UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, DC  20549
                                FORM 10-Q
                               (Mark One)

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


                For the quarterly period ended September 30, 1998
                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                        For the transition period from to

                          Commission File No. 0-20660

                             COMPUTER CONCEPTS CORP.
             (Exact name of registrant as specified in its charter)


            Delaware                                  11-2895590
(State or other jurisdiction of                    (I.R.S. Employer
 incorporation or organization)                     Identification  No.)


     80 Orville Drive, Bohemia, N.Y.                      11716
(Address of principal executive offices)                (Zip Code)


Registrant's telephone number, including area code     (516) 244-1500


Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                     Yes   [X]           No [ ]

     The number of shares of $.0001 par value stock  outstanding  as of November
16, 1998 was: 19,129,340.

<PAGE>

                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES

                                      INDEX

                                                                        
PART I -  FINANCIAL INFORMATION                                         Page

          Condensed Consolidated Balance Sheets
          as of September 30, 1998 and December 31, 1997                   3

          Condensed Consolidated Statements of Operations
          and Comprehensive Income For the Three and
          Nine Months Ended September 30, 1998 and 1997                    4

          Condensed Consolidated Statements of Cash Flows
          For the Nine Months ended September 30, 1998 and 1997            5

          Notes to Condensed Consolidated Financial Statements           6 - 16

          Management's Discussion and Analysis of Financial
          Condition and Results of Operations                           17 - 23



                       PART II - OTHER INFORMATION

          Item 1. Legal Proceedings                                        24

          Item 2. Changes in Securities                                    24

          Item 3. Defaults Upon Senior Securities                          24

          Item 4.  Submission of Matters to a Vote of Security Holders     24

          Item 5. Other Information                                        24

          Item 6. Exhibits and Reports on Form 8-K                         24

          Signatures                                                       25

<PAGE>

                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 as of September 30, 1998 and December 31, 1997
                        (in thousands, except share data)
<TABLE>
<CAPTION>
                                             September 30,       December 31,
                                                 1998                1997
                              ASSETS         --------------      ------------ 
                                              (Unaudited)
                                              -----------     
<S>                                             <C>               <C>     
CURRENT ASSETS:
 Cash and cash equivalents                      $ 15,258          $    778
 Accounts receivable, net of allowance 
   for doubtful accounts of $371 and
   $252 in 1998 and 1997,  respectively           10,702            11,718
 Installment receivables                          10,154             6,148
 Advances to  officers                               818             1,070
 Prepaid expenses and other current assets         5,959             1,987
 Deferred tax assets, current                        180              -
                                                --------          --------
                                                  43,071            21,701  

INSTALLMENT RECEIVABLES, due after one year        7,729             6,480
PROPERTY AND EQUIPMENT, net                        2,489             2,069
SOFTWARE COSTS, net                                6,179             3,730
EXCESS OF COST OVER FAIR VALUE OF NET 
  ASSETS ACQUIRED, net of accumulated 
  amortization  of $3,571  and $2,477 in 
  1998 and 1997, respectively                      9,278             4,611
OTHER ASSETS                                       1,174               707
DEFERRED TAX ASSETS, non-current                     365              -
                                                --------          --------
                                                $ 70,285          $ 39,298
                                                ========          ========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
   Accounts payable and accrued expenses        $  5,901          $  7,225
   Current portion of long- term debt              1,124             1,291
   Current income taxes payable                      506              -
   Deferred installment revenue                    6,981             5,506
   Deferred maintenance revenue                    6,435             6,267
                                                --------          --------
                                                  20,947            20,289
DEFERRED INSTALLMENT REVENUE, earned after 
   one year                                        1,919               825
DEFERRED MAINTENANCE REVENUE, earned after 
   one year                                        7,662             7,122
LONG-TERM DEBT, net of current portion             1,636             1,395
                                                --------          --------     
           Total liabilities                      32,164            29,631
                                                --------          --------     
MINORITY INTEREST                                  4,872              -
                                                --------          -------- 
COMMITMENTS AND CONTINGENCIES                       

SHAREHOLDERS' EQUITY:
   Common stock, $.0001 par value; 150,000,000
    authorized; 19,082,341 shares
    in 1998 and 12,744,751 shares in 1997
    issued and outstanding                             2                1
   Additional paid-in capital                    106,576           91,641
   Accumulated deficit                           (73,013)         (81,741)
   Foreign currency translation                      (76)             (54)
   Unrealized loss on marketable securities         (240)            (180)
                                                --------         --------     
          Total shareholders' equity              33,249            9,667
                                                --------         --------     
                                                $ 70,285         $ 39,298
                                                ========         ======== 
<FN>
            See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>


                COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                                   (Unaudited)
                For the Three and Nine Months Ended September 30,
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                               Three Months Ended         Nine Months Ended
                                                  September 30,             September 30,
                                               1998          1997         1998         1997
                                               ----          ----         ----         ----
<S>                                         <C>           <C>           <C>         <C>     
REVENUE:
  Software licenses                         $  8,194      $  4,343      $ 17,983    $ 11,050
  Maintenance                                  2,630         2,578         7,827       7,407
  Professional services                        1,926            45         6,045       1,474
                                            --------      --------      --------    --------   
                                              12,750         6,966        31,855      19,931
COSTS AND EXPENSES:
  Cost of revenue - software licenses            434           262         1,132         653
  Cost of revenue - maintenance                1,776         1,455         4,886       4,155
  Cost of revenue - professional services      1,719            38         5,183       1,927
  Research and development                     1,498         1,406         3,316       3,121
  Sales and marketing                          7,216         5,820        19,394      12,928
  General and administrative                   3,136         2,520         7,965       7,090
  Amortization and depreciation                1,478           546         2,718       1,594
  Unusual charges                               -             -             -           850
                                            --------      --------      --------    --------   
                                              17,257        12,047        44,594      32,318
                                            --------      --------      --------    --------   
LOSS FROM OPERATIONS                         (4,507)        (5,081)      (12,739)    (12,387)
OTHER INCOME/(EXPENSE):
  Gain on partial disposition of subsidiary  15,839           -           22,466        -
  Gain on sale of net assets of subsidiary      -              813          -            813
  Interest expense                             (173)          (104)         (732)       (137)
  Minority interest in earnings of subsidiary  (275)          -             (275)       -
  Interest charge pertaining to the discount 
    on convertible debentures                   -             (408)         -         (1,288)
                                            --------      --------      --------    --------   
INCOME (LOSS) BEFORE INCOME TAXES            10,884         (4,780)        8,720     (12,999)
                                            --------      --------      --------    --------   
BENEFIT FROM INCOME TAXES                         8           -                8        -
                                            --------      --------      --------    --------   
NET INCOME (LOSS)                            10,892         (4,780)        8,728     (12,999)

OTHER COMPREHENSIVE INCOME:
   Foreign currency translation adjustments     (15)          -              (22)       -
   Marketable securities reserve adjustments    (60)          -              (60)       -
COMPREHENSIVE INCOME (LOSS)                 $10,817       $ (4,780)     $  8,646    $(12,999)
                                            ========      ========      ========    ========   
BASIC NET INCOME (LOSS) PER SHARE           $  0.61       $  (0.41)     $   0.56    $  (1.22)
                                            ========      ========      ========    ========                                 
DILUTED NET INCOME (LOSS) PER SHARE         $  0.60       $  (0.41)     $   0.53    $  (1.22)
                                            ========      ========      ========    ========   
BASIC WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING                                17,811         11,745        15,595      10,690
                                            ========      ========      ========    ========   
DILUTED WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING                                18,008         11,745        16,364      10,690
                                            ========      ========      ========    ========   
<FN>
        See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>

