U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)
[ X ]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 OF THE
                 SECURITIES EXCHANGE ACT OF 1934
          For the quarterly period ended September 30, 1998

[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE
                 SECURITIES EXCHANGE ACT OF 1934
          For the transition period from _______to________

                         Commission file number: 1-14076

                 SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
       (Exact name of small business issuer as specified in its charter)

                Delaware                               22-3270045
      (State or other jurisdiction                     (IRS Employer
     of incorporation or organization)            Identification Number)

                     3A Oak Road, Fairfield, New Jersey 07004
                    (Address of principal executive offices)

                                 (973) 808-1992
                           (Issuer's telephone number)


     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 [  ]

     State the number of shares  outstanding of each of the issuer's  classes of
common equity,  as of the latest  practicable  date:  3,966,954 shares of Common
Stock as of November 13, 1998.

     Transitional Small Business Disclosure Format (check one):  
Yes [  ]   No [ X ]

                                   -1-
<PAGE> 

                          PART I. FINANCIAL INFORMATION


Item                                                                       Page

Item 1.   Financial Statements:

Condensed Consolidated Balance Sheets as of September 
  30, 1998 (Unaudited) and December 31, 1997. . . . . . . . . . . . . . . . .3
Condensed Consolidated Statements of Operations for 
  the Three and Nine Months Ended September 30, 1998 
  and 1997 (Unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Condensed Consolidated Statement of Changes in 
  Stockholders' Equity for the Nine Months Ended
  September 30, 1998 (Unaudited). . . . . . . . . . . . . . . . . . . . . . .5
Condensed Consolidated Statements of Cash Flows for 
  the Three and Nine Months Ended September 30, 
  1998 and 1997 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . .6
Notes to Condensed Financial Statements . . . . . . . . . . . . . . . . . . .7


Item 2.   Management's Discussion and Analysis. . . . . . . . . . . . . . . .9

                                   -2-
<PAGE>


         SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                     September 30,            December 31,
                                                        1998                      1997
                                                     -------------            ------------
                                                     (Unaudited)                 (Note)

                                     ASSETS
Current assets:
<S>                                                  <C>                      <C>         
 Cash and cash equivalents . . . . . . . . . . .     $  1,504,749             $  2,586,753
 Restricted cash . . . . . . . . . . . . . . . .          100,000                       --
 Marketable securities . . . . . . . . . . . . .               --                  173,600
 Accounts receivable, net. . . . . . . . . . . .        1,361,733                1,324,102
 Inventories . . . . . . . . . . . . . . . . . .          485,473                  567,336
 Prepaid expenses and other current assets . . .          517,314                  329,591
                                                     -------------            ------------
      Total current assets . . . . . . . . . . .        3,969,269                4,981,382
Property and equipment, net. . . . . . . . . . .          393,243                  568,888
Acquired software, net . . . . . . . . . . . . .        2,720,000                4,446,750
Goodwill, net. . . . . . . . . . . . . . . . . .          212,350                  268,559
Restricted cash. . . . . . . . . . . . . . . . .          200,000                  300,000
Other assets . . . . . . . . . . . . . . . . . .           96,422                   63,923
                                                     -------------            ------------
      Total assets . . . . . . . . . . . . . . .     $  7,591,284             $ 10,629,502
                                                     -------------            ------------

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable. . . . . . . . . . . . . . . .     $  3,201,249             $  3,015,198
 Accrued liabilities . . . . . . . . . . . . . .        1,454,408                4,112,267
 Current portion of long-term debt . . . . . . .          112,236                  173,866
                                                     -------------            ------------
      Total current liabilities. . . . . . . . .        4,767,893                7,301,331
Long-term debt, less current maturities. . . . .          124,836                  184,765
                                                     -------------            ------------
      Total liabilities. . . . . . . . . . . . .        4,892,729                7,486,096
Commitments and contingencies. . . . . . . . . .               --                       --
Stockholders' equity:
 Serial Preferred Stock, authorized 1,939,480 
  shares: none issued and outstanding. . . . . .               --                       --
 Class B Voting Preferred Stock, Series A, 60,520
  shares authorized, none issued and outstanding               --                       --
 Common stock, par value $.001 per share,
  authorized 30,000,000 shares: issued 3,970,049
  shares at September 30, 1998 and 3,003,767 shares
  at December 31, 1997 . . . . . . . . . . . . .            3,970                    3,004
Additional paid-in capital . . . . . . . . . . .       44,290,458               42,971,820
Accumulated deficit. . . . . . . . . . . . . . .      (41,585,478)             (39,831,418)
                                                     -------------            ------------
                                                        2,708,950                3,143,406
Less treasury shares(3,095 at September 30, 
  1998), at cost . . . . . . . . . . . . . . . .          (10,395)                      --
                                                     -------------            ------------
      Total stockholders' equity . . . . . . . .        2,698,555                3,143,406
                                                     -------------            ------------
      Total liabilities and stockholders' equity     $  7,591,284             $ 10,629,502
                                                     -------------            ------------

<FN>
      Note:  The balance  sheet at December  31, 1997 has been  derived from the
      audited financial  statements at that date but does not include all of the
      information  and  footnotes  required  by  generally  accepted  accounting
      principles for complete financial statements.
</FN>
</TABLE>

            See notes to condensed consolidated financial statements.

