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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: September 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 September
30, 1998 was 31,636,916.



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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
                  September 30, 1998 and December 31, 1997 .................   3

                  Condensed Consolidated Statements of Operations
                  Three Months and Nine Months Ended September 30,
                  1998 and 1997 ............................................   4

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

                  Condensed Consolidated Statements of Cash Flows
                  Nine Months Ended September 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..........................  18


SIGNATURES        ..........................................................  19

<PAGE>

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

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

                       INTELIDATA TECHNOLOGIES CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 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                                                      $      6,625    $      2,055
     Short-term investments                                                                   --           9,304
     Accounts receivable, net of allowances of $296
         in 1998 and $461 in 1997                                                          1,332           1,309
     Inventories                                                                              29               7
     Net assets of discontinued operations                                                 4,494          32,618
     Prepaid expenses and other current assets                                               106             158
                                                                                    ------------    ------------
         Total current assets                                                             12,586          45,451

  NONCURRENT ASSETS
     Property and equipment, net                                                             442             923
     Other assets                                                                            259             328
                                                                                    ------------    ------------

TOTAL ASSETS                                                                        $     13,287    $     46,702
                                                                                    ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
  CURRENT LIABILITIES
     Accounts payable                                                               $        882    $        756
     Accrued expenses and other liabilities                                                2,899           4,231
     Deferred revenues                                                                     3,074           3,396
                                                                                    ------------    ------------
         Total current liabilities                                                         6,855           8,383

  NONCURRENT LIABILITIES
     Deferred revenues                                                                        --           1,250
                                                                                    ------------    ------------
TOTAL LIABILITIES                                                                          6,855           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 32,318,416 shares in 1998 and 31,862,449 shares in 1997;
         outstanding 31,636,916 shares in 1998 and 31,180,949 in 1997                         32              32
     Additional paid-in capital                                                          246,907         245,699
     Treasury stock, at cost                                                              (2,064)         (2,064)
     Deferred compensation                                                                  (261)            (18)
     Accumulated other comprehensive income                                                   --             425
     Accumulated deficit                                                                (238,182)       (207,005)
                                                                                    ------------    ------------
TOTAL STOCKHOLDERS' EQUITY                                                                 6,432          37,069
                                                                                    ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $     13,287    $     46,702
                                                                                    ============    ============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

<PAGE>

                       INTELIDATA TECHNOLOGIES CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                (in thousands, except per share data; unaudited)

<TABLE>

                                                              Three months ended                  Nine months ended
                                                                 September 30,                      September 30,             
                                                          ----------------------------       ----------------------------
                                                             1998             1997              1998             1997     
                                                          -----------      -----------       -----------      -----------
<S>                                                       <C>              <C>               <C>              <C>    

REVENUES
     Software                                             $     416        $     274         $     416        $     775
     Consulting and services                                    415              314               626              973
     Leasing and other                                        1,894            2,223             6,305            8,295  
                                                          -----------      -----------       -----------      -----------
         Total revenues                                       2,725            2,811             7,347           10,043  
                                                          -----------      -----------       -----------      -----------

COST OF REVENUES
     Software                                                    --               --                --              223
     Consulting and services                                    162              270               196              860
     Leasing and other                                          400            1,484             1,629            4,839 
                                                          -----------      -----------       -----------      ----------
         Total cost of revenues                                 562            1,754             1,825            5,922  
                                                          -----------      -----------       -----------      -----------

GROSS PROFIT                                                  2,163            1,057             5,522            4,121

OPERATING EXPENSES
     General and administrative                               1,586            2,727             4,861            6,221
     Selling and marketing                                      714              564             2,001            1,216
     Research and development                                   656            1,141             2,013            3,423  
                                                          -----------      -----------       -----------      -----------
         Total operating expenses                             2,956            4,432             8,875           10,860  
                                                          -----------      -----------       -----------      -----------

OPERATING LOSS                                                 (793)          (3,375)           (3,353)          (6,739)
                                                          -----------      -----------       -----------      -----------