<PAGE>

                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                     For the Nine Months Ended September 30,
                                 (in thousands)
<TABLE>
<CAPTION>
                                                               1998         1997
                                                               ----         ----
<S>                                                         <C>         <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash flows from operating activities
   Net income (loss)                                         $  8,728    $ (12,999)
Adjustments  to  reconcile  net  income  (loss)  
   to net cash  used in  operating activities:
   Depreciation and amortization:
     Software costs                                             1,514          480
     Property and equipment                                       899          679
     Excess of cost over fair value of net assets acquired      1,094          552
     Other                                                          2            3
   Gain on partial disposition of subsidiary                  (22,466)          -
   Gain on sale of net assets of subsidiary                       -           (813)
   Provision for doubtful accounts                                324           61
   Common stock and options issued for services                 3,548        3,766
   SOFTWORKS common stock exchanged for services                1,612           -
   Deferred income tax benefit                                  ( 545)          -
   Minority interest in earnings of subsidiary                    275           -
   Non-cash unusual charges                                       -            500
   Non-cash interest charge for discount on convertible debt      -          1,288
   Other                                                          421           -
Changes in operating assets and liabilities
   Accounts receivable                                         (3,314)      (4,235)
   Installment accounts receivable, due after one year         (1,249)      (3,266)
   Inventories                                                   -              10
   Prepaid expenses and other current assets                     (230)        (134)
   Other assets                                                  (467)          81
   Accounts payable and accrued expenses                       (1,047)       2,502
   Current income taxes payable                                   506           -
   Deferred revenue                                             3,277        5,653
                                                               ------       ------  
     Net cash used in operating activities                     (7,118)      (5,872)
                                                               ------       ------  
Cash flows from investing activities
   Capital expenditures                                        (1,319)      (1,164)
   Additional consideration for SOFTWORKS acquisition            (678)        (486)
   Proceeds from the sale of net assets of subsidiary (net)        -           230
   Net proceeds from initial public offering of subsidiary     19,419          -
   Software development and technology purchases               (1,263)       (525)
   Advances to officers, net                                      252        (179)
                                                               ------       ------  
        Net cash provided by (used in) investing activities    16,411      (2,124)
                                                               ------       ------  
Cash flows from financing activities
     Net proceeds from sales of common stock and options        5,210       2,783
     Proceeds from issuance of convertible debt
        (net of issuance costs)                                 1,925       3,381
     Repayment of convertible debt                             (2,000)        -
     Net proceeds (repayments) of long-term debt                   74        (243)
                                                               ------       ------  
        Net cash provided by financing activities               5,209       5,921
                                                               ------       ------  
Effect of exchange rate changes on cash and cash equivalents      (22)         -
                                                               ------       ------  
Net increase (decrease) in cash and cash equivalents           14,480      (2,075)
Cash and cash equivalents, beginning of period                    778       5,675
                                                               ------       ------  
Cash and cash equivalents, end of period                     $ 15,258     $ 3,600
                                                               ------       ------  
<FN>
            See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>

                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997


     1.  INTERIM FINANCIAL INFORMATION

     The condensed  consolidated balance sheet as of September 30, 1998, and the
condensed  consolidated  statements  of  operations  and cash flows for the nine
months ended  September  30, 1998,  and 1997,  have been prepared by the Company
without  audit.  These interim  financial  statements  include all  adjustments,
consisting  only  of  normal  recurring  accruals,  which  management  considers
necessary  for a fair  presentation  of the financial  statements  for the above
periods.  The results of  operations  for the three months ended  September  30,
1998,  are not  necessarily  indicative  of results that may be expected for any
other  interim  periods  or for the  full  year.  

     These  condensed  consolidated  financial  statements  should  be  read  in
conjunction with the consolidated financial statements and notes thereto for the
year ended  December 31, 1997.  The  accounting  policies  used in preparing the
condensed  consolidated financial statements are consistent with those described
in the December 31, 1997, consolidated financial statements, except for recently
issued accounting pronouncements as described in Notes 6 and 7, and Note 9 which
describes the consolidation policy with respect to minority interest.

     2.  BASIS OF PRESENTATION

     Computer Concepts Corp. and subsidiaries (the "Company")  design,  develop,
market and support  information  delivery software products,  including end-user
data access tools for use in personal  computer and  client/server  environments
and systems management  software products for corporate  mainframe data centers.
The Company created a "professional  services"  division in 1997. For a fee, the
Company  assists in the design,  construction  and  installation  of  technology
systems,   including   the  reselling  of  computer   hardware.   The  Company's
professional  services  organization also provides systems management  services,
including  training,   implementation  of  software,   and  staff  augmentation.
Additionally,  effective June 30,1998,  the Company  completed an acquisition of
software and related sales and marketing rights which is designed to provide non
computer literate owners (e.g.  parents) the ability to identify threats as well
as  objectionable  material  which may be viewed by users of the computer on the
Internet  (e.g.  children) . See Note 8. The Company's  principal  market is the
United  States.   Overseas  revenue  is  principally   generated  from  European
subsidiaries and distributors.

     While the Company has reported net income of $10,892,000 and $8,728,000 for
the three  and nine  months  ended  September  30,  1998,  respectively,  it has
incurred consolidated losses from operations of $4,507,000 and $12,999,000,  for
the same respective periods.  Further, the Company has incurred consolidated net
losses of  $12,385,000,  $18,953,000  and $18,365,000 for the years December 31,
1997, 1996, 1995, respectively. As a result of the partial disposition of one of
its subsidiaries,  SOFTWORKS,  Inc., ("SOFTWORKS") the Company recognized a gain
of  approximately  $22,466,000  during the nine month period ended September 30,
1998 (See Note 9). For the nine month period ended  September 30, 1998, net cash
used in operating  activities  was  $7,118,000,  reflecting the above net income
adjusted  for  various   non-cash  charges  which  aggregate   $9,144,000,   the
$22,466,000 gain referred to above, and a net change in (cash used by) operating
assets and  liabilities of  $2,524,000.  The Company's  cash  requirements  were
primarily  financed  through the partial  disposition of SOFTWORKS,  the sale of
restricted  common stock, the exercises of stock options,  and proceeds from the
issuance of a convertible debenture.
<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997

         2.  BASIS OF PRESENTATION   (continued)

     The Company  does not maintain a  comprehensive  credit  facility  with any
financial  institution,  although  the Company is  actively  seeking to obtain a
secured  line  of  credit.  The  Company  has  continued  to  incur  significant
expenditures  with respect to the  development  and marketing of its d.b.Express
technology without generating any significant  revenue. As a result of continued
operating  losses  and  the use of  significant  cash in  operations,  there  is
substantial doubt about the Company's ability to continue as a going concern. No
adjustments have been made with respect to the consolidated financial statements
to record the results of the ultimate outcome of this uncertainty.

