<PAGE>   1
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-Q
 
[X]             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
 
               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
 
                                       OR
 
[ ]             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
 
                        COMMISSION FILE NUMBER: 0-27470
 
                                CYBERCASH, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                                         <C>
                 DELAWARE                         54-1725021
       (STATE OR OTHER JURISDICTION            (I.R.S. EMPLOYER
     OF INCORPORATION OR ORGANIZATION)       IDENTIFICATION NO.)
</TABLE>
 
                     2100 RESTON PARKWAY, RESTON, VA 20191
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
 
     REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (703) 620-4200
 
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
 
                               Yes [X]     No [ ]
 
     Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
 
                               
                               
 Common Stock, $0.001 Par Value                       15,723,023 Shares
            (Class)                          (Outstanding at September 30, 1998)
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                        PAGE NO.
                                                                        --------
<S>       <C>                                                           <C>
PART I    FINANCIAL INFORMATION
Item 1.   Consolidated Financial Statements...........................      3
          Consolidated Statements of Operations for the three and nine
            months ended September 30, 1998 and 1997..................      3
          Consolidated Balance Sheets as of September 30, 1998 and
            December 31, 1997.........................................      4
          Consolidated Statements of Cash Flows for the nine months
            ended September 30, 1998 and 1997.........................      5
          Notes to Consolidated Financial Statements..................      6
Item 2.   Management's Discussion and Analysis of Financial Conditions
            and Results of Operations.................................     10
Item 3.   Qualitative and Quantitative Market Risk Disclosure.........     13
PART II   OTHER INFORMATION
Item 1.   Legal Proceedings...........................................     14
Item 2.   Changes in Securities.......................................     14
Item 3.   Defaults upon Senior Securities.............................     15
Item 4.   Submission of Matters to a Vote of Security-Holders.........     15
Item 5.   Other Information...........................................     15
Item 6.   Exhibits and Reports on Form 8-K............................     15
Signatures............................................................     16
</TABLE>
 
                                        2
<PAGE>   3
 
                        PART I -- FINANCIAL INFORMATION
 
ITEM I.  CONSOLIDATED FINANCIAL STATEMENTS
 
                                CYBERCASH, INC.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED            NINE MONTHS ENDED
                                                SEPTEMBER 30,                SEPTEMBER 30,
                                          -------------------------   ---------------------------
                                             1998          1997           1998           1997
                                          -----------   -----------   ------------   ------------
<S>                                       <C>           <C>           <C>            <C>
Revenues................................  $ 4,522,285   $ 1,514,243   $  8,169,621   $  2,481,999
Cost of Revenues........................    2,406,713       772,085      4,958,730      2,286,578
                                          -----------   -----------   ------------   ------------
Gross Profit............................    2,115,572       742,158      3,210,891        195,421
Costs and expenses:
  Research and development..............    2,342,087     2,621,230      6,355,774      7,468,960
  Sales and marketing...................    3,637,281     2,635,106     11,241,282      7,718,055
  General and administrative............    1,866,326     1,450,741      5,441,037      4,691,063
  Amortization of intangibles...........    1,936,521            --      3,227,535             --
  Write-off of NetBill technology
     license............................           --            --             --      2,162,500
  Restructuring Charge..................           --            --        608,755        344,242
                                          -----------   -----------   ------------   ------------
Loss from operations....................   (7,666,643)   (5,964,919)   (23,663,492)   (22,189,399)
Interest and other income...............       45,293       405,851        876,110      1,099,217
Other expense...........................      (10,723)           --       (119,776)            --
                                          -----------   -----------   ------------   ------------
Net loss................................  $(7,632,073)  $(5,559,068)  $(22,907,158)  $(21,090,182)
                                          ===========   ===========   ============   ============
Net loss per share......................  $     (0.51)  $     (0.52)  $      (1.71)  $      (1.96)
                                          ===========   ===========   ============   ============
</TABLE>
 
                            See accompanying notes.
 
