<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:   September 30, 1997
                                  ------------------

                                                    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
                        -------

                              DESKTOP DATA, INC.
            (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)

                                (617) 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 September 30, 1997
-------------------                     ---------------------------------

Common Stock, par value $.01            8,670,411
<PAGE>
 
                      DESKTOP DATA, INC. AND SUBSIDIARIES

                               TABLE OF CONTENTS

<TABLE> 
<CAPTION> 

<S>         <C>                                                                             <C> 
PART I   -  FINANCIAL INFORMATION                                                           Page Number
 
Item 1   -  Financial Statements
 
            Condensed Consolidated Balance Sheets at
                 September 30, 1997 and December 31, 1996................................        3
 
            Condensed Consolidated Statements of Income
                 for the three and nine months ended September 30, 1997 and 1996.........        4
 
            Condensed Consolidated Statements of Cash Flows
                 for the nine months ended September 30, 1997 and 1996...................        5
 
            Notes to the Condensed Consolidated Financial Statements.....................        6
 
Item 2  -   Management's Discussion and Analysis of
            Financial Condition and Results of Operations................................        8
        
PART II  - OTHER INFORMATION
 
Item 6(a) - Exhibits.....................................................................        12
 
Item 6(b) - Reports on Form 8-K..........................................................        12
 
Signature................................................................................        13
 
Exhibit Index............................................................................        14
 
Exhibits.................................................................................        15
</TABLE>

                                       2
<PAGE>
 
ITEM 1                DESKTOP DATA, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)

<TABLE> 
<CAPTION>  
                                                          Unaudited                  
                                                        September 30,    December 31,
                                                             1997            1996    
                                                        -------------    ------------
<S>                                                     <C>              <C> 
ASSETS                                                                               
                                                                                     
Current assets:                                                                      
     Cash and cash equivalents                                $29,220         $10,735   
     Short-term investments                                    13,157          18,120   
     Accounts receivable                                        4,865           4,948   
     Prepaid expenses and deposits                              2,569           1,814   
                                                        -------------    ------------
        Total current assets                                   49,811          35,617   
                                                        -------------    ------------
                                                                                      
Long-term investments                                               -           7,928   
                                                        -------------    ------------

Property and equipment, net                                     5,591           4,640   
                                                        -------------    ------------

Other assets                                                      143             142   
                                                        -------------    ------------
                                                                                      
        Total assets                                          $55,545         $48,327   
                                                        =============    ============
                                                                                      
                                                                                      
LIABILITIES AND STOCKHOLDERS' EQUITY                                                  
                                                                                      
Current liabilities:                                                                  
     Accounts payable                                         $ 2,149         $   878   
     Accrued expenses                                           6,053           3,572   
     Deferred revenue, current                                 15,122          13,631   
     Obligation under capital leases, current                      34              34   
                                                        -------------    ------------
        Total current liabilities                              23,358          18,115   
                                                        -------------    ------------
                                                                                      
Obligation under capital leases, noncurrent                        12              38   
                                                        -------------    ------------
                                                                                      
Deferred revenue, noncurrent                                        2             190   
                                                        -------------    ------------
                                                                                      
Commitments (Note 2)                                                                  
                                                                                      
Stockholders' equity:                                                                 
     Common stock                                                  87              86   
     Additional paid-in capital                                31,925          31,782   
     Retained earnings (deficit)                                  161          (1,884)  
                                                        -------------    ------------
        Total stockholders' equity                             32,173          29,984   
                                                        -------------    ------------
                                                                                      
                                                                                      
        Total liabilities & stockholders' equity              $55,545         $48,327   
                                                        =============    ============ 
</TABLE>

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

                                       3
<PAGE>
 
                      DESKTOP DATA, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                  (UNAUDITED)
                     (in thousands, except per share data)
 
<TABLE> 
<CAPTION>  
                                            Three Months Ended       Nine Months Ended   
                                              September 30,             September 30,    
                                           -------------------       -----------------   
                                             1997       1996           1997     1996     
                                           --------    -------       -------   -------    
<S>                                        <C>         <C>           <C>       <C>       
Subscription and royalty revenues           $10,218     $8,062       $29,227   $22,457   
Other revenues                                  630        690         2,086     1,645   
                                           --------    -------       -------   -------    
     Total revenues                          10,848      8,752        31,313    24,102   
                                           --------    -------       -------   -------    
                                                                                         
