================================================================================
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES  
     EXCHANGE ACT OF 1934

     For the quarterly period ended June 30, 1998

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from __________ to __________

                        Commission File Number 000-21909

                      PIRANHA INTERACTIVE PUBLISHING, INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


           Nevada                                                86-0779928
-------------------------------                              -------------------
(State or other jurisdiction of                                (IRS Employer
incorporation or organization)                               Identification No.)

                 1839 West Drake, Suite B, Tempe, Arizona 85283
                 ----------------------------------------------
                    (Address of principal executive offices)

                                  602-491-0500
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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. [X] Yes [ ] No

As of July 31,  1998,  the  number of  outstanding  shares of the  Registrant's
Common Stock was 3,200,000.

================================================================================
<PAGE>

                                      INDEX
                                                                            Page
                                                                            ----
PART I. FINANCIAL INFORMATION

      Item 1. Financial Statements (Unaudited)

              Balance Sheet as of June 30, 1998 ............................ 3

              Statements of Operations for the three month and six month
              periods ended June 30, 1998 and 1997 ......................... 4

              Statements of Cash Flows for the three month and six month
              periods ended June 30, 1998 and 1997 ......................... 5

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

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

PART II. OTHER INFORMATION

      Item 2. Changes in Securities and Use of Proceeds ....................15

      Item 6. Exhibits and Reports on Form 8-K..............................16

SIGNATURES..................................................................17


                                       2

<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                      PIRANHA INTERACTIVE PUBLISHING, INC.
                                  BALANCE SHEET
                                  JUNE 30, 1998
                                   (UNAUDITED)

                                     ASSETS
Current assets:
   Cash and cash equivalents                                        $ 1,032,276
   Accounts receivable, net of allowance for returns
     of $255,749 and doubtful accounts of $5,000                      1,013,069
   Inventories                                                          246,250
   Prepaid royalties                                                    194,921
   Other prepaid expenses                                               103,687
                                                                    -----------
Total current assets                                                  2,590,203

Property and equipment, net                                             101,394
Other assets                                                              4,293
                                                                    -----------
Total assets                                                        $ 2,695,890
                                                                    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                                 $   306,145
   Payroll related accruals                                              21,387
   Other accrued liabilities                                             20,140
                                                                    -----------
Total current liabilities                                               347,672

Notes payable - officers                                                 42,243
Other liabilities                                                         6,568
                                                                    -----------
Total liabilities                                                       396,483

Stockholders' equity:
   Preferred stock, $.001 par value;  5,000,000 shares
      authorized;  no shares issued and outstanding
      Common stock, $.001 par value; 20,000,000 shares
      authorized; 3,200,000 shares issued and outstanding                 3,200
   Additional paid-in capital                                         5,901,339
   Accumulated deficit                                               (3,605,132)
                                                                    -----------
Total stockholders' equity                                            2,299,407
                                                                    -----------

Total liabilities and stockholders' equity                          $ 2,695,890
                                                                    ===========

   The accompanying notes are an integral part of these financial statements.

                                        3

<PAGE>

                      PIRANHA INTERACTIVE PUBLISHING, INC.
                            STATEMENTS OF OPERATIONS
     FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                     THREE MONTHS ENDED              SIX MONTHS ENDED
                                          JUNE 30,                       JUNE 30,
                                 --------------------------    ----------------------------
                                     1998          1997             1998           1997
                                     ----          ----             ----           ----
<S>                              <C>            <C>            <C>             <C>
Net sales                        $1,012,783     $   9,949      $ 1,217,303      $   67,656
  Cost of goods sold                439,678        45,306          544,156          73,401
                                 ----------     ---------      -----------      ----------
Gross profit (loss)                 573,105       (35,357)         673,147          (5,745)

Selling, general and
  administrative expenses           970,690       386,499        1,735,803         720,568
                                 ----------     ---------      -----------      ----------
Loss from operations               (397,585)     (421,856)      (1,062,656)       (726,313)

Other income (expense):
  Interest income                    17,961             -           49,373               -
  Interest expense                   (1,030)     (113,687)          (2,036)       (225,533)
                                 ----------     ---------      -----------      ----------
                                     16,931      (113,687)          47,337        (225,533)

Net loss                         $ (380,654)    $(535,543)     $(1,015,319)     $ (951,846)
                                 ==========     =========      ===========      ==========