                                        3
<PAGE>   4
 
                                CYBERCASH, INC.
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                              SEPTEMBER 30,      DECEMBER 31,
                                                                  1998               1997
                                                              -------------      ------------
<S>                                                           <C>                <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 16,403,249       $ 13,222,234
  Short-term investments....................................            --          8,779,773
  Restricted cash...........................................       347,733            263,132
  Accounts receivable.......................................     4,004,876          2,706,776
  Prepaid expenses and other current assets.................     2,892,225            816,730
                                                              ------------       ------------
Total current assets........................................    23,648,083         25,788,645
Property and equipment, net.................................     7,826,722          4,671,350
Investment in affiliates....................................     1,344,127            342,155
Other long-term assets......................................       862,423            557,124
Goodwill and other intangible assets, net...................    67,043,824                 --
                                                              ------------       ------------
Total assets................................................  $100,725,179       $ 31,359,274
                                                              ============       ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $  2,215,342       $    801,252
  Accrued bonus and employee benefits.......................       743,603            474,942
  Other accrued expenses....................................     1,668,474            266,946
  Deferred revenue..........................................       919,443            209,806
                                                              ------------       ------------
Total current liabilities...................................     5,546,862          1,752,946
Commitments
  Series C Convertible Preferred Stock, $.001 par value;
     15,000 shares authorized and designated, 1,000 shares
     issued and outstanding as of September 30, 1998 and
     13,500 shares issued and outstanding as of December 31,
     1997; liquidation preference of $1,057,671 at September
     30, 1998...............................................       296,296         13,013,772
  Series D Convertible Preferred Stock, $.001 par value;
     30,000 shares authorized and designated, 21,000 shares
     issued and outstanding as of September 30, 1998;
     liquidation preference of $21,681,781 at September 30,
     1998...................................................    20,620,358                 --
Stockholders' equity:
  Common Stock, $.001 par value; 40,000,000 shares
     authorized; 15,743,023 shares issued and 15,723,023
     outstanding as of September 30, 1998 and 11,075,246
     shares issued and 11,055,246 outstanding as of December
     31, 1997...............................................        15,743             11,075
  Additional paid-in capital................................   161,913,137         81,896,532
  Accumulated deficit.......................................   (86,843,498)       (63,936,340)
  Treasury stock, at cost, 20,000 shares....................      (120,000)          (120,000)
  Accumulated other comprehensive income....................      (423,602)          (332,288)
  Receivable from sale of Common Stock......................      (263,812)          (803,338)
  Unearned compensatory stock options.......................       (16,305)          (123,085)
                                                              ------------       ------------
Total stockholders' equity..................................    74,261,663         16,592,556
                                                              ------------       ------------
Total liabilities and stockholders' equity..................  $100,725,179       $ 31,359,274
                                                              ============       ============
</TABLE>
 
                            See accompanying notes.
                                        4
<PAGE>   5
 
                                CYBERCASH, INC.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                   NINE MONTHS ENDED
                                                                     SEPTEMBER 30,
                                                              ---------------------------
                                                                  1998           1997
                                                              ------------   ------------
<S>                                                           <C>            <C>
OPERATING ACTIVITIES
  Net loss..................................................  $(22,907,158)  $(21,090,182)
  Adjustments to reconcile net loss to net cash used in
     operating activities:
     Depreciation...........................................     2,236,376      1,793,700
     Amortization...........................................     3,227,535             --
     Write-off of NetBill technology license................            --      2,162,500
     (Gain) Loss on disposal of assets......................       211,973        (16,558)
     Accrued interest on receivable from sale of Common
       Stock................................................       (23,364)       (16,551)
     Compensation expense related to stock options..........        83,632        128,312
     Changes in operating assets and liabilities:
       Accounts receivable..................................    (1,298,100)    (1,231,024)
       Prepaid expenses and other current assets............    (2,160,096)       150,675
       Other long-term assets...............................      (305,299)         7,110
       Accounts payable and accrued expenses................     3,084,279       (665,994)
       Deferred revenue.....................................       709,637        239,588
                                                              ------------   ------------
          Net cash used in operating activities.............   (17,140,485)   (18,538,424)
INVESTING ACTIVITIES
  (Purchases) Sales of short-term investments...............     8,779,773     (8,779,773)
     Acquisition of ICVerify, net of cash received..........   (16,040,399)            --
  Investment in affiliates..................................    (1,001,972)       (82,645)
  Purchases of property and equipment.......................    (5,603,721)      (980,665)
                                                              ------------   ------------
          Net cash used in investing activities.............   (13,866,419)    (9,843,083)
FINANCING ACTIVITIES
  Proceeds from issuance of Preferred Stock.................    29,262,372     14,275,945
  Proceeds from sale of Common Stock........................     3,600,000             --
  Proceeds from receivable from sale of Common Stock........       562,890         20,000
  Proceeds from the issuance of Common Stock through the
     Employee Stock Purchase Plan...........................       163,152        239,551
  Proceeds from the issuance of Common Stock through the
     Employee Stock Option Plan.............................       690,819        706,853
                                                              ------------   ------------
          Net cash provided by financing activities.........    34,279,233     15,242,349
                                                              ------------   ------------
Effect of exchange rate changes on cash and cash
  equivalents...............................................       (91,314)       (21,776)
                                                              ------------   ------------
Net increase (decrease) in cash and cash equivalents........     3,181,015    (13,160,934)
Cash and cash equivalents at beginning of period............    13,222,234     33,687,076
                                                              ------------   ------------
Cash and cash equivalents at end of period..................  $ 16,403,249   $ 20,526,142
                                                              ============   ============
</TABLE>
 
