UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                             ----------------------

                                    FORM 10-Q

            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1998
                  --------------------------------------------


                         Commission File Number 0-21041

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


         Delaware                                         02-0424252
         --------                                         ----------
(State or other jurisdiction of                        (I.R.S.  Employer
incorporation or organization)                         Identification No.)


25 Mall Road, Burlington, MA                              01803
----------------------------                              -----
(Address of principal executive offices)               (Zip Code)


Registrant's telephone number, including area code: (781) 674-5000

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

       The number of shares outstanding of the registrant's common stock as of
July 31, 1998 was 27,860,344.


<PAGE>


                               OBJECT DESIGN, INC.

                               INDEX TO FORM 10-Q

Part I - Financial Information                                           Page
------------------------------                                           ----

    Consolidated Balance Sheets as of June 30, 1998                        3
    and December 31, 1997

    Consolidated Statements of Income for the three and six
    months ended June 30, 1998 and June 30, 1997                           4

    Consolidated Statements of Cash Flows for the six months
    ended June 30, 1998 and June 30, 1997                                  5

    Notes to Consolidated Financial Statements                             6

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

Part II - Other Information
---------------------------

    Item 1.  Legal Proceedings                                            11

    Item 4.  Submission of Matters to a Vote of Security Holders          12

    Item 5.  Other Information                                            12

    Item 6.  Exhibits and Reports on Form 8-K                             12

    Exhibit Index                                                         12
    Signatures                                                            13



<PAGE>


                               Object Design Inc.
                           Consolidated Balance Sheets
                        (in thousands, except share data)
<TABLE>
<CAPTION>
                                                                            June 30,       December 31,
                                                                              1998              1997
                                                                         ---------------   ---------------
                                                                          (unaudited)
<S>                                                                      <C>                <C>
Assets
Current assets:
     Cash and cash equivalents                                           $   16,373        $   16,345
     Marketable securities                                                    3,967             2,564
     Accounts receivable, net                                                13,476            14,052
     Prepaid expenses and other current assets                                  778               830
                                                                         ----------        ----------
Total current assets                                                         34,594            33,791
Property and equipment, net                                                   4,124             3,915
Other assets                                                                  2,928             1,172
                                                                         ----------        ----------
Total assets                                                             $   41,646        $   38,878
                                                                         ==========        ==========

Liabilities and Stockholders' Equity

Current liabilities:
     Current portion of capital lease obligations                        $       32        $      104
     Accounts payable                                                         2,808             2,852
     Accrued expenses                                                         1,777               953
     Accrued compensation                                                     2,312             1,968
     Deferred revenue                                                         4,676             3,946
                                                                         ----------        ----------
Total current liabilities                                                    11,605             9,823

Long-term capital lease obligations                                              36               236

Stockholders' equity:
  Preferred stock, $.01 par value; authorized 5,000,000
       shares; no shares issued or outstanding                                   --                --
  Common stock, $.001 par value; authorized 200,000,000 shares;
     27,832,703 and 27,444,572 shares issued and outstanding
                                                                                 28                27
  Additional paid-in capital                                                 64,631            64,091
  Accumulated deficit                                                       (31,674)          (32,733)
  Net unrealized holding loss on marketable securities                           (8)               (8)
  Cumulative translation adjustment
                                                                             (2,085)           (1,419)
  Advances to stockholders                                                     (687)             (887)
  Unearned compensation                                                        (200)             (252)
                                                                         -----------       -----------
Total stockholders' equity                                                   30,005            28,819
                                                                         ------------      ------------
Total liabilities and stockholders' equity                               $   41,646        $   38,878
                                                                         ===========       ===========
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


<PAGE>


                               Object Design Inc.
                        Consolidated Statements of Income
                      (in thousands, except per share data)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                       Three Months Ended                      Six Months Ended
                                                           June 30,                               June 30,
                                                     1998             1997                   1998           1997
                                                     ----             ----                   ----           ----
<S>                                                <C>             <C>                     <C>           <C>
Revenues:
   Software                                         $  11,570      $   8,280               $ 20,818      $  14,905
   Services                                             3,948          2,651                  7,641          5,391
   Related party software and services                     84            244                    169          2,034
                                                    ---------      ---------              ---------      ---------
      Total revenues                                   15,602         11,175                 28,628         22,330
Cost of revenues:
   Cost of software                                       429            415                    792            803
   Cost of services                                     2,585          1,949                  5,132          3,822
   Cost of related party
   software and services                                   57             72                    116            235
                                                    ---------      ---------              ---------      ---------
      Total cost of revenues                            3,071          2,436                  6,040          4,860

