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 MARCH 31, 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 March 31,  1998,  there  were  1,869,308  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
<TABLE>
<CAPTION>

                                                                           Page
<S>                                                                      <C>

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........................................7

          Item 2.   Changes in Securities....................................7

          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


</TABLE>



<PAGE>


            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.

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.


<PAGE>


                          PART I: FINANCIAL INFORMATION

Item 1.  Financial Statements

                        STV GROUP, INC., AND SUBSIDIARIES

                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                    UNAUDITED
<TABLE>
<CAPTION>

                                                                     March 31, 1998     September 30, 1997
<S>                                                                <C>                 <C>

ASSETS
Current Assets
  Cash                                                                 $1,641,000          $1,153,000
  Accounts Receivable                                                  21,190,000          20,154,000
  Costs and Estimated Profits of Uncompleted
   Contracts in Excess of Related Billings                             14,397,000          15,077,000
  Prepaid Income Taxes                                                    503,000             503,000
  Other Current Assets                                                    618,000           1,223,000
                                                                          -------           ---------

  Total Current Assets                                                 38,349,000          38,110,000

Property and Equipment                                                  7,513,000           7,466,000

  Less Accumulated Depreciation                                         6,390,000           6,127,000
                                                                        ---------           ---------

    Net Property and Equipment                                          1,123,000           1,339,000

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

Other Assets                                                              586,000             716,000
                                                                          -------             -------

      TOTAL                                                           $41,718,000         $41,825,000
                                                                      ===========         ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities
    Notes and Accounts Payable                                         $8,913,000         $16,567,000
    Accrued Wages and Expenses                                          9,798,000           7,851,000
    Billings on Uncompleted Contracts in Excess of
      Related Costs                                                     8,919,000           4,386,000
                                                                        ---------           ---------

      Total Current Liabilities                                        27,630,000          28,804,000

  Long-Term Debt                                                        1,967,000           1,819,000

  Stockholders' Equity
    Preferred Stock                                                             0                   0
    Common Stock                                                        1,989,000           1,921,000
    Capital Surplus                                                     3,227,000           3,003,000
    Retained Earnings                                                   7,581,000           6,674,000
                                                                        ---------           ---------

      Total                                                            12,797,000          11,598,000
        Less:  Treasury Stock                                             676,000             271,000
                  Loans Receivable from Officers                                0             125,000
                                                                        ---------             -------

      Total Stockholders' Equity                                       12,121,000          11,202,000

      TOTAL                                                           $41,718,000         $41,825,000
                                                                      ===========         ===========
</TABLE>


<PAGE>


                        STV GROUP, INC., AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                    UNAUDITED
<TABLE>
<CAPTION>

                                                                    SIX MONTHS ENDED
                                                                         March
                                                                  1998            1997
<S>                                                       <C>              <C>

Operating Activities
  Net Income                                                    $907,000        $341,000
  Adjustments to reconcile net income to
    net cash provided by operating activities
      Depreciation and Amortization                              363,000         452,000
  Changes in Operating assets and liabilities
      Accounts Receivable                                     (1,036,000)      2,234,000
      Costs of uncompleted contracts in
        excess of billings and prepaid expenses                1,284,000      (1,369,000)
      Accounts Payable and accrued expenses                    1,581,000        (513,000)
      Billing in excess of related costs                       4,533,000        (173,000)
      Current Income Taxes                                       796,000        (274,000)
                                                                 -------        -------- 
Net Cash provided by operating activities                     $8,428,000        $698,000

Investing Activities
  Purchase of Property and Equipment                             (97,000)       (468,000)
  Purchase of Software                                           (10,000)        (23,000)
  Decrease (Increase) in other assets                             59,000        (230,000)
                                                                  ------        -------- 
    Net Cash provided (used) by investing activities            ($48,000)      ($721,000)