     Management's plans to remain a going concern require  additional  financing
until such time as the  Company  achieves  positive  cash flows from  operations
including the successful exploitation of the Company's d.b.Express technology as
well as its newly acquired  software product (See Note 8). The Company's current
source of operating  revenue  continues to be primarily  derived from SOFTWORKS.
The Company has incurred significant losses (both cash and non-cash expenses) as
a  result  of the  development  and  marketing  of the  d.b.Express  technology.
Nevertheless,  management believes that its proprietary  d.b.Express  technology
has  significant  potential  in  several  areas and solves  certain  significant
business issues in the telecommunications and Internet related markets. In order
to  realize  the  potential  of  this  technology,  the  Company  is  vigorously
continuing  its  efforts  to enter  into  sales  or  license  agreements  of its
d.b.Express  technology  as  well  as  its  world  wide  web  hosting  services.
Management  believes that the successful  exploitation  of: i.- the  d.b.Express
technology;  ii.- projected growth in professional services; and iii.- the newly
acquired  software product and related  marketing  rights;  among other factors,
will  eventually  enable  the  Company  to  achieve  positive  cash  flows  from
operations and reduce its dependency on cash flows from financing activities.

     In  January,  1998,  the  Company  consummated  the  sale of  approximately
$1,978,000  (net of expenses of  approximately  $162,000) of  restricted  common
stock. In May, 1998, the Company obtained approximately  $1,925,000 (net of fees
and  commissions  of  approximately  $75,000)  from  the  sale of a  convertible
debenture.  The  debenture  would  have  matured  on August  28,  1998,  and was
convertible upon a payment  default.  In August,  1998,  prior to maturity,  the
Company repaid the debenture plus interest aggregating approximately $2,460,000.
Although the Company  increased cash by  approximately  $19,400,000,  in August,
1998, through the sale of 3,200,000 shares of its SOFTWORKS subsidiary (See Note
9), until such time as  sufficient  cash flows are  generated  from  operations,
additional  financing  will be necessary.  There can be no  assurances  that the
Company will be able to obtain  sufficient  financing or will be  successful  in
achieving  positive cash flows from  operations in order to execute its business
plan.

<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997

     3.   SHAREHOLDERS' EQUITY

a.  Common Stock Split

     On March 18,  1998,  the Board of Directors  declared a reverse  split at a
ratio of 1 for 10 shares with a record  date of March 27, 1998 and an  effective
date of March  30,1998.  Par value and  authorized  shares  remain  unchanged at
$0.0001 and 150,000,000 shares respectively. All references to numbers of shares
and per share  data have been  restated  for 1997 so as to reflect  the  reverse
stock split

b.  Sale of Common Stock

     In January,  1998,  the Company  consummated  the sale of restricted  stock
under a private placement to accredited United States investors under Regulation
D. Proceeds from this sale totaled  $1,978,000,  net of commissions  and fees of
approximately  $162,000.  A total  of  496,232  shares  were  sold at a price of
$4.3125 per share.  The  closing bid price of the  Company's  common  stock,  as
stated on the NASDAQ Small Cap Market did not exceed an average of $5.28 for any
five consecutive  trading days during the thirty days immediately  following the
effective date of the Registration  Statement  (effective  February 6, 1998, see
Note 4).  Accordingly,  under the terms of this transaction,  the Company issued
approximately 280,000 additional shares in April, 1998.

     Additionally,   during  the  nine  months   ended   September   30,   1998,
approximately  939,000  options were  exercised at prices  ranging from $0.10 to
$5.00. Proceeds raised from these exercises aggregated approximately $3,232,000.

c.  Transactions with consultant

     During  October,  1997,  the Company issued  114,765  restricted  shares of
common stock to HPS America,  Inc. ("HPS") for settlement of product development
costs of approximately $600,000 owed to HPS and its affiliates. These shares had
a valuation  guarantee  based on the  Company's  stock price during the first 30
days  immediately  following  the  effective  date of a  registration  statement
(January  6,  1998).  The shares  were sold at a value less than the  guaranteed
amount  and  the  Company   settled  the  shortfall   with  a  cash  payment  of
approximately $170,000 in the first quarter of 1998.

d.  Stock / stock option compensation

     During April,  1998, the Company issued  1,628,900 stock options to several
officers,  key employees,  including those at SOFTWORKS,  and  consultants.  The
options range in exercise  price from $4.00 to $6.00 and vest December 31, 1998,
but are subject to forfeiture should the Company not achieve profitability of at
least $5,000,000 for the year ending December 31, 1998. Additionally, in lieu of
cash  compensation,   the  Company  issued  895,000  stock  options  to  several
consultants for which the Company recorded,  during the three month period ended
June 30, 1998, a non-cash charge to earnings of  approximately  $1,469,000.  The
Company,  pursuant to the compensation  committee,  issued 1,209,148  options to
officers and employees of both the Company and its then wholly owned subsidiary,
SOFTWORKS,  which  have an  exercise  price of $4.00 and are fully  vested.  All
options expire December 31, 2000.
<PAGE>

                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997

d.  Stock / stock option compensation - (continued)

     During  September,  1998,  the Company  canceled  1,266,667  stock options,
1,067,750  with an exercise  price of $4.00 and 27,500 with an exercise price of
$6.00  which were  included  in the April,  1998  grant.  The balance of 171,417
options  canceled had exercise  prices ranging from $3.75 to $15.00.  In lieu of
the canceled stock options the Company issued  1,034,300 shares of the Company's
restricted common stock.

     4.  COMMITMENTS AND CONTINGENCIES

a. Contingent Consideration

     In  connection  with the 1993  acquisition  of  SOFTWORKS,  the  Company is
required to make additional  payments to two of SOFTWORKS' former  shareholders,
based upon certain  product  revenues for the years 1995 through  1998,  up to a
maximum of $1,000,000  each,  for an aggregate  maximum of  $2,000,000.  Through
September  30,  1998,  the  Company  incurred  and  paid the  aggregate  maximum
liability of $2,000,000 to the non-employee former shareholders,  which has been
treated as additional  consideration  in connection with the  acquisition,  and,
accordingly,  included  in the  excess of cost over the fair value of net assets
acquired, as these individuals did not continue in the employment of the Company
subsequent to the acquisition.

b. Registration Statements / Restricted Securities

     During December, 1997, the Company filed three registration statements: (i)
an amended registration  statement on Form S-1 (No. 33-97560,  effective January
6, 1998) which amended a registration statement that was originally effective on
August  9,  1996,  (ii) a  registration  statement  on Form S-8 (No.  333-42795,
effective upon filing, December 19, 1997), and (iii) a registration statement on
Form S-1 (No.  333-42919,  effective  January 6, 1998).  The primary  purpose of
these  registration  statements was to register  outstanding  restricted  common
stock and shares issuable upon exercise of outstanding options.

     On January 22, 1998,  the Company filed another  registration  statement on
Form S-1 ( No.  333-44683,  effective  February 6, 1998). The primary purpose of
this  registration  statement was to register  shares  issued in January,  1998,
pursuant to a private placement (See Note 3).

     On May 15, 1998 the Company  filed a  registration  statement on Form S-8 (
No.  333-52875 ) for 779,148 options and 122,500 shares of the Company's  common
stock which was effective upon filing.  The primary purpose of this registration
statement was to register  shares issued to certain  consultants and non-officer
employees.

