyDataBase, and other graphics 
tool products, MyTypeArtist and MyCreativeClipArt.  MyDataBase is designed to
enable users to easily organize and summarize information. MyTypeArtist 
contains 1,000 unique typestyles that can be browsed according to color, 
pattern, theme, shape and more. MyCreativeClipArt includes 10,000 quality 
clipart and border images for home and business use. In addition, the Company
also provides productivity tools for Internet home pages, Web-based resumes, 
and Web-based calendars. During 1998, the Company introduced its first 
seasonal product, MyHolidayMailingKit, which is designed for creating and 
mailing holiday greetings, announcements. The Company also markets the 
American Check Printers line of checks for personal financial programs.  
These products are not expected to contribute materially to the Company's 
future revenues. 


<PAGE>


Product Development

The software and Internet industry is undergoing rapid changes, including 
evolution of industry standards, introduction of new operating systems and 
environments, frequent new product introductions, introduction of new media, 
and changes in customer requirements and preferences.  The Company believes 
that its future success will depend in large part upon its ability to keep 
pace with competitive offerings, to adapt to new operating systems, hardware 
platforms, media, Internet technologies, and industry standards, and to 
provide additional functionality by enhancing its existing products and 
introducing new products on a timely basis.

The Company focuses on developing and improving its family of core products 
at the same time as it develops products and services in complementary 
software categories and Internet services related to direct marketing areas. 
This focused strategy allows MySoftware to know its market and to develop 
solutions to customer problems.  In order to meet the business development 
needs of small businesses, the Company works with current and prospective 
users to define the functionality of the Company's new products and services 
and make improvements to its existing products and services.  The Company's 
development process is organized around multi-functional teams composed of 
product development, marketing, and quality assurance personnel who work 
together in the development of products from an earlier design stage.  This 
team approach ensures a high level of marketing and customer support input 
throughout many stages of product development. From time to time, the Company
will license third-party's products that fit into the Company's core product 
line and strategy and publish such products under the Company brands and sell
them through the Company's channel.

MySoftware conducts systematic usability testing as an integral part of the 
product development process, beginning with the product specification phase, 
continuing during development and beta testing phases, and concluding with 
post-release customer satisfaction audits.  This testing is used to identify 
potential problems quickly and formulate early solutions.  In addition to 
monitoring customer support calls and requests, the Company has in place a 
mandatory customer registration program that further enhances its ability to 
monitor customer use of its products and to obtain valuable customer feedback.

With respect to its core software applications, MySoftware creates all 
product specifications for both new products and updates of its existing 
products, and maintains internal control over the creative and market-driven 
aspects of product development.  Once a product has been defined and a 
detailed specification has been designed, the Company leverages its resources
by outsourcing most of the coding functions.  The Company relies primarily on
two independent firms with which the Company has worked for eight and seven 
years, respectively, to perform the majority of the coding for its software 
products, including coding for new products and maintenance and bug-fix 
releases, and updates for existing products.  The need to update the 
Company's products, both for enhanced functionality and for ease of use under
new operating platforms, increases the Company's dependence on these 
third-party coders.  The Company has entered into separate software 
development agreements for the development of specific pieces of software as 
work-for-hire with its third-party coders.  The Company compensates 
third-party coders primarily through payments for software production costs 
and royalty payments.  Royalty expenses have been at 2% of net revenues of 
the relevant products, with a dollar maximum cap on total royalty payments 
for certain products.  The Company generally owns all intellectual property 
rights to products developed by third-party coders with the exception of the 
base code for MyBrochures, MyAdvancedBrochures, 
MyProfessionalMarketingMaterials, MyProfessionalBusinessCards, Custom 
Business Stationery and MyBusinessPublisher.  With respect to these products,
the Company owns the code for the user interface, while the base code is 
owned by the third-party coder.  The Company holds an irrevocable, 
non-exclusive license to copy and distribute the executable code compiled 
from the base code and to make limited modifications. There can be no 
assurance that third-party coders will not develop or market any stand-alone 
desktop publishing software based on the base code that competes with the 
Company's products. The Company's success depends in part on its continued 
ability to obtain and renew agreements for coding by independent software 
developers.  There can be no assurance that the Company will be able to 
obtain or renew such coding agreements on favorable terms, if at all.

The Company has made use of shared code across products.  For example, 
MyAdvancedMailList and MyAdvancedLabelDesigner share portions of the same 
base code, and the code for MyAdvancedBrochures was used to develop 
MyProfessionalBusinessCards, Custom Business Stationery and 
MyBusinessPublisher.  The Company believes its ability to leverage 
significant blocks of code across multiple products has enabled it to shorten
development time and reduce development costs.


<PAGE>


During 1998, the Company licensed third-party's products that are strategic 
to its product strategy and distributed such products through its regular 
channels. The Company generally does not own the intellectual property rights
to such licensed products. The Company compensates third-party licensees 
through royalty expenses for revenues generated from such licensed products. 
Royalty expenses for licensed products range from 10% to 12% of net revenues 
of the relevant products. The Company's success depends in part on its 
continued ability to renew or obtain such license agreements.  There can be 
no assurance that the Company will be able to obtain or renew such licensed 
agreements on favorable terms, if at all.

With respect to its development for the Internet services for prospecting, 
the Company formed an Internet Data Group in June 1998 to develop its 
Internet prospecting services. All the design, interface and programming are 
done by the Company's internal employees.  The Company's Web services success
depends on the ability to retain and recruit technical professionals to 
develop and maintain its Web services. There is no guarantee that the Company
can retain its professionals or can attract professional key employees with 
good qualifications and technical skills.

As of December 31, 1998, the Company had 20 full-time and one part-time 
professional and technical employees engaged in product development.  During 
the years ended December 31, 1998, 1997, and 1996, product development 
expenses were $1,915,015, $2,221,712, and $1,988,881, respectively, not 
including capitalized software production costs paid to third-party coders of
$523,032, $1,290,180 and $1,253,117, respectively, which were capitalized.

Sales and Marketing

Sales 
The Company's products are distributed primarily through computer software 
and office supply retailers throughout the United States and Canada, 
including computer superstores (CompUSA Inc.; Elek-tek, Inc.; Fry's 
Electronics, Inc.; MicroCenter), office warehouse clubs (Office Depot Inc.; 
OfficeMax; Staples Inc.), software specialty stores (Electronics Boutique; 
Future Shop), consumer electronics stores (BestBuy Co., Inc.) and general 
warehouse clubs (Price/Costco Inc.; Sam's Club). Of the Company's top ten 
retail outlets, MySoftware sells directly to six and serves the other four 
retailers through distributors such as Ingram Micro, Inc. ("Ingram"), 
Merisel, Inc. and Triad.  Ingram and Office Depot, Inc. accounted for 37% and
15% of net revenues for 1998, 37% and 20% of net revenues for 1997, and 34% 
and 29% of net revenues for 1996, respectively.  The Company has 
non-exclusive arrangements with its distributors and retailers that generally
do not require minimum purchases of the Company's products and may be 
terminated at any time.

The Company monitors product sell-through and retail inventory information.  
Most of the Company's distributors and key retailers provide weekly or 
monthly sell-through data as well as current inventory information.  This 
information is analyzed for both positive and negative trends and is used to 
assist the Company's retailers in managing product inventory levels.  This 
information is also used to determine the effectiveness of retail promotions 
and account advertising.  The Company's promotional vehicles are also geared 
toward increasing customer exposure to its products with additional facings 
and high traffic locations. The Company maintains sales forces in the Los 
Angeles and New York metropolitan areas, and has contracted with 
manufacturers' representative firms in the Dallas and Minneapolis 
metropolitan areas. 

The Company's products are also distributed through direct, OEM, and 
international channels. Direct sales to customers are expected to increase as
the Company introduces new, annuity-based products and services to its 
mailing customer base. Sales through the OEM channel, with partners such as 
Pitney Bowes, Brother, U S WEST, Ameritech and others, enable the Company to 
generate additional revenues, expand the target market for its annuity-based 
products and services, and build awareness of the MySoftware brand.  During 
December 1998, the Company launched its first Internet service channel via 
Web channel. Revenues from such Web channel and from sources outside of North
America have not been significant to date.

Cooperative Marketing Arrangements
MySoftware has entered into cooperative marketing relationships with 
companies that sell products complementary to the Company's products, 
including paper products and targeted mailing lists.  In exchange for 
inserting these marketing partners' catalogs and product samples inside the 
Company's retail software packages, the Company receives a 
per-registered-user fee, per-product-shipped fee, or sales commission on any 
sales generated by the Company's activities or other promotional 
consideration.  MySoftware currently has cooperative marketing programs with 
Geographics, PaperDirect, BeaverPrints, MindSpring and EarthLink. To date, 
these activities have not produced significant revenues, but the Company 
believes that these activities contribute to its brand-building efforts.  
There can be no assurance that any of these arrangements can be maintained or
will benefit the Company.


<PAGE>


In addition, the Company has developed custom versions of its products for 
sale by some of its marketing partners. The Company has entered into a resale
contract with NEBS, Geographics and Great Gizmos for various MySoftware 
titles. There can be no assurance that any significant revenue will result 
from these activities or that any of these relationships can be maintained.

Marketing
MySoftware's marketing department is responsible for managing products and 
developing new market opportunities; building brand recognition through 
public relations, advertising, and other promotional techniques; and 
communicating directly with current customers to market additional products 
and services. The Company's marketing department has three main areas of 
focus: product marketing, corporate marketing and direct communications.

The Company's product marketing group is responsible for analyzing the 
marketing needs of small businesses and individuals, specifying product 
features, validating product ease-of-learning and ease-of-use, managing 
package design, coordinating product training, developing sales of 
complementary products and services, and increasing repeat purchases by 
existing customers.  Market research is an integral part of MySoftware's 
customer-focused approach, enabling the Company to continue to improve 
existing products and define new products.  Product marketing personnel work 
closely with product development engineers to develop overall product 
development specifications based on demonstrated customer needs.

The Company's corporate marketing group focuses on building awareness of the 
MySoftware brand and increasing MySoftware product trials.  Its 
responsibilities include external communications, such as public and investor
relations, advertising, the corporate Web site, trademark issues and 
promotions. MySoftware also conducts periodic retail promotions designed to 
increase short-term sales and strengthen relationships with retailers.

The Company formed a direct communications group in late 1997 to utilize 
various technologies, including the Internet, to market products and services
directly to MySoftware customers, who then order these annuity products and 
services directly from the Company.  This group markets primarily 
mailing-related products and services to the Company's current mailing 
customers using direct mail, fax, and e-mail communications. In December 
1998, the Company launched the Web prospecting service, www.myprospects.com, 
as well as two software products, MyBusiness e-Mailer and 
MyBusinessPublisher, expanding its suite of direct marketing products and 
services.  This suite of direct marketing solution tools will be offered 
directly to the Company's existing customers as well as all the small office 
and home office users and in the meantime the direct communication group will
be actively promoting this direct marketing suite of products and services.

Customer Support

The Company's customer support activities provide valuable services to its 
customers and enhance customer satisfaction, in addition to providing 
valuable customer input to the Company's product development process.  
MySoftware provides customer technical support in-house for certain Internet 
products and through a third party managed by the Company's internal customer
support group for all other products.  This structure facilitates the 
Company's ability to achieve satisfactory customer support on a 
cost-effective basis.  The Company receives daily downloads of data from its 
customer technical support provider, allowing it to monitor service levels 
and support quality.  The Company's contract with its customer technical 
support operator can be terminated on 60 days' notice by either party.  This 
third-party provider also provides services to several larger companies, and 
there can be no assurance that demands from such companies or other factors 
will not result in termination of this relationship.  The unavailability of 
such a firm to perform customer technical support for the Company could 
result in significant disruption to the Company's operations, could lead to 
customer dissatisfaction, and could have a material adverse effect on the 
Company.

Operations

The Company directly performs all purchasing, finished goods inventory 
management and warehousing, scheduling, order processing, and shipping.  The 
Company prepares master software diskettes, CD-ROMs, user manuals, and 
packaging designs, and conducts independent quality control and testing at 
its facilities.  Diskette and CD-ROM duplication, printing of documentation, 
and packaging and assembly are performed by independent contractors to the 
Company's specifications.  To date, the Company has not experienced any 
material difficulties or delays in the manufacture and assembly of its 
products.  However, if such difficulties and delays were encountered and if 
the Company's transition to an alternate vendor were not completed promptly, 
the Company could be adversely affected.


<PAGE>


The Company generally ships products within three days of receipt of an 
order.  As a result, the Company has relatively little backlog at any given 
time, and does not consider backlog to be a significant indicator of future 
performance.

