SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549
                                    
                                Form 10-Q
                                    
              Quarterly Report Under Section 13 or 15(d) of
                   the Securities Exchange Act of 1934


For Quarter Ended              July 31, 1998



Commission file number            0-20085


                         IQ SOFTWARE CORPORATION

         (Exact name of registrant as specified in its charter)





           GEORGIA                                      58-1614492
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                      Identification No.)

                  3295 River Exchange Drive, Suite 550
                           Norcross, Georgia 
                                  30092
                 (Address of principal executive office)
                               (Zip Code)
                                    
                             (770) 446-8880
          (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.


Yes X   No


Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

                Class                          Number of Shares
               Common                   Outstanding at August 24, 1998
                                                  4,682,466
<PAGE>
                        IQ SOFTWARE CORPORATION 
                                Form 10-Q
                       Quarter Ended July 31, 1998
                                    
                            Table of Contents

                                                                Page
                                                               Number

          Part I.  Financial Information

Item 1.   Financial Statements

          Condensed Consolidated Balance Sheets -
          July 31, 1998 (unaudited) and January 31, 1998         3

          Condensed Consolidated Statements of Income 
          (unaudited) -  Three months and six months 
          ended July 31, 1998 and 1997                           4

          Condensed Consolidated Statements of Cash Flows 
          (unaudited) -  Six months ended July 31, 1998 
          and 1997                                               5

          Notes to Condensed Consolidated Financial Statements   6


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



          Part II.  Other Information

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

          Signatures                                            11

<PAGE>
                     PART I.  FINANCIAL INFORMATION

Item 1.   Financial Statements

                   IQ SOFTWARE CORPORATION AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
                                                                                      July 31, 1998       January 31, 1998
                                                                                       (unaudited)

<S>                                                                                    <C>                  <C>

                                  ASSETS  


Current Assets:
     Cash and cash equivalents                                                         $ 7,862,374          $ 5,595,113
     Marketable securities                                                               9,496,723            9,176,780
     Accounts receivable:
          Billed                                                                         6,812,382            6,079,074
          Non-billed                                                                     1,825,339            2,526,542
                                                                                       -----------          -----------
                                                                                         8,637,721            8,605,616
          Allowance for doubtful accounts                                                 (876,566)            (829,312)
                                                                                       -----------          -----------
                                                                                         7,761,155            7,776,304
     Prepaid expenses and other current assets                                             955,397              909,988
                                                                                       -----------          -----------
Total current assets                                                                    26,075,649           23,458,185

Property and equipment:
     Furniture and fixtures                                                              1,115,689            1,095,854
     Equipment                                                                           5,200,190            5,106,613
                                                                                       -----------          -----------
                                                                                         6,315,879            6,202,467
Allowance for depreciation                                                              (5,331,048)          (4,925,784)
                                                                                       -----------          -----------
                                                                                           984,831            1,276,683
Capitalized software development costs, net of accumulated amortization of
      $1,623,000 at July 31, 1998 and  $1,142,000 at January 31, 1998                    1,422,387            1,729,281
Purchased software, net of accumulated amortization of $334,000 at
      July 31, 1998 and $262,000 at January 31, 1998                                       166,352              237,650
Goodwill, net of accumulated amortization of $416,000 at July 31, 1998
      and $320,000 at January 31, 1998                                                   1,352,093            1,445,566
Other assets                                                                               176,703              182,671
                                                                                       -----------          -----------
     Total assets                                                                      $30,178,015          $28,330,036
                                                                                       ===========          ===========

                 LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
     Accounts payable                                                                  $   652,562          $   572,027
     Accrued expenses                                                                      797,749              943,767
     Unearned revenue                                                                    2,078 756            1,786 575
     Income taxes payable                                                                  562,703              465,076
     Current portion of deferred income taxes                                                   --               22,000
                                                                                       -----------          -----------
Total current liabilities                                                                4,091,770            3,789,445
Deferred income taxes, less current portion                                                514,000              484,000

