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                       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 Quarter ended: JUNE 30, 1998      Commission File Number 000-21685



                       INTELIDATA TECHNOLOGIES CORPORATION
             (Exact name of registrant as specified in its charter)

    DELAWARE                                                        54-1820617
    (State of incorporation)           (I.R.S. Employer Identification Number)

               13100 Worldgate Drive, Suite 600, Herndon, VA 20170
                    (Address of Principal Executive Offices)
                                 (703) 834-8500
                         (Registrant's telephone number)




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 the  registrant's  Common Stock  outstanding on June 30,
1998 was 31,659,616.



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<PAGE>


                       INTELIDATA TECHNOLOGIES CORPORATION

                          QUARTERLY REPORT ON FORM 10-Q

                                TABLE OF CONTENTS


                                                                            Page
PART I - FINANCIAL INFORMATION                                              ----

         Item 1.  Unaudited Condensed Consolidated Financial Statements

                  Condensed Consolidated Balance Sheets
                  June 30, 1998 and December 31, 1997..........................3

                  Condensed Consolidated Statements of Operations
                  Three Months and Six Months Ended June 30, 1998 and 1997.....4

                  Condensed Consolidated Statement of Changes in
                  Stockholders' Equity
                  Six Months Ended June 30, 1998...............................5

                  Condensed Consolidated Statements of Cash Flows
                  Six Months Ended June 30, 1998 and 1997......................6

                  Notes to Condensed Consolidated Financial Statements ........7

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


PART II - OTHER INFORMATION

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


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

<PAGE>

PART I:  FINANCIAL INFORMATION
------------------------------

ITEM 1:  FINANCIAL STATEMENTS
-----------------------------

                       INTELIDATA TECHNOLOGIES CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 1998 AND DECEMBER 31, 1997
                        (in thousands, except share data)
<TABLE>
                                                                                        1998            1997
                                                                                    (unaudited)
                                                                                    ------------    ------------
<S>                                                                                 <C>             <C>
ASSETS
  CURRENT ASSETS
     Cash and cash equivalents                                                      $      8,404    $      2,055
     Short-term investments                                                                   --           9,304
     Accounts receivable, net of allowances of $296
         in 1998 and $461 in 1997                                                          1,274           1,309
     Inventories                                                                              29               7
     Net assets of discontinued operations                                                 7,071          31,519
     Prepaid expenses and other current assets                                               144             158
                                                                                    ------------    ------------
         Total current assets                                                             16,922          44,352

  NONCURRENT ASSETS
     Property and equipment, net                                                             513           2,022
     Other assets                                                                            187             328
                                                                                    ------------    ------------
TOTAL ASSETS                                                                        $     17,622    $     46,702
                                                                                    ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
  CURRENT LIABILITIES
     Accounts payable                                                               $        467    $        756
     Accrued expenses and other liabilities                                                4,005           4,231
     Deferred revenues                                                                     2,691           3,396
                                                                                    ------------    ------------
         Total current liabilities                                                         7,163           8,383

  NONCURRENT LIABILITIES
     Deferred revenues                                                                       625           1,250
                                                                                    ------------    ------------
TOTAL LIABILITIES                                                                          7,788           9,633

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
     Preferred stock, $0.001 par value; authorized 5,000,000 shares;
         no shares issued and outstanding                                                     --              --
     Common stock, $0.001 par value; authorized 60,000,000 shares;
         issued 32,341,116 shares in 1998 and 31,862,449 shares in 1997;
         outstanding 31,659,616 shares in 1998 and 31,180,949 in 1997                         32              32
     Additional paid-in capital                                                          246,844         245,699
     Treasury stock, at cost                                                              (2,064)         (2,064)
     Deferred compensation                                                                  (382)            (18)
     Accumulated other comprehensive income                                                   --             425
     Accumulated deficit                                                                (234,596)       (207,005)
                                                                                    ------------    ------------
TOTAL STOCKHOLDERS' EQUITY                                                                 9,834          37,069
                                                                                    ------------    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $     17,622    $     46,702
                                                                                    ============    ============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.
<PAGE>
                       INTELIDATA TECHNOLOGIES CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                (in thousands, except per share data; unaudited)
<TABLE>
                                                              Three months ended                    Six months ended
                                                                    June 30,                            June 30,
                                                          ----------------------------       ----------------------------
                                                             1998             1997              1998             1997
                                                          -----------      -----------       -----------      -----------
<S>                                                       <C>              <C>               <C>              <C>
REVENUES
     Software                                             $      --        $     289         $      --        $     501
     Consulting and services                                     63              295               211              659
     Leasing and other                                        2,088            2,682             4,411            6,072
                                                          -----------      -----------       -----------      -----------
         Total revenues                                       2,151            3,266             4,622            7,232
                                                          -----------      -----------       -----------      -----------