                                   -3-
<PAGE>


        SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                        Three Months Ended                   Nine Months Ended
                                         September 30,                          September 30,
                                       1998            1997                1998             1997
                                                      (Note)              (Note)           (Note)

<S>                                  <C>           <C>                  <C>              <C>         
Net sales. . . . . . . . . . . .     $ 4,223,325   $ 4,032,609          $12,226,304      $ 12,127,172
Cost of goods sold . . . . . . .       1,103,873       951,371            2,807,174         2,730,740
                                     ------------  ------------         ------------     -------------
Gross profit. . . . . . . . . .        3,119,452     3,081,238            9,419,130         9,396,432

Selling, general and administrative
 expenses. . . . . . . . . . . .      (2,962,769)   (4,375,128)          (8,375,433)      (12,103,144)
Amortization of acquired software and
 goodwill and depreciation . . .        (575,988)     (847,847)          (1,942,837)       (2,537,384)
Product development. . . . . . .        (154,780)     (794,071)            (927,356)       (2,440,809)
Other income - net . . . . . . .          18,071        24,971               72,436           133,228
                                     ------------  ------------         ------------     -------------
Net loss . . . . . . . . . . . .     $  (556,014)  $(2,910,837)         $(1,754,060)     $ (7,551,677)
                                     ------------  ------------         ------------     -------------

Net loss per common share:
 Net loss per common share -
basic and diluted. . . . . . . .     $      (.14)  $    (1.08)          $      (.50)     $      (2.83)
                                     ------------  ------------         ------------     -------------
 Weighted average number of
    common shares outstanding -
    basic and diluted. . . . . .       3,940,357    2,683,475             3,513,780         2,670,543
                                     ------------  ------------         ------------     -------------

<FN>
Note:   Net  loss  per  common  share  and  weighted  average  number  of common
shares  outstanding for all periods  presented have been adjusted to reflect the
Company's one-for-three (1:3) reverse stock split made effective May 27, 1998.
</FN>
</TABLE>

            See notes to condensed consolidated financial statements.

                                   -4-
<PAGE>


         SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                      NINE MONTHS ENDED SEPTEMBER 30, 1998
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                               Additional                             Total
                                   Common Stock          Treasury Shares        Paid-In         Accumulated       Stockholders'
                                   $.001 Par Value          (At Cost)           Capital           Deficit            Equity
                                 Shares       Amount    Shares       Amount
                                         (Note)

<S>                             <C>          <C>         <C>         <C>       <C>             <C>                 <C> 
Balance at December 31, 1997 . .3,003,767    $ 3,004                           $42,971,820     $(39,831,418)       $ 3,143,406
Issuance of common stock
 in payment of liability
 in connection with business
 combination . . . . . . . . . .   10,616         11                                31,239                              31,250
Issuance of common stock
 in payment of liabilities
 for services in connection
 with business combinations. . .   27,299         27                                49,112                              49,139
Issuance of common stock in
 payment of liabilities for
 services. . . . . . . . . . . .   20,670         21                                36,697                              36,718
Issuance of common stock and
 warrants for services
 rendered. . . . . . . . . . . .  113,333        113                               164,137                             164,250
Sale of common stock and
 warrants. . . . . . . . . . . .  333,333        333                               499,667                             500,000
Sale of common stock in
 private placement - net . . . .  461,031        461                               537,786                             538,247
Acquisition of treasury
 shares. . . . . . . . . . . . .                         3,095       $(10,395)                                         (10,395)
Net loss . . . . . . . . . . . .                                                                 (1,754,060)        (1,754,060)
                                ----------   -------    ------       --------- ------------    -------------       ------------
Balance at September 30,
 1998 . . . . . . . . . . . . . 3,970,049    $ 3,970     3,095       $(10,395) $44,290,458     $(41,585,478)       $ 2,698,555
                                ----------   -------    ------       --------- ------------    -------------       ------------


<FN>
Note:   All  issuances  of  common stock through May 27, 1998 have been adjusted
to reflect the Company's  one-for-three (1:3) reverse stock split made effective
May 27, 1998.
</FN>
</TABLE>

            See notes to condensed consolidated financial statements.

                                   -5-
<PAGE>


         SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                Nine Months Ended September 30,
                                                      1998            1997

<S>                                                <C>              <C>
Operating activities
Net cash used in operations. . . . . . . . . . . . $(1,943,140)     $(3,014,633)
                                                   ------------     ------------
Investing activities
Purchase of property and equipment . . . . . . . .     (45,157)        (581,139)
                                                   ------------     ------------

Financing activities
Proceeds from sale of common stock . . . . . . . .   1,038,247               --
Acquisition of treasury shares . . . . . . . . . .     (10,395)              --
Proceeds from issuance of notes payable. . . . . .          --          104,239
Repayment of notes . . . . . . . . . . . . . . . .    (121,559)      (1,805,273)
                                                   ------------     ------------
                                                       906,293       (1,701,034)
                                                   ------------     ------------

Net (decrease) in cash and cash
 equivalents . . . . . . . . . . . . . . . . . . .  (1,082,004)      (5,296,806)
Cash and cash equivalents at beginning
 of period . . . . . . . . . . . . . . . . . . . .   2,586,753        6,483,454
                                                   ------------     ------------
Cash and cash equivalents at end
 of period . . . . . . . . . . . . . . . . . . . . $ 1,504,749      $ 1,186,648
                                                   ------------     ------------

Supplemental disclosure of non-cash financing and investing activities:

Common stock issued in payment of liabilities. . . $   107,107      $        --
                                                   ------------     ------------

Common stock issued for services . . . . . . . . . $   174,250      $        --
                                                   ------------     ------------
</TABLE>

            See notes to condensed consolidated financial statements.