Cost of revenues                              3,424      2,409         9,600     6,519   
Customer support expenses                     1,372        898         3,852     2,547   
Development expenses                          1,345      1,024         3,817     3,184   
Sales and marketing expenses                  3,886      3,199        10,973     8,649   
General and administrative expenses             583        359         1,560     1,124   
                                           --------    -------       -------   -------    
     Total costs and expenses                10,610      7,889        29,802    22,023   
                                           --------    -------       -------   -------    
                                                                                         
     Income from operations                     238        863         1,511     2,079   
                                                                                         
Interest income, net                            575        490         1,640     1,370   
                                           --------    -------       -------   -------    
                                                                                         
Income before provision                                                                  
     for income taxes                           813      1,353         3,151     3,449   
                                                                                         
Provision for income taxes                      260        151         1,107       384   
                                           --------    -------       -------   -------    
                                                                                         
     Net income                             $   553    $ 1,202       $ 2,044   $ 3,065   
                                           ========    =======       =======   =======    
                                                                                         
Net income per common and common                                                         
     equivalent share                       $  0.06    $  0.14       $  0.23   $  0.35   
                                           ========    =======       =======   =======                         
                                                                                         
Weighted average number of common and                                                    
     common equivalent shares outstanding     8,792      8,795         8,750     8,811   
                                           ========    =======       =======   =======                         
</TABLE>

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

                                       4
<PAGE>

                      DESKTOP DATA, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                                (in thousands)

<TABLE> 
<CAPTION> 
                                                                                               Nine Months Ended
                                                                                                 September 30,
                                                                                    ----------------------------------------
                                                                                          1997                  1996
                                                                                    ------------------    ------------------
<S>                                                                                      <C>                    <C> 
Cash flows from operating activities:                                             
    Net income                                                                              $  2,044           $  3,065
    Adjustments to reconcile net income to net cash provided 
         by operating activities:
            Depreciation                                                                       1,152                664
         Changes in assets and liabilities:
            Accounts receivable                                                                   83               (884)
            Prepaid expenses and deposits                                                       (755)              (687)
            Accounts payable                                                                   1,271                339
            Accrued expenses                                                                   2,481                613
            Deferred revenue                                                                   1,303              4,078
                                                                                            --------           --------
         Net cash provided by operating activities                                             7,579              7,188
                                                                                            ========           ========

Cash flows from investing activities:
    (Increase) decrease in investments, net                                                   12,891            (15,051)
    Purchases of property and equipment                                                       (2,103)            (2,838)
    Increase in other assets                                                                       -               (149)
                                                                                            --------           --------
         Net cash provided by (used in) investing activities                                  10,788            (18,038)
                                                                                            ========           ========

Cash flows from financing activities:
    Proceeds from exercise of stock options                                                       81                124
    Proceeds from stock issuance under employee stock purchase plan                               63                154
    Payments on obligation under capital leases                                                  (26)               (22)
                                                                                            --------           --------
         Net cash provided by financing activities                                               118                256
                                                                                            ========           ========

Increase (decrease) in cash and cash equivalents                                              18,485            (10,594)
Cash and cash equivalents, beginning of period                                                10,735             19,301
                                                                                            --------           --------

Cash and cash equivalents, end of period                                                    $ 29,220           $  8,707
                                                                                            ========           ========

Supplemental disclosure of cash flow information
    Cash paid for income taxes                                                              $    138           $    205
                                                                                            ========           ========
    Cash paid for interest                                                                  $      5           $      4
                                                                                            ========           ========

Supplemental disclosure of noncash transactions
    Equipment acquired under capital lease obligations                                      $      -           $     25
                                                                                            ========           ========
</TABLE> 

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


                                       5
<PAGE>
 
                      DESKTOP DATA, INC. AND SUBSIDIARIES
           NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)



1.   Operations and Significant Accounting Policies
 
Basis of Presentation

    The condensed consolidated financial statements of Desktop Data, Inc. (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, 1996 included in the Company's Form 
10-K.  In the opinion of management, the accompanying unaudited 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 which would be expected for the full year.

