SECURITIES AND EXCHANGE COMMISSION

                        Washington, D.C. 20549



                              FORM 10-Q



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

            For the quarterly period ended June 30, 1998



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


         For the transition period from _______ to  ________



                   Commission File Number  0-25646





                        EXPERT SOFTWARE, INC.

   State of Delaware  --  I.R.S. Employer Identification No.:  65-0359860
                           800 Douglas Road
                        North Tower, 6th Floor
                        Coral Gables, FL 33134
                            (305) 567-9990



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 [   ]

As of July 31, 1998, there were 7,607,631 shares of the Registrant's
Common Stock, $ .01 par value, outstanding.

                  The exhibit index is on page 13.

                           Page 1 of 13.


<PAGE>

                        EXPERT SOFTWARE, INC.

                          INDEX TO FORM 10-Q

                    Six Months Ended June 30, 1998





                                                              Page
                                                              ------
Part I - Financial Information
Item 1.  Financial Statements.
  Condensed Consolidated Balance Sheets as of
    June 30, 1998 and December 31, 1997...........................3
  Condensed Consolidated Statements of Operations for the
    Three Months and Six Months Ended June 30, 1998 and 1997......4
  Condensed Consolidated Statements of Cash Flows for the
    Six Months Ended June 30, 1998 and 1997.......................5
  Notes to Condensed Consolidated Financial Statements............6
Item 2.  Management's Discussion and Analysis of Financial        
  Condition and Results of Operations.............................7


Part II -- Other Information
Item 5.  Other Information.......................................11
Item 6.  Exhibits and Reports on Form 8-K........................13

Signatures.......................................................13







  This Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. The Company's actual results
could differ materially from those set forth in the forward-looking
statements. Factors that might cause such a difference are discussed
in the section entitled "Factors Affecting Future Operating Results"
on page 11 of this Form 10-Q.



<PAGE>

                   PART I -- FINANCIAL INFORMATION


Item 1.  Financial Statements.


                  EXPERT SOFTWARE, INC.
          CONDENSED CONSOLIDATED BALANCE SHEETS
                      (In thousands)

<TABLE>
<S>                                        <C>            <C>
                                              June 30,    December 31,
                                                1998           1997
                                           ------------   ------------
ASSETS .................................                  (unaudited)
CURRENT ASSETS:
Cash and equivalents ...................   $      4,819   $      5,685
Accounts receivable, net ...............          5,909          4,636
Inventories, net .......................          2,680          2,922
Income taxes receivable ................             65          1,924
Prepaid expenses .......................            673            834
Deferred income taxes ..................          1,259          1,616
                                           ------------   ------------
Total current assets ...................         15,405         17,617
PROPERTY AND EQUIPMENT, net ............          1,004          1,270
DEFERRED INCOME TAXES ..................          3,471          3,311
OTHER ASSETS, net ......................              5             35
                                           ------------   ------------
Total assets ...........................   $     19,885   $     22,233
                                           ============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .......................   $      3,144   $      4,755
Accrued expenses .......................          3,824          4,900
Current portion of capital lease
obligations ............................              3             46
                                           ------------   ------------
Total current liabilities ..............          6,971          9,701
                                           ------------   ------------

STOCKHOLDERS' EQUITY:
Preferred stock ........................           --             --
Common stock ...........................             76             76
Additional paid-in capital .............         23,648         23,601
Accumulated deficit ....................        (10,810)       (11,145)
                                           ------------   ------------
Total stockholders' equity .............         12,914         12,532
                                           ============   ============
Total liabilities and
stockholders' equity ...................   $     19,885   $     22,223
                                           ============   ============
</TABLE>



  The accompanying notes to condensed financial statements are an
               integral part of these balance sheets.


