SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 10Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

FOR QUARTER ENDED JUNE 30, 1998                       COMMISSION FILE NO. 0-3415

                             STV GROUP, INCORPORATED
(Exact name of registrant as specified in its charter)


     Pennsylvania                                         23-1698231
(State or other jurisdiction of                 (I.R.S. Employer Identification)
 incorporation or organization)


205 West Welsh Drive, Douglassville, Pennsylvania                19518
(Address of principal executive offices)                       (Zip Code)


                                 (610) 385-8200
              (Registrant's telephone number, including area code)


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


                          Common Stock $1.00 par value
                                (Title of class)


As of June  30,  1998,  there  were  3,790,318  shares  of  common  stock of the
registrant outstanding.

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 twelve 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


<PAGE>


                                TABLE OF CONTENTS


                                                                            Page

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS.....................1

Part I:   FINANCIAL INFORMATION

          Item 1.   Financial Statements......................................2

          Item 2.   Management's Discussion and Analysis of Financial
                    Condition and Results of Operation........................6

Part II:  OTHER INFORMATION

          Item 1.   Legal Proceedings.........................................8

          Item 2.   Changes in Securities.....................................8

          Item 3.   Defaults Upon Senior Securities...........................8

          Item 4.   Submission of Matters to a Vote of Security Holders.......8

          Item 5.   Other Information.........................................8

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

SIGNATURES          ..........................................................9





<PAGE>


5

            CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

Certain  oral  statements  made by  management  from  time to time  and  certain
statements  contained  herein,  including  certain  statements in  "Management's
Discussion and Analysis of Financial  Condition and Results of Operations"  such
as statements  regarding the Company's  ability to meet its liquidity  needs and
control costs, certain statements in Notes to Condensed  Consolidated  Financial
Statements,  and other statements  contained herein regarding  matters which are
not historical facts are forward looking  statements (as such term is defined in
the  Securities  Act of 1933) and  because  such  statements  involve  risks and
uncertainties,  actual  results may differ  materially  from those  expressed or
implied by such  forward  looking  statements.  Factors  that could cause actual
results to differ  materially  include,  but are not limited to those  discussed
below:

1.   The  Company's  ability to secure the capital and the related  cost of such
     capital necessary to fund its future growth through.

2.   The  Company's   continued  ability  to  operate  in  a  heavily  regulated
     government  environment.  The Company's government contracts are subject to
     termination,  reduction  or  modification  as a result  of  changes  in the
     government's   requirements   or  budgetary   restrictions.   In  addition,
     government  contracts are subject to termination at the conveniences of the
     government. Under certain circumstances, the government can also suspend or
     debar  individuals  or  firms  from  obtaining  future  contracts  with the
     government.

3.   The level of competition  in the Company's  industry,  including  companies
     with significantly larger operations and resources than the Company.

4. The Company's ability to identify and win suitable projects and to consummate
or complete any such projects.

5.   The Company's  ability to perform  design/build  projects which may include
     the  responsibility of ensuring the actual  construction of a project for a
     guaranteed price.

These and other  factors  have been  discussed  in more detail in the  Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1997.

                                       1


<PAGE>


                          PART I: FINANCIAL INFORMATION

Item 1.  Financial Statements

                        STV GROUP, INC., AND SUBSIDIARIES

                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                    UNAUDITED
<TABLE>
<CAPTION>
                                                                June 30, 1998     September 30, 1997
<S>                                                            <C>                 <C>  

ASSETS
Current Assets
  Cash and Equivalents                                              $1,222,000          $1,153,000
  Accounts Receivable                                               23,196,000          20,154,000
  Costs and Estimated Profits of Uncompleted
   Contracts in Excess of Related Billings                          14,080,000          15,077,000
  Prepaid Income Taxes                                                 503,000             503,000
  Other Current Assets                                                 918,000           1,223,000
                                                                       -------           ---------

  Total Current Assets                                              39,919,000          38,110,000

Property and Equipment                                               7,759,000           7,466,000