     Other than the restricted shares issued for the acquisition  referred to in
Note 8,plus the balance of the stock options  granted in April,  1998 as well as
the recently  issued shares of the Company's  common stock  discussed in Note 3,
substantially  all of the Company's  outstanding  common stock (including shares
issuable upon exercise of  outstanding  options) have been either  registered or
are qualified for sale in the market  pursuant to Rule 144 of the Securities Act
of 1933, as amended.

<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997

     4.  COMMITMENTS AND CONTINGENCIES (Continued)

c. Legal Matters

     In July, 1995, the Company and certain officers received  notification that
they  have  been  named as  defendants  in a class  action  claim in  regard  to
announcements  and  statements  regarding the  Company's  business and products.
Although  the  Company  denied  any  wrongdoing,  in an effort to avoid  further
expense and resolve the  uncertainty of litigation,  in July,  1997, the Company
tentatively  agreed to a Stipulation  and Agreement of Settlement  ("Stipulation
Agreement") of this class action.  In February,  1998, the Court entered a final
order  approving the terms of the Stipulation  Agreement.  The Company agreed to
deliver $500,000 of its common stock, and in April,  1998, the Company delivered
119,850  shares.  Further,  the  Company  and its  insurance  carrier  each paid
$350,000,  totaling $700,000.  Based upon the Stipulation Agreement, the Company
recorded an $850,000  Unusual  Charge to earnings in the quarter  ended June 30,
1997.

     In March, 1995, an action was originally  commenced against the Company and
a number of defendants.  In early 1997, after a change in counsel, the plaintiff
amended the  complaint  for a second  time,  now naming as  defendants  only the
Company and three of its officers.  The second  amended  complaint  alleges that
certain  third  parties,  unrelated  to the  Company,  transferred  certificates
representing  1,000,000  shares of the Company's  common stock to the plaintiff.
The  complaint  further  alleges that such shares were  endorsed in blank by the
third  parties  and  became  bearer  securities  which  were  negotiated  to the
plaintiff by physical  delivery.  The certificates had not been legally acquired
from the Company  and the  certificates  were  reported  to the  Securities  and
Exchange  Commission  by the  Company  as  stolen  certificates.  Plaintiff  has
requested  validation of the transfer of the certificates and is seeking damages
of an unspecified  amount,  consisting of alleged  diminution in market value of
the subject shares from 1994 through the date of any judgment in the plaintiff's
favor.  Discovery was  substantially  completed in January,  1998, and, unless a
summary  judgment is granted to one side or the other,  this case is expected to
go to  trial  later  in 1998.  The  Company  and its  counsel  believe  that the
Company's position regarding the claim has substantial factual and legal support
and are  vigorously  defending  the  matter.  However,  the Company is unable to
predict the ultimate outcome of this claim and, accordingly, no adjustments have
been made in the consolidated  financial  statements for any potential losses or
potential issuance of common stock.

     In 1995,  Fletcher  Capital Corp.  filed a claim  against the Company,  its
president and several  unrelated  parties,  regarding a claim for an unspecified
amount of  commissions in the form of options from the Company and cash from the
other parties.  This matter was settled in February,  1997, with the issuance of
36,000 options exercisable at $3.50 per share,  $126,000 paid with 25,200 shares
of common stock (issued January, 1998) and cash payments totaling $31,000.

<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997

     4.  COMMITMENTS AND CONTINGENCIES (Continued)

 d. Software distribution agreement

     In July,  1997, the Company  acquired from Cognizant  Technology  Solutions
Corporation ("CTS") rights to technology ( the "Technology") that compliment the
Company's  existing  Year  2000  product  solutions.  Pursuant  to the  software
distribution  agreement,  in exchange for the Technology  rights, the Company is
required  to pay CTS a  royalty  on sales of the  Technology  at  defined  rates
subject to minimum  annual  royalties of;  $100,000,  $900,000,  $1,400,000  and
$400,000 for the years 1997 through 2000.  An asset,  equal to the present value
of the minimum  royalties,  of  $2,160,000  has been  recorded as purchased  and
acquired  software  technologies for resale and is being amortized over the five
year term of the  agreement.  The  payment  obligation  is recorded as long term
debt.


e. Employment agreements

     The Company  recently  entered into six new employment  agreements with key
SOFTWORKS employees.  The agreements terminate at various times through December
31, 2002. Five of the agreements automatically renew for one year periods unless
SOFTWORKS or the employee notify the other party ninety days prior to the end of
any renewal term.  The last agreement is "at-will".  One agreement  provides for
the issuance of a $500,000 full recourse loan,  interest  bearing at the rate of
approximately  6.0% per  annum,  unsecured,  and  payable on  December  1, 2000,
subject  to  certain  acceleration  provisions.  The six  employment  agreements
provide for an aggregate annual base compensation of $809,000.  All are eligible
for incentive bonuses subject to SOFTWORKS achieving various net income levels.

     5.  RECLASSIFICATIONS

     Certain  reclassifications  have  been made to the  condensed  consolidated
financial statements shown for the prior year in order to have it conform to the
current year's classifications.

     6.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     Statement of Position 97-2, "Software Revenue  Recognition",  ("SOP 97-2"),
which superceded  Statement of Position 91-1 "Software Revenue  Recognition" was
issued to provide further  guidance on applying  generally  accepted  accounting
principles  to software  transactions,  and became  effective  for  transactions
entered into beginning in 1998. In March, 1998, Statement of Position 98-4 ("SOP
98-4"), amended a portion of SOP 97-2 The adoption of SOP 97-2 and the amendment
contained  in SOP 98-4 did not require any changes to the  Company's  method for
the  accounting  of software  transactions  and  therefore  had no impact on the
Company's financial statements.

<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997

     6.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS    (Continued)

GEOGRAPHIC INFORMATION

     The  Company  is  primarily  engaged  in a  single  line of  business.  The
geographic  data is  summarized  between  the United  States and  international.
International  consists  of  operations  through  the  Company's   international
subsidiaries in the United Kingdom, France, Brazil,  Australia,  Spain, Germany,
and  Italy,  as well  as  sales  generated  through  international  distributors
primarily in Europe and Asia.  Geographic  data is presented in accordance  with
Statement  of  Financial  Accounting  Standards  No.  131, "  Disclosures  About
Segments of an Enterprise and Related  Information" for all periods presented as
follows (in thousands):

<TABLE>
<CAPTION>

                               Three Months Ended       Nine Months Ended
                                 September 30,            September 30,
                               1998        1997         1998         1997
                               ----        ----         ----         ----
<S>                          <C>        <C>            <C>         <C> 
Revenue:    
   United States             $ 10,330   $  5,462      $  26,097    $ 16,611
   International                2,420      1,195          5,758       3,320
                             --------   --------       --------    --------
     Total                   $ 12,750   $  6,657       $ 31,855    $ 19,931
                             ========   ========       ========    ========
Operating Income:
   United States             $ (4,280)   $(4,912)      $(11,795)   $(11,834)
   International                 (227)      (169)          (944)       (553)
                             --------   --------       --------    --------
      Total                  $ (4,507)   $(5,081)      $(12,739)   $(12,387)
                             ========   ========       ========    ========

                                 Sept. 30, 1998    Dec. 31, 1997
                                 --------------    -------------
Identifiable Assets:

   United States                   $ 63,768          $36,630
   International                      6,517            2,668
                                   --------          -------  
      Total                        $ 70,285          $39,298
                                   ========          =======  
</TABLE>

      7.  REPORTING OF COMPREHENSIVE INCOME

     In January,  1998, the Company began accounting for comprehensive income in
accordance with Statement of Financial Accounting Standards No. 130 - "Reporting
Comprehensive  Income."  Accordingly,  the  Company  displayed  other  items  of
comprehensive income in the accompanying  Condensed  Consolidated  Statements of
Operations and Comprehensive Income.