Gross profit                                           12,531          8,739                 22,588         17,470
Operating expenses:
   Selling and marketing                                8,101          5,672                 15,073         10,528
   Research and development                             2,076          1,864                  4,008          3,978
   General and administrative                           1,435          1,119                  2,761          2,231
                                                    ---------      ---------              ---------      ---------
      Total operating expenses                         11,612          8,655                 21,842         16,737

   Operating income                                       919             84                    746            733

Other income, net                                         230            411                    430            737

Income before income taxes                              1,149            495                  1,176          1,470
Provision for income taxes                                115             48                    117             97
                                                    ---------      ---------              ---------      ---------
Net income                                             $1,034       $    447               $  1,059       $  1,373
                                                    =========      =========              =========      =========

Net income per share-Basic                           $   0.04       $   0.02               $   0.04       $   0.05
Weighted average number of
common shares outstanding                              27,780         26,720                 27,655         26,736

Net  income per share- Diluted                       $   0.04       $   0.02               $   0.04       $   0.05
Weighted average number of
common and dilutive common
equivalent shares                                      29,004         28,795                 29,014         28,952
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


<PAGE>



                               Object Design Inc.
                      Consolidated Statements of Cash Flows
                                 (in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                            Six Months Ended June 30,
                                                                              1998               1997
                                                                           ---------           --------
<S>                                                                        <C>                <C>
Cash flows from operating activities:
   Net income                                                              $  1,059         $   1,373
   Adjustments to reconcile net income to net
     cash provided by (used for) operating activities:
     Depreciation and amortization                                            1,117               961
     Bad debt expense                                                           308               419
     Other                                                                       66                --
Changes in operating assets and liabilities:
     Accounts receivable                                                        189            (1,185)
     Prepaid expenses and other current assets                                  (74)             (760)
     Other assets                                                                89                18
     Accounts payable and accrued expenses                                      486            (1,694)
     Deferred revenue                                                           757              (261)
                                                                          ---------         ---------
Net cash provided by (used for) operating activities                          3,997            (1,129)
                                                                          ---------         ---------

Cash flows from investing activities:
     Capital expenditures                                                   (1,366)            (1,182)
     Purchased software                                                     (1,300)                --
     Purchases of marketable securities                                     (3,564)            (4,366)
     Proceeds from maturities and sales of marketable securities              2,162             7,676
                                                                          ---------         ---------
Net cash (used for) provided by investing activities                       ( 4,068)             2,128
                                                                          ---------         ---------

Cash flows from financing activities:
     Proceeds from exercise of stock options                                   539                496
     Repayments from shareholder advances                                      200                 --
     Principal payments on capital lease obligations                           (44)               (30)
                                                                          ---------         ---------
Net cash provided by financing activities                                      695                466
                                                                          ---------         ---------

Effect of exchange rate changes on cash                                       (596)              (620)
                                                                          ---------         ---------

Net change in cash and cash equivalents                                         28                845

Cash and cash equivalents, beginning of period                              16,345             10,952
                                                                          ---------         ---------
Cash and cash equivalents, end of period                                  $ 16,373            $11,797
                                                                          =========         =========
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statements.



<PAGE>


Notes to Consolidated Financial Statements

A.       Basis of Presentation

    The consolidated financial statements include the accounts of Object Design,
Inc. (the "Company") and its wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated. In the opinion of
management, the accompanying consolidated financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the consolidated financial position, results of operations and
cash flows of the Company. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the Securities
and Exchange Commission rules and regulations. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements and related notes included in the Company's Annual Report on Form
10-K filed for the year ended December 31, 1997. Certain reclassifications have
been made to the prior year's statements to conform to the current period
presentation

    The results for the three and six months ended June 30, 1998 are not
necessarily indicative of the results to be expected for the entire fiscal year
ending December 31, 1998.