<PAGE>

                       EXPERT SOFTWARE, INC.
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          (In thousands, except per share and share data)
                            (Unaudited)




                                  Three Months Ended      Six Months Ended
                                       June 30,                June 30,
                                  --------------------   --------------------
<TABLE>
<S>                              <C>         <C>         <C>         <C>
                                      1998        1997        1998        1997
                                 ---------   ---------   ---------   ---------


NET REVENUES .................   $   7,854   $   7,075   $  17,144   $  15,101
                                 ---------   ---------   ---------   ---------
OPERATING COSTS AND EXPENSES:
Cost of revenues .............       3,515       2,649       7,258       5,784
Marketing and sales ..........       3,163       2,268       5,915       4,695
General and administrative ...       1,178       1,109       2,475       2,324
Development ..................         584         743       1,198       1,383
                                 ---------   ---------   ---------   ---------
Total operating costs and
expenses .....................       8,440       6,769      16,846      14,186
                                 ---------   ---------   ---------   ---------

Operating income (loss) ......        (586)        306         298         915

Other income, net ............          62          50         232          79
                                 ---------   ---------   ---------   ---------

Income (loss) before provision
(benefit) for income taxes ...        (524)        356         530         994

Provision (benefit) for income
taxes ........................        (194)        132         196         368
                                 ---------   ---------   ---------   ---------

Net income (loss) ............   $    (330)  $     224   $     334   $     626
                                 =========   =========   =========   =========


Earnings (Loss) per Share:

Basic ........................   $   (.04)   $     .03   $     .04   $     .08
                                 =========   =========   =========   =========

Diluted ......................   $   (.04)   $     .03   $     .04   $     .08
                                 =========   =========   =========   =========

</TABLE>


















  The accompanying notes to condensed financial statements are an
                 integral part of these statements.


<PAGE>

                       EXPERT SOFTWARE, INC.
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (In thousands)
                            (Unaudited)

                                                        Six Months Ended
                                                             June 30,
                                                     ----------------------
<TABLE>
<S>                                                  <C>          <C>
                                                          1998         1997
                                                     ---------    ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................  $      334   $      626
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
  Depreciation of property and equipment..........         378          400
  Amortization of acquired intangibles............          30           69
  Compensation expense on stock
  option grants...................................          42         --
  Deferred income tax provision...................         197          368
Changes in current assets and
liabilities:
  (Increase) decrease in accounts
  receivable......................................      (1,273)       1,434
  (Increase) decrease in income tax
  receivable......................................       1,859          517
  (Increase) decrease in inventories..............         242           55
  (Increase) decrease in prepaid expenses.........         161         (207)
  (Increase) decrease in other assets.............        --           --
  Increase (decrease) in accounts payable.........      (1,611)      (1,487)
  Increase (decrease) in accrued expenses.........      (1,169)         315
  Increase (decrease) in income taxes
  payable.........................................          94         --
  Increase (decrease) in other
  obligations.....................................        --           (300)
                                                     ---------    ---------
Net cash provided by (used in)
operating activities..............................        (716)       1,790
                                                     ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment...............        (112)         (36)
                                                     ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock options exercised...........................           5           44
Payments on capital lease obligations.............         (43)         (21)
                                                     ---------    ---------
Net cash provided by (used in)
financing activities..............................         (38)          23
                                                     ---------    ---------

Net increase (decrease) in cash
and equivalents...................................        (866)       1,777
CASH AND EQUIVALENTS, beginning of
period............................................       5,685        2,959
                                                     ---------    ---------
CASH AND EQUIVALENTS, end of period ..............  $    4,819   $    4,736
                                                     =========    =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for
interest .........................................  $        1   $        3
                                                     =========    =========

Cash paid during the period for
income taxes .....................................   $    --      $    --
                                                     =========    =========
</TABLE>


     The accompanying notes to condensed consolidated financial
        statements are an integral part of these statements.


<PAGE>

                        EXPERT SOFTWARE, INC.
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            June 30, 1998
                             (Unaudited)



1.    THE ORGANIZATION

Expert Software, Inc. (the "Company") publishes and distributes
computer software under the "Expert" trade name.  The Company's
products address a broad range of consumer interest and everyday
tasks for the productivity, lifestyle, small office/home office,
entertainment and education market categories. The Company sells its
products directly to large retailers, as well as to distributors.

2.    BASIS OF PRESENTATION

The condensed consolidated balance sheet as of December 31, 1997,
which has been derived from audited financial statements, and the
unaudited interim condensed consolidated financial statements
included herein, have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission.  Certain
information and note disclosures normally included in annual
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
those rules and regulations, although the Company believes that the
disclosures made are adequate to make the information presented not
misleading.  These financial statements should be read in
conjunction with the financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.

