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                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                  FORM 10-QSB/A
                                   AMENDMENT 1

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      FOR QUARTER ENDING   DECEMBER 31, 1998
                         ---------------------

      COMMISSION FILE NUMBER   33-23138-D
                              ------------

                                 HEARTSOFT, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


              Delaware                               87-0456766
              --------                               ----------
      (State of Incorporation)             (IRS Employer Identification No.)

  3101 Hemlock Circle, Broken Arrow, Oklahoma                  74012
  -------------------------------------------                  -----
    (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:   918/362-3600

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days. YES           NO   X
                                      -----        -----

The Company is amending its 10-QSB for the quarter ending December 31, 1998 as a
result of recently discovering an agreement for consulting services, dated
September 20, 1998, which will have an impact on the Company's financial
statements. Additionally, the Company is amending its 10-QSB to include sales of
unregistered securities. The Company is also amending its financial statements
to reflect adjustments to the quarterly financial information as a result of the
audit of the March 31, 1999, financial statements.

Part I. Financial Information - Items 1 and 2 and Part II. Other Information -
Items 2 and 6 have been amended.

As of December 31, 1998, there were 7,667,064 shares of Heartsoft, Inc. Common
Stock, $0.0005 par value outstanding.

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<PAGE>

HEARTSOFT, INC. - QUARTERLY REPORT

                                TABLE OF CONTENTS
                                -----------------




                                                                        Page
                                                                        ----
PART I.  Financial Information

Item 1:  Balance Sheet as of December 31, 1998                           3

         Statements of Operations For the Nine Months Ended
         December 31, 1998 and December 31, 1997                         4

         Statements of Operations For the Three Months Ended
         December 31, 1998 and December 31, 1997                         5

         Statement of Cash Flows For the Nine Months Ended
         December 31, 1998                                               6

         Notes to Financial Statements                                   7


Item 2:  Management's Discussion and Analysis of Financial
         Condition, and Results of Operations                            8



PART II. Other Information

Item 2:  Changes in Securities and Use of Proceeds                      10


Item 6:  Exhibits and Reports on Form 8-K                               11


         Signature Page                                                 11












                                       2

<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1:  FINANCIAL STATEMENTS

                                  BALANCE SHEET
                                  -------------
                                   (unaudited)

                                                                 Dec. 31, 1998
                                                                 =============
ASSETS
------
Current Assets:
   Cash                                                                 12,575
   Accounts Receivable                                                  18,657
   Inventory                                                            21,181
   Prepaid Expenses and Deposits                                        80,520
                                                                 -------------
Total Current Assets                                                   132,933

Fixed Assets and Developed Software, Net                               497,419
Other                                                                    2,689
                                                                 -------------
Total Other Assets                                                     500,108
                                                                 -------------

Total Assets                                                           633,041
                                                                 =============

LIABILITIES
-----------
Current Liabilities:
   Accounts Payable - Trade                                            250,309
   Notes Payable-current portion                                       438,565
   Accrued Expenses                                                    102,707
                                                                 -------------
Total Current Liabilities                                              791,581

Long Term Liabilities                                                        -
                                                                 -------------
Total Liabilities                                                      791,581

STOCKHOLDERS EQUITY
-------------------
Preferred Stock, $.01 par value, 5,000,000 shares
authorized, 1,218,500 shares issued                                     12,185
Common Stock, $.0005 par value, 30,000,000 shares
authorized, 7,667,064 shares issued                                      3,834
Additional Paid-In Capital                                           3,142,625
Accumulated Deficit                                                 (3,317,184)
                                                                 -------------

Total Stockholders Equity                                             (158,540)
                                                                 -------------

Total Liabilities And Stockholders Equity                              633,041
                                                                 =============

                                        3
<PAGE>
                            STATEMENTS OF OPERATIONS
                            ------------------------
                                   (unaudited)



                                             Nine months ended
                                     ----------------------------------
                                     Dec. 31, 1998        Dec. 31, 1997
                                     =============        =============

REVENUE:
--------
   Gross Sales                        $   405,424          $ 1,079,615

    Sales Returns & Discounts             (33,530)             (72,841)
                                      -----------          -----------
   Net Sales                              371,894            1,006,774
   Total Cost of Good                      92,370              164,504
                                      -----------          -----------
   GROSS MARGIN                           279,524              842,270

COSTS AND EXPENSES:
-------------------
   Payroll Expense                        177,402              160,772
   Administrative Expense                 881,191              496,756
                                      -----------          -----------
   Total Operating Expenses             1,058,593              657,528

OTHER INCOME:
-------------
   Gain on sale of interest in
   Software Library                       165,511                    -
                                      -----------          -----------
Loss before income taxes                 (613,558)             184,472