Principles of Consolidation

    The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, Desktop Data Canada, Inc. and
Desktop Data Securities Corp. All material intercompany accounts and
transactions have been eliminated in consolidation.

Cash Equivalents and Investments

    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.
 
    At September 30, 1997, cash equivalents included approximately $2,258,000 in
money market investments and $23,134,000 in U.S. government agency securities.
At  September 30, 1997, short-term investments included approximately $8,049,000
in U.S. Treasury Notes and $5,108,000 in U.S. government agency securities.  As
of September 30, 1997, all of the Company's investments are classified and
accounted for as held to maturity.

Net Income Per Common and Common Equivalent Share

    For the three and nine month periods ended September 30, 1997 and 1996, net
income per common and common equivalent share is computed by dividing net income
by the weighted average number of common and common equivalent shares
outstanding during that period.  Common equivalent shares from stock options
have been included in the computation using the treasury-stock method.

    In February 1997, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 128, Earnings Per Share. SFAS No. 128 specifies revised
computational guidelines, presentation and disclosure requirements for earnings
per share and supersedes Accounting Principles Board Opinion No. 15. SFAS No.
128 is effective for financial statements issued for periods ending after
December 15, 1997, including interim periods. Earlier application is not
permitted; however, upon adoption, SFAS No. 128 requires restatement of all
prior period earnings per share information. The difference between earnings per
share for the three and nine months ended September 30, 1997 and 1996,
calculated in accordance with SFAS No. 128, and net income per common and common
equivalent share computed using the existing rules, is not expected to be
significant.

                                       6
<PAGE>
 
                      DESKTOP DATA, INC. AND SUBSIDIARIES
           NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


2.  Commitments

    On August 31, 1995, the Company entered into an operating lease for office
facilities, which commenced in February 1996 and expires in fiscal 2003.  The
Company will pay out a total of approximately $2.3 million in monthly lease
payments over the period of the lease.  As of September 30, 1997, the Company
has paid a deposit of approximately $150,000 related to the lease.

3.  Subsequent Events

    On November 2, 1997, the Company entered into an Agreement and Plan of
Merger and Reorganization (the "Agreement") with Individual, Inc.
("Individual"), a publicly-held company that develops and markets a suite of
customized news and information services that provide knowledge workers with
daily personalized current awareness reports. Individual's proprietary systems
filter incoming information, prepare for each user a daily news briefing, and
deliver its services across a range of delivery platforms, including facsimile,
electronic mail, groupware, intranets and the Internet. Under the terms of the
Agreement, the Company will issue one-half (1/2) of a share of Common Stock for
each outstanding share of Individual common stock (the "Exchange Ratio"). In
addition, each outstanding option, warrant or right to purchase Individual
common stock pursuant to outstanding warrants or rights to purchase common stock
under Individual's various stock option and purchase plans will be assumed by
the Company and will become an option, warrant or right to purchase the
Company's Common Stock after giving effect to the Exchange Ratio. Consummation
of the merger contemplated by the Agreement is conditioned upon the affirmative
vote of both companies' stockholders, among other conditions.

                                       7
<PAGE>
 
ITEM 2             Management's Discussion and Analysis of Financial
                      Condition and Results of Operations

Overview

  Desktop Data, through its NewsEDGE products, delivers a large variety of news
and information sources in real time to professionals' personal computers,
automatically monitoring and filtering the news, and alerting the users to
stories of interest to them.  NewsEDGE is delivered via both corporations'
intranets and the internet.

  The Company's revenues consist primarily of NewsEDGE subscription fees and
related royalties received from news providers in connection with sales of their
newswires through NewsEDGE.  Historically, royalties have constituted less than
10% of this amount.  The Company's other revenues consist principally of
NewsEDGE installation services and related computer hardware system sales, and
non-recurring custom development projects related to the Company's software.