In the opinion of the Company, the accompanying condensed
consolidated financial statements contain all adjustments necessary
to present fairly the financial position of the Company as of June
30, 1998, and the results of operations and cash flows for the
periods presented herein. Results of operations and cash flows for
the period ending June 30, 1998, are not necessarily indicative of
the results of operations of the entire fiscal year.

The accounting policies followed for quarterly financial reporting
purposes are the same as those disclosed in the Company's audited
financial statements for the year ended December 31, 1997, included
in the Form 10-K.

3. INVENTORIES

Inventories consisted of the following as of June 30, 1998 and
December 31, 1997 (in thousands):
    <TABLE>
    <S>                                         <C>          <C>
                                                      1998         1997
                                                ----------   ----------

    Finished goods .........................    $    2,162   $    2,439
    Raw materials ..........................           518          483
                                                ----------   ----------
                                                $    2,680   $    2,922
                                                ==========   ==========
    </TABLE>


<PAGE>

4.  EARNINGS PER SHARE

Earnings per share are computed in accordance with the requirements
of SFAS 128. Basic earnings per common share were computed by
dividing income available to common shareholders by the weighted
average number of shares of common stock outstanding during the
period. Diluted earnings per share were determined by including
assumptions of stock option conversions. For periods in which the
Company reports a loss from continuing operations, diluted earnings
per share do not include stock options as their effect would be
antidilutive. Amounts for 1997 were restated to conform with SFAS
128. Shares used in the computations for the three months and six
months ended June 30, 1998 and 1997 are as follows:


                              Three Months Ended  Six Months Ended
                                   June 30,          June 30,
                              ------------------  -----------------
<TABLE>
<S>                          <C>       <C>       <C>       <C>
                                1998       1997     1998      1997
                             ---------  --------- --------- ---------
    Weighted average shares
    used in basic
    computation............  7,606,969  7,517,756 7,606,025 7,514,517

    Common stock
    equivalents - options..      --       525,558   707,770   469,027
                             ---------  --------- --------- --------- 
    Weighted average shares
    used in diluted
    computation............  7,606,969  8,043,313 8,313,795 7,983,544
                             =========  ========= ========= ========= 
</TABLE>



5.  NEWLY ISSUED ACCOUNTING STANDARDS

The Company adopted SFAS No. 130, Reporting Comprehensive Income, in
the quarter ended March 31, 1998. SFAS 130 requires that all items
that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other
financial statements. The statement requires that an enterprise
classify items of other comprehensive income by their nature in a
financial statement and to display the accumulated balance of other
comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a statement of
financial position. The Company believes that the adoption of SFAS
130 will have no material impact on its financial statements as
there are no material differences between net income and
comprehensive income.

In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging
Activities. The Statement establishes accounting and reporting
standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be
recorded on the balance sheet as either an asset or a liability
measured at its fair value. The Company believes that the adoption
of SFAS 133 will have no material impact on its financial statements
as it has entered into no significant derivatives contracts and has
no current plans to do so in the future.



<PAGE>

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


Results of Operations

   The following table sets forth certain statement of operations
data as a percentage of net revenues, for comparative purposes, for
the periods indicated.

 
                                       Three Months    Six Months
                                           Ended         Ended
                                         June 30,       June 30,
                                      -------------  --------------
    <TABLE>
    <S>                              <C>     <C>     <C>     <C>
                                      1998    1997    1998    1997
                                      -----   -----   -----   -----

    Net revenues .................     100%    100%    100%    100%
                                      -----   -----   -----   -----
    Operating costs and expenses:
    Cost of revenues .............      45      37      42      38
    Marketing and sales ..........      40      32      35      31
    General & administrative .....      15      16      14      15
    Development ..................       7      11       7       9
                                      -----   -----   -----   -----
                                       107      96      98      94
                                      -----   -----   -----   -----
    Operating income (loss) ......      (7)      4       2       6
    Other income (expense) .......       1       1       1       1
                                      -----   -----   -----   -----
    Income (loss) before provision
    (benefit) for income taxes ...      (6)      5       3       7
    Provision (benefit) for income
    taxes ........................      (2)      2       1       3
                                      -----   -----   -----   -----
    Net income (loss) ............      (4)%     3%      2%      4%
                                      =====   =====   =====   =====
    </TABLE>


