SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-Q


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

            For the quarterly period ended                July 31, 1998
                                                          -------------- 

 [   ]   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 0-13284

                               V BAND CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           New York                                           13-2990015
-------------------------------                           -------------------
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                            Identification No.)


                   565 Taxter Road, Elmsford, New York 10523
              ----------------------------------------------------
              (Address and zip code of principal executive office)


                                 (914) 789-5000
              ----------------------------------------------------
              (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 [   ]

The  number  of  shares  of Common  Stock  outstanding  as of July 31,  1998 was
5,426,591 shares.
<PAGE>
                               V BAND CORPORATION
                           FORM 10-Q QUARTERLY REPORT
                FOR THE THREE AND NINE MONTHS ENDED JULY 31, 1998




                                TABLE OF CONTENTS

                       
                          PART I. Financial Information                     Page
                          -----------------------------                     ----

Item 1.   Financial Statements

          Consolidated  balance  sheets at July 31,  1998  (unaudited)  and
          October 31, 1997 ................................................   1
              
          Consolidated  statements  of  operations  for the  three and nine
          months ended July 31, 1998 and 1997 (unaudited)..................   2

          Consolidated  statements  of cash flows for the nine months ended
          July 31, 1998 and 1997 (unaudited) ..............................   3

          Notes to consolidated financial statements (unaudited)...........   4

Item 2.   Management's  Discussion and Analysis of Financial  Condition and
                 Results of Operations ....................................   6


                      PART II. Other Information

Item 4.   Submission of Matters to a Vote of Security Holders .............   9

SIGNATURES ................................................................  10
<PAGE>
<TABLE>
<CAPTION>
                          V BAND CORPORATION AND SUBSIDIARIES
                              CONSOLIDATED BALANCE SHEETS
                          JULY 31, 1998 AND OCTOBER 31, 1997
                             (in 000's, except share data)

                                                                July 31,     October 31,
                                                                  1998          1997
                                                                --------      --------
          ASSETS                                               (unaudited)
<S>                                                             <C>           <C>     
Current Assets:
Cash and cash equivalents .................................     $    880      $    336
Accounts receivable, less allowance for doubtful
          accounts of $239 in 1998 and $498 in 1997 .......        2,208         8,079
Inventories, net ..........................................        4,669         4,733
Prepaid expenses and other current assets .................          445           458
                                                                --------      --------
                   Total current assets ...................        8,202        13,606
                                                                --------      --------
Fixed Assets:
Furniture, fixtures, equipment and leasehold improvements .        9,518         9,539
Less: Accumulated depreciation and amortization ...........       (9,038)       (8,786)
                   Total fixed assets .....................          480           753
                                                                --------      --------
Other Assets ..............................................          167           193
                                                                --------      --------
          TOTAL ASSETS ....................................     $  8,849      $ 14,552
                                                                ========      ========

          LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt ...........................................     $    833      $  2,943
Accounts payable ..........................................        2,573         2,557
Accrued wages .............................................          838           894
Customer deposits .........................................        1,469           959
Other accrued expenses ....................................          990         1,102
                                                                --------      --------
                   Total  current liabilities .............        6,703         8,455
                                                                --------      --------
Shareholders' Equity:
Common stock, $.01 par value; authorized 20,000,000 shares;
          issued 7,145,913 in 1998 and 7,131,913 in 1997 ..     $     71      $     71
Capital in excess of par value ............................       20,011        19,872
Accumulated deficit .......................................       (6,303)       (2,270)
Cumulative translation adjustment .........................          135           192
                                                                --------      --------
                                                                  13,914        17,865
Less Treasury stock, at cost; 1,719,322 shares ............      (11,768)      (11,768)
                                                                --------      --------
                   Total shareholders' equity .............        2,146         6,097
                                                                --------      --------
          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......     $  8,849      $ 14,552
                                                                ========      ========

</TABLE>                                      
                 See notes to consolidated financial statements
                                      -1-
<PAGE>
<TABLE>
<CAPTION>
                                V BAND CORPORATION AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE THREE AND NINE MONTHS ENDED JULY 31, 1998 AND 1997 (unaudited)
                                 (in 000's, except per share data)


                                                   Three Months Ended          Nine Months Ended           
                                                        July 31,                   July 31,
                                                ----------------------      ----------------------
                                                  1998          1997          1998          1997  
                                                --------      --------      --------      --------     
<S>                                             <C>           <C>           <C>           <C>                 
Sales
     Equipment ............................     $  2,669      $  5,407      $  9,352      $ 19,617     
     Service ..............................        1,750         1,448         4,611         4,196  
                                                --------      --------      --------      --------        
         Total sales ......................        4,419         6,855        13,963        23,813 
                                                --------      --------      --------      --------     
    
