UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 ---------------


                                    FORM 10-Q

(Mark One)

X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
For the quarterly period ended      June 30, 1998
                               --------------------------

                                       OR
    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 000-22327


                             PSW TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)


       Delaware                                         74-2796054
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

6300 Bridgepoint Parkway, Building 3, Suite 200, Austin Texas           78730
(Address of principal executive offices)                              (Zip Code)

Registrant's telephone number, including area code            (512) 343-6666
                                                   -------------------------



         Indicate  by check x whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes _x No __________


         As of July 31, 1998, the Registrant had outstanding 9,145,561 shares of
Common Stock, $.01 par value.


<PAGE>


                             PSW TECHNOLOGIES, INC.

                        Index to June 30, 1998 Form 10-Q



<TABLE>
<CAPTION>
                                                                                                               Page
                         Part I -- Financial Information

<S>         <C>                                                                                                 <C>
Item 1.     Financial Statements..................................................................................3

            Condensed Balance Sheets -- June 30, 1998 and December 31, 1997.......................................3

            Condensed Statements of Operations -- Three Months and Six Months Ended
            June 30, 1998 and 1997................................................................................4

            Condensed Statements of Cash Flows -- Six Months Ended June 30,
            1998 and 1997.........................................................................................5

            Notes to Condensed Financial Statements...............................................................6

Item 2.     Management's Discussion and Analysis of
            Financial Condition and Results of Operations.........................................................9

                          Part II -- Other Information

Item 4.     Submission of Matters to a Vote of Security Holders..................................................17

Item 5.     Other Information....................................................................................18

Item 6.     Exhibits and Reports on Form 8-K.....................................................................18

            Signatures...........................................................................................19


</TABLE>

                                       2
<PAGE>


                         Part 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

                             PSW Technologies, Inc.
                            Condensed Balance Sheets
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                    June 30,
                                                                      1998            December 31,
                                                                  (Unaudited)             1997

<S>                                                              <C>                 <C>    
Assets
Current assets:
   Cash                                                           $     1,321         $     835
   Short-term investments                                              20,958            22,470
   Accounts receivable, net of allowance for doubtful
      accounts of  $165 at June 30, 1998 and
      December 31, 1997                                                 6,702             7,429
   Unbilled revenue under customer contracts                              864               418
   Prepaid expenses and other current assets                              982               483
                                                                   ----------        ----------    
Total current assets                                                   30,827            31,635
Other assets                                                            4,306             3,785
                                                                   ----------        ----------  
Total assets                                                       $   35,133        $   35,420
                                                                   ==========        ==========


Liabilities and stockholders' equity 
Current liabilities:
   Trade payables                                                         906               532
   Accrued expenses and other current liabilities                       2,223             3,029
                                                                  -----------        ----------
Total current liabilities                                               3,129             3,561

Stockholders' equity:
  Preferred stock, par value $.01 per share, 1,000,000
     shares authorized and none issued and outstanding                      -                 -
  Common stock, par value $.01 per share, 34,000,000  
     shares authorized, 9,079,800 and 8,960,935 shares
     issued and outstanding at June 30, 1998 and
     December 31, 1997, respectively                                       91                90
  Additional paid-in capital                                           29,931            29,484
  Deferred compensation                                                  (161)             (243)
  Accumulated other comprehensive income                                   10               (27)
  Retained earnings                                                     2,133             2,555
                                                                   ----------       -----------
Total stockholders' equity                                             32,004            31,859
                                                                   ----------       -----------

Total liabilities and stockholders' equity                         $   35,133        $   35,420
                                                                   ==========        ==========
</TABLE>

                             See accompanying notes.


                                       3
<PAGE>



                             PSW Technologies, Inc.
                       Condensed Statements of Operations
                      (in thousands, except per share data)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                         Three Months Ended           Six Months Ended
                                                              June 30,                    June 30,
                                                     --------------------------- ---------------------------
                                                         1998           1997          1998         1997
                                                         ----           ----          ----         ----

<S>                                                      <C>          <C>            <C>          <C>     
Revenue                                                  $ 9,867      $ 10,702       $ 19,625     $ 21,009
Operating expenses:
   Technical staff                                         5,523         5,450         11,326       10,734
   Selling and administrative staff                        2,759         2,088          5,308        3,974
   Other expenses                                          1,980         1,918          3,906        3,879
   Special compensation expense                               38            69             82          188
                                                      ----------    ----------     ----------   ----------
Total operating expenses                                  10,300         9,525         20,622       18,775
                                                      ----------    ----------     ----------   ----------

Income (loss) from operations                               (433)        1,177           (997)       2,234

Interest income (expense), net                               223           (14)           475         (103)
                                                      ----------   -----------     ----------   ----------
Income (loss) before provision (benefit) for
   income taxes                                             (210)        1,163           (522)       2,131
                                                      ----------   -----------     ----------   ----------

Provision (benefit) for income taxes:
Nonrecurring charge for termination of
  Subchapter S election                                        -         1,200              -        1,200
C Corporation                                                              100           (100)         100
                                                     -----------    ----------     ----------   ----------
                                                               -
Total provision (benefit) for income taxes                               1,300           (100)       1,300
                                                     -----------    ----------     ----------    ---------
                                                               -

Net income (loss)                                     $    (210)    $     (137)   $     (422)    $     831
                                                      ==========    ==========    ===========    =========

Basic earnings (loss) per share                      $    (0.02)                   $   (0.05)
                                                     ===========                  ===========

Diluted earnings (loss) per share                    $    (0.02)                   $   (0.05)
                                                     ===========                  ===========

Pro forma information:
Historical income before provision for
   income taxes                                                     $    1,163                  $    2,131
Pro forma provision for income taxes                                       442                         810
                                                                     ---------                  ----------

Pro forma net income                                                $      721                  $    1,321
                                                                     =========                  ==========

Pro forma basic earnings per share                                  $     0.12                  $     0.22
                                                                     =========                  ==========

Pro forma diluted earnings per share                                $     0.10                  $     0.19
                                                                     =========                  ==========

Shares used in basic earnings (loss) per share
   calculation                                             9,057         6,221          9,023        5,884
                                                       =========     =========      =========   ==========

Shares used in diluted earnings (loss) per share
   Calculation                                             9,057         7,290          9,023        7,015
                                                       =========     =========      =========   ==========
</TABLE>

                             See accompanying notes.