COST OF REVENUES
     Software                                                    --              118                --              223
     Consulting and services                                     25              250                34              590
     Leasing and other                                          524            1,559             1,229            3,355
                                                          -----------      -----------       -----------      -----------
         Total cost of revenues                                 549            1,927             1,263            4,168
                                                          -----------      -----------       -----------      -----------

GROSS PROFIT                                                  1,602            1,339             3,359            3,064

OPERATING EXPENSES
     General and administrative                               1,840            1,509             3,275            3,494
     Selling and marketing                                      645              586             1,287              652
     Research and development                                   716            1,173             1,357            2,282
                                                          -----------      -----------       -----------      -----------
         Total operating expenses                             3,201            3,268             5,919            6,428
                                                          -----------      -----------       -----------      -----------

OPERATING LOSS                                               (1,599)          (1,929)           (2,560)          (3,364)
                                                          -----------      -----------       -----------      -----------
                 
OTHER INCOME                                                    550              418               686              856
                                                          -----------      -----------       -----------      -----------
LOSS BEFORE INCOME TAXES                                     (1,049)          (1,511)           (1,874)          (2,508)
INCOME TAXES                                                     --               --                --               --
                                                          -----------      -----------       -----------      -----------
LOSS FROM CONTINUING OPERATIONS                              (1,049)          (1,511)           (1,874)          (2,508)

DISCONTINUED OPERATIONS
  Loss from operation of telecommunications and
    interactive service divisions (net of income taxes)     (13,487)          (1,326)          (16,724)            (164)
  Loss on disposal of telecommunications and
    interactive service divisions                            (8,233)             --             (8,993)             --
                                                          -----------      -----------       -----------      -----------
         Total discontinued operations                      (21,720)          (1,326)          (25,717)            (164)
                                                          -----------      -----------       -----------      -----------
NET LOSS                                                  $ (22,769)       $  (2,837)        $ (27,591)       $  (2,672)
                                                          ===========      ===========       ===========      ===========

Basic and diluted loss from continuing operations
  per common share                                        $   (0.03)       $   (0.05)        $   (0.06)       $   (0.08)
                                                          ===========      ===========       ===========      ===========
Basic and diluted loss per common share                   $   (0.73)       $   (0.09)        $   (0.88)       $   (0.08)
                                                          ===========      ===========       ===========      ===========
Basic and diluted weighted average outstanding shares        31,374           31,819            31,273           31,818
                                                          ===========      ===========       ===========      ===========
</TABLE>
     See accompanying notes to condensed consolidated financial statements.
<PAGE>

                       INTELIDATA TECHNOLOGIES CORPORATION
       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                         SIX MONTHS ENDED JUNE 30, 1998
                            (in thousands; unaudited)

<TABLE>


                                                                                Accumulated
                                         Common stock    Additional                Other
                                        ---------------   paid-in    Treasury  Comprehensive    Deferred     Accumulated
                                        Shares   Amount   capital      Stock      Income      Compensation     Deficit      Total
                                        ------   ------  ----------  --------  -------------  ------------   -----------  ----------
<S>                                     <C>      <C>     <C>         <C>       <C>            <C>            <C>          <C>
Balance at December 31, 1997            31,181   $   32  $  245,699  $(2,064)   $       425   $       (18)   $ (207,005)  $  37,069 
  Cancellation of common stock             (10)      --          --       --             --            --            --          --
  Issuance of restricted common stock      153       --         459       --             --          (459)           --          --
  Cancellation of accrued stock options     --       --         363       --             --            --            --         363
  Exercise of stock options                300       --         294       --             --            --            --         294
  Employee stock purchase plan              35       --          29       --             --            --            --          29
  Recognized gain on investments            --       --          --       --           (425)           --            --        (425)
  Compensation expense                      --       --          --       --             --            95            --          95
  Net loss                                  --       --          --       --             --            --       (27,591)    (27,591)
                                        ------   ------  ----------  --------  -------------  ------------   -----------  ----------
Balance at June 30, 1998                31,659   $   32  $  246,844  $(2,064)  $         --   $      (382)   $ (234,596)  $   9,834
                                        ======   ======  ==========  ========  =============  ============   ===========  ==========

</TABLE>













     See accompanying notes to condensed consolidated financial statements.