OTHER INCOME                                                     32              299               718            1,155 
                                                          -----------      -----------       -----------      -----------
LOSS BEFORE INCOME TAXES                                       (761)          (3,076)           (2,635)          (5,584)
INCOME TAXES                                                     --               --                --               --  
                                                          -----------      -----------       -----------      -----------
LOSS FROM CONTINUING OPERATIONS                                (761)          (3,076)           (2,635)          (5,584)

DISCONTINUED OPERATIONS
  Loss from operation of telecommunications and
    interactive service divisions (net of income taxes)      (1,325)         (76,102)          (18,049)         (76,266)
  Loss on disposal of telecommunications and
    interactive service divisions                            (1,500)              --           (10,493)              -- 
                                                          -----------      -----------       -----------      -----------
         Total discontinued operations                       (2,825)         (76,102)          (28,542)         (76,266)
                                                          -----------      -----------       -----------      -----------
NET LOSS                                                  $  (3,586)       $ (79,178)        $ (31,177)       $ (81,850)
                                                          ===========      ===========       ===========      ===========

Basic and diluted loss from continuing operations
  per common share                                        $   (0.02)       $   (0.10)        $   (0.08)       $   (0.18)
                                                          ===========      ===========       ===========      ===========
Basic and diluted loss per common share                   $   (0.11)       $   (2.51)        $   (0.99)       $   (2.58)
                                                          ===========      ===========       ===========      ===========
Basic and diluted weighted average outstanding shares        31,644           31,497            31,397           31,711  
                                                          ===========      ===========       ===========      ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

<PAGE>

                       INTELIDATA TECHNOLOGIES CORPORATION
       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                      NINE MONTHS ENDED SEPTEMBER 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              (33)      --         (68)        --           --            68            --         --
  Issuance of restricted common stock       153       --         459         --           --          (459)           --         --
  Cancellation of accrued stock options      --       --         494         --           --            --            --        494
  Exercise of stock options                 300       --         294         --           --            --            --        294
  Employee stock purchase plan               35       --          29         --           --            --            --         29
  Recognized gain on investments             --       --          --         --         (425)           --            --       (425)
  Compensation expense                       --       --          --         --           --           148            --        148
  Net loss                                   --       --          --         --           --            --       (31,177)   (31,177)
                                         ------  -------  ----------  ----------    --------        -------   -----------  ---------
Balance at September 30, 1998            31,636  $    32  $  246,907  $  (2,064)    $     --        $ (261)   $ (238,182)  $  6,432
                                         ======  =======  ==========  ==========    ========        =======   ===========  =========
</TABLE>















     See accompanying notes to condensed consolidated financial statements.

<PAGE>
                       INTELIDATA TECHNOLOGIES CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 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                                                 $   (2,635)       $   (5,584)
Adjustments to reconcile loss from continuing operations
to net cash used in operating activities for continuing operations:
   Depreciation and amortization                                                       488             2,375
   Deferred compensation and other noncash items                                       148                87
   Changes in certain assets and liabilities:
       Accounts receivable                                                             (23)              211
       Inventories                                                                     (22)               --
       Prepaid expenses and other current assets                                        52               894
       Other assets                                                                     69              (303)
       Accounts payable                                                                126              (204)
       Accrued expenses and other liabilities                                       (1,332)              138
       Deferred revenues                                                            (1,572)             (286)
                                                                                -----------       -----------
            Net cash used in operating activities for continuing operations         (4,701)           (2,672)
                                                                                -----------       -----------

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES OF
DISCONTINUED OPERATIONS                                                              1,151           (21,700)
                                                                                -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from the sale of short-term investments                                  9,304             1,648
   Purchases of property and equipment-continuing operations                            (7)              (82)
   Purchases of property and equipment-discontinued operations                          --              (869)
                                                                                -----------       -----------
            Net cash provided by investing activities                                9,297               697 
                                                                                -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Payment of short-term borrowings-discontinued operations                         (1,500)             (700)
   Payments to acquire treasury stock                                                   --            (2,064)
   Proceeds from the issuance of common stock                                          323               100
                                                                                -----------       -----------
            Net cash used in financing activities                                   (1,177)           (2,664)
                                                                                -----------       -----------

                 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                    4,570           (26,339)

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                                                     $    6,625        $      305
                                                                                ==========        ==========
</TABLE>



     See accompanying notes to condensed consolidated financial statements.