                                       4
<PAGE>



                             PSW Technologies, Inc.
                       Condensed Statements of Cash Flows
                                 (in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                  Six Months
                                                                                Ended June 30,
                                                                     --------------------------------------
                                                                           1998              1997
                                                                           ----              ----
<S>                                                                     <C>                <C>
Operating activities
Net income                                                              $    (422)         $     831
Adjustments to reconcile net income to net cash provided by
   (used in) operating activities:
     Special compensation                                                      82                188
     Depreciation and amortization                                            491                363
     Bad debt expense                                                          20                 30
     Changes in operating assets and liabilities:
        Accounts receivable                                                   707               (560)
        Due to/from related party                                               -               (258)
        Unbilled revenue under customer contracts                            (446)                48
        Prepaid expenses and other current assets                            (499)               (61)
        Accounts payable and accrued expenses                                (552)               199
        Deferred revenue                                                       24                114
        Income taxes                                                            -              1,300
                                                                       ----------           --------
Net cash provided by (used in) operating activities                          (595)             2,194
                                                                       ----------           --------

Investing activities
Purchase securities                                                             -            (18,045)
Proceeds from sale of short term investments                                1,549                  -
Acquisition of property and equipment                                        (829)            (1,994)
                                                                       ----------        -----------
Net cash provided by (used in) investing activities                           720            (20,039)
                                                                       ----------        -----------

Financing activities
Repayments of line of credit                                                    -            (5,125)
Issuance of common stock                                                      361             22,764
                                                                       ----------        -----------
Net cash provided by financing activities                                     361             17,639
                                                                       ----------        -----------

Net increase (decrease) in cash                                               486               (206)
Cash and cash equivalents, beginning of period                                835              3,182
                                                                       ----------        -----------

Cash and cash equivalents, end of period                                $   1,321        $     2,976
                                                                        =========        ===========

Non-cash activities:
Unrealized gain on investments                                         $       37        $         -
Reduction of income taxes payable associated with the
   exercise of stock options                                           $       87        $         -


</TABLE>


                             See accompanying notes.

                                       5
<PAGE>


                             PSW Technologies, Inc.
                     Notes to Condensed Financial Statements
                                  June 30, 1998
                                   (unaudited)
1.    Basis of Presentation

PSW  Technologies,  Inc.  (the  "Company")  commenced  operations as a separate,
stand-alone  corporation  effective October 1, 1996. The accompanying  unaudited
financial statements have been prepared by the Company pursuant to the rules and
regulations  of the  Securities and Exchange  Commission  (the "SEC")  regarding
interim  financial  reporting.   Accordingly,   they  do  not  include  all  the
information and notes required by generally accepted  accounting  principles for
complete  financial  statements  and  should  be read in  conjunction  with  the
financial  statements  and notes  thereto for the year ended  December  31, 1997
included in the Company's annual report on Form 10-K. The accompanying financial
statements reflect  adjustments,  all of which are of a normal recurring nature,
which are, in the opinion of management, necessary for a fair presentation.
The results for interim  periods  are not  necessarily  indicative  of full year
results.

2.    Significant Accounting Policies

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
could affect the financial  statements and  accompanying  notes.  Actual results
could differ from those estimates.

3.    Pro Forma Provision for Income Taxes

From commencement  through June 5, 1997 the Company had elected to be treated as
an S  Corporation  under  Subchapter S of the Internal  Revenue Code of 1986, as
amended.  As such,  federal income taxes  attributable to income through June 5,
1997 were the responsibility of the individual stockholders. Pro forma provision
for income taxes  reflect the  estimated  corporate  income tax expense that the
Company  would  have  recognized  had  it  not  elected  to be  treated  as an S
corporation for the period presented.

4.    Pro Forma Earnings Per Share

The pro  forma  basic  and  diluted  earnings  per  share  amounts  prior to the
Company's  initial public offering,  which occurred during the second quarter of
1997,  have been  restated as required to comply  with  Statement  of  Financial
Accounting  Standards  No.  128,  Earnings  Per Share,  and the  Securities  and
Exchange Commission Staff Accounting Bulletin 98.




                                       6
<PAGE>

                             PSW Technologies, Inc.
               Notes to Condensed Financial Statements (Continued)
                                   (unaudited)


5.    Comprehensive Income

As of January 1, 1998, the Company adopted SFAS No. 130, Reporting Comprehensive
Income.  SFAS No. 130  establishes  new rules for the  reporting  and display of
comprehensive income and its components; however, the adoption of this Statement
had no impact on the Company's net income or shareholders'  equity. SFAS No. 130
requires  unrealized  gains  or  losses  on  the  Company's   available-for-sale
securities,  which prior to adoption were reported  separately in  shareholders'
equity,  to be  included in other  comprehensive  income.  Prior year  financial
statements  have been  reclassified  to confirm to the  requirements of SFAS No.
130.

The  components of  comprehensive income for the three and six months ended June
30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
                                                        Three months ended               Six months ended
                                                             June 30,                        June 30,
                                                        1998         1997(a)            1998        1997(a)
                                                     -----------    -----------        --------    ----------

<S>                                                        <C>             <C>           <C>          <C>   
Net income (loss)                                          $(210)          $721          $(422)       $1,321

Unrealized gain (loss) on short term
  investments                                                 (2)            -              37             -
Income tax expense related to items of other
  comprehensive income                                        -               -             (7)            -

                                                     -----------    -----------        --------    ---------
Comprehensive income (loss)                                $(212)          $721        $   (392)      $1,321
                                                     ===========    ===========        ========    ==========
</TABLE>

(a)            Net income and  comprehensive  income  amounts are presented on a
               pro forma basis as if the Company had been subject to federal and
               state income taxes.

