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, 1997



[  ]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
                    Executive Tower, Suite #750
                      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, 1997,  there were  7,521,804  shares of the  Registrant's  Common
Stock, $ .01 par value, outstanding.

                The exhibit index is on page 14.

                          Page 1 of 16.


<PAGE>



                       EXPERT SOFTWARE, INC.

                        INDEX TO FORM 10-Q

                  Six Months Ended June 30, 1997





                                                               Page
                                                              ------
Part I - Financial Information
Item 1.  Financial Statements.
  Condensed Consolidated Balance Sheets as of
    June 30, 1997 and December 31, 1996...........................4
  Condensed Consolidated Statements of Operations for the
    Three Months and Six Months Ended June 30, 1997 and 1996......5
  Condensed Consolidated Statements of Cash Flows for the
    Six Months Ended June 30, 1997 and 1996.......................6
  Notes to Condensed Consolidated Financial Statements............7
Item 2.  Management's Discussion and Analysis of Financial        
Condition and Results of Operations...............................8


Part II -- Other Information
Item 4.  Submission of Matters to a Vote of Security Holders.....13
Item 6.  Exhibits and Reports on Form 8-K........................14

Signatures.......................................................14







  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 13 of this Form 10-Q.




<PAGE>



                  PART I -- FINANCIAL INFORMATION


Item 1.  Financial Statements.


                             EXPERT SOFTWARE, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In thousands)
     
                                       June 30, December 31,
                                        1997       1996
                                       -------    -------
                ASSETS                (unaudited)
CURRENT ASSETS:
   Cash and equivalents...............  $4,736     $2,959
   Accounts receivable, net...........   2,341      3,775
   Inventories, net...................   1,201      1,256
   Income taxes receivable............   1,880      2,397
   Prepaid expenses...................     632        425
   Deferred income taxes..............   2,248      2,616
                                       -------    -------
      Total current assets............  13,038     13,428
PROPERTY AND EQUIPMENT, net...........   1,533      1,897
DEFERRED INCOME TAXES.................   3,586      3,586
ACQUIRED INTANGIBLES, net.............      97        166
                                       -------    -------
      Total assets.................... $18,254    $19,077
                                       =======    =======

 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Accounts payable...................  $1,739     $3,226
   Accrued expenses...................   5,353      5,038
   Current portion of capital lease         
     obligations......................      67         88
                                       -------    -------
      Total current liabilities.......   7,159      8,352
                                       -------    -------
OTHER OBLIGATIONS, net of current          
  portion.............................      --        300
                                       -------    -------
STOCKHOLDERS' EQUITY:
   Preferred stock....................      --         --
   Common stock.......................      75         75
   Additional paid-in capital.........  23,242     23,198
   Accumulated deficit................ (12,222)   (12,848)
                                       -------    -------
      Total stockholders' equity......  11,095     10,425
                                       =======    =======
      Total liabilities and              
stockholders' equity.................. $18,254    $19,077
                                       =======    =======



 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,
                                 ---------------    -----------------
                                   1997    1996       1997     1996
                                 -------- ------    -------  --------

NET REVENUES.....................$7,075   $6,354    $15,101   $16,737
                                 ------   ------    -------   -------
OPERATING COSTS AND EXPENSES:
  Cost of revenues............... 2,649    6,851      5,784    10,744
  Marketing and sales............ 2,268    2,632      4,695     5,294
  General and administrative..... 1,109    3,029      2,324     4,783
  Development....................   743      890      1,383     1,750
  Loss on impairment of              
  intangible assets..............    --    5,700         --     5,700
                                 ------   ------    -------   -------
    Total operating costs and     
     expenses.................... 6,769   19,102     14,186    28,271
                                 ------   ------    -------   -------

    Operating income (loss)......   306  (12,748)       915   (11,534)

Other income, net................    50       29         79        69
                                 ------   ------    -------   -------

  Income (loss) before provision 
    (benefit) for income taxes...   356  (12,719)       994   (11,465)

Provision (benefit) for income     
   taxes.........................   132   (4,727)       368    (4,268)
                                 ------   ------    -------   -------