<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997

     8.  ASSET ACQUISITION

     On June 30, 1998,  pursuant to an Asset  Purchase and Sale  Agreement,  the
Company  acquired  certain  software and related sales and marketing rights from
Internet  Tracking  & Security  Ventures  ("ITSV")  in  exchange  for  1,900,000
restricted shares of the Company's common stock and 1,000,000  restricted shares
of common stock of the Company's then wholly owned  subsidiary,  SOFTWORKS.  The
acquired  software program is designed to inform non computer  literate parents,
guardians and alike,  exactly what materials,  or possible threats to the safety
and well being their  children or others have been  accessing over the internet,
such as objectionable web sites, text, pictures,  screens, electronic mail, etc.
The  Agreement  also includes the rights to the use of Richard "Bo" Dietl's name
in  conjunction  with the promotion and  endorsement  of the software as well as
appearances  by Mr.  Dietl in support of the  software in regional  and national
marketing  campaigns.  Orders  for the  initial  version  of the  product  began
shipping in November, 1998.

     The acquisition  has been valued at an aggregate of $12,210,000  determined
as  follows:  1,900,000  restricted  shares of the  Company  have been valued at
$5,700,000 and the 1,000,000  restricted  shares of SOFTWORKS' common stock have
been value at  $6,510,000  (based upon the  ultimate net proceeds to the selling
shareholders in SOFTWORKS' initial public offering which became effective August
4, 1998 (See Note 9).

     The $12,210,000  purchase price has been allocated to the fair value of the
assets  acquired  at June 30,  1998,  based  upon a  written  valuation  from an
independent investment banking firm. Accordingly,  $2,700,000 has been allocated
to "Software costs"; $4,150,000 has been recorded as "Prepaid expenses and other
current  assets" and  $5,360,000  has been recorded as "Excess of cost over fair
value of net assets  acquired".  The software costs will be amortized  using the
greater of the ratio of current revenue to the total  projected  revenue for the
software  or the  straight  line method  using a useful  life of 30 months.  The
prepaid expenses will be expensed as related services are performed, (including,
but not limited to, appearances,  promotion and endorsement). The excess of cost
over fair value of net assets acquired, which primarily relate to the use of the
name "Bo Dietl" will be amortized using the straight line method over 36 months.


      9. GAIN ON PARTIAL DISPOSITION OF SUBSIDIARY

     Prior to June 30,  1998,  SOFTWORKS  was a wholly owned  subsidiary  of the
Company  with  14,083,000  shares of common  stock  outstanding.  As part of the
consideration  for the assets acquired from ITSV (see Note 8), on June 30, 1998,
the Company  exchanged  1,000,000  restricted  shares of SOFTWORKS common stock.
Also on June 30,  1998,  the  Company  exchanged  100,000  restricted  shares of
SOFTWORKS common stock to a member of its Internet Strategy Committee,  (who now
also serves as Chairman of the Board of SOFTWORKS) for services rendered through
June 30, 1998,  resulting in a charge to  operations  of $525,000.  On August 4,
1998,  SOFTWORKS  completed a public offering of 4,200,000  shares of its common
stock at a price of $7.00 per share (less  underwriting  fees and commissions of
$0.49 per  share) as  follows:  1,700,000  shares of common  stock  were sold by
SOFTWORKS;  1,000,000 shares were sold by ITSV and 1,500,000 shares were sold by
the Company. As a result of these transactions, the Company's ownership interest
in SOFTWORKS  was reduced to 92.2% on June 30, 1998,  and  subsequently  further
reduced to 71.9% on August 4, 1998. Additionally,  in the third quarter of 1998,
options to acquire  3,637,500  restricted  shares of SOFTWORKS common stock have
been  granted  to  the  Company  and  SOFTWORKS  officers,   key  employees  and
consultants,  of which 806,500  options,  which vested upon the public  offering
date, are currently exercisable ( into restricted shares of
<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997

      9. GAIN ON PARTIAL DISPOSITION OF SUBSIDIARY  - (Continued)

SOFTWORKS'  common  stock).  The balance  vest,  ranging from December 31, 1998,
through  December 31, 2002,  and could vest earlier,  should  SOFTWORKS  achieve
certain financial thresholds.  All options are exercisable at the initial public
offering price of $7.00 per share.

     During  the  quarter  ended June  30th,  1998,  the  Company  recognized  a
$6,627,000 gain on the sale of the 1,100,000  shares of SOFTWORKS'  common stock
representing the difference between the fair value of the SOFTWORKS common stock
exchanged,  and the related adjusted carrying value of the Company's  investment
in SOFTWORKS.  In accordance with Staff  Accounting  Bulletins 51 and 84, in the
third  quarter of 1998,  the Company  recognized  a net gain of  $15,271,000  to
reflect the  reduction  of its  ownership  interest in  SOFTWORKS  from 92.2% to
71.9%. Additionally, in the third quarter of 1998, the Company exchanged 535,000
restricted shares of SOFTWORKS'common  stock to various consultants for services
rendered;  as a  result  of such  exchange,  the  Company  recognized  a gain of
$568,000 (and a non-cash charge to operations of $1,087,000).

     In conjunction with the SOFTWORKS public offering,  the remaining shares of
SOFTWORKS  common stock owned by the Company have been placed in a voting trust.
The voting  power of the trust is held by three  trustees who are members of the
Board of Directors of SOFTWORKS.  One trustee is the C.E.O. and President of the
Company.  The remaining  two trustees are SOFTWORKS  directors who do not have a
significant  financial interest in the Company,  one of which is the Chairman of
SOFTWORKS.  The agreement provides that upon a change in either of the remaining
two trustees, the non-Company  stockholders have control of the selection of the
successor  director/trustee.  This  agreement  remains  in effect as long as the
Company continues to own at least 25% of SOFTWORKS.

     For financial reporting purposes, the assets, liabilities and operations of
SOFTWORKS will continue to be included in the Company's  consolidated  financial
statements.  As of September 30, 1998, the Company owns 68.5% of SOFTWORKS.  The
public's  interest in SOFTWORKS is reflected in the  consolidated  balance sheet
and results of operations as minority interest.

<PAGE>

                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997


   10.EARNINGS PER SHARE

     For 1997,  outstanding  stock options,  warrants and other  potential stock
issuances have not been  considered in the  computation of diluted  earnings per
share amounts since the effect of their  inclusion  would be  antidilutive.  For
1998, the Company's  dilutive  instruments are "in the money" stock options with
various exercise dates and prices as well as certain  contingent stock issuances
(which were issued prior to June 30, 1998).  The Company uses the treasury stock
method to calculate  the effect that the  conversion  of the stock options would
have on earnings per share.  The following  table sets forth the  computation of
basic and diluted earnings per share.