                            See accompanying notes.
 
                                        5
<PAGE>   6
 
                                CYBERCASH, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.  ORGANIZATION AND NATURE OF OPERATIONS
 
     CyberCash, Inc. ("CyberCash" or the "Company") was incorporated on August
29, 1994 in the state of Delaware and was in the development stage from date of
inception through December 31, 1996. CyberCash is the world leader in secure,
convenient payment technologies and services, enabling e-commerce across the
entire market spectrum from electronic retailing environments to the Internet.
 
     CyberCash provides a complete line of software products and services
allowing merchants, billers, financial institutions and consumers to conduct
secure transactions using the broadest array of popular payment forms. Credit,
debit, purchase cards, cash, checks, smart cards and alternative payment types
(e.g., "frequent buyer" or loyalty programs) are all supported by CyberCash
payment solutions. Leading brands of CyberCash and its subsidiaries include
Agile Wallet(TM), InstaBuy(TM), ICVERIFY(R), PCVERIFY(TM), CashRegister,
NetVERIFY(TM), CyberCoin(R) and PayNow(TM).
 
     For financial institutions, software developers and integrators, commerce
and Internet service providers, and technology partners, CyberCash solutions are
the preferred choice, offering unmatched ease and flexibility in integrating
payment capabilities into value-added offerings to customers.
 
     The accompanying interim consolidated financial statements and notes
thereto are unaudited, but have been prepared in accordance with generally
accepted accounting principles for interim financial information and should be
read in conjunction with the Company's consolidated financial statements found
in the Company's Form 10-K. In the opinion of management, all adjustments
(consisting only of normal, recurring adjustments) considered necessary to
reflect fairly the Company's consolidated financial position and consolidated
results of operations have been included. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The results of operations for the three and
nine months ended September 30, 1998 and 1997 are not necessarily indicative of
the results for the full year.
 
2.  INTANGIBLE ASSETS
 
     Intangible assets are recorded at cost and amortized using the
straight-line method over the following estimated useful lives:
 
<TABLE>
<S>                                                           <C>
Developed technology........................................   3 years
Assembled workforce.........................................   5 years
Trademark and tradename.....................................  10 years
Goodwill....................................................  10 years
</TABLE>
 
     The Company evaluates the recoverability of intangible assets based on
estimated undiscounted operating income over the amortization periods, giving
consideration to sales and cost benefits expected to be realized by the
consolidated entity from the acquisition and integration of acquired entities.
 
3.  REVENUE RECOGNITION
 
     The Company recognizes transaction processing revenues, merchant set-up and
account fees, hardware and software product sales, software development and
technology license fees as the related services are performed or products are
shipped. In those cases where customers have duplication rights for the software
products, revenue is recognized upon receipt of reports of units produced by the
customers. Maintenance and support revenue is recognized ratably over the term
of the agreement, which in most cases is one year.
 
                                        6
<PAGE>   7
                                CYBERCASH, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
4.  ACQUISITION OF ICVERIFY, INC.
 
     On April 30, 1998, CyberCash acquired all the outstanding shares of common
stock of ICVerify, Inc. ("ICVerify") from its shareholders for $70.7 million,
including fees and expenses. The purchase price included $16.25 million in cash
and 2.3 million in shares of CyberCash Common Stock. The consolidated financial
statements include the results of operations of ICVerify since the date of
acquisition.
 