Competition

The market for the Company's small business products is intensely 
competitive, and is characterized by pressure to increase marketing and 
promotional activity, incorporate new features, release new product versions,
and reduce prices.  Existing software companies may broaden or enhance their 
product lines to compete with the Company's products, and other potential new
competitors, including computer hardware manufacturers, diversified media 
companies, and small business service companies, may enter or increase their 
focus on the small business software market, resulting in even greater 
competition for the Company. The Company's software products compete with 
task-specific products sold by Avery (labeling software), Intuit, Inc. 
("Intuit") (invoicing/estimating software), The Learning Company, Inc. 
("The Learning Company") (business card, labeling, and brochure/marketing 
material software), and several other companies of varying size and financial
and marketing strength.  The Company's products also compete with general 
purpose programs, such as word processing, database, and desktop publishing 
products from major software companies, including Adobe Systems Incorporated 
("Adobe"), Lotus Development Corp. ("Lotus"), Microsoft Corporation 
("Microsoft") and Corel Corporation ("Corel").  The Company believes it would
face increased competition from such general purpose programs if such 
programs were designed for greater ease-of-use of task-specific functions. 
The Company's Web services compete with the similar services provided by some
large data provider like InfoUSA, iMarketinc, I-Rent-America, and Dun & 
Bradstreet.  The Company believes that it will face increased competition 
from similar Web services provided by other data companies like Acxiom, First
Data, Experian and others. In addition, new operating systems may incorporate
features enabling users to accomplish small business marketing and other 
tasks currently addressed by the Company's software products.  

The Company's strategy of focusing on its core and complementary products and
services heightens the competitive risk.  Many of the companies with which 
the Company currently competes, or may compete in the future, have greater 
financial, technical, marketing, sales, and customer support resources, as 
well as greater name recognition and access to customers, than the Company.  
The competition for retail shelf space and direct Internet selling is also 
likely to increase due to the proliferation of software products and 
companies.  Failure to achieve and maintain unit sales volumes may result in 
loss of shelf space, which may, in turn, lead to further reductions in sales 
volumes.

Only a small percentage of products introduced in the market achieve any 
degree of sustained market acceptance.  Principal competitive factors in the 
marketing of software include product features, quality, reliability, 
technological sophistication, brand recognition, ease-of-learning, 
ease-of-use, merchandising, access to distribution channels and retail shelf 
space, marketing, advertising, public relations, price, and the availability 
and quality of support services.  The Company believes that it competes 
effectively in these areas, particularly in the areas of quality, brand 
recognition, ease-of-learning, ease-of-use, merchandising, access to 
distribution channels and retail shelf space.  To the extent that competitors
achieve performance, price, or other selling advantages, the Company could be
adversely affected.  There can be no assurance that the Company will have the
resources required to respond to market or technological changes or to 
compete successfully in the future.  In addition, increasing competition in 
the small business software market may cause prices to fall, which could 
adversely affect the Company.

The Company started offering its prospecting Web services in December 1998 
and expects to see increased competition from other larger data companies in 
the very near future.  There can be no assurance that the Company will have 
the resources required to successfully drive traffic to the Company's 
prospecting Web site or to convert such Web site traffic into revenues. 

Proprietary Rights and Licenses

The Company relies primarily on a combination of trademark, copyright, and 
trade secret laws, employee and third-party nondisclosure agreements and 
other methods to protect its proprietary rights.  The Company does not 
include in its products any mechanism to prevent or inhibit unauthorized 
copying.  Unauthorized copying occurs within the software industry, and if a 
significant amount of unauthorized copying of the Company's products were to 
occur, the Company could be adversely affected.  In addition, as the number 
of software products in the industry increases and the functionality of these
products further overlaps, software developers and publishers may 


<PAGE>


increasingly become subject to infringement claims.  There can be no 
assurance that third parties will not assert infringement claims against the 
Company in the future with respect to current or future products.  Use of 
third-party coders or license of third-party products may increase the risk 
of infringement of the rights of others.  The third-party coders' and 
licensors' liabilities to the Company for any infringement of copyrights, 
trade secrets or patents are contractually limited to royalties received from
the Company.

Although the Company has not been the target of any actual, pending, or 
threatened intellectual property litigation, there has been substantial 
litigation regarding copyrights, trademark, and other intellectual property 
rights involving other computer software companies.  Any such claims or 
litigation, with or without merit, could be costly and could divert 
management's attention, which could have a material adverse effect on the 
Company.  Adverse determinations in such claims or litigation could also have
a material adverse effect on the Company.

Employees

As of December 31, 1998, the Company employed 66 full-time employees and two 
part-time employees.  Of the Company's full-time employees, 27 are in sales 
and marketing, 20 are in development, six are in customer support, 10 are in 
systems, administration and finance, and three are in operations.  None of 
the Company's employees is represented by a collective bargaining agreement, 
nor has the Company ever experienced any work stoppage.  The Company believes
that it has good employee relations.

Risk Factors

The following risk factors should be considered carefully in addition to the 
other information contained in this  Form 10-KSB.

Emerging Market; Uncertainty of Market Acceptance
The Company's success is dependent on the market acceptance of its new and 
existing products and services.  The majority of the Company's revenues are 
derived from the sale of task-specific software applications for small 
businesses.  The market for such products is relatively undeveloped, making 
it difficult to predict with any assurance the future size of the market.  
The Company's focus on a small number of core products heightens exposure to 
these market development and product acceptance risks.  The Company embraces 
a strategy of building brand name recognition primarily through the use of 
consumer marketing techniques.  This strategy is likely to require increased 
sales and marketing expenditures.  There can be no assurance that the Company
will be able to build brand recognition successfully, or that its marketing 
strategy will be successful.  There also can be no assurance that the 
Company's existing products will achieve broad-based market acceptance, that 
sales of such products will continue at historical rates or that the Company 
will introduce new products that achieve significant market acceptance in the
future.

The Company's success is increasingly dependent upon its ability to secure 
arrangements with OEM partners that distribute the Company's products.  These
relationships allow the Company to generate additional revenues, expand its 
target market for annuity-based products and services, and build awareness of
the MySoftware brand.  OEM revenues accounted for 13.9% of the Company's 
revenues in 1998.  The market for these relationships is highly competitive, 
and there can be no assurance that the Company will be successful in 
sustaining existing relationships or creating new relationships in the 
future.  Although revenues from international sales of the Company's products
have been insignificant in the past, the Company plans to seek out various 
international partners for the localization, marketing, and distribution of 
the Company's products.  The markets that the Company plans to penetrate are 
highly fragmented and very competitive.  There can be no assurance that the 
Company will be successful in penetrating these international markets.  

The Company's strategy of becoming a direct marketing solutions company 
relies in part on the success of its new prospecting Web services.  The 
Internet market is highly competitive and this service is relatively new to 
users.  There is no assurance that the Company can successfully create the 
necessary traffic to its prospecting site or can convert such traffic and 
site visits into revenues.  

Changes in Technology and Industry Standards; Timing and Quality of New 
Product Offerings
The Company believes that its future success will depend in large part upon 
its ability to keep pace with competitive offerings, to adapt to new 
operating systems, hardware platforms, media, and industry standards, and to 
provide additional functionality by enhancing its existing products and 
services and introducing new products and services on a timely basis.  The 
development cycle for products and services utilizing new operating systems 
or formats may be significantly longer than the Company's current development
cycle for products and services on existing operating systems and formats.  
If the Company were unable to develop such products in a timely manner due to


<PAGE>


resource constraints or technological or other reasons, this inability would 
have a material adverse effect on the Company.  Failure to develop and 
introduce new products and services and product/service enhancements in a 
timely fashion could result in significant product returns and inventory 
obsolescence and could have a material adverse effect on the Company.  In 
addition, introduction or anticipation of new or improved products and 
services by others could also result in lower sales and increased product 
returns.

Dependence on Postal Regulations and Availability of Postal Information 
The Company's line of mailing products, which in the aggregate accounted for 
15% of the Company's net revenues in 1998, have been developed based on 
current USPS regulations ("Postal Service regulations").  Changes in Postal 
Service regulations, which historically have occurred frequently, could 
necessitate updating these products or could eliminate or reduce the 
usefulness of these products, which could adversely affect the Company's 
operating results.  The Company licenses from an independent third-party 
address information and certain software code embodied in the 
MyDeluxeMailList and AddressChecker products that perform address correction,
add ZIP+4 Codes and supply delivery point bar codes.  There can be no 
assurance that the Company will be able to maintain or renew its relationship
with this third party or that the code and information licensed to the 
Company will be error free or perform to the Company's specifications or in 
accordance with Postal Service regulations.  Significant changes in Postal 
Service regulations or the inability to maintain or renew its relations with 
the independent party on acceptable terms or at all could have a material 
adverse effect on the Company.  The Company must also obtain Postal Service 
certification on a bi-monthly basis in order to be able to supply, 
MyDeluxeMailList and AddressChecker users with CD-ROM updates in a timely 
manner.  There can be no assurance that the Company will be able to continue 
to secure such certification on a timely basis, if at all, and the failure to
do so could have a material adverse effect on the Company.  Moreover, 
increased adoption of facsimile, electronic mail, or other alternative 
communications technologies could result in reduced use of the postal system,
thereby adversely affecting the market for the Company's mailing products.

Fluctuations in Operating Results
The Company has experienced, and may continue to experience, significant 
fluctuations in operating results due to a variety of factors.  These factors
include: the size and rate of growth of the market for task-specific 
applications for small businesses and of the software market in general; 
market acceptance of the Company's products and services and those of its 
competitors; the timing and number of product enhancements and new product 
and services introductions by the Company and its competitors; the timing and 
extent of development and promotional expenses; the timing and delivery of 
partnership arrangements; product returns; changes in pricing policies by the
Company and its competitors; accuracy of retailers' forecasts of consumer 
demand; timing of the receipt of orders from major retailer and distributor 
customers; cancellations or terminations by retail or distributor accounts; 
shelf space reductions; and delays in shipment.  Products generally are 
shipped as orders are received, and accordingly, the Company historically 
has operated with little backlog.  As a result, net revenues in any quarter 
are dependent on orders booked and shipped in that quarter.  A significant 
portion of the Company's operating expenses are relatively fixed, and planned
expenditures are based, in part, on expectations with regard to future sales.
As a result, if net revenues do not meet the Company's expectations in any 
given quarter, operating results may be materially adversely affected.  The 
Company's operating results can also be affected substantially by the timing 
of new product and services introductions, which may result in substantial 
increases in product returns and higher selling and marketing expenses.  In 
response to competitive pressure, the Company may also take certain pricing 
or marketing actions that could have a material adverse effect on the 
Company.  There can be no assurance that the Company will achieve consistent 
profitability on a quarterly or annual basis. 

Competition
The market for the Company's products and services is intensely competitive, 
and is characterized by pressure to increase marketing and promotional 
activities, incorporate new features, release new product versions, and 
reduce prices.  Existing software companies may broaden or enhance their 
product lines to compete with the Company's products and services, and other 
potential new competitors, including computer hardware manufacturers, 
diversified media companies, data providers and small business service 
companies, may enter or increase their focus on the small business software 
market, resulting in even greater competition for the Company. The Company's 
software products compete with task-specific products sold by Avery (labeling
software), Intuit (invoicing/estimating software), The Learning Company 
(business card and labeling software and marketing material software), and 
several other companies of varying size and financial and marketing strength.
The Company's products also compete with general purpose programs, such as 
word processing, database and desktop publishing products from major software
companies, including Adobe, Lotus, Microsoft, and Corel. The Company believes
that it would face increased competition from such general purpose programs 
if such programs were designed for greater ease-of-use of task-specific 
functions.  The Company's Web services compete with the similar services 
provided by some large data provider like InfoUSA, iMarketinc, 
I-Rent-America, and Dun & Bradstreet.  The Company believes that it will face


<PAGE>


increased competition from similar Web services provided by other data 
companies like Acxiom, First Data, Experian and others. In addition, new 
operating systems may incorporate features enabling users to accomplish small 
business marketing and other tasks currently addressed by the Company's 
software products. 

The Company's strategy of focusing on its core and complementary products and
services heightens the competitive risk.  Many of the companies with which 
the Company currently competes, or may compete in the future, have greater 
financial, technical, marketing, sales, and customer support resources, as 
well as greater name recognition and access to customers, than the Company.  
The competition for retail shelf space and direct Internet selling is also 
likely to increase due to the proliferation of software products and 
companies.  Failure to achieve and maintain unit sales volumes may result in 
loss of shelf space, which may, in turn, lead to further reductions in sales 
volumes.

Only a small percentage of products introduced in the market achieve any 
degree of sustained market acceptance.  Principal competitive factors in the 
marketing of software include product features, quality, reliability, 
technological sophistication, brand recognition, ease-of-learning, 
ease-of-use, merchandising, access to distribution channels and retail shelf 
space, marketing, advertising, public relations, price, and the availability 
and quality of support services.  The Company believes that it competes 
effectively in these areas, particularly in the areas of quality, brand 
recognition, ease-of-learning, ease-of-use, merchandising, access to 
distribution channels and retail shelf space.  To the extent that competitors
achieve performance, price, or other selling advantages, the Company could be
adversely affected.  There can be no assurance that the Company will have the
resources required to respond to market or technological changes or to 
compete successfully in the future.  In addition, increasing competition in 
the small business software market may cause prices to fall, which could 
adversely affect the Company.