                                   -6-
<PAGE>


         SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.   Basis of Presentation.

     The  accompanying   unaudited  condensed  financial  statements  have  been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-QSB and Item 310 of
Regulation  S-B.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been  included.  Operating  results for the three and nine month  periods  ended
September  30, 1998 are not  necessarily  indicative  of the results that may be
expected for the year ending December 31, 1998. For further  information,  refer
to the consolidated  financial  statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1997.


2.   Accounting Principles.

Recently Issued Accounting Pronouncements

     In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No.  130,  "Reporting  Comprehensive  Income"  ("SFAS  No.  130").  SFAS No. 130
establishes standards for reporting and displaying  comprehensive income and its
components in financial  statements.  SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997.  Reclassification of financial statements for
earlier periods provided for comparative  purposes is required.  The adoption of
SFAS  No.  130  has had no  impact  on the  Company's  consolidated  results  of
operations, financial position or cash flows. The Company presently has no items
of other comprehensive income.

     In June 1997, the FASB issued SFAS No. 131,  "Disclosures About Segments of
an  Enterprise  and  Related   Information"  ("SFAS  No.  131").  SFAS  No.  131
establishes  standards  for the way  that  public  business  enterprises  report
information about operating segments in annual financial statements and requires
that those enterprises  report selected  information about operating segments in
interim financial reports issued to stockholders.  It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers.  SFAS No. 131 is effective for financial  statements for fiscal years
beginning  after December 15, 1997.  Financial  statement  disclosures for prior
periods are required to be restated. The Company is in the process of evaluating
the disclosure requirements. The adoption of SFAS No. 131 is expected to have no
impact on the Company's  consolidated results of operations,  financial position
or cash flows.


3.   Loss Per Share.

     Basic loss per share is computed based upon the weighted  average number of
common  shares  outstanding  during each  period  presented.  Stock  options and
warrants did not have an effect on the computation of diluted earnings per share
in the three and nine month periods ended September 30, 1998 and 1997 since they
were anti-dilutive.


4.   Inventories.

     Inventories consist principally of finished goods.

                                   -7-

<PAGE>

5.   Stockholders' Equity.

     In  March  1998,   the  Company   authorized   100,000   shares  of  Junior
Participating  Preferred Stock,  Series A, par value $.001 per share. The Junior
Preferred Stock has preferential  voting,  dividend and liquidation  rights over
the  Common  Stock.  On  March  31,  1998,  the  Company   declared  a  dividend
distribution,  payable  April 30, 1998, of one Preferred  Share  Purchase  Right
("Right") on each share of Common Stock. Each Right, when exercisable,  entitles
the registered holder thereof to purchase from the Company one one-thousandth of
a share of Junior Preferred Stock at a price of $1.00 per one  one-thousandth of
a share (subject to adjustment).  The one  one-thousandth of a share is intended
to be the  functional  equivalent of one share of the Common  Stock.  The Rights
will not be  exercisable  or  transferable  apart from the Common Stock until an
Acquiring  Person,  as defined in the  Rights  Agreement,  dated as of March 31,
1998,  between the Company and American Stock Transfer & Trust Company,  without
the prior consent of the Company's  Board of Directors,  acquires 20% or more of
the voting  power of the Common  Stock or  announces  a tender  offer that would
result in 20% ownership.  The Company is entitled to redeem the Rights, at $.001
per Right,  any time before a 20%  position has been  acquired or in  connection
with certain transactions  thereafter  announced.  Under certain  circumstances,
including the acquisition of 20% of the Common Stock,  each Right not owned by a
potential  Acquiring Person will entitle its holder to purchase,  at the Right's
then-current  exercise  price,  shares of Common  Stock having a market value of
twice the  Right's  exercise  price.  Holders of a Right will be entitled to buy
stock of an Acquiring  Person at a similar discount if, after the acquisition of
20% or more of the Company's  voting power,  the Company is involved in a merger
or other  business  combination  transaction  with  another  person in which its
common shares are changed or converted,  or the Company sells 50% or more of its
assets or earning power to another person. The Rights expire on April 20, 2008.

     On May 26,  1998,  the  stockholders  of the  Company  granted the Board of
Directors  of the  Company  authority  to amend  the  Company's  Certificate  of
Incorporation to authorize either a one-for-two  (1:2),  one-for-three  (1:3) or
one- for-five  (1:5) reverse  stock split of the Common  Stock.  Following  such
stockholder action, the Company's Board of Directors  authorized a one-for-three
(1:3) reverse  stock split (the  "Reverse  Stock Split") of the Common Stock and
directed that a Certificate of Amendment of the Certificate of  Incorporation of
the Company (the  "Certificate  of  Amendment")  effectuating  the Reverse Stock
Split  be filed  with the  Delaware  Secretary  of  State.  The  Certificate  of
Amendment  was filed with the Delaware  Secretary  of State on May 27, 1998.  In
accordance  with the  Certificate  of Amendment,  the Reverse Stock Split became
effective as of the close of business on May 27, 1998.  All  issuances of Common
Stock  through  May 27,  1998  have  been  adjusted  to  reflect  the  Company's
one-for-three (1:3) reverse stock split made effective May 27, 1998.


