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           April 30, 1997



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
                                           Outstanding at June 5, 1997
     Common                                         4,647,632


<PAGE>
                      IQ SOFTWARE CORPORATION 
                              Form 10-Q
                    Quarter Ended April 30, 1997
                          Table of Contents

                                                               Page
                                                               Number

     Part I.  Financial Information

Item 1.   Financial Statements

          Condensed Consolidated Balance Sheets -
          April 30, 1997 (unaudited) and January 31, 1997        3

          Condensed Consolidated Statements of Income 
          (unaudited) - Three months ended April 30, 1997
          and 1996                                               4

          Condensed Consolidated Statements of Cash Flows
          (unaudited) - Three months ended April 30, 1997
          and 1996                                               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                       10

          Signatures                                             10

<PAGE>


                  PART I.  FINANCIAL INFORMATION

Item 1.   Financial Statements

<TABLE>

                                       IQ SOFTWARE CORPORATION AND SUBSIDIARIES
                                         CONDENSED CONSOLIDATED BALANCE SHEETS
               
                                                                                April 30, 1997    January 31, 1997
                                                                                  (unaudited)
                                                               ASSETS                
<S>                                                                                <C>               <C>
Current Assets:               
     Cash and cash equivalents..............................................       $ 4,902,900       $ 4,258,458
     Marketable securities..................................................         5,009,963         4,944,596
     Accounts receivable:
          Billed............................................................         4,811,388         5,452,025
          Non-billed........................................................         3,816,083         3,276,880
                                                                                   -----------       ----------- 
                                                                                     8,627,471         8,728,905
     Allowance for doubtful accounts........................................          (641,945)         (654,227)
                                                                                   -----------       -----------
                                                                                     7,985,526         8,074,678
     Note receivable from affiliate (Note 2)................................         1,800,000         1,800,000
     Prepaid expenses and other current assets..............................         1,282,256         1,314,316
                                                                                   -----------       -----------
Total current assets........................................................        20,980,645        20,392,048
Property and equipment:            
     Furniture and fixtures.................................................         1,185,817         1,192,163
     Equipment..............................................................         4,890,646         4,733,355
                                                                                   -----------       -----------
                                                                                     6,076,463         5,925,518
Allowance for depreciation..................................................        (4,511,172)       (4,296,835)
                                                                                   -----------       -----------
                                                                                     1,565,291         1,628,683
Capitalized software development costs, net of accumulated amortization of           
      $575,000 at April 30, 1997 and  $457,000 at January 31, 1997..........         1,422,145         1,312,776
Purchased software, net of accumulated amortization of $535,000 as of           
      April 30, 1997 and $458,000 at January 31, 1997.......................           464,891           542,345
Goodwill, net of accumulated amortization of $172,000 as of April 30, 1997           
     and $134,000 at January 31, 1997.......................................         1,318,575         1,242,886 
Other assets................................................................           176,118           176,118
                                                                                   -----------       -----------
     Total assets...........................................................       $25,927,665       $25,294,856
                                                                                   ===========       ===========

                                         LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:               
     Accounts payable.......................................................       $   724,695       $   548,153
     Accrued expenses.......................................................           525,965           821,039
     Unearned revenue.......................................................         1,498,670         1,357,090
     Income taxes payable...................................................           275,772            75,136
     Current portion of deferred income taxes...............................           301,000           312,000
                                                                                   -----------       -----------
Total current liabilities...................................................         3,326,102         3,113,418
               
Deferred income taxes, less current portion.................................           332,000           353,000
               
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 - 4,647,632 at April 30, 1997           
        and 4,647,632 at January 31, 1997...................................             1,534             1,534
Additional paid-in capital..................................................        12,912,089        12,912,089
Retained earnings...........................................................         9,395,075         8,991,959
Net unrealized gain on marketable securities available for sale.............             3,110            20,622
Foreign currency translation adjustments....................................           (42,245)          (97,766)
                                                                                   -----------       ----------- 
     Total shareholders' equity.............................................        22,269,563        21,828,438
                                                                                   -----------       -----------
     Total liabilities and shareholders' equity.............................       $25,927,665       $25,294,856
                                                                                    ===========       ===========
</TABLE>
            See Notes to Condensed Consolidated Financial Statements
<PAGE>