Net loss per common share        $    (0.19)    $   (1.43)     $     (0.51)     $    (2.54)
                                 ==========     =========      ===========      ==========

Shares used in computing
  net loss per common share       1,975,000       375,000        1,975,000         375,000
                                 ==========     =========      ===========      ==========
</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                        4

<PAGE>
                      PIRANHA INTERACTIVE PUBLISHING, INC.
                             STATEMENT OF CASH FLOWS
     FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                                JUNE 30,                           JUNE 30,
                                                  --------------------------------      -----------------------------
                                                         1998              1997             1998               1997
                                                         ----              ----             ----               ----
<S>                                               <C>               <C>                 <C>              <C>
Cash flows from operating activities:
Net loss                                          $   (380,654)     $    (535,543)      $(1,015,319)     $  (951,846)

Adjustments to reconcile net loss to net cash
  used in operating activities:
  Depreciation                                           8,720              5,712            17,031           11,244
  Amortization                                              54             70,099               107          139,429
  Interest on notes payable - officers                   1,030                934             2,036            1,844
  Reserve for obsolescence                             (31,282)              (693)          (45,986)           1,330
Net changes in current assets and liabilities:
  Accounts receivable                                 (825,770)             3,747          (976,169)          (8,206)
  Inventory                                             31,981            (17,564)          (60,256)         (50,531)
  Prepaid expenses                                     161,599             58,332            62,012           25,945
  Accounts payable                                      98,197             34,949           147,103          251,577
  Accrued liabilities                                   (9,109)            52,698           (11,093)         109,626
  Other liabilities                                       (950)              (653)           (1,900)          (1,306)
                                                  ------------      -------------       -----------      -----------
    Net cash used in operating activities             (946,184)          (327,982)       (1,882,434)        (470,894)
                                                  ------------      -------------       -----------      -----------

Cash flow used in investing activities:
  Purchase of property and equipment                    (4,689)                 -           (19,042)         (10,748)
                                                  ------------      -------------       -----------      -----------
    Net cash used in investing activities               (4,689)                 -           (19,042)         (10,748)
                                                  ------------      -------------       -----------      -----------

Cash flows from financing activities:
  Proceeds from accounts and notes payable -
    officers                                                 -             16,000                 -           22,000
  Proceeds from notes payable                                -            410,000                 -          410,000
  Payments related to initial public offering                -            (71,423)                -         (155,129)
  Repayment of accounts and notes payable -
    officers                                                 -            (16,000)                -          (16,000)
                                                  ------------      -------------       -----------      -----------
    Net cash used in financing activities                    -            338,577                 -          260,871
                                                  ------------      -------------       -----------      -----------

Net decrease in cash and cash equivalents             (950,873)            10,595        (1,901,476)        (220,771)
Cash and cash equivalents, beginning of period       1,983,149             15,366         2,933,752          246,732
                                                  ------------      -------------       -----------      -----------
Cash and cash equivalents, end of period          $  1,032,276      $      25,961       $ 1,032,276      $    25,961
                                                  ============      =============       ===========      ===========
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                        5
<PAGE>

                      PIRANHA INTERACTIVE PUBLISHING, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

BASIS OF PRESENTATION

Interim Financial Information

The unaudited interim financial  statements of Piranha  Interactive  Publishing,
Inc., a Nevada corporation (the "Company"), include all adjustments,  consisting
of only normal recurring  adjustments  which, in the opinion of management,  are
necessary for their fair presentation. The results of operations for the interim
periods are not  necessarily  indicative of the  operating  results for the full
year.  These  financial  statements  have been prepared in  accordance  with the
instructions to Form 10-QSB and do not contain certain  information  required by
generally  accepted  accounting  principles.  These statements should be read in
conjunction  with the financial  statements and notes thereto for the year ended
December  31,  1997  included  in the  Company's  Form  10-KSB  on file with the
Securities and Exchange Commission.

LOSS PER SHARE DISCLOSURES

Basic  loss per  share is  computed  by  dividing  income  available  to  common
stockholders by the weighted average number of common shares outstanding for the
period.  Diluted  loss per share is computed  giving  effect to all  potentially
dilutive  common  shares that were  outstanding  during the period.  Potentially
dilutive  common shares consist of the  incremental  common shares issuable upon
exercise of stock options, warrants and the unit purchase option.