The Company started offering its prospecting Web services in December 1998 
and expects to see increased competition from other larger data companies in 
the very near future.  There can be no assurance that the Company will have 
the resources required to successfully drive traffic to the Company's 
prospecting Web site or to convert such Web site traffic into revenues.  

Dependence on Limited Distribution and Retail Channels
Sales to a limited number of distributors and retailers have constituted, and
are anticipated to continue to constitute, a significant share of the 
Company's net revenues from software.  There is an increasing number of 
software products competing for access to these channels.  Retailers of the 
Company's products typically have a limited amount of shelf space and 
promotional resources, and there is intense competition for shelf space and 
promotional support from retailers.  Some distributors control access to 
shelf space of certain retailers, and termination of the Company's 
relationship with a particular distributor may prevent the Company from 
obtaining shelf space in some retail outlets.  As a result, retailers and 
distributors increasingly are in a better position to negotiate favorable 
terms of sale, including price discounts and product-return policies.  Since 
task-specific applications for small businesses constitute a relatively small
percentage of these retailers' sales volumes, there can be no assurance that 
such retailers will continue to purchase the Company's products or provide 
the Company's products with high quality and adequate levels of shelf space 
and promotional support.  The Company has nonexclusive arrangements with its 
distributors and retailers which generally do not require minimum purchases 
of the Company's products and which may be terminated at any time.  In 
addition, other types of retail outlets and methods of product distribution 
may become important in the future, such as the Internet, online services, 
and other electronic distribution services.  The Company's success will 
depend, in part, upon its ability to maintain access to existing channels of 
distribution and gain access to new channels if and when they develop. 

Dependence on the Internet
The success of the Company's future mailing-related products and services may
rely on Internet distribution. The failure of Internet usage to grow could 
have a material adverse effect on the Company.  The failure to drive and 
direct traffic to the Company's Web site or Web services could result in 
lower revenues and could have a material adverse effect on the Company 
financially.

Customer Concentration; Credit Risk
The Company sells its products principally to a limited number of major 
retailers and to distributors for resale to retailers.  Such sales have 
constituted, and may continue to constitute, a majority of the Company's net 
revenues.  In 1998, one distributor accounted for 37% of net revenues, and 
one retailer accounted for 15% of net revenues.  None of the Company's 
distributors or retailers has a minimum purchase obligation.  The loss of, or
significant reduction in, sales volume attributable to any of the Company's 
principal distributors or retail accounts could materially and adversely 
affect the Company. 


<PAGE>


The Company's sales are made on credit terms, and the Company does not hold 
collateral to secure payment.  Although the Company currently maintains 
accounts receivable insurance that covers a portion of its accounts, there 
can be no assurance that the Company will be able to maintain or increase 
such insurance on acceptable terms or at all.  The inability to collect any 
significant receivable in a timely manner could adversely affect the Company.

A majority of the Company's software sales are made through retailers.  The 
Company could be adversely affected if an alternative channel for 
distribution of software were to become a major vehicle for distributing 
software.

Risk of Product Returns
The Company has various stock balancing terms with distributors and retailers
that allow distributors and retailers certain rights to return products.  
There can be no assurance that retailers and distributors will not seek and 
obtain additional return and credit rights.  The Company also provides 
end-users with a 30-day money-back guarantee.  It is difficult for the 
Company to ascertain current demand for its existing products, predict demand
for newly introduced products or verify that inventories are appropriate for 
actual demand levels. Accordingly, the Company is exposed to the risk of 
product returns from retailers and distributors, particularly during times of
product transition. In addition, promotional or other activities of 
competitors could cause returns to increase sharply at any time.  The Company
establishes allowances based on estimated future returns of products, taking 
into account promotional activities, the timing of new product introductions,
distributor and retailer inventories of the Company's products, and other 
factors.  Product returns that exceed the Company's allowances could 
adversely affect the Company's operating results and financial condition.

Dependence on External Coding Contractors and Licensors
The Company generally develops internally the specifications for both new 
products and updates of its existing products.  From time to time, the 
Company also licenses third-party products that are complementary to its core
product line strategy.  The Company relies primarily on two independent firms
and licensors to perform the majority of the coding for its software 
products, including coding for new products and bug fixes, maintenance and 
updates for existing products.  While the Company generally owns the code 
that is developed by these firms with the exception of licensed products, the
base code used in developing the Company's brochures and business cards 
products is owned by the third-party coder. With respect to these products, 
the Company holds an irrevocable, non-exclusive license to copy and 
distribute the executable code complied form the base code and to make 
limited modifications.  Although the agreements with these firms contain 
various protective terms, there can be no assurance that such provisions will 
effectively protect the Company's interests or that third-party coders will 
not develop or market any stand-alone desktop publishing software based on 
the base code that competes with the Company's products. The need to update 
the Company's software products over time, both for enhanced functionality 
and to take advantage of new operating platforms, increases the Company's 
dependence on these third-party coders and licensors. The Company may have 
less control over the scheduling and quality of the work of independent 
coders than it does over its own employees, and there can be no assurance 
that such coders or licensors will complete products for the Company on a 
timely basis, within acceptable guidelines, or at all.  In addition, many 
independent coders or licensors have limited financial resources, which 
exposes the Company to the risk that such coders or licensors may go out of 
business prior to completing a project or require larger pre-payments from 
the Company.  As independent coders are in high demand, there can be no 
assurance that independent coders, including those who have developed 
products for the Company in the past, will be available to provide coding 
services to the Company in the future.  The Company has compensated 
third-party coders and licensors primarily through royalty payments, which 
have been partially prepaid to cover their costs. Even if the Company is able
to secure coding services, increased demand for these services may allow 
third-party coders or licensors to negotiate more advantageous terms.  There 
can be no assurance that the Company will be able to obtain or renew such 
coding or licensing agreements on favorable terms, or at all.

Capitalized Software Production Costs
The Company makes payments to third-party developers for software production 
costs.  These payments are capitalized upon the establishment of 
technological feasibility, which is defined by the Company as the completion 
of a detailed design specification of the software and are amortized to cost 
of revenues during the period that the related product revenues are 
recognized.  The on-going assessment of the realizability of these costs 
requires considerable judgment related to anticipated future product 
revenues, estimated economic lives, and changes in hardware and software 
technology.  In the event that the future product revenues do not meet the 
anticipated forecasts, the unamortized software production costs could 
adversely affect the Company's financial statements.  For example, the 
Company had a write-off of $1,296,000 in 1997.


<PAGE>


Dependence on Third-Party Service Providers and Supplies
The Company relies on external service providers to perform most of its 
customer technical support and product assembly functions.  One independent 
firm provides substantially all customer technical support for the Company's 
software products.  The Company's agreement with this firm is terminable on 
60 days notice by either party.  This contractor also provides services to 
several larger companies, and there can be no assurance that demands from 
such companies or other factors will not result in termination by such 
contractor of its relationship with the Company.  The unavailability of such 
firm to perform customer technical support for the Company would result in 
significant disruption to the Company's operations, could lead to customer 
dissatisfaction and could have a material adverse effect on the Company.  The
Company relies on two printers for packaging and two assembly houses to 
assemble and package its products and has only limited sources for some of 
its supplies.  The Company does not have contracts with such assembly houses 
or suppliers.  All of the Company's inventory of packaging components is 
maintained at third-party facilities.  The Company's ability to assemble and 
package its products is dependent on continued relationships with these third
parties.  The failure of such third-party vendors to continue to provide 
supplies and services to the Company on a timely basis could have a material 
adverse effect on the Company. 

Dependence on Key Personnel
The Company's success depends to a significant extent on the performance and 
continued service of its senior management and certain key employees.  
Competition for highly skilled employees with technical, management, 
marketing, sales, product development and other specialized skills is 
intense, and there can be no assurance that the Company will be successful in
attracting and retaining such personnel.  In addition, there can be no 
assurance that employees will not leave the Company or, after leaving, 
compete against the Company.  The Company's failure to attract additional 
qualified employees or to retain the services of key personnel could have a 
material adverse effect on the Company. 

Management of Growth
The Company has experienced periods of growth that have placed, and could 
continue to place, a significant strain on the Company's financial, 
management, and other resources.  The Company may attempt to hire additional 
key personnel in high level management positions in the future.  The 
Company's ability to manage its growth effectively will require it to 
continue to improve its operations and financial management information 
systems, and to attract, train, motivate, manage, and retain key employees.  
If the Company's management were to become unable to manage growth 
effectively, the Company could be adversely affected. 

Limited Protection of Intellectual Property and Proprietary Rights
The Company relies primarily on a combination of trademarks, copyright and 
trade secret laws, employee and third-party nondisclosure agreements and 
other methods to protect its proprietary rights.  The Company does not 
include in its products any mechanism to prevent or inhibit unauthorized 
copying.  Unauthorized copying occurs within the software industry, and if a 
significant amount of unauthorized copying of the Company's products were to 
occur, the Company could be adversely affected.  In addition, as the number 
of software products in the industry increases and the functionality of these
products further overlaps, software developers, and publishers may 
increasingly become subject to infringement claims.  There can be no 
assurance that third parties will not assert infringement claims against the 
Company in the future with respect to current or future products.  Use of 
third-party coders or publishing of licensed products may increase the risk 
of infringement.  In the event that the Company's third-party coders or 
licensors were to use infringing code in the Company's products, the Company 
could be required to pay damage or be subject to an injunction to prevent the
Company from shipping its products.  The third-party coders' liability to the
Company for any infringement of copyrights, trade secrets, or patents is 
contractually limited to amounts received from the Company.  Although the 
Company has not been the target of any actual, pending, or threatened 
intellectual property litigation, there has been substantial litigation 
regarding copyright, trademark, and other intellectual property rights 
involving computer software companies.  Any such claims or litigation, with 
or without merit, could be costly and a diversion of management's attention, 
which could have a material adverse effect on the Company.  Adverse 
determinations in such claims or litigation could also have a material 
adverse effect on the Company.

As part of the Company's general branding strategy, it attempts to limit the 
use of the "My" prefix by others in the software field.  If the Company is 
unsuccessful in these efforts, the value of the Company's brand could be 
materially impacted.

Year 2000 Issues
The Company presently believes that the Year 2000 issues will not pose 
significant operational problems for the Company.  However, if all Year 2000 
issues are not properly identified, or assessment, remediation and testing 
are not effected timely with respect to Year 2000 problems that are 
identified, there can be no assurance that the Year 2000 issue will not 
materially adversely impact the Company's results of operations or adversely 


<PAGE>


affect the Company's relationship with customers or others.  Additionally, 
the failure to correct a material Year 2000 problem could result in an 
interruption in certain normal business activities or operations.  Such 
failure could materially and adversely affect the Company's systems, results 
of operations, liquidity and financial condition. 

Possible Volatility of Stock Price
The Company believes factors such as quarterly fluctuations in its revenues 
or results of operations, general conditions in the computer hardware, 
software and Internet industries, and announcements of new products and 
services by the Company or by its competitors may cause the market price of 
the Common Stock to fluctuate, perhaps substantially.  In addition, in recent
years the stock market in general, and the prices of the stocks of technology
companies in particular, has experienced large price fluctuations, sometimes 
without regard to the fundamentals of the particular company.  These broad 
market and industry fluctuations may adversely affect the market price of the
Company's Common Stock.

Anti-Takeover Provisions
The Company's Board of Directors has the authority to issue up to 2,000,000 
shares of Preferred Stock and to determine the price, rights, preferences, 
and privileges of those shares without any further vote or action by the 
stockholders.  The rights of the holders of the Company's Common Stock will 
be subject to and may be adversely affected by, the rights of the holders of 
any Preferred Stock that may be issued in the future.  Issuance of shares of 
Preferred Stock could have the effect of making it more difficult for a third 
party to acquire a majority of outstanding voting stock of the Company.  In 
addition, the Company is subject to anti-takeover provisions of Section 203 
of the Delaware General Corporation Law, which prohibits the Company from 
engaging in a "business combination" with an "interested stockholder" for a 
period of three years after the date of the transaction in which the person 
became an interested stockholder, unless the business combination is approved
in a prescribed manner.  The application of Section 203 also could have the 
effect of delaying or preventing a change of control of the Company.  Certain
other provisions of the Company's Certificate of Incorporation may have the 
effect of delaying or preventing changes in control or management of the 
Company, which could adversely affect the market price of the Company's 
Common Stock. 

In addition, in June 1998 the Company adopted a share purchase rights plan, 
or poison pill.  The Rights Plan could have the effect of discouraging, 
delaying or preventing an acquisition of the Company.

ITEM 2. PROPERTIES

As of December 31, 1998 MySoftware leased approximately 20,000 square feet of
office space in Palo Alto, California, which facility includes its executive 
offices, marketing, sales, product development, and customer support. In 
addition, the Company also has a non-cancelable operating lease for 
approximately 3,000 square feet of office space in San Francisco from 
previous years.  The Company entered into an agreement to lease its 
facilities under a certain non-cancelable operating lease extending through 
2000.