<PAGE>

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

(1)      Basis of Presentation

                  The  condensed   consolidated   balance  sheet  of  InteliData
         Technologies  Corporation  ("InteliData"  or "Company") as of September
         30,  1998,  and  the  related  condensed  consolidated   statements  of
         operations  for the three and nine month  periods  ended  September 30,
         1998 and 1997, condensed consolidated  statements of cash flows for the
         nine month  periods  ended  September  30, 1998 and 1997 and  condensed
         consolidated  statement of changes in stockholder's equity for the nine
         month period ended  September 30, 1998  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
         September  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 their  estimated  net
         realizable value.

                  Revenues from  discontinued  operations  were  $5,404,000  and
         $8,897,000  for the three  months  ended  September  30, 1998 and 1997,
         respectively.  Revenues from  discontinued  operations were $25,067,000
         and  $40,092,000 for the nine months ended September 30, 1998 and 1997,
         respectively.  Included  within  the  loss on  disposal  was a loss for
         discontinued  operations aggregating $5,081,000 for the period from the
         measurement date, June 1, 1998, to September 30, 1998. Also included in
         the loss on
<PAGE>
          disposal is a  pretax provision of  $5,412,000 for estimated operating
          losses during the  phase-out period, which is expected to be from June
          1, 1998 through March 31, 1999.  Loss from discontinued  operations is
          net of  income  tax  benefits associated with the  operations  of  the
          telecommunications divisions of $1,422,000.  Noncash activities in the
          loss from  discontinued  operations  for the nine month  period  ended
          September  30,  1998  include   $15,283,000   for  the  write-down  of
          inventories  and  provision  for  sales  returns;   and  $751,000  for
          depreciation  and  amortization.  Noncash  activities  in the  loss on
          disposal  of  discontinued   operations  for  the  nine  months  ended
          September 30, 1998 include  $3,538,000 for the write-down of property,
          plant and equipment.  Noncash activities  associated with discontinued
          operations for the nine month period ended  September 30, 1997 include
          $1,905,000 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. Since April 1, 1998, 130,500 of
         such shares have been issued to employees,  net of  forfeitures.  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 nine months  ended  September  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 SEPTEMBER 30, 1998 AND 1997

Revenues

         The Company's  third quarter  revenues were $2,725,000 in 1998 compared
to  $2,811,000 in 1997, a decrease of 3% or $86,000.  Revenues  were  relatively
constant from the same period in the prior year, however, there were significant
changes in the Company's product mix,  primarily related to the decline in lease
revenues, offset  in part by the  increase  attributed  to Visa  royalties,  and
increased revenues from software sales and consulting services. The Company sold
home banking related software  aggregating  $416,000 during the third quarter of
1998  compared  to  $274,000  in  software  revenues in the same period in 1997.
Consulting  and services  revenues  aggregated  $415,000 in the third quarter of
1998  for  services   associated  with   installations,   special  projects  and
feasibility  studies for potential  financial  institution and banking  clients.
During the same  period in 1997,  the  Company  aggregated  $314,000 in customer
support  revenues,  which were  remarketed  by Visa  InterActive  to Visa member
banks. Leasing and other revenues aggregated  $1,894,000 in the third quarter of
1998  compared  to  $2,223,000  in the third  quarter of 1997.  During the third
quarter  of 1998,  revenues  from  leasing  and other  operations  consisted  of
$1,158,000  from  customers  within its lease base,  $111,000  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  $1,987,000  from  customers  within its
lease base and $236,000 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  approximately  30% per year.  The Company  expects this
trend to continue and expects  leasing to become a less  significant  portion of
revenues as its software products gain market share.