A  reconciliation  of the numerator and  denominator  of basic loss per share is
provided as follows:
<TABLE>
<CAPTION>
                                                         Three Months Ended               Six Months Ended
                                                              June 30,                        June 30,
                                                   ------------------------------   ----------------------------
                                                        1998            1997            1998            1997
                                                        ----            ----            ----            ----
<S>                                                <C>             <C>              <C>             <C>
Numerator - Basic and Diluted loss per share:
  Net loss                                         $   (380,654)   $    (535,543)   $ (1,015,319)   $  (951,846)
                                                   ============    =============    ============    ===========

Denominator - Basic and Diluted loss per share:
  Weighted average common shares outstanding          3,200,000        1,600,000       3,200,000      1,600,000
  Less shares of common stock in escrow              (1,225,000)      (1,225,000)     (1,225,000)    (1,225,000)
                                                   ------------    -------------    ------------    -----------
                                                      1,975,000          375,000       1,975,000        375,000
                                                   ============    =============    ============    ===========

Basic and Diluted loss per share                   $      (0.19)   $       (1.43)   $      (0.51)   $     (2.54)
                                                   ============    =============    ============    ===========
</TABLE>
Outstanding  warrants,   unit  purchase  options,  and  stock  options  totaling
2,717,500  in 1998 and 766,000 in 1997 are not included in the  computations  of
diluted loss per share as their effect  would be  antidilutive.  An aggregate of

                                       6
<PAGE>

1,225,000  shares of outstanding  common stock are currently held in escrow.  As
the  conditions  for release of the  escrowed  shares have not been met nor will
they be met  upon the mere  passage  of time,  the  escrowed  shares  have  been
considered to be contingently issuable and, accordingly, have been excluded from
the  weighted  average  number  of  common  shares   outstanding  used  for  the
calculation of the basic and dilutive net loss per share.

REVENUE RECOGNITION

The  Company   sells  its   products  to   original   equipment   manufacturers,
distributors,   and  retailers.  Revenues  are  recognized  upon  delivery.  The
Company's  agreements with  distributors and retailers allow for stock rotation.
Reserves are provided for stock  rotation and returns based on industry and past
experience.  These  reserves are  established at the time of shipment and reduce
gross sales to arrive at net sales as presented in the accompanying statement of
operations.  These reserves are reflected as an allowance for returns. It is the
policy of the Company's  customers to offset any returns as  reductions  against
payments on accounts receivable.

Prior to the second quarter of 1998,  the Company had a  distribution  agreement
with a distributor  which  permitted the  distributor to delay payment until the
product was sold by its retail  customers.  Consequently,  the Company's revenue
recognition  for such sales was  deferred  until  receipt  of  payment  from the
distributor.  During the second quarter of 1998, the Company  entered into a new
agreement,  a copy of which is filed as an  exhibit  to this  report,  with this
distributor and as a result, the Company's revenue recognition for such sales is
recognized  upon  product   delivery.   This  resulted  in  the  recognition  of
approximately $200,000 in additional revenue, net of estimated sales returns and
allowances, for the Company during the second quarter related to product shipped
in prior quarters. Additionally,  during the second quarter of 1998, the Company
recognized  approximately  $160,000 in net sales on shipments made in the second
quarter  under  the  new  distribution  agreement  which  would  not  have  been
recognized under the previous agreement.

MANAGEMENT'S PLANS

On September 23, 1997,  the Company was  successful  in  completing  its initial
public  offering (the  "Offering") of 1,600,000  units,  each  consisting of one
share of common stock and one Class A warrant, at a price to the public of $5.00
per unit; however, the Company continues to experience  difficulty in generating
sufficient  cash flows from its  operations.  As a result of its working capital
deficiency  prior to the  Offering,  the  Company's  net  sales  for  1997  were
materially hampered by its inability to acquire, launch and market new products.
The Company's  revenues were  substantially  improved for the three month period
ended June 30, 1998 as compared to the  comparable  quarter of 1997.  Management
expects,  but cannot assure, cash flows to improve based on these improved sales
expectations   and  to  continue   operations   through  sales,   marketing  and
distribution  of eight software  titles it has licensed since the Offering,  one
title licensed  prior to the Offering but not yet released,  and other titles it
is currently pursuing.