The  components of  accumulated  other comprehensive income at June 30, 1998 and
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
                                                                        1998             1997
                                                                   ------------    --------------

<S>                                                                       <C>              <C>  
Unrealized gain (loss) on short term investments                          $10              $(27)
                                                                   ============    ==============
</TABLE>



                                       7
<PAGE>

                             PSW Technologies, Inc.
               Notes to Condensed Financial Statements (Continued)
                                   (unaudited)


6.    Earnings per Share

The following table sets forth the computation of basic and diluted earnings per
share (in thousands,  except per share data) for the three months and six months
ended June 30:
<TABLE>
<CAPTION>

                                                         Three Months Ended                     Six Months Ended
                                                              June 30,                              June 30,
                                                      1998              1997(1)             1998              1997(1)
                                                  --------------     ---------------    --------------     --------------
Numerator:
<S>                                               <C>                <C>                <C>                <C>           
  Net income (loss)                               $        (210)     $           721    $        (422)     $        1,321
                                                  ==============     ===============    ==============     ==============

Denominator:
  Shares used in basic earnings (loss) per
    share calculation                                     9,057               6,221             9,023              5,884

  Effect of dilutive securities:
    Employee stock options                                    -                 563                 -                626
    Warrants                                                  -                 506                 -                505
                                                  --------------     ---------------    --------------     --------------
  Shares used in diluted earnings (loss) per
    share calculation                                     9,057               7,290             9,023              7,015
                                                  ==============     ===============    ==============     ==============

Basic earnings (loss) per share                   $       (0.02)     $          0.12    $       (0.05)     $        0.22
                                                  ==============     ===============    ==============     ==============

Diluted earnings (loss) per share                 $       (0.02)     $          0.10    $       (0.05)     $        0.19
                                                  ==============     ===============    ==============     ==============

</TABLE>

(1) Net income and earnings per share amounts are presented on a pro forma basis
as if the Company had been  subject to federal and state income  taxes.  The pro
forma  basic and pro forma  diluted  earnings  per  share  amounts  prior to the
Company's  initial public offering,  which occurred during the second quarter of
1997,  have  been  restated  as  required  to comply  with SFAS No.  128 and the
Securities and Exchange  Commission Staff Accounting Bulletin 98 ("SAB 98"). The
adoption of the provisions of SFAS 128 and SAB 98 resulted in an increase to pro
forma diluted  earnings per share for the three months and six months ended June
30, 1997 of $0.01 per share.

7.    Income Taxes

During the second quarter,  the Company revised its estimated  annual  effective
tax rate for 1998 from 32%,  which was used during the first quarter of 1998, to
19% due to changes in  management's  estimate of  projected  levels of operating
income  relative to  tax-exempt  income.  Using a 19% annual  effective tax rate
during the first and second  quarter of 1998,  net loss would have been $253,000
for the three  months  ended March 31, 1998 and  $170,000  for the three  months
ended June 30, 1998. The diluted loss per share would have remained at $0.02 for
the three months ended June 30, 1998 and decreased  $.0.01 to a diluted loss per
share of $0.03 for the three months ended March 31, 1998.


                                       8
<PAGE>


Item 2.

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION AND RESULTS OF
OPERATIONS

This report 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, that involve risks and  uncertainties,  such as statements  concerning:
growth and future operating  results;  developments in the Company's markets and
strategic   focus;   and  future   economic  and  business   conditions.   These
forward-looking  statements and other  statements  made elsewhere in this report
are made in reliance on the Private  Securities  Litigation  Reform Act of 1995.
The section below  entitled  "Certain  Factors That May Affect  Future  Results,
Financial  Condition and Market Price of Securities" sets forth and incorporates
by  reference  certain  factors that could cause  actual  future  results of the
Company to differ materially from these statements.

Overview

PSW Technologies,  Inc., (the "Company"), is a software services firm, operating
in one industry  segment,  that  provides  high value  solutions to  information
technology  ("IT")  vendors  and IT users by  mastering  and  applying  critical
emerging  technologies,   including  Web  based  distributed  computing,  object
oriented   development,   advanced  operating  systems  and  systems  management
technologies. IT vendors primarily consist of software companies who utilize the
Company's  services to help bring  their  products  to market  faster.  IT users
generally  utilize the Company's  services to help define,  develop and complete
high value,  mission critical  enterprise software systems for internal use. PSW
provides  joint  project-based  development,  porting  and  testing  services to
selected IT vendor  clients and applies the technical  expertise  learned to the
design and  development  of high value,  mission  critical  enterprise  business
systems for its Fortune 1000 IT user clients.

To  date,  revenue  has  been  generated  principally  from   time-and-materials
contracts for the Company's software services.  Revenue from  time-and-materials
contracts is  recognized  during the period in which the services are  provided.
The Company also enters into fixed price  contracts  for its software  services.
Revenue    from   fixed    price    contracts    is    recognized    using   the
percentage-of-completion  method over the term of the client contract,  measured
by the  labor  incurred  as a  percentage  of the  estimated  total  labor.  The
cumulative  impact  of  revisions  in  percentage  of  completion  estimates  is
reflected  in the  period  in which  the  revisions  are  made.  Provisions  for
estimated  losses on  uncompleted  contracts  are made on a contract by contract
basis and are  recognized  in the  period in which such  losses are  determined.
There  can  be no  assurance  of  the  accuracy  of the  Company's  future  work
completion  estimates,  and  operating  results  may be  adversely  affected  by
inaccurate estimates of contract related labor.

Year 2000 Compliance

Many older computer systems and software products  currently in use 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  21st century dates from
20th century dates. As a result, in less than 18 months, computer systems and/or
software  used by many  companies  will need to be  upgraded to comply with such
"Year 2000" requirements.

All of the  services  currently  offered by the Company are  designed to be Year
2000 compliant.  However, the Company's services are often integrated or used in
conjunction with third-party software;  such software may not be compatible with
Company's  services  or Year 2000  compliant.  The  Company may in the future be
subject  to claims  based on Year 2000  problems  in  other's  products,  custom
scripts  created by third parties to interface  with the  Company's  services or
issues arising from the  integration of multiple  products and systems within an
overall system. The costs of defending and resolving Year 2000-related disputes,
and any  liability  of the  Company  for Year  2000-related  damages,  including
consequential  damages,  could have a material  adverse  effect on the Company's
business,  operating results and financial condition. 