B.       Net Income Per Share

    Basic earnings per share is computed by dividing net income by the
weighted-average number of common shares outstanding for the period. Diluted
earnings per share is computed by dividing net income by the sum of the
weighted-average number of common shares outstanding for the period plus the
number of common shares issuable upon the assumed exercise of all dilutive
securities, such as stock options. The following is a calculation of earnings
per share (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                          Three Months Ended June 30,     Six Months Ended June 30,
                                          ---------------------------     -------------------------
Basic EPS Computation                          1998          1997           1998          1997
                                               ----          ----           ----          ----
<S>                                        <C>           <C>           <C>            <C>
Numerator:
     Net income                            $  1,034       $   447        $ 1,059      $  1,373
Denominator:
     Common shares outstanding               27,780        26,720         27,655        26,736
                                             ======        ======         ======        ======

Basic EPS                                  $   0.04       $  0.02        $  0.04      $   0.05

Diluted EPS Computation                        1998          1997           1998          1997
                                               ----          ----           ----          ----
Numerator:
     Net income                            $  1,034       $   447        $ 1,059      $  1,373
Denominator:
     Common shares outstanding               27,780        26,720         27,655        26,736
     Stock options (dilutive)                 1,224         2,075          1,359         2,216
                                             ------        ------         ------        ------
     Total shares                            29,004        28,795         29,014        28,952
                                             ======        ======         ======        ======

Diluted EPS                                  $ 0.04       $  0.02         $ 0.04       $  0.05
</TABLE>

     Options to purchase shares of the Company's common stock of 1,990,549 and
1,694,540 for the three and six months ended June 30, 1998, respectively, and of
311,832 and 204,831 for the three and six months ended June 30, 1997, were
outstanding, but were not included in the computations of diluted earnings per
share as the inclusion of these shares would have been anti-dilutive.


<PAGE>


D.        Comprehensive Income

     The Company has adopted for the year ending December 31, 1998 the Statement
of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
Income" which establishes standards for the reporting and display of
comprehensive income and its components in general purpose financial statements.
The table below sets forth "comprehensive income" as defined by SFAS 130.

<TABLE>
<CAPTION>
                                                            Three Months Ended June 30,         Six Months Ended June 30,
                                                            ---------------------------         -------------------------
                                                                 1998            1997             1998             1997
                                                                 ----            ----             ----             ----

<S>                                                          <C>              <C>          <C>                 <C>     
Net income                                                   $  1,034         $   447      $     1,059         $  1,373

Other comprehensive income, net of tax:
   Foreign currency translation adjustments                      (119)            (23)            (666)            (620)
   Unrealized holding loss on securities                           --              --               --              (23)
                                                            ---------       ---------        ---------          -------
Total comprehensive expense                                     (119)            (23)            (666)            (643)
                                                            ---------       ---------        ---------          --------
Comprehensive income                                        $     915       $     424        $     393          $   730
                                                            =========       =========        =========          =======
</TABLE>


E.       New Accounting Standards

   In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 ("SFAS 131") "Disclosures about Segments
of an Enterprise and Related Information." SFAS 131 specifies new guidelines for
determining a company's operating segments and related requirements for
disclosure. SFAS 131 will become effective for fiscal years beginning after
December 15, 1997. The Company will adopt the new standard for the fiscal year
ending December 31, 1998, and is in the process of evaluating the impact of the
new standard on the presentation of its financial statements and the disclosures
therein.

   In March 1998, the AICPA issued SOP 98-1, "Accounting For the Costs of
Computer Software Developed or Obtained for Internal Use," which specifies the
accounting treatment provided for such computer software costs depending upon
the type of costs incurred. This Statement is effective for fiscal years
beginning after December 15, 1998 and restatement of prior years will not be
required. The Company will adopt the new standard for the fiscal year ending
December 31, 1999 and does not believe that the adoption of this Statement will
have a significant impact on its financial position or results of operations.

F.       Purchased Technology Transfer and Software License Transaction

   During the quarter ended June 30, 1998, the Company purchased, from an
existing customer, certain technology intended to be incorporated in products to
be marketed by the Company. The $2.0 million purchase price of the technology,
which was paid in cash, is included in other assets and will be amortized to
cost of software revenues over a period of three years. In an unrelated
transaction, the same customer purchased products from the Company that
accounted for $1.5 million of the Company's software license revenues during the
quarter. The price and payment terms for this software license transaction were
consistent with the Company's practices for transactions of this type. The
Company believes that these transactions were entered into on normal commercial
terms and reflects the fair value of the technology received and of the software
licensed by the Company, respectively.