                                       7
<PAGE>

The Company's expenditures have continued to exceed its revenues. If substantial
cash  flows  from  operations  do not  materialize  during  the third and fourth
quarter of 1998 as  anticipated  by  management,  the Company  will need to seek
additional debt or equity financing to continue operations.  In such case, there
is no  assurance  that such funds can be  obtained  on terms  acceptable  to the
Company, or at all.

                                       8

<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

THE  STATEMENTS  CONTAINED  IN THIS  REPORT THAT ARE NOT PURELY  HISTORICAL  ARE
"FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933 AND SECTION 21E OF THE  SECURITIES  EXCHANGE ACT OF 1934,  INCLUDING
STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS,  HOPES, BELIEFS,  INTENTIONS OR
STRATEGIES REGARDING THE FUTURE GENERALLY, THE COMPANY'S GROWTH STRATEGY, FUTURE
SALES AND  ANTICIPATED  TRENDS IN THE COMPANY'S  BUSINESS.  ALL FORWARD  LOOKING
STATEMENTS  INCLUDED  IN THIS  DOCUMENT  ARE BASED ON  INFORMATION  KNOWN TO THE
COMPANY ON THE DATE HEREOF,  AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY
SUCH FORWARD  LOOKING  STATEMENTS.  IT IS IMPORTANT TO NOTE THAT ACTUAL  RESULTS
COULD  DIFFER  MATERIALLY  FROM THOSE IN SUCH  FORWARD-LOOKING  STATEMENTS  AS A
RESULT  OF A NUMBER OF  FACTORS,  MOST OF WHICH  ARE OUT OF THE  CONTROL  OF THE
COMPANY,   INCLUDING,   BUT  NOT  LIMITED  TO,  THE  COMPANY'S  EARLY  STAGE  OF
DEVELOPMENT,  INTENSE  COMPETITION  IN  VARIOUS  ASPECTS  OF ITS  BUSINESS,  THE
SEASONAL  NATURE OF ITS BUSINESS,  ITS DEPENDENCE ON THIRD PARTY AUTHORS AND KEY
PERSONNEL,  THE RISING COST OF ACQUIRING A TITLE WHICH CAN SUCCESSFULLY  COMPETE
IN AN  INCREASINGLY  COMPETITIVE  RECREATIONAL  SOFTWARE  MARKET  AND THE  RISKS
ASSOCIATED  WITH  BRINGING  ITS  SOFTWARE  TITLES TO MARKET,  INCLUDING  BUT NOT
LIMITED  TO,  THE   DIFFICULTY  OF  ACCURATELY   FORECASTING   FUTURE   CONSUMER
PREFERENCES,  FINDING  REASONABLY  PRICED  AVAILABLE TITLES TO MEET THE FORECAST
PREFERENCES  AND  PUBLISHING  THOSE  TITLES IN A TIMELY  MANNER IN ORDER TO TAKE
ADVANTAGE OF THE ANTICIPATED MARKET. ADDITIONAL FACTORS WHICH COULD CAUSE ACTUAL
RESULTS  TO  DIFFER  MATERIALLY  FROM  THOSE IN THE  COMPANY'S  FORWARD  LOOKING
STATEMENTS ARE DESCRIBED IN THE COMPANY'S DOCUMENTS FILED FROM TIME TO TIME WITH
THE U.S. SECURITIES AND EXCHANGE  COMMISSION.  IN LIGHT OF THESE AND OTHER RISKS
AND  UNCERTAINTIES,   THERE  CAN  BE  NO  ASSURANCE  THAT  THE  FORWARD  LOOKING
INFORMATION  CONTAINED IN THIS  DOCUMENT  WILL IN FACT  TRANSPIRE OR PROVE TO BE
ACCURATE.  READERS SHOULD REVIEW THE INFORMATION SET FORTH HEREIN IN THE CONTEXT
OF THE OTHER INFORMATION,  INCLUDING, BUT NOT LIMITED TO, INFORMATION IDENTIFIED
AS  "RISK  FACTORS"  AND  THE  COMPANY'S  FINANCIAL  INFORMATION  MADE  PUBLICLY
AVAILABLE BY THE COMPANY IN THE COMPANY'S  REGISTRATION  STATEMENT ON FORM SB-2,
AS WELL AS THE  INFORMATION  CONTAINED IN THE COMPANY'S  REPORTS ON FORM 10-QSB,
8-K,  10-KSB,  AND OTHER REPORTS PUBLICLY FILED FROM TIME TO TIME BY THE COMPANY
WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.