Shareholders' equity:
Preferred stock, $.01 par value:
     Authorized shares - 5,000,000 - Issued and outstanding shares - none                       --                   --
Common stock, $.00033 par value:
     Authorized shares - 30,000,000
     Issued and outstanding shares - 4,682,466 at July 31, 1998
        and 4,666,466 at January 31,1998                                                     1,545                1,540
Additional paid-in capital                                                              13,125,230           13,071,891
Retained earnings                                                                       12,446,976           10,968,071
Accumulated other comprehensive income (loss)                                               (1,506)             (15,089)
                                                                                       -----------          -----------
     Total shareholders' equity                                                         25,572,245           24,056,591
                                                                                       -----------          -----------
     Total liabilities and shareholders' equity                                        $30,178,015          $28,330,036
                                                                                       ===========          ===========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements
<PAGE>



Item 1.   Financial Statements (continued)


                IQ SOFTWARE CORPORATION AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                               (unaudited)

          
<TABLE>
                                                    Three Months Ended                Six Months Ended
                                                          July 31,                         July 31,
                                                   1998           1997               1998            1997
<S>                                             <C>            <C>               <C>             <C>
Revenue:
    License fees                                $3,769,822     $3,770,242        $ 7,424,421     $ 7,572,948
    Service fees                                 2,954,931      2,333,126          5,568,875       4,511,831
                                                ----------     ----------        -----------     -----------
                                                 6,724,753      6,103,368         12,993,296      12,084,779

Operating expenses:
    Cost of license fees                           404,042        396,446            795,512         664,657
    Cost of service fees                           986,515        816,640          2,001,192       1,599,015
    Development                                    653,729        587,176          1,302,063       1,105,058
    Selling                                      2,576,378      2,787,627          4,887,637       5,852,101
    General and administrative                   1,220,725      1,087,183          2,307,449       2,112,258
                                                ----------     ----------        -----------     -----------
           Total operating expenses              5,841,389      5,675,072         11,293,853      11,333,089
                                                ----------     ----------        -----------     -----------
    
Operating income                                   883,364        428,296          1,699,443         751,690

Investment income, net                             197,472        167,635            373,461         292,356
                                                ----------     ----------        -----------     -----------

Income before income taxes                       1,080,836        595,931          2,072,904       1,044,046
Income taxes                                       314,000        100,000            594,000         145,000 
                                                ----------     ----------        -----------     -----------
Net income                                      $  766,836     $  495,931        $ 1,478,904     $   899,046
                                                ==========     ==========        ===========     ===========
           
Net income per common share:
    Basic                                       $     0.16     $     0.11        $      0.32     $      0.19
                                                ==========     ==========        ===========     ===========
    Diluted                                     $     0.16     $     0.11        $      0.31     $      0.19
                                                ==========     ==========        ===========     ===========

Weighted average number of common and
  common equivalent shares outstanding:
    Basic                                        4,677,000      4,648,000          4,673,000       4,648,000
    Diluted                                      4,827,000      4,677,000          4,780,000       4,689,000
</TABLE>

              See Notes to Condensed Consolidated Financial Statements
<PAGE>                                                                   

Item 1.       Financial Statements (continued)

                IQ SOFTWARE CORPORATION AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (unaudited)

<TABLE>
                                                                                        Six  Months Ended
                                                                                             July 31,
                                                                                      1998            1997
<S>                                                                               <C>              <C>
Operating activities:
Net income                                                                        $1,478,904       $  899,046
Adjustments to reconcile net income
  to net cash provided by operating activities:
  Depreciation and amortization                                                    1,163,944        1,004,444
  Deferred income taxes                                                              (94,000)         (22,000)
  Gain on disposal of equipment                                                      (11,051)          (1,636)
  Changes in operating assets and liabilities:
    Accounts receivable                                                               (5,232)        (401,857)

    Prepaid expenses and other current assets                                          2,108         (131,465)
    Accounts payable                                                                  96,268           74,574
    Accrued expenses                                                                (158,622)          20,374
    Unearned revenue                                                                 318,023          181,814
    Income taxes payable                                                             153,446          229,638
                                                                                  ----------       ----------
Net cash provided by operating activities                                          2,943,788        1,852,932