<TABLE>
<CAPTION>

                               Three Months Ended       Nine Months Ended
                                 September 30,            September 30,
                               1998        1997         1998         1997
                               ----        ----         ----         ----
<S>                          <C>        <C>            <C>         <C> 
                                            
(Thousands except per share data)        

Numerator:
Net Income (Loss)             $10,892   $(4,780)       $8,728    $(12,999)
                              =======   =======        ======    ========  
Denominator:
wtd avg Shares Outstanding
(Denominator for Basic EPS)    17,811    11,745        15,595      10,690

  Effect of Dilutive Securities/
  Stock Options                   197       N/A           483         N/A
  Contingent Stock issuances        0       N/A           286         N/A
                              -------   -------       -------     -------  
Denominator for Diluted EPS    18,008    11,745        16,085      10,690
                              =======   =======        ======    ========  

Basic Net Income (Loss) EPS     $0.61    $(0.41)        $0.56     $(1.22)

Diluted Net Income (Loss) EPS   $0.60    $(0.41)        $0.53     $(1.22)


     11. BENEFIT FROM INCOME TAXES

     The  Company  accounts  for  income  taxes  under  Statement  of  Financial
Accounting  Standards No. 109,  "Accounting  for Income Taxes" ("SFAS No. 109").
SFAS No. 109 requires the  determination  of deferred tax assets nd liabilities
based on the differences between the financial statement and income tax bases of
assets and liabilities,  using enacted tax rates. SFAS No. 109 requires that the
net  deferred tax asset is adjusted by a valuation  allowance,  if, based on the
weight of  available  evidence,  it is more likely than not that some portion or
all of the net deferred tax asset will not be realized.

     Through  August 4, 1998,  the  results  of the  Company's  U.S.  operations
conducted  through its SOFTWORKS  subsidiary have been included in the Company's
consolidated Federal income tax returns. However, separate provisions for income
taxes have been determined for SOFTWORKS' wholly-owned foreign subsidiaries that
are not eligible to be included in the U.S.  Federal  income tax  returns.  As a
result of the initial  public  offering  of  SOFTWORKS  (Note 9), the  Company's
ownership of SOFTWORKS is reduced below 80% and SOFTWORKS is no longer  eligible
to be  included  in the  Company's  consolidated  Federal  income  tax  returns.
Accordingly,  since the future  realization of the  SOFTWORKS'  component of the
deferred tax asset ($902,000 as of August 4, 1998) is no longer  uncertain,  the
related valuation allowance has been eliminated.

     It is expected that the Company will utilize a portion of its available net
operating  loss  carryforwards  to  substantially  reduce  the  taxable  income
resulting from the gain on partial disposition of SOFTWORKS.


<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997


BUSINESS DESCRIPTION

     Computer Concepts Corp. and subsidiaries (the "Company")  design,  develop,
market and support  information  delivery software products,  including end-user
data access tools for use in personal  computer and  client/server  environments
and systems management  software products for corporate  mainframe data centers.
The Company created a "professional  services"  division in 1997. For a fee, the
Company  assists  in the  design,  construction  and  installation  of  building
technology systems,  including the reselling of computer hardware. The Company's
professional  services  organization also provides systems management  services,
including  training,   implementation  of  software,   and  staff  augmentation.
Additionally,  effective June 30,1998,  the Company  completed an acquisition of
software  and related  sales and  marketing  rights which is designed to provide
non- computer literate owners (e.g.  parents) the ability to identify threats as
well as  objectionable  material which may be viewed by users of the computer on
the internet (e.g. children) . See Note 8. The Company's principal market is the
United  States.   Overseas  revenue  is  principally   generated  from  European
subsidiaries and distributors.

     The Company  currently  consists of three operating units or product lines:
d.b.Express , SOFTWORKS,  and professional  services unit. With the consummation
of the  acquisition  of the software  technology and related sales and marketing
rights effective June 30, 1998, the Company has grown to four units. d.b.Express
provides businesses with a simple, fast, low-cost method of finding, organizing,
analyzing and using information  contained in databases through a visually-based
proprietary  software tool.  SOFTWORKS,  provides  systems  management  software
products  that  optimize   mainframe   system   performance,   reduce   hardware
expenditures,   and  enhance  the  reliability  and  availability  of  the  data
processing  environment.  During 1997, the Company  commenced  operations of the
professional  services  unit. The Company  employs an individual,  formerly with
I.B.M.,  having  expertise  in this  field  and  intends  to  capitalize  on his
experience and competency in order to create a unique  infrastructure to support
an extensive selection of services and vendors.  The professional  services unit
will offer solutions, support and strategies to solve various business crises in
such  areas  as:  selection  of  hardware,  network  determination,   help  desk
applications,  wiring/cabling, LAN connections,  moves/adds/changes, and project
management. It can also provide training,  implementation of software, and staff
augmentation.  Additionally, this unit will oversee new installations as well as
offering on-site  component  repair.  The newly acquired software is designed to
provide non  computer  literate  owners  (e.g.  parents) the ability to identify
threats as well as  objectionable  material  which may be viewed by users of the
computer on the internet (e.g. children) . Orders for the initial version of the
product began shipping in November,  1998. The method of revenue recognition for
each unit, will be dependent upon the type and manner of service provided and or
the terms of product sales.


<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997


RESULTS OF OPERATIONS

Three and Nine Months Ended September 30, 1998 Compared With September 30, 1997

     Total  revenue for the  quarter  ended  September  30,  1998,  $12,750,000,
reflects an increase of  $5,784,000,  or 83% when compared to $6,966,000 for the
same period last year.  A  significant  factor  contributing  to this growth was
software license revenue  increasing 89% or $3,851,000.  The introduction of new
products,  services and  enhancements as well as an expanding global sales force
are major contributors to the growth. Additionally, revenue generated during the
three months ended  September 30, 1998,  from  professional  services  increased
$1,881,000  to  $1,926,000  when  compared to $45,000 for the three months ended
September 30, 1997. While there can be no assurances,  the Company believes that
this revenue growth should continue due in part to planned product enhancements,
new released product line,  continued global  expansion,  and an increased sales
force. When comparing the nine months ended September 30, 1998, to 1997, revenue
increased $11,924,000, or 60%, from $19,931,000 to $31,855,000.

     The cost of  revenue -  software  licenses,  as a  percentage  of  software
license  revenue,  decreased from 6% of software license revenue for the quarter
ended  September 30, 1997, to 5% for the quarter ended  September 30, 1998.  The
cost of revenue-  software  licenses  consists  primarily of  royalties  paid to
Company developers and to third parties. Cost of revenue - maintenance,  for the
three month period ended September 30, 1998, as a percent of maintenance revenue
increased 11 percentage points to 67% from 56% when compared to the three months
ended  September 30, 1997. The increase is primarily  attributable to additional
payroll and related costs. Cost of revenue - professional services,  stated as a
percent of professional  services revenue,  for the three months ended September
30, 1998 was 89% an increase of 4% as compared to the three months  period ended
September  30, 1997.  The increase in dollars in cost of revenue -  professional
services is consistent with the increase in its revenue.

     Research and  development  costs for the three month period ended September
30, 1998,  increased  approximately  $92,000 over the same period last year, and
increased  $195,000 to $3,316,000 for the nine months ended  September 30, 1998,
from $3,121,000 for the prior year nine month period.