  Less Accumulated Depreciation                                      6,397,000           6,127,000
                                                                     ---------           ---------

    Net Property and Equipment                                       1,362,000           1,339,000

Deferred Income Taxes                                                1,660,000           1,660,000

Other Assets                                                           761,000             716,000
                                                                       -------             -------

      TOTAL                                                        $43,702,000         $41,825,000
                                                                   ===========         ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities
    Notes and Accounts Payable                                      $7,531,000         $16,567,000
    Accrued Wages and Expenses                                      10,307,000           7,851,000
    Billings on Uncompleted Contracts in Excess of
      Related Costs                                                 11,052,000           4,386,000
                                                                    ----------           ---------

      Total Current Liabilities                                     28,890,000          28,804,000

  Long-Term Debt                                                     2,051,000           1,819,000

  Stockholders' Equity
    Preferred Stock                                                          0                   0
    Common Stock                                                     2,020,000           1,921,000
    Capital Surplus                                                  3,329,000           3,003,000
    Retained Earnings                                                8,183,000           6,674,000
                                                                     ---------           ---------

      Total                                                         13,532,000          11,598,000
        Less:  Treasury Stock                                          771,000             271,000
                  Loans Receivable from Officers                             0             125,000
                                                                             -             -------

      Total Stockholders' Equity                                    12,761,000          11,202,000

      TOTAL                                                        $43,702,000         $41,825,000
                                                                   ===========         ===========
</TABLE>

                                       2

<PAGE>


                        STV GROUP, INC., AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                    UNAUDITED
<TABLE>
<CAPTION>

                                                               NINE MONTHS ENDED
                                                                    June 30
                                                              1998            1997
<S>                                                   <C>               <C>    

Operating Activities
  Net Income                                               $1,509,000        $569,000
  Adjustments to reconcile net income to
    net cash provided by operating activities
      Depreciation and Amortization                           512,000         609,000
  Changes in Operating assets and liabilities
      Accounts Receivable                                  (3,042,000)        916,000
      Costs of uncompleted contracts in
        excess of billings and prepaid expenses             1,302,000      (1,991,000)
      Accounts Payable and accrued expenses                 2,642,000         269,000
      Billing in excess of related costs                    6,666,000         435,000
      Current Income Taxes                                  1,051,000         (87,000)
                                                            ---------         ------- 
Net Cash provided by operating activities                 $10,640,000        $720,000

Investing Activities
  Purchase of Property and Equipment                         (461,000)       (680,000)
  Purchase of Software                                       (203,000)        (91,000)
  Decrease (Increase) in other assets                          51,000         121,000
                                                               ------         -------
    Net Cash provided (used) by investing activities        ($613,000)      ($650,000)

Financing Activities
  Proceeds from issuance of common stock                       84,000               0
  Proceeds from line of credit and long term
    borrowings                                             55,261,000      69,210,000
  Principal payments on line of credit and long
    term borrowings                                       (65,303,000)    (68,948,000)
                                                          -----------     ----------- 
    Net Cash (used) provided by financing
      activities                                          ($9,958,000)       $262,000

  Increase (decrease) in cash and equivalents                  69,000         332,000
  Cash and equivalents at beginning of year                 1,153,000          28,000
                                                            ---------          ------
    Cash and equivalents at end of period                  $1,222,000        $360,000
                                                           ==========        ========
</TABLE>

                                       3

<PAGE>


                        STV GROUP, INC., AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                                    UNAUDITED
<TABLE>
<CAPTION>

                                                       THREE MONTHS ENDED               NINE MONTHS ENDED
                                                           June 30                           June 30
                                                     1998             1997              1998              1997
<S>                                           <C>              <C>               <C>               <C>
Revenue

  Total Revenue                                   $25,550,000      $24,637,000       $75,682,000       $69,684,000
    Less Subcontract and Procurement Costs          5,510,000        6,524,000        16,688,000        15,267,000
                                                    ---------        ---------        ----------        ----------

  Operating Revenue                               $20,040,000      $18,113,000       $58,994,000       $54,417,000