Cost of Revenues

         The  Company's  third  quarter cost of revenues  were  $562,000 in 1998
compared to $1,754,000 in 1997, a decrease of 68% or $1,192,000. The Company did
not recognize any cost of sales associated with its software revenues during the
third quarter of 1998 and 1997 because costs  associated with software  revenues
were expensed to operations  during the period of  development.  Consulting  and
services cost of revenues  aggregated  $162,000 in the third quarter of 1998 for
services associated with installations, special projects and feasibility studies
for potential  clients.  During the same period in 1997, the Company  aggregated
$270,000  in  cost  of revenues  for  customer  support  revenues,   which  were
remarketed  by  Visa InterActive to Visa
<PAGE>
member  banks.  Cost of revenues  associated  with leasing and other  operations
aggregated  $400,000 in the third  quarter of 1998 compared to $1,484,000 in the
third quarter of 1997. During the third quarter of 1998, the Company  recognized
cost of  revenues  aggregating  $400,000  for its lease  base.  During the third
quarter of 1997, the Company recognized cost of revenues aggregating  $1,254,000
from customers  within its lease base and $230,000 from monthly service fees for
bill pay  operations.  The decrease in cost of revenues for the Company's  lease
base from the third quarter of 1997 to the third 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 79% for the third quarter of
1998 from 38% for the third 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  $1,586,000  for the third
quarter of 1998 as  compared to  $2,727,000  in the third  quarter of 1997.  The
decrease of  $1,141,000  was  attributed  primarily to unusual and  nonrecurring
charges  for bad  debts of  $541,000,  facilities  expenses  of  $83,000,  staff
reductions of $78,000,  and estimated legal expenses of $68,000 recorded as part
of the  Company's  overhead  in the third  quarter of 1997.  Exclusive  of these
charges,  general and  administrative  expenses decreased $371,000 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 $714,000  for the third
quarter of 1998 from  $564,000  for the same  period  last year.  The Company is
continually  expanding its marketing  efforts in promoting  and  developing  its
products.  The  increase  of 27% or  $150,000  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  $656,000 in the third quarter of
1998  compared  to  $1,141,000  for the same  period in 1997.  The  decrease  of
$485,000 was largely  attributable to cost saving measures relating to personnel
costs and more focused research and development efforts.
<PAGE>
Other Income

         Other income,  primarily  investment  income, was $32,000 for the third
quarter of 1998 compared to $299,000 for the same period in the prior year.  The
decrease  of  $267,000  was  attributed  to the  liquidation  of  the  Company's
investment   portfolio  and  maintaining   cash  and  equivalents  in  risk-free
investments  during the third  quarter of 1998  compared to the same period last
year.

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 September 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 their estimated
net realizable value.

         Revenues from  discontinued  operations  were $5,404,000 and $8,897,000
for the three months ended September 30, 1998 and 1997,  respectively.  Included
within the loss on disposal was a loss associated with a particular product line
for $2,825,000  relating to inventory  write-downs and additional sales returns.

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

         The basic and diluted  weighted  average shares increased to 31,644,000
for the third quarter of 1998  compared to  31,497,000  for the third quarter of
1997. The increase  resulted  primarily from shares issued to certain  employees
during  the  second  quarter  of 1998 in  accordance  with  the  Company's  1996
Incentive Plan. As a result of the foregoing,  basic and diluted loss per common
share from  continuing  operations  was  $(0.02)  for the third  quarter of 1998
compared to $(0.10) for the third  quarter of 1997;  basic and diluted  loss per
common share was $(0.11) for the third  quarter of 1998  compared to $(2.51) for
the third quarter of 1997.

NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

Revenues

         The  Company's  revenues  for  the  first  nine  months  of  1998  were
$7,347,000 compared to $10,043,000 in 1997, a decrease of 27% or $2,696,000. The
decrease is attributed primarily to a significant change in the product mix, and
the decline in software,  consulting and lease  revenues,  offset in part by the
increase attributed to Visa royalties. The Company sold $416,000 in home banking
related  software  during the first nine months of 1998  compared to $775,000 in
software  revenues in the same period in 1997.  Consulting and services revenues
aggregated  $626,000  in the first nine months of 1998 for  services  associated
with  installations,  special  projects and  feasibility  studies for  potential
financial  institution and banking clients.  During the same period in 1997, the
Company aggregated $973,000 in customer support revenues, which were  remarketed
by Visa InterActive to Visa member banks.  Leasing and other revenues aggregated
<PAGE>
$6,305,000  in the first nine months of 1998 compared to $8,295,000 in the first
nine months of 1997. During the first nine months of 1998, revenues from leasing
and other  operations  consisted of $4,241,000  from customers  within its lease
base,  $189,000 in revenues from  maintenance  contracts  related to the sale of
software,  and $1,875,000 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 $7,008,000 from customers
within its lease base and  $1,287,000  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  approximately  30% per year.  The Company
expects this trend to continue and expects leasing to become a less  significant
portion of revenues as its software products gain market share.

Cost of Revenues

         The  Company's  cost of revenues for the first nine months of 1998 were
$1,825,000 compared to $5,922,000 in 1997, a decrease of 69% or $4,097,000.  The
Company did not recognize any cost of sales associated with the sale of software
during the first nine months of 1998  compared  to $223,000 in costs  associated
with  software  sales in the same period in 1997.  The Company did not recognize
any cost of sales  associated  with the sale of  software  during the first nine
months of 1998 because costs associated with software  revenues were expensed to
operations  during the period of  development.  Consulting  and services cost of
revenues  aggregated  $196,000  in the first  nine  months of 1998 for  services
associated with  installations,  special  projects and  feasibility  studies for
potential  clients.  During  the same  period in 1997,  the  Company  aggregated
$860,000  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 $1,629,000 in the first nine months
of 1998 compared to $4,839,000 in the same period of 1997. During the first nine
months of 1998, the Company recognized cost of revenues  aggregating  $1,629,000
for its lease base. During the same period in 1997, the Company  recognized cost
of revenues  aggregating  $3,920,000  from  customers  within its lease base and
$919,000 from monthly service fees for bill pay operations. The decrease in cost
of revenues for the  Company's  lease base from the first nine months of 1997 to
the  first  nine  months 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 75% for the first nine months
of 1998 from 41% 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 $4,861,000  for the first nine
months of 1998 as compared to $6,221,000  in the first nine months of 1997.  The
decrease of  $1,360,000  was  attributed  primarily to unusual and  nonrecurring
charges  for bad  debts of  $541,000,  facilities  expenses  of  $83,000,  staff
reductions of $78,000 and,  estimated legal expenses of $68,000 recorded as part
of the Company's overhead in the third quarter of 1997. Exclusive of these
<PAGE>
charges,  general and  administrative  expenses decreased $590,000 from the same
period  in the prior  year.  The  decrease  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.

Selling and Marketing

         Selling and marketing  expenses  increased to $2,001,000  for the first
nine months of 1998 from  $1,216,000  for the same  period last year.  The large
increase is primarily attributed to unusually low selling and marketing expenses
in the first quarter of 1997.  Considering the change in the Company's strategic
direction in the third 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 65% or $785,000 from the same
period last year is attributed primarily to the change in strategic direction in
the third  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 $2,013,000 in the first nine months
of 1998  compared to  $3,423,000  for the same period in 1997.  The  decrease of
$1,410,000  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 $718,000 for the first
nine  months of 1998  compared  to  $1,155,000  for the same period in the prior
year. The decrease of $437,000 was attributed to decreased cash, equivalents and
short-term investment balances for the first nine months of 1998 compared to the
first nine months 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 September 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 $25,067,000 and $40,092,000
for the nine months ended  September 30, 1998 and 1997,  respectively.  Included
within the loss on disposal was a loss for discontinued  operations  aggregating
$5,081,000 for the period from the
<PAGE>
measurement date, June 1, 1998, to September 30, 1998. Also included in the loss
on disposal is a pretax  provision of $5,412,000 for estimated  operating losses
during the phase-out  period,  which is expected to be from June 1, 1998 through
March 31, 1999. Loss from discontinued  operations is net of income tax benefits
associated   with  the  operations  of  the   telecommunications   divisions  of
$1,422,000.