  NewsEDGE 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.  NewsEDGE subscription revenues
are recognized ratably over the subscription term, beginning on installation of
the 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 are purchased by the
customer directly from the news provider and payments are made directly from the
NewsEDGE 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 subscription and
royalty revenues.  For other newswires that are resold by Desktop Data to the
NewsEDGE customer, the Company includes a fee for the newswire in the NewsEDGE
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.

Results of Operations for the Three and Nine Month Periods Ended September 30,
1997

  Total revenues increased 24% to $10.8 million for the three months ended
September 30, 1997 as compared to $8.8 million for the same period in 1996.
Year-to-date total revenues increased 30% to $31.3 million as compared to $24.1
million for the same period in 1996.  For the three months ended September 30,
1997, subscription and royalty revenues increased 27% to $10.2 million, up from
$8.1 million for the same period in 1996.  Year-to-date subscription and royalty
revenues increased 30% to $29.2 million as compared to $22.5 million for the
same period in 1996.  For the three month period ended September 30, 1997, other
revenues decreased 9% to $630,000, down from $690,000 for the same period in
1996.  Conversely, year-to-date other revenues increased 27% to $2.1 million, up
from $1.6 million for the same period in 1996. The increase in subscription and
royalty revenues was due to increased subscription revenues from new customers,
the retention and growth of revenues from existing customers and increased
royalties from the sale of third party information news.  Fluctuations in other
revenues occur as a result of increases or decreases in non-recurring custom
development projects and installations of NewsEDGE.

  The number of installed customers increased from 373 customers at September
30, 1996, to 410 customers at September 30, 1997, an increase of 10%.  The
number of authorized users within customer organizations increased from 110,298
users at September 30, 1996 to 169,438 users at September 30, 1997, an increase
of  54%.  The average number of users per customer increased from 270 users at
September 30, 1996 to 369 users at September 30, 1997, an increase of  37%.  The
Company's average revenues per customer increased from $63,435 for the nine
months ended September 30, 1996 to $73,806 for the nine months ended September
30, 1997, an increase of 16%.

                                       8
<PAGE>
 
  Cost of revenues, as a percentage of total revenues, increased to 32% and 31%,
respectively, for the three and nine month periods ended September 30, 1997 from
28% and 27%, respectively, for the same periods in 1996.  The percentage
increases in cost of revenues were due primarily to increases in royalties paid
to third party information providers and increases in transmission costs.

  Customer support expenses increased 53% to $1.4 million for the three months
ended September 30, 1997, as compared to $898,000 for the same period in 1996.
Year-to-date customer support expenses increased 51% to $3.9 million for the
nine months ended September 30, 1997, as compared to $2.5 million for the same
period in 1996.  These increases resulted primarily from higher staffing levels
and the continuing need for the Company to provide additional support to its
growing customer base.  As a percentage of total revenues, customer support
expenses increased to 13% and 12% for the three and nine month periods ended
September 30, 1997 from 10% and 11% for the comparable periods in 1996.  At
September 30, 1997, Desktop Data had 62 employees engaged in field and central
customer support operations.

  Development expenses increased 31% to $1.3 million for the three months ended
September 30, 1997, as compared to $1.0 million for same period in 1996. 
Year-to-date development expenses increased 20% to $3.8 million for the nine
months ended September 30, 1997, as compared to $3.2 million for the same period
in 1996. Increases in development expenses resulted primarily from higher
payroll and recruiting costs deemed necessary to attract and retain new and
existing personnel. As a percentage of total revenues, development expenses
remained relatively constant at 12% for the three and nine month periods ended
September 30, 1997, as compared to 12% and 13% for the comparable periods in
1996. At September 30, 1997, Desktop Data had 44 employees engaged in
development and quality assurance operations.

  Sales and marketing expenses increased 22% to $3.9 million for the three month
period ended September 30, 1997, as compared to $3.2 million for the same period
in 1996.  Year-to-date sales and marketing expenses increased 27% to $11.0
million for the nine month period ended September 30, 1997, from $8.6 million
for the same period in 1996.  Sales and marketing expenses increased during
these periods, primarily due to the expansion of the sales and marketing
organizations.  As a percentage of total revenues, sales and marketing expenses
remained relatively constant at 36% and 35% for the three and nine month periods
ended September 30, 1997, as compared with 37% and 36% for the same periods in
1996.  As of  September 30, 1997, Desktop Data's direct sales force and
marketing staff consisted of 75 employees.