OVERVIEW

The Company  publishes  interactive  multimedia  software  products for the home
personal computer ("PC") market with an emphasis on "edutainment"  titles, which
combine entertainment and educational content, as well as games and other titles
which it  determines  to have  market  potential.  The  Company  was  founded in
November  1994  and  has  published  titles  in  several  categories,  including
entertainment,  early childhood education,  reference and personal productivity.
The Company's  management team has worked closely  together for the past four to
seven years and all have prior software publishing experience.  During its first
year of  operations,  the  Company's  primary  focus was  devoted to  developing
infrastructure  and obtaining titles for  publication.  The Company's first four
titles were  published in the fall of 1995.  Thereafter,  the Company  published
only one  title in 1996 as a result of its  working  capital  deficiency  during
1996, which continued through the closing date of its initial public offering on
September  23, 1997.  This  deficiency  prevented  the Company  from  acquiring,
launching  and marketing  new products in time to realize  significant  sales in

                                       9
<PAGE>

1997 as well as the first quarter of 1998.  Consequently,  the Company  believes
that the  comparisons  below in "Results of Operations" may not be meaningful or
representative of future results or trends.

On September  23,  1997,  the Company  completed a public  offering of 1,600,000
units, each consisting of one share of common stock and one Class A warrant,  at
a price to the public of $5.00 per unit. The net proceeds of the offering to the
Company, after deducting all associated costs, were approximately $6,400,000.

The home  education  and  entertainment  software  business is highly  seasonal.
Typically,  net sales are highest during the third and fourth calendar  quarters
(which  includes  the  holiday  buying  season),  decline in the first  calendar
quarter and are lowest in the second calendar quarter.  This seasonal pattern is
due  primarily to the  increased  demand for home  education  and  entertainment
software titles during the year-end holiday buying season.

To date in 1998,  the Company has released  four  educational  software  titles,
including REDSHIFT 3, the sequel to the popular REDSHIFT astronomy series,  and,
additionally,  the combat  strategy game,  EXTREME  TACTICS.  The adventure game
title,  MORPHEUS,  and the 3-D action  game,  DEAD  RECKONING,  are  planned for
introduction  in the  second  half of 1998 in time for the 1998  fourth  quarter
holiday buying season.

The  Company   sells  its   products  to   original   equipment   manufacturers,
distributors,   and  retailers.  Revenues  are  recognized  upon  delivery.  The
Company's  agreements with  distributors and retailers allow for stock rotation.
Reserves are provided for stock  rotation and returns based on industry and past
experience.  These  reserves are  established at the time of shipment and reduce
gross sales to arrive at net sales as presented in the accompanying statement of
operations.  These reserves are reflected as an allowance for returns. It is the
policy of the Company's  customers to offset any returns as  reductions  against
payments on accounts receivable.

Prior to the second quarter of 1998,  the Company had a  distribution  agreement
with a distributor  which  permitted the  distributor to delay payment until the
product was sold by its retail  customers.  Consequently,  the Company's revenue
recognition  for such sales was  deferred  until  receipt  of  payment  from the
distributor.  During the second quarter of 1998, the Company  entered into a new
agreement with this  distributor  which allows for revenue to be recognized upon
product delivery.  This resulted in the recognition of approximately $200,000 in
additional  revenue,  net of estimated  sales  returns and  allowances,  for the
Company  during the  second  quarter  from  product  shipped in prior  quarters.
Additionally,  during  the  second  quarter  of  1998,  the  Company  recognized
approximately  $160,000  in net sales on  shipments  made in the second  quarter
under the new distribution  agreement which would not have been recognized under
the previous agreement.

RESULTS OF OPERATIONS

COMPARISON OF THREE MONTH PERIODS ENDED JUNE 30, 1998 AND 1997

NET SALES

The  Company's  net sales for the three  month  period  ended June 30, 1998 were
$1,012,783, which represents a $1,002,834 or approximately 10,000% increase from
the comparable  1997 period.  Net sales for 1997 were adversely  affected by the

                                       10
<PAGE>

Company's working capital deficiency.  This deficiency,  which continued through
September 23, 1997, the date of the Company's initial public offering, prevented
the Company from  acquiring,  launching  and  marketing  new products in time to
begin realizing significant net sales until the second quarter of 1998.