<PAGE>

                       INTELIDATA TECHNOLOGIES CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                            (in thousands; unaudited)

<TABLE>

                                                                                     1998               1997
                                                                                --------------     --------------
<S>                                                                             <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Loss from continuing operations                                                 $      (1,874)     $      (2,508)
Adjustments to reconcile loss from continuing operations
to net cash used in operating activities for continuing operations:
   Depreciation and amortization                                                          413              2,131
   Restructuring credit                                                                    --             (1,167)
   Deferred compensation and other noncash items                                         (105)               (18)
   Changes in certain assets and liabilities:
       Accounts receivable                                                                235                  6
       Inventories                                                                        (22)                --
       Prepaid expenses and other current assets                                           14               (230)
       Other assets                                                                       141               (299)
       Accounts payable                                                                  (289)              (318)
       Accrued expenses and other liabilities                                            (226)               797
       Deferred revenues                                                               (1,330)              (291)
                                                                                --------------     --------------
            Net cash used in operating activities for continuing operations            (3,043)            (1,897)
                                                                                --------------     --------------

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES OF
DISCONTINUED OPERATIONS                                                                 1,301            (10,725)
                                                                                --------------     --------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from the sale of short-term investments                                     9,304              1,006
   Purchases of property and equipment-continuing operations                               (7)               (55)
   Purchases of property and equipment-discontinued operations                             --               (231)
                                                                                --------------     --------------
            Net cash provided by investing activities                                   9,297                720
                                                                                --------------     --------------

CASH FLOWS USED IN FINANCING ACTIVITIES
   Payment of short-term borrowings-discontinued operations                            (1,500)            (2,000)
   Proceeds from the issuance of common stock                                             294                100
                                                                                --------------     --------------
            Net cash used in financing activities                                      (1,206)            (1,900)
                                                                                --------------     --------------

                  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                      6,349            (13,802)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD FOR
CONTINUING AND DISCONTINUED OPERATIONS                                                  2,055             26,644
                                                                                --------------     --------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD FOR CONTINUING
AND DISCONTINUED OPERATIONS                                                     $       8,404      $      12,842
                                                                                ==============     ==============
</TABLE>





     See accompanying notes to condensed consolidated financial statements.

<PAGE>


                       INTELIDATA TECHNOLOGIES CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                    THREE MONTHS ENDED JUNE 30, 1998 AND 1997
                                   (UNAUDITED)

(1)      BASIS OF PRESENTATION

                  The  condensed   consolidated   balance  sheet  of  InteliData
         Technologies  Corporation  ("InteliData"  or  "Company") as of June 30,
         1998, and the related condensed  consolidated  statements of operations
         for the three and six month  periods  ended June 30,  1998 and 1997 and
         condensed  consolidated cash flows for the six month periods ended June
         30, 1998 and 1997  presented  in this Form 10-Q are  unaudited.  In the
         opinion  of   management,   all   adjustments   necessary  for  a  fair
         presentation  of such financial  statements  have been  included.  Such
         adjustments consist only of normal recurring items. Interim results are
         not necessarily  indicative of results for a full year. Certain amounts
         have been  reclassified  to conform to the current  year  presentation.
         During  the  second  quarter  of 1998,  the  Company  adopted a plan to
         dispose  of  the   telecommunications   division   through  a  sale  or
         liquidation.  As a result,  certain  financial  information  previously
         issued has been restated to give effect to the  classification  of this
         business as discontinued operations.

                  The condensed  consolidated financial statements and notes are
         presented  as  required  by  Form  10-Q,  and  do not  contain  certain
         information   included  in  the  Company's  annual  audited   financial
         statements  and notes.  These  financial  statements  should be read in
         conjunction with the annual audited financial statements of the Company
         and the  notes  thereto,  together  with  management's  discussion  and
         analysis of financial condition and results of operations, contained in
         the Form 10-K for the fiscal year ended December 31, 1997.

(2)      DISCONTINUED OPERATIONS

                  During the second quarter of 1998, the Company  adopted a plan
         to dispose of its various  telecommunications  divisions through a sale
         or liquidation.  The Company's Caller ID adjunct  inventory was sold in
         May  1998.  Negotiations  for the sale of some or all of the  remaining
         telecommunications  assets are being conducted with various parties. At
         June 30, 1998, the net assets of  discontinued  operations,  consisting
         primarily  of  inventories,  trade  receivables,  equipment,  warehouse
         facilities, and liabilities expected to be assumed by others, have been
         reclassified as current assets at the estimated net realizable value.