Item 1.   Financial Statements (continued)

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

                                                                                          Three Months Ended
                                                                                               April 30,
                                                                                      1997                1996
<S>                                                                                 <C>                <C>
Revenues:           
    License fees............................................................       $3,802,706          $4,108,457
    Service fees............................................................        2,178,705           1,798,230
                                                                                   ----------          ----------
                                                                                    5,981,411           5,906,687
Operating expenses:           
    Cost of license fees....................................................          268,210             282,871
    Cost of service fees....................................................          782,375             751,526
    Development ............................................................          517,882             497,935
    Selling ................................................................        3,064,474           2,597,151
    General and administrative..............................................        1,025,075           1,069,334
                                                                                   ----------          ----------
       Total operating expenses.............................................        5,658,016           5,198,817
                                                                                   ----------          ----------
               
Operating income ...........................................................          323,395             707,870
                 
Investment income, net......................................................          124,721             107,946
                                                                                   ----------          ----------
               
Income before income taxes..................................................          448,116             815,816
Income tax..................................................................           45,000             224,000
                                                                                   ----------          ----------
Net income .................................................................       $  403,116          $  591,816
                                                                                   ==========          ==========

Net income per common and common equivalent share...........................       $     0.09          $     0.13
                                                                                   ==========          ==========
               
Weighted average number of common and             
  common equivalent shares outstanding......................................        4,700,000           4,648,000
                                                                                   ==========          ==========
</TABLE>
           See Notes to Condensed Consolidated Financial Statements    
<PAGE>                                                                 
                                                    
         




Item 1.       Financial Statements (continued)

<TABLE>

                                       IQ SOFTWARE CORPORATION AND SUBSIDIARIES
                                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (unaudited)
                                                           
                                                                                          Three Months Ended
                                                                                               April 30,
                                                                                       1997                1996
<S>                                                                                <C>                 <C>
Operating activities:              
Net income .................................................................       $   403,116         $   591,816
Adjustments to reconcile net income               
  to net cash provided by operating activities:             
  Depreciation and amortization.............................................           473,630             509,614
  Deferred income taxes.....................................................           (21,000)            (31,505)
  Loss (gain) on disposal of equipment......................................               693              (9,854)
  Changes in operating assets and liabilities:              
    Accounts receivable.....................................................           122,886            (405,303)
    Prepaid expenses and other current assets...............................            36,518              (8,811)
    Accounts payable........................................................           171,249            (293,328)
    Accrued expenses........................................................          (297,659)            (94,727)
    Unearned revenue........................................................           135,768            (121,982)
    Income taxes  payable...................................................           200,398              61,879
                                                                                   -----------         -----------   
Net cash provided by operating activities...................................         1,225,599             197,799
               
Investing activities:              
Purchase of property and equipment..........................................          (180,701)            (60,027)
Additions of capitalized software development costs.........................          (226,666)           (243,533)
Purchase of marketable securities, net......................................           (94,784)         (1,374,281)
Payments in connection with the acquisition of Skribe Software, Inc.........          (113,868)           (119,640)
                                                                                   -----------         -----------
Net cash used in investing activities.......................................          (616,019)         (1,797,481)
               
Financing activities:              
Proceeds from issuance of common stock......................................                --             434,873
                                                                                   -----------         -----------
Net cash provided by  financing activities..................................                --             434,873
Effect of exchange rate changes on cash.....................................            34,862              (1,997)
                                                                                   -----------         -----------
Net increase (decrease) in cash and cash equivalents........................           644,442          (1,166,806)
Cash and cash equivalents at beginning of period............................         4,258,458           5,632,580
                                                                                   -----------         -----------
Cash and cash equivalents at end of period..................................       $ 4,902,900         $ 4,465,774
                                                                                   ===========         ===========
               