Cost of Sales
     Equipment ............................        1,637         3,406         6,639        12,228     
     Service ..............................        1,174           990         3,156         2,874 
                                                --------      --------      --------      --------         
         Total cost of sales ..............        2,811         4,396         9,795        15,102 
                                                --------      --------      --------      --------     
    
         Gross profit .....................        1,608         2,459         4,168         8,711  
                                                --------      --------      --------      --------     
   
Operating Expenses
     Selling, general and administrative ..        1,636         2,470         6,465         6,990     
     Research and development .............          369           787         1,560         2,478 
                                                --------      --------      --------      --------         
         Total operating expenses .........        2,005         3,257         8,025         9,468  
                                                --------      --------      --------      --------     
   
         Operating loss ...................         (397)         (798)       (3,857)         (757)    
Interest Expense ..........................          (55)          (19)         (135)          (15)    
Other (Expense) Income ....................           (6)            3           (45)           (9) 
                                                --------      --------      --------      --------        
         Net loss .........................     $   (458)     $   (814)     $ (4,037)     $   (781)    
                                                ========      ========      ========      ======== 
    
Net loss per share ........................     $   (.08)     $   (.15)     $   (.74)     $   (.15)    
                                                ========      ========      ========      ========     
Weighted average number of shares of common
    stock and common stock equivalents ....        5,427         5,413         5,421         5,385
                                                ========      ========      ========      ========
</TABLE>
                 See notes to consolidated financial statements
                                      -2-
<PAGE>
<TABLE>
<CAPTION>
                              V BAND CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE NINE MONTHS ENDED JULY 31, 1998 AND 1997 (unaudited)
                                           (in 000's)

                                                                          1998          1997
                                                                       --------      -------- 
<S>                                                                    <C>           <C>      
Cash Flows from Operating Activities
    Net loss .....................................................     $ (4,037)     $   (781)
    Adjustments to reconcile net loss to net
       cash provided by (used in) operating activities:
       Depreciation ..............................................          354           432
       Amortization of other assets ..............................         --             309
       Provision for doubtful accounts ...........................            9             2
       Waiver of Chairman's salary ...............................          140          --
       Changes in assets and liabilities:
           Accounts receivable ...................................        5,862          (782)
           Inventories ...........................................           64           596
           Prepaid expenses and other current assets .............           13           144
           Other assets ..........................................           26           (26)
           Accounts payable and other current liabilities ........          358        (3,957)
           Foreign currency translation adjustment ...............          (55)            6
                                                                       --------      -------- 
               Net cash provided by (used in) operating activities        2,734        (4,057)
                                                                       --------      -------- 
Cash Flows from Investing Activities
    Capital expenditures .........................................          (81)         (133)
                                                                       --------      -------- 
               Net cash used in investing activities .............          (81)         (133)
                                                                       --------      -------- 
Cash Flows from Financing Activities
    Proceeds from short-term debt ................................       14,080         3,032
    Payments of short-tem debt ...................................      (16,189)         (718)
    Proceeds from issuance of common stock .......................         --              97
    Debt issuance costs ..........................................         --            (105)
                                                                       --------      -------- 
               Net cash (used in) provided by financing activities       (2,109)        2,306
                                                                       --------      -------- 

Net increase (decrease) in cash and cash equivalents .............          544        (1,884)
Cash and cash equivalents, at beginning of period ................          336         2,258
                                                                       --------      -------- 
Cash and cash equivalents, at end of period ......................     $    880      $    374
                                                                       ========      ========
Supplementary Disclosures
    Income taxes paid ............................................     $     16      $    230
                                                                       ========      ========
    Interest paid ................................................     $    135      $    204
                                                                       ========      ========
</TABLE>
                 See notes to consolidated financial statements
                                      -3-
<PAGE>
                       V BAND CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (in 000's)

Note A -- Basis of Presentation

The accompanying  consolidated  financial  statements  include the accounts of V
Band  Corporation  and  its  wholly-owned  subsidiaries  (the  "Company").   All
significant intercompany balances and transactions have been eliminated. Certain
information and footnote  disclosures  normally included in financial statements
prepared in accordance with generally accepted  accounting  principles have been
condensed or omitted.  These consolidated financial statements should be read in
conjunction with the Company's audited financial  statements for the fiscal year
ended October 31, 1997 as set forth in the Company's annual report on Form 10-K.
In the  opinion of  management,  all  adjustments  (which  include  only  normal
recurring  adjustments)  necessary  to present  fairly the  financial  position,
results of operations and cash flows at July 31, 1998 and all periods  presented
have been made.