6.   Pending Legal Matters

     The  action  ,  titled  Howard  Milstein  and  Ronald  Altman  v.  Software
Publishing Corporation Holdings,  Inc., Mark E. Leininger and Barry A. Cinnamon,
commenced  by certain  purchasers  of Common  Stock  seeking  recission of their
aggregate  $919,495  investment in the Company and certain other relief,  and in
which the Company has made certain counterclaims, is in the discovery stage.

                                   -8-
<PAGE>

Item 2.   Management's Discussion and Analysis.

     Statements  contained in this Quarterly  Report on Form 10-QSB that are not
based upon historical fact are  "forward-looking  statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking statements included
in this Form 10-QSB  involve known and unknown  risks,  uncertainties  and other
factors which could cause actual results,  performance  (financial or operating)
or achievements  expressed or implied by such forward looking  statements not to
occur or be realized.  Such forward looking statements  generally are based upon
the best  estimates  by Software  Publishing  Corporation  Holdings,  Inc.  (the
"Company") of future  results,  performance or  achievement,  based upon current
conditions and the most recent results of operations. Forward-looking statements
may be  identified  by the use of  forward-looking  terminology  such as  "may,"
"will," "expect," "believe,"  "estimate,"  "anticipate,"  "continue," or similar
terms, variations of those terms or the negative of those terms.

     The  Company  acquired  three  operating  software  companies  in 1996  and
conducted a  restructuring  of its  management  and  operations in late 1997 and
early 1998 with the expectation that such  transactions and  restructuring  will
result in  long-term  strategic  benefits.  While the Company has  substantially
implemented its integration and restructuring  plans,  there can be no assurance
that  the  expected  long-term   strategic  benefits  of  the  acquisitions  and
restructuring  will be realized.  Additional  potential risks and  uncertainties
include,  among other things,  such factors as the overall level of business and
consumer  spending for computer  software,  the market  acceptance and amount of
sales of the  Company's  products,  the extent  that the  Company's  direct mail
programs  achieve  satisfactory  response rates, the efficiency of the Company's
telemarketing  operations,  the  competitive  environment  within  the  computer
software and direct mail industries,  the Company's  ability to raise additional
capital,  the ability of the Company to continue to implement its reorganization
plan   efficiently  and  achieve  the   anticipated   results   therefrom,   the
cost-effectiveness of the Company's product development  activities,  the extent
to which the  Company  is  successful  in  developing,  acquiring  or  licensing
successful products,  and other factors and information  disclosed and discussed
in this "Item 2. Management's  Discussion and Analysis or Plan of Operation" and
in other  sections  of this Form  10-QSB.  Readers  of this Form 10- QSB  should
carefully consider such risks, uncertainties and other information,  disclosures
and  discussions  which  contain  cautionary  statements  identifying  important
factors that could cause actual results to differ materially from those provided
in the forward looking statements.

General

     The  Company is an  international  developer,  publisher  and  supplier  of
proprietary computer software applications primarily targeted towards the visual
communications market segment through desktop publishing, presentation graphics,
graphics/drawing  and business  productivity  software for the corporate,  small
office/home office ("SOHO") and consumer markets. The Company's products produce
documents through its easy-to-use desktop  publishing,  drawing and presentation
graphics  applications,  and also  improve  the  graphical  appeal  and  overall
effectiveness  of documents  produced by either the Company's or third  parties'
desktop publishing, presentation graphics, web page, e-mail, word processing and
other similar  applications.  The Company  currently  offers eighteen  products,
primarily  Serif  PagePlus(TM)  and  Harvard  Graphics(R),  that  operate on the
Windows 98, Windows 95, Windows NT(R) , Windows(R) 3.1 and DOS operating systems
for IBM  personal  computers  and  compatibles.  The Company has  established  a
multi-channel distribution system utilizing direct mail, telemarketing,  retail,
corporate and OEM sales  channels and also  disseminates  its software  programs
over the Internet.  The Company currently  derives  substantially all of its net
sales  from  products  sold  directly  to  end-users  by  its  direct  mail  and
telemarketing  centers, and to retailers,  distributors and corporate purchasers
by  its  internal  corporate  and  retail  sales  force  and  independent  sales
representatives.  In the third  quarter  of 1998,  the  Company  also  commenced
selling certain computer hardware and digital imaging equipment, manufactured by
third parties, through the Company's direct mail sales channel.

     In July 1996, the Company  acquired  Serif Inc. and Serif (Europe)  Limited
(collectively,   the  "Serif  companies"),   which  significantly  expanded  the
Company's  product line to include desktop  publishing titles Serif PagePlus and
Serif DrawPlus,  among others. In December 1996, the Company acquired all of the
outstanding  capital  stock of Software  Publishing  Corporation  ("SPC"),  as a
result of which the  Company's  product line  expanded  further to include SPC's
presentation  graphics and other visual communications and business productivity

                                   -9-
<PAGE>

software products.  The Company continues to operate the Serif companies and SPC
as  wholly-owned  subsidiaries.  Since January 1998,  the operations of SPC have
been significantly reduced.