               
Supplemental disclosure of cash flow information:           
Cash paid during the period for interest....................................       $       530         $     3,790
                                                                                   ===========         ===========
Cash paid during the period for income taxes................................       $    33,950         $    64,162
                                                                                   ===========         ===========
</TABLE>
      See Notes to Condensed Consolidated Financial Statements
<PAGE>



              IQ SOFTWARE CORPORATION AND SUBSIDIARIES
        Notes to Condensed Consolidated Financial Statements
                           April 30, 1997
                             (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.   Note Receivable From Affiliate

     On April 18, 1995, the Company loaned $1.8 million to Daystar
Digital, Inc. pursuant to a note receivable (the "Note").  Under the
terms of the agreement, the Note was payable one year from the date of
the agreement.  The Note bore interest payable monthly at a rate of
prime plus 1/2 percent, adjusted quarterly, and was renewable at the
end of one year.  The interest rate on the date of the agreement was 9
1/2%.  The Company renewed the original agreement with Daystar
Digital, Inc. for an additional term ending June 30, 1997.  Under the
terms of the renewal, the Note bears interest payable monthly at a
rate of prime plus 1-1/2 percent, adjusted quarterly. The Note is
guaranteed by Intelligent Systems Corporation and is secured by
154,904 shares of the Company's common stock and certificates of
deposit totalling $1,364,137 owned by Intelligent Systems Corporation.

<PAGE>
3.   Earnings Per Share
     
     In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share, which is required to be adopted
for the Company's fourth quarter ending January 31, 1998.  At that
time the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods
presented.  Under Statement No. 128, the Company is required to
present both "basic" and "diluted" earnings per share for each period
presented.  Under the new requirements for calculating basic earnings
per share, the dilutive effect of stock options will be excluded.  The
following table sets forth the pro forma results had earnings per
share been calculated under Statement No. 128 for the three months
ended April 30, 1997 and 1996:

                                               Three months ended
                                                    April 30,
                                               1997         1996
               
 Basic earnings per share                   $    0.09   $    0.13
                                            =========   =========
               
 Weighted average common and            
  common equivalent shares outstanding      4,648,000   4,535,000
                                            =========   =========
               
 Diluted earnings per share                 $    0.09   $    0.13
                                           ==========   =========
               
 Weighted average common and            
  common equivalent shares outstanding      4,700,000   4,658,000
                                            =========   =========

4.   Reclassifications

     Certain prior-year amounts have been reclassified to conform with
current year presentation in the accompanying consolidated financial
statements.
<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 $376,000 to $17,655,000
as of April 30, 1997 from $17,279,000 as of January 31, 1997.  This
increase was due primarily to increases in working capital provided
from operations partially offset by additions to capitalized software
development cost of $227,000 and property and equipment additions of
$181,000.
  
     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 $5,981,000 for the quarter ended April 30, 1997
and $5,907,000 for the quarter ended April 30, 1996, an increase of
$74,000 or 1%. License fees were $3,803,000 for the quarter ended
April 30, 1997 and $4,108,000 for the quarter ended April 30, 1996, a
decrease of $305,000 or 7%.

     Service fees were $2,179,000 for the quarter ended April 30, 1997
compared to $1,798,000 for the quarter ended April 30, 1996, an
increase of $381,000 or 21%.  Service fees increased principally as a
result of 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 $268,000 or 4% of revenues for the quarter ended
April 30, 1997.  For the comparable quarter of the prior year, cost of
license fees was $283,000 or 5% of revenues. The decrease in cost of
license fees in dollars and as a percentage of revenue for the quarter
ended April 30, 1997 is due primarily to decreases in amortization of
capitalized software development. Amortization of capitalized software
development costs was  $195,000 and $230,000 for the quarters ended
April 30, 1997 and 1996, respectively.

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 $782,000 or 13% of
revenues 

<PAGE>
for the quarter ended April 30, 1997.  Cost of service fees was
$752,000 or 13% of revenues for the quarter ended April 30, 1996.  The
increase in cost of service fees in dollars is due principally to
increases in the Company's training and consulting staff.  The Company
expects costs of service fees to continue to increase in dollars in
conjunction with the increases in the Company's service fee revenues.