     The acquisition has been accounted for as a purchase and, accordingly, the
purchase price has been allocated to the assets and liabilities acquired at
their estimated fair value as of the date of acquisition. Of the purchase price,
$400,000 was allocated to ICVerify's net assets, and the remainder was allocated
to intangible assets, as follows:
 
<TABLE>
<S>                                                           <C>
Developed technology........................................   $2,700,000
Assembled workforce.........................................     $800,000
Trademark and tradename.....................................   $1,500,000
Goodwill....................................................  $65,300,000
</TABLE>
 
     Accumulated amortization is $3,228,000 at September 30, 1998.
 
     The Company's unaudited pro forma consolidated condensed statements of
income for the nine months ended September 30, 1998 and 1997, assuming the
acquisition of ICVERIFY was effected at the beginning of each period, are
summarized as follows:
 
<TABLE>
<CAPTION>
                                                               FOR THE NINE MONTHS ENDED
                                                                     SEPTEMBER 30,
                                                              ----------------------------
                                                                  1998            1997
                                                              ------------    ------------
<S>                                                           <C>             <C>
Revenue.....................................................  $ 10,763,707    $  7,589,622
Net loss....................................................  $(27,521,577)   $(18,203,366)
                                                              ------------    ------------
Net loss available to Common Stockholders...................  $(28,117,465)   $(18,315,818)
                                                              ------------    ------------
Weighted average shares outstanding.........................    14,753,533      13,143,558
Basic earnings per share....................................  $      (1.91)   $      (1.39)
                                                              ============    ============
Diluted earnings per share..................................  $      (1.91)   $      (1.39)
                                                              ============    ============
</TABLE>
 
     This pro forma information does not purport to be indicative of the results
which may have been obtained had the acquisition been consummated at the date
assumed.
 
5.  PRIVATE PLACEMENT
 
     On both February 5, 1998 and July 14, 1998, the Company completed private
placements of equity securities. It issued an aggregate of 30,000 shares of
Series D Convertible Preferred Stock with a stated value of $1,000 per share
(the "Series D Preferred Stock") and options to purchase up to an aggregate of
708,382 shares of the Company's Common Stock (the "Investment Options"). The two
private placements resulted in net proceeds of approximately $14,409,000 and
$14,800,000, respectively. The Series D Preferred Stock has no voting rights and
is convertible into the number of shares of the Company's Common Stock equal to
the stated value of $1,000 per share plus a premium of 5% per annum of the
stated value from the respective dates of issuance of the Series D Preferred
Stock divided by a conversion price. The conversion price is equal to the lowest
closing price of the Company's Common Stock during the measurement period ending
one trading day prior to the conversion date, multiplied by a "conversion
percentage." The conversion percentage is 100% through February 4, 1999, 92.5%
from February 5, 1999 to August 4, 1999 and 85% thereafter. The Company has
accreted the premium of 5% per annum to the Series D Preferred Stock carrying
value.
 
                                        7
<PAGE>   8
                                CYBERCASH, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The Series D Preferred Stock is convertible at the option of the holders
subject to certain limits and redeemable upon the occurrence of certain events
such as dissolution. The Company has filed a registration statement under the
Securities Act of 1933 for the resale of the underlying Common Stock into which
the Series D Preferred Stock may be converted.
 
     As of the date of this report, the holders of the Company's Series C
Convertible Preferred Stock have converted all 15,000 shares of Series C
Preferred Stock into an aggregate of 1,301,343 shares of Common Stock.
 
     As of the date of this report, the holders of the Company's Series D
Preferred Stock had converted an aggregate of 24,000 shares of Series D
Preferred Stock into an aggregate of 2,953,806 shares of Common Stock. 6,000
shares of Series D Preferred Stock remain outstanding.
 
     The exercise price of the Investment Options is equal to the lesser of the
average of $10.59 and the market price of the Company's Common Stock at the end
of 1998 and 110% of the stock market price at the end of 1998. The Investment
Options may be exercised between January 1, 1999 and February 5, 2003.
 