The Company's net sales for the second  quarter of 1998 were the highest for any
quarter since its initial public  offering in September  1997, and were realized
in what is typically the slowest quarter for the consumer software industry. The
Company  anticipates  net sales to  increase  during  the 1998  third and fourth
quarter  holiday  buying  season as a result of increased  sales of its existing
products and the sale of new products planned for introduction during the second
half of 1998;  however,  the Company is unable to predict  whether its  existing
products will continue to generate sales and whether its planned future products
will receive market acceptance.

GROSS PROFIT

The Company  experienced a gross profit of $573,105,  or 57% of net sales during
the three  month  period  ended  June 30,  1998 as  compared  to a gross loss of
$(35,357),  or (355%) of net sales  during the three month period ended June 30,
1997.  The gross  loss  during the three  month  period  ended June 30,  1997 is
primarily  attributable  to  insufficient  net sales to offset the cost of goods
sold.

The Company  anticipates,  but cannot  assure,  increased  gross  profits in the
future due to higher sales volumes of new and future titles.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses increased to approximately $971,000
during the three month period ended June 30, 1998,  compared with  approximately
$386,000  during the  corresponding  1997 period.  The  increase  was  primarily
attributable  to the Company's  expanded  marketing  efforts  related to new and
future products,  including  participation in the most significant trade show of
the  year for the  Company,  during  the  three  months  ended  June  30,  1998,
additional  administrative  costs  related  to  operating  as a  publicly-traded
company,  and the hiring of  additional  personnel  subsequent to June 30, 1997.
Selling,  general  and  administrative  expenses  as a  percentage  of net sales
decreased  from 3,885%  during the three month period ended June 30, 1997 to 96%
during the three  months  ended June 30, 1998.  Management  expects,  but cannot
assure,  that such  expenses  will  continue to decrease as a percentage  of net
sales as the Company's revenues from product sales continue to increase.

INTEREST EXPENSE

Interest expense decreased to approximately $1,000 during the three month period
ended June 30, 1998, compared to approximately $114,000 during the corresponding
1997 period.  Interest expense in the 1997 period was primarily  attributable to
amortization  of deferred  financing  costs and interest  expense related to the
bridge  notes issued in the fourth  quarter of 1996.  These notes were repaid in
September of 1997 out of proceeds from the initial public offering.

                                       11
<PAGE>

NET LOSS

Due primarily to the  Company's  inability to generate  sufficient  net sales to
offset selling,  general and administrative expenses, the Company had a net loss
for the three  month  period  ended June 30, 1998 of  $(380,654)  or $(0.19) per
share,  compared to a net loss of  $(535,543) or $(1.43) per share for the three
month period ended June 30, 1997.

COMPARISON OF SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997

NET SALES

The  Company's  net sales  for the six month  period  ended  June 30,  1998 were
$1,217,303, which represents a $1,149,647 or 1,699% increase from the comparable
1997 period. Net sales for 1997 were adversely affected by the Company's working
capital deficiency during such period. This deficiency,  which continued through
September 23, 1997, the closing date of the Company's  initial public  offering,
prevented  the Company from  acquiring,  launching and marketing new products in
time to begin realizing significant net sales until the second quarter of 1998.

The majority of the  Company's net sales for the six month period ended June 30,
1998 were  concentrated  in the second  quarter,  typically  the slowest for the
consumer software industry. The Company anticipates net sales to increase during
the 1998 third and fourth quarter holiday buying season as a result of increased
sales  of its  existing  products  and the  sale  of new  products  planned  for
introduction during the second half of 1998;  however,  the Company is unable to
predict  whether its  existing  products  will  continue  to generate  sales and
whether its planned future products will receive market acceptance.

GROSS PROFIT

The Company  experienced a gross profit of $673,147,  or 55% of net sales during
the six  month  period  ended  June  30,  1998 as  compared  to a gross  loss of
$(5,745),  or (8%) of net sales during the six month period ended June 30, 1997.
The gross loss  during the six month  period  ended June 30,  1997 is  primarily
attributable to insufficient net sales to offset the cost of goods sold.