                  Revenues from  discontinued  operations  were  $8,307,000  and
         $13,597,000  for the  three  months  ended  June  30,  1998  and  1997,
         respectively.  Revenues from  discontinued  operations were $23,163,000
         and  $31,195,000  for the six  months  ended  June 30,  1998 and  1997,
         respectively.  Included  within  the  loss on  disposal  was a loss for
         discontinued  operations aggregating $2,416,000 for the period from the
         measurement  date, June 1, 1998, to June 30, 1998. Also included in the
         loss on disposal is a pretax  provision  of
<PAGE>
         $2,279,000 for estimated operating losses during the phase-out  period,
         which is expected to be from June 1, 1998  through  October  31,  1998.
         Loss  from  discontinued  operations  is net of   income  tax  benefits
         associated with the operations of the  telecommunications  divisions of
         $2,729,000.   Noncash   activities  in   the  loss  from   discontinued
         operations  for the  six month  period  ending  June 30,  1998  include
         $12,458,000  for  the  write-down  of  inventories;  and  $751,000  for
         depreciation  and  amortization.  Noncash  activities  in  the  loss on
         disposal   of  discontinued   operations  include  $3,538,000  for  the
         write-down  of  property,  plant  and  equipment.   Noncash  activities
         associated  with  discontinued  operations  for  the six  month  period
         ended   June  30,  1997  include   $2,131,000  for   depreciation   and
         amortization.

(3)      STOCKHOLDERS' EQUITY

                  On  February  24,  1998,  the  Company's  Board  of  Directors
         approved  the  issuance  of up to  200,000  restricted  shares  of  the
         Company's  common  stock under the  Company's  1996  Incentive  Plan to
         employees  of the home  banking  division.  Effective  April  1,  1998,
         153,000 of such shares were issued to employees. Under the terms of the
         stock award,  the shares may not be sold or transferred for a period of
         eighteen  months from the date of grant and the shares are  forfeitable
         should the employee's  employment  with the Company  terminate prior to
         the end of the holding period.

                  On June 9, 1998, the Company offered  employees  participating
         in the  Company's  Stock  Option  Plans the  opportunity  to cancel the
         exercisable  and  unexercisable  portions of their stock  options as of
         June 9, 1998 and  replace  them with an equal  number of  options at an
         exercise  price of $1.00,  which was the closing  market  price on such
         date.  The Company did not offer this  opportunity to the President and
         Chief Executive  Officer,  but offered this opportunity to employees as
         an incentive to encourage  employee  retention.  Approximately  944,235
         stock  options with exercise  prices  ranging from $1.25 to $23.75 were
         replaced.  The  replacement  options  vest as  follows:  the  number of
         previously  granted  options  exercisable  on June 9, 1998 will  become
         exercisable on December 9, 1998;  and the number of previously  granted
         options  unexercisable as of June 9, 1998 will become  exercisable over
         three years from June 9, 1998 in equal annual increments.

<PAGE>

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

RESULTS OF OPERATIONS
---------------------

The following  represents the results of operations for InteliData  Technologies
Corporation  for the three and six  months  ended June 30,  1998 and 1997.  Such
information should be read in conjunction with the interim financial  statements
and the notes thereto in Part I, Item 1 of this Quarterly Report.

THREE MONTHS ENDED JUNE 30, 1998 AND 1997

Revenues

         The Company's  second quarter revenues were $2,151,000 in 1998 compared
to $3,266,000 in 1997, a decrease of 34% or $1,115,000. The Company did not sell
any software  during the second quarter of 1998 compared to $289,000 in software
revenues in the same period in 1997. Consulting and services revenues aggregated
$63,000 in the second quarter of 1998 for services  associated with  feasibility
studies  for  potential  clients.  During the same  period in 1997,  the Company
aggregated $295,000 in customer support revenues,  which were remarketed by Visa
InterActive  to  Visa  member  banks.  Leasing  and  other  revenues  aggregated
$2,088,000  in the second  quarter of 1998  compared to $2,682,000 in the second
quarter of 1997.  During the second  quarter of 1998,  revenues from leasing and
other  operations  consisted of $1,385,000 from customers within its lease base,
$78,000 in revenues from maintenance  contracts related to the sale of software,
and $625,000 from deferred royalty revenues related to an agreement  whereby the
Company was prepaid for certain  royalties in the fourth quarter of 1997. During
the same period in 1997, the Company recognized $2,203,000 from customers within
its lease base and $479,000 from monthly  service fees for bill pay  operations.
The number of active records in the Company's  installed lease base historically
decreases at a rate of 27% per year. The Company expects this trend to continue.