Investing activities:
Purchase of property and equipment                                                  (120,176)        (295,627)
Additions of capitalized software development costs                                 (269,200)        (453,552)
Payment under note receivable (Note 2)                                                    --        1,800,000
Purchase of marketable securities, net                                              (338,553)        (505,707)
Payments in connection with the acquisition of Skribe Software, Inc.                      --         (199,544)
Other investing activities                                                             5,968               --
                                                                                  ----------       ----------
Net cash provided (used) in investing activities                                    (721,961)         345,570

Financing activities:
Proceeds from issuance of common stock                                                53,344               --
                                                                                  ----------       ----------
Net cash provided by financing activities                                             53,344               --
Effect of exchange rate changes on cash                                               (7,910)          21,973
                                                                                  ----------       ----------
Net increase in cash and cash equivalents                                          2,267,261        2,220,475
Cash and cash equivalents at beginning of period                                   5,595,113        4,258,458
                                                                                  ----------       ----------
Cash and cash equivalents at end of period                                        $7,862,374       $6,478,933
                                                                                  ==========       ==========

Supplemental disclosure of cash flow information:
Cash paid during the period for interest                                          $       --       $      530
                                                                                  ==========       ==========
Cash paid during the period for income taxes                                      $  524,250       $  122,450
                                                                                  ==========       ==========
</TABLE>

     See Notes to Condensed Consolidated Financial Statements
<PAGE>

                IQ SOFTWARE CORPORATION AND SUBSIDIARIES
          Notes to Condensed Consolidated Financial Statements
                              July 31, 1998
                               (unaudited)


1.   Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the results of operations
have been included.


2.   Earnings Per Share
     
     In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 128, "Earnings per
Share" ("Statement No. 128").  Statement No. 128 replaced the previously
reported primary and fully diluted earnings per share with basic and
diluted earnings per share.  Unlike primary earnings per share, basic
earnings per share excludes any dilutive effect of options, warrants and
convertible securities.  Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share.  All earnings per
share amounts for all periods have been presented, and where appropriate,
restated to conform to the Statement No. 128 requirements.  The diluted
weighted average common shares were calculated by adding common share
equivalents of 150,000 and 29,000 to the basic weighted average common
shares for the three months ended July 31, 1998 and 1997, respectively.
For the six months ended July 31, 1998 and 1997, common share equivalents
were 107,000 and 41,000, respectively.

3.   Comprehensive Income

     In June 1997, the FASB issued Statement No. 130, "Reporting
Comprehensive Income" ("Statement No. 130"), which establishes standards
for reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses) in financial statements.  Statement
No. 130 is effective for fiscal years beginning after December 15, 1997. 
The Company adopted Statement No. 130 on February 1, 1998 and has not
presented a statement of comprehensive income because the effect of the
components of comprehensive income is not material to its consolidated
financial statements.  Accumulated other comprehensive loss for the six
months ended July 31, 1998 was ($1,506) and consisted of net unrealized
gain on marketable securities available for sale of $34,058, and a loss on
foreign currency translation adjustments of ($35,564).  Accumulated other
comprehensive loss for the quarter ended July 31, 1998 was ($87,402) and
consisted of net unrealized loss on marketable securities available for
sale of ($2,232), and a loss on foreign currency translation adjustments of
($85,170).


4.   Revenue Recognition

     In January 1998, the Company adopted the American Institute of
Certified Public Accountants ("AICPA") Statement of Position 97-2,
"Software Revenue Recognition," ("SOP 97-2"), as amended, which supersedes
SOP 91-1.  While some principles remain the same, there are several key
differences 

<PAGE>
between the two pronouncements, including accounting for multiple element
arrangements.  SOP 97-2 addresses revenue recognition from a conceptual
level and does not specifically provide implementation guidance.  The
Company, based on its reading and interpretation of SOP 97-2, has not
materially altered its accounting for license and services agreements in
the current period.  Revenue recognition under SOP 97-2 may, in the future,
result in a deferral of license fee revenue compared to revenue recognition
under SOP 91-1 for some agreements.
<PAGE>

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

Liquidity and Capital Resources

     The Company's working capital increased $2,315,000 to $21,984,000 as
of July 31, 1998 from $19,669,000 as of January 31, 1998.  This increase
was due primarily to increases in working capital provided from operations
partially offset by additions to capitalized software development cost of
$269,000 and property and equipment additions of $120,000.
  