                                       9
<PAGE>

Over the past three years,  the Company has made Year 2000 compliance a priority
in IT purchasing and installation decisions.  The Company's internal information
technology  group has  adopted  a Year 2000  compliance  program  to assess  and
address any Year 2000 issues which remain  related to the  Company's IT systems.
The program consists of the following phases:  identifying Year 2000 application
issues,  updating  applications,  identifying  Year 2000  systems and  operating
systems  issues (such phases are each at least 90% complete and  scheduled to be
completed by August 31, 1998), collecting  manufacturer's compliance statements,
verifying  solutions to Year 2000 issues,  updating  and/or  patching  operating
systems, updating firmware and phasing out unsupported hardware (such phases are
in process and  scheduled to be completed in the first  quarter of fiscal 1999).
As of June  30,  1998,  the  Company  has  spent  approximately  $10,000  of the
currently  estimated  $30,000  total cost of the  program.  Costs  incurred  and
expected  to be  incurred  consist  primarily  of the cost of Company  personnel
involved  in  updating  applications  and  operating  systems  and the  costs of
software updates and patches (many of which are provided free of charge from the
vendors). Funds for the Year 2000 compliance program are expected to be provided
from available working capital.  The Company has utilized the Company's internal
technical personnel,  and intends to continue to use such personnel,  to address
Year 2000 issues, rather than contract with third-party consultants.
Although the Company has not completed its survey of third parties with which it
has a  material  relationship,  the  majority  of the  Company's  customers  are
sophisticated IT vendors and users who are addressing their own Year 2000 issues
and the Company  relies  primarily on its  technical  personnel  and internal IT
systems,  rather  than  third  party  suppliers.  As  the  Company's  Year  2000
compliance program is on schedule to be completed in the first quarter of fiscal
year 1999,  the Company has not formulated a most  reasonably  likely worst case
scenario  or  formulated  a  contingency  plan  should  the  program  fail to be
completed by such date.

Significant  uncertainty still exists as to the global  implications of the Year
2000 issue. The Company  believes that the purchasing  patterns of customers and
potential  customers  may be  affected by Year 2000 issues in a variety of ways.
Many companies  (including  customers of the Company, and customers or potential
customers of the Company's  customers)  are expending  significant  resources to
correct or patch  their  current  hardware  and  software  systems for Year 2000
compliance.  Such  expenditures  may result in reduced  funds  available for the
Company's  customers  to  pursue  product  development  programs  or IT  systems
enhancements for which the Company's  services would otherwise be utilized.  Any
of the foregoing,  including costs of defending and resolving Year  2000-related
disputes,  reductions  in  development  programs or IT systems  enhancements  by
customers  and their  customers  or the  failure of the  Company  to  adequately
resolve internal Year 2000 compliance  issues could result in a material adverse
effect on the Company's business, operating results and financial condition.




                                       10
<PAGE>

Results of Operations

The  following  table sets  forth the  percentage  of  revenue of certain  items
included in the  Company's  condensed  statement  of  operations  for the period
indicated:

<TABLE>
<CAPTION>
                                                          Three Months                        Six Months
                                                          ended June 30,                     ended June 30,
                                                          --------------                     --------------
                                                          1998       1997                    1998       1997
                                                          ----       ----                    ----       ----
<S> .................................                      <C>        <C>                     <C>       <C>
Revenue .............................                      100%       100%                    100%      100%
Operating expenses:
   Technical staff ..................                       56         51                      58        51
   Selling and administrative staff .                       28         19                      27        19
   Other expenses ...................                       20         18                      20        18
   Special compensation expense .....                       --          1                      --         1
                                                          ----       ----                    ----     ------
Total operating expense .............                      104         89                     105        89
                                                          ----       ----                    ----     ------
Income (loss) from operations .......                       (4)        11                      (5)       11
Interest income (expense), net ......                        2         --                       2        (1)
Provision (benefit) from income taxes                       --          4 (a)                  (1)        4 (a)
                                                          ----       ----                    ----     ------
Net income (loss) ...................                       (2)%        7%(a)                  (2)%       6%(a)
                                                          ====       ====                    ====     ======
</TABLE>

(a)      Net income is presented on a pro forma basis as if the Company had been
         fully subject to federal and state income taxes.

First Six Months of 1998 Compared with First Six Months of 1997

The following discussion of operations and trends also relates to the comparison
of the three month  period  ended June 30, 1998 to the three month  period ended
June 30, 1997.

Revenue

The Company's revenue consists primarily of fees for software services provided.
Revenue  was $19.6  million in the first six months of 1998,  down 7% from $21.0
million for the first six months of 1997,  principally due to the decline in IBM
business partially offset by new projects and new clients.  Revenue attributable
to software  services  rendered to IT vendors was $12.7 million in the first six
months  of 1998 and the  first  six  months  of 1997.  Revenue  attributable  to
software services rendered to IT users was $6.9 million and $8.3 million for the
first  six  months of 1998 and the first  six  months of 1997,  respectively,  a
decrease  of 17% in the  first six  months of 1998 over the first six  months of
1997.

One client,  including its wholly owned subsidiaries,  accounted for 35% and 46%
of revenue in each of the first six  months of 1998 and 1997,  respectively.  No
other client accounted for more than 10% of revenue for either period.

 Technical Staff

Technical staff expenses consist of the cost of salaries,  payroll taxes, health
insurance and workers'  compensation,  for technical staff personnel assigned to
client  projects and  unassigned  technical  staff  personnel,  and fees paid to
subcontractors for work performed in connection with a client project. Technical
staff  expenses  were $11.3 million in the first six months of 1998, an increase
of 6% over $10.7  million  for the first six  months of 1997.  The  increase  in
technical  staff  expenses  was  primarily  due to the  addition of personnel to
service  the  increase  in scope  and  number of client  projects  during  1997.
Technical staff expenses  increased to 58% of revenue in the first six months of
1998 from 51% in the first six  months of 1997,  primarily  as a result of lower
utilization of technical  staff and lower revenues.  