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

         The basic and diluted  weighted  average shares decreased to 31,397,000
for the first nine  months of 1998  compared  to  31,711,000  for the first nine
months of 1997.  The decrease  resulted  primarily from the purchase of treasury
shares during the third quarter of 1997 and the  cancellation  of certain shares
of common stock in the first quarter of 1998; partially offset by an increase in
shares issued in  accordance  with the 1996  Incentive  Plan. As a result of the
foregoing,  basic and diluted loss per common share from  continuing  operations
was $(0.08) for the first nine months of 1998  compared to $(0.18) for the first
nine months of 1997; basic and diluted loss per common share was $(0.99) for the
first nine months of 1998 compared to $(2.58) for the first nine months of 1997.


LIQUIDITY AND CAPITAL RESOURCES

         During the first nine months of 1998, the Company's  cash,  equivalents
and short-term  investments  increased by $4,570,000  resulting from the sale of
short-term  investments  offset by the  payment of  outstanding  liabilities  at
year-end,   including  short-term   borrowings  and  the  financing  of  certain
operations.  At September 30, 1998,  the Company had $6,625,000 in cash and cash
equivalents.  At  September  30,  1998,  the  Company  had  working  capital  of
$5,731,000  with no long-term  debt. The Company's  total assets  exceeded total
liabilities by $6,432,000.

         During the first nine months of 1998, cash used in operating activities
from  continuing  operations was  $4,701,000  compared to $2,672,000 in the same
period in 1997.  Cash flows from operating  activities of continuing  operations
during the first nine months of 1998  include  certain  fixed costs in operating
expenses,  payment of certain  liabilities  and recognition of income related to
deferred  revenues.  Cash flows from operations  during the first nine months of
1998 were primarily related to an increase in inventories of $22,000 and funding
payments from accrued  expenses of  $1,332,000,  and  recognition of income from
deferred revenues of $1,572,000; offset in part by decreases in prepaid expenses
and other  assets  aggregating  $121,000 and  increases  in accounts  payable of
$126,000. Cash flows from operating activities of discontinued operations during
the first nine months of 1998 were  $1,151,000  compared to $21,700,000  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 nine months
of 1998  compared to  providing  $697,000  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 $1,177,000 in the first nine months of 1998
compared to using  $2,664,000 in the same period in 1997.  Financing  activities
consist  primarily of the payment to acquire  treasury  stock and 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,  capital
expenditures  and the  upgrade  of the  Company's  systems  and  operations.  In
addition,  the  Company  may use cash for  investments  in  strategic  ventures,
potential  acquisitions,  and potential stock repurchases.  In order to meet the
Company's  needs for cash  throughout  the year,  the Company  will utilize cash
on-hand,  cash generated  through the future sale of certain  assets  associated
with discontinued  operations,  and may utilize, to the extent available,  funds
generated from operations.


YEAR 2000 UPDATE

General
-------

         The  inability of  computers,  software and other  equipment  utilizing
microprocessors  to recognize  and properly  process data fields  containing a 2
digit year is commonly  referred to as the Year 2000  Compliance  issue.  As the
year 2000 approaches,  such systems may be unable to accurately  process certain
date-based information.

         The Company  believes it has  identified all  significant  applications
that will  require  modification  to ensure Year 2000  Compliance.  Internal and
external  resources are being used to make the required  modifications  and test
Year 2000 Compliance.

Project
-------

         The Company's Year 2000 Project ("Project") is generally  proceeding on
schedule.  In  1996,  the  Company  began a  significant  re-engineering  of its
business  processes  across the Company  including  improved  access to business
information  through common,  integrated  computing  systems.  As a result,  the
Company  replaced its business systems with systems from J.D. Edwards & Company,
IBM  Corporation and Microsoft  Corporation,  which are designed to be Year 2000
Compliant. The Company became fully operational on these systems in 1998.