During 1998, the Company entered into non-cancelable operating sublease 
agreements for its San Francisco office and a portion of its Palo Alto 
office.  The Company received operating sublease revenues of $123,000 in 
1998.  The total future minimum lease payments to be received under these 
non-cancelable operating subleases are approximately $70,764, which are not 
reflected in the above table.

ITEM 3. LEGAL PROCEEDINGS

MySoftware is not a party to any legal proceedings.


<PAGE>


PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED 
        STOCKHOLDER MATTERS

Since the Company's initial public offering of its Common Stock on June 15, 
1995, the Company's Common Stock has been traded on the Nasdaq National 
Market ("Nasdaq") under the symbol "MYSW."  As of December 31, 1998 there 
were 46 record holders of the Company's Common Stock.  As of the same date, 
4,458,950 shares of Common Stock were outstanding out of 20,000,000 shares of
Common Stock authorized.

The following table sets forth the range of high and low sales prices per 
share of Common Stock for each of the periods indicated, as reported by 
Nasdaq.


<TABLE>
<CAPTION>


                                                        High        Low
---------------------------------------------------------------------------
<S>                                                    <C>         <C>
1997 by quarter:
First                                                  $ 4.38      $ 2.25
Second                                                   3.25        2.06
Third                                                    2.48        1.56
Fourth                                                   4.25        1.88

1998 by quarter:
First                                                  $ 4.25      $ 1.88
Second                                                   6.44        3.25
Third                                                    5.50        3.25
Fourth                                                  15.13        3.13

</TABLE>

Dividend Policy

Prior to its initial public offering, the Company made distributions as a S 
corporation from undistributed earnings to its stockholders, including 
amounts to fund the payments of their individual tax liabilities attributable
to their allocation of the Company's income.  Such distributions totaled 
$2,815,000 and $200,000 (less contributions of $200,000) in 1995 and 1994, 
respectively.  Upon completion of its initial public offering, the Company 
terminated its S corporation status. Future earnings will be retained for use
in the Company's business, and the Company does not intend to pay any cash 
dividends on its Common Stock for the foreseeable future. 


<PAGE>


ITEM 6. MANAGEMENT'S DISCUSSSION AND ANALYSIS OF FINANCIAL 
        CONDITION AND RESULTS OF OPERATIONS

Overview
MySoftware designs, markets and supports a family of leading task-specific 
software applications and Internet services for small businesses, including 
home-based businesses. The Company provides users with powerful, 
easy-to-learn and easy-to-use solutions for business mailers, including tools
for mail list management; postage savings; creating brochures, stationery, 
and postcards; and Internet tools to get prospects data. The Company also 
provides productivity tools for labels, invoices/estimates, Internet home 
pages, Web-based resumes and Web-based calendars. The Company's products are 
fully featured to meet the requirements of a particular task, yet they are 
easy to learn and easy to use. MySoftware places significant emphasis on 
consumer marketing techniques in developing products and building brand 
awareness.  The Company's products are distributed primarily through computer
software and office supply retailers, and are currently sold in approximately
5,000 stores throughout the United States and Canada.

Fiscal 1998 was a period during which the Company focused on stabilizing its 
cost and expenses structure and returning to profitability.  Leveraging the 
Company's core strength in productivity software solutions for the small 
businesses and home offices, MySoftware introduced six new products under the
My brand: in February 1998 - MyDataBase; in June 1998 - MyTypeArtist; in 
September 1998 - MyHolidayMailingKit; and in December 1998 - MyBusiness 
E-Mailer, MyBusinessPublisher and MyCreativeClipArt.  The Company also 
introduced twelve new budget products under the ProVenture brand: in June 
1998 - Business Cards, Label Maker, Mail List, DataBase, Brochures, and 
Stationery; and in September 1998 - Invoices and Estimates, Postcards, 
Newsletters, Presentations and Charts, Address Book, and Web Page Designer. 
In addition to its regular software application development, the Company also
launched its first Internet services product, www.myprospects.com, for list 
prospecting in December 1998.

Management's Discussion and Analysis of Financial Condition and Results of 
Operations and other parts of this Annual Report contain forward-looking 
statements that involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking 
statements.  Factors that might cause such a difference include, but are not 
limited to, those discussed elsewhere herein.

Net Revenues
MySoftware's net revenues increased 22% to $15.0 million in 1998, compared to
$12.4 million in 1997.  The Company's net revenues decreased 4% in 1997 from 
$12.9 million in 1996. The Company generates revenues primarily through the 
sale of software products to retailers and to distributors for resale to 
retailers.  During 1998, approximately 3% of software sales were made 
directly to end-users.  In addition, approximately 21% of total net revenues 
were generated by sales of complementary products, such as address-correction
CD-ROM's, invoice forms and checks, and other supplies and related services 
during 1998.  The Company also generated revenues of approximately 14% of 
total net revenues from sales of its products by strategic partners who 
typically bundle MySoftware products with their own products.  Sales of 
software products to retail and end-users represented 67.0%, 81.3% and 81.6% 
of net revenues in 1998, 1997 and 1996, respectively.

The increase in net revenues in 1998 compared to 1997 was primarily the 
result of increased revenues through Original Equipment Manufacturers ("OEM")
arrangements, as well as the Company's annuity products.  The 1998 net 
revenues also benefited from the launch of a new seasonal promotional 
product, MyHolidayMailingKit, in September 1998.  The decrease in net 
revenues in 1997 compared to 1996 was primarily the result of softness in the
retail market for the Company's products.

In accordance with Statement of Position ("SOP") 97-2, Software Revenue 
Recognition, the Company is required to defer revenue related to certain 
promotional product offerings.  In the fourth quarter of 1998, the Company 
recorded deferred revenue of approximately $599,000 related to such 
promotional product offerings.  This deferred revenue will be recognized as 
revenue by the Company upon redemption of the promotion by end-users or upon 
expiration of the promotion, whichever occurs first.

Gross Profits
The Company's gross profit margins were 72.1% in 1998, compared to 53.6% in 
1997, and 69.3% in 1996.  The increase in gross profit margin in 1998 from 
1997 was primarily due to the success of cost restructuring efforts in 1998, 


<PAGE>


as well as the write-off of software production costs related to product 
development in 1997.  The decline in gross profit margin in 1997 from 1996 
was primarily due to the write-off of software production costs related to 
product development. 

Product Development Expenses
The Company's product development expenses were $1.9 million in 1998, 
compared to $2.2 million in 1997 and $2.0 million in 1996.  As a percent of 
net revenues, product development expenses were 12.7% in 1998 compared to 
18.0% in 1997 and 15.4% in 1996.  The decrease in product development 
expenses as a percent of net revenues in 1998 compared to 1997 was primarily 
due to better management processes, more internal coding versus outside 
coding efforts as well as leveraging the existing code for budget category 
products.  The increase in product development expenses as a percent of net 
revenues in 1997 from 1996 was primarily the result of lower revenues and the
increased expense of developing new products in existing and new product 
categories.

Much of the Company's product development costs are coding costs or licensing
costs paid to outside contractors or licensors, as well as internal 
development costs for its new Internet services.  These outside development 
costs have been capitalized and amortized to the cost of revenues as the 
corresponding products are sold.  The Company includes the costs of 
identifying and validating product concepts and features in sales and 
marketing expenses.

Sales and Marketing Expenses 
Sales and marketing expenses were $6.0 million in 1998, compared to $6.4 
million in 1997 and $6.3 million in 1996, representing 39.9%, 51.5% and 48.7%
of net revenues, respectively.  Sales and marketing expenses as a percent of 
net revenues decreased in 1998 from 1997 due to a reduction in headcount and 
the success of cost restructuring efforts.  The increase in these expenses as
a percentage of net revenues in 1997 from 1996 was primarily the result of 
the Company's efforts to introduce new products.

General and Administrative Expenses
General and administrative expenses were $2.6 million in 1998,  $2.2 million 
in 1997 and $1.8 million in 1996, representing 17.6%, 17.7% and 14.2% of net 
revenues, respectively.  The increase in absolute dollars in general and 
administrative expenses in 1998 from 1997 was primarily due to the increased 
expenses associated with the new chief executive officer's salary, investor 
relations efforts and the set up of new information technology 
infrastructure.  The increase in absolute dollars in general and 
administrative expenses in 1997 compared to 1996 was attributable to expenses
incurred to support the Company's creation of a division in San Francisco to 
publish Internet-related products.  In 1997, the Company incurred $193,000 of 
restructuring expenses associated with the closing of the San Francisco 
division.

Acquired Technology
In January 1996, the Company wrote off acquired technology in the amount of 
$255,000, resulting from the Company's acquisition of technology from 
MediaTech, Inc., an Internet publishing tools company, which had not reached 
technological feasibility and had no alternative future use.

Interest Income
Interest income was $238,000 in 1998 compared to $309,000 in 1997 and 
$397,000 in 1996.  The decreases in interest income in 1998 from 1997 and in 
1997 from 1996 were the result of lower average cash balances during the year. 

Provision for Income Taxes 
Due to the reversal of deductible temporary differences, the Company had a 
net operating loss for income tax purposes in 1998 despite having net income 
for financial reporting purposes.  In addition, based on the uncertainty of 
future realization of the deferred tax assets, the Company's management does 
not believe that it is more likely than not that sufficient future taxable 
income will be generated to realize all of the net deferred tax assets. 
Accordingly, a full valuation allowance has been recorded against the deferred 
tax assets.

Liquidity and Capital Resources
The Company's primary sources of financing have been net cash from 
operations, and in 1995, the proceeds from its initial public offering of 
common stock.  Operating activities generated cash of $574,000 in 1998, used 
cash of $1.3 million in 1997, and generated cash of $1.4 million in 1996. 
The Company's cash and cash equivalents balance was $5.4 million on December 
31, 1998.


<PAGE>


Recent Accounting Pronouncement   
In March 1998, the AICPA issued SOP 98-1, Accounting for the Costs of 
Computer Software Developed or Obtained for Internal Use. SOP 98-1 required 
entities to capitalize certain costs related to internal-use software once 
certain criteria have been met.  The Company expects that the adoption of SOP
98-1 will  not have a material impact on the Company's financial position, 
results of operations or cash flows. The Company will be required to adopt 
SOP 98-1 for the year ending December 31, 1999.

In April 1998, the AICPA issued SOP 98-5, Reporting on the Costs of Start-Up 
Activities.  SOP 98-5 requires all start-up costs that were capitalized in 
the past to be charged immediately to expense when SOP 98-5 is adopted.  The 
Company expects that the adoption of SOP 98-5 will not have a material impact
on the Company's financial position, results of operations or cash flows. 
The Company will be required to adopt SOP 98-5 for the year ending December 
31, 1999.

In December 1998, the AICPA issued SOP 98-9, Modification of SOP 97-2, 
Software Revenue Recognition, with Respect to Certain Transactions.  SOP 98-9
establishes the method of recognizing revenue for certain multiple-element 
software arrangements.  The Company will be required to adopt SOP 98-9 for 
transactions entered into beginning  January 1, 2000.  The Company expects 
that the adoption of SOP 98-9 will not have a material impact on the Company 
financial position, results of operations or cash flows.

Year 2000 Issues

Background of Year 2000 Issues

Many currently installed computer systems and software use only two digits to
identify a year in the date field and are unable to distinguish between 
twentieth and twenty-first century dates.  Such systems, applications and/or 
devices could result in system failures or miscalculations causing 
disruptions of operations of any businesses, including, among other things, a
temporary disability to process transactions, send invoices or engage in 
similar normal business activities. As a result, many companies' software and 
computer systems may need to be upgraded or replaced to comply with such 
"Year 2000" requirements.

State of Readiness

The Company has undertaken various initiatives intended to help ensure that 
its computer equipment and software, as well as its software products, will 
function properly with respect to dates in the Year 2000 and thereafter.  For
this purpose, the term "computer equipment and software" includes systems 
that are commonly thought of as information technology systems, including 
accounting, data processing, communications networks such as the Internet and
private Intranets, telephone/PBX systems, and miscellaneous systems as well 
as systems that are not commonly thought of as IT systems, such as fax 
machines, or other miscellaneous systems. Both IT and non-IT systems may 
contain imbedded technology, which complicates the Company's Year 2000 
assessment, remediation, and testing efforts.

Company's External Software Products

As of December 31, 1998, all of the Company's current software products for 
Windows 95 are Year 2000 compliant.  Although the Company's software, which 
is designed for use with Windows 3.1, is not Year 2000 compliant, the Company
provides upgrades to Windows 95 software products for a fee.  In addition, 
the Company encourages its customers to upgrade to products compatible with 
Windows 95 through its written materials and during verbal communications 
with end-users.  However, there is no guarantee for customers whose computer 
equipment and software are not Year 2000 compliant not to encounter any 
unforeseen problems or disruption to their systems.