  General and administrative expenses increased 62% to $583,000 for the three
months ended September 30, 1997 from $359,000 for the same period in 1996.
Year-to-date general and administrative expenses increased 39% to $1.6 million
for the nine months ended September 30, 1997 from $1.1 million for the same
period in 1996.  The increases in general and administrative expenses were due
primarily to additions to staff  and new administrative functions to support the
Company's growth.  General and administrative expenses, as a percentage of total
revenues, remained relatively constant at 5% for the three and nine month
periods ended September 30, 1997, as compared to 4% and 5% for the same periods
in 1996.  At September 30, 1997, Desktop Data had 15 employees engaged in
general and administrative operations.

  Interest income, net increased to $575,000 and $1.6 million for the three and
nine month periods ended September 30, 1997, from $490,000 and $1.4 million for
the comparable periods in 1996 due to higher cash and investment balances
generated from operations and higher interest rates earned on cash, cash
equivalent and investment balances.

  The provision for income taxes increased to $260,000 and $1.1 million,
respectively, for the three and nine month periods ended September 30, 1997 from
$151,000 and $384,000, respectively, for the comparable periods in 1996.  The
increase in the tax provision is due to both a reduction in the tax loss
carryforwards and higher expected taxable income from the Company's operations.

                                       9
<PAGE>
 
Liquidity and Capital Resources

  The Company's combined cash, cash equivalent and investment balance was $42.4
million at September 30, 1997, as compared to $36.8 million at December 31,
1996, an increase of $5.6 million.  Net cash  of $7.6 million was generated from
operations for the nine months ending September 30, 1997 as a result of the
Company's profitability and increases in current liabilities since the beginning
of the year.  Net cash provided by investing activities for the nine months
ended September 30, 1997 was $10.8 million, due to the maturity of certain
investments.  Net cash provided by financing activities in the nine months ended
September 30, 1997 was $118,000, due primarily to employee stock option
exercises and stock purchases pursuant to the employee stock purchase plan.

  As previously announced, on November 2, 1997, the Company entered into an
Agreement and Plan of Merger and Reorganization (the "Agreement") with
Individual, Inc. ("Individual"), a publicly-held company that develops and
markets a suite of customized news and information services that provide
knowledge workers with daily personalized current awareness reports.  Under the
terms of the Agreement, Individual will merge with and into the Company, with
the Company remaining as the surviving entity (the "Merger").  Direct
transaction costs associated with the Merger of Desktop and Individual, which
are not currently reasonably estimable, will be charged to operations upon
consummation of the Merger.

  The Company continues to investigate the possibility of additional investments
in or acquisitions of complementary businesses, products or technologies.

  The Company believes that its current cash, cash equivalent and investment
balances combined with funds anticipated to be generated from future 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 following
discussion highlights some of the risks which may affect future operating
results.

  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.  Increased competition, on the basis of price or otherwise,
may require price reductions or increased spending on marketing or software
development, which could have material adverse effect on the Company's business
and results of operations.  In the recent past, competition has increased as
several new companies and Internet-based technologies have entered the market.
The Company believes that this has resulted in a lengthening of its customers'
decision making process and may adversely affect the Company's business and
results of operations in the future.

  Dependence on NewsEDGE Service. The Company currently derives substantially
all of its revenues from NewsEDGE service subscriptions and related royalties.
Although the Company intends to increase the number of news and other
information sources available through NewsEDGE and to otherwise enhance
NewsEDGE, the Company's strategy is to continue to focus on providing the
NewsEDGE service as its sole line of business. In addition, there can be no
assurance that the Company will be able to increase the number of news sources
or otherwise enhance NewsEDGE. As a result, any factor adversely affecting sales
of NewsEDGE would have a material adverse effect on the Company. The Company's
future financial performance will depend principally on the market's acceptance
of NewsEDGE and the Company's ability to sell NewsEDGE to additional customers
and to increase revenue derived from existing customers by increasing the number
of users within each customer, adding additional newswires or adding additional
NewsEDGE servers.