Income taxes                                    -                    -
                                      -----------          -----------
Net income (loss)                     $  (613,558)         $   184,742
                                      ===========          ===========

 EARNINGS (LOSS) PER SHARE            $     (0.09)         $      0.04














                                       4
<PAGE>
                            STATEMENTS OF OPERATIONS
                            ------------------------
                                   (unaudited)



                                             Three months ended
                                     ----------------------------------
                                     Dec. 31, 1998        Dec. 31, 1997
                                     =============        =============

REVENUE:
--------
   Gross Sales                        $   118,424          $   293,745

   Sales Returns & Discounts              (10,103)             (32,992)
                                      -----------          -----------
   Net Sales                              108,321              260,753
   Total Cost of Goods Sold                29,556               32,765
                                      -----------          -----------
   GROSS MARGIN                            78,765              227,988

COSTS AND EXPENSES:
-------------------
   Payroll Expense                         52,368               47,371
   Administrative Expense                 276,994              176,932
                                      -----------          -----------
   Total Operating Expenses               329,362              224,303

                                      -----------          -----------
Income (loss) before income taxes        (250,597)               3,685

Income taxes                                    -                    -
                                      -----------          -----------
Net income (loss)                     $  (250,597)         $     3,685
                                      ===========          ===========

EARNINGS (LOSS) PER SHARE             $     (0.03)         $     0.001


















                                       5
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                             STATEMENT OF CASH FLOWS
                             -----------------------
                                   (unaudited)


                                                            Nine Months Ended
                                                              Dec. 31, 1998
                                                              -------------

CASH FLOW FROM OPERATING ACTIVITIES
-----------------------------------
Net Loss                                                       $  (613,558)

Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
   Depreciation/Amortization                                       180,494
   Gain on sale of interest in software library                    165,513
   Changes in:
      Accounts Receivable                                          249,439
      Inventories                                                  (11,574)
      Other Assets                                                 (69,153)
      Accounts Payable                                              71,125
      Note Payable - Current                                       (63,478)
      Accrued expenses                                              79,686
                                                               -----------

Net cash used in operating activities                              (11,506)

CASH FLOW FROM INVESTING ACTIVITIES
-----------------------------------
 (Increase) or decrease in development software costs              (97,441)
 Proceeds from sale of property, plant & equipment                  47,783
                                                               -----------

Net cash used in investing activities                              (49,658)

CASH FLOW FROM FINANCING ACTIVITIES
-----------------------------------
 Repayment of long-term debt                                      (175,429)
 Proceeds from issuance of debt                                          -
 Proceeds from the issuance of common stock                        244,757
                                                               -----------

Net cash provided by financing activities                           69,328
                                                               -----------

Net Increase in Cash                                                 8,164
                                                               ===========

Beginning Cash Balance                                               4,411
Net Increase in Cash                                                 8,164
                                                               -----------

Ending Cash Balance                                            $    12,575
                                                               ===========


                                       6
<PAGE>
ITEM 1.  NOTES TO FINANCIAL STATEMENTS

NOTE 1.  BASIS OF PRESENTATION

The financial statements for Heartsoft, Inc. (the "Company") for the nine months
ended December 31, 1998 and 1997, are unaudited and reflect all adjustments,
consisting of normal recurring adjustments, which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods. These financial statements should be read in conjunction with all other
publicly available information which is incorporated herein by reference. The
results of operations for the nine months ended December 31, 1998, are not
necessarily indicative of the results for the entire fiscal year ending March
31, 1999.

NOTE 2.  NATURE OF BUSINESS

Heartsoft, Inc.'s business is the development, publishing, and distribution of
early-learning educational computer software products for schools and parents
throughout the United States and to certain markets internationally.

NOTE 3.  CAPITALIZED SOFTWARE COSTS

Capitalization of software development costs begins when a project reaches
technological feasibility and includes the costs incurred until the project is
ready for release. Software development costs are amortized on the straight-line
method over a maximum of seven years or the expected life of the product,
whichever is less.


NOTE 4.  RESTATEMENT OF FINANCIAL STATEMENTS

On September 20, 1998, Heartsoft and Intercap Funding LTD ("Intercap") entered
into an agreement whereby Intercap agreed to provide consulting advisory
services over a three year period, primarily related to capital formation, in
exchange for 1.2 million shares of Heartsoft's Convertible Preferred Stock. On
March 16, 2001, Heartsoft issued 1.2 million shares of its common stock to
satisfy the Company's obligation under the agreement.

