<PAGE>
 
                                   FORM 10-Q
                                        
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                        

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

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

                                      OR

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

For the transition period from __________ to __________

Commission file number  0-26540
                        -------

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

          DELAWARE                                      04-3016142
(State or other jurisdiction of                     (I.R.S. Employer
 incorporation or organization)                  Identification Number)

                               80 Blanchard Road
                        Burlington, Massachusetts 01803
                   (Address of principal executive offices)

                                (781) 229-3000
             (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 60 days.  Yes   X     No 
                                        -----      -----    

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Title of each class                     Outstanding at July 31, 1998
-------------------                     ----------------------------

Common Stock, par value $.01            17,382,065
<PAGE>
 
                     NEWSEDGE CORPORATION AND SUBSIDIARIES

                               TABLE OF CONTENTS
                                        


<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                     PAGE NUMBER
 
<S>                                                                <C>
Item 1 - Financial Statements
              
         Condensed Consolidated Balance Sheets
             June 30, 1998 and December 31, 1997 (unaudited)......       3
                                                                  
         Condensed Consolidated Statements of Operations          
             for the three and six months ended June 30,          
               1998 and 1997 (unaudited)..........................       4
                                                                  
         Condensed Consolidated Statements of Cash Flows          
             for the six months ended June 30, 1998 and           
               1997 (unaudited)...................................       5
                                                                  
         Notes to the Condensed Consolidated Financial Statements.       6
 
Item 2 - Management's Discussion and Analysis of
         Financial Condition and Results of Operations...........        9

PART II - OTHER INFORMATION
 
Item 1.   Legal Proceedings......................................       18
 
Item 4.   Submission of Matters to a Vote of Security Holders....       18
 
Item 5.   Other Information......................................       19
 
Item 6(a) Exhibits...............................................       19
 
Item 6(b) Reports on Form 8-K....................................       19
 
Signature........................................................       20
 
Exhibit Index....................................................       21
 
Exhibits.........................................................       22
</TABLE>

                                       2
<PAGE>
 
PART I  FINANCIAL INFORMATION

ITEM 1
                     NEWSEDGE CORPORATION AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)
                                (IN THOUSANDS)
 
 
<TABLE> 
<CAPTION> 
                                        JUNE 30,    DECEMBER 31,
                                          1998         1997
                                       ---------    -----------
<S>                                    <C>          <C>
ASSETS
 
Current assets:
    Cash and cash equivalents          $  13,729       $ 45,854
    Short-term investments                35,379          9,013
    Accounts receivable                   14,231         17,903
    Prepaid expenses and deposits          4,233          5,718
                                       ---------       --------
         Total current assets             67,572         78,488
Long-term investments                          -          3,760
Property and equipment, net                8,933          9,497
Other assets                                 178            589
                                       ---------       --------
 
         Total assets                  $  76,683       $ 92,334
                                       =========       ========
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
    Accounts payable                   $   3,921       $  5,639
    Accrued expenses                      18,372         13,319
    Deferred revenue, current             30,424         32,374
    Current portion of long-term 
         obligations                       1,087          1,298
                                       ---------       --------
         Total current liabilities        53,804         52,630

Long-term obligations, 
    less current portion                     702          1,132
Deferred revenue, noncurrent                  50             39
 
Stockholders' equity:
    Common stock                             174            169
    Additional paid-in capital           123,895        124,853
    Cumulative translation adjustment         33             24
    Accumulated deficit                 (101,975)       (86,513)
                                       ---------       --------

          Total stockholders' equity      22,127         38,533
                                       ---------       --------

 
          Total liabilities & 
           stockholders' equity        $  76,683       $ 92,334
                                       =========       ========
</TABLE>

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

                                       3
<PAGE>
 
                     NEWSEDGE CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED       SIX MONTHS ENDED
                                                                 JUNE 30,               JUNE 30,
                                                           ------------------      -------------------
                                                            1998        1997         1998       1997
                                                           -------    -------      --------   --------
<S>                                                        <C>        <C>          <C>        <C>
 
Total revenues                                             $19,208    $19,522      $ 38,957   $ 38,040
 
Costs and expenses:
   Cost of revenues                                          7,998      7,751        16,016     15,026
   Customer support expenses                                 1,407      1,256         3,074      2,463
   Development expenses                                      2,866      3,143         6,272      5,716
   Sales and marketing expenses                              7,947      9,236        16,427     17,767
   General and administrative expenses                       1,105      1,363         2,634      3,019
   Merger, disposition and other charges                         -      3,069        11,093      4,701
                                                           -------    -------      --------   --------
     Total costs and expenses                               21,323     25,818        55,516     48,692
 
   Loss from operations                                     (2,115)    (6,296)      (16,559)   (10,652)
 
Interest income and other, net                                 643        869         1,271      1,660
                                                           -------    -------      --------   --------
 
   Net loss before provision for income taxes               (1,472)    (5,427)      (15,288)    (8,992)
 
Provision for income taxes                                      53        266            86        846
                                                           -------    -------      --------   --------
 
Net loss                                                   $(1,525)   $(5,693)     $(15,374)  $ (9,838)
                                                           =======    =======      ========   ========
 
Basic and diluted  net loss per common share               $ (0.09)   $ (0.34)     $  (0.90)  $  (0.59)
                                                           =======    =======      ========   ========
Weighted average number of common shares outstanding        17,250     16,633        17,109     16,597
                                                           =======    =======      ========   ========
</TABLE>

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

                                       4
<PAGE>
 
                     NEWSEDGE CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                                (IN THOUSANDS)
 
<TABLE>
<CAPTION>

                                                            SIX MONTHS ENDED
                                                                 JUNE 30,
                                                           ------------------
                                                             1998       1997
                                                           --------   -------
<S>                                                        <C>        <C>
 
Cash flows from operating activities:
   Net loss                                                $(15,374)  $(9,838)
   Adjustments to reconcile net loss to net cash
     (used in) provided by operating activities:
     Depreciation and amortization                            2,065     2,194
     Gain (loss) on disposal of property, 
      equipment and other assets                               (139)      463
     Charge for issuance of common stock for
      consulting services                                         -       513
     Changes in assets and liabilities:
       Accounts receivable                                    3,303     2,231
       Prepaid expenses and deposits                          1,443        (8)
       Accounts payable and accrued expenses                  3,714     5,391
       Deferred revenue                                      (1,422)     (654)
                                                           --------   -------
     Net cash (used in) provided by operating activities     (6,410)      292
                                                           --------   -------