                                       11
<PAGE>

Selling and  Administrative Staff

Selling  and  administrative  staff  expenses  consist of the cost of  salaries,
payroll  taxes,  health  insurance  and  workers'  compensation  for selling and
administrative personnel, all commissions and bonuses, and the cost of technical
staff salaries for technical staff personnel assigned to methodology development
projects  or  performing   selling  or  training  related  tasks.   Selling  and
administrative staff expenses were $5.3 million in the first six months of 1998,
an  increase  of 34% from $4.0  million  in the first  six  months of 1997.  The
increase in selling and  administrative  staff expenses was primarily due to the
addition of sales and administrative  personnel,  and increased  technical staff
training.  Selling and administrative  staff expenses were 27% of revenue in the
first six months of 1998  compared  to 19% of revenue in the first six months of
1997,  primarily as a result of increases in the sales staff,  greater technical
staff involvement in sales and lower revenues.

Other Expenses

Other expenses consist of all non-staff  related costs, such as occupancy costs,
travel,  business  insurance,  business  development,  recruiting,  training and
depreciation.  Other  expenses were $3.9 million in the first six months of 1998
and in the first six months of 1997,  principally  due to expense  controls  and
lower  recruiting  costs.  Other  expenses  were 20% of revenue in the first six
months of 1998  compared  to 18% in the  first  six  months of 1997 due to lower
revenues.

Special Compensation Expense

Special compensation expense consists of stock-based  compensation in connection
with  the  grants  of  replacement   options  to  the  Company's  employees  who
participated  in the Pencom  Systems  Incorporated  stock option  plan.  Special
compensation  expense was $82,000,  or less than 1% of revenue, in the first six
months of 1998 and $188,000, or 1% of revenue, in the first six months of 1997.

Income (Loss) from Operations

The Company  recorded a loss from operations of $997,000 in the first six months
of 1998,  down from $2.2  million  of income  from  operations  in the first six
months of 1997. Due primarily from the decrease in revenue, loss from operations
was 5% of  revenue  in the first  six  months of 1998,  down  from  income  from
operations of 11% of revenue in the first six months of 1997.

Income Taxes

From commencement  through June 5, 1997 the Company had elected to be treated as
an S  Corporation  under  Subchapter S of the Internal  Revenue Code of 1986, as
amended.  As such,  federal income taxes  attributable to income through June 5,
1997  were the  responsibility  of the  individual  stockholders.  The pro forma
disclosures  on the  statements  of  operations  reflect  adjustments  to record
provisions for income taxes as if the Company had not been an S Corporation.

The pro forma  provision  for income  taxes of $810,000 for the six months ended
June 30, 1997 is computed using an estimated  annual  effective tax rate of 38%,
which  differs form the federal  statutory  rate of 34%  primarily  due to state
taxes.

The  historical  benefit for income  taxes of $100,000  for the six months ended
June 30, 1998, is computed using an estimated  annual effective tax rate of 19%,
which differs from the federal  statutory rate of 34% as a result of state taxes
and tax-exempt income.

During the second quarter,  the Company revised its estimated  annual  effective
tax rate for 1998 from 32% to 19% due to changes  in  management's  estimate  of
tax-exempt income relative to projected levels of operating income.



                                       12
<PAGE>

Net Loss and Pro Forma Net Income

Net loss was  $422,000  in the first six months of 1998 and pro forma net income
was  $1,321,000  in the first six months of 1997.  Net loss was 2% of revenue in
the first six  months of 1998 and pro forma net  income was 6% of revenue in the
first six months of 1997.

Liquidity and Capital Resources

At June 30, 1998, the Company had cash and short term investments totaling $22.3
million,  a decrease  from $23.3  million at  December  31,  1997 as a result of
funding operating and investing activities.

The Company  maintains a Credit Facility with a bank providing for borrowings of
up to $10 million, subject to a borrowing base requirement.  The Credit Facility
expires on May 1, 1999. Available borrowings under the Credit Facility are based
upon a percentage of the Company's  eligible  accounts  receivable.  At June 30,
1998,  no amount was  outstanding  under the Credit  Facility and the  available
borrowing amount was $7.5 million.

The Company  anticipates  that its existing capital  resources  described above,
together with cash provided by operating activities will be adequate to fund the
Company's  operations for at least the next 12 months. There can be no assurance
that  changes  will not occur that would  consume  available  capital  resources
before such time. The Company's capital requirements depend on numerous factors,
including  potential  acquisitions,  the  timing  of  the  receipt  of  accounts
receivable,  employee  growth and the  percentage  of projects  performed at the
Company's  facilities.  There can be no assurance that  additional  funding,  if
necessary, will be available on favorable terms, if at all.

Certain Factors That May Affect Future Results, Financial Condition
   and Market Price of Securities

Numerous  factors may affect the Company's  business and results of  operations.
These  factors  include,  but are not limited  to,  industry  concentration  and
dependence on large  projects,  fixed price  contracts and other project  risks,
ability to manage growth,  variability of quarterly  operating results,  need to
attract and retain professional staff, rapid technological  advances and risk of
targeting emerging  technologies,  dependence on key personnel,  risks of system
interruption  and  security  risks,  and  uncertainty  related  to the Year 2000
Compliance issues.  The discussion below addresses some of these factors.  For a
more  thorough  discussion  of these  and  other  factors  that may  affect  the
Company's  future results,  see the "Item 1 - Business" of the Company's  Annual
Report of Form  10-K for the year  ended  December  31,  1997 and the  Company's
Registration Statement of From S-1 (File No. 333-21565).

         Industry  Concentration;  Dependence on Large Projects. The Company has
derived and  believes it will  continue to derive a  significant  portion of its
revenue  from  the  technology  vendor  industry.  As a  result,  the  Company's
business,  financial  condition  and results of  operations  are  influenced  by
economic  and  other  conditions  affecting  such  industry,  such  as  economic
downturns  which could lead to a reduction in spending on IT projects,  which in
turn could lead to fewer new research and development outsourcing projects being
undertaken. Further, several of the Company's client contracts limit its ability
to provide  services to competitors  of such clients,  thereby  restricting  the
field of  potential  future  clients.  In  addition,  as a result of the dynamic
nature  of the IT vendor  industry,  the  Company  may lose  clients  due to the
acquisition, merger or consolidation of existing clients with entities which are
not current clients of the Company. The occurrence of any of the foregoing could
have a material adverse effect on the Company's  business,  financial  condition
and results of operations.