Costs and Expenses

  Costs of Services and Sales                      17,296,000       15,994,000        51,118,000        48,307,000
  General and Administrative                        1,535,000        1,324,000         4,557,000         3,923,000
  Interest Expense                                     59,000          350,000           418,000         1,035,000
  Interest Income                                     (31,000)         (19,000)          (64,000)          (38,000)
                                                      -------          -------           -------           ------- 

Total Costs and Expenses                           18,859,000       17,649,000        56,029,000        53,227,000

Income Before Income Taxes                          1,181,000          464,000         2,965,000         1,190,000

Income Taxes                                          579,000          236,000         1,456,000           621,000
                                                      -------          -------         ---------           -------

Net Income                                           $602,000         $228,000        $1,509,000          $569,000
                                                     ========         ========        ==========          ========

Net Income per share:                                   $0.15            $0.06             $0.38             $0.15

Weighted Average Number
  of Shares Outstanding                             4,102,795        3,805,702         3,943,723         3,802,938
</TABLE>



Note: A 2 for 1 split was effected April 13, 1998, for shareholders of record as
of March 31,  1998.  Prior  period  net income  per share and  weighted  average
number of shares outstanding have been adjusted to reflect this split.

                                       4

<PAGE>


               Notes to Consolidated Condensed Financial Statement

                                  June 30, 1998

1.    BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance  with the  instruction  to Form 10-Q and therefore do not
include all  information  and  footnotes  necessary for a fair  presentation  of
financial  position,  results of operations,  and cash flows in conformity  with
generally accepted accounting principles.

It should be understood  that the foregoing  interim results are not necessarily
indicative  of the  results  of  operations  for the  full  fiscal  year  ending
September  30, 1998 due in part to  increased  reliance on  estimates at interim
dates.

2.    EARNINGS PER SHARE

SFAS No. 128,  "Earnings  per Share," has been adopted by the Company.  SFAS 128
replaces  primary  earnings per share (EPS) with basic EPS and fully diluted EPS
with diluted  EPS.  Basic EPS is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period.  Diluted
EPS recognizes the potential  dilutive  effects of the future exercise of common
stock options.

<TABLE>
<CAPTION>

                                          THREE MONTHS ENDED                           NINE MONTHS ENDED
                                  June 30, 1998         June 30, 1997          June 30, 1998         June 30, 1997
                                  -------------         -------------          -------------         -------------
<S>                             <C>                   <C>                    <C>                   <C>

Basic earnings per share                $0.16                 $0.06                  $0.41                $0.16
Shares outstanding                  3,774,740             3,642,492              3,691,946            3,642,492

Diluted earnings per share              $0.15                 $0.06                  $0.38                $0.15
Shares outstanding                  4,102,795             3,805,702              3,943,723            3,802,938
</TABLE>


A 2-for-1 split was effected  April 13, 1998, for  shareholders  of record as of
March 31, 1998.  This split is  reflected in the above basic  earnings per share
and weighted average number of shares outstanding.

                                       5

<PAGE>


Item 2.  Management Discussion and Analysis of  Financial Condition and Results 
         of Operation

Results of Operations

Total  revenues for the quarter ended June 30, 1998 (third  quarter fiscal 1998)
increased  3.7% as  compared to the third  quarter of fiscal 1997 and  decreased
1.7% as compared to the previous  quarter.  Operating  revenues  (total revenues
excluding  pass-through  costs) increased 10.6% as compared to the third quarter
of fiscal 1997 and increased 1.2% as compared to the previous quarter.

Pass-through  costs,  expressed as a percentage of total revenues,  decreased to
21.6% as  compared to 26.5% in the third  quarter of fiscal  1997 and  decreased
from 23.9% in the previous  quarter.  Pass-through  costs will vary depending on
the need for specialty subconsultants and governmental subcontract requirements.

Cost of services,  expressed as a percentage of operating revenues, decreased to
86.3% for the third  quarter of fiscal  1998 from 88.3% in the third  quarter of
fiscal 1997 and decreased  from 87.0% in the previous  quarter.  The decrease in
the  percentage  from the third  quarter  of fiscal  1997 was due  mainly to the
increase in  operating  revenues  noted  above.  The costs of services  remained
comparable to the previous quarter.