  Net income (loss)..............  $224  $(7,992)     $ 626   $(7,197)
                                 ======   ======    =======   =======

  Net income (loss) per share     
   of common stock..............   $.03  $ (1.07)     $ .08   $ (.096)
                                 ======   ======    =======   =======

Weighted average number of
 common stock and stock           
 equivalents outstanding........  8,019    7,481      7,957     7,481       
                                 ======   ======    =======   =======















 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,
                                      ------------------------
                                           1997       1996
                                       ----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)....................... $   626     $(7,197)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
  Depreciation of property and              
   equipment............................     400         488
  Amortization of acquired intangibles..      69         473
  Loss on impairment of assets..........      --       5,700
  Deferred income tax provision             
   benefit).............................     368      (3,472)
Changes in current assets and
liabilities:
 (Increase) decrease in accounts         
   receivable...........................   1,434       3,375
 (Increase) decrease in income tax        
   receivable...........................     517      (1,401)
 (Increase) decrease in inventories.....      55       1,612
 (Increase) decrease in prepaid           
   expenses.............................    (207)       (362)
 (Increase) decrease in other assets....      --           7
  Increase (decrease) in accounts        
   payable..............................  (1,487)        401
  Increase (decrease) in accrued            
   expenses.............................     315        (188) 
  Increase (decrease) in income taxes        
   payable..............................      --      (2,144)
  Increase (decrease) in other             
   obligations..........................    (300)         --
                                         -------     -------   
    Net cash provided by (used in)       
     operating activities...............   1,790      (2,708)
                                         -------     ------- 
CASH FLOWS FROM INVESTING ACTIVITIES:
  Maturities of marketable securities...     --        6,222
  Purchases of property and equipment...     (36)       (594)
                                         -------     -------
    Net cash provided by (used in)           
     investing activities...............     (36)      5,628    
                                         -------     -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Stock options exercised...............      44          43
  Borrowings under capital lease             
   obligations..........................      --          89
  Payments on capital lease                
   obligations..........................     (21)        (67)
                                         -------     ------- 
    Net cash provided by financing        
     activities.........................      23          65
                                         -------     ------- 
    Net increase in cash and             
     equivalents........................   1,777       2,985
CASH AND EQUIVALENTS, beginning of        
   period...............................   2,959         912
                                         -------     ------- 
CASH AND EQUIVALENTS, end of period.....  $4,736     $ 3,897
                                         =======     =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
  Cash paid during the period for        
   interest.............................  $    3     $    19
                                         =======     =======
  Cash paid during the period for        
   income taxes......................... $   --       $2,748
                                         =======     =======   

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, 1997
                            (Unaudited)

1.    BASIS OF PRESENTATION

The condensed consolidated balance sheet as of December 31, 1996, 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, 1996.

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, 1997,  and the results of operations  and
cash flows for the three months and six months ended June 30, 1997 and 1996.  In
addition to the normal  recurring  accruals,  as previously  reported,  material
adjustments were recorded to the financial statements for the three months ended
June 30,  1996.  As more fully  discussed  in Part I, Item 2, these  adjustments
included recognizing a loss from the impairment of intangible assets,  recording
inventory  losses,   and  providing   additional   allowances  against  accounts
receivable for possible future returns from customers and for doubtful accounts.
Results of operations  and cash flows for the period  ending June 30, 1997,  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, 1996, included in the Form 10-K.

2.    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.

3.    INVENTORIES

Inventories  consisted of the  following  as of June 30, 1997,  and December 31,
1996, (in thousands):

                                   1997      1996
                                 -------   -------  
       Finished goods............ $  968    $1,101
       Raw materials.............    233       155
                                 -------   -------  
                                  $1,201    $1,256
                                 =======   =======  

4. NEWLY ISSUED ACCOUNTING STANDARD

In March 1997,  the Financial  Accounting  Standards  Board issued SFAS No. 128,
Earnings  Per Share,  which is required to be adopted as of December  31,  1997.
Upon  adoption,  all  prior  earnings  per  share  amounts  are  required  to be
retroactively restated.