Financing Activities
  Proceeds from issuance of common stock                          46,000               0
  Proceeds from line of credit and long term
    borrowings                                                48,700,000      46,760,000
  Principal payments on line of credit and long
    term borrowings                                          (56,638,000)    (46,310,000)
                                                             -----------     ----------- 
    Net Cash (used) provided by financing
      activities                                             ($7,892,000)       $450,000

  Increase (decrease) in cash and equivalents                    488,000         427,000
  Cash and equivalents at beginning of year                    1,153,000          28,000
                                                               ---------          ------
    Cash and equivalents at end of period                     $1,641,000        $455,000
                                                              ==========        ========
</TABLE>


<PAGE>


                        STV GROUP, INC., AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                                    UNAUDITED
<TABLE>
<CAPTION>

                                                            THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                 March 31                      March 31
                                                         1998            1997             1998            1997
<S>                                              <C>              <C>               <C>             <C>

Revenue

  Total Revenue                                      $25,997,000     $22,311,000       $50,132,000     $45,047,000
    Less Subcontract and Procurement Costs             6,201,000       4,130,000        11,178,000       8,743,000
                                                       ---------       ---------        ----------       ---------

  Operating Revenue                                  $19,796,000     $18,181,000       $38,954,000     $36,304,000

Costs and Expenses

  Costs of Services and Sales                         17,214,000      16,089,000        33,789,000      32,294,000
  General and Administrative                           1,492,000       1,350,000         3,022,000       2,599,000
  Interest                                               100,000         358,000           359,000         685,000
                                                         -------         -------           -------         -------

Total Costs and Expenses                              18,806,000      17,797,000        37,170,000      35,578,000

Income Before Income Taxes                               990,000         384,000         1,784,000         726,000

Income Taxes                                             495,000         201,000           877,000         385,000
                                                         -------         -------           -------         -------

Net Income                                              $495,000        $183,000          $907,000        $341,000
                                                        ========        ========          ========        ========

Net Income per share:                                      $0.25           $0.10             $0.47           $0.18

Weighted Average Number
  of Shares Outstanding                                1,958,444       1,902,851         1,932,094       1,900,778

</TABLE>

     Note: A 2-for-1  split was effected  April 13, 1998,  for  shareholders  of
     record as of March 31, 1998.  This split is not  reflected in the above net
     income  per  share  and  weighted  average  number  of  shares  outstanding
     calculations.



<PAGE>


               Notes to Consolidated Condensed Financial Statement

                                 March 31, 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                           SIX MONTHS ENDED
                                 March 31, 1998        March 31, 1997         March 31, 1998        March 31, 1997
                                 --------------        --------------         --------------        --------------
<S>                              <C>                  <C>                    <C>                  <C>

Basic earnings per share                $0.27                 $0.10                  $0.48                $0.19
Shares outstanding                  1,829,304             1,821,246              1,869,308            1,821,246

Diluted earnings per share              $0.25                 $0.10                  $0.47                $0.18
Shares outstanding                  1,958,444             1,902,851              1,932,094            1,900,778

</TABLE>

3.    TREASURY STOCK TRANSACTION.

On March 17, 1998, the Company exchanged common stock shares into treasury stock
from certain Company  officers,  sufficient to pay off a $125,000 five year term
loan receivable  from officers with interest,  which had been secured by a stock
pledge agreement.  This transaction was recorded as a treasury stock acquisition
and thus a reduction to stockholder's equity.

4.    SUBSEQUENT EVENT.

A 2-for-1 split was effected  April 13, 1998, for  shareholders  of record as of
March 31,  1998.  This split is not  reflected  in the above basic  earnings per
share and weighted average number of shares outstanding.



<PAGE>


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

Results of Operations

Total  revenues for the quarter  ended March 31, 1998 (second  quarter of fiscal
1998)  increased  16.5% as  compared  to the second  quarter of fiscal  1997 and
increased 7.7% as compared to the previous  quarter.  Operating  revenues (total
revenues  excluding  pass through  costs) for the second  quarter of fiscal 1998
increased  8.9% as compared to the second  quarter of fiscal 1997 and  increased
3.3% as compared to the previous  quarter.  The  increase in operating  revenues
reflects an increase in the services provided for transportation  infrastructure
engineering.