General and  administrative  expense,  expressed  as a  percentage  of operating
revenue,  is 7.7% in the third  quarter of fiscal 1998 and is comparable to 7.3%
recorded in the third quarter of fiscal 1997 and 7.5% in the previous quarter.

Interest,  expressed as a percentage of operating revenues, decreased to .1% for
the third  quarter of fiscal 1998 from 1.8% in the third  quarter of fiscal 1997
and decreased slightly from .4% in the previous quarter. This decrease is due to
the virtual elimination in bank borrowings as a result of continued  improvement
in cash receipts and interest earned from surplus cash.

                                       6

<PAGE>


Income tax  expense  for the third  quarter of fiscal  1998 was 49.0% of pre-tax
income  compared  to 50.9% in the third  quarter of fiscal 1997 and 50.5% in the
previous quarter. The decrease is due to slightly higher non-deductible expenses
being lower as a  percentage  of a  considerably  higher third  quarter  pre-tax
income.

Earnings per common share,  calculated using the Treasury Stock Method,  for the
third quarter of fiscal 1998 were 15 cents based on 4,102,795 shares outstanding
versus 6 cents for the third  quarter of fiscal 1997 based on  3,805,702  shares
outstanding. A 2 for 1 stock split was effective April 13, 1998 for stockholders
of record as of March 31,  1998.  Prior period net income per share and weighted
average number of shares outstanding have been adjusted to reflect this split.

Financial Condition and Liquidity
Working  capital  increased  to  $11,029,000  from  $10,719,000  in the previous
quarter.  Capital resources available to the Company include an existing line of
credit for  working  capital.  The current  limit is a maximum of $15.5  million
based on accounts  receivable and  work-in-progress of which approximately $13.3
million is currently available.  The Company recently completed negotiations and
entered into an agreement  with its bank which has reduced its borrowing rate to
the bank's base rate.  The Agreement also reduces the amount charged by the bank
for Letters of Credit. The Company believes that it and the lender will maintain
a line of credit adequate to meet the current and future  financial needs of the
Company.  The  Company  is  planning  to  continue  its  program  of  purchasing
computer-assisted  design and drafting equipment and has purchased a new project
management and accounting system.

The  Company  has been  notified by NASDAQ that it does not meet the new listing
requirements  for the National Market System  promulgated by NASDAQ in 1998. The
Company has appealed  that  decision and is awaiting the outcome of that appeal.
In the event the Company is unsuccessful  in its appeal,  it will be delisted by
NASDAQ National  Market System.  In that case, it would apply for listing on the
NASDAQ small cap market.

The Company's backlog is approximately $150 million.


                                       7

<PAGE>


                           PART II: OTHER INFORMATION

Item 1.    Legal Proceedings

           Not applicable.

Item 2.    Changes in Securities

           Not applicable.

Item 3.    Defaults Upon Senior Securities

           Not applicable.

Item 4.    Submission of Matters to Vote of Security Holders

           Not applicable.

Item 5.    Other Information

           Not applicable.

Item 6.    Exhibits and Reports on Form 8-K

           (a)   Exhibits

                 The following is filed as an exhibit to Part I of this 
Form 10Q:

                 Exhibit 10.37 - Amendment To Loan Documents

           (b)   Reports on Form 8-K

                 The Company  filed no reports on Form 8-K for the quarter ended
June 30, 1998.


                                       8

<PAGE>


SIGNATURES

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







STV GROUP, INCORPORATED
         (Registrant)




  August 14, 1998                         By:  /s/ Michael Haratunian
-------------------                            ----------------------
       Date                                    Michael Haratunian
                                               Chairman, Chief Executive Officer






  August 14, 1998                         By:  /s/ Peter W. Knipe
-------------------                            ----------------------
     Date                                      Peter W. Knipe
                                               Secretary/Treasurer

                                       9