         The Company has a Project  team,  with  certain sub teams.  The Project
includes four major areas - corporate business systems,  local software systems,
third party suppliers of goods and services, and Interpose software systems. The
general  phases of the Project  are:  (1)  inventorying  date-aware  items;  (2)
determining  criticality  and  assigning  priorities to  identified  items;  (3)
assessing  the Year 2000  compliance  of items  determined to be material to the
Company; (4) repairing,  replacing or identifying workarounds for material items
that are determined not to be Year 2000 Compliant;  (5) testing  material items;
(6) identifying critical third parties; and (7) designing contingency plans.

         At  September  30,  1998,  the  inventory,   priority   assessment  and
compliance  assessment  phases  of each  area of the  Project  were  essentially
complete.  Material  items  are those  believed  by
<PAGE>
the  Company  to  have  a  risk  involving  the  welfare  of  our  customers  or
substantially affect revenues.

         Corporate  business  systems on schedule at September  30, 1998 include
hardware and systems software,  networks and  telecommunications.  All corporate
systems activities are expected to be complete by mid-1999.

         Local software  systems  include  process  control and  instrumentation
systems and building systems.  Operational improvement projects already underway
address  some of the Year  2000  concerns.  Some  manufacturer  replacements  or
upgrades  are  behind  schedule;   however,   the  Company  estimates  necessary
replacements or upgrades will be completed by mid-1999.

         The third party suppliers phase includes the process of identifying and
prioritizing  critical  suppliers of goods and services,  and communicating with
them about their plans and progress in addressing  the Year 2000  concerns.  The
Company has recently initiated the  identification  phase which will be followed
by an evaluation of the most critical third parties.  These  evaluations will be
followed by the development of contingency  plans as necessary,  including plans
to use  alternative  third party  vendors,  if necessary.  This Project phase is
scheduled  for  completion  by mid-1999,  with  monitoring  planned  through the
remainder of 1999 and early 2000.

         The Interpose  software phase included  actions to address the issue of
Year 2000  Compliance  as it relates to the  Company's  customer  software.  The
Company believes that its current version of the Interpose software is Year 2000
Compliant. Actions taken to address previous releases of the software were, with
minor exceptions, programming changes to replace a non-compliant date conversion
routine  with one that was  already  Year 2000  compliant.  Any  customer  whose
product was not already compliant was notified of any source code changes and/or
release  updates  made to the  product.  The Company  has issued  letters to its
customers  that assure that any changes  pertinent to the  correcting  Year 2000
concerns  were  addressed  by the  third  quarter  of 1997 and  that all  future
releases of Interpose will be fully year 2000 compliant.

Costs
-----

         The estimated  total cost  associated  with required  modifications  to
become Year 2000 compliant has not and is not  anticipated to be material to the
Company's  financial  position or results of operations  in any given year.  The
estimated  total  cost  of the  Project  is or  will be  expensed  and  includes
allowances  for  some  items  for  which  a fix or  workaround  is  still  being
determined.

Risks
-----

         The failure to correct a material  Year 2000 problem could result in an
interruption in, or failure of certain normal business activities or operations,
which could materially and adversely affect the Company's results of operations,
liquidity and financial  condition.  Due to the general uncertainty  inherent in
the Year 2000 problem,  resulting in part from the  uncertainty of the Year 2000
readiness  of  third-party  suppliers  and  customers,  the Company is unable to
determine at this time whether the  consequences of Year 2000 problems will have
a material impact on the
<PAGE>
Company's results of operations,  liquidity or financial condition.  The Project
is expected to reduce significantly the Company's level of uncertainty about the
Year 2000  problem  and,  in  particular,  about the Year  2000  compliance  and
readiness of its material third-party suppliers.  The Company believes that with
the  previously  accomplished  implementation  of global  business  systems  and
completion  of  the  Project  as   scheduled,   the   possibility   of  material
interruptions of normal operations should be reduced significantly.


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
      --------

      None

(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/ Alfred S. Dominick, Jr.
                                      ------------------------------------------
                                      Alfred S. Dominick, Jr.
                                      President and Chief Executive Officer


                                By:   /s/ E. Philip Hanlon
                                      ------------------------------------------
                                      E. Philip Hanlon
                                      Vice President and Chief Financial Officer