<PAGE>



Management's Discussion and Analysis of Financial Condition and Results of
Operations

Results of operations:

Total Revenues. The Company's total revenues increased 39.6% from $11.2 million
for the three months ended June 30, 1997 to $15.6 million for the three months
ended June 30, 1998. Total revenues for the six months ended June 30, 1998
increased 28.2% to $28.6 million, up from $22.3 million for the same period last
year. This growth resulted primarily from unit volume increases in ObjectStore
database software licenses and service revenues.

Software Revenues. Software revenues increased 39.7% from $8.3 million for the
three-month period ended June 30, 1996 to $11.6 million for the three-month
period ended June 30, 1998. Software revenues increased 39.7% from $14.9 million
for the six-month period ended June 30, 1997 to $20.8 million for the six-month
period ended June 30, 1998. The increase was primarily due to increased volume
of ObjectStore software licenses resulting from the ongoing expansion of the
Company's worldwide salesforce, increased expenditures for marketing and
continued market acceptance of the Company's products and technology.

Service Revenues. Service revenues increased 48.9% from $2.7 million for the
three-month period ended June 30, 1997 to $3.9 million for the three-month
period ended June 30, 1998. Service revenues increased 41.7% from $5.4 million
for the six-month period ended June 30, 1997 to $7.6 million for the six-month
period ended June 30, 1998. The increase was primarily the result of increased
consulting revenues for customer deployments and training as well as increased
maintenance revenues reflecting growth in the Company's installed base. The
demand for the Company's consulting services has led the Company to increase the
number of its consulting personnel. As a result, the Company expects its service
revenues to grow in absolute dollars in future periods, but to vary as a
percentage of revenue.

Related Party Software and Services. Revenues from related parties decreased
from $244,000 for the three-month period ended June 30, 1997 to $84,000 for the
three-month period ended June 30, 1998. For the six-month periods ended June 30,
1998 and 1997, revenues from related parties were $169,000 and $2.0 million
respectively. The decrease is primarily due to the discontinuation of a joint
development project in 1997 and to the fact that a single large purchase of
software licenses by IBM in the first quarter of 1997 was not repeated in 1998.
The Company does not expect related party software and services revenues to be
material in future periods.

Revenues from International Operations. Revenues from operations of the
Company's international subsidiaries as a percentage of the Company's total
revenues was 37.7% for the three months ended June 30, 1998 compared with 38.9%
for the corresponding period in 1997. Revenues from international operations as
a percentage of total revenues for the six-month periods ended June 30, 1998 and
1997 were 37.3% and 37.5%. The increase in domestic revenues is due to increased
unit volume of ObjectStore software licenses and is attributable to the
expansion of the domestic sales force as well as increased customer deployments
resulting in a larger installed customer base.

Cost of Software. Cost of software increased 3.4% from $415,000 for the three
month period ended June 30, 1997 to $429,000 for the three month period ended
June 30, 1998 and decreased as a percent of software revenues from 5.0% to 3.7%
for June 30, 1997 and 1998, respectively. Cost of software decreased 1.4% from
$803,000 for the six month period ended June 30, 1997 to $792,000 for the six
month period ended June 30, 1998 and decreased as a percent of software revenues
from 5.4% to 3.8% for the same periods, respectively. The decrease in cost of
software as a percentage of software revenue reflects lower royalty costs in
1998, due in part to a change in revenue mix toward sales of ObjectStore and
other products of the Company that bear lower or no third-party royalties and
materials efficiencies attained from higher volume.