     The Company believes that the current cash, cash equivalents and cash
flow from operations will be sufficient to provide the liquidity and
capital resources to meet its lease obligations and to finance operating
needs, research and development activities and planned growth for at least
the next twelve months.

Results of Operations

  Revenues

      Revenues were $12,993,000 for the six months ended July 31, 1998 and
$12,085,000 for the six months ended July 31, 1997, an increase of $908,000
or 8%.  Revenues were $6,725,000 for the quarter ended July 31, 1998 and
$6,103,000 for the quarter ended July 31, 1997, an increase of $622,000 or
10%.

      License fees were $7,424,000 for the six months ended July 31, 1998
compared to $7,573,000 for the six months ended July 31, 1997, a decrease
of $149,000 or 2%.  License fees were $3,770,000 for the quarter ended July
31, 1998 and $3,770,000 for the quarter ended July 31, 1997.  License fees
for the six months ended July 31, 1998 decreased primarily as a result of
the continued declining sales of the Company's older generation products.  

      Service fees  were $5,569,000 for the six months ended July 31, 1998
compared to $4,512,000 for the six months ended July 31, 1997, an increase
of $1,057,000 or 23%.  Service fees were $2,955,000 for the quarter ended
July 31, 1998 compared to $2,333,000 for the quarter ended July 31, 1997,
an increase of $622,000 or 27%.  Service fees increased principally as a
result of the increase in the installed base of the Company's software
products and increases in training and consulting revenues.

Cost of License Fees

     Cost of license fees includes the amortization of capitalized software
development costs, royalties related to licensed products and the costs of
magnetic media, packaging and documentation.  Cost of license fees was
$796,000 or 6% of revenues and $665,000 or 6% of revenues for the six
months ended July 31, 1998 and 1997, respectively.  Cost of license fees
was $404,000 or 6% of revenues for the quarter ended July 31, 1998.  For
the comparable quarter of the prior year, cost of license fees was $396,000
or 6% of revenues. 

<PAGE>
Cost of Service Fees

     Cost of service fees consists of the costs associated with supplying
customers with technical assistance and training and consulting services.
Cost of  service fees was $2,001,000 or 15% of revenues and $1,599,000 or
13% of revenues for the six months ended July 31, 1998 and 1997,
respectively.  Cost of service fees was $987,000 or 15% of revenues for the
quarter ended July 31, 1998.  Cost of service fees was $817,000 or 13% of
revenues for the quarter ended July 31, 1997.  The increase in cost of
service fees in dollars is due principally to increases in the Company's
support, training and consulting staffs.  The Company expects costs of
service fees to continue to increase in dollars as the Company's customer
base expands.  Cost of service fees increased as a percentage of revenue
due primarily to an increase in service fees as a percentage of revenue.

Development Expenses

     Development expenses were $1,302,000 or 10% of revenues for the six
months ended July 31, 1998 compared to $1,105,000 or 9% of revenues for the
six months ended July 31, 1997, an increase of 18%.  Development expenses
were $654,000 or 10% of revenues for the quarter ended July 31, 1998 and
$587,000 or 10% of revenues for the quarter ended July 31, 1997, an
increase of 11%. The increase in development expenses in dollars and as a
percentage of revenue is due principally to an increase in the number of
current development projects which have not yet reached technological
feasibility and an increase in the costs associated with translating the
Company's products into foreign languages. 