Cost of Revenues

         The  Company's  second  quarter cost of revenues  were $549,000 in 1998
compared to $1,927,000 in 1997, a decrease of 72% or $1,378,000. The Company did
not sell any software  during the second quarter of 1998 compared to $118,000 in
costs associated with software sales in the same period in 1997.  Consulting and
services cost of revenues  aggregated  $25,000 in the second quarter of 1998 for
services associated with feasibility  studies for potential clients.  During the
same period in 1997,  the Company  aggregated  $250,000 in cost of revenues  for
customer  support  revenues,  which were remarketed by Visa  InterActive to Visa
member  banks.  Cost of revenues  associated  with leasing and other  operations
aggregated  $524,000 in the second quarter of 1998 compared to $1,559,000 in the
second  quarter  of  1997.  During  the  second  quarter  of 1998,  the  Company
recognized  cost of revenues  aggregating  $524,000  for its lease base.  During
1997,  the Company  recognized  cost of  revenues  aggregating  $1,220,000  from
customers  within its lease base and $339,000 from monthly service fees for bill
pay  operations.  The
<PAGE>
decrease  in cost of  revenues  for the  Company's  lease  base from the  second
quarter of 1997 to the second  quarter of 1998 was  attributed to the lease base
becoming  fully  depreciated  in the first quarter of 1998 and a decrease in the
number of active lease customers.

         Overall gross profit margins increased to 74% for the second quarter of
1998 from 41% for the second quarter of 1997. The large increase in gross profit
margins was  attributed  primarily  to a shift in the source of revenues for the
Company and the full  depreciation  of the  Company's  lease  base.  The Company
anticipates that gross profit margins may fluctuate in the future due to changes
in product mix,  competitive pricing pressure,  the introduction of new products
and changes in the volume and terms of leasing activity.

General and Administrative

         General and  administrative  expenses  were  $1,840,000  for the second
quarter of 1998 as compared to  $1,509,000  in the second  quarter of 1997.  The
increase of $331,000 was  attributed  to a reversal of  estimated  restructuring
charges related to the home banking  division during the second quarter of 1997.
Exclusive of this  adjustment,  general and  administrative  expenses  decreased
$836,000  from the same period in the prior  year.  This  decrease is  primarily
attributed to a reduction in headcount and other  comprehensive  cost  reduction
measures  implemented  by the  Company  as well  as the  reduction  of  goodwill
amortization  expense resulting from a valuation adjustment in the third quarter
of 1997.  Throughout  the year,  the  Company  expects  to control  general  and
administrative  expenses  and plans to  continually  assess  its  operations  in
managing the  continued  development  of  infrastructure  to handle  anticipated
business levels.

Selling and Marketing

         Selling and  marketing  expenses  increased  to $645,000 for the second
quarter of 1998 from  $586,000  for the same  period  last year.  The Company is
continually  expanding its marketing  efforts in promoting  and  developing  its
products.  The  increase  of 10% or $59,000  from the same  period  last year is
attributed   primarily  to  increased   direct  selling  costs  related  to  the
introduction of new products to financial institutions.

Research and Development

         Research and  development  costs were $716,000 in the second quarter of
1998  compared  to  $1,173,000  for the same  period in 1997.  The  decrease  of
$457,000 was largely  attributable to cost saving measures relating to personnel
costs and more focused research and development efforts.

Other Income

         Other income,  primarily investment income, was $550,000 for the second
quarter of 1998 compared to $418,000 for the same period in the prior year.  The
increase of $132,000 was attributed to the  recognition of realized gains in the
Company's investment portfolio.

<PAGE>

Discontinued Operations

         During  the  second  quarter  of 1998,  the  Company  adopted a plan to
dispose  of  its  various   telecommunications   divisions  through  a  sale  or
liquidation.  The  Company's  Caller ID adjunct  inventory was sold in May 1998.
Negotiations  for the  sale of some or all of the  remaining  telecommunications
assets are being  conducted  with various  parties.  At June 30,  1998,  the net
assets of discontinued  operations,  consisting primarily of inventories,  trade
receivables,  equipment,  warehouse  facilities and  liabilities  expected to be
assumed by others, have been reclassified as current assets at the estimated net
realizable value.