     Sales and marketing  expenses increased by $1,396,000 to $7,216,000 for the
three months ended  September 30, 1998 when compared to $5,820,000  incurred for
the same period in 1997. The increase was primarily due to increased  commission
expenses  resulting from increased sales,  and increased  personnel costs due to
the expanded  sales  organization.  However,  as a percentage of total  revenue,
sales  and  marketing  costs  decreased  from  84% for the  three  months  ended
September  30, 1997 to 56% for the three month period ended  September 30, 1998.
For the nine month period ended September 30, 1998, sales and marketing expenses
increased  $6,466,000 when compared to the nine months ended September 30, 1997,
primarily  due to the factors  mentioned  above.  As with the three month period
ended September 30, 1998, the nine month period ended September 30, 1998,  sales
and marketing, when viewed as a percentage of total revenue,  decreased from 65%
to 61%.  While sales and marketing  costs have risen,  the Company  believes the
increases are necessary in order to maintain,  and in some instances gain market
presence. The Company anticipates a continued growth in spending to continue for
the remainder of 1998, due to additional  personnel and related costs associated
with the planned growth and pursuit of new market opportunities.
<PAGE>


RESULTS OF OPERATIONS (Continued)

Three and Nine Months Ended September 30, 1998 Compared With September 30, 1997
   (Continued)

     General and  administrative  costs increased $616,000 to $3,136,000 for the
three months ended  September 30, 1998,  when compared to the three months ended
September  30,  1997,  of  $2,520,000,and  $875,000  for the nine  months  ended
September  30,1998,  when compared to the nine month period ended  September 30,
1997 . Major factors  contributing to the increase are expanded  staffing levels
which the  Company  believes  necessary  in order to  support  its  growth  plus
additional  costs  associated  with the initial public  offering of SOFTWORKS in
August, 1998.

     Amortization and  depreciation  increased by $932,000 from $546,000 for the
three months ended  September 30, 1997, to $1,478,000 for the three months ended
September 30, 1998.  This increase is due to primarily to increases in purchased
software and goodwill (See Notes 4 and 8).

     Gain on partial disposition of subsidiary - see Note 9.

     Interest  expenses incurred during the quarter ended September 30, 1998, of
$173,000  consist  primarily of charges  relating to the convertible  debenture,
which was repaid in August,  1998, and imputed interest  charges  resulting from
the  calculation of the present value of minimum annual  royalties for purchased
technologies for resale. (See Notes 2 and 4).

     Benefit from income taxes - See Note 11


<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997

FINANCIAL CONDITION AND LIQUIDITY

     While the Company has reported net income of $10,892,000 and $8,728,000 for
the three  and nine  months  ended  September  30,  1998,  respectively,  it has
incurred consolidated losses from operations of $4,507,000 and $12,739,000,  for
the same respective periods.  Further, the Company has incurred consolidated net
losses of  $12,385,000,  $18,953,000  and $18,365,000 for the years December 31,
1997, 1996, 1995, respectively. As a result of the partial disposition of one of
its subsidiaries,  SOFTWORKS,  Inc., ("SOFTWORKS") the Company recognized a gain
of  approximately  $22,466,000  during the nine month period ended September 30,
1998 (See Note 9). For the nine month period ended  September 30, 1998, net cash
used in operating  activities  was  $7,118,000,  reflecting the above net income
offset by various  non-cash items which  aggregate  $9,144,000,  the $22,466,000
gain referred to above,  and a net change in (cash provided by) operating assets
and liabilities of $2,524,000.  The Company's cash  requirements  were primarily
financed  through the partial  disposition of SOFTWORKS,  the sale of restricted
common stock, the exercises of stock options,  and proceeds from the issuance of
a convertible debenture.

     The Company  does not maintain a  comprehensive  credit  facility  with any
financial  institution,  although  the Company is  actively  seeking to obtain a
secured  line  of  credit.  The  Company  has  continued  to  incur  significant
expenditures  with respect to the  development  and marketing of its d.b.Express
technology without generating any significant  revenue. As a result of continued
operating  losses  and  the use of  significant  cash in  operations,  there  is
substantial doubt about the Company's ability to continue as a going concern. No
adjustments have been made with respect to the consolidated financial statements
to record the results of the ultimate outcome of this uncertainty.

     Management's plans to remain a going concern require  additional  financing
until such time as the  Company  achieves  positive  cash flows from  operations
including the successful exploitation of the Company's d.b.Express technology as
well as its newly acquired  software product (See Note 8). The Company's current
source of operating  revenue  continues to be primarily  derived from SOFTWORKS.
The Company has incurred significant losses (both cash and non-cash expenses) as
a  result  of the  development  and  marketing  of the  d.b.Express  technology.
Nevertheless,  management believes that its proprietary  d.b.Express  technology
has  significant  potential  in  several  areas and solves  certain  significant
business issues in the telecommunications and Internet related markets. In order
to  realize  the  potential  of  this  technology,  the  Company  is  vigorously
continuing  its  efforts  to enter  into  sales  or  license  agreements  of its
d.b.Express  technology  as  well  as  its  world  wide  web  hosting  services.
Management  believes that the successful  exploitation  of: i.- the  d.b.Express
technology;  ii.- projected growth in professional services; and iii.- the newly
acquired  software product and related  marketing  rights;  among other factors,
will  eventually  enable  the  Company  to  achieve  positive  cash  flows  from
operations and reduce its dependency on cash flows from financing activities.

     In  January,  1998,  the  Company  consummated  the  sale of  approximately
$1,978,000  (net of expenses of  approximately  $162,000) of  restricted  common
stock. In May, 1998, the Company obtained approximately  $1,925,000 (net of fees
and  commissions  of  approximately  $75,000)  from  the  sale of a  convertible
debenture. The debenture would have matured on August 28, 1998. In August, 1998,
prior to maturity,  the Company repaid the debenture  plus interest  aggregating
approximately  $2,460,000.  Although the Company increased cash by approximately
$20,000,000  in  August,  1998,  through  the sale of  3,200,000  shares  of its
<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997



FINANCIAL CONDITION AND LIQUIDITY Continued

SOFTWORKS  subsidiary (See Note 9), until such time as sufficient cash flows are
generated from operations,  additional financing will be necessary. There can be
no assurances  that the Company will be able to obtain  sufficient  financing or
will be successful in achieving  positive cash flows from operations in order to
execute its business plan.

YEAR 2000 ISSUES

     Background.   Some  computers,   software,   and  other  equipment  include
programming  code in which calendar year data is abbreviated to only two digits.
As a result of this design decision, some of these systems could fail to operate
or fail to produce correct  results if "00" is interpreted to mean 1900,  rather
than 2000.  These  problems  are widely  expected to increase in  frequency  and
severity  as the year  2000  approaches,  and are  commonly  referred  to as the
"Millenium Bug"or "Year 2000 Problem".

     Assessment.  The Year 2000 Problem could affect  computers,  software,  and
other equipment used, operated, or maintained by the Company.  Accordingly,  the
Company is reviewing its internal  computer  programs and systems to ensure that
the  programs  and systems will be Year 2000  compliant.  The Company  presently
believes  that its  computer  systems  will be Year 2000  compliant  in a timely
manner.  However,  while the estimated cost of these efforts are not expected to
be material to the Company's overall financial  position,  or any year's results
of operations, there can be no assurance to this effect.