The  computation  under SFAS No. 128 differs from the primary and fully  diluted
earnings per share  computed under APB Opinion No. 15 primarily in the manner in
which potential common stock is treated. Basic earnings per share is computed by
dividing net income by the weighted-average number of common shares outstanding.
In the computation of diluted earnings per share, the weighted-average number of
common shares  outstanding  is adjusted for the effect of all  potential  common
stock.

The pro forma basic and diluted  earnings per share  computed  according to SFAS
No. 128 for the quarter ended June 30, 1997,  are $.03 each. The pro forma basic
and  diluted  earnings  per share  computed  according  to SFAS No.  128 for the
quarter ended June 30, 1996 are $(1.07) each.




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,
                                        -------------  --------------
                                         1997   1996    1997    1996
                                        ------ ------  ------  ------ 

     Net revenues....................... 100%   100%    100%    100%
                                        ------ ------  ------  ------  
     Operating costs and expenses:
       Cost of revenues.................  37    108      38      64
       Marketing and sales..............  32     41      31      32
       General & administrative.........  16     48      15      29
       Development......................  11     14       9      10
       Loss on impairment of intangible  
        assets..........................  --     90      --      34
                                        ----   ----    ----    ----    
                                          96    301      94     169
                                        ----   ----    ----    ---- 
     Operating income (loss)............   4   (201)      6     (69)
     Other income (expense).............   1     --       1      --
                                        ----   ----    ----    ----     
     Income (loss) before provision        
       (benefit) for income taxes.......   5   (201)      7     (69)
     Provision (benefit) for income        
        taxes...........................   2    (75)      3     (26)
                                        ----   ----    ----    ----  

     Net income (loss)..................   3%   (126)%    4%    (43)%
                                        ====   =====   =====   ====



<PAGE>


General Comments Regarding 1996 Results of Operations

Results  for the three  months  ended June 30,  1996,  included  provisions  for
potential  excess  inventories  of $2.6 million and a reduction in the estimated
inventory value for product  returned of $1.4 million;  an increase in estimated
product returns that exceeded  expectations by $0.5 million;  an increase in the
provision  for  doubtful  accounts  of $1.0  million;  and  losses  recorded  in
connection  with the Swfte  acquisition  totaling $5.7 million.  The slowdown in
retail  sales  resulted  in the  Company not  meeting  sales  objectives,  which
contributed  to  excess  inventories.   In  addition,  the  Company  experienced
temporary  difficulties  in the  implementation  of new  management  information
systems which  contributed  to purchasing  higher levels of inventory  than were
necessary  in the normal  course of  business.  Additionally,  higher  levels of
returns  resulted in increased  inventory.  Based on the  foregoing,  management
determined  that the value  assigned to the returned  goods should be lower than
that assigned in prior periods,  and reserves for potential  excess  inventories
should be increased, causing an increase in the cost of revenues.

Additionally,  the products  obtained in the Swfte  acquisition  were selling at
levels  substantially  below projected levels.  Together with other developments
which are  described  below under "Loss on  Impairment  of  Intangibles",  these
events led  management  to record  during the second  quarter of 1996 a material
loss  on  the  impairment  of the  intangible  assets  arising  from  the  Swfte
acquisition.  This loss included  additional  reserves for returns and marketing
allowances against the acquired accounts receivable, additional reserves against
the  acquired  inventories,  adjustments  to  fixed  assets,  and  accruals  for
guaranteed royalty agreements entered into prior to the acquisition that are not
expected to be recouped in the ordinary  course of business.  See the discussion
at "Loss on Impairment of  Intangibles"  below for further  information on these
adjustments.


Comparison of Three Months Ended June 30, 1997 and 1996

Net Revenues.  Net revenues for the three months ended June 30 increased to $7.1
million in 1997 from $6.4 million in 1996, an increase of $0.7 million,  or 11%.
Net revenues  increased both  domestically  and  internationally.  International
revenues represented 29% and 24% of net revenues in 1997 and 1996, respectively.
The increase in net revenues was due primarily to increased  units sold, and the
higher  provisions  for returns  recorded in 1996 and  discussed  under  General
Comments above.  Average selling prices for the balance of 1997 are not expected
to change  significantly,  although the sales of new premium  products which are
anticipated  beginning  in the third  quarter are expected to be at higher price
points.