         Revenues from  discontinued  operations were $8,307,000 and $13,597,000
for the three months ended June 30, 1998 and 1997,  respectively.  The loss from
the operation of the telecommunications and interactive services divisions,  net
of income taxes,  was $13,487,000  during the second quarter of 1998 compared to
$1,326,000  for the same period in the prior  year.  The loss on disposal of the
telecommunications  and  interactive  services  divisions was $8,233,000 for the
second  quarter of 1998.  Included  within the loss on  disposal  was a loss for
discontinued   operations   aggregating  $2,416,000  for  the  period  from  the
measurement  date,  June 1, 1998, to June 30, 1998. Also included in the loss on
disposal is a pretax  provision of  $2,279,000  for estimated  operating  losses
during the phase-out  period,  which is expected to be from June 1, 1998 through
October 31, 1998.

Weighted Average Outstanding Shares and Basic and Diluted Loss Per Common Share

         The basic and diluted  weighted  average shares decreased to 31,374,000
for the second  quarter of 1998 compared to 31,819,000 for the second quarter of
1997.  The decrease  resulted  primarily  from the  purchase of treasury  shares
during 1997 and the  cancellation of certain shares of common stock in the first
quarter of 1998;  partially  offset by an increase  in shares  issued due to the
exercise of stock options and stock grants to key employees.  As a result of the
foregoing,  basic and diluted loss per common share from  continuing  operations
was  $(0.03) for the second  quarter of 1998  compared to $(0.05) for the second
quarter of 1997;  basic and  diluted  loss per common  share was $(0.73) for the
second quarter of 1998 compared to $(0.09) for the second quarter of 1997.

SIX MONTHS ENDED JUNE 30, 1998 AND 1997

Revenues

         The Company's revenues for the first six months of 1998 were $4,622,000
compared to $7,232,000 in 1997, a decrease of 36% or $2,610,000. The Company did
not sell any software  during the first six months of 1998  compared to $501,000
in  software  revenues  in the same  period  in 1997.  Consulting  and  services
revenues  aggregated  $211,000  in the  first six  months  of 1998 for  services
associated  with  feasibility  studies for  potential  clients.  During the same
period in 1997, the Company  aggregated  $659,000 in customer support  revenues,
which were  remarketed by Visa  InterActive  to Visa member  banks.  Leasing and
other revenues aggregated $4,411,000 in the first six months of 1998 compared to
$6,072,000 in the first six months of
<PAGE>
1997.  During  the first six months of 1998,  revenues  from  leasing  and other
operations consisted of $3,083,000 from customers within its lease base, $78,000
in revenues  from  maintenance  contracts  related to the sale of software,  and
$1,250,000 from deferred royalty  revenues  related to an agreement  whereby the
Company was prepaid certain  royalties in the fourth quarter of 1997. During the
same period in 1997, the Company recognized $5,021,000 from customers within its
lease base and $1,051,000 from monthly service fees for bill pay operations. The
number of active  records in the  Company's  installed  lease base  historically
decreases at a rate of 27% per year. The Company expects this trend to continue.

Cost of Revenues

         The  Company's  cost of revenues  for the first six months of 1998 were
$1,263,000 compared to $4,168,000 in 1997, a decrease of 70% or $2,905,000.  The
Company did not sell any software  during the first six months of 1998  compared
to $223,000 in costs  associated with software sales in the same period in 1997.
Consulting  and services  cost of revenues  aggregated  $34,000 in the first six
months of 1998 for services  associated with  feasibility  studies for potential
clients. During the same period in 1997, the Company aggregated $590,000 in cost
of  revenues  for  customer  support  revenues,  which were  remarketed  by Visa
InterActive to Visa member banks.  Cost of revenues  associated with leasing and
other operations  aggregated $1,229,000 in the first six months of 1998 compared
to $3,355,000  in the same period of 1997.  During the first six months of 1998,
the Company  recognized  cost of revenues  aggregating  $1,229,000 for its lease
base.  During the same period in 1997, the Company  recognized  cost of revenues
aggregating  $2,666,000  from customers  within its lease base and $689,000 from
monthly service fees for bill pay  operations.  The decrease in cost of revenues
for the  Company's  lease  base from the first half of 1997 to the first half of
1998 was attributed  primarily to the lease base becoming  fully  depreciated in
the  first  quarter  of 1998  and a  decrease  in the  number  of  active  lease
customers.

         Overall gross profit margins  increased to 73% for the first six months
of 1998 from 42% for the same period in 1997. The large increase in gross profit
margins was  attributed  primarily  to a shift in the source of revenues for the
Company and the full  depreciation  of the  Company's  lease  base.  The Company
anticipates that gross profit margins may fluctuate in the future due to changes
in product mix,  competitive pricing pressure,  the introduction of new products
and changes in the volume and terms of leasing activity.