Comparison of Three Months Ended June 30, 1998 and 1997

Net Revenues.  Net revenues for the three months ended June 30
increased to $7.9 million in 1998 from $7.1 million in 1997, an
increase of $0.8 million, or 11%. The increase in net revenues was
due primarily to increased units sold, partially offset by
increased provisions for returns and lower average selling prices.
Gross revenues increased approximately $2.1 million, and
provisions for returns increased approximately $1.3 million. The
provision for returns increased due to higher promotional sales on
which returns are expected at rates higher than usually
experienced by the Company. Average selling prices may continue to
decline as the Company expands sales to certain mass merchants,
primarily through distributors. Domestic net revenues increased
approximately 26%, while international net revenues decreased
about 29%, primarily due to lower sales volume. International
revenues represented 17% and 27% of net revenues in 1998 and 1997,
respectively. The Company has added international sales personnel
and expects international activity to increase over current levels
in the coming periods.

Net revenues consist of gross sales net of allowances for returns
and discounts, and royalty income related to licensing of products,
primarily to publishers in Europe. The Company adjusts its allowance
for returns as it deems appropriate. The Company may accept
substantial product returns or make other concessions to maintain
its relationships with retailers and distributors and its access to
distribution channels. If the Company chooses to accept product
returns, some of that product may be defective, shelf-worn or
damaged and may not therefore be salable in the ordinary course of
business. There can be no assurance, however, that the Company will
not experience significant returns, which could be greater than the
Company's provision for returns or could have a material adverse
affect on the Company's results of operations. In accordance with
its policy, the Company will continue to reassess market conditions
and adjust its provision for returns as it deems appropriate.

Cost of Revenues.  Cost of revenues increased to $3.5 million in 1998 from
$2.6 million in 1997, an increase of $0.9 million, or 33%, due primarily to
increased gross sales and product costs. As a percentage of net
revenues, cost of revenues represented 45% and 37% of net revenues
in 1998 and 1997, respectively. This higher percentage was due in
part to the higher provisions for returns noted under Net Revenues
above and higher promotional sales. Promotional sales generally
have lower gross margins than other sales. The Company expects
cost of revenues may vary from period to period based on the
relative mix of products sold, the level of promotional sales in a
given period and other market factors.

Cost of revenues consists primarily of product cost, freight
charges, royalties to outside programmers and content providers, as
well as amortization of software licenses, storage and returns
processing charges, and an inventory provision for damaged and
obsolete products, if any. Product costs consist of the costs to
purchase the underlying materials and print both boxes and manuals,
media costs (disks and CD-ROMs) and fulfillment (assembly and
shipping).

Marketing and Sales.  Marketing and sales expense increased to $3.2 million
in 1998 from $2.3 million in 1997, an increase of $0.9 million, or 39%, and
increased as a percentage of net revenues to 40% of net revenues in 1998 from
32% in 1997. This increase was related to the increased marketing
activities to promote the Company's products and brand names, and
increased personnel. In repsonse to increased competition for shelf
space in retail outlets, the Company intends to continue to launch
new and innovative marketing promotions and to hire additional
personnel as needed. As a result, the Company expects marketing and
sales expenses to increase in dollar amount over those in the prior
year.

General and Administrative.  General and administrative ("G&A")
expense increased to $1.2 million in 1998 from $1.1 million in 1997,
an increase of $0.1 million, or 6%, primarily due to the costs of
computer systems conversions. G&A expenses decreased as a percentage
of net revenues to 15% in 1998 from 16% in 1997. The Company expects
G&A expenses during 1998 to increase due to costs to be incurred in
connection with computer systems conversions, including costs to
address the "Year 2000" issue.

Development.  Development expense decreased to $0.6 million in 1998
from $0.7 million in 1997, a decrease of $0.1 million, or 21%, and
decreased as a percentage of net revenues to 7% of net revenues in
1998 from 11% in 1997. Development expense includes expenses related
to product upgrades, new products development activities, quality
control and customer service support. The Company currently believes
that development expenses will increase over current levels in
future periods due to additional costs to develop new brands and
titles, including the development of products to take advantage of
the Internet and other on-line capabilities, operating system
upgrades such as Windows 98, and the adaptation of product for
international sales.