Upon issuance of the common stock, it was determined that the Company had not
previously given accounting recognition to the agreement. The value of the
agreement, based on the September 20, 1998, trading price of the common stock
into which the preferred stock was to have been convertible, was $240,000. This
value has been allocated to general and administrative expenses over the term of
the agreement. The Company's legal counsel has advised that the preferred stock
called for in the agreement could not have been validly issued prior to the time
the services were rendered. As a result, the obligation will be reported as an
accrued liability as it is accrued over the period October 1998 through March
2001. For the nine months ended December 31, 1998, a total of $26,989 for
consulting advisory services was recognized as general and administrative
expense.






                                       7
<PAGE>

ITEM 2:    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
           RESULTS OF OPERATIONS

This report contains forward-looking statements. These forward-looking
statements can generally be identified as such because the context of the
statement will include words such as the Company "believes", "plans", "intends",
"anticipates", "expects", or words of similar import. Similarly, statements that
describe the Company's future plans, objectives, estimates, or goals are also
forward-looking statements. Such statements address future events and conditions
concerning capital expenditures, earnings, litigation, liquidity, capital
resources, and accounting matters. Actual results in each case could differ
materially from those currently anticipated in such statements by reason of
factors such as economic conditions, including changes in customer demands;
future legislative, regulatory and competitive developments in markets in which
the Company operates; and other circumstances affecting anticipated revenues and
costs.

OVERVIEW

Heartsoft, Inc. develops and publishes educational computer software products
which educate and inspire the joy of learning in young children ages 4 through
12 years old. The company's primary emphasis has been upon publishing its early
learning products for schools and school districts in the United States.
However, late in 1998, the company also began to sell its products to parents of
young children and to international software markets world-wide.

The company distributes its products directly to the school market utilizing
various sales methods including it own inside sales force, independent school
resellers, major school catalog resellers, and from time to time, direct mail.
The company also sells its products to parents using software clubs distributed
through school teachers. The company's international sales are conducted through
international distributors in Australia and Canada.

The company's products range in price from under $40 for a single-user version
to over $1,300 for a building-wide license. During 1998, the company began to
focus a greater percentage of its marketing and sales efforts on larger-priced
configurations for entire school districts.

The mission of Heartsoft, Inc. is to create value for its shareholders through
the development, licensing, and distribution of engaging early-learning software
technologies for education in schools and homes. The company has achieved a
market share of approximately 10% of the 100,000+ elementary schools in the U.S.
since its inception, and plans to accelerate its market share significantly over
the next few years.

RESULTS OF OPERATIONS

Net Sales, derived from the combination of three revenue sources during fiscal
1997 and only two revenue sources during 1998, declined to $371,894 for the nine
months ending December 31, 1998, when compared to $1,006,774 for the same period
one year ago. The decrease in Net Sales is fully attributed to the elimination
of revenue from the company's unprofitable Advanced Technologies Division, which
was completely phased out during the fourth quarter of fiscal 1997, and a 67%
reduction of the one-time revenues derived from international product licensing.

Prior to December 31, 1998, the principle focus of the company was on the
development of the company's educational software product lines with only
minimal focus placed on product sales. During November, 1998, the company
completed all software development projects and shifted its focus to the
building of its marketing, sales, and distribution forces.

The company anticipates that results from these efforts will begin to have a
positive affect on the company's revenues during the fourth quarter, ending
March 31, 1999, continuing with a much larger, material affect on its revenue
growth during the first quarter of fiscal 1999, ending June 30, 1999.

                                       8
<PAGE>
COST OF GOODS SOLD

Cost of Goods sold for the nine months ended December 31, 1998 decreased by 44%
as a result of the shutdown of the unprofitable Advanced Technologies Division
which generated its revenues through the sale of 3rd party products. Sale of
these 3rd party products by the discontinued division greatly increased the
company's cost of goods since the products were purchased from publishers and
sold to end-users resulting in much smaller margins.

RESTRUCTURING AND OFFICE CLOSURE

Prior to December 31, 1998, the principle focus of the company was on the
development of the company's educational software product lines with only
minimal focus placed on product sales. During November, 1998, the company
completed all software development projects and shifted its focus to the
building of its marketing, sales, and distribution forces.

Also, during the fourth quarter of fiscal 1997, the company eliminated its
Advanced Technologies division in Dallas, Texas, and shifted all of its
available resources to its sole remaining core products division in Tulsa,
Oklahoma.

Certain on-going expenses related to the closing of the Advanced Technologies
Division were carried into 1998 and had a minor impact on Operating Expenses

OPERATING EXPENSES

Operating expenses increased for the nine months ended December 31, 1998,
to $1,058,593 compared to $657,528 for the period ending December 31, 1997.
Payroll expenses increased $16,630 or 10%. Administrative expense increased
$384,435. A breakdown of the major increases in administrative expense follows:
amortization expense increased $100,094 to correctly state accumulated
amortization of software development costs; interest expense increased $68,850
to recognize expense associated with issuance of stock; other expenses increased
$60,000 for settlement of a lawsuit; miscellaneous expense increased $53,404 as
a result of writing down fixed assets; advertising expense increased $42,739,
and professional fees increased $26,989 in conjunction with the consulting
advisory services disclosed in Note 4 to the financial statements.