General and Administrative

         General and  administrative  expenses were $3,275,000 for the first six
months of 1998 as compared to  $3,494,000  in the first six months of 1997.  The
decrease of  $219,000  was  attributed  to a reduction  in  headcount  and other
comprehensive cost reduction measures implemented by the Company. Throughout the
year, the Company  expects to control  general and  administrative  expenses and
plans to continually assess its operations in managing the continued development
of infrastructure to handle anticipated business levels.
<PAGE>
Selling and Marketing

         Selling and marketing  expenses  increased to $1,287,000  for the first
six  months of 1998 from  $652,000  for the same  period  last  year.  The large
increase is primarily  attributed to lower selling and marketing expenses in the
first  quarter  of 1997.  Considering  the  change  in the  Company's  strategic
direction in the second quarter of 1997, the Company began  investing in selling
and  marketing  programs.  The Company is  continually  expanding  its marketing
efforts in promoting its products. The increase of 97% or $635,000 from the same
period last year is attributed primarily to the change in strategic direction in
the second  quarter of 1997 and  increased  direct  selling costs related to the
introduction of new products to financial institutions.

Research and Development

         Research and development  costs were $1,357,000 in the first six months
of 1998  compared to  $2,282,000  for the same period in 1997.  The  decrease of
$925,000 was largely  attributable to cost saving measures relating to personnel
costs and more focused research and development efforts.

Other Income

         Other income,  primarily  investment income, was $686,000 for the first
six months of 1998  compared to $856,000  for the same period in the prior year.
The  decrease of $170,000 was  attributed  to decreased  cash,  equivalents  and
short-term  investment balances for the first half of 1998 compared to the first
half of 1997.  The  decrease  in cash,  equivalents  and  short-term  investment
balances  were  related to the  funding of the  Company's  working  capital  and
operations.

Discontinued Operations

         During  the  second  quarter  of 1998,  the  Company  adopted a plan to
dispose  of  its  various   telecommunications   divisions  through  a  sale  or
liquidation.  The  Company's  Caller ID adjunct  inventory was sold in May 1998.
Negotiations  for the  sale of some or all of the  remaining  telecommunications
assets are being  conducted  with various  parties.  At June 30,  1998,  the net
assets of discontinued  operations,  consisting primarily of inventories,  trade
receivables,  equipment,  warehouse  facilities and  liabilities  expected to be
assumed by others have been  reclassified as current assets at the estimated net
realizable value.

         Revenues from discontinued  operations were $23,163,000 and $31,195,000
for the six months ended June 30, 1998 and 1997, respectively. The loss from the
operation of the telecommunications  and interactive services divisions,  net of
income taxes,  was  $16,724,000  during the first six months of 1998 compared to
$164,000  for the same period in the prior year.  The loss from  disposal of the
telecommunications  and  interactive  services  divisions was $8,993,000 for the
first  half of  1998.  Included  within  the  loss on  disposal  was a loss  for
discontinued   operations   aggregating  $2,416,000  for  the  period  from  the
measurement  date,  June 1, 1998, to June 30, 1998. Also included in the loss on
disposal is a pretax  provision of
<PAGE>
$2,279,000 for estimated operating losses during the phase-out period,  which is
expected to be from June 1, 1998 through October 31, 1998.

Weighted Average Outstanding Shares and Basic and Diluted Loss Per Common Share

         The basic and diluted  weighted  average shares decreased to 31,273,000
for the first half of 1998  compared to  31,818,000  for the first half of 1997.
The decrease resulted primarily from the purchase of treasury shares during 1997
and the  cancellation  of certain shares of common stock in the first quarter of
1998;  partially  offset by an increase in shares  issued due to the exercise of
stock options and stock grants to key  employees.  As a result of the foregoing,
basic and diluted loss per common share from  continuing  operations was $(0.06)
for the first half of 1998 compared to $(0.08) for the first half of 1997; basic
and  diluted  loss per  common  share was  $(0.88)  for the  first  half of 1998
compared to $(0.08) for the first half of 1997.

LIQUIDITY AND CAPITAL RESOURCES

         During the first six months of 1998,  the Company's  cash,  equivalents
and short-term investments decreased by $2,955,000 resulting from the payment of
outstanding  liabilities at year-end,  including  short-term  borrowings and the
financing of certain operations. At June 30, 1998, the Company had $8,404,000 in
cash and cash equivalents.  At June 30, 1998, the Company had working capital of
$9,759,000  with no long-term  debt. The Company's  total assets  exceeded total
liabilities by $9,834,000.