Company's Internal Systems and Equipment

Based on an analysis of all systems potentially impacted by conducting 
business in the year 2000 and beyond, the Company applies a phased approach 
to make such systems/software applications, and accordingly operations, ready
for the Year 2000.  Beyond awareness of the issues and scopes of systems 
involved, the phases of activities in progress include: an assessment and 
evaluation of specific underlying computer systems, software applications and
/or hardware; remediation or replacement of Year 2000 non-complaint 
technology; validation and testing of technologically compliant Year 2000 
solutions; and the implementation of the Year 2000 compliant solutions.  The 
following table outlines the status and the timing of such phased activities.


<PAGE>

<TABLE>
<CAPTION>


                                  Percentage Completed         Expectant
   Impacted Systems             As of December 31, 1998      Completion Date   
---------------------           -----------------------      ---------------
<S>                             <C>                          <C>
Hardware and software systems 
used to deliver services......             80%                   Q3 1999

Telecommunication equipment...             25%                   Q2 1999  

Operability with internal systems 
of customers and suppliers....             10%                   Q3 1999

</TABLE>

Company's Vendors and Suppliers

The Company relies on two outside software vendors for some of its software 
coding, who has reported to the Company that they are Year 2000 compliant. 
The Company's operational suppliers are for the most part not date-sensitive 
for the services or capacity that they are serving the Company.  However the 
Company cannot be certain such vendors will not encounter operational 
problems if any unforeseen problems related to Year 2000 should cause the 
vendors or suppliers any interruption of the services they provide the 
Company.  If such interruption should occur, the Company does not foresee any
major problems in replacing these vendors or suppliers and the cost of 
replacing such vendors and suppliers are not expected to materially adversely
affect the Company financially.

Costs to Address Year 2000 Issues

The total cost associated with required modifications to become Year 2000 
compliant is not expected to be material to the Company's financial position.
The estimated total cost of the Year 2000 issues is approximately $200,000. 
As of December 31, 1998, the Company had incurred costs of approximately 
$25,000 related to its Year 2000 identification, assessment, upgrading, 
remediation and testing efforts. 

Year 2000 Issues

The Company presently believes that the Year 2000 issues will not pose 
significant operational problems for the Company.  However, if all Year 2000 
issues are not properly identified, or assessment, remediation and testing 
are not effected timely with respect to Year 2000 problems that are 
identified, there can be no assurance that the Year 2000 issue will not 
materially adversely impact the Company's results of operations or adversely 
affect the Company's relationship with customers or others.  Additionally, 
the failure to correct a material Year 2000 problem could result in an 
interruption in certain normal business activities or operations.  Such 
failure could materially and adversely affect the Company's systems, results 
of operations, liquidity and financial condition. 

Contingency Plans

The Company expects to develop contingency plans for key internal systems by 
mid-1999.  This contingency planning includes, but is not limited to 
identifying additional vendors who could provide similar goods services on 
short notice.  Management expects these plans to substantially reduce the 
risk of interruption, delay, or failure of key processes required for 
business operations, impact on the Company's results of operations or 
financial condition.


<PAGE>


ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Financial Statements included herein beginning on page 28.

ITEM 7 A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary objective of the Company's investment activities is to preserve 
principal and meet liquidity needs while at the same time maximizing the 
income we receive from our investments without significantly increasing risk.
Most of the securities that the Company has invested in are not subject to 
significant market risk due to their short-term maturity.  The Company 
maintains its portfolio of cash equivalents and short-term investments in a 
variety of investments, including U.S. Treasuries, U.S. Government Agencies, 
money market funds, Master Notes and Repurchase Agreements of AAA qualities 
with short-term maturities.  As of December 31, 1998, all of the Company's 
investments mature on January 1, 1999.


<PAGE>


                                   PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS
Information with respect to Directors may be found in the section captioned 
"Election of Directors" appearing in the definitive Proxy Statement to be 
delivered to stockholders in connection with the Annual Meeting of 
Stockholders to be held on May 19, 1999.  Such information is incorporated 
herein by reference.

EXECUTIVE OFFICERS

The executive officers of the Company as of March 26, 1998 are as follows:

            NAME           AGE                 POSITIONS
-----------------------   -----   ---------------------------------------
Gregory W. Slayton.....    39     President, Chief Executive Officer and 
                                  Director

Sharon S. Chiu.........    38     Vice President of Operations, Chief 
                                  Financial Officer and Secretary

A biography of the principal occupation for the past five years of each of 
the executive officers is provided below.

Gregory W. Slayton joined the Company in December 1997 as President, Chief 
Executive Officer and a member of the Company's Board of Directors.  From 
March 1996 to July 1997, Mr. Slayton was the President, Chief Operating 
Officer, and Director of ParaGraph International.  In August 1994, Mr. 
Slayton co-founded Worlds, Inc. and served as Senior Vice President and Chief 
Financial Officer until November 1995.  Prior to founding Worlds, Inc., Mr. 
Slayton served as Vice President and Chief Financial Officer at Paramount 
Technology Group of Paramount Communications Inc. Mr. Slayton was also a 
management consultant with McKinsey & Company for four years.  Mr. Slayton 
serves on a number of high tech corporate Boards including inTest Corporation
and is on the Board of Opportunity International, a large non-profit 
organization.  Mr. Slayton holds a Bachelors of Arts in Economics from 
Dartmouth College magna cum laude and a Masters of Business Administration 
with Distinction from Harvard Business School.

Sharon S. Chiu joined the Company in November 1990 and has served in a number
of financial, operational and managerial positions.  Ms. Chiu has served as 
Chief Financial Officer, Vice President of Operations and Secretary since May
of 1998.  Ms. Chiu formerly held positions as Vice President, Director of 
Finance, Controller, and Manager of Operations and Accounting.  Prior to 
joining the Company, Ms. Chiu served as Accounting Manager and Operations 
Manager at PC manufacturing companies and high-tech start-up companies.  Ms. 
Chiu has a Bachelors Degree in Business Administration from National Taiwan 
University and a Masters of Business Administration from University of 
Illinois at Champaign and Urbana.  

ITEM 10. EXECUTIVE COMPENSATION

Information with respect to this item will be set forth in the Company's 
Proxy Statement for its Annual Meeting of Stockholders to be held on May 19, 
1999, and is incorporated herein by reference.


<PAGE>


ITEM 11. SECURITIES OF OWNERSHIP OF CERTAIN BENEFICIAL 
         OWNERS AND MANAGEMENT

Information with respect to this item will be set forth in the Company's 
Proxy Statement for its Annual Meeting of Stockholders to be held on May 19, 
1999, and is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to this item will be set forth in the Company's 
Proxy Statement for its Annual Meeting of Stockholders to be held on May 19, 
1999, and is incorporated herein by reference.


<PAGE>


ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS 
         ON FORM 8-K

(a)  Documents filed as part of this report

     1.  Financial Statements

          Independent Auditors' Report                    29

          Balance Sheets
          December 31, 1998 and 1997                      30

          Statements of Operations
          Years Ended December 31, 1998, 1997 and 1996	   31

          Statements of Stockholders' Equity		
          Years Ended December 31, 1998, 1997 and 1996	   32

          Statements of Cash Flows
          Years Ended December 31, 1998, 1997 and 1996	   33

         Notes to Financial Statements                    34

	
2.       Exhibits:
       
          See Exhibits Index on page 45. The Exhibits listed in the 
          accompanying Exhibits Index are filed or incorporated by reference 
          as part of this report.

(b)  Reports on Form 8-K:

     A Form 8-K was filed with Securities and Exchange Commission in 
     connection with the adoption of the Rights Agreement in June 1998.


<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, in the City of 
Palo Alto, California, on the 26th day of March 1998.






                                    MYSOFTWARE COMPANY





                              BY   /s/  Gregory W. Slayton
                                   --------------------------
                                        Gregory W. Slayton
                                 President and Chief Executive Officer


<PAGE>


                                   SIGNATURES
                                   (Continued)

Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities indicated on the 26th day of March 1998.


        Signature                       Title
--------------------------     ------------------------

/s/    David P. Mans           Chairman of the Board of  Directors
--------------------------
       David P. Mans

/s/  Gregory W. Slayton        President, Chief Executive Officer and Director
--------------------------     (Principal Executive Officer)
     Gregory W. Slayton

/s/    Sharon S. Chiu          Vice President of Operations and Chief
--------------------------     Financial Officer
       Sharon S. Chiu          (Principal Financial and Accounting Officer)
	         
/s/    Grant M. Inman          Director
--------------------------
       Grant M. Inman

/s/    Donald F. Wood          Director
--------------------------
       Donald F. Wood

/s/    John J. Katsaros        Director
--------------------------
       John J. Katsaros

/s/    Emerick M. Woods        Director
--------------------------
       Emerick M. Woods


<PAGE>


FINANCIAL STATEMENTS

As required under Item 7. Financial Statements and Supplementary Data, the 
financial statements of the Company are provided in this separate section. 
The financial statements included in this section are as follows:


                                                                 Sequentially
                                                                     Numbered
Financial Statement Description                                          Page 
-----------------------------------------------------------------------------
  Independent Auditors' Report                                             29


  Balance Sheets                                                              
  December 31, 1998 and 1997                                               30


  Statements of Operations					
  Years Ended December 31, 1998, 1997 and 1996                             31


  Statements of Stockholders' Equity 
  Years Ended December 31, 1998, 1997 and 1996                             32


  Statements of Cash Flows                                                    
  Years Ended December 31, 1998, 1997 and 1996                             33


  Notes to Financial Statements                                            34


<PAGE>


                            Independent Auditors' Report


The Board of Directors
MySoftware Company:


We have audited the accompanying balance sheets of MySoftware Company as of 
December 31, 1998 and 1997, and the related statements of operations, 
stockholders' equity and cash flows for each of the years in the three-year 
period ended December 31, 1998.  These financial statements are the 
responsibility of the Company's management. Our responsibility is to express 
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement.  An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation.  We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MySoftware Company as of 
December 31, 1998 and 1997, and the results of its operations and its cash 
flows for each of the years in the three-year period ended December 31, 1998,
in conformity with generally accepted accounting principles.




                                                    KPMG LLP



Mountain View, California
February 5, 1999


<PAGE>
<TABLE>


                               MYSOFTWARE COMPANY
                                 Balance Sheets
<CAPTION>  
                                                          December 31,
                                                 ----------------------------
                                                     1998           1997
                                                 ------------   ------------
<S>                                                 <C>            <C>

Assets
Current assets:
 Cash and cash equivalents                       $  5,387,463   $  5,034,828 
 Accounts receivable, net                           3,354,875      1,031,286 
 Inventories                                          265,605        620,781 
 Other current assets                                  87,524      1,019,089
                                                 ------------   ------------
  Total current assets                              9,095,467      7,705,984


 Property and equipment, net                          217,360        278,287
 Other assets                                         619,265        674,131
                                                 ------------   ------------
    Total assets                                 $  9,932,092   $  8,658,402 
                                                 ============   ============


Liabilities and Stockholders' Equity 
Current liabilities:
 Accounts payable                                $  1,088,052   $    848,045   
 Accrued compensation                                 459,663        464,379 
 Other accrued liabilities                          2,174,442      2,654,839
 Deferred revenue                                     599,006           ----
                                                 ------------   ------------
  Total current liabilities                         4,321,163      3,967,263


 Stockholders' equity:
  Preferred stock: $0.001 par value; 2,000,000 
  shares authorized;
    None outstanding                                     ----           ----
  Common stock: $0.001 par value; 20,000,000 
  shares authorized;
   4,458,950 and 4,235,866 shares issued and 
   outstanding, respectively                            4,459          4,236 
  Deferred compensation                              (249,375)          ----
  Additional paid-in capital                        9,258,559      8,568,393    
  Accumulated deficit                              (3,402,714)    (3,881,490)
                                                 -------------   ------------
   Total stockholders' equity                       5,610,929      4,691,139
                                                 -------------   ------------
   Total liabilities and stockholders' equity    $  9,932,092    $ 8,658,402 
                                                 =============   ============

<FN>
                See accompanying notes to financial statements.
</TABLE>


<PAGE>


<TABLE>


                               MYSOFTWARE COMPANY

                             Statements of Operations

<CAPTION>

                                           Years Ended December 31,
                               ----------------------------------------------
                                    1998            1997            1996
                               --------------  --------------  --------------
<S>                            <C>             <C>             <C>

Net revenues                   $  15,038,139   $  12,353,090   $  12,872,575   
Cost of revenues                   4,200,746       5,737,570       3,951,241 
                               --------------  --------------  --------------
  Gross profit                    10,837,393       6,615,520       8,921,334 
                               --------------  --------------  --------------


Operating expenses:
 Product development               1,915,015       2,221,712       1,988,881 
 Sales and marketing               6,002,173       6,356,201       6,270,939 
 General and administrative        2,644,907       2,184,769       1,831,183 
 Restructuring charge                   ----         193,000            ----
 Write-off of acquired technology       ----            ----         255,000
                               --------------  --------------  --------------

  Total operating expenses        10,562,095      10,955,682      10,346,003
                               --------------  --------------  --------------

  Operating income (loss)            275,298      (4,340,162)     (1,424,669)