Note B -- Significant accounting policies

Revenue  recognition  -  Equipment  revenue,  for new system  installations  and
modifications  to existing systems at customer  locations,  is recognized as the
product is shipped.  For long-term  contracts,  equipment  revenue is recognized
under the  percentage of completion  method.  Service  revenue,  which  includes
maintenance  contract  revenue and repairs,  is recognized  when the service has
been completed.

Note C -- Inventories

Inventories are summarized as follows:

                                            July 31,   October 31,
                                              1998         1997
                                            -------      -------

               Finished goods .........     $ 3,275      $ 3,374
               Parts and components ...       3,568        3,935
                                            -------      -------
                                              6,843        7,309
               Less: Inventory reserves      (2,174)     (2,5760
                                            -------      -------
                                            $ 4,669      $ 4,733
                                            =======      =======

Note D  -- Short-term debt

In May 1997, the Company  entered into a Credit  Agreement with National Bank of
Canada, (the "Credit Agreement"). The Credit Agreement provides a revolving loan
and letter of credit facility of up to $4 million with an interest rate of prime
plus 2 percent. The Company's obligations under the Credit Agreement are secured
by a  security  interest  in all of the  assets  of V Band  Corporation  and its
domestic  subsidiaries.  The prime  rate was 8.5% at July 31,  1998.  Due to the
Company's  results of  operations  for 1997,  the Company  failed to satisfy the
financial  covenants  set forth in the Credit  Facility.  On  February  9, 1998,

                                      -4-
<PAGE>
National Bank of Canada waived the Company's  failure to satisfy those covenants
at October 31, 1997 and has amended them for fiscal year 1998. In addition,  the
interest rate on the  outstanding  borrowings  has been modified to prime plus 2
percent  effective  February 1, 1998. The amended  financial  covenants were not
satisfied  for the three month period ended April 30, 1998.  On June 4, 1998 the
National Bank of Canada waived the Company's  failure to satisfy those covenants
at April 30,  1998 and has  amended  them for  fiscal  year  1998.  The  Company
satisfied the amended financial  covenants for the three-month period ended July
31, 1998. The interest rate on the outstanding  borrowings remains at prime plus
2 percent.

Note E  -- Restructuring plan

On  January  31,  1998,  the  Company  established  a plan  to  restructure  its
operations.  The  restructuring  plan  involves  consolidation  of the Company's
office space in New York and London,  the  restructuring of its operations,  the
establishment  of a centralized  customer service center and the reassignment of
various marketing and administrative  personnel to field sales support functions
to open new sales and  distribution  channels.  As a result  of this  plan,  the
Company  has  reduced  its  headcount  from its  October  31,  1997 level of 186
employees to 170  employees at January 31, 1998.  The Company  recorded a $1,023
charge during the quarter  ended January 31, 1998 relating to the  restructuring
plan.

Note F - Related party transaction

In the nine months ended July 31, 1998,  the Chairman of the Company waived $140
of his  compensation.  The Company  has  recorded  such  amount as  compensation
expense and a capital contribution.

                                      -5-
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and 
         Results of Operations (in 000's except per share data)

Results of Operations

Sales for the third quarter of 1998, ended July 31, 1998, of $4,419 were $2,436,
or 36%, lower than the $6,855  reported in the third quarter of 1997.  Equipment
sales of $2,669 in the third quarter of 1998  decreased by $2,738,  or 51%, from
the  equipment  sales of $5,407 in the third  quarter of 1997.  The  decrease in
equipment  sales  for  the  three  months  ended  July  31,  1998  is  primarily
attributable to a significant  number of large  installations in the U K and the
Northeast Region in 1997, as well as a reduction in sales at the Company's Licom
subsidiary.  Sales from the Company's  service business  increased to $1,750 for
the third  quarter of 1998,  an increase of 21% compared to the third quarter of
1997.  The  increase  was  primarily  due to a $257,  or 21%,  in the  Company's
maintenance sales due to an increase in customers serviced by the Company, and a
$45, or 20%, increase in the Company's repair business due to an increase in out
of warranty repairs.