     North America and  international net revenues for the Company's three month
and nine month periods ended September 30, 1998 and 1997, were as follows:

<TABLE>
<CAPTION>
                        Three Months Ended September 30,            Nine Months Ended September 30,
                             1998             1997                        1998             1997
                      -----------------   -----------------       -----------------  ------------------
                            $        %         $         %            $         %       $          %
                      ----------  -----   ----------  -----       ----------- -----  -----------  -----
<S>                   <C>          <C>    <C>          <C>        <C>          <C>   <C>           <C> 
North America . .     $2,013,761   47.7   $3,160,929   78.4       $ 5,844,355  47.8  $ 6,935,474   57.2
International . .      2,209,564   52.3      871,680   21.6         6,381,949  52.2    5,191,698   42.8
                      ----------  -----   ----------  -----       ----------- -----  -----------  -----
Total . . . . . .     $4,223,325  100.0   $4,032,609  100.0       $12,226,304 100.0  $12,127,172  100.0
</TABLE>

     The Company  believes  that end users are  continuing  to migrate  from the
Windows  3.1 and  Windows 95 to the  Windows NT and  Windows  98  platforms  and
potentially may migrate to Internet  computing.  The Company  expects  increased
competition,  including  price  competition,  in the  Windows  3.1,  Windows 95,
Windows  98 and  Windows  NT markets  in the  future.  Several of the  Company's
competitors  have  introduced  suites of products  which  include  products that
directly  compete with the Company's  products.  The Company believes that these
offerings of product suites  adversely  affect net revenues and will continue to
adversely affect sales of the Company's products in the future as the individual
products   within   the   suites   continue   to  gain   increased   levels   of
inter-operability  and  functionality.  The Company  currently  does not offer a
suite of general purpose office products;  however, the Company currently offers
one product  suite,  Serif  Publishing  Power  Suite,  as well as products  that
complement  competitive  suite products.  The Company  believes that in order to
increase  its net  revenues,  it must  continue  to develop  and  introduce  new
technologies  and  products  internally,   obtain  additional  technologies  and
products  through  strategic   alliances  and  acquisitions  and  introduce  new
marketing  strategies.  Any  inability or delay in executing  these  strategies,
difficulties  encountered in introducing new products or marketing programs,  or
failures of the Company's  current and future  products to compete  successfully
with products offered by other vendors, could adversely affect the Company's net
revenues  and  profitability.  The  Company's  growth  is  expected  to  require
increases in the number of the Company's employees, expenditures for new product
development,  the acquisition of product rights,  sales and marketing  expenses,
and general and administrative expenses.

Results of Operations

     Three Month Period  Ended  September  30, 1998  Compared to the Three Month
Period Ended September 30, 1997

     Net  Sales.  Net  sales  increased  approximately  $190,000,  or  5%,  from
$4,033,000  in the three month period ended  September 30, 1997 to $4,223,000 in
the three month period ended  September  30,  1998,  principally  as a result of
increased  international  software  sales as well as the  inclusion  of  digital
imaging equipment in the Company's product  offerings.  The Company provided for
returns in the three month period ended September 30, 1998 at approximately  10%
of gross sales as compared to 11% in the three month period ended  September 30,
1997 due to a shift in product sales from retail sales to direct channels, which
historically have exhibited lower returns than the retail sales channels.  As at
September 30, 1998,  the Company had  approximately  $173,000 in confirmed  back
log.

     Cost of Goods Sold. Cost of goods sold increased approximately $153,000, or
16%,  from  $951,000  in the three  month  period  ended  September  30, 1997 to
$1,104,000 in the three month period ended  September  30, 1998,  primarily as a
result of an increase in sales of digital  imaging  equipment,  which  generally
have lower gross margins than  software.  As a percentage of net sales,  cost of
goods sold  increased  from  approximately  24% of net sales in the three  month
period  ended  September  30, 1997 to 26% of net sales in the three month period
ended  September  30,  1998.  Cost of goods sold  consists  primarily of product
costs,  freight  charges,  royalties  and inventory  allowances  for damaged and
obsolete products. Product costs consist of the costs to purchase the underlying
materials  and print both boxes and  manuals,  media costs  (CD-ROM's  and other
media) and assembly.

     The  Company's  gross  margins  and  operating  income may be  affected  in
particular periods by the timing of product  introductions,  promotional pricing
and rebate offers, as well as by return  privileges and marketing  promotions in

                                   -10-
<PAGE>

connection with new product  introductions  and upgrades.  These  promotions may
have a negative  influence on average  selling prices and gross  margins.  Gross
margins  have  also  been,  and  may  continue  to  be,  adversely  affected  by
competitive pricing strategies in the industry as a whole, including competitive
upgrade pricing, the OEM business and alternative licensing arrangements.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative ("SG&A") expenses decreased by approximately  $1,412,000, or 32%,
from $4,375,000 in the three month period ended September 30, 1997 to $2,963,000
in the three month period ended September 30, 1998, primarily as a result of the
implementation of the Company's  restructuring  program,  which included closing
the Company's San Jose, California office. Total selling expenses (not including
salaries) decreased approximately $761,000, or 35%, from $2,155,000 in the three
month period ended June 30, 1997 to  $1,394,000  in the three month period ended
September  30,  1998,  primarily  as a  result  of a  decrease  in the  level of
advertising  and sales  promotion  activities  within  the  retail  distribution
channels.

     The Company establishes  several of its marketing  expenditure levels based
on expected net revenues.  If orders and  shipments do not occur when  expected,
expenditure  levels  could be  disproportionately  high  compared to  recognized
revenues for the reported  period and the Company's  operating  results could be
adversely affected.  The Company  periodically  reviews and adjusts its variable
expenditure  levels based on actual sales volumes.  In the future, the Company's
net  revenues and  operating  results  could be adversely  affected by these and
other factors, such as delays in new product introductions,  the availability of
suitable  mailing  lists  and the  successful  utilization  thereof,  the mix of
product sales or distribution  channels and customer choices regarding operating
systems.