Interest income, net                 238,478         309,240         397,586
                               --------------  --------------  --------------

  Income (loss) before taxes         513,776     ( 4,030,922)    ( 1,027,083)

Income tax expense (benefit)          35,000            ----        ( 72,000)
                               --------------  --------------  --------------
  Net income (loss)                  478,776   $ ( 4,030,922)  $   ( 955,083) 
                               ==============  ==============  ==============

  Basic net income (loss) 
  per share                    $        0.11   $       (0.95)  $       (0.23)
                               ==============  ==============  ==============

  Shares used in computing 
  basic net income (loss) 
  per share                        4,370,010        4,233,366      4,233,486
                               ==============  ===============  =============

  Diluted net income (loss) 
  per share                    $        0.10   $        (0.95)  $      (0.23) 
                               ==============  ===============  =============

  Shares used in computing 
  diluted net income (loss) 
  per share                        4,697,047        4,233,366      4,233,486
                               ==============  ===============  =============

<FN>
                   See accompanying notes to financial statements.
</TABLE>


<PAGE>
<TABLE>


                                MYSOFTWARE COMPANY

                         Statements of Stockholders' Equity

                     Years Ended December 31, 1998, 1997 and 1996
<CAPTION>

                                                      
                                  Addit-               Retained      
                 Common Stock     ional     Deferred   Earnings      Total
                ----------------  Paid-in   Compen-  (Accumulated  Stockholders'
                 Shares   Amount  Capital   Sation      Deficit)      Equity
                --------- ------ ---------- -------   ------------  ----------- 
<S>             <C>       <C>    <C>        <C>       <C>           <C>
Balances as of   
December 31, 
1995            4,231,366 $4,232 $8,561,503 $  ----   $ 1,104,515 $ 9,670,250   

Exercise of 
stock options       2,000      2       ----     ---          ----           2
Net loss             ----   ----       ----    ----      (955,083)   (955,083)
                --------- ------ ---------- -------   -----------  ----------
Balances as of 
December 31, 
1996            4,233,366  4,234  8,561,503               149,432   8,715,169


Exercise of 
stock options       2,500      2      6,890    ----          ----       6,892
Net loss             ----   ----       ----    ----    (4,030,922) (4,030,922)
                ---------  -----  --------- -------    ----------  ----------
Balances as of 
December 31, 
1997            4,235,866  4,236  8,568,393    ----    (3,881,490)  4,691,139


Exercise of 
stock options     223,084    223    427,031    ----          ----     427,254
Deferred 
compensation 
related to
officer stock 
bonus                ----   ----    263,135 (263,135)        ----        ----
Amortization of 
deferred 
compensation         ----   ----       ----   13,760         ----      13,760
Net income           ----   ----       ----     ----       478,776    478,776
                ---------  -----   --------  -------      --------   --------
Balances as of 
December 31, 
1998          $4,458,950  $4,459 $9,258,559 $(249,375) $(3,402,714) $5,610,929
              ==========  ====== ========== ========== ============ ==========


<FN>
                       See accompanying notes to financial statements.
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                   MYSOFTWARE COMPANY

                                 Statements of Cash Flows


                                              Years Ended December 31,
                                      --------------------------------------
                                         1998         1997         1996 
                                     ------------  ------------  ------------
<S>                                  <C>           <C>           <C>

Cash flows from operating activities:
Net income (loss)                     $  478,776   $ (4,030,922) $  (955,083)
Adjustments to reconcile net income 
 (loss) to net cash provided by 
 (used for) operating activities:
 Depreciation and amortization           771,621      2,117,859      658,478 
 Amortization of deferred compensation    13,760           ----         ----
 Provisions for returns and doubtful 
 accounts                             (1,149,196)       (57,002)   1,594,777 
 Deferred income taxes                      ----        282,345      149,460
 Changes in operating assets and 
 liabilities:
  Accounts receivable                 (1,719,823)        35,023      595,256
  Inventories                            355,176        (24,645)    (147,623)
  Other assets                           923,918       (199,001)    (667,438)
  Accounts payable                       240,007        118,578      (47,924) 
  Deferred officers' compensation           ----            ---      (52,922)
  Deferred income taxes                     ----        (25,388)         ---
  Accrued compensation                    (7,778)        75,985       46,323 
  Deferred revenue                       599,006           ----         ----
  Other accrued liabilities               68,095        362,364      238,766 
                                       ----------      ---------    ---------
Net cash provided by (used for) 
operating activities                     573,562     (1,344,804)   1,412,070 
                                       ----------    -----------   ----------


Cash flows from investing activities:
Additions to property and equipment     (125,149)       (55,520)    (234,838)
Software production costs and other 
 assets                                 (523,032)    (1,290,180)  (1,253,117)
                                       -----------   -----------  -----------
  Net cash used for investing 
   activities                           (648,181)    (1,345,700)  (1,487,955)
                                       -----------   -----------  -----------


Cash flows from financing activities-
   Proceeds from exercise of stock 
    options                              427,254          6,892            2 
                                       -----------   -----------   ----------


Net increase (decrease) in cash and 
 cash equivalents                        352,635     (2,683,612)     (75,883) 

Cash and cash equivalents at beginning 
 of year                               5,034,828      7,718,441    7,794,324 
                                       -----------   -----------   ----------

Cash and cash equivalents at end of 
 year                                $ 5,387,463    $ 5,034,829  $ 7,718,441 
                                     ===========    ===========  ===========


Noncash financing activities:
 Deferred compensation related to 
  officer stock bonus                $   263,135            ---          ---
                                     ===========    ============  ==========


<FN>
                    See accompanying notes to financial statements.
</TABLE>


<PAGE>


                                   MYSOFTWARE COMPANY

                              Notes to Financial Statements

                       Years Ended December 31, 1998, 1997 and 1996

1.  Summary of Significant Accounting Policies

Nature of Business 

MySoftware Company (the Company) develops, manufactures and markets small 
business application programs and Internet list services.  The Company sells 
its products primarily through distributors and retail dealers.

Principles of Presentation and Preparation

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
reported amounts of revenues and expenses during the reporting period. 
Actual results could differ from those estimates.

Revenue Recognition and Deferred Revenue

Effective January 1, 1998, the Company adopted Statement of Position (SOP) 
97-2, Software Revenue Recognition.  Under SOP 97-2 revenue from product 
sales is recognized when evidence of the arrangement exists, delivery has 
occurred, the fee is fixed or determinable and collection is probable.  The 
Company provides reserves for estimated returns of product sales to 
distributors and retail dealers and accrues for the estimated costs of 
providing customer support. 

Under SOP 97-2, the Company is required to defer revenue related to certain 
promotional product offerings based on the relative fair value of undelivered
products included in the promotional offering. As of  December 31, 1998, the 
Company recorded approximately $599,000 of deferred revenue related to such 
promotional product offerings.  The deferred revenue will be recognized as 
revenue by the Company upon delivery of the promotional products to end-users
or upon expiration of the promotion, whichever occurs first.

Prior to 1998, the Company recognized revenue in accordance with SOP 91-1.  
Under SOP 91-1, revenue was recognized upon shipment of the product provided 
there were no remaining significant obligations and collection was probable. 
The Company provided reserves for estimated returns of product sales to 
distributors and retail dealers and accrued for estimated costs of providing 
customer support.

Other Comprehensive Income or Loss

The Company has no items of other comprehensive income or loss.

Cash and Cash Equivalents

The Company considers all liquid instruments with an original maturity of 90
days or less to be cash equivalents.  Cash equivalents are stated at cost and
consist primarily of money market securities.  The carrying amount of cash 
and cash equivalents approximates fair value.

Inventories

Inventories, comprising finished goods and packaging materials, are stated at
the lower of first-in, first-out cost or market.


<PAGE>


                                MYSOFTWARE COMPANY

                     Notes to Financial Statements, Continued

Property and Equipment

Property and equipment, comprised primarily of computer equipment and 
furniture, are recorded at cost.  Depreciation is provided using the 
straight-line method over the estimated useful lives of the respective 
assets, generally three to seven years.

The Company reviews the recoverability of the carrying amount of its property
and equipment assets whenever events or changes in circumstances indicate 
that the carrying amount of an asset might not be recoverable.  In the event 
that facts and circumstances indicate that the carrying amount of assets may 
be impaired, an evaluation of recoverability would be performed and the 
estimated future undiscounted cash flows associated with the asset would be 
compared to the asset's carrying amount to determine if a write-down to fair 
value is required.  Fair value is determined by reference to discounted 
future cash flows over the remaining useful life of the related asset.

Software Development Costs

In accordance with Statement of Financial Accounting Standards (SFAS) No. 86,
Accounting for the Costs of Computer Software to be Sold, Leased, or 
Otherwise Marketed, the Company capitalizes its internal software development
costs after technological feasibility has been established.  Such amounts to 
date have not been significant in its software development efforts.

The Company makes payments to third-party developers for software production 
costs.  These payments are capitalized upon the establishment of 
technological feasibility, which is defined by the Company as the completion 
of a detailed design specification of the software and are amortized to cost 
of revenues during the period that the related product revenues are 
recognized.  The ongoing assessment of the realizability of the costs 
requires considerable judgment related to anticipated future product 
revenues, estimated economic life, and changes in hardware and software 
technology.  The capitalized amounts paid to third-party developers for the 
years ended December 31, 1998, 1997 and 1996 aggregated $523,032 $1,179,660, 
and $1,197,217 respectively. Accumulated amortization aggregated $1,446,846 
as of December 31, 1998.

Amortization of these software production costs is provided on a 
product-by-product basis.  Annual amortization is the greater of the amount 
computed using the ratio of current product revenue to the total of current 
and anticipated future product revenue or the straight-line method over the 
remaining estimated economic lives of two years.  Amortization expenses for 
the years ended December 31, 1998, 1997 and 1996, aggregated $585,544, 
$1,986,143, and $538,390, of which a write-off of $1,296,000 software 
production cost was included in 1997's expense.  The write-off was related to
certain products that are not strategic to the Company's future strategy.

Royalties 

Royalties are accrued based on net sales pursuant to agreements with external
software developers of software products published by the Company.  Royalty 
costs, generally 2% of related revenues subject to certain maximum payment 
amounts, are included in cost of revenues.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations 
of credit risk consist primarily of cash equivalents and accounts receivable.
The Company maintains cash and cash equivalents with one financial institution. 
Management believes the financial risks associated with such deposits are 
minimal.  Substantially all of the Company's accounts receivable are derived 
from sales to computer software distributors and retailers.  Historically, 
the Company has not incurred material credit-related losses. 


<PAGE>


                               MYSOFTWARE COMPANY

                    Notes to Financial Statements, Continued

Income Taxes

Income taxes are provided under the asset and liability method, whereby 
deferred tax assets and liabilities are recognized for the future tax 
consequences attributable to differences between the financial statement 
carrying amounts of existing assets and liabilities and their respective tax 
bases.  Deferred tax assets and liabilities are measured using enacted tax 
rates expected to apply to taxable income in the years in which those 
temporary differences are expected to be recovered or settled.  The 
effect on deferred tax assets and liabilities of a change in tax rates is 
recognized in income in the period that includes the enactment date.

A valuation allowance is established to reduce deferred tax assets when it is
more likely than not that some portion or all of the deferred tax assets will
not be realized.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted average 
number of shares of common stock outstanding.  Diluted net income (loss) per 
share is computed using the weighted average number of shares of common stock
outstanding and, when dilutive, common equivalent shares from options to 
purchase common stock using the treasury stock method. 

Net income used to calculate basic net income (loss) per share was identical 
to net income used to calculate diluted per share for all years presented. 
Following is a reconciliation of the common shares used to calculate basic 
net income per share to the common shares used to calculate diluted net 
income per share for 1998, 1997, and 1996:


<TABLE>
<CAPTION>

                                       Years Ended December 31,         
                           ----------------------------------------------
                                     1998        1997        1996
                                  ----------  ----------  ----------
<S>                               <C>         <C>         <C>

Weighted-average common 
 shares used to calculate 
 basic net income (loss) 
 per share                        4,370,010    4,233,366   4,233,486
Stock options                       327,037         ----        ----
                                  ----------   ----------  ----------
Weighted-average common shares 
 used to calculate diluted net 
 income(loss) per share           4,697,047    4,233,366   4,233,486
                                  ==========   ==========  ==========

</TABLE>


Excluded from the computation of diluted loss per share for 1997 and 1996 are
options to acquire 1,036,700 and 558,757 shares, respectively, of common 
stock with weighted-average exercise prices of $2.91 and $3.51, respectively,
because their effect would be anti-dilutive.
 
Stock-Based Compensation

The Company accounts for its stock option plans using the intrinsic value 
method.  Deferred compensation is amortized ratably over the vesting period.

Fair Value of Financial Instruments

The fair value of the Company's cash, receivables, and accounts payable 
approximate the carrying amount due to the relatively short maturity of these
items.