         During the first six months of 1998, cash used in operating  activities
from  continuing  operations was  $3,043,000  compared to $1,897,000 in the same
period in 1997.  Cash flows from operating  activities of continuing  operations
during the first six months of 1998  include  certain  fixed costs in  operating
expenses,  payment of certain  liabilities  and recognition of income related to
deferred  revenues,  offset  in part by net cash  generated  from the  Company's
accounts  receivable of $235,000.  Cash flows from  operations  during the first
half of 1998 were primarily related to an increase in inventories of $22,000 and
funding  payments  from  accounts  payable  of  $289,000,  accrued  expenses  of
$226,000, and recognition of income from deferred revenues of $1,330,000; offset
in part by decreases in prepaid expenses and other assets aggregating  $155,000.
Cash flows from operating activities of discontinued operations during the first
six months of 1998 were  $1,301,000  compared  to  $10,725,000  used in the same
period  in 1997.  The  change  related  primarily  to the  funding  of  accounts
receivable and inventory purchases in the prior year.

         Investing activities provided $9,297,000 during the first six months of
1998  compared  to  providing  $720,000  during  the same  period in 1997.  Cash
provided  by  investing  activities  was  primarily  contributed  by the sale of
short-term  investments  offset in part by the purchase of certain  property and
equipment, primarily to support an upgrade for the Company's internal networks.
<PAGE>
         Financing activities used $1,206,000 in the first half of 1998 compared
to using  $1,900,000 in the same period in 1997.  Financing  activities  consist
primarily  of the  payment  of  short-term  borrowings,  offset  in part by cash
received from the exercise of stock options.

         The Company's  primary needs for cash in the future are for investments
in product development,  working capital, the financing of operations, strategic
ventures,   potential   acquisitions,   potential  stock  repurchases,   capital
expenditures and the upgrade of the Company's  systems and operations.  In order
to meet the  Company's  needs for cash  throughout  the year,  the Company  will
utilize  cash  on-hand,  cash  generated  through  the  sale of  certain  assets
associated  with  discontinued  operations,  collateralized  borrowings  and may
utilize, to the extent available, funds generated from operations.


CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

         The  above  information  includes   forward-looking   statements,   the
realization  of which  may be  impacted  by the  factors  discussed  below.  The
forward-looking  statements  are made pursuant to the safe harbor  provisions of
the Private  Securities  Litigation Reform Act of 1995 (the "Act").  This report
contains forward looking statements that are subject to risks and uncertainties,
including,  but not  limited  to, the impact of  competitive  products,  pricing
pressure,  product  demand and market  acceptance  risks,  year 2000  compliance
issues,  pace  of  consumer  acceptance  of  home  banking,   bank  mergers  and
acquisitions, evolution of standards including Open Financial Exchange (OFX) and
the GOLD  standard,  risk of  integration  of the Company's  technology by large
software  companies,  reliance on key  strategic  alliances  and newly  emerging
technologies,  reliance on  resellers,  the on-going  viability of the mainframe
marketplace  and demand  for  traditional  mainframe  products,  the  ability to
attract and retain key employees,  the availability of cash for growth,  product
obsolescence,  ability  to  reduce  product  costs,  fluctuations  in  operating
results,  ability to continue funding operating losses, delays in development of
highly complex products and other risks detailed from time to time in InteliData
filings with the Securities and Exchange Commission,  including the risk factors
disclosed  in the  Company's  Form 10-K for the fiscal year ended  December  31,
1997.  These risks could cause the Company's  actual results for 1998 and beyond
to differ materially from those expressed in any forward looking statements made
by, or on behalf of, the Company.  The foregoing  list of factors  should not be
construed  as  exhaustive  or  as  any  admission   regarding  the  adequacy  of
disclosures made by the Company prior to the date hereof or the effectiveness of
said Act.

<PAGE>

PART II:   OTHER INFORMATION
           -----------------

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K
           --------------------------------

(a)   Exhibits
      --------

      10.23  Employment and Non-Competition Agreement dated June 9, 1998 between
             InteliData  Technologies Corporation and  Joseph P. Payne.

(b)   Reports on Form 8-K
      -------------------
  
      None
  

<PAGE>

                                   SIGNATURES


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



                                 INTELIDATA TECHNOLOGIES CORPORATION



                                 By:   /s/John C. Backus, Jr.
                                       -------------------------------------
                                       John C. Backus, Jr.
                                       President and Chief Executive Officer