Cost of Services. Cost of services increased 32.6% from $1.9 million for the
three month period ended June 30, 1997 to $2.6 million for the three month
period ended June 30, 1998 and decreased as a percent of service revenues from
73.5% to 65.5% for the same periods. Cost of services increased 34.3% from $3.8
million for the six month period ended June 30, 1997 to $5.1 million for the six
month period ended June 30, 1998 and decreased as a percent of service revenues
from 70.9% to 67.2% for the same periods. The increase in cost of services
reflects the growth in staffing necessary to generate and support increased
worldwide service revenue and provide ongoing quality customer


<PAGE>



support to the Company's increasing installed base. The decrease in cost of
services as a percentage of service revenues is primarily due to higher average
utilization of consulting personnel in 1998. The Company expects cost of
services to continue to grow in absolute dollars, but to vary as a percentage of
service revenues.

Selling and Marketing. Selling and marketing expenses increased 42.8% from $5.7
million for the three month period ended June 30, 1997 to $8.1 million for the
three month period ended June 30, 1998 and increased as a percentage of total
revenues from 50.8% to 51.9% for the same periods. Selling and marketing
expenses increased 43.2% from $10.5 million for the six month period ended June
30, 1997 to $15.1 million for the six month period ended June 30, 1998 and
increased as a percentage of total revenues from 47.1% to 52.7% for the same
periods. The increase resulted primarily from the rapid expansion of the
Company's direct sales force and increased marketing investment, including
increased expenditures on salaries, recruiting fees, marketing programs, travel
and other related expenses as well as higher sales commissions associated with
higher revenues. The Company intends to continue to expand its direct sales
force and maintain higher levels of marketing investments throughout 1998 and as
a result expects selling and marketing expenses to continue to increase in
future periods, but to vary as a percentage of revenues.

Research and Development. Research and development expenses increased 11.4% from
$1.9 million for the three month period ended June 30, 1997 to $2.1 million for
the three month period ended June 30, 1998, but decreased as a percent of total
revenues from 16.7% to 13.3% for the same periods, respectively. Research and
development expense was $4.0 million for both of the six months ended June 30,
1997 and 1998, but decreased as a percentage of total revenues from 17.8% to
14.0% for the same periods, respectively. The increase was due to increased
staff and investments in new technologies as well as continued enhancements to
existing products. The six months ended June 30, 1997 include a nonrecurring
charge for purchased in-process technology of $150,000. The Company expects that
research and development expenses will increase in dollar amount in future
periods as the Company continues to enhance ObjectStore and related products and
to develop new products for component-based computing applications but may vary
as a percentage of revenue.

General and Administrative. General and administrative expenses increased 28.2%
from $1.1 million for the three months ended June 30, 1997 to $1.4 million for
the three months ended June 30, 1998 and decreased as a percentage of revenue
from 10.0% to 9.2%. General and administrative expenses increased 23.8% from
$2.2 million for the six months ended June 30, 1997 to $2.8 million for the six
months ended June 30, 1998, and decreased slightly from 10.0% to 9.6% of total
revenues. The increase in dollar amounts is reflective of the increased
staffing, investments in information technology, professional expenses and other
costs associated with expanding operations.

Other Income. Other income decreased 44.0%, from $411,000 for the three-month
period ended June 30, 1997 to $230,000 for the corresponding period in 1998.
Other income decreased 41.7% from $737,000 for the six-month period ended June
30, 1997 to $430,000 for the corresponding period in 1998. The decrease was
largely the result of lower rates of return on cash and investments.

Provision for Income Taxes. The Company's effective tax rates for the
three-month periods ended June 30, 1997 and 1998 were 9.7% and 10.0%,
respectively. The Company's effective tax rates for the six-month periods ended
June 30, 1997 and 1998 were 6.6% and 10.0%, respectively. These effective tax
rates reflect an alternative minimum tax provision for federal taxes and certain
state taxes. The effective tax rate in all periods is lower than the statutory
rate principally due to the utilization of net operating loss carryforwards.

Liquidity and Capital Resources

   At June 30, 1998, the Company's principal sources of liquidity included $20.3
million of cash and cash equivalents and short-term investments and an $2.0
million revolving line of credit which expires in December 1999. No borrowings
were outstanding under the line of credit during the six-month period ended June
30, 1998, but letters of credit in the amount of $550,000 issued for the account
of the Company under the line of credit were outstanding at that date.