Other Income. Other income, which includes interest income and interest
expense, increased to $62,000 in 1998 from $50,000 in 1997, primarily due
to the increased balance of interest bearing deposits and investments.

Provision (Benefit) for Income Taxes. The Company accounts for
income taxes under SFAS No. 109, Accounting for Income Taxes, which
requires that deferred income taxes be recognized for the tax
consequences in future years of differences between the tax basis of
assets and liabilities and their financial reporting basis at rates
based on enacted tax laws and statutory tax rates applicable to the
periods in which the differences are expected to affect taxable
income.  Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized.
The effective tax rate used in recording the provision for income
taxes was approximately 37% in 1998 and 1997.


Comparison of Six Months Ended June 30, 1998 and 1997

Net Revenues.  Net revenues for the six months ended June 30
increased to $17.1 million in 1998 from $15.1 million in 1997, an
increase of $2.0 million, or 14%. The increase in net revenues was
due primarily to increased units sold, partially offset by higher
provisions for returns and lower average selling prices. Gross
revenues increased approximately $3.4 million, and provisions for
returns increased approximately $1.4 million. The provision for
returns increased due to higher promotional sales on which returns
are expected at rates higher than usually experienced by the
Company. Average selling prices may continue to decline as the
Company expands sales to certain mass merchants, primarily through
distributors. Domestic net revenues increased approximately 26%,
while international net revenues decreased about 28%, primarily
due to lower sales volume. International revenues represented 15%
and 24% of net revenues in 1998 and 1997, respectively. The
Company has added international sales personnel and expects
international activity to increase over current levels in the
coming periods.

Cost of Revenues.  Cost of revenues increased to $7.3 million in 1998 from
$5.8 million in 1997, an increase of $1.5 million, or 25%, due primarily to
increased gross sales and product costs. As a percentage of net
revenues, cost of revenues represented 42% and 38% of net revenues
in 1998 and 1997, respectively. This higher percentage was due in
part to the higher provisions for returns noted under Net Revenues
above and higher promotional sales. Promotional sales generally
have lower gross margins than other sales. The Company expects
cost of revenues may vary from period to period based on the
relative mix of products sold, the level of promotional sales in a
given period and other market factors.

Marketing and Sales.  Marketing and sales expense increased to $5.9 million
in 1998 from $4.7 million in 1997, an increase of $1.2 million, or 26%, and
increased as a percentage of net revenues to 35% of net revenues in 1998 from
31% in 1997. This increase was related to the increased marketing
activities to promote the Company's products and brand names, and
increased personnel. In response to increased competition for shelf
space in retail outlets, the Company intends to continue to launch
new and innovative marketing promotions and to hire additional
personnel as needed. As a result, the Company expects marketing and
sales expenses to increase in dollar amount over those in the prior
year.

General and Administrative.  General and administrative ("G&A")
expense increased to $2.5 million in 1998 from $2.3 million in 1997,
an increase of $0.2 million, or 6%, primarily due to the costs of
computer systems conversions. G&A expenses decreased as a percentage
of net revenues to 14% in 1998 from 15% in 1997. The Company expects
G&A expenses during 1998 to increase due to costs to be incurred in
connection with computer systems conversions, including costs to
address the "Year 2000" issue.

Development.  Development expense decreased to $1.2 million in 1998
from $1.4 million in 1997, a decrease of $0.2 million, or 13%, and
decreased as a percentage of net revenues to 7% of net revenues in
1998 from 9% in 1997. Development expense includes expenses related
to product upgrades, new products development activities, quality
control and customer service support. The Company currently believes
that development expenses will increase over current levels in
future periods due to additional costs to develop new brands and
titles, including the development of products to take advantage of
the Internet and other on-line capabilities, operating system
upgrades such as Windows 98, and the adaptation of product for
international sales.

Other Income.  Other income, which includes interest income and interest
expense, increased to $232,000 in 1998 from $79,000 in 1997, primarily due
to the receipt of interest of approximately $117,000 in connection with
the refund of prior years' income tax payments, and the increased
balance of interest bearing deposits and investments.