Cost of Revenues.  Cost of revenues  decreased to $2.6 million in 1997 from $6.8
million in 1996,  a decrease  of $4.2  million,  or 61%,  due  primarily  to the
provisions of $2.6 million and $1.4 million recorded in 1996 and discussed under
General  Comments  above.  As a  percentage  of net  revenues,  cost of revenues
represented 37% and 108% of net revenues in 1997 and 1996, respectively. Cost of
revenues consists primarily of product costs (printed material,  boxes, disk and
CD costs,  assembly  and  shipping),  freight  charges,  reserves for excess and
obsolete   inventories,   and  royalties  to  outside  programmers  and  content
providers.  The Company expects cost of revenues in future periods will increase
over those in the current quarter due to anticipated mix changes  favoring boxed
products,  which have higher  packaging and freight costs.  The Company believes
that  retailers  prefer such boxed  products due to their  additional  marketing
content and appeal.

Marketing and Sales.  Marketing  and sales expense  decreased to $2.3 million in
1997  from $2.6  million  in 1996,  a  decrease  of $0.3  million,  or 14%,  and
decreased  as a  percentage  of net revenues to 32% of net revenues in 1997 from
41% in 1996.  This decrease was primarily  the result of lower  promotional  and
advertising  costs.  As a result  of not  meeting  sales  expectations  in 1996,
marketing  costs  represented  a higher  percentage  of revenues in 1996 than in
1997. The Company's  marketing  spending  consists  principally of activities to
promote the Company's  products and brand name,  including  costs to promote and
support the Company's growing  international  sales,  in-store  promotions,  and
personnel  costs.  The  Company  intends to  continue  to launch  new  marketing
promotions and to hire additional  personnel as needed.  As a result the Company
expects  marketing  and sales  expenses to  increase  in dollar  amount and as a
percentage of revenues in the future.

General and Administrative. General and administrative ("G&A") expense decreased
to $1.1 million in 1997 from $3.0  million in 1996, a decrease of $1.9  million,
or 63%, and decreased as a percentage of net revenues to 16% in 1997 from 48% in
1996.  This  decrease was  primarily  due to decreased  provisions  for doubtful
accounts and decreased  legal costs.  Provisions  for doubtful  accounts in 1996
included the additional $1.0 million adjustment discussed under General Comments
above. Legal costs decreased due to the settlement in the fourth quarter of 1996
of litigation  involving the former owners of Swfte. The Company expects general
and administrative  expenses to decrease in 1997 as compared to 1996 as a result
of the  settlement  of the Swfte  litigation,  and lower bad debt  expenses  and
personnel costs.

Development.  Development  expense  decreased  to $0.7 million in 1997 from $0.8
million  in 1996,  a  decrease  of $0.1  million,  or 16%,  and  decreased  as a
percentage  of net  revenues  to 11% of net  revenues  in 1997 from 14% in 1996.
Development  expense includes expenses related to product upgrades,  new product
activities,  quality  control and customer  service  support.  During the fourth
quarter of 1996, the Company reduced development personnel and did not renew the
lease  for the  facilities  previously  occupied  by Swfte,  which  will help to
contain development  expenses in future periods.  The Company currently believes
that the steps taken to reduce  development  expenses in 1996 will be  partially
offset by  additional  costs to develop  new brands and  titles,  including  the
development  of products to take  advantage of the  Internet  and other  on-line
capabilities.  The Company therefore expects development  expenses will increase
in future periods.

Other Income. Other income, which includes interest income and interest expense,
increased  to  $50,000  in 1997  from  $29,000  in  1996,  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
1997 and 1996.