The Company  anticipates,  but cannot  assure,  increased  gross  profits in the
future due to higher sales volumes of new and future titles.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling,   general  and  administrative   expenses  increased  to  approximately
$1,736,000  during the six month  period  ended  June 30,  1998,  compared  with
approximately  $721,000 during the corresponding  1997 period.  The increase was
primarily  attributable to the Company's  expanded  marketing efforts related to
new and future products,  including  participation in the most significant trade
show of the year for the  Company,  during the six months  ended June 30,  1998,
additional  administrative  costs  related  to  operating  as a  publicly-traded
company,  and the hiring of  additional  personnel  subsequent to June 30, 1997.
Selling,  general  and  administrative  expenses  as a  percentage  of net sales
decreased  from 1,065%  during the six month  period ended June 30, 1997 to 143%
during  the six months  ended  June 30,  1998.  Management  expects,  but cannot
assure,  that such  expenses  will  continue to decrease as a percentage  of net
sales as the Company's revenues from product sales continue to increase.

                                       12
<PAGE>

INTEREST EXPENSE

Interest expense  decreased to approximately  $2,000 during the six month period
ended June 30, 1998, compared to approximately $226,000 during the corresponding
1997 period.  Interest expense in the 1997 period was primarily  attributable to
amortization  of deferred  financing  costs and interest  expense related to the
bridge  notes issued in the fourth  quarter of 1996.  These notes were repaid in
September of 1997 out of proceeds from the initial public offering.

NET LOSS

Due primarily to the  Company's  inability to generate  sufficient  net sales to
offset selling,  general and administrative expenses, the Company had a net loss
for the six month  period  ended June 30,  1998 of  $(1,015,319)  or $(0.51) per
share,  compared  to a net loss of  $(951,846)  or $(2.54) per share for the six
month period ended June 30, 1997.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary source of liquidity during 1997 was the sale of securities
in connection with the Company's initial public offering and cash generated from
the issuance of various notes payable.

The Company's cash and cash equivalent  balance  totaling  $1,032,276 as of June
30, 1998, is invested  primarily in an investment  grade money market fund which
is available to fund immediate cash needs.

The Company's  long-term debt consists primarily of notes payable to officers in
the aggregate  amount of $42,243,  including  interest  accrued through June 30,
1998, which are due August 1, 1999.

The Company's  expenditures have continued to substantially exceed its revenues.
The Company's cash used in operating  activities  was $1,882,434  during the six
month  period  ended June 30,  1998,  while  revenues  for the same  period were
$1,217,303.  The Company  anticipates that its actual expenditures will continue
to increase in the  aggregate as it attempts to expand its business by acquiring
new products and increasing  sales and marketing  efforts and other  operations.
The Company expects to continue to incur losses until such time as it is able to
sell a  sufficient  volume of  products at prices that  provide  adequate  gross
profit to cover operating costs. The Company's working capital requirements will
depend upon numerous factors, including payment cycles for its shipped products,
credit  arrangements  with  suppliers,  the scale-up of its sales and  marketing
resources,  acquisition  of new products and the terms upon which such  products
are acquired,  competitive  factors  including  costs  associated with obtaining
adequate levels of retail shelf space, and marketing activities.

Generally,  the  Company  is  obligated  to pay its  vendors  within  30 days of
shipment, although the Company's customers' payment terms are often much longer,
generally from between 45 to 60 days.  Previously,  this  discrepancy in payment
cycles has resulted in  inconsistent  cash flows and reduced working capital for
the Company,  which condition may recur in the future. In addition,  the Company
has entered into a new  agreement  with a  distributor  which  provides  payment
within 45 days of shipment, rather than when the distributor sells the product.

                                       13
<PAGE>

The Company does not currently  have a credit  facility or other  commitment for
additional financing. The Company may require additional financing in the future
to further expand its product offerings, or to make strategic acquisitions,  and
will  require  additional  financing  to  continue  operations  in the event the
Company  does not  realize  anticipated  revenues  during  the third and  fourth
quarters of 1998. There can be no assurance that such additional  financing will
be available, or that, if available,  such financing will be obtainable on terms
favorable to the Company or its stockholders.