Selling Expenses

     Selling expenses were $4,888,000 for the six months ended July 31,
1998 as compared to $5,852,000 for the six months ended July 31, 1997, a
decrease of 16%.  Selling expenses were $2,576,000 for the quarter ended
July 31, 1998 and $2,788,000 for the quarter ended July 31, 1997, a
decrease of 8%.  Selling expenses as a percentage of revenues were 38% for
the six months ended July 31, 1998 and 48% for the six months ended July
31, 1997, and 38% for the quarter ended July 31, 1998 and 46% for the
quarter ended July 31, 1997.  The decrease in selling expenses in dollars
and as a percentage of revenues is due principally to a reduction in the
number of sales and marketing personnel related to a change in the sales
organization of the Company in fiscal 1998.  

General and Administrative Expenses

     General and administrative expenses were $2,307,000 for the six months
ended July 31, 1998 and $2,112,000 for the six months ended July 31, 1997,
an increase of 9%.  General and administrative expenses were $1,221,000 for
the quarter ended July 31, 1998 and $1,087,000 for the quarter ended July
31, 1997, an increase of  12%. General and administrative expenses were 18%
of revenues for the six months ended July 31, 1998 and 17% of revenues for
the six months ended July 31, 1997.  These expenses were 18% of revenues
for the quarter ended July 31, 1998 and 18% for the quarter ended July 31,
1997.  The increase in general and administrative expenses in dollars for
the six months and quarter ended July 31, 1998 is due primarily to legal
expenses related to the Company's class action litigation.

Income Taxes

     The Company's effective tax rate on pretax income was 29% and 14% for
the six months ended July 31, 1998 and 1997, respectively, and 29% and 17%
for the quarters ended July 31, 1998 and 1997, respectively.  Income tax
expense was $594,000 and $145,000 for the six months ended July 31, 1998 
<PAGE>
and 1997, respectively.  Income tax expense was $314,000 and $100,000 for
the quarters ended July 31, 1998 and 1997, respectively.  The increase in
income tax expense for the six months and the quarter ended July 31, 1998
was due principally to an increase in operating income.  The increase in
the effective tax rate for the six months and quarter ended July 31, 1998
was due principally to the lesser relative effect tax credits had on the
higher operating income, and a reduction in the percentage effect of
tax-free investment income because of the increase in income from
operations.

     The Company does not provide for U.S. federal income taxes on
undistributed earnings of foreign subsidiaries as such earnings are
considered to be permanently reinvested.  The amount of undistributed
earnings which would be subject to U.S. federal income tax if repatriated
as of July 31, 1998 was approximately $1,241,000.  The tax liability on
these earnings, if repatriated, would not be material.

Income Per Share

     Net income per share, assuming dilution, increased to $0.31 from
$0.19, or 63%, for the six months ended July 31, 1998 and 1997,
respectively.  Net income per share, assuming dilution, increased to $0.16
from $0.11, or 45%, for the quarters ended July 31, 1998 and 1997,
respectively.  This increase was due primarily to increased income from
operations.

<PAGE>

                       PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

         (a)   Exhibits

               None

         (b)   Reports on Form 8-K

               A report dated June 29, 1998 was filed during the quarter
               ended July 31, 1998, reporting under Item 5, Other Events,
               the Agreement and Plan of Merger, by and among Information
               Advantage, Inc., a Delaware corporation (Information
               Advantage), IAC Merger Corporation, a Georgia corporation
               and wholly-owned subsidiary of Information Advantage
               ("Merger Sub") and the Corporation; and the Press Release
               announcing the signing of the Agreement and Plan of Merger.




                           S I G N A T U R E S



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.


                                            IQ SOFTWARE CORPORATION
                                       . . . . . . . . . . . . . . . . .
                                                  (Registrant)

           September 10, 1998
Date:  . . . . . . . . . . . . . . . 

                                               /s/ Charles R. Chitty
                                       By:. . . . . . . . . . . . . . . . .
                                                   Charles R. Chitty
                                                Chairman, President and
                                                Chief Executive Officer
                                             (Principal Executive Officer)

                                              /s/ J. Kent Elmer
                                       By:  . . . . . . . . . . . . . . . .
                                                  J. Kent Elmer
                                            Vice President Finance
                                         (Principal Accounting Officer)