Cash flows from investing activities:
   Increase in investments, net                             (22,463)     (614)
   Purchases of property and equipment, net                  (1,741)   (2,983)
   Contingent purchase price payment                         (3,918)        -
   Cash paid for acquisition                                      -      (280)
   Increase in other assets                                      68       444
                                                           --------   -------
     Net cash used in investing activities                  (28,054)   (3,433)
                                                           --------   -------


Cash flows from financing activities:
   Proceeds from issuance of common stock                     2,965       611
   (Decrease) increase in other long-term obligations          (430)      593
   Payments on capital lease obligations                       (205)      (72)
                                                           --------   -------
     Net cash provided by financing activities                2,330     1,132
                                                           --------   -------

Effect of exchange rate on cash                                   9        (6)
 
Decrease in cash and cash equivalents                       (32,125)   (2,015)
Cash and cash equivalents, beginning of period               45,854    32,852
                                                           --------   -------
 
Cash and cash equivalents, end of period                   $ 13,729   $30,837
                                                           ========   =======
 
Supplemental disclosure of cash flow information:
    Cash paid for income taxes                             $     68   $   114
                                                           ========   =======
    Cash paid for interest                                 $    118   $   259
                                                           ========   =======
</TABLE>

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

                                       5
<PAGE>
 
                     NEWSEDGE CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                                        
1.  OPERATIONS

  NewsEDGE Corporation (the "Company") is a leading independent provider of
global news and current awareness solutions for business.  The Company's mission
is to make news valuable for busy people at work.  Formed by the merger of
Desktop Data, Inc. ("Desktop Data") and Individual, Inc. ("Individual"),
NewsEDGE Corporation is the world's largest independent news integrator.

  On February 24, 1998, the Company completed its merger with Individual.  In
connection with the merger, the Company (i) changed its corporate name from
Desktop Data to NewsEDGE Corporation, (ii) increased the authorized shares of
common stock, par value $.01 per share (the "Common Stock") reserved for
issuance from 15,000,000 to 35,000,000 shares, (iii) amended the 1995 Stock Plan
to increase the number of shares of Common Stock reserved for issuance
thereunder from 1,625,000 to 4,125,000 shares, (iv) amended the 1995 Employee
Stock Purchase Plan to increase the number of shares of Common Stock reserved
for issuance thereunder from 175,000 to 500,000 shares and (v) assumed
outstanding options and warrants to purchase approximately 3,000,000 shares of
Common Stock from grants made under Individual's corporate stock plans.

  In connection with the merger with Individual, approximately 8,230,000 shares
of NewsEDGE Common Stock were issued in exchange for all of the outstanding
common stock of Individual.  The transaction was accounted for as a pooling of
interests and therefore, all prior period financial statements presented herein
have been restated as if the merger took place at the beginning of such periods.

  In addition, on January 6, 1998, the Company acquired the assets, customers,
and personnel of Investment Software Solutions ("ISS"), a former business unit
of ADP Financial Services, Inc., in a cash transaction.  The management and
staff of ISS joined the Company to form the nucleus of the Company's new
professional services initiative.

  For the six months ended June 30, 1998, the Company recorded merger,
disposition and other charges totaling $11.1 million, related primarily to costs
associated with the merger with Individual and the purchase of ISS, the
termination of the Clarinet business unit, severance and benefits for terminated
employees and the cost of terminating and settling certain contractual
obligations of the combined companies.  For the three- and six-month periods
ended June 30, 1997, merger, disposition and other charges, totaling $3.1
million and $4.7 million, respectively, related primarily to product development
expenses, goodwill amortization and other charges associated with companies
previously acquired by Individual.

2.  SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

  The condensed consolidated financial statements of the Company presented
herein have been prepared pursuant to the rules of the Securities and Exchange
Commission for quarterly reports on Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles.  These financial statements should be read in conjunction with the
Company's consolidated financial statements and notes thereto for the year ended
December 31, 1997 included in the Company's Form 10-K.  In the opinion of
management, the accompanying unaudited condensed consolidated financial
statements include all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the consolidated financial position,
results of operations and cash flows of the Company and its subsidiaries.
Quarterly operating results are not necessarily indicative of the results that
would be expected for the full year.

Principles of Consolidation

  The accompanying condensed consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries.  All material
intercompany accounts and transactions have been eliminated in consolidation.

                                       6
<PAGE>
 
Use of Estimates

  The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.  Estimates and assumptions in
these financial statements relate to, among other items, valuation of deferred
tax assets, the allowance for doubtful accounts and accrued liabilities.

Cash Equivalents and Investments

  The Company applies Statement of Financial Accounting Standards ("SFAS") No.
115, Accounting for Certain Investments in Debt and Equity Securities.
Accordingly, the Company's investments are classified as held-to-maturity and
are recorded at amortized cost at June 30, 1998 and December 31, 1997.  Cash
equivalents consist of highly-liquid investments purchased with an original
maturity of three months or less.  Those securities with maturities of three
months to twelve months as of the balance sheet date are classified as short-
term investments and securities with maturities of greater than twelve months
are classified as long-term investments.

Conforming Adjustments and Reclassifications

  The Company's condensed consolidated financial statements include adjustments
to conform the accounting policies of Individual to be consistent with those of
the Company.  Prior to combining the financial results of Individual and Desktop
Data to form the results for the Company, certain amounts were reclassified to
consistently present certain costs in these condensed consolidated financial
statements.

3.  CONTINGENT PURCHASE PRICE PAYMENT

  In connection with the acquisition of FreeLoader, Inc. ("FreeLoader") in June
1996 by Individual, Individual guaranteed the value of certain shares issued to
the two founders of FreeLoader, which was to be measured during the period
February 1998 through April 1998.  If the fair value of the stock was less than
the guaranteed value, then the Company was obligated to pay the difference in
cash.  In February 1998, the two founders of FreeLoader exercised their rights
under the value guarantee and received a payment from the Company of
approximately $3.9 million.  The contingent purchase price payment was recorded
as a reduction to stockholders' equity.

4.  OTHER CONTINGENCIES

  A class action shareholder suit was filed against Individual (now the
Company), certain of its directors and officers and the underwriters of its
initial public offering claiming that the defendants made misstatements, or
failed to make statements, to the investing public in Individual's Prospectus
and Registration Statement in connection with its initial public offering
relating to the alleged existence of disputes between Joseph A. Amram,
Individual's former Chief Executive Officer, and Individual. On May 27, 1998,
the U.S. District Court for the District of Massachusetts dismissed the class
action in its entirety.  Plaintiffs have appealed that dismissal to the U.S.
Court of Appeals for the First Circuit. The Company continues to believe that
the allegations contained in the complaint are without merit and intends to
defend vigorously against the claims, and based upon information currently
available, believes that the action will not have a material impact on the
Company.  However, there can be no assurance that this litigation will
ultimately be resolved on terms that are favorable to the Company and that the
resolution of this litigation will not have a material adverse effect on the
Company.