6.  WARRANT AGREEMENT
 
     The Company issued three warrants to First USA Bank in November 1998 (the
"FUSA Warrants"). The warrants collectively give First USA the right to purchase
up to 2,200,000 shares of common stock of the Company, subject to adjustment as
provided in the FUSA Warrants. Under the first warrant, 600,000 shares of Common
Stock may be acquired from January 1, 1999 through June 30, 1999 at a per share
price of $12.50. From July 1, 1999 through December 31, 1999, these same shares
may be acquired at a per share price of $17.00. From January 1, 2000 through
September 30, 2003, these same shares may be acquired at a per share price of
$32.00. Under the second warrant, 600,000 shares of Common Stock may be acquired
from January 1, 1999 through December 31, 1999 at a per share price of $17.00.
From January 1, 2000 through September 30, 2003, these same shares may be
acquired at a per share price of $32.00. Under the third warrant, 1,000,000
shares of Common Stock may be acquired from January 1, 1999 through September
30, 2003 at a per share price of $32.00.
 
7.  NET LOSS PER SHARE
 
     The following table sets forth the computation of basic and diluted net
loss per share:
 
<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED            NINE MONTHS ENDED
                                               SEPTEMBER 30,                SEPTEMBER 30,
                                         -------------------------   ---------------------------
                                            1998          1997           1998           1997
                                         -----------   -----------   ------------   ------------
<S>                                      <C>           <C>           <C>            <C>
Numerator:
Net loss...............................  $(7,632,073)  $(5,559,068)  $(22,907,158)  $(21,090,182)
Accrued dividends to Preferred
  Stockholders.........................     (251,132)     (112,452)      (595,888)      (112,452)
                                         -----------   -----------   ------------   ------------
Net loss available to Common
  Stockholders.........................  $(7,883,205)  $(5,671,520)  $(23,503,046)  $(21,202,634)
                                         ===========   ===========   ============   ============
Demominator:
Weighted average shares outstanding....   15,436,576    10,912,656     13,756,866     10,843,558
Basic earnings per share...............  $     (0.51)  $     (0.52)  $      (1.71)  $      (1.96)
                                         ===========   ===========   ============   ============
Diluted earnings per share.............  $     (0.51)  $     (0.52)  $      (1.71)  $      (1.96)
                                         ===========   ===========   ============   ============
</TABLE>
 
8.  COMPREHENSIVE INCOME
 
     As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 ("SFAS No. 130"), Reporting Comprehensive Income.
SFAS No. 130 establishes new rules for the reporting and presentation of
comprehensive income and its components. SFAS No. 130 requires unrealized gains
or losses on the Company's foreign currency translation adjustments, which prior
to adoption was reported separately in stockholders' equity, to be included in
other comprehensive income. Prior year financial statements have been
reclassified to conform to the requirements of SFAS No. 130.
 
                                        8
<PAGE>   9
                                CYBERCASH, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The components of comprehensive income for the nine months ended September
30, 1998 and 1997 are as follows:
 
<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED            NINE MONTHS ENDED
                                               SEPTEMBER 30,                SEPTEMBER 30,
                                         -------------------------   ---------------------------
                                            1998          1997           1998           1997
                                         -----------   -----------   ------------   ------------
<S>                                      <C>           <C>           <C>            <C>
Net loss...............................  $(7,632,073)  $(5,559,068)  $(22,907,158)  $(21,090,182)
Foreign currency translation
  adjustments..........................          771         3,214        (91,314)       (21,776)
                                         -----------   -----------   ------------   ------------
Comprehensive income...................  $(7,631,302)  $(6,336,105)  $(22,998,472)  $(15,556,104)
                                         ===========   ===========   ============   ============
</TABLE>
 
     The components of accumulated other comprehensive income at September 30,
1998 and December 31, 1997 are as follows:
 
<TABLE>
<CAPTION>
                                                              FOREIGN CURRENCY
                                                                TRANSLATION
                                                              ----------------
<S>                                                           <C>
December 31, 1997...........................................     $(332,288)
Current period other comprehensive income...................       (91,314)
                                                                 ---------
September 30, 1998..........................................     $(423,602)
                                                                 =========
</TABLE>
 
9.  YEAR 2000 COMPLIANCE
 
     The "year 2000" compliance issue involves a number of related issues
associated with the new millennium. In the electronic commerce environment,
potential year 2000 obstacles include issues such as payment card expiration
dates, on-line processing, batch/offline processing, reporting and leap year
2000. Overcoming these obstacles requires reviewing every element of a system,
including software written in-house, software purchased from third parties,
hardware elements, payment processing partners and electronic storefront
integrators.
 