     Amortization   of  Acquired   Software  and   Goodwill  and   Depreciation.
Depreciation and amortization  decreased to approximately  $576,000 in the three
month period ended September 30, 1998 from approximately  $848,000 for the three
month period ended September 30, 1997 due to the elimination of certain goodwill
in 1997.

     Product Development.  Product development expenses decreased  approximately
$639,000,  or 81%, from  $794,000 in the three month period ended  September 30,
1997 to $155,000 in the three month period ended September 30, 1998, principally
as a result of the reduction in product  development staff located in California
and the  Company's  shift  in  focus  toward  acquiring  or  licensing  products
developed by third parties.  As a percentage of net sales, the Company's product
development  costs  were  approximately  4% in  the  three  month  period  ended
September 30, 1998 as compared to 20% in the three month period ended  September
30, 1997. The Company expects that development  expenses will increase in dollar
amount  in  the  future  to the  extent  the  Company  expands  its  development
activities,  although the  Company's  long-term  goal is to continue to maintain
product  development costs as a low percentage of sales. All product development
costs have been expensed in the period incurred.

     Other Income.  Other income  decreased  from  approximately  $25,000 in the
three month period ended September 30, 1997 to $18,000 in the three month period
ended  September 30, 1998,  primarily as a result of lower average cash balances
during  the 1998  period,  which  was  partially  offset by lower  average  debt
balances in the 1998 period.

Nine  Month  Period  Ended  September  30,  1998  Compared  to  the  Nine  Month
Period Ended September 30, 1997

     Net  Sales.  Net  sales  increased   approximately  $99,000,  or  1%,  from
$12,127,000 in the nine month period ended  September 30, 1997 to $12,226,000 in
the nine month period ended  September 30, 1998,  primarily as a result of sales
of digital imaging  equipment.  The Company  provided,  in the nine month period
ended  September  30, 1998,  for returns at  approximately  8% of gross sales as
compared to 14% in the nine month period  ended  September  30,  1997,  due to a
shift in product sales from  primarily  retail sales to direct  channels,  which
historically have exhibited fewer returns than the retail sales channels.

     Cost of Goods Sold. Cost of goods sold increased  approximately $76,000, or
3%,  from  $2,731,000  for the nine month  period  ended  September  30, 1997 to
$2,807,000  in the nine month period  ended  September  30, 1998  primarily as a
result of an increase in sales of digital  imaging  equipment,  which  generally
have lower gross margins than  software.  As a percentage of net sales,  cost of
goods sold  remained  at  approximately  23% for each of the nine month  periods
ended September 30, 1997 and 1998.

                                   -11-
<PAGE>

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses  decreased by  approximately  $3,728,000,  or 31%, from
$12,103,000  in the nine month period ended  September 30, 1997 to $8,375,000 in
the nine month  period  ended  September  30,  1998,  primarily as a result of a
decrease  in  advertising  expenses  and  the  implementation  of the  Company's
restructuring,  which  resulted  in  reduced  personnel  costs of  approximately
$1,050,000 and decreases in rental and other occupancy  costs,  partially offset
by an  increase  in  professional  fees.  General  and  administrative  expenses
decreased  approximately  $362,000,  or 20%,  from  $1,801,000 in the nine month
period ended  September  30, 1997 to  $1,439,000  in the nine month period ended
September 30, 1998.  Total selling expenses (not including  salaries)  decreased
approximately $1,766,000, or 31%, from $5,766,000 in the nine month period ended
September 30, 1997 to  $4,000,000  in the nine month period ended  September 30,
1998, primarily as a result of the Company's restructuring program.

     Amortization  of Acquired  Software and Goodwill and  Depreciation.  In the
nine month period ended September 30, 1997, the Company  recorded  approximately
$2,537,000 in  amortization of acquired  software and goodwill and  depreciation
compared to  $1,943,000  incurred in the nine month period ended  September  30,
1998.  This  decrease  was a result  primarily  of the  elimination  of  certain
goodwill in 1997.

     Product Development.  Product development expenses decreased  approximately
$1,514,000, or 62%, from $2,441,000 in the nine month period ended September 30,
1997 to $927,000 in the nine month period ended September 30, 1998,  principally
as a result of the  Company's  restructuring  program.  As a  percentage  of net
sales, the Company's product  development costs decreased to approximately 8% in
the nine month  period ended  September  30, 1998 as compared to 20% in the nine
month period ended  September  30, 1997.  The Company  expects that  development
expenses  will increase in dollar amount in the future to the extent the Company
expands its development activities,  although the Company's long-term goal is to
continue to maintain product development costs as a low percentage of sales. All
development costs have been expensed in the period incurred.

     Other Income.  Other income decreased  approximately  $57,000, or 43%, from
$133,000 in the nine month  period  ended  September  30, 1997 to $72,000 in the
nine month  period  ended  September  30,  1998,  primarily as a result of lower
average cash balances in the 1998 period,  which was  partially  offset by lower
average debt balances in the 1998 period.

Liquidity and Capital Resources

     During the nine-month  period ended  September 30, 1998, the Company's cash
and cash equivalents  decreased by  approximately  $1,082,000 from $2,587,000 at
December 31, 1997 to $1,505,000 at September 30, 1998,  primarily as a result of
using  $1,943,000  in  operations,  $122,000 to pay certain  debt and $45,000 to
purchase  property  and  equipment,  partially  offset  by the  sale of  Company
securities  in  April  and  May  1998,  with  net  proceeds  to the  Company  of
$1,038,000.  The Company had a working capital deficit of approximately $799,000
at September  30, 1998, a reduction of  $1,521,000  from the  Company's  working
capital  deficit  at  December  31,  1997,  which  resulted  primarily  from the
Company's sale of securities referred to above and reductions in liabilities.