5.  RECENTLY ISSUED ACCOUNTING STANDARDS

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

                                       7
<PAGE>
 
6.  COMPREHENSIVE INCOME

  The Company adopted SFAS No. 130, Reporting Comprehensive Income, effective
January 1, 1998.  SFAS No. 130 requires that items defined as other
comprehensive income, such as foreign currency translation adjustments, be
separately classified in the financial statements and that the accumulated
balance of other comprehensive income be reported separately from retained
earnings and additional paid-in capital in the equity section of the balance
sheet.  The components of comprehensive income for the three and six months
ended June 30, 1998 and 1997 are as follows:


<TABLE>
<CAPTION>
                                      THREE MONTHS ENDED     SIX MONTHS ENDED
(in thousands)                              JUNE 30,             June 30,
                                      -----------------------------------------
                                       1998      1997         1998       1997
                                      -------   -------      --------   -------
<S>                                   <C>       <C>          <C>        <C>
Comprehensive income:
  Net loss                            $(1,525)  $(5,693)     $(15,374)  $(9,838)
  Other comprehensive income (loss):
    Write down of investments to   
      amortized cost                      (88)        -           (88)        -
    Foreign currency adjustment           (33)       12             9        (6)
                                      -------   -------      --------   -------
  
         Comprehensive loss           $(1,646)  $(5,681)     $(15,453)  $(9,844)
                                      =======   =======      ========   =======
</TABLE>

7.  EARNINGS PER SHARE

In accordance with SFAS No. 128, Earnings per Share, basic and diluted earnings
per share were computed by dividing net loss by the weighted average number of
common shares outstanding during the first three and six months of 1998 and
1997.  Diluted earnings per share excludes shares issuable from the assumed
exercise of stock options, as their effect would be antidilutive.

                                       8
<PAGE>
 
ITEM 2
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

  NewsEDGE Corporation (the "Company") is a leading independent provider of
global news and current awareness solutions for business.  The Company's mission
is to make news valuable for busy people at work.  Formed by the merger (the
"Merger") of Desktop Data, Inc. ("Desktop Data") and Individual, Inc.
("Individual"), the Company is the world's largest independent news integrator.
Clients at over 1,100 organizations are provided with a powerful combination of
authoritative content, a comprehensive line of technologies, customization
options, editorial value-added capabilities and superior client support and
consulting services.  The Company helps business people find the most important,
relevant stories from an overwhelming volume of daily news, enabling them to act
on the most current information possible.

  The Company's revenues are derived primarily from two classes of services:
enterprise services and single-user services.  Approximately 80% of total
revenues during the three- and six-month periods ended June 30, 1998 was derived
from enterprise service revenue.  Enterprise service revenues consist primarily
of subscription fees generated from services provided to corporations, financial
institutions and other businesses as well as royalties received from news
providers in connection with sales of their newswires for use with the Company's
NewsEdge Live or NewsEdge Insight products.  The remainder of enterprise
revenues consists of hardware sales and non-recurring custom development
projects related to the Company's software.  Approximately 8% of total revenues
during the three- and six-month periods ended June 30, 1998, was derived from
the Company's primary single-user service, NewsEdge NewsPage.  NewsPage revenues
consist of advertising fees from companies placing advertisements through this
service, subscription fees for premium levels of service and fees for the
fulfillment of certain user requests for additional information.  The remainder
of total revenues for the three- and six-month periods ended June 30, 1998 was
derived from services provided by business lines that have been terminated or
are being de-emphasized.

  Enterprise subscriptions are generally for an initial term of twelve months,
payable in advance, and are automatically renewable for successive one-year
periods unless the customer delivers notice of termination prior to the
expiration date of the then current agreement.  Revenues from subscription fees
are recognized ratably over the subscription term, beginning on installation of
a NewsEdge service.  Accordingly, a substantial portion of the Company's
revenues are recorded as deferred revenues until they are recognized over the
license term.  The Company does not capitalize customer acquisition costs.

  Certain newswires offered by the Company through NewsEdge services are
purchased by the customer directly from the news provider and payments are made
directly from the customer to the provider.  For some of these newswires, the
Company receives ongoing royalties on payments made by the customer to the news
provider, and those royalties constitute part of the Company's enterprise
service revenues.  For other newswires that are resold by NewsEDGE Corporation
to the customer, the Company includes a fee for the newswire in the subscription
fee paid by the customer and pays a royalty to the news provider.  Such
royalties are included in the Company's cost of revenues.

                                       9
<PAGE>
 
RESULTS OF OPERATIONS FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 1998
AS COMPARED TO THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 1997

REVENUES

Total revenues for the three months ended June 30, 1998 declined 2% to $19.2
million compared to $19.5 million for the same period in 1997 due primarily to
anticipated declines in revenues from terminated or harvested product lines.
Total revenues for the six months ended June 30, 1998 increased 2% to $39
million as compared to $38 million for the same period in 1997 due primarily to
growth in revenues from the Company's enterprise and single worker product
lines, which exceeded the declines in revenues from terminated or harvested
product lines.

Enterprise revenue for the three months ended June 30, 1998 increased 9% to
$16.1 million as compared to $14.8 million for the same period in 1997.
Enterprise revenue for the six months ended June 30, 1998 increased 12% to $32.1
million as compared to $28.6 million for the same period in 1997. The increase
in enterprise revenue was due primarily to increased subscription revenues from
new customers and the retention and growth of revenues from existing customers.

Single worker revenue for the three months ended June 30, 1998 increased 23% to
$1.8 million as compared to $1.4 million for the same period in 1997.  Single
worker revenue for the six months ended June 30, 1998 increased 20% to $3.3
million as compared to $2.7 million for the same period in 1997. The increase in
single worker revenue resulted primarily from higher advertising revenue
generated from the NewsPage product.

Terminated or harvested product line revenues decreased 60% to $1.3 million and
47% to $3.6 million for the three- and six-month periods ended June 30, 1998,
respectively.  The decrease in revenues from terminated or harvested product
lines was due primarily to the spin out of the Clarinet business unit effective
March 31, 1998 and an overall reduced sales effort directed at business lines
that have been terminated or are being de-emphasized by the Company.  The
Company expects that revenue from terminated or harvested product lines will
continue to decline.