     The Company is committed to ensuring that its software and services are
entirely year 2000 compliant before the millenium date change. To meet this
objective, the Company already has conducted an internal review of software
components developed by the Company that are contained in its CashRegister
payment service. The 1.x and 2.x releases of the Company's CashRegister product
are not year 2000 compliant. The Company believes that its CashRegister 3.x
release is year 2000 compliant and is taking steps to verify that this is so.
ICVerify began testing the ICVERIFY product for year 2000 compliance in 1996,
beginning with version 1.04 for DOS. All versions of PCVERIFY and NetVERIFY,
which were introduced after 1996, have been tested successfully for year 2000
compliance.
 
     The Company is determining whether to make releases of its software that
are not year 2000 compliant obsolete and to migrate customers to year 2000
compliant releases or, alternatively, to issue updates to the earlier releases
that will make the earlier releases year 2000 compliant. CyberCash encourages
all new customers to use only versions of its software that the Company believes
to be year 2000 compliant.
 
     The certification standards imposed by many payment processors provide an
independent measure of verification that the Company's services and products are
year 2000 compliant. Many of these certification standards, which are intended
to assure that financial information passed to the processors conform with the
processors' protocols, include testing procedures for year 2000 compliance. The
Company and ICVerify have obtained certification on most of their respective
services and products from many, although not all, payment processors. Of the
processors from whom certifications have been obtained, the Company is not aware
of any material failure by its software to comply with the payment processors'
certification standards. However, the Company does not control the payment
processors' certification standards or their data protocols. Consequently, there
can be no assurance whether transactions effected over the Company's products or
using the
 
                                        9
<PAGE>   10
                                CYBERCASH, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
Company's services will continue to be year 2000 compliant if the protocols
established by the payment processors are not year 2000 compliant or if the
certification standards fail to test for year 2000 compliance.
 
     The Company's payment solutions often are integrated by third parties with
other electronic commerce software solutions. The Company and ICVerify provide
written documentation and in-house training to integrators detailing the code
specifications that need to be followed to integrate CyberCash or ICVerify
software, as applicable, with other solutions. However, there can be no
assurance whether transactions initiated at an electronic storefront that
integrates one of the Company's products or services will continue to be year
2000 compliant if (i) the integrator fails to comply with the Company's or
ICVerify's code specifications, (ii) the Company or ICVerify's software is not
configured and used in accordance with its related documentation, or (iii) the
underlying operating system of the host machine or any other software used with
or in the host machine is not also year 2000 compliant.
 
     It is possible that the Company's operations could also be affected if
software or systems it uses to provide its services or for management or
communications are not year 2000 compliant. The Company is taking steps,
including retaining outside consultants and establishing an internal task force,
to identify and remedy any problems. At this time the Company does not believe
that the costs associated with this effort will be material.
 
     The Company believes that it has managed risk of revenue and customer
service interruption due to the year 2000 threat to immaterial levels. However,
existing industry standards in year 2000 compliance efforts cannot guarantee
100% accuracy. Accordingly, the Company may experience future uncertainties
regarding year 2000 compliance of its services and products. There can be no
assurance that all of the Company's products and services will be year 2000
compliant prior to January 1, 2000, even though the Company and ICVerify, Inc.
designed and tested most of its product offerings to be year 2000 compliant. Nor
can there be assurances that the Company's currently compliant products do not
contain undetected problems associated with year 2000 compliance. Such problems
may result in litigation and/or increased expenses negatively affecting future
operating results.
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS.
 
     The following discussion should be read in conjunction with the
accompanying interim consolidated financial statements and notes thereto.
Historical results and percentage relationships among any amounts in the
financial statements are not necessarily indicative of trends in operating
results for any future period. This discussion contains, in addition to
historical information, forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ significantly from the
results discussed in the forward-looking statements. The uncertainties and risks
include the pace of growth of Internet commerce, development by the Company and
its competitors of new products and services, the ability of the Company to form
alliances with banks and other financial institutions to distribute the
Company's services, strategic decisions by major participants in the industry,
integration of the ICVerify, Inc. product offerings with the service offerings
of the Company, competitive pricing pressures, legal and regulatory
developments, and general economic conditions. Further information about these
and other relevant risks and uncertainties may be found in the Company's Annual
Report on Form 10-K.
 