     SOFTWORKS has obtained  certification  of its processes to assess Year 2000
Problems from the Information  Technology Association of America (ITAA). Because
the Company's business involves software development, the Company has not sought
further   verification  or  validation  by  independent  third  parties  of  its
corrections of Year 2000 Problems. However, the Company's Year 2000 project team
is reviewing the Company's  project plans and monitoring  progress against those
plans.

     Software Sold to Consumers.  The Company believes that it has substantially
identified  and  resolved  all  potential  Year  2000  Problems  with any of the
software  products it develops and markets.  However,  management  also believes
that it is not possible to determine with complete  certainty that all Year 2000
Problems  affecting the  Company's  software  products  have been  identified or
corrected due to complexity of these  products and the fact that these  products
interact with other third party vendor products and operate on computer  systems
which are not under the Company's control.

     Internal  Infrastructure.  The  Company  believes  that  it has  identified
substantially  all of the major computers,  software  applications,  and related
equipment used in connection with its internal operations that must be modified,
upgraded,  or replaced to minimize the  possibility of a material  disruption to
its business. The Company has commenced the process of modifying, upgrading, and
replacing  major systems that have been  identified as adversely  affected,  and
expects to complete this process before the end of 1998.

<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997

YEAR 2000 ISSUES -Continued

     Systems Other than Information Technology Systems. In addition to computers
and related systems, the operation of office and facilities  equipment,  such as
fax machines, photocopiers, telephone switches, security systems, elevators, and
other common  devices may be affected by the Year 2000  Problem.  The Company is
currently assessing the potential effect of, and costs of remediating,  the Year
2000 Problem on its office and facilities equipment.

     The  Company  estimates  the total cost to the  Company of  completing  any
required modifications, upgrades, or replacements of these internal systems will
not have a  material  adverse  effect on the  Company's  business  or results of
operations.  This estimate is being  monitored and will be revised as additional
information becomes available.

     Suppliers.  The Company has initiated  communications,  including  surveys,
with third party suppliers of the major computers, software, and other equipment
used,  operated,  or  maintained  by the Company to identify  and, to the extent
possible,  to resolve  issues  involving  the Year 2000  Problem.  However,  the
Company  has  limited  or no  control  over the  actions  of these  third  party
suppliers. Thus, while the Company does not anticipate any significant Year 2000
Problems with these systems, there can be no assurance that these suppliers will
resolve any or all Year 2000 Problems with these systems  before the  occurrence
of a material disruption to the business of the Company or any of its customers.
Any  failure of these third  parties to resolve  Year 2000  problems  with their
systems in a timely manner could have a material adverse effect on the Company's
business, financial condition, and results of operation.

     Most Likely  Consequences  of Year 2000  Problems.  The Company  expects to
identify  and resolve all Year 2000  Problems  that could  materially  adversely
affect its business  operations.  However,  management  believes  that it is not
possible  to  determine  with  complete  certainty  that all Year 2000  Problems
affecting the Company have been  identified or corrected.  The number of devices
that could be affected and the  interactions  among these devices are simply too
numerous.  In  addition,  one  cannot  accurately  predict  how many  Year  2000
Problem-related  failures  will occur or the  severity,  duration,  or financial
consequences  of these  perhaps  inevitable  failures.  As a result,  management
expects that the Company could likely suffer the following consequences:

     1.   a significant number of operational  inconveniences and inefficiencies
          for the Company and its clients that may divert  management's time and
          attention and financial and human resources from its ordinary business
          activities; and 

     2.   a  lesser  number  of  serious   system   failures  that  may  require
          significant  efforts  by the  Company  or its  clients  to  prevent or
          alleviate material business disruptions.

    Contingency Plans. The Company is currently developing  contingency plans to
be implemented as part of its efforts to identify and correct Year 2000 Problems
affecting its internal systems.  The Company expects to complete its contingency
plans by the end of 1998.  Depending on the systems affected,  these plans could
include  accelerated  replacement  of affected  equipment or software,  short to
medium-term  use of backup  equipment  and  software,  increased  work hours for
Company  personnel  or use of contract  personnel  to correct on an  accelerated
schedule any Year 2000 Problems that arise or to provide manual work-arounds for
information  systems,  and  similar  approaches.  If the  Company is required to
implement  any of these  contingency  plans,  it could have a  material  adverse
effect on the Company's financial condition and results of operations.

<PAGE>
                    COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

        For the Three and Nine Months Ended September 30, 1998 and 1997

YEAR 2000 ISSUES -Continued

    Based on the activities  described  above, the Company does not believe that
the Year 2000  Problem  will have a  material  adverse  effect on the  Company's
business or results of operations.

    Disclaimer.  The  discussion  of the  Company's  efforts,  and  management's
expectations,  relating to Year 2000 compliance are forward-looking  statements.
The  Company's  ability  to  achieve  Year  2000  compliance  and the  level  of
incremental costs associated  therewith,  could be adversely  impacted by, among
other things,  the availability  and cost of programming and testing  resources,
vendors' ability to modify  proprietary  software,  and  unanticipated  problems
identified in the ongoing compliance review.





Safe Harbor Statement
---------------------
Certain information contained in this quarterly report, particularly information
regarding  future  economic  performance  and finances,  plans and objectives of
management,  is forward-looking.  In some cases,  information  regarding certain
important  factors that could cause actual results to differ materially from any
such  forward-looking   statement  appear  together  with  such  statement.  The
following  factors,  in addition  to other  possible  factors not listed,  could
affect the Company's actual results and cause such results to differ  materially
from those  expressed in forward- looking  statements.  These  factors  include
competition  within the computer  software  industry,  which  remains  extremely
intense,  both domestically and internationally,  with many competitors pursuing
price  discounting;  changes in  economic  conditions;  the  development  of new
technologies  and/or  changes in  operating  systems  which  could  obsolete  or
diminish the value of existing  technologies  and  products;  personnel  related
costs; legal claims; risks inherent to rolling out new software and new software
technologies; the inability to maintain of adequate financial resources to carry
out the Company's current business plan in regard to the d.b.Express technology;
the  potential  cash and  non-cash  costs of raising  additional  capital or the
possible failure to raise necessary  capital;  changes in accounting  principles
applicable  to the  Company's  activities  and  other  factors  set forth in the
Company's filings with the Securities and Exchange Commission.
<PAGE>

                COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
                      PART II - OTHER INFORMATION

For the Three and Nine Months Ended September 30, 1998 and 1997


Item 1.  Legal Proceedings
 See Note 4 to the condensed consolidated financial statements.

Item 2.  Changes in Securities
 Not applicable.

Item 3.  Defaults Upon Senior Securities
 Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders
 Not applicable.

Item 5.  Other Information
 Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

 Report on Form 8-K dated June 15, 1998 covering Item 2 - Acquisition  of Assets
  and Item 7 - Financial Statements and Exhibits.

<PAGE>


                COMPUTER CONCEPTS CORP. AND SUBSIDIARIES
                      PART II - OTHER INFORMATION

    For the Three and Nine Months Ended September 30, 1998 and 1997



SIGNATURES

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

COMPUTER CONCEPTS CORP.


/s/ Daniel DelGiorno, Jr.
Daniel DelGiorno Jr.       President, C.E.O. Treasurer,     November 19, 1998
                           Director


/s/ George Aronson
George Aronson            Chief Financial Officer            November 19, 1998


</TABLE>