COST OF REVENUES

Cost of revenues consists primarily of royalties paid to information providers,
payroll and related expenses for the editorial and news operations staff, as
well as data transmission and computer related costs for the support and
delivery of the Company's services.  Cost of revenues as a percentage of total
revenues for the three- and six-month periods ended June 30, 1998 increased to
41.6% and 41.1%, respectively, from 39.7% and 39.5%, respectively, for the same
periods in 1997.  The percentage increases in cost of revenues were due
primarily to increased royalties paid to third-party information providers.

CUSTOMER SUPPORT EXPENSES

Customer support expenses consist primarily of costs associated with technical
support of the Company's installed base of customers.  Customer support expenses
for the three month period ended June 30, 1998 increased 12.0% to $1.4 million
as compared to $1.3 million for the same period in 1997.  Customer support
expenses for the six months ended June 30, 1998 increased 24.8% to $3.1 million
as compared to $2.5 million for the same period in 1997.  These increases
resulted primarily from higher staffing levels needed to provide additional
support to the Company's growing customer base.  As a percentage of total
revenues, customer support expenses for the three- and six-month periods ended
June 30, 1998 increased to 7.3% and 7.9%, respectively, from 6.4% and 6.5%,
respectively, for the same period in 1997.

DEVELOPMENT EXPENSES

Development expenses consist primarily of costs associated with the design,
programming, and testing of the Company's software and services.  Development
expenses for the three-month period ended June 30, 1998 decreased 8.8% to $2.9
million as compared to $3.1 million for the same period in 1997.  Development
expenses for the six months ended June 30, 1998 increased 9.7% to $6.3 million
as compared to $5.7 million for the same period in 1997.  The decrease in
development expenses in the current quarter resulted from reductions in
headcount and related expenses associated with the spin out of the Clarinet
business unit effective March 31, 1998 and the discontinuation of other
development efforts previously maintained by Individual.  Development expenses
for the six months ended 

                                       10
<PAGE>
 
June 30, 1998 increased due to higher staffing levels needed to provide
enhancements to existing features and to develop new features for NewsEdge
services. As a percentage of total revenues, development expenses for the three-
and six-month periods ended June 30, 1998 were 14.9% and 16.1%, respectively, as
compared to 16.1% and 15.0%, respectively, for the same period in 1997.

SALES AND MARKETING EXPENSES

Sales and marketing expenses consist primarily of compensation costs (including
sales commissions and bonuses), travel expenses, trade shows and other marketing
programs.  Sales and marketing expenses for the three-month period ended June
30, 1998 decreased 14.0% to $7.9 million as compared to $9.2 million for the
same period in 1997.  Sales and marketing expenses for the six months ended June
30, 1998 decreased 7.5% to $16.4 million as compared to $17.8 million for the
same period in 1997.  The decrease resulted primarily from reductions in
customer acquisition costs and nonrecurring product management and advertising
sales costs charged during the three-month period ended June 30, 1997 to promote
the NewsPage product.  Additionally, sales and marketing costs for Clarinet were
included as part of total sales and marketing costs for the thee months ended
June 30, 1997, but not included in the current quarter as a result of the spin
out of the Clarinet business unit effective March 31, 1998.  As a percentage of
total revenues, sales and marketing expenses for the three- and six-month
periods ended June 30, 1998 decreased to 41.4% and 42.2%, respectively, as
compared to 47.3% and 46.7%, respectively, for the same period in 1997.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses consist primarily of expenses for finance,
office operations, administration and general management activities, including
legal, accounting and other professional fees.  General and administrative
expenses for the three-month period ended June 30, 1998 decreased 18.9% to $1.1
million as compared to $1.4 million for the same period in 1997.  General and
administrative expenses for the six months ended June 30, 1998 decreased 12.8%
to $2.6 million as compared to $3.0 million for the same period in 1997.  The
decrease in general and administrative expenses was due primarily to a reduction
in professional fees associated with special business development efforts.
Additionally, general and administrative costs for Clarinet were included as
part of total general and administrative costs for the thee months ended June
30, 1997, but not included in the current quarter as a result of the spin out of
the Clarinet business unit effective March 31, 1998.  As a percentage of total
revenues, general and administrative expenses for the three- and six-month
periods ended June 30, 1998 decreased to 5.8% and 6.8%, respectively, as
compared to 7.0% and 7.9%, respectively, for the same period in 1997.

MERGER, DISPOSITION AND OTHER CHARGES

Merger, disposition and other charges consist primarily of the nonrecurring
costs related to the Company's recent business combinations.  For the six months
ended June 30, 1998, these costs, totaling $11.1 million, related primarily to
costs associated with the Merger with Individual and the purchase of ISS, the
termination of the Clarinet business unit, severance and benefits for terminated
employees and the cost of terminating and settling certain contractual
obligations of the combined companies.  For the three- and six-month periods
ended June 30, 1997, merger, disposition and other charges, totaling $3.1
million and $4.7 million, respectively, related primarily to product development
expenses, goodwill amortization and other charges associated with companies
previously acquired by Individual.

INTEREST INCOME (EXPENSE), NET

Interest income (expense), net during the three- and six-month periods ended
June 30, 1998, decreased to $643,000 and $1.3 million, respectively, from
$869,000 and $1.7 million, respectively, for the same periods in 1997, due to
the interest earned on lower cash and investment balances.

PROVISION FOR INCOME TAXES

The provision for income taxes for the three- and six-month periods ended June
30, 1998 decreased to $53,000 and $86,000, respectively, as compared to $266,000
and $846,000, respectively, for the same periods in 1997.  The higher tax
liability for the three- and six-month periods ended June 30, 1997, related to
the tax liability generated from the profitable operations of Desktop Data when
operating as a separate entity.  Components of the provisions include state
taxes due in states that do not have net operating loss carry-forwards
available, foreign tax liabilities and the 

                                       11
<PAGE>
 
alternative minimum tax due under the Internal Revenue Code. The Company has not
recorded a deferred tax benefit in either period for the potential future
benefit of its tax loss carry-forwards, as the Company has concluded that it is
not likely such deferred tax asset would be realized.