     The Company has a letter of credit facility of $300,000 relating to certain
lease  obligations  collateralized by $300,000 of restricted cash and has a debt
facility of approximately  $100,000 with its primary bank in the United Kingdom,
of which  approximately  $100,000 was  outstanding  at September  30, 1998.  The
Company intends to continue to pursue a possible  offering of its equity or debt
securities;  however,  there  can be no  assurance  that  the  Company  will  be
successful  in  completing  such an  offering.  The  Company  believes  that its
existing cash and cash equivalents and cash generated from operations  should be
sufficient to meet its currently  anticipated  liquidity and capital expenditure
requirements  for  approximately  the  next  three  months.  Proceeds  from  the
anticipated  sale of the Company's  securities  would be expected to provide the
Company with additional  capability to meet the Company's  anticipated liquidity
requirements.  There can be no  assurance,  however,  that the  Company  will be
successful  in  attaining  its sales  goals,  or be  successful  in selling  its
securities,  nor that attaining such goals or selling such  securities will have
the desired effect on the Company's cash resources.

     The Company's  operating  activities for the first nine months of 1998 used
cash of  approximately  $1,943,000  primarily  related to costs  associated with
sales  and  marketing  of  the  Company's  products,  an  increase  in  accounts

                                   -12-
<PAGE>

receivable and a reduction of accrued expenses.  The Company intends to continue
to utilize its working  capital in 1998 for product  development,  marketing and
advertising,  to finance the higher level of inventory  and accounts  receivable
necessary  to  support  an  anticipated  increase  in  sales,  for  acquisition,
licensing or entering into joint ventures for additional products and technology
and for internal and external software development.  However, the Company's cash
requirements  may change  depending upon numerous  factors,  including,  without
limitation,  the need to finance direct marketing  programs and the licensing or
acquisition of third party software, as well as increased inventory and accounts
receivable  arising  from the sale and  shipment  of new  products.  The Company
intends to continue to seek additional working capital funding to expand certain
direct  marketing  programs,  including  its Go Digital  Photo Pak  package of a
digital camera and digital imaging software.

     In the nine-month period ended September 30, 1998,  approximately  52.2% of
the Company's total sales were generated outside the United States.  The Company
expects this  pattern to continue as it  continues  to expand its foreign  sales
operations.  The  Company's  exposure  to foreign  currency  gains and losses is
partially  mitigated as the Company incurs  operating  expenses in the principal
foreign  currency in which it invoices  foreign  customers.  As of September 30,
1998 the Company had no foreign exchange  contracts  outstanding.  The Company's
foreign  exchange  gains and losses may be expected to fluctuate  from period to
period depending upon the movement in exchange rates. Foreign exchange gains and
losses in 1998 have been immaterial.

Seasonality

     The computer  software  market is  characterized  by  significant  seasonal
swings in demand,  which  typically  peak in the fourth quarter of each calendar
year.  This  seasonal  pattern  is due  primarily  to the  increased  demand for
software  during the  year-end  holiday  buying  season and  reduced  retail and
corporate  demand for  business  software  during the  summer  vacation  period,
particularly in Europe.  The Company expects its net sales and operating results
to  continue  to reflect  this  seasonality.  The  Company's  revenues  may also
experience  substantial  variations as a result of a number of factors,  such as
consumer and  business  preferences  and  introduction  of  competing  titles by
competitors,  as  well as  limited  time  promotional  offers.  There  can be no
assurance that the Company will achieve  consistent growth or profitability on a
quarterly or annual basis.

Inflation

     The Company believes that inflation has generally not had a material impact
on its operations.

Year 2000 Compliance Issues

     Many currently  installed  computer systems and software products are coded
to accept only two-digit entries in the date code field.  These date code fields
will need to accept four digit entries to distinguish twenty-first century dates
from twentieth  century  dates.  As a result,  in less than two years,  computer
systems and software  used by many  companies  may need to be upgraded to comply
with  such  "Year  2000"  requirements.   The  Company  is  in  the  process  of
implementing a review of issues  related to the Company's Year 2000  compliance.
This review is intended  to  determine  the effect of the turn of the century on
the  operability of the Company's  products,  internal and external  information
technology  ("IT") systems,  non-IT systems the Company  utilizes to conduct its
business  and  other  internal  and  external  processes  which may  impact  the
Company's  operations.  In  connection  with this  evaluation,  the Company also
intends to review the Company's  vendors and suppliers for Year 2000  compliance
and to effect changes where necessary.

     The Company  believes  that this review  process will be conducted in three
phases.  The first  phase is  anticipated  to  encompass  a review of all of the
Company's  products,  internal  and external  systems/processes  and vendors and
suppliers for Year 2000 compliance.  The second phase is expected to correct all
items  identified  as  non-compliant  and  essential  to the  operations  of the
Company.  The third phase is  contemplated  to be a second review to ensure year
2000 compliance and interoperability of all systems/processes.

     The Company  anticipates  conducting its review with its current  resources
and expects that it has sufficient resources to complete the review process in a
timely manner. The Company has not determined, at this time, what total costs it

                                   -13-
<PAGE>

will  incur to  conduct  the  review  process  and to  implement  any  necessary
corrections.  The Company has  identified  one IT system which it believes  will
need to be replaced at a cost of approximately $25,000.