         Fixed-Price  Contracts  and Other  Project  Risks.  During 1997 and the
first  six  months  of 1998,  approximately  20% and 13%,  respectively,  of the
Company's  revenue  was  generated  on a  fixed  price,  fixed-delivery-schedule
("fixed price") basis, rather than on a time-and-materials  basis. The Company's
failure to accurately  estimate the resources required for a fixed price project
or its  failure to  complete  its  contractual  obligations  in a timely  manner
consistent  with the project  plan upon which its fixed price  contract is based


                                       13
<PAGE>

could  have a  material  adverse  effect on the  Company's  business,  financial
condition  and  results of  operations.  In the past,  the  Company has found it
necessary to revise project plans after  commencement  of the project and commit
unanticipated  additional  resources to complete  certain  projects,  which have
negatively  affected  the  profitability  of  such  projects.  The  Company  may
experience similar situations in the future, which could have a material adverse
effect on the Company's business, financial condition and results of operations.
In addition, the Company may establish contract prices before the project design
specifications are finalized, which could result in a fixed price that proves to
be too low and therefore  adversely  affects the Company's  business,  financial
condition and results of operations.

         Many of the Company's  engagements  involve projects which are critical
to the operations of its clients' businesses and which provide benefits that may
be difficult to quantify.  The Company's failure to meet a client's expectations
in the  performance  of its services  could damage the Company's  reputation and
adversely  affect its ability to attract new  business,  and may have a material
adverse effect upon its business, financial condition and results of operations.
The Company has undertaken,  and may in the future undertake,  projects in which
the Company guarantees  performance based upon defined operating  specifications
or guaranteed  delivery dates. The Company has also undertaken projects in which
a material  portion  of total  revenue is earned  based upon  meeting  specified
delivery  dates.  Unsatisfactory  performance or  unanticipated  difficulties or
delays in completing  such projects may result in client  dissatisfaction  and a
reduction  in payment  to, or payment of damages by, the  Company,  any of which
could  have a  material  adverse  effect on the  Company's  business,  financial
condition and results of operations.  There can be no assurance that the Company
will be able to limit its liability to clients, including liability arising from
the  Company's  failure to meet  clients'  expectations  in the  performance  of
services, through contractual provisions, insurance or otherwise.

         Management  of Growth.  The  Company's  growth  has placed  significant
demands on its management and other resources.  For example, the Company's staff
increased  from 167  full-time  employees at December 31, 1994 to 456  full-time
employees  at June 30,  1998.  In order to manage  its growth  effectively,  the
Company will need to continue to develop and improve its operational,  financial
and other internal systems,  as well as its business  development  capabilities,
and to continue to attract, train, retain, motivate and manage its employees. In
addition,  the Company's future success will depend in large part on its ability
to continue to maintain high rates of employee utilization, set fixed price fees
accurately, maintain project quality and meet delivery dates, all as the Company
seeks to increase the number of projects in which it is engaged.  If the Company
is unable to manage its growth and projects  effectively,  such inability  would
have a material  adverse  effect on the quality of the Company's  services,  its
ability  to retain key  personnel  and its  business,  financial  condition  and
results of operations.  No assurance can be given that the Company's growth will
continue to be achieved, or if achieved,  will be maintained or that the Company
will be successful in managing any such growth.

         Recent  Organization;  Limited  Operating  History  as  an  Independent
Business;  Limited  Relevance  of  Historical  Financial  Information.  Prior to
October 1996, the Company  conducted its business and operations as the software
division of Pencom Systems Incorporated,  ("Pencom").  Accordingly,  the Company
has only a limited independent operating history upon which an evaluation of the
Company and its prospects can be based.  Prior to October 1996, the Company also
had limited  accounting  capability and depended upon Pencom for most accounting
functions.  By October 1, 1996, the Company had assumed  responsibility for most
internal accounting  functions,  but continued to depend upon Pencom for limited
accounting  support in connection with the Company's 1996 year-end audit.  There
can be no assurance  that the Company will be  successful  in taking  control of
these functions from Pencom. The Company has also relied upon, and will continue
to rely upon,  Pencom for certain legal services and recruiting  functions.  The
Company's  management  has only limited  experience  operating  the Company as a
stand-alone company, separate and apart from Pencom. Pencom has no obligation to
provide financial or management assistance to the Company and has no plans to do
so.  The  inability  of  the  Company  to  operate  successfully  as  an  entity
independent  from Pencom would have a material  adverse  effect on the Company's
business, financial condition and results of operations.

         Variability of Quarterly  Operating  Results.  The Company's  quarterly
revenue,  expenses and operating  results have varied  significantly in the past
and are likely to vary significantly from quarter to quarter in the future. Such
quarterly  fluctuations are based on a number of factors,  including the number,
size and scope of  projects in which the  Company is  engaged,  the  contractual


                                       14
<PAGE>

terms and  degree  of  completion  of such  projects,  any  delays  incurred  in
connection  with a project,  the Company's  success in earning  bonuses or other
contingent  payments,  employee  hiring and utilization  rates,  the adequacy of
provisions  for losses,  the  accuracy of  estimates  of  resources  required to
complete ongoing projects and general economic  conditions.  Other factors which
may effect  operating  results  include  customer  budget  cycles  and  customer
spending priorities such as the Year 2000 compliance issue. A high percentage of
the Company's operating expenses,  particularly personnel and rent, are fixed in
advance of any particular quarter. For example, while the number of professional
staff the  Company  employs may be adjusted  to reflect  active  projects,  such
adjustments  take time and the  Company  must  maintain a  sufficient  number of
senior  professionals  to oversee  existing  client  engagements and to focus on
securing new client engagements.  As a result,  unanticipated  variations in the
number or progress  toward  completion of the Company's  projects or in employee
utilization rates may cause  significant  variations in operating results in any
particular  quarter  and  could  result  in  adverse  changes  to the  Company's
business,  financial condition and results of operations.  In the second half of
1998,  revenues may be adversely  impacted by the Company's lengthy sales cycle,
among other matters,  which may cause the Company's  revenues and earnings to be
below the  expectations  of  securities  analysts.  Any  shortfall in revenue or
earnings  from  expected  levels  or  other  failures  to meet  expectations  of
securities  analysts or the market in general  regarding  results of  operations
could have an immediate and material  adverse  effect on the market price of the
Company's Common Stock. Given the possibility of such quarterly  fluctuations in
revenue or earnings,  the Company  believes  that  comparisons  of its quarterly
results of operations are not  necessarily  meaningful and that such results for
one quarter should not be relied upon as an indication of future performance.