LIQUIDITY AND CAPITAL RESOURCES

  The Company's cash, cash equivalents and investments totaled $49.1 million at
June 30, 1998, as compared to $58.6 million at December 31, 1997, a decrease of
$9.5 million.  Net cash of approximately $6.4 million was used in operations for
the six months ending June 30, 1998 primarily resulting from the Company's net
loss for the period.  Net cash used in investing activities for the six months
ended June 30, 1998 was approximately $28.1 million, resulting from a $3.9
million contingent purchase price payment made to FreeLoader founders, purchases
of $22.5 million in short-term investments and purchases of $1.7 million in
property and equipment.  Net cash provided by financing activities for the six
months ended June 30, 1998 was $2.3 million due primarily to employee stock
option exercises and stock purchases made pursuant to the Company's stock plans.

  The Company continues to investigate the possibility of investments in or
acquisitions of complementary businesses, products or technologies, although the
Company has not entered into any commitments or negotiations with respect to any
such transactions.

  The Company believes that its current cash and cash equivalents, investment
balances and funds anticipated to be generated from operations will be
sufficient to satisfy working capital and capital expenditure requirements for
at least the next twelve months.

CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS

  The Company operates in a rapidly changing environment that involves a number
of risks, some of which are beyond the Company's control.  The discussion below
highlights some of the risks which may affect future operating results.

Uncertainties Relating to Integration of Operations

  The Company merged with Individual on February 24, 1998 with the expectation
that the Merger would result in long term anticipated benefits.  These
anticipated benefits will depend in part on whether the companies' operations
can be integrated in an efficient and effective manner.  There can be no
assurance that this will occur.  The combination of the companies requires,
among other things, integration of the companies' respective service offerings
and coordination of the companies' sales, marketing and research and development
efforts.  Historically, the sales models used by the Company and Individual have
differed significantly.  While the Company sold principally to the enterprise
market utilizing a direct sales force, Individual addressed the three tiers of
the market with a distribution strategy that utilized a direct sales force at
the enterprise level, telesales to workgroups, and an Internet distribution
model that incorporated World Wide Web ("Web") banner advertising, marketing
relationships with a number of high traffic Web sites and agreements with
Internet Service Providers to capture the individual knowledge worker.  There
can be no assurance that the Company will be able to take full advantage of the
combined sales force's efforts.  The Company and Individual also used a number
of distribution channels in certain overseas markets in which products are sold
and there can be no assurance that channel conflicts will not develop as the
Company attempts to integrate these channels.

  The success of the integration process will be significantly influenced by the
ability of the Company to attract and retain key management, sales, marketing
and research and development personnel.  There is no assurance that the
foregoing will be accomplished smoothly or successfully.  The current
integration of operations requires the dedication of management resources, which
may distract attention from the day-to-day operations of the Company.  The
inability of management to successfully integrate the operations of the
companies could have a material adverse effect upon the business, operating
results and financial condition of the Company.  In addition, there can be no
assurance that the Company will not incur additional material charges in
subsequent quarters to reflect additional costs associated with the Merger.

                                       12
<PAGE>
 
Management of Growth and Hiring of Additional Personnel

  The Company has experienced growth in revenues and expansion of its operations
which have placed significant demands on the Company's management, development,
sales and customer support staff.  Continued growth will require the Company to
hire and retain more development, selling and customer support personnel.  The
Company has at times experienced, and is now experiencing, difficulty in
recruiting and retaining qualified personnel.  As of July 31, 1998, the Company
was seeking personnel for more than 25 full-time positions.  Recruiting and
retaining qualified personnel is an intensely competitive and time-consuming
process.  There can be no assurance that the Company will be able to attract and
retain the necessary personnel to accomplish its growth strategies.  Continued
difficulties with the recruiting and retention of personnel could adversely
affect the Company's ability to satisfy customer demand in a timely fashion or
to support satisfactorily its customers and operations, which could in turn,
materially adversely affect its business, operating results and financial
condition.

Effects of Merger on Customers

  There can be no assurance that the present and potential customers of the
Company will continue their current buying patterns without regard to the
Merger.  Any significant delay or reduction in orders could have an adverse
effect on the near-term business and results of operations of the Company.  In
addition, uncertainties regarding product overlap of the Company's services and
resolution of that overlap may cause customers to delay purchasing decisions
regarding these products.


Fluctuations in Quarterly Results

  The Company's quarterly operating results may fluctuate significantly in the
future depending on factors such as demand for its services, changes in service
mix, the size and timing of new and renewal subscriptions from corporate
customers, advertising revenue levels, the effects of new service announcements
by the Company and its competitors, the ability of the Company to develop,
market and introduce new and enhanced versions of its services on a timely basis
and the level of product and price competition. A substantial portion of the
Company's cost of revenue, which consists principally of fees payable to
information providers, telecommunications costs and personnel expenses, is
relatively fixed in nature. The operating expense levels of the Company are
based, in significant part, on their expectations of future revenue. If
quarterly revenues are below management's expectations, results of operations
would be adversely affected because a relatively small amount of the Company's
costs and expenses will vary with its revenues.

Future Operating Results Uncertain

  The Company's ability to increase its revenues will depend upon its ability to
expand its sales force, to increase sales to new customers as well as increase
penetration into existing customers, to integrate the Company's product
offerings under a single brand and to generate increased revenue from the
Company's internet products.  In addition, as of December 31, 1997, Individual
had an accumulated deficit on a stand-alone basis of approximately $88.5
million.  The time required for the Company to reach profitability is highly
uncertain and there can be no assurance that the Company will be able to achieve
profitability on a sustained basis, if at all.  The failure of the Individual
portion of the Company's business to achieve profitability could have a material
adverse effect on the Company's business, results of operations and financial
condition.  As a result, the Company believes that period-to-period comparisons
of the Company's and Individual's pre-merger or the Company's post-merger
results of operations are not and will not necessarily be meaningful and should
not be relied upon as an indication of future performance.  Due to all of the
foregoing factors, it is possible that in some future quarter the Company's
operating results will be below the expectations of public market analysts and
investors.  In such event, the price of the Company's Common Stock would likely
be materially adversely affected.  Although each of the Company and Individual
experienced growth in revenues in recent years, there can be no assurance that,
in the future, the Company will sustain revenue growth or be profitable on a
quarterly or annual basis.