OVERVIEW
 
     The Company's future operating performance will depend in large part on the
rate of growth of electronic commerce and what role payment systems, like those
offered by the Company, will play in electronic commerce. Moreover, the market
for electronic payment services is still immature and is changing rapidly. It is
not certain that the Company's services will find acceptance in the market. The
Company's revenue expectations have been based partly on expectations of future
demand rather than on actual experience. Since its inception in August 1994, the
Company has devoted most of its efforts to business development and marketing in
preparation for, and anticipation of, the growth in electronic commerce that it
expects will create
                                       10
<PAGE>   11
 
a substantial market for its Internet payment services. The Company has also
made significant investments in software development, computers, networking
systems and telecommunications equipment. Largely, as a result of the expenses
associated with these efforts, the Company's operating expenses increased each
quarter through the end of 1996, but were maintained at approximately $7.5
million for each quarter through March 31, 1998.
 
     On April 30, 1998, the Company completed the acquisition of ICVerify, a
company that develops and markets payment systems software, for $16,250,000 in
cash and 2,300,000 shares of Common Stock. The Company's operating expenses
increased to approximately $12.2 million for each of the quarters ending June 30
and September 30, 1998, as a result of consolidating the operating results of
ICVerify. The Company expects operating expenses to be maintained at
approximately this level for the foreseeable future.
 
     During 1997 and 1998, the Company has continued its efforts to establish a
strong market position and to lay the foundations for growth in recurring
revenues as electronic commerce increases. Meanwhile, the Company has generated
significant revenues from agreements with strategic allies or joint venture
partners to finance all or part of the development work necessary to adapt the
Company's technology to new uses or to foreign markets. The Company intends to
continue to seek revenues from development work it performs in connection with
strategic alliances in order to help finance its overall development program.
 
     If electronic commerce continues to grow during 1998; if there is a
resulting increase in the demand for electronic payment services; and if the
Company's efforts to develop and market new products and services are
successful; the Company believes it is strategically positioned to be able to
capture a significant share of its market. The rate of growth of the electronic
market and the Company's success in it remain, however, subject to considerable
uncertainty.
 
RESULTS OF OPERATIONS
 
     Revenues.  The Company's revenues for the three months ended September 30,
1998 and 1997 were $4,522,000 and $1,514,000, respectively and $8,170,000 and
$2,482,000 for the nine months ended September 30, 1998 and 1997, respectively.
For the three months ended September 30, 1998, the Company generated its
revenues from sales of ICVERIFY payment software, providing its recurring
services and development work associated with the licensing of its technology.
The Company anticipates that revenues from payment software sales will continue
to represent an increasing portion of its total revenue during the next several
quarters as the market for electronic commerce continues to gain momentum. These
revenues are, however, subject to some degree of seasonal variation. Merchants
tend to be reluctant to modify their payment systems during the fourth quarter
holiday period, and thus sales of payment software are likely to be slower
during that period.
 
     The Company's secure credit card transport service has come under
increasing competitive pressure, which has required the Company in some cases to
reduce the fees it charges for that service. Those reductions have been offset,
however, by increases in the number of merchants to whom the Company provides
the service, with the result that revenues from the credit card service have
continued to increase, although at a slower rate than would have been the case
if prices had remained the same. The Company expects that competition, and thus
pressures on pricing, will continue to characterize the market for its credit
card service.
 
     Revenues from licensing and development, are expected to continue to be
material. They are generally less predictable and more inclined to vary from
period to period than revenues from fees paid by merchants and other customers.
Accordingly, the Company may experience significant fluctuations in future
quarterly operating results.
 
     Cost of Revenues.  Cost of revenues consist primarily of cost of operations
to provide transaction processing and customer support, labor costs for
providing development work associated with licensing activities and cost of
ICVERIFY payment system software. Cost of revenues increased $1,635,000 from
 
                                       11
<PAGE>   12
 
$772,000 for the three months ended September 30, 1997 to $2,407,000 for the
three months ended September 30, 1998 and increased $2,672,000 from $2,287,000
for the nine months ended September 30, 1997 to $4,959,000 for the nine months
ended September 30, 1998. The increases are attributable primarily to the
acquisition of ICVerify, which added the cost of goods for the ICVERIFY payment
system software and increased customer support costs. In addition, the Company
independently enlarged and enhanced its customer support operations.
 
     Research and Development.  Research and development expenses consist
primarily of compensation expense and consulting fees to support the development
of the Company's services and technologies. Research and development expenses
decreased $279,000 