         Need to Attract and Retain  Professional  Staff. The Company's  success
depends in large part upon its ability to attract,  train, retain,  motivate and
manage highly skilled employees,  particularly project managers and other senior
technical  personnel.  Significant  competition  exists for  employees  with the
skills required to perform the services offered by the Company,  and the Company
requires that a significant  number of such employees  travel to client sites to
perform services on its behalf,  which may make a position with the Company less
attractive  to  potential  employees.   Qualified  project  managers,   software
architects  and senior  technical  and  professional  staff are in great  demand
worldwide  and are  likely  to  remain a limited  resource  for the  foreseeable
future.  Furthermore,  there is a high rate of attrition  among such  personnel.
There can be no assurance that a sufficient  number of highly skilled  employees
will continue to be available to the Company,  that potential  employees will be
willing to travel to client  sites,  or that the Company will be  successful  in
training,  retaining and motivating  current or future employees.  The Company's
inability  to  attract,  train and retain  skilled  employees  or the  Company's
employees'  inability to achieve expected levels of performance could impair the
Company's  ability to adequately  manage and staff its existing  projects and to
bid for or obtain new  projects,  which in turn  would  have a material  adverse
effect on the Company's business, financial condition and results of operations.

         Rapid Technological  Advances; Risk of Targeting Emerging Technologies.
The Company has derived,  and will continue to derive, a substantial  portion of
its revenue from projects  based on  client/server  systems.  The  client/server
systems  market is continuing  to develop and is subject to rapid  technological
change.  The Company's future success will also depend in part on its ability to
develop IT  solutions  which keep pace with  continuing  changes in  information
processing   technology,   evolving  industry   standards  and  changing  client
preferences.  There can be no assurance  that the Company will be  successful in
addressing  these  developments  in a timely manner or that,  if addressed,  the
Company will be successful in the marketplace. The Company's delay or failure to
address these developments could have a material adverse effect on the Company's
business,  financial condition and results of operations. In addition, there can
be no assurance that products or technologies developed, or services offered, by
third parties will not render the Company's services noncompetitive or obsolete.
The  Company's  Software   Technology  Unit  also  seeks  to  identify  emerging
technologies  which it believes  will develop into  critical  technologies  with
broad  application  and  longevity.  Once  identified,  the  Company  may commit
substantial   resources  to  provide   services  to  the   developers   of  such
technologies.  No assurance can be given that the technologies identified by the
Company will develop  into  critical  technologies  with broad  application  and
longevity.  The  failure  of the  Company  to align  itself  with such  critical
emerging  technologies  would have a material  adverse  affect on its  business,
financial condition and results of operations.



                                       15
<PAGE>

         Dependence on Key Personnel.  The Company's  future success will depend
in part upon the  continued  services of a number of key  management  employees,
particularly  Dr. W. Frank King, Keith D. Thatcher,  Brian E. Baisley,  James T.
Kelsey and William C. Cason, and a number of key technical  employees.  The loss
of the  services of any of the  Company's  key  personnel  could have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.  In addition,  the  Company's  credit  facility  prohibits  material
changes in management.  The Company does not maintain  key-person life insurance
on any of its  employees.  In  addition,  if one or  more of the  Company's  key
employees  resigns from the Company to join a competitor  or to form a competing
company,  any  resulting  loss of  existing  or  potential  clients  to any such
competitor  could  have a material  adverse  effect on the  Company's  business,
financial  condition and results of operations.  In the event of the loss of any
such  personnel,  there can be no  assurance  that the Company  would be able to
prevent the unauthorized disclosure or use of its technical knowledge, practices
or procedures by such personnel.

         System  Interruption and Security Risks.  The Company's  operations are
dependent on its ability to protect its  intranet  from  interruption  by damage
from  telecommunications  failure,  fire, earthquake,  power loss,  unauthorized
entry or other  events  beyond  the  Company's  control.  Most of the  Company's
computer equipment,  including its processing equipment, is currently located at
a single site.  There can be no assurance that  unanticipated  problems will not
cause any significant  system outage or data loss. Despite the implementation of
security  measures,  the  Company's  infrastructure  may also be  vulnerable  to
computer  viruses,  hackers or similar  disruptive  problems  caused by Internet
users.  Persistent problems continue to affect public and private data networks.
For example,  it is common for Internet service  providers to experience  system
interruptions which cause the Company to lose access to the Internet,  the means
by which the Company posts  internal  information  and provides  e-mail and time
sheet query and entry.  Any damage or failure that causes  interruptions  in the
Company's  operations  could have a  material  adverse  effect on the  Company's
business, financial condition and results of operations.

         Potential  Volatility  of Stock  Price.  The market for  securities  of
early-stage  companies  has been highly  volatile in recent years as a result of
factors  often  unrelated to a company's  operations.  In addition,  the Company
believes   factors  such  as   quarterly   variations   in  operating   results,
announcements  of  technological  innovations or new products or services by the
Company  or its  competitors,  general  conditions  in the  IT  industry  or the
industries  in which the  Company's  clients  compete  and  changes in  earnings
estimates by securities  analysts,  could  contribute  to the  volatility of the
price of the Company's Common Stock. These factors,  as well as general economic
conditions  such as recessions  or changes in interest  rates,  could  adversely
affect the market price of the Company's Common Stock. Furthermore, in the past,
following  periods of volatility in the market price of a company's  securities,
securities  class action claims have been brought  against the issuing  company.
There can be no assurance that such litigation will not occur in the future with
respect to the Company.  Such litigation could result in substantial costs and a
diversion of management's attention and resources, and any adverse determination
in such  litigation  could also subject the Company to significant  liabilities,
all of which could have a material  adverse  effect on the  Company's  business,
financial condition and results of operations.