Dependence on Continued Growth in Use of the Internet

  The Company distributes certain products and services across multiple delivery
platforms, including facsimile, electronic mail, and private networks based on
Lotus Notes and other groupware products.  Sales of certain of the Company's
products and services depend upon the adoption of the Internet as a widely used
medium for commerce 

                                       13
<PAGE>
 
and communication. Rapid growth in the use of and interest in the Internet is a
recent phenomenon. There can be no assurance that communication or commerce over
the Internet will become widespread or that extensive content will continue to
be provided over the Internet. The Internet may not prove to be a viable
commercial marketplace for a number of reasons, including potentially inadequate
development of the necessary infrastructure, such as a reliable network
backbone, or timely development and commercialization of performance
improvements, including high speed modems. In addition, to the extent that the
Internet continues to experience significant growth in the number of users and
level of use, there can be no assurance that the Internet infrastructure will
continue to be able to support the demands placed upon it by such potential
growth or that the performance or reliability of the Web will not be adversely
affected by this continued growth. The Internet could lose its viability due to
delays in the development or adoption of new standards and protocols required to
handle increased levels of Internet activity, or due to increased governmental
regulation. Changes in or insufficient availability of telecommunications
services to support the Internet also could result in slower response times and
adversely affect usage of the Web and the Company's online services. If the
necessary infrastructure or complementary services necessary to make the
Internet a viable commercial marketplace are not developed, or if the Internet
does not become a viable commercial marketplace, the Company's business, results
of operations, and financial condition could be materially adversely affected.

Reliance on Advertising Revenues and Uncertainty of Web as Advertising Medium

  The Internet is an unproven medium for paid advertising sponsorship of Web-
based services such as the Company's  NewsEdge NewsPage service.  Subscriptions
to the Web-based service are partially subsidized by revenues from the sale of
advertisements on the Web pages of such services.  Most of the Company's
advertising customers have only limited experience with the Web as an
advertising medium, have not devoted a significant portion of their advertising
expenditures to Web-based advertising and may not find such advertising to be
effective for promoting their products and services relative to traditional
print and broadcast media.  The Company's ability to generate significant
advertising revenues to subsidize subscriptions to its Web-based services will
depend upon, among other things, advertisers' acceptance of the Web as an
effective and sustainable advertising medium, the development of a large base of
users of the Company's services possessing demographic characteristics
attractive to advertisers, and the ability of the Company to develop and update
effective advertising delivery and measurement systems.  No standards have yet
been widely accepted for the measurement of the effectiveness of Web-based
advertising, and there can be no assurance that such standards will develop
sufficiently to support Web-based advertising as a significant advertising
medium.  In addition, there is intense competition in the sale of advertising on
the Internet, which has resulted in a wide range of rates quoted by different
vendors for a variety of advertising services, which makes it difficult to
project future levels of Internet advertising revenues that will be realized
generally or by any specific company.  Competition among current and future Web
sites, as well as competition with other traditional media for advertising
placements, could result in significant price competition and reductions in
advertising revenues.  As a result of these factors, there can be no assurance
that the Company will sustain or increase current advertising sales levels.
Failure to do so could have a material adverse effect on the Company's business,
results of operations and financial condition.

Competition

  The business information services industry is intensely competitive and is
characterized by rapid technological change and the entry into the field of
extremely large and well-capitalized companies as well as smaller competitors.
The Company competes or may compete directly or indirectly with the following
categories of companies: (i) large, well-established news and information
providers such as Dow Jones, Bridge, Lexis/Nexis, Pearson, Reuters and Thomson;
(ii) market data services companies such as ADP and Bloomberg; (iii) traditional
print media companies that are increasingly searching for opportunities for on-
line provision of news, including through the establishment of World Wide Web
sites on the Internet; (iv) large providers of LAN-based and Internet-based
software systems such as IBM/Lotus, Netscape and Microsoft, which could, in the
future, ally with competing news and information providers; and (v)  single-
user, advertising-subsidized Web-based services and Internet access providers.
Many of these companies and market participants not named above have
substantially greater financial, technical and marketing resources than the
Company.  Increased competition, on the basis of price or otherwise, may require
price reductions or increased spending on marketing or software development,
which could have a material adverse effect on the Company's business, results of
operations and financial condition.

                                       14
<PAGE>
 
Risks Relating to Acquisitions

  Management may from time to time consider acquisitions of assets or businesses
that it believes may enable the Company to obtain complementary skills and
capabilities, offer new products, expand its customer base or obtain other
competitive advantages. Such acquisitions involve potential risks, including
difficulties in assimilating the acquired company's operations, technology,
products and personnel, completing and integrating acquired in-process
technology, diverting management's resources, uncertainties associated with
operating in new markets and working with new employees and customers, and the
potential loss of the acquired company's key employees.

Dependence on Cooperative Marketing Arrangements

  The Company has entered into certain cooperative marketing agreements and
informal arrangements with software vendors, Web site sponsors and operators of
on-line services, including Microsoft, Netscape and NETCOM. These companies
presently market services that compete directly with those of the Company. If
the Company's marketing activities with such companies were terminated, reduced,
curtailed, or otherwise modified, the Company may not be able to replace or
supplement such efforts alone or with others. If these companies were to develop
and market their own business information services or those of the Company's
competitors, the Company's business and results of operations and financial
condition may be materially and adversely affected.

Litigation Risks

  A class action shareholder suit was filed against Individual (now the
Company), certain of its directors and officers and the underwriters of its
initial public offering claiming that the defendants made misstatements, or
failed to make statements, to the investing public in Individual's Prospectus
and Registration Statement in connection with its initial public offering
relating to the alleged existence of disputes between Joseph A. Amram,
Individual's former Chief Executive Officer, and Individual. On May 27, 1998,
the U.S. District Court for the District of Massachusetts dismissed the class
action in its entirety.  Plaintiffs have appealed that dismissal to the U.S.
Court of Appeals for the First Circuit. The Company continues to believe that
the allegations contained in the complaint are without merit and intends to
defend vigorously against the claims, and based upon information currently
available, believes that the action will not have a material impact on the
Company.  However, there can be no assurance that this litigation will
ultimately be resolved on terms that are favorable to the Company and that the
resolution of this litigation will not have a material adverse effect on the
Company.

Dependence on News Providers

  A significant percentage of the Company's customers subscribe to services
provided by one or more of Press Association Inc., a subsidiary of The
Associated Press, Dow Jones, The Financial Times, Reuters and Thompson.  The
Company's agreements with news providers are generally for terms of one to three
years, with automatic renewal unless notice of termination is provided before
the end of the term by either party.  These agreements may also be terminated by
the provider if the Company fails to fulfill its obligations under the
agreement.  Many of these news and information providers compete with one
another and, to some extent, with the Company.  Termination of one or more
significant news provider agreements would decrease the news and information
which the Company can offer its customers and could have a material adverse
effect on the Company's business, results of operations and financial condition.