<PAGE>


                                MYSOFTWARE COMPANY

                    Notes to Financial Statements, Continued

Disclosures About Segments of an Enterprise and Related Information
 
During 1998, the Company adopted SFAS No. 131, Disclosures About Segments of 
an Enterprise and Related Information.  SFAS No. 131 establishes standards 
for the manner in which public companies report information about operating 
segments in annual and interim financial statements.  The Company determines 
its reportable segments based principally upon the type of products sold.

<TABLE>

2.  Balance Sheet Components

      Accounts Receivable

      A summary of accounts receivable follows:  

<CAPTION>

                                                      December 31,
                                          ----------------------------------
                                                 1998            1997
                                            --------------  --------------
<S>                                         <C>             <C>
            Accounts receivable              $  4,030,161    $  2,310,338
            Allowance for returns and  
             doubtful accounts                 (  675,286)     (1,279,052)
                                            --------------  --------------
                                            $   3,354,875   $   1,031,286
                                            ==============  ==============
</TABLE>
<TABLE>

Other Current Assets

      Other current assets consisted of 
      the following:

<CAPTION>

                                                    December 31,
                                        ----------------------------------
                                                 1998             1997
                                          ----------------   --------------
<S>                                       <C>                <C>
      Prepaid income taxes                       -----       $    958,151
      Other                                     87,524             60,938
                                          ----------------   --------------
                                          $     87,524       $  1,019,089
                                          ================   ==============

</TABLE>
<TABLE>

Property and Equipment

      Property and equipment are as 
      follows:

<CAPTION>
                                                    December 31,
                                        ---------------------------------
                                                 1998            1997
                                           ---------------  --------------
<S>                                        <C>              <C>

      Computer equipment and purchased 
       software                            $   384,773      $    413,886
      Office equipment, furniture and 
       fixtures                                139,613           174,831
      Leasehold improvements                     -----             1,547
                                           -------------    --------------
                                               524,386           590,264
      Less accumulated depreciation and 
       amortization                           (307,026)         (311,977)
                                           -------------    --------------
                                           $   217,360      $    278,287
                                           =============    ==============

</TABLE>
<TABLE>

Other Assets
        Other assets consisted of the following:

<CAPTION>
                                                       December 31,
                                        -------------------------------------
                                                 1998             1997
                                            --------------   --------------
<S>                                         <C>              <C>
        Software production costs paid 
         to third-party contractors, 
         net of accumulated amortization    $    579,535     $    642,047
        Deposits                                  39,730           32,084
                                            --------------   --------------
                                            $    619,265     $    674,131
                                            ==============   ==============

</TABLE>


<PAGE>
<TABLE>

                                 MYSOFTWARE COMPANY
 
                      Notes to Financial Statements, Continued

Other Accrued Liabilities
                A summary of other accrued liabilities follows:

<CAPTON>
                                                   December 31,
                                       -------------------------------------
                                              1998               1997
                                       ------------------  -----------------
<S>                                    <C>                 <C>
           Customer prepayments        $     307,767       $    853,196
           Accrued advertising               657,905            250,444
           Accrued technical support          30,000            151,000
           Customer Deposit                  362,580            516,510
           Other                             816,190            883,689
                                        ------------------  ----------------
                                        $  2,174,442        $ 2,654,839
                                        ==================  ================

</TABLE>


3.  Stockholders' Equity

    Officer Stock Bonus

    In June 1998, the Board of Directors granted a stock bonus of 60,000 shares 
    of common stock, at no cost, to the Chief Executive Officer ("CEO"). 
    Unvested shares are subject to a buy back provision and vest ratably over 
    five years, with acceleration if certain performance conditions are 
    achieved by the Company.  The Company has recorded $263,135 as deferred 
    compensation, which is being amortized ratably, over the vesting period. 
    As the shares underlying the stock bonus had not been issued as of 
    December 31, 998, the shares have been disclosed as outstanding stock 
    options with a zero excise price in the tables below.

    Stock Options

    In September 1994, the Company granted five key employees an aggregate of 
    235,000 common stock options at an exercise price of $1.50 per share, the 
    fair market value of the Company's common stock on the date of grant.  
    These options vested ratably over three years and expire 10 years from 
    the grant date.

    The Company adopted the 1995 Equity Incentive Plan (the Plan) in April 
    1995, and reserved 1,000,000 shares thereunder.  The Plan provides for 
    the grant of incentive stock options to employees of the Company and for 
    the grant of nonstatutory stock options to employees and consultants of 
    the Company.  The Board of Directors administers the Plan and has the 
    discretion to grant stock options.  Exercise prices may not be less than 
    100% and 85% of the fair market value at the date of grant for incentive 
    options and nonstatutory options, respectively. Options granted under the
    Plan generally vest over four years and expire 10 years from the grant 
    date.  In 1998, the Company granted 544,522 options under the Plan.

    The Company adopted the 1995 Nonemployee Directors' Plan in April 1995 and 
    reserved 200,000 shares thereunder.  The Nonemployee Directors' Plan 
    provides for the automatic grant of nonstatutory stock options to 
    nonemployee directors of the Company at the fair market value of the 
    common stock on the date of grant.  The term of all options granted under
    the Nonemployee Directors' Plan may not exceed 10 years or the end of the
    director's status as director.  In 1998, the Company granted 10,000 
    options under the Nonemployee Directors' Plan. 

    The Company adopted the 1998 Non-Officer Stock Option Plan (the "NOSOP") in 
    November 1998 and reserved 215,000 shares thereunder.  The NOSOP provides
    for the grant of non-qualified options to non-officer employees and 
    consultants of the Company.  The Board of Directors administers the NOSOP
    and has the discretion to grant stock options.  Exercise prices may not 
    be less than 100% of the fair market value at the date of grant.  Options
    granted under the NOSOP generally vest over four years and expire 10 
    years from the grant date.  The Company granted 185,000 options during 
    1998 under the NOSOP.


<PAGE>


                                  MYSOFTWARE COMPANY

                      Notes to Financial Statements, Continued

On September 12, 1996, the Company offered its employees a stock option 
repricing program that allowed employees to exchange on a one-for-one basis 
any options with an exercise price above the September 17, 1996 closing price
of the MySoftware common stock, which was $4.00.  As a result, 189,000 
options were surrendered by eligible employees for repriced options.  The 
vesting of the repriced options was extended by six months.

On November 16, 1998, the Company offered its employees a stock option 
repricing program that allowed employees to exchange on a one-for-one basis 
any options priced above $4.25 for options with an exercise price of $3.875 
per share, which was the closing price of the MySoftware common stock on 
November 13, 1998.  As a result, 135,500 options were surrendered by eligible
employees for repriced options.  The vesting of the repriced options was 
extended by six months.

The following table summarizes all stock option and stock bonus activities 
for the Company's stock option plans:

<TABLE>
<CAPTION>

                                          Shares             Weighted 
                                          under           average exercise 
                                          Option          price per share
                                     ----------------    ------------------
<S>                                  <C>                 <C>
Outstanding as of December 31, 1995       400,838         $      4.85

Granted                                   380,450                4.68
Expired or canceled                      (220,531)               7.96
Exercised                                (  2,000)               4.00
                                     ----------------
Outstanding as of December 31, 1996       558,757                3.51



Granted                                   584,000                2.48
Expired or canceled                      (103,557)               3.73
Exercised                                (  2,500)               1.50
                                     -----------------
Outstanding as of December 31, 1997     1,036,700                2.91


Granted                                   740,000                3.77
Expired or canceled                      (334,717)               4.30
Exercised                                (223,084)               1.95
                                      ---------------- 
Outstanding as of December 31, 1998     1,218,899                3.22
                                      ================

Available for grant at:
  December 31, 1998                       190,681
                                      ================

</TABLE>
<TABLE>

The following table summarizes information about stock bonus and stock 
options outstanding as of December 31, 1998:

<CAPTION>                          
                         
                  Outstanding                           Exercisable
     -----------------------------------  ----------------------------------
                       Weighted-Avg. Weighted-                    Weighted-
Range of  Number       Remaining     Average         Number       Average
Exercise  Outstanding  Contractual   Exercise Price  Exercisable  Exercise 
Prices                 Life                                       Price
--------  -----------  ------------  --------------  -----------  ----------
<C>       <C>          <C>           <C>             <C>          <C>
$  0.00        60,000   9.50 years      $  0.00         6,000      $  0.00
   1.50        46,000   6.50               1.50        46,000         1.50
1.80 - 2.75   468,136   8.79               2.48       168,668         2.51  
3.63 - 7.00   624,763   9.40               3.88       108,970         4.01
   12.25       20,000   6.83              12.25        15,833        12.25
$0.00-12.25 1,218,899   9.02            $  3.22       345,471      $  3.25


</TABLE>


<PAGE>


                                  MYSOFTWARE COMPANY
       
                       Notes to Financial Statements, Continued

The Company applies the intrinsic value method in accounting for its stock 
option plans and, accordingly, has not recognized compensation cost because 
the exercise price is equal to the fair market value of the underlying common
stock on the date of grant.  If the Company had elected to recognize 
compensation cost based on the fair value method as prescribed by SFAS No. 
123, net income (loss) and net income (loss) per share would have been 
changed to the pro forma amounts indicated in the table below (in thousands 
except per share amounts):


<TABLE>
<CAPTION>

                                     1998          1997           1996
                                   --------      --------       --------  
<S>                                <C>           <C>            <C>
Net income (loss):
  As reported                      $  478,776  $ ( 4,030,922)  $ ( 955,083)
  Pro forma                          (212,187)   ( 4,513,944)   (1,276,711)


Net income (loss) per share-diluted:
  As reported                      $     0.10  $      ( 0.95)  $    ( 0.23)
  Pro forma                             (0.05)         (1.07)       ( 0.30)

</TABLE>


The fair value of each option grant is estimated on the date of grant using 
the Black-Scholes option pricing model with the following assumptions:

                Expected dividend yield                          -
                Expected stock price volatility	             50.00%
                Risk-free interest rate	               4.58 - 6.22%
                Expected life of options                4 - 5 years

The weighted-average fair value of options granted during 1998, 1997, and 
1996 was $1.66, $1.25, and $2.44 per share, respectively.

4.  Segment and Geographic Information

The Company is principally engaged in the development, marketing and 
manufacturing of small business application programs and Internet services.  
The Company's main products provide solutions for creating customized, 
professional-quality mailing lists, brochures, labels, business cards, 
invoices/estimates, and other marketing communications materials.  The 
Company also markets annuity-based mailing products and services which 
complement the Company's existing mailing software products.

In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an 
Enterprise and Related Information, which the Company has adopted in 1998.

The Company identifies such segments based principally upon the type of 
products sold.  The accounting policies of these reportable segments are the 
same as those described for the consolidated entity.  The Company evaluates 
the performance of its operating segments based on revenues, gross profit and
segment operating income.  The Company does not assess the performance of its
segments on other measures of income or expense, such as depreciation and 
amortization, interest revenue and expense, income taxes or net income.  In 
addition, as the Company's assets are primarily located in its corporate 
office in the United States and not allocated to any specific segment, the 
Company does not produce reports for or measure the performance of its 
segments based on any asset-based metrics.  Therefore, segment information, 
is presented only for revenues and modified operating income.

The Company has not separately reported segment information on a geographic 
basis, as international sales represent less than 1% of net revenue for the 
year ended December 31, 1998.