Pass through costs,  expressed as a percentage of total  revenues,  increased to
23.9%  compared  to 18.5% in the second  quarter of fiscal 1997 and 20.6% in the
previous  quarter.  Pass  through  costs  will  vary  depending  on the need for
specialty subconsultants and governmental subcontract requirements.

Costs of services, expressed as a percentage of operating revenues, decreased to
87.0% for the second quarter of fiscal 1998 from 88.6% for the second quarter of
fiscal 1997 and increased  from 86.6% for the first quarter of fiscal 1998.  The
decreases in the percentage  from the second quarter of fiscal 1997 is primarily
due to the  increase in  operating  revenues  noted  above.  The increase in the
percentage from the previous  quarter is primarily due to costs  associated with
the new project management system.

General and  administrative  expense,  expressed  as a  percentage  of operating
revenue,  increased  slightly to 7.5% in the second  quarter of fiscal 1998 from
7.4% in the second  quarter of fiscal  1997 and  decreased  from the 8.0% in the
previous  quarter.  The  decrease  in the  percentage  is  primarily  due to the
increase in operating revenues.

Interest,  expressed as a percentage of operating revenues,  decreased to .5% in
the second  quarter of fiscal  1998  compared  to 2.0% in the second  quarter of
fiscal  1997 and 1.4% in the  previous  quarter.  The  decrease  is due to lower
borrowings as a result of continued improvement in cash receipts.


<PAGE>


Income tax  expense  for the second  quarter of fiscal 1998 was 50.0% of pre-tax
income  compared  to 48.1% in the  first  quarter  of  fiscal  1998 and 52.3% of
pre-tax  income for the same  period  last  year.  The  increase  from the first
quarter is due to higher non-deductible expenses and the decrease from last year
is due to non-deductible expenses being lower as a percentage of a higher second
quarter pre-tax income in 1998.

Earnings per common share,  calculated using the Treasury Stock Method,  for the
second  quarter  of  fiscal  1998  were  25  cents  based  on  1,958,444  shares
outstanding compared to 10 cents in fiscal 1997 on 1,902,851 shares outstanding.

Financial Condition and Liquidity

Working  capital  increased  to  $10,719,000  from  $9,955,000  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 $16.5  million
based on accounts  receivable and  work-in-progress of which approximately $10.5
million is currently  available.  The Company is in discussions  with its lender
which may reduce its line of credit.  The Company  believes  that its  liquidity
needs  can be met by  expected  operating  cash  flow  and the  availability  of
borrowings under its credit facility,  as amended,  with its lender. The Company
is planning to continue its program of purchasing  computer-assisted  design and
drafting equipment as well as installing a new project management and accounting
system.

The Company's backlog is approximately $117 million.


                           PART II: OTHER INFORMATION

Item 1.    Legal Proceedings

           None

Item 2.    Changes in Securities

           None



<PAGE>


Item 3.    Defaults Upon Senior Securities

           None

Item 4.    Submission of Matters to Vote of Security Holders

           The Annual Meeting of  Shareholders  of STV Group,  Incorporated  was
           held Tuesday,  March 31, 1998 at which the following  Directors  were
           elected for a term of three (3) years:

           Maurice L. Meier
           Dr. Harry Prystowsky
           Dominick M. Servedio

Item 5.    Other Information

           None

Item 6.    Exhibits and Reports on Form 8-K

           (a)   Exhibits - None

           (b)   Reports on Form 8-K

                 The Company  filed no reports on Form 8-K for the quarter ended
                 March 31, 1998.


<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)




  May 15, 1998                            By:  /s/ Michael Haratunian
----------------                               ----------------------
       Date                                    Michael Haratunian
                                               Chairman, Chief Executive Officer






  May 15, 1998                            By:  /s/ Peter W. Knipe
----------------                               ----------------------
     Date                                      Peter W. Knipe
                                               Secretary/Treasurer