<PAGE>



   Net cash provided by operating activities was $4.0 million for the six months
ended June 30, 1998, as compared to $1.1 million used for operating activities
in the corresponding period in 1997. The increase in cash provided was primarily
the result of improvement in cash generated from working capital accounts. The
increase in working capital was due to improvement in accounts receivable,
decreased prepaid expenses and increased deferred revenue
associated with maintenance billings and accrued expenses

   The Company's investing activities used $4.1 million of cash for the six
months ended June 30, 1998 compared with cash provided by the Company's
investing activities of $2.1 million in 1997. The decrease was attributable
primarily to the net purchase of $1.4 million of marketable securities in 1998,
compared to the net sale of $3.3 million of marketable securities in 1997 and a
$1.3 million purchase of technology in 1998.

   The Company's financing activities provided $695,000 and $466,000 for the six
months ended June 30, 1998 and 1997, respectively. The increase in 1998 was the
result of repayments of shareholder advances and higher proceeds from employee
stock plans.

   The Company believes that its current cash, cash equivalents, marketable
securities, bank facilities and funds generated from operations, if any, will
provide adequate liquidity to meet the Company's capital and operating
requirements for the next twelve months.

International Operations: Exchange Rate Fluctuations

   Fluctuations in exchange rates can adversely affect the Company's results of
operations and financial position. The financial statements of the Company's
international subsidiaries, all of whose functional currencies are the local
currency, are translated using exchange rates in effect at the end of the period
for assets and liabilities and average exchange rates during the period for
results of operations. Foreign currency transaction adjustments are recorded as
a separate component of stockholders' equity, and also are included in reporting
the Company's comprehensive income. The Company itself also engages in
transactions denominated in foreign currencies. Gains and losses from these
transactions, which to date have been immaterial, are reflected in the Company's
results of operations. For the six-month periods ended June 30, 1998 and 1997,
foreign currency translation losses reflected in stockholder's equity at the end
of such periods and included in determining comprehensive income for such
periods were $666,000 and $620,000, respectively. The impact of future exchange
rate fluctuations on the Company's results of operations and financial condition
cannot accurately be predicted. The Company does not currently engage in foreign
currency hedging activities.

Year 2000 Computer Systems Compliance

   Customers of the Company have requested that the Company certify that its
products are year 2000 compliant, and failure of the Company's products to be
year 2000 compliant could lead to substantial liability on the part of the
Company. The Company has audited its ObjectStore database management system and
believes that, with the exception of certain minor administrative functions that
do not affect the utility of the product, ObjectStore is year 2000 compliant in
all material respects. The Company has not yet completed its audit of certain
third-party software programs that are incorporated in the Company's rapid
application development and enterprise integration tools. Although the Company
believes, based on the nature of these programs, that it is unlikely that any of
them is year 2000 non-compliant in a manner that would impair the utility of the
Company's product in which it is incorporated or require the Company to incur
substantial expense to correct such noncompliance, there can be no assurance
that this is the case. In addition, the Company is assessing the risk of
compliance of a number of computer software programs, including programs used in
its internal operations to manage the Company's financial and accounting
functions as well as in the Company's sales, marketing and product development
activities. The Company plans to the extent necessary to correct or replace
these administrative and business systems in time to avoid material problems.
The inability of such programs to interpret properly data for the year 2000 and
beyond could have a material adverse effect on the Company's operations. Failure
by the Company to identify a year 2000 problem in its software products or in
any software program used in its operations could require modification or
replacement of such software. Even if all such problems are identified,
resolution of the problem could require significant expenditures and might not
be achievable by January 1, 2000.


<PAGE>



   Costs incurred in the Company's year 2000 compliance effort will be expensed
as incurred and are not expected to be material. Any such year 2000 problem
affecting the Company's products or software programs used in the Company's
operations could have a material adverse effect on the Company's business,
financial condition and results of operations.

New Accounting Standards

   In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 ("SFAS 131") "Disclosures about Segments
of an Enterprise and Related Information." SFAS 131 specifies new guidelines for
determining a company's operating segments and related requirements for
disclosure. SFAS 131 will become effective for fiscal years beginning after
December 15, 1997. The Company will adopt the new standard for the fiscal year
ending December 31, 1998, and is in the process of evaluating the impact of the
new standard on the presentation of its financial statements and the disclosures
therein.