         Effect of  Certain  Antitakeover  Provisions.  The  Company's  Board of
Directors has the authority to issue shares of Preferred  Stock and to determine
the designations,  preferences and rights and the qualifications or restrictions
of those  shares  without any further  vote or action by the  stockholders.  The
rights of the holders of Common  Stock will be subject to, and may be  adversely
affected by, the rights of the holders of any Preferred Stock that may be issued
in the future.  The issuance of Preferred  Stock could have the effect of making
it more  difficult  for a third party to acquire a majority  of the  outstanding
voting  stock of the  Company.  In  addition,  the  Company  is  subject  to the
antitakeover  provisions of Section 203 of the Delaware General  Corporation Law
(the  "DGCL").  In general,  this  statute  prohibits a publicly  held  Delaware
corporation  from  engaging  in a  "business  combination"  with an  "interested
stockholder"  for a period of three years after the date of the  transaction  in
which  the  person  became  an  interested  stockholder,   unless  the  business
combination  is approved in a  prescribed  manner.  Furthermore,  certain  other
provisions of the Company's  Amended and Restated  Certificate of  Incorporation
and Amended and Restated Bylaws may have the effect of discouraging, delaying or
preventing a merger, tender offer or proxy contest, which could adversely affect
the market price of the Company's Common Stock.



                                       16
<PAGE>

         Uncertainty  Related  to the Year 2000  Compliance  Issues.  Many older
computer systems and software products currently in use 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  21st century dates from 20th century
dates.  As a result,  in less than 18 months,  computer  systems and/or software
used by many  companies will need to be upgraded to comply with such "Year 2000"
requirements. Significant uncertainty still exists as to the global implications
of the Year 2000 issue.  The Company  believes that the  purchasing  patterns of
customers  and  potential  customers  may be  affected  by Year 2000 issues in a
variety  of ways.  Many  companies  (including  customers  of the  Company,  and
customers  or potential  customers of the  Company's  customers)  are  expending
significant  resources to correct or patch their  current  hardware and software
systems for Year 2000 compliance.  Such expenditures may result in reduced funds
available for the Company's customers to pursue product development  programs or
IT systems  enhancements  for which the Company's  services  would  otherwise be
utilized. Any of the foregoing,  including costs of defending and resolving Year
2000-related  disputes,   reductions  in  development  programs  or  IT  systems
enhancements  by customers and their  customers or the failure of the Company to
adequately  resolve  internal  Year 2000  compliance  issues  could  result in a
material  adverse  effect  on the  Company's  business,  operating  results  and
financial condition.




                          PART II -- OTHER INFORMATION


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

          At the Company's Annual Meeting of Stockholders  held on May 20, 1998,
          the folowing proposals were adopted by the vote specifed below.

<TABLE>
<CAPTION>
                                                                                AGAINST OR
                                                                 FOR             WITHHELD           ABSTAIN
                                                             ------------    ------------------   -------------
            <S>                                               <C>                     <C>             <C>
            1.    Election of Seven Directors  
                  All directors proposed by
                  management were elected.
                    W. Frank King, Ph.D.                       8,615,839               316,374               -
                    Wade E. Saadi                              8,615,939               316,274               -
                    Edward C. Ateyeh, Jr.                      8,616,339               315,874               -
                    Thomas A. Herring                          8,616,339               315,874               -
                    Kevin B. Kurtzman                          8,616,339               315,874               -
                    Michael J. Maples                          8,615,161               317,052               -
                    Jonathan D. Wallace, Esq.                  8,616,198               316,015               -

            2.    Approval of an amendment to 1996             6,434,699             1,555,585           2,175
                  Stock Option/Stock Issuance Plan to
                  increase the number of shares of
                  Common Stock available for
                  issuance thereunder from 1,715,000
                  to 2,715,000

            3.    Ratification of Ernst & Young LLP            8,928,904                 2,000           1,309
                  as Independent auditors

</TABLE>



                                       17
<PAGE>

Item 5.   Other Information

Stockholder Proposals

Proposals of stockholders  intended to be presented at the Company's 1999 annual
meeting of stockholders  must be received at the Company's  principal  executive
offices  not  later  than  December  24,  1998 in  order to be  included  in the
Company's proxy statement and form of proxy relating to the 1999 annual meeting.

Pursuant to new  amendments to Rule 14a-4(c) of the  Securities  Exchange Act of
1934, as amended, if a stockholder who intends to present a proposal at the 1999
annual meeting of  stockholders  does not notify the Company of such proposal on
or prior to March 9, 1999, then management proxies would be allowed to use their
discretionary  voting  authority  to vote on the  proposal  when the proposal is
raised at the annual meeting, even though there is no discussion of the proposal
in the 1999 proxy statement.

Pursuant to the  Company's  Bylaws,  proposals  of  stockholders  intended to be
presented at the Company's 1999 annual meeting of stockholders  must be received
by the Secretary of the Company at the Company's principal executive offices not
earlier  than the  150th  day nor  later than the  120th day  prior to the first
anniversary  of the date of the proxy  statement  delivered to  stockholders  in
connection  with the  preceding  year's  annual  meeting  in order to be brought
before the meeting. 


Item 6.   Exhibits and Reports on Form 8-K

          (a)Exhibits

Number            Description

10.1              Mountainview Lease  Agreement  dated May 11, 1998  between the
                  Registrant and South Bay/ Copley Joint Venture
10.2              Employment Agreement dated May 18, 1998 between the Registrant
                  and James T. Kelsey.
10.3              1996 Stock Option/Stock Issuance Plan Amendment.
27.1              Financial Data Schedule
---------

          (b) Reports on Form 8-K

                None.



                                       18
<PAGE>


                                   SIGNATURES

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


                                       PSW TECHNOLOGIES, INC.
                                       (Registrant)



Date:  August 14, 1998                 \s\ W.Frank King
                                       Dr. W. Frank King
                                       President and Chief Executive Officer
                                       (Principal Executive Officer)




Date:  August 14, 1998                 \s\ Keith D. Thatcher
                                       Keith D. Thatcher
                                       Vice President of Finance, Treasurer and
                                       Chief Financial Officer
                                       (Principal Financial Officer)



Date:  August 14, 1998                 \s\ Kasaundra L. Simpson
                                       Kasaundra L. Simpson
                                       Financial Reporting and Budgeting Manager
                                       (Principal Accounting Officer)




                                       19
<PAGE>