  Dependence on News Providers. The Company currently makes over 650 news and
information sources available through NewsEDGE, pursuant to agreements between
the Company and numerous 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 & Company,
Inc., The Financial Times (London), Reuters America, Inc. and Thomson. The
Company's agreements with news providers are generally for a term of one year,
with automatic renewal unless notice of termination is provided before the end
of the term by either party. These 

                                       10
<PAGE>
 
agreements may also be terminated by the provider if Desktop Data fails to
fulfill its obligations under the agreement and, under some of the agreements,
upon the occurrence of a change in control of the Company. 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
would have a material adverse effect on the Company's business and results of
operations.

  Dependence on News Transmission Sources. NewsEDGE news and information 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 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, Desktop Data'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's
news consolidation facility, where it is reformatted for broadcast to NewsEDGE
servers and retransmitted to customers through an arrangement between the
Company and WavePhore  ("WavePhore"), a common carrier communications vendor.
WavePhore is also the communications provider for many newswires offered by the
Company through NewsEDGE. The Company's agreement with WavePhore expires on
December 31, 1998.  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 would 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.

  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 NewsEDGE and keep pace
with technological developments.

  Dependence on Key Personnel. The Company's success depends to a significant
extent upon the continued service of its executive officers and other key
management, sales and technical personnel, and on its ability to continue to
attract, retain and motivate qualified personnel. The competition for such
employees is intense. The Company has no long-term employment contracts with any
of its employees. The loss of the services of one or more of the Company's
executive officers, sales people, design engineers or other key personnel or the
Company's inability to recruit replacements for such personnel or to otherwise
attract, retain and motivate qualified personnel could have a material adverse
effect on the Company's business and results of operations.

                                       11
<PAGE>
 
                      DESKTOP DATA, INC. AND SUBSIDIARIES



PART II - OTHER INFORMATION


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

6(a)     Exhibits.
                                                                                
         10.1 - 1995 Employee Stock Purchase Plan, as amended                   
         11.1 - Computation of Earnings Per Share                               
         27.0 - Financial Data Schedule                                         
                                                                                
6(b)     REPORTS ON FORM 8-K                                                    
                                                                                
         A Form 8-K was filed by the Company on November 14, 1997 which reported
         that the Company entered into an Agreement and Plan of Merger and
         Reorganization (the "Agreement") with Individual, Inc. ("Individual")
         on November 2, 1997. Under the terms of the Agreement, the Company will
         issue one-half (1/2) of a share of Common Stock for each outstanding
         share of Individual common stock (the "Exchange Ratio"). In addition,
         each outstanding option, warrant or right to purchase common stock
         pursuant to outstanding warrants or rights to purchase common stock
         under Individual's various stock option and purchase plans will be
         assumed by the Company and will become an option, warrant or right to
         purchase the Company's Common Stock after giving effect to the Exchange
         Ratio. Consummation of the Merger contemplated by the Agreement is
         conditioned upon the affirmative vote of both companies' stockholders,
         among other conditions.

                                       12
<PAGE>
 
                      DESKTOP DATA, INC. 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.


                                                       DESKTOP DATA, INC.
                                                       (Registrant)



Date:  November 14, 1997                 /s/ Edward R. Siegfried
                                         --------------------------------------
                                         Edward R. Siegfried
                                         Vice President--Finance and Operations,
                                         Treasurer and Assistant Secretary

                                       13
<PAGE>
 
                      DESKTOP DATA, INC. AND SUBSIDIARIES
                                 EXHIBIT INDEX
                                        
<TABLE> 
<CAPTION> 

Exhibit No.              Description                           Page
-----------              -----------                           ----
<S>                      <C>                                   <C>
     10.1    -   1995 Employee Stock Purchase Plan, as amended  15
 
     11.1    -   Computation of earnings per share              24
 
     27.0    -   Financial Data Schedule                        25
</TABLE>


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