   In March 1998, the AICPA issued SOP 98-1, "Accounting For the Costs of
Computer Software Developed or Obtained for Internal Use," which specifies the
accounting treatment provided for such computer software costs depending upon
the type of costs incurred. This Statement is effective for fiscal years
beginning after December 15, 1998 and restatement of prior years will not be
required. The Company will adopt the new standard for the fiscal year ending
December 31, 1999 and does not believe that the adoption of this Statement will
have a significant impact on its financial position or results of operations.

Certain Factors That May Affect Future Results

    From time to time, information provided by the Company, statements made by
its employees or information included in its filings with the Securities and
Exchange Commission may contain statements which are not historical facts but
which are "forward looking statements" which involve risks and uncertainties.
The words "expect", "anticipate", "internal", "plan", "believe," "seek",
"estimate" and similar statements are intended to identify such forward looking
statements. In particular, statements in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" relating to the Company's
future shipments, revenue and expense levels and profitability, as well as the
sufficiency of capital to meet working capital and capital expenditure
requirements, may be forward-looking statements. Such statements are not
guarantees of future performance, and involve certain risks, uncertainties and
assumptions that could cause the Company's future results to differ materially
from those expressed in any forward-looking statements. The Company disclaims
any intent or obligation to update publicly any forward-looking statements
whether in response to new information, future events or otherwise. Important
information about such factors and the basis for those assumptions are contained
in "Certain Factors That May Affect Future Results" included in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in the Company's 1997 Annual Report on Form 10-K, which section is
incorporated herein by reference.

Part II: OTHER INFORMATION

Item 1.  Legal Proceedings

There are no material legal proceedings pending to which the Company is a party.


<PAGE>



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

On May 27, 1998, the Annual Meeting of Stockholders of Object Design, Inc. was
held in Burlington, Massachusetts. An election of directors was held with the
following individuals being elected to the Board of Directors of Object Design,
Inc as Class II directors for a three-year term of office:

                           Total Vote for            Total Vote Withheld
                           Each Director             From Each Director

Arthur J. Marks            21,951,592                92,795
Steven C. Walske           21,958,932                85,455

Robert N. Goldman, Kevin J. Burns, Gerald B. Bay and David A. Litwack continue
as Directors.

The following matter was voted upon and approved by the stockholders at the
meeting:

A proposal to approve an amendment to the Company's 1996 Incentive and
Nonqualified Stock Option Plan to increase the number of shares of Common Stock
available for grant thereunder by 1,000,000.

For               Against           Abstain          No Vote

21,187,197        830,386           25,804           1,000

Item 5.  Other Information

Under the rules recently adopted by the securities and exchange Commission,
proxies solicited by management in connection with the Company's 1999 annual
meeting of stockholders may confer discretionary authority to vote on any
shareholder proposal of which the Company did not have notice by April 12, 1999
or, if the date of the 1999 annual meeting is changed by more than thirty days
from May 27, 1999, by a reasonable time before the Company mails its proxy
materials for such annual meeting. The Company's By-Laws provide that the
stockholder must give written notice to the Company not less than sixty days
prior to the scheduled annual meeting describing any proposal to be brought
before such meeting, even if such item is not included in the Company's proxy
statement relating to such meeting. Such notice requirements are set forth in
Section 3 of the Company's By-Laws.

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

Exhibit Number                     Description

*3.3                       Amended and Restated Certificate of Incorporation
*3.5                       Amended and Restated By-laws of the Company
27.1                       Financial Data Schedule
27.2                       Restated Financial Data Schedule

* This exhibit is incorporated by reference to the similarly numbered exhibit
filed as part of the Company's Registration Statement on Form S-1, Securities
and Exchange Commission File No. 333-05241.

b)   Reports on Form 8-K

No reports on Form 8-K were filed during the quarter ended June 30, 1998.


<PAGE>



                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, Object
Design, Inc. has duly caused this Quarterly Report on Form 10-Q to be signed on
its behalf by the undersigned, thereunto duly authorized.



                                OBJECT DESIGN, INC.
                                (Registrant)



August 13, 1998                 By: /s/ Robert N. Goldman
                                   ---------------------------------------------
                                    Robert N. Goldman
                                    President, Chairman of the Board



August 13, 1998                 By: /s/ Lacey P. Brandt
                                   ---------------------------------------------
                                    Lacey P. Brandt
                                    Chief Financial Officer