  Also, an increase in the fees required to be paid by the Company to its
information providers would have an adverse effect on the Company's gross
margins and results of operations. Because the Company licenses the
informational content included in its services from third parties, the Company's
exposure to copyright infringement actions may increase. Although the Company
generally obtains representations as to the origins and ownership of such
licensed content and generally obtains indemnification for any breach thereof,
there can be no assurance that such representations will be accurate or that
indemnification will adequately compensate the Company for any breach.

Dependence on News Transmission Sources

  The Company's news and information for certain of the NewsEDGE products is
transmitted using one or more of three methods: leased telephone lines,
satellites or FM radio transmission.  None of these methods of news transmission
is within the control of the Company, and the loss or significant disruption of
any of them could have a 

                                       15
<PAGE>
 
material adverse effect on the Company's business. Many newswire providers have
established their own broadcast communications networks using one or more of
these three vehicles. In these cases, the Company's role is to arrange
communications between the news provider and the NewsEDGE customer's server. For
sources which do not have their own broadcast communications capability, news
and information is delivered to the Company news consolidation facility, where
it is reformatted for broadcast to NewsEDGE servers and retransmitted to
customers through an arrangement between the Company and WavePhore, a common
carrier communications vendor. WavePhore presently markets services that compete
directly with those of the Company. WavePhore is also the communications
provider for many newswires offered by the Company through NewsEdge services.
The Company's agreement with WavePhore expires on December 31, 1999. This
agreement can be terminated earlier in the event of a material breach by the
Company of the agreement. If the agreement with WavePhore were terminated on
short notice, or if WavePhore were to encounter technical or financial
difficulties adversely affecting its ability to continue to perform under the
agreement or otherwise, the Company's business could be materially and adversely
affected. The Company believes that if WavePhore were unable to fulfill its
obligations, other sources of retransmission would be available to the Company,
although the transition from WavePhore to those sources could result in delays
or interruptions of service that could have a material adverse affect on the
Company's business, results of operations and financial condition. Wavephore did
experience technical difficulties in May 1998 due to the disablement of the
PanAmSat Galaxy IV satellite. This disablement caused an interruption in the
delivery of news services to between one-third and one-half of the Company's
customers. The interruption was resolved in approximately ten days and did not
have a material impact on the Company's financial results.

Risk of System Failure or Inadequacy

  The Company's operations are dependent on its ability to maintain its computer
and telecommunications systems in effective working order and to protect its
systems against damage from fire, natural disaster, power loss,
telecommunications failure or similar events.  Although the Company has limited
back-up capability, this measure does not eliminate the significant risk to the
Company's operations from a natural disaster or system failure at its principal
site. In addition, any failure or delay in the timely transmission or receipt of
news feeds and computer downloads from its information providers, due to system
failure of the information providers, the public network or otherwise, could
disrupt the Company's operations.

Risks Relating to Year 2000 Issues

  Because the Company's software and services are not date sensitive or date
dependent, the Company believes that its software and services are substantially
year 2000 compliant and currently does not anticipate material expenditures to
remedy any year 2000 problems.  However, many computer systems were not designed
to handle any dates beyond the year 1999, and therefore, many companies will be
required to modify their computer hardware and software prior to the year 2000
in order to remain functional.  Many enterprises, including the Company's
present and potential customers, will be devoting a substantial portion of their
information systems spending to resolving this upcoming year 2000 problem, which
may result in spending being diverted from network applications, such as the
Company's products, over the next two years.  Additionally, the Company utilizes
third-party computer and telecommunications equipment to produce and distribute
its products as well as to operate other aspects of its business, and there can
be no assurances that such equipment is year 2000 compliant.  Although the
Company intends to take measures to address the impact, if any, of year 2000
issues, failure of any critical equipment to operate properly in the year 2000
may have a material adverse effect upon the Company's business, results of
operations and financial condition or require the Company to incur unanticipated
material expenses to remedy any problem.

Rapid Technological Change

  The business information services, software and communications industries are
subject to rapid technological change, which may render existing products and
services obsolete or require significant unanticipated investments in research
and development.  The Company's future success will depend, in part, upon its
ability to enhance its service offerings and keep pace with technological
developments.  The Company's future success will depend on its ability to
enhance its existing services, to develop new products and services that address
the needs of its customers and to respond to technological advances and emerging
industry standards and practices, each on a timely basis. Services as complex as
those offered by the Company entail significant technical risks, often encounter
development delays and may result in service failures when first introduced or
as new versions are released.  Any such delays in development or failures that
occur after commercial introduction of new or enhanced services may result in
loss of or delay in 

                                       16
<PAGE>
 
market acceptance, which could have a material adverse
effect upon the Company's business, results of operations and financial
condition.

Dependence on Proprietary Technology

  The Company is heavily dependent upon proprietary technology.  In addition,
the Company relies on a combination of trade secret, copyright and trademark
laws and non-disclosure agreements to protect its proprietary rights in its
software and technology.  There can be no assurance that such measures are or
will be adequate to protect the Company's proprietary technology.  In addition,
there can be no assurance that the Company's competitors will not independently
develop technologies that are substantially equivalent or superior to the
Company's technologies or services.  Individual licensed the proprietary SMART
filtering software, which is used as the filtering engine for all of its
products and services, from Cornell Research Foundation, Inc. ("Cornell
University").  Under the terms of the license agreement with Cornell University,
Individual, and now the Company, has exclusive worldwide rights until February
1999 to design, develop, market, and sell systems and services based on the
SMART software for the retrieval and dissemination of data from recent and
continually changing data sources.  Provided that the Company is not then in
default of the license agreement, at the end of the initial term of the
agreement the Company will retain a continuing worldwide, non-exclusive,
perpetual royalty-free right to use the SMART software; and in addition, the
Company owns, and will continue to own, all enhancements to the SMART software
that it has developed.  There can be no assurance, however, that Cornell
University will not license the SMART software to a third-party, including a
competitor of the Company, once the Company's exclusive rights have lapsed.  In
addition, Cornell University may terminate the license agreement if the Company
has materially breached the agreement and such breach remains uncured for 60
days after written notice of such breach has been given.  If the license
agreement were to terminate, the Company could be required to develop or acquire
a replacement filtering technology, and there can be no assurance that such
technology could be developed or acquired, on a timely basis or at all, and on
favorable terms to the Company.  Consequently, any termination of the Company's
license agreement with Cornell University would have a material adverse effect
on the Company's business, results of operations, and financial condition.