Provision (Benefit) for Income Taxes. The Company accounts for
income taxes under SFAS No. 109, Accounting for Income Taxes, which
requires that deferred income taxes be recognized for the tax
consequences in future years of differences between the tax basis of
assets and liabilities and their financial reporting basis at rates
based on enacted tax laws and statutory tax rates applicable to the
periods in which the differences are expected to affect taxable
income.  Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized.
The effective tax rate used in recording the provision for income
taxes was approximately 37% in 1998 and 1997.


Liquidity and Capital Resources

As of June 30, 1998, the Company had $8.4 million in working
capital, including $4.8 million in cash. To date, the Company has
not invested in any financial instruments that involve a high level
of complexity or risk. Net cash used by operating activities was
$0.7 million for the six months ended June 30, 1998, primarily due
to payments of accounts payable and accrued expenses, and increased
accounts receivable; partially offset by profitable results of
operations and the receipt of income tax refunds related to prior
years' taxes paid.

The Company believes that cash generated by operations may be
affected by an increase in working capital requirements as it
continues to expand operations. In response to such growth in
working capital requirements, the Company entered into a loan
agreement with a bank which provides for a revolving line of credit
collateralized by substantially all of the Company's assets.
Borrowings under the line are limited to a percentage of eligible
receivables as defined in the agreement and may not exceed $5.0
million through May 31, 1999, the maturity date. The loan agreement
contains restrictive covenants. There can be no assurance that the
Company's results of operations will continue to be in compliance
with the line of credit covenants which, among other things,
prohibit two consecutive quarterly losses, or that the line of
credit would be otherwise available to the Company. To date, there
have been no borrowings under the line. Management believes that it
has adequate financial resources for its planned operations through
the next twelve months.

The Company's federal tax filings with respect to the year ended
December 31, 1992 and subsequent years are presently being reviewed
by the Internal Revenue Service ("IRS"). The IRS has questioned the
allocation of the purchase price made by the Company in connection
with the acquisition of assets and business of the Predecessor from
Bloc in October 1992, and related amortization and other deductions
with respect to the acquired assets. In June 1997, the IRS proposed
assessments for additional taxes of $442,000, $553,000 and $857,000
for the tax years 1992, 1993 and 1994, respectively, plus interest
to the date of payment. The preliminary adjustments proposed by the
IRS would also reduce the Company's federal income taxes for the
years 1995, 1996 and 1997 by $242,000, $68,000 and $55,000,
respectively. The Company believes that it has properly reported its
income and paid its taxes in accordance with applicable laws and
intends to contest the proposed adjustments vigorously. The Company
believes that the ultimate resolution of this matter will not have a
material adverse effect on its financial position.

From time to time, the Company evaluates potential acquisitions of
products, businesses and technologies that would complement or
expand the Company's business. The Company currently does not have
any commitments or agreements with respect to any such acquisitions.
There can be no assurance that any such acquisitions will be made
or, if made, will be successfully integrated. The Company has also
engaged a financial advisor to assist it in assessing strategic
alternatives to enhance shareholder value.



                     PART II - OTHER INFORMATION


Item  5.   Other Information.

Factors That May Affect Future Results

In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company is providing
the following cautionary statements identifying important factors,
some of which are beyond the Company's control, that in the past
have caused or in the future could cause the Company's actual
results to differ materially from its historical operating results
and from those projected in any forward-looking statements made by,
or on behalf of, the Company.
 .

General Business and Economic Conditions

General business and economic conditions have an impact on the
Company's financial results. The Company's customer base, which is
largely retailers and distributors for resale to retailers, may be
impacted by weak economic conditions and, as a result, may reduce
their inventories of products purchased from the Company. The
Company's customers are not contractually required to make future
purchases of the Company's products and therefore could discontinue
carrying the Company's products in favor of a competitor's products
or for any other reason. The Company's financial results could be
affected by the size and rate of growth of the consumer software
market and consumer PC market. The consumer software business is
seasonal due primarily to the increased demand for consumer software
during the year-end holiday buying season. General business and
economic conditions and consumer confidence, both domestically and
abroad, may impact retail sales of consumer software. Currency
fluctuations associated with international sales and accounts
receivable may also affect the Company's financial results.