<PAGE>


                                 MYSOFTWARE COMPANY

                     Notes to Financial Statements, Continued

The following segment information is provided for the years ended December 
31, 1998, 1997  and 1996 (in thousands):  


<TABLE>
<CAPTION>
                                 Segment Information
                        For the year ended December 31, 1998
                        ------------------------------------
                 Mailing    Mail     Other     New     OEM    Other   Total
                  Retail   Annuity   Retail   Retail 
                --------- --------- -------- --------  -----  ------- -------
<S>             <C>       <C>       <C>      <C>       <C>    <C>     <C>
Net revenues    $  2,254  $  1,790  $ 4,820  $  2,681  $2,088 $ 1,405 $15,038
Cost of revenues     705       253    1,335       800     388     720   4,201
                --------- --------- -------- --------- ------ ------- -------
   Gross profit    1,549     1,537    3,485     1,881   1,700     685  10,837
Segment operating 
 expenses          1,521     1,371    1,640     1,099     813   1,202   7,646
                --------- --------- -------- --------- ------ ------- -------
Segment profit 
 (loss)         $     28  $    166  $1, 845  $    782  $  887 $  (517)  3,191
                ========= ========= ======== ========= ====== ========

General and administrative expenses                                   ( 2,645)
Bonus expense not allocated to segments                                (  270)
Interest income, net                                                      238
                                                                      -------
Income before taxes, as reported                                      $   514
                                                                      =======

</TABLE>
<TABLE>
<CAPTION>


                               Segment Information
                       For the year ended December 31, 1997
                       ------------------------------------

                    Mailing    Mail     Other     OEM    Other   Total
                     Retail   Annuity   Retail
                   --------- --------- --------  ------ ------- -------
<S>                <C>       <C>       <C>       <C>    <C>     <C>
Net revenues       $  2,338  $  1,159  $  6,552  $1,053 $ 1,251 $12,353
Cost of revenues      1,823       248     3,090     266     311   5,738
                   --------- --------- --------  ------ ------- -------
   Gross profit         515       911     3,462     787     940   6,615
Segment operating 
 expenses             1,059       820     5,825     498     375   8,577
                   --------- --------- --------  ------ ------- -------
Segment profit 
 (loss)            $   (544) $     91  $ (2,363) $  289 $   565  (1,962)
                   ========= ========= ========= ====== ======== =======


General and administrative expenses                             ( 2,185)
Restructuring charges                                             ( 193)
Interest income, net                                                309
                                                             -----------
Income before taxes, as reported                             $   (4,031)
                                                             ===========


</TABLE>


<PAGE>


                                 MYSOFTWARE COMPANY

                      Notes to Financial Statements, Continued

<TABLE>
<CAPTION>

                                Segment Information

                        For the year ended December 31, 1996
                        ------------------------------------

                     Mailing    Mail     Other    OEM   Other    Total 
                     Retail   Annuity   Retail
                    --------- --------- -------- ----- -------- --------
<S>                 <C>       <C>       <C>      <C>   <C>      <C>
Net revenues        $  2,764  $   559   $  7,526 $ 548 $ 1,475  $ 12,872
Cost of revenues         884      214      2,271    26     556     3,951
                    --------- --------- -------- ----- -------- --------
    Gross profit       1,880      345      5,255   522     919     8,921
Segment operating 
 expenses              2,009      337      5,053   466     395     8,260
                    --------- --------- -------- ----- -------- --------
Segment profit 
 (loss)             $   (129) $     8   $    202 $  56 $   524       661
                    ========= ========= ======== ===== ========

General and administrative expenses                              ( 1,831)
Write-off of acquired technology                                   ( 255)
Interest income, net                                                 398
                                                                ---------
Income before taxes, as reported                                $ (1,027)
                                                                =========

</TABLE>

The following is a brief summary of the types of products and services from 
which each segment derives its revenues:

Mailing Retail Products include software products and applications that were 
designed for mailing list management and sold through the direct retail 
channel.

Mail Annuity Products include annuity-based products that were designed to 
correct addresses on the consumers' data base to take advantage of postal 
savings and are sold directly to end-users.

Other Retail Products include all other marketing communication software 
products and applications that were sold through the direct retail channel.

New Retail Products include new retail products sold through the direct 
retail channel products that were released in 1998. 

OEM Products include sales of various products via the Original Equipment 
Manufacturing channel.

The segment operating expenses include all operating expenses except for 
general and administrative expenses and bonus expense which are not evaluated
on a segment basis by the Company.  

The following tables summarize sales to customers when sales to such 
customers exceeded 10% of revenues as well as the amounts due from these 
customers as a percentage of total gross accounts receivable.
	 

<TABLE>
<CAPTION>


                                       Years ended December 31,	
                                    ------------------------------
Percentage of net revenues         1998         1997         1996
----------------------------------------------------------------------
<S>                                 <C>          <C>          <C>
Customer A                           37%          37%          34%
Customer B                           15%          20%          29%


</TABLE>
	

<PAGE>


                                 MYSOFTWARE COMPANY
  
                      Notes to Financial Statements, Continued

<TABLE>
<CAPTION>

                                                           December 31,
                                                           ------------
Percentage of total accounts receivable as of             1998      1997
--------------------------------------------------------------------------
<S>                                                       <C>       <C>
Customer A                                                 56%       61%
Customer B                                                 17%       17%


</TABLE>


5.  Income Taxes

The components of income tax expense (benefit) for the years ended December 
31, 1998, 1997, and 1996 are as follows:


<TABLE>
<CAPTION>


                                        1998          1997          1996
                                    -----------    -----------   -----------
<S>                                 <C>            <C>           <C>
   Income taxes:
    Current:
     Federal                        $  20,774      $ ( 282,345)   $ (221,459)
     State                                800              ---           ---
     Foreign                           13,426              ---           ---
                                    -----------    ------------   ----------
       Total current                   35,000        ( 282,345)     (221,459)
                                    -----------    ------------   ----------
   Deferred:
     Federal                              ---           282,345       43,482
     State                                ---               ---      105,977
                                    -----------    ------------   ----------
       Total deferred                  35,000           282,345      149,459
                                    -----------    ------------   ----------
       Total income tax expense 
        (benefit)                   $  35,000      $        ---   $  (72,000)
                                    ===========    ============   ==========
	

</TABLE>


The following table reconciles the expected corporate federal income tax 
expense (benefit) computed by multiplying the Company's income (loss) before 
income taxes by 34% to the Company's reported income tax expense (benefit) 
for the years ended December 31, 1998, 1997, and 1996:


<TABLE>
<CAPTION>


                                          1998          1997         1996
                                       ----------  -------------- ----------
<S>                                    <C>         <C>            <C>
Expected income tax expense (benefit)  $  174,684  $  (1,370,241) $ (349,208)
State income taxes, net of federal 
 tax effect                                   528              -      70,473
Change in valuation allowance            (187,447)       282,345     281,600
Research and development tax credits            -              -     (83,711)
Unutilized losses                               -      1,029,478           -
Non-deductible expenses                    13,035         57,890           -
Foreign withholding tax                    13,426              -           -
Other                                      20,774            528       8,846
                                       ----------   -------------- ----------
Actual income tax expense (benefit)    $   35,000   $          -   $ (72,000)
                                       ==========   ============== ==========

</TABLE>


<PAGE>


                                  MYSOFTWARE COMPANY

                       Notes to Financial Statements, Continued

The tax effects of temporary differences that give rise to significant 
portions of the deferred tax assets as of December 31, 1998 and 1997 are as 
follows:

<TABLE>
<CAPTION>

                                           1998             1997
                                      --------------   --------------
<S>                                   <C>              <C>
   Deferred tax assets:
    Accrual and reserves              $     811,923    $   1,340,235
    Net operating loss carryforwards      1,065,861          489,843
    Tax credit carryforwards                679,434          468,533
                                      --------------   --------------
      Total gross deferred tax assets     2,557,218        2,298,611
   Less valuation allowance               2,557,218        2,298,611
                                      --------------   --------------
      Net deferred tax assets         $           -    $           -  
                                      ==============   ==============

</TABLE>


The net change in the total valuation allowance for the year ended December 
31, 1998 was an increase of $258,607.  The Company's accounting for deferred 
taxes under SFAS No. 109 involves the evaluation of a number of factors 
concerning the realizability of the Company's deferred tax assets.  To 
support the Company's conclusion that a 100% valuation allowance was 
required, management primarily considered such factors as the Company's 
history of operating losses, the nature of the Company's deferred tax assets 
and the absence of taxable income in prior carryback years.  Although 
management's operating plans assume taxable and operating income in future 
periods, management's evaluation of all the available evidence in assessing 
the realizability of the deferred tax assets indicates that such plans are 
not considered sufficient to overcome the available negative evidence.

As of December 31, 1998, the Company has federal and California net operating
loss carryforwards of approximately $2,722,000 and $2,404,000, respectively, 
which expire in various years through 2018 and 2003, respectively.  The 
Company also has federal and California research and development tax credit 
carryforwards of approximately $365,000 and $259,000, respectively.  The 
federal credits expire between 2010 and 2018. The Company also has federal 
minimum tax credit and foreign tax credit carryforwards of approximately 
$38,000 and $18,000, respectively.  The foreign tax credit expires between 
2002 and 2003.

Included in gross deferred tax assets above is approximately $235,000 related
to stock option compensation for which the benefit, when realized, will be 
recorded directly to stockholders' equity.

6.     Commitments 

Leases
The Company has entered into agreements to lease its facilities under certain
non-cancelable operating leases extending through 2000.  Future minimum lease
commitments under these leases are as follows: 


<TABLE>
<CAPTION>

          Year ending December 31,
          ------------------------
                 <C>                <C>
                 1999               523,161
                 2000               163,707
                                  -----------
                                  $ 686,868
                                  ===========

</TABLE>


Rent expense for the years ended December 31, 1998, 1997 and 1996 was 
approximately $501,023, $419,815, and $263,000, respectively.  During 1998, 
the Company entered into non-cancelable operating sublease agreements for its
San Francisco office and a portion of its Palo Alto office.  The Company 
received operating sublease revenues of $123,000 in 1998.  The total future 
minimum lease payments to be received under these non-cancelable operating 
subleases are approximately $70,764, which are not reflected in the above 
table.


<PAGE>


Bonus Plan
During 1998, the Company instituted a new bonus plan to replace the previous 
profit sharing plan.  The Company's contributions to its employee bonus plan 
are made at the Company's discretion.  Contributions to the bonus plan 
amounted to $401,607 for the year ended December 31, 1998.


<PAGE>


                                   EXHIBITS INDEX

                                                                             
                                      Incorporated by Reference
Exhibit                                                      
Number           Exhibit Description         Form    Date    
--------   ------------------------------   ------  -------  

  3.1      Certificate of Incorporation       S-1   6/20/95          

  3.2      Bylaws                             S-1   6/20/95               

  10.1     Form of Indemnity Agreement for 
           officers and directors             S-1   6/20/95        

  10.2     Form of Indemnity Agreement for 
           officers and directors             S-1   6/20/95        

  10.3     1995 Equity Incentive Plan
           (the "1995 Plan")                  S-1   6/20/95        

  10.4     Form of Incentive Stock Option 
           under the 1995 Plan                S-1   6/20/95        

  10.5     Form of Nonstatutory Stock Option 
           under the 1995 Plan                S-1   6/20/95        

  10.6     1995 Non-Employee Directors' Stock 
           Option Plan (the "Directors' Plan")S-1   6/20/95        

  10.7     Form of Stock Option under the 
           Directors' Plan                    S-1   6/20/95        

  10.8     Lease Agreement by and between 
           MySoftware and 2197 E. Bayshore 
           Road Partnership dated February 25, 
           1993, as amended                   S-1   6/20/95        

  10.9     Software Development Agreement
           by and between MySoftware and 
           Micro-Burst, Inc. dated October 11,
           1993 ("the October 11, 1993 
           Agreement")                        S-1   6/20/95        

  10.10    Software Development Agreement
           by and between MySoftware and 
           Micro-Crafts, Inc. dated September 
           13, 1993 ("the September 13, 1991 
           Agreement")                        S-1   6/20/95        

  10.11    Amendment to the September 13, 
           1991 Agreement between MySoftware 
           and MicroCrafts, Inc., dated 
           October 10, 1994                   S-1   6/20/95                    


<PAGE>

   
                                EXHIBITS INDEX
                                 (Continued)


                                      Incorporated by Reference
  Exhibit			                                                  
  Number         ExhibitDescription          Form      Date
----------   ---------------------------    -------  --------    
  10.12      Software Development Agreement
             by and between MySoftware and 
             Micro-Crafts, Inc. dated October 
             18, 1992 ("the October 18, 1992 
             Agreement")                      S-1     6/20/95                

  10.13      Amendment to the October 18, 
             1992 Agreement between MySoftware 
             and MicroCrafts, Inc., dated 
             October 10, 1994                 S-1     6/20/95                   

  10.14      Software Development Agreement
             by and between MySoftware and 
             Micro-Crafts, Inc. dated December 
             10, 1993)                        S-1     6/20/95        

  10.15      Software Purchase Agreement and 
             Assignment of Copyright dated 
             January 15, 1996 by and between 
             MySoftware and Mediatech, Inc.   10-K    12/31/95

  10.16      Amendment to Lease Agreement 
             dated June 30, 1995              10-K    12/31/95

  10.17      Lease Agreement by and between 
             MySoftware and Birmingham 
             Properties, Inc. dated October 
             8, 1996                          10-KSB  12/31/96

  10.18      Third Amendment to Lease 
             Agreement by and between 
             MySoftware and Holvick Family 
             Trust, dated January 31, 1997    10-KSB  12/31/96

  10.19      Rights Agreement                  8-K     6/15/98

  10.20      1998 Non-Officer Stock Option 
             Plan                              S-8     12/14/98

  10.21      Data Agreement with the Polk 
             Company                           N/A       N/A         

  10.22      Data Agreement with Experian 
             Information Solutions, Inc.       N/A       N/A         

   23.1      Consent of KPMG LLP               N/A       N/A         

   27.1      Financial Data Schedule           N/A       N/A        


<PAGE>


                                     EXHIBIT 23.1

                            CONSENT OF INDEPENDENT AUDITOR




The Board of Directors
MySoftware Company

We consent to incorporation by reference in the registration statements 
(No. 33-91898 and No. 333-68841) on Form S-8 of MySoftware Company of our 
report dated February 5, 1999, relating to the balance sheets of MySoftware 
Company as of December 31, 1998 and 1997, and the related statements of 
operations, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1998, which report appears in the 
December 31, 1998 annual report on Form 10-KSB of MySoftware Company.




                                                       KPMG LLP



Mountain View, California
March 26, 1999


<PAGE>