  There has been substantial litigation in the information services industry
involving intellectual property rights.  Although the Company believes that it
is not infringing the intellectual property rights of others, there can be no
assurance that such claims, if asserted, would not have a material adverse
effect on the Company's business, results of operations, and financial
condition.  In addition, inasmuch as the Company licenses the informational
content that is included in its services from third parties, its exposure to
copyright infringement actions may increase because the Company must rely upon
such third parties for information as to the origin and ownership of such
licensed content.  Although the Company generally obtains representations as to
the origins and ownership of such licensed informational content and generally
obtains indemnification to cover any breach of any such representations, there
can be no assurance that such representations will be accurate or that such
indemnification will provide adequate compensation for any breach of such
representations.  In the future, litigation may be necessary to enforce and
protect trade secrets, copyrights and other intellectual property rights of the
Company.  The Company may also be subject to litigation to defend against
claimed infringement of the rights of others or to determine the scope and
validity of the intellectual property rights of others.  Any such litigation
would be costly and divert management's attention, either of which would have a
material adverse effect on the Company's business, results of operations, and
financial condition.  Adverse determinations in such litigation could result in
the loss of the Company's proprietary rights, subject the Company to significant
liabilities, require the Company to seek licenses from third parties, and
prevent the Company from selling its services, any one of which could have a
material adverse effect on the Company's business, results of operations, and
financial condition.

                                       17
<PAGE>
 
                     NEWSEDGE CORPORATION AND SUBSIDIARIES
                                        
                                        

PART II  OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

  A class action shareholder suit was filed against Individual (now the
Company), certain of its directors and officers and the underwriters of its
initial public offering claiming that the defendants made misstatements, or
failed to make statements, to the investing public in Individual's Prospectus
and Registration Statement in connection with its initial public offering
relating to the alleged existence of disputes between Joseph A. Amram,
Individual's former Chief Executive Officer, and Individual. On May 27, 1998,
the U.S. District Court for the District of Massachusetts dismissed the class
action in its entirety.  Plaintiffs have appealed that dismissal to the U.S.
Court of Appeals for the First Circuit. The Company continues to believe that
the allegations contained in the complaint are without merit and intends to
defend vigorously against the claims, and based upon information currently
available, believes that the action will not have a material impact on the
Company.  However, there can be no assurance that this litigation will
ultimately be resolved on terms that are favorable to the Company and that the
resolution of this litigation will not have a material adverse effect on the
Company.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  The Annual Meeting of Stockholders was held on June 4, 1998.  Holders of an
aggregate of 17,128,314 shares at the close of business on April 15, 1998 were
entitled to vote at the meeting.  At such meeting, the Company's stockholders
voted as follows:

PROPOSAL I.  To reelect and reconstitute the Board of Directors of the
Corporation as follows:

<TABLE>
<CAPTION>
Director's                                                                 Term expires at
Name and Year Director            Position(s) with                         Annual Meeting      Class of
First Became a Director           the Corporation                          Held in:            Director
-----------------------------     ------------------------------------     ---------------     -------------
<S>                               <C>                                     <C>                  <C>
Donald L. McLagan                 Chairman, President, Chief                    2001               I
     1988                         Executive Officer and Director     
 
Michael E. Kolowich               Vice-Chairman and Director                    2001               I
     1998
June Rokoff                       Director                                      2001               I
     1996
William A. Devereaux              Director                                      2000               II
     1988
Rory J. Cowan                     Director                                      2000               II
     1993
Ellen Carnahan                    Director                                      1999               III
     1991
James D. Daniell                  Director                                      1999               III
     1998
</TABLE>

                                       18
<PAGE>
 
<TABLE>
<CAPTION>
                          Total Vote For   Total Vote Against    Abstentions from      Broker
Director Name               Proposal I         Proposal I           Proposal I       Non-votes
-----------------------   --------------   -------------------    ----------------   ---------
<S>                       <C>              <C>                   <C>                 <C>
Donald L. McLagan           13,312,963         77,960                  N/A              N/A
Michael E. Kolowich         13,307,281         83,642                  N/A              N/A
June Rokoff                 13,302,315         88,608                  N/A              N/A
William A. Devereaux        13,302,505         88,418                  N/A              N/A
Rory J. Cowan               13,298,865         92,058                  N/A              N/A
Ellen Carnahan              13,312,563         78,360                  N/A              N/A
James D. Daniell            13,312,607         78,316                  N/A              N/A
</TABLE>

PROPOSAL II.  To ratify the selection of the firm of Arthur Andersen LLP and
              independent auditors for the fiscal year ending December 31, 1998.

<TABLE>
<CAPTION>
Total Vote For   Total Vote Against     Abstentions from     Broker Non-votes
 Proposal II     Proposal II            Proposal II
--------------   ------------------     ----------------     -----------------
<S>              <C>                    <C>                  <C>
 13,357,427             25,384                8,112                N/A
</TABLE>


ITEM 5.  OTHER INFORMATION.

  Proposals of stockholders intended for inclusion in the proxy statement to be
furnished to all stockholders entitled to vote at the next annual meeting of
stockholders of the Company must be received at the Company's principal
executive offices not later than December 24, 1998.  The deadline for providing
timely notice to the Company of matters that stockholders otherwise desire to
introduce at the next annual meeting of stockholders of the Company is March 10,
1999.  In order to curtail any controversy as to the date on which a proposal
was received by the Company, it is suggested that proponents submit their
proposals by Certified Mail, Return Receipt Requested.


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

6(a) Exhibits.

     27.1 - Financial Data Schedule for the three- and six-month periods ended
            June 30, 1998

     27.2 - Restated Financial Data Schedule for the three- and six-month
            periods ended June 30, 1997

6(b) REPORTS ON FORM 8-K

     No reports on Form 8-K have been filed during the quarter for which this
     report is filed.

                                       19
<PAGE>
 
                     NEWSEDGE CORPORATION AND SUBSIDIARIES
                                        

SIGNATURE

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.


                                   NEWSEDGE CORPORATION
                                   (Registrant)



Date:  August 14, 1998             /s/ Edward R. Siegfried
                                   ------------------------------
                                   Edward R. Siegfried
                                   Vice President - Finance and CFO,
                                   Treasurer and Assistant Secretary

                                       20
<PAGE>
 
                     NEWSEDGE CORPORATION AND SUBSIDIARIES
                                 EXHIBIT INDEX
                                        


Exhibit No.              Description                                   Page
-----------              -----------                                   ----


  27.1    --  Financial Data Schedule for June 30, 1998                 22

  27.2    --  Restated Financial Data Schedule for June 30, 1997        23