Competition

The market for the Company's products is intensely and increasingly
competitive. Existing consumer software companies may broaden their
product lines to compete with the Company's products and potential
new competitors, including computer hardware and software
manufacturers, diversified media companies and book publishing
companies, may enter or increase their focus on the consumer
software market, resulting in even greater competition for the
Company. There has been a consolidation among competitors in the
market for the Company's products, and many of the companies with
which the Company currently competes or may compete in the future
have greater financial, technical, marketing, sales and customer
support resources, as well as greater name recognition and better
access to consumers, than the Company. Competition for retail space
has increased as retailers continue to focus on sales per square
foot of shelf space and other measures of product performance. The
competition for retail space is also likely to increase due to the
proliferation of consumer software products and companies.

Dependence on Retailers and Distributors

Retailers and distributors compete in a volatile industry that is
subject to rapid change, consolidation, financial difficulty and
increasing competition from new distribution channels. Due to
increased competition for limited shelf space, retailers and
distributors are increasingly in a better position to negotiate
favorable terms of sale, including price discounts, promotional
support and product return policies. The Company's financial results
may be impacted by the accuracy of retailers' forecasts of consumer
demand, the timing of the receipt of orders from major customers,
account cancellations or delays in shipment, competitors' marketing
strategies and promotions, changes in pricing strategies by the
Company or its competitors and the collectibility of accounts
receivable. Furthermore, a significant portion of sales within a
quarter is typically not realized until late in that quarter. As a
result, it may be difficult for the Company to predict its net
revenues for the quarter or to quickly adapt its spending levels
within a quarter to reflect changes in demand for its products.

Uncertainty of Market Acceptance; Changes in Technology and Industry
Standards

The consumer software industry is undergoing rapid changes,
including evolving industry standards, frequent product
introductions and changes in consumer requirements and preferences.
Consumer preferences are difficult to predict, and few consumer
software products achieve sustained market acceptance. The Company's
financial results will be impacted by market acceptance of the
Company's products and those of its competitors, development and
promotional expenses relating to the introduction of new products,
new versions of existing products or new operating systems, and
evolving distribution channels. The growth in popularity of the
Internet and other new technologies has impacted the distribution
and purchase of software.

Other Factors

In addition to the important factors discussed above, the Company's
financial results, financial position and cash flows may be impacted
by, among other factors, future cash flow and working capital
requirements, management's ability to manage growth, implementation
and expansion of the Company's systems and operations to accommodate
the Company's anticipated future revenues, the outcome of current
and future examinations by taxing authorities, and the acquisitions
of new businesses by the Company and related charges and write-offs.
The market price of the Company's Common Stock has been, and in the
future will likely be, subject to significant fluctuations in
response to variations in quarterly operating results and other
factors, such as announcements of technological innovations or new
products by the Company or its competitors, or other events. The
stock prices for many companies in the technology sector have
experienced wide fluctuations which often have been unrelated to
their operating performance. Such fluctuations may adversely affect
the market price of the Company's Common Stock.



The Year 2000 Issue

The Company does not believe that it has material exposure to the
Year 2000 issue with respect to its own information system as the
supplier of its primary systems has an updated release of the
Company's applications software that correctly identifies the year
2000. The Company plans to implement the new release beginning in
1998 and to complete the implementation before the fourth quarter of
1999. However, there can be no assurance that this software
implementation will be successfully completed, or that the
implementation will not have a material adverse impact on the
Company's financial results, financial position and cash flows. The
Company is seeking to determine if the information systems of its
major customers and vendors (insofar as they relate to the Company's
business) comply with Year 2000 requirements, and there can be no
assurance that the Year 2000 issue will not affect the information
systems of the Company's major customers and vendors as they relate
to the Company's business, or that any such impact of a major
customer's or vendor's information system would not have a material
adverse effect on the Company. The Company has also begun a survey
of its non-information technology (such as its telephone switching
system) to assess the risk of Year 2000 issues with respect to this
technology.  The Company has not yet reached a determination of
whether or not it has material exposure to the Year 2000 issue with
respect to its non-information technology.



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

(a)                          Exhibit 27.

   Financial Data Schedule (EDGAR filing only).

(b)                     Reports on Form 8 K.

   None.


                              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, thereto duly authorized.


                          Expert Software, Inc.

                          /s/ Charles H. Murphy
                          Charles H. Murphy,
                          Chief Financial Officer
                          (Principal Financial and Accounting Officer)


Dated: August 11, 1998