Sales for the nine months ended July 31, 1998 of $13,963  were  $9,850,  or 41%,
lower than the nine months reported in 1997. Equipment sales for the nine months
ended July 31, 1998 decreased $10,265, or 52%, compared to the nine months ended
July 31, 1997.  Sales for the Company's core product  decreased $3,252 and sales
for the eXchange phone decreased $7,013,  primarily due to three large contracts
during the nine months ended July 31, 1997.  The Company's  service  revenue for
the nine  months  ended  July 31,  1998  increased  by $415 to  $4,611,  or 10%,
compared to the nine months ended July 31, 1997.  The increase  compared to July
31, 1997 is attributable to an increase in maintenance  revenue of $556, or 16%,
which  was  partially  offset  by  a  reduction  in  repairs.  The  increase  in
maintenance  revenue is attributable to an increase of customers  serviced under
maintenance contracts.

Gross  profit  margin for the three and nine months  ended July 31, 1998 was 36%
and 30%  respectively  as compared to 36% and 37% for the comparable  periods in
1997. Equipment gross profit margin for the three and nine months ended July 31,
1998 was 39% and 29%  respectively as compared to 37% and 38% for the comparable
periods in 1997.  The increase in the gross profit  margin for  equipment  sales
during  the  third  quarter  of 1998  was  primarily  attributable  to a  higher
percentage of  modifications to existing  systems at customer  locations,  which
historically generate higher margins than new system installations. The decrease
in the gross profit margin for equipment sales during the nine months ended July
31,  1998  was  primarily  due  to  an  increase  in  distributor  sales,  which
historically generate lower margins, and increased competition. The gross profit
margin  for  service  sales was 33% for the third  quarter  and 32% for the nine
months  ended July 31,  1998 as compared  to 32% for both  periods in 1997.  The
increase for the third  quarter was  attributable  to increased  volume for both
maintenance and repairs.

Operating  expenses  for the third  quarter of 1998 were $2,005 or $1,252  lower
than the $3,257  reported for the third quarter of 1997.  The decrease  reflects
cost savings  from the  restructuring  of the  Company's  operations.  Operating
expenses  for the nine  months  ended  July 31,  1998 were  $8,025,  or a $1,443
decrease from the same period last year,  including a $1,023  charge  related to
the restructuring of the Company's  operations.  The Company consolidated office
space in New York and London and  centralized  administrative  functions  of the
Company's  United  States  service  operation  into its New York  operation.  In

                                      -6-
<PAGE>
addition,  the Company has reassigned several marketing and administrative staff
to field sales support functions as a further effort to enhance  revenues.  As a
result of this plan,  the Company  reduced the number of its employees  from the
October 31, 1997 level of 186 to 170 at January 31, 1998. The employee headcount
as of July 31,  1998 is 114 .  Excluding  the  restructuring  charge,  operating
expenses  decreased  by $2,466 for the nine  months  ended July 31,  1998.  This
decrease was partially  attributable  to a decrease in research and  development
expenses as 1997 expenses  included  development of the second generation of the
Company's  eXchange  phone.  In addition,  operating  expenses for the Company's
Licom subsidiary decreased by $109, which was attributable to the downsizing and
relocation of its operations into the Company's corporate facility.

The net loss reported in the third quarter ended July 31, 1998 was $458, or $.08
per share,  compared  to a net loss of $814,  or $.15 per  share,  for the third
quarter of 1997.  The net loss  reported for the nine months ended July 31, 1998
was  $4,037,  or $.74 per  share,  compared  to a net loss of $781,  or $.15 per
share,  for the same  period  in 1997.  The  third  quarter  loss was  primarily
attributable to a decrease in sales. The loss for the nine months ended July 31,
1998 includes a $1,023  non-recurring  charge related to the restructuring . The
average  shares  outstanding  for the quarter  ended July 31, 1998  increased to
5,427 versus 5,413 for the same period in 1997.

Financial Condition

The Company's  aggregate of cash and cash equivalents was $880 at July 31, 1998,
an  increase  of $544  from the  October  31,  1997  balance  of $336.  Accounts
receivable  decreased $5,862 primarily due to the payment of retainage  balances
on several large customer  contracts as well as a decrease in sales for the nine
months  ended July 31, 1998 as  compared to the same period in 1997.  Short-term
debt decreased $2,059 as a result of the liquidation of accounts receivable.