YEAR 2000 RISKS

Some computer  applications were originally designed to recognize calendar years
by their  last two  digits.  As a result,  calculations  performed  using  these
truncated  fields  will not work  properly  with  dates  from the year  2000 and
beyond. The Company has determined that the sensitivity of its internal computer
applications  and  software  products  to the Year  2000  issue  will not have a
material impact on its business,  operations or financial condition. As required
by an  interpretive  release  recently  issued by the  Securities  and  Exchange
Commission,  the  Company  has  undertaken  to confirm in  writing  whether  the
internal business operations of third parties with whom it has it has a material
relationship  will be  affected  by the Year 2000  issue.  Although  the Company
believes  that the computer  applications  of these third  parties are Year 2000
compliant, the Company's assessment is not yet complete. The Company anticipates
that such assessment will be completed prior to December 31, 1998.


                                       14
<PAGE>

                          PART II -- OTHER INFORMATION

ITEM 2.           CHANGES IN SECURITIES AND USE OF PROCEEDS

On September 18, 1997, the Company's  Registration  Statement on Form SB-2 (File
No. 333-18605) (the "Form SB-2"), was declared effective by the U.S.  Securities
and  Exchange  Commission.  The Form SB-2 was  prepared  in  connection  with an
initial public  offering by the Company of 1,600,000  units,  each consisting of
one share of common stock and one Class A Warrant.  The units and the components
thereof  were each  separately  tradable  upon  issuance.  Each  Class A Warrant
entitles  the holder to purchase one share of the  Company's  Common Stock at an
exercise price of $6.50 at any time prior to September 18, 2002. The offering of
units  pursuant to the Form SB-2  commenced on September 18, 1997 and terminated
September 23, 1997,  the date on which all of the units were sold.  The offering
was  underwritten  by D.H. Blair  Investment  Banking Corp. on a firm commitment
basis.  The units were  offered  to the public at a price of $5.00 per unit,  or
$8,000,000 in the aggregate for all 1,600,000  units offered,  all of which were
sold as of the date the offering terminated.

The  Company's  actual  expenses  incurred in  connection  with the issuance and
distribution  of  the  units  registered  pursuant  to  the  Form  SB-2  equaled
approximately $1,600,000 in the aggregate, which consisted of the following: (i)
$760,000 in aggregate underwriting  discounts and commissions,  (ii) $240,000 in
expenses paid to or for the  underwriter  and (iii) $600,000 in other  expenses.
None of the $600,000 in other expenses  consisted of direct or indirect payments
to the Company's  officers,  directors,  holders of at least 10% of any class of
the  Company's   outstanding   securities  or  other  affiliates   (collectively
"Affiliates").

After deducting the foregoing  expenses,  the offering resulted in approximately
$6,400,000 in net proceeds to the Company.  Since the offering, the Company used
approximately  $2,245,000 of the net proceeds for the repayment of indebtedness,
approximately  $450,000 toward acquisition of software  programs,  approximately
$1,100,000 toward marketing and sales and  approximately  $1,400,000 for working
capital.  Approximately  $60,000 was paid to  affiliates  for payment of accrued
salaries. The preceding discussion of the Company's use of net proceeds reflects
reasonable  estimates  of amounts  paid by the  Company.  The  Company's  use of
proceeds from the offering,  as described herein,  does not represent a material
change from that described in the prospectus included in the Form SB-2.


                                       15
<PAGE>

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (A)  EXHIBITS.

               Exhibit
               Number              Description
               -------             -----------

               10.1 -- Computer Software  Distribution Agreement  between Ingram
                       Micro,  Inc. and  the  Registrant  dated  June 30, 1998 *
               27.1 -- Financial Data Schedule

               * The Company  has requested  confidential  treatment for certain
                 portions  of this agreement.  This  document to  be filed by an
                 amendment.

          (B)  REPORTS ON FORM 8-K.

               None.

                                       16
<PAGE>

                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                                     PIRANHA INTERACTIVE PUBLISHING, INC.


Date:   August 5, 1998               /s/  Timothy M. Brannan
     -----------------------         -------------------------------------------
                                     Timothy M. Brannan, Chief Executive Officer


Date:   August 5, 1998               /s/  Keith P. Higginson
     -----------------------         -------------------------------------------
                                     Keith P. Higginson, Chief Financial Officer




                                       17