NET INCOME (LOSS)

The Company experienced a net loss of $613,558 for the nine months ending
December 31, 1998, versus a net profit of $184,742 for the same period one year
ago. The decrease is the result of the elimination of revenues from the
company's Advanced Technologies division as well as the one-time charges
associated with the division's closing.

Additionally, the company's remaining core products division significantly
increased expenses associated with the establishment of its new inside sales
organization during the quarter ending December 31, 1998.

SALES AND MARKETING

The Company's sales and marketing efforts are comprised primarily of
compensation for the Company's sales and marketing personnel, advertising, trade
shows and other promotional costs.

For the foreseeable future it is the intention of the company to increase its
market share within the school, home, and home-school market with its current
product line and to expand or add to its product lines whenever it believes
favorable market conditions exist. Recent endorsements by third party reviews of
the company's new critical thinking skills product, Thinkology(r), have caused
the company to accelerate the growth of its marketing and sales strategy. As a
result, the company began to significantly increase staffing of its inside sales
group in November, 1998, and continuing into 1999.

                                       9
<PAGE>
The company believes that results from this expansion will begin to have a small
impact on revenues during its fourth fiscal quarter and will have a significant
impact on revenues during the first quarter of fiscal 1999.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1998 the Company's principle sources of liquidity included
cash and accounts receivable totaling $31,232. Additional working capital will
be required to expand operations. Management is considering options available in
providing such funding sources, including debt or equity financing.

YEAR 2000 ISSUES

The Company has reviewed its internal programs and has determined that there are
no significant Year 2000 issues within the Company's systems or services.

Further, all products sold by the company are Year 2000 compliant and will
impose no Year 2000 problems for its customers.



PART II -- OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES

Recent Sales of Unregistered Securities

During the nine months ended December 31, 1998, the Company has issued the
following securities without registering the securities under the Securities Act
of 1933:

--------------------------------------------------------------------------------
CLASS OF PERSONS                     CONSIDERATION
--------------- ----------------------------------------------------------------
Individuals     A total of 176,500 shares of common stock were issued for cash
                consideration.
--------------- ----------------------------------------------------------------
Individual      A total of 37,500 shares were issued for cash consideration
                received in a prior period.
--------------- ----------------------------------------------------------------
Individual      A total of 210,000 shares of common stock were issued to induce
                an individual to enter into two separate promissory notes.
--------------- ----------------------------------------------------------------
Individuals     A total of 74,427 shares of common stock were issued for
                investor relations, marketing, financial and legal services.
--------------- ----------------------------------------------------------------
Employees       A total of 8,000 shares of common stock were granted for
                services
--------------- ----------------------------------------------------------------
Individuals     A total of 425,200 shares of common stock were granted for
                conversion of convertible preferred stock.
--------------- ----------------------------------------------------------------
Individual      A total of 330,000 shares of common stock were issued for
                settlement of a disputed employment contract.
--------------- ----------------------------------------------------------------
Individuals     A total of 4,280 shares of common stock were issued to
                individuals in lieu of preferred stock dividends.
--------------- ----------------------------------------------------------------
Leasing         A total of 60,000 shares were issued to a leasing company for
Company         collateral against a lease.
--------------------------------------------------------------------------------

The Company relied on the exemption set forth in Section 4(2) of the Securities
Act of 1933, as amended, in connection with the issuances of stock set forth
above. All parties listed above are sophisticated persons or entities, performed
services for the Company or had prior or existing relationships with members of
Company's management staff at the time of the transactions listed above.

                                       10
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.


(a)     Exhibits:

     EXHIBIT NO.                 DESCRIPTION
--------------------------------------------------------------------------------
        10.1         Consulting Agreement by and between Heartsoft, Inc. and
                     Intercap Funding LTD dated September 20, 1998.
                     (Incorporated by reference to the Company's Form 10-QSB for
                     the period ended March 31, 2001, which was filed on May 15,
                     2001.)



(b)     Reports on Form 8-K:

        No reports on Form 8-K were filed during the nine-month period ended
        December 31, 1998.

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

                                   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.


                                   HEARTSOFT, INC.
                                   (Registrant)


July 13, 2001                      /s/ Benjamin P. Shell
-----------------------            ----------------------------
                                   Chairman of the Board, President, and CEO


July 13, 2001                      /s/ Rodger Graham
-----------------------            ----------------------------
                                   Chief Financial Officer





                                       11