Comparison of Six Months Ended June 30, 1997 and 1996

Net  Revenues.  Net revenues for the six months ended June 30 decreased to $15.1
million in 1997 from $16.7 million in 1996, a decrease of $1.6 million,  or 10%.
Domestic  net  revenues  in 1997  decreased  as a result of a number of factors,
including increased competition,  a more pronounced seasonality in the business,
and retailers  keeping  tighter  inventory  levels.  International  net revenues
decreased  due  to  lower  sales  in  the  United  Kingdom  as  the  Company  is
transitioning to a new distributor.  International  revenues represented 23% and
25% of net revenues in 1997 and 1996,  respectively.  Average selling prices for
the balance of 1997 are not expected to change significantly, although the sales
of new premium products which are anticipated beginning in the third quarter are
expected to be at higher price points.

Cost of Revenues.  Cost of revenues decreased to $5.8 million in 1997 from $10.7
million  in 1996,  a  decrease  of $4.9  million,  or 46%,  and  decreased  as a
percentage  of net revenues to 38% in 1997 from 64% in 1996.  This  decrease was
primarily  due to the  provisions  of $2.6 million and $1.4 million  recorded in
1996 and  discussed  under General  Comments  above.  Cost of revenues  consists
primarily of product costs (printed material, boxes, disk and CD costs, assembly
and shipping), freight charges, reserves for excess and obsolete inventories and
royalties to outside programmers and content providers. The Company expects cost
of revenues in future  periods will increase  over those in the current  quarter
due to  anticipated  mix  changes  favoring  boxed  products,  which have higher
packaging and freight costs.  The Company  believes that  retailers  prefer such
boxed products due to their additional marketing content and appeal.

Marketing and Sales.  Marketing  and sales expense  decreased to $4.7 million in
1997  from $5.3  million  in 1996,  a  decrease  of $0.6  million,  or 11%,  and
decreased  as a  percentage  of net revenues to 31% of net revenues in 1997 from
32% in 1996.  This decrease was primarily  the result of lower  promotional  and
advertising  costs.  As a result  of not  meeting  sales  expectations  in 1996,
marketing  costs  represented  a higher  percentage  of revenues in 1996 than in
1997. The Company's  marketing  spending  consists  principally of activities to
promote the Company's  products and brand name,  including  costs to promote and
support the Company's  growing  international  sales,  in-store  promotions  and
personnel  costs.  The  Company  intends to  continue  to launch  new  marketing
promotions and to hire additional  personnel as needed.  As a result the Company
expects  marketing  and sales  expenses to  increase  in dollar  amount and as a
percentage of revenues in the future.

General and Administrative. General and administrative ("G&A") expense decreased
to $2.3 million in 1997 from $4.8  million in 1996, a decrease of $2.5  million,
or  51%,  and  decreased  as a  percentage  of net  revenues  to 15%  from  29%,
respectively.  This  decrease  was  primarily  due to decreased  provisions  for
doubtful accounts,  decreased legal costs, and decreased  amortization  expense.
Provisions for doubtful  accounts in 1996 included the  additional  $1.0 million
adjustment  discussed under General Comments above. Legal costs decreased due to
the settlement in the fourth quarter of 1996 of litigation  involving the former
owners of Swfte.  Amortization  decreased  due to the  write-off  in the  second
quarter of 1996 of a substantial  portion of the  intangible  assets  associated
with the acquisition of Swfte.  The Company  expects general and  administrative
expenses to  decrease in 1997 as compared to 1996 as a result of the  settlement
of the Swfte litigation, and lower bad debt expenses and personnel costs.

Development.  Development  expense  decreased  to $1.4 million in 1997 from $1.8
million  in 1996,  a  decrease  of $0.4  million,  or 21%,  and  decreased  as a
percentage  of net  revenues  to 9% of net  revenues  in 1997  from 10% in 1996.
Development  expense includes expenses related to product upgrades,  new product
activities,  quality  control and customer  service  support.  During the fourth
quarter of 1996, the Company reduced development personnel and did not renew the
lease  for the  facilities  previously  occupied  by Swfte,  which  will help to
contain development  expenses in future periods.  The Company currently believes
that the steps taken to reduce  development  expenses in 1996 will be  partially
offset by  additional  costs to develop  new brands and  titles,  including  the
development  of products to take  advantage of the  Internet  and other  on-line
capabilities.

Loss on Impairment of Intangibles.  During the three months ended June 30, 1996,
management  reevaluated the carrying value of the intangible  assets recorded in
connection with the November 1995 acquisition of Swfte.  These intangible assets
consisted  of  acquired  software  technology,  a license  agreement  to use the
BicycleAE  brand name in certain card game  software,  the  assembled  workforce
acquired,  and Swfte's customer list. This reevaluation of the intangible assets
was necessitated by management's  determination  based on then-recent results of
operations that the expected sales and cash flows from the acquired assets would
be substantially lower than had been previously expected.

The  acquired  Swfte  products   originally   projected  to  generate  the  most
significant  sales and cash  flows  were  selling  at  substantially  lower than
expected  rates.  Certain  of those  titles  faced new  competition  from  other
publishers,  which had taken market share away from those titles. In particular,
the card games  category  had become more  competitive  as a result of marketing
efforts  by Sierra On Line and  others.  Additionally,  certain  other  acquired
titles were released shortly before the acquisition of Swfte. Based on low sales
rates, some retailers were discontinuing  certain of these titles and management
determined their expected future sales were minimal.

A  significantly  higher  level of returns  was  experienced  with the  products
acquired  in the  acquisition  over the  rate of  returns  experienced  with the
Company's other products. Management believes that certain titles were sold into
the  distribution  and retail  channel prior to the  acquisition at higher rates
than  were  supported  by  sales  through  to  the  end  users.   This  prompted
distributors  and retailers to return these products.  This overstock of product
and  returns  experience  had,  in  management's  judgment,  damaged  the market
receptiveness  to the acquired  products and reduced their expected future sales
levels.

Lower than  expected  acceptance  of the acquired  products,  together  with the
terminations  of personnel in  connection  with closing the Swfte  facilities in
Delaware to consolidate all operations at the Company's headquarters in Florida,
caused management to write-off the value originally ascribed to the workforce in
place.

Value was originally  ascribed to Swfte's customer list based upon  management's
assessment  of  the  value  of  Swfte's   experience  in  dealing  with  certain
educational channels and bookstores.  Due to the lower than expected sales rates
and higher than expected returns rates for the acquired products,  management no
longer believed this to be true, and accordingly wrote-off the costs assigned to
the customer list.

These  factors  were  determined  not to be  short-term  or temporary in nature,
causing management to reduce the carrying value of the intangible assets by $3.5
million.  Management  also  determined  that the lower  demand for the  acquired
products and customer claims for pre-acquisition cooperative marketing and price
protection credits required an additional  provision for reserves for returns of
$1.1  million  higher  than  originally   provided  on  the  acquired   accounts
receivable; and a provision for reserves $0.2 higher than originally provided on
the acquired  inventory.  Such  provisions were recorded during the three months
ended June 30,  1996,  and are  included  in the stated  loss on  impairment  of
intangibles.  Additionally,  the  lower  than  expected  sales and  higher  than
expected  returns  levels on the acquired  products  indicated  that the minimum
royalties  required under certain  contracts and prepaid  royalties would not be
recouped in the ordinary course of business.  Approximately $0.3 million of such
royalties  were  therefore  accrued  as  part  of  the  loss  on  impairment  of
intangibles as of June 30, 1996.  Similarly,  losses on fixed assets and certain
other assets  determined  to have lower  values than  originally  assigned  were
accrued as part of the loss on impairment of intangibles as of June 30, 1996.

Other Income. Other income, which includes interest income and interest expense,
increased  to  $79,000  in 1997  from  $69,000  in  1996,  primarily  due to the
increased balance of interest bearing deposits and investments.

Provision 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 1997 and 1996.


Liquidity and Capital Resources

During 1996, the Company  experienced a reduction in its  stockholders'  equity,
working capital and ratio of current assets to current liabilities, primarily as
a result of net losses realized during that period.  Management has responded by
reducing   expenses,   including,   among  other  actions,   reducing  personnel
significantly. With these actions and assuming the continued availability of the
Company's  revolving  line of credit,  management  believes that it has adequate
financial resources for its planned operations through the next twelve months.

As of June 30, 1997, the Company had $5.9 million in working capital,  including
$4.7 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 provided
by operating activities was $1.8 million for the six months ended June 30, 1997,
primarily due to profitable  results of  operations,  decreased  investments  in
accounts  receivable and inventories,  and receipt of $0.5 million of income tax
refunds from taxes paid in 1996.

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,  1998,  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.

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 royalty and amortization
deductions with respect to the acquired  assets.  In June 1997, the IRS proposed
assessments  for additional  taxes and penalties of  approximately  $2.0 million
plus  interest  to date of  payment.  The  Company  and its  special tax counsel
believe  that it has  properly  reported  its  income  and  paid  its  taxes  in
accordance with applicable laws and intends to contest the proposed  adjustments
vigorously.  Management  does not believe that the final  resolution  of the IRS
claims will have a material adverse impact on the Company's 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.



<PAGE>



Factors Affecting Future Operating Results

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  its
historical  operating  results  and from those set forth in the  forward-looking
statements and may fluctuate between operating periods. Factors that might cause
such a differences and fluctuations include, without limitation,  the following:
the size and rate of growth of the  consumer  software  market and  consumer  PC
market,  consolidation  of  the  software  industry  among  both  customers  and
competitors,  market  acceptance  of the  Company's  products  and  those of its
competitors,  competitors' marketing strategies and promotions,  development and
promotional expenses relating to the introduction of new products,  new versions
of existing products or new operating systems,  evolving distribution  channels,
currency   fluctuations   associated  with  international   sales  and  accounts
receivable,  the growth in popularity of the Internet and other new technologies
which could impact the distribution  and purchase of software,  product returns,
acquisitions   of  new  businesses  by  the  Company  and  related  charges  and
write-offs,  the  collectibility  of  accounts  receivable,  changes  in pricing
policies  by the  Company  and  its  competitors,  the  accuracy  of  retailers'
forecasts of consumer demand, competition for retail space, consumer confidence,
the timing of the receipt of orders from major customers,  account cancellations
or delays  in  shipment,  future  cash flow and  working  capital  requirements,
payment of the Company's obligations under the settlement of the litigation with
the  former  owners of Swfte,  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 other
factors.  In addition,  the consumer software business is seasonal due primarily
to the increased demand for consumer software during the year-end holiday buying
season.  Further,  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.
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.


                    PART II - OTHER INFORMATION

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

The Annual Meeting of Stockholders of Expert Software, Inc. was held on June 12,
1997, for the purpose of: (i) the election of Stephen J. Clearman and Charles E.
Noell III as the two Class II  Directors  of the Company to serve until the year
2000 Annual Meeting of Stockholders  and until their successors are duly elected
and qualified;  (ii) the ratification of the selection of Arthur Andersen LLP to
serve as the Company's  independent auditors for 1997; and (iii) the approval of
the  Company's  1997 Stock Option Plan for  Directors and 1997 Stock Option Plan
for Officers and  Employees.  The following  table  describes the results of the
shareholder votes.

                                        Votes      Votes
                                       in Favor   Withheld
                                      ---------  ---------
     Election of Stephen J. Clearman  
     as a Class II Director            5,079,683   495,622
     Election of Charles E. Noell III 
     as a Class II Director            4,611,396   963,909


                                         Votes     Votes
                                        in Favor  Opposed   Abstain
                                       --------- ---------  -------
     Ratification of the selection of
     Arthur Andersen LLP as             
     independent auditors              5,503,718    71,487     100


                                          Votes     Votes
                                        in Favor  Opposed   Abstain
                                       --------- ---------  -------      
     Approval of the Company's 1997
     Stock Option Plan for Directors
     and 1997 Stock Option Plan for     
     Officers and Employees            4,089,700 1,481,105   4,500



The following directors continue in their respective offices:

Class I Directors--Term Expires 1999: Kenneth P.Currier and A. Bruce Johnson
Class III Directors--Term Expires 1998: Susan A. Currier and William H. Lane III


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



(a)                          Exhibit 11.

   Statement regarding computation of earnings per share.

(b)                          Exhibit 27.

   Financial Data Schedule (EDGAR filing only).

(c)                     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 8, 1997