Development Expenses

     Development expenses were $518,000 or 9% of revenues for the
quarter ended April 30, 1997 and $498,000 or 8% of revenues for the
quarter ended April 30, 1996. The increase in development expenses in
dollars and as a percentage of revenue is due principally to the
addition of personnel needed for modifying, porting and enhancing all
the Company's products and for developing new products and decreased
capitalization of software development costs. The Company capitalized
$227,000 and $244,000 of development expenditures for the quarters
ended April 30, 1997 and 1996, respectively.

Selling Expenses

     Selling expenses were $3,064,000 for the quarter ended April 30,
1997 and $2,597,000 for the quarter ended April 30, 1996, an increase
of 18%.  Selling expenses as a percentage of revenues were 51% for the
quarter ended April 30, 1997 and 44% for the quarter ended April 30,
1996.  The increase in selling expenses in dollars and as a percentage
of revenues is due principally to the addition of sales and marketing
personnel and increased marketing expenses.

General and Administrative Expenses

     General and administrative expenses were $1,025,000 for the
quarter ended April 30, 1997 and $1,069,000 for the quarter ended
April 30, 1996, a decrease of 4%. General and administrative expenses
were 17% of revenues for the quarter ended April 30, 1997 and 18% for
the quarter ended April 30, 1996.

Income Taxes

     The Company's effective tax rates on pretax income were 10 % and
28% for the quarters ended April 30, 1997 and 1996, respectively. 
Income tax expense was $45,000 and $224,000 for the quarters ended
April 30, 1997 and 1996, respectively.  The decrease in income tax
expense for the quarter ended April 30, 1997 was due to a decrease in
operating income and a relative increase of tax free interest income
as a percentage of total pretax income.

     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 April 30, 1997 was approximately $704,000.  The tax
liability on these earnings, if repatriated, would not be material.

Income Per Share

     Net income per share decreased to $0.09 from $0.13 for the
quarters ended April 30, 1997 and 1996, respectively.  This decrease
was due primarily to decreased income from operations.
<PAGE>



                     PART II.  OTHER INFORMATION


Item 6.   Exhibits and Reports on Form 8-K

     (a)  Exhibits

          11.  Computation of Primary and Fully Diluted Per Share
               Earnings

     (b)  Reports on Form 8-K

          None




                         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)

Date   June 14, 1997

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


                                        By: /s/ J. Kent Elmer
                                             J. Kent Elmer
                                               Controller
                                    (Principal Accounting Officer) 
<PAGE>


EXHIBIT 11
<TABLE>

                                       IQ SOFTWARE CORPORATION AND SUBSIDIARIES
                             COMPUTATION OF PRIMARY AND FULLY DILUTED PER SHARE EARNINGS 


                                                                                          Three Months Ended
                                                                                              April 30,
                                                                                     1997                 1996
<S>                                                                                <C>                 <C>
PRIMARY             
               
   Weighted average Common Shares outstanding...............................       4,648,000           4,535,000
               
   Net effect of dilutive stock options-based on the             
     treasury stock method..................................................          52,000             113,000
                                                                                   ---------           ---------

   Total....................................................................       4,700,000           4,648,000
                                                                                   =========           =========
               
   Net income ..............................................................       $ 403,116           $ 591,816
                                                                                   =========           =========

   Net income per share.....................................................       $    0.09           $    0.13
                                                                                   =========           =========

FULLY DILUTED            
               
   Weighted average Common Shares outstanding...............................       4,648,000           4,535,000
               
   Net effect of dilutive stock options-based on the             
     treasury stock method..................................................          52,000             123,000
                                                                                   ---------           ---------
 
   Total....................................................................       4,700,000           4,658,000
                                                                                   =========           =========

   Net income ..............................................................       $ 403,116           $ 591,816
                                                                                   =========           =========

   Net income per share.....................................................       $    0.09           $    0.13
                                                                                   =========           =========
</TABLE>