     The Company produces computer  application software and has determined that
the  products  it has  developed  within  the last  several  years are Year 2000
compliant. The Company is currently reviewing products sold by the Company prior
to 1994 for Year 2000 compliance.  The Company currently believes that it has no
liability concerning any of its products with respect to Year 2000 requirements.

     The Company does not know, at this time, of any product, process or system,
which, if found to be non-Year 2000 compliant, would have any significant impact
on the Company's business, financial condition or results of operations.

                                   -14-
<PAGE>


                           PART II - OTHER INFORMATION


Item 1.   Legal Proceedings.

     Reference is hereby made to the Company's  Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1997,  Item 3 (pages 11-12),  filed April 15,
1998, Quarterly Report on Form 10-QSB for the quarter ended March 31, 1998, Item
1 of Part II (page 13), filed May 13, 1998, and Quarterly  Report on Form 10-QSB
for the quarter ended June 30, 1998,  Item 1 of Part II (page 14),  filed August
14, 1998 (Commission File No.: 1-14076),  and to the references  therein,  for a
discussion of all material pending legal proceedings to which the Company or any
of its subsidiaries are parties.

     The action titled Howard Milstein and Ronald Altman v. Software  Publishing
Corporation Holdings, Inc., Mark E. Leininger and Barry A. Cinnamon is currently
in the discovery stage.


Item 2.   Changes in Securities and Use of Proceeds.

     In August 1998,  the Company  issued  60,000  shares (the "P-B  Shares") of
Common Stock to Parker Bromley Ltd. in payment for consulting services valued at
$64,000.  The issuance of the P-B Shares was a private  transaction  exempt from
registration under Section 4(2) of the Securities Act.

     Effective  August 1998, the Company  acquired an aggregate  3,095 shares of
Common Stock, of which 1,237 shares were held by a former employee of one of the
Company's  subsidiaries and 1,858 shares were held by a trust for the benefit of
certain of the employees of such  subsidiary.  The Company is holding such 3,095
shares in its treasury.


Item 3.   Defaults Upon Senior Securities.

          None.


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

          None.


Item 5.   Other Information.

     In October  1998,  a Nasdaq  Listing  Qualifications  Panel  (the  "Panel")
determined to continue the listing of the  Company's  Common Stock on The Nasdaq
SmallCap Market.  The Company is in compliance with the Nasdaq SmallCap Market's
net tangible  assets/market  capitalization/net  income requirements.  The Panel
determined  to  continue  the  Company's  Common  Stock's  listing on the Nasdaq
SmallCap  Market subject to the condition that the Company file a current report
on Form 8-K with the Securities and Exchange  Commission on or prior to December
15, 1998,  indicating net tangible assets (including acquired software costs) of
not less than  $3,500,000 as of October 31, 1998,  adjusted on a pro forma basis
for any  significant  events or  transactions  occurring on or before the filing
date. Such significant events would include  additional equity financing,  which
the Company is  pursuing.  The Company had  $2,486,205  of net  tangible  assets
(including acquired software costs) as of September 30, 1998. The Panel has also
imposed on the  Company  the  requirement  that the bid price for the  Company's
Common Stock meet or exceed $1.00 per share on or prior to January 21, 1999, and
thereafter  have a closing bid price of $1.00 or more per share for a minimum of
ten  consecutive  trading days.  Until such time as Nasdaq  determines  that the
Company meets such Panel's net tangible  asset and bid price  requirements,  the
Nasdaq symbol for the Company's Common Stock will be SPCOC.

                                   -15-
<PAGE>

     In the  event  that the  Company  is  deemed to have met the terms of these
conditions,  as well as all requirements for continued listing, its Common Stock
shall continue to be listed on The Nasdaq SmallCap Market.  The Company believes
that it can meet these  conditions;  however,  there can be no assurance that it
will do so. If at some future date, the Company's  securities should cease to be
listed on The Nasdaq SmallCap Market,  they may continue to be listed on the OTC
Bulletin  Board.  Any  delisting of the Company's  securities  from Nasdaq could
cause a decline in the market value of the  Company's  securities  and adversely
affect the liquidity of the Company's securities.

     Effective July 17, 1998, the Company repriced to $1.375 per share of Common
Stock,  75% of all options  granted under the Company's  various stock incentive
plans to current employees, officers and directors of the Company.

     In October 1998,  Robert Gordon resigned as the  Vice-President - Marketing
and Sales of the Company.


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

     (a)  Exhibits.

     Set forth below are all exhibits to this Quarterly Report on Form 10-QSB.

Exhibit
Number    Description

27        Financial Data Schedule.


          (b) Reports on Form 8-K.

          None.

                                   -16-
<PAGE>


                                   SIGNATURES

     In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                           SOFTWARE PUBLISHING
                                           CORPORATION HOLDINGS, INC.



Dated: November 13, 1998                By:/s/ Mark E. Leininger
                                           Mark E. Leininger
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)


Dated: November 13, 1998                By:/s/ Kevin D. Sullivan
                                           Kevin D. Sullivan
                                           Vice President - Finance, Treasurer
                                           and Chief Financial Officer
                                           (Principal Financial Officer)

                                   -17-
<PAGE>


                                  EXHIBIT INDEX

Exhibit
Number    Description

27        Financial Data Schedule.

                                   -18-