The Company's  loss for fiscal year 1997 and the first nine months of 1998 had a
substantial  impact on its working  capital and  liquidity.  On May 28, 1997 the
Company entered into a Credit  Agreement (the "Credit  Agreement") with National
Bank of Canada, New York Branch (the "Bank"). The Credit Agreement provided a $4
million  credit  facility to the  Company  secured by  substantially  all of the
assets  of the  Company  and  its  domestic  subsidiaries.  As a  result  of the
Company's  results of  operations  for 1997,  the Company  failed to satisfy the
financial  covenants set forth in the Credit  Facility.  The Bank has waived the
Company's  failure to satisfy the  financial  covenants  set forth in the Credit
Agreement  and has amended  those  covenants  for fiscal year 1998.  The amended
financial  covenants were not satisfied for the  three-month  period ended April
30,  1998.  On June 4, 1998 the  National  Bank of Canada  waived the  Company's
failure to satisfy  those  covenants  at April 30, 1998 and has amended them for
fiscal  year  1998.  The  Company  satisfied  the  financial  covenants  for the
three-month  period ended July 31, 1998. The Company's  operations are dependent
upon the  continued  availability  of funding  under the Credit  Agreement.  The
continued  availability of funding under the Credit  Agreement is dependent,  in
turn, upon the Company's ability to satisfy the amended financial  covenants set
forth in the Credit Agreement which require an improvement in the results of the
Company's operations for the remainder of 1998.

In the nine months ended July 31, 1998,  the Chairman of the Company waived $140
of his  compensation.  The Company  has  recorded  such  amount as  compensation
expense and a capital contribution.

                                      -7-
<PAGE>
Year 2000

The Company utilizes software and related  technologies  throughout its business
that may be affected by the date change in the year 2000.  System  modifications
or replacements  are underway or planned which will make all computer systems at
the Company compliant with the year 2000 requirement.  Anticipated  spending for
these  modifications  will be expensed as incurred and is not expected to have a
material impact on the Company's ongoing results of operations.

                                      -8-
<PAGE>
Part II.        OTHER INFORMATION

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

                The 1997 annual meeting of  shareholders of the Company was held
                on May 11, 1998.

                The name of each director  elected at the 1998 annual meeting of
                shareholders,  and the  number  of votes  cast for,  against  or
                withheld as to each such nominee is set forth below:


                     NAME                        FOR            WITHHELD
                     ----                        ---            --------
                Thomas E. Feil                4,612,165          171,744
                Luke P. La Valle, Jr.         4,646,215          137,694
                Thomas H. Lenagh              4,645,715          138,194
                Brian S. North                4,646,215          137,694
                A. Eugene Sapp, Jr.           4,646,215          137,694
                J. Stephen Vanderwoude        4,646,215          137,694

                At the  annual  meeting,  the  shareholders  voted to ratify the
                retention of Deloitte & Touche LLP as  independent  auditors for
                the 1998 fiscal year.  The number of votes cast for,  against or
                abstaining  with  respect to the  retention of Deloitte & Touche
                LLP were:

                        FOR                   AGAINST            ABSTAIN
                        ---                   -------            -------
                      4,459,990               197,900            126,019


                At the  annual  meeting,  the  shareholders  voted to approve an
                amendment to the Company's Restated Certificate of Incorporation
                to effect the reverse stock split. The number of votes cast for,
                against or abstaining with respect to the Amendment were:

                        FOR                 AGAINST              ABSTAIN
                        ---                 -------              -------
                      3,270,087            1,507,742              6,080

Item 5.         Other Information

                The NASDAQ Stock  Market,  Inc.  delisted the  Company's  common
                stock from the NASDAQ National  Market  effective with the close
                of business on May 20, 1998. In connection with that action, the
                NASDAQ Stock Market,  Inc.  determined that the Company would be
                unable to sustain compliance with the requirements for continued
                listing on the NASDAQ  SmallCap  Market over the long term. As a
                result of NASDAQ's  determination,  the  company  elected not to
                effect  the  reverse  stock  split  approved  by  the  Company's
                shareholders.

Item 6.         Exhibits and Reports on Form 8-K

               (a)  Exhibits
                10.16   Agreement  dated May 28,  1998  between  the Company and
                        National Bank of Canada, New York Branch.

                                      -9-
<PAGE>



                               V BAND CORPORATION


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                             V BAND CORPORATION
                                             ------------------
                                               (Registrant)



Date:  August 28, 1998
                                             /s/ Thomas E. Feil
                                             ------------------
                                             Thomas E. Feil
                                             Chairman & Chief Executive Officer
                                             (Duly Authorized Officer)



Date:  August 28, 1998
                                             /s/ Robert O. Riiska
                                             --------------------
                                             Robert O. Riiska
                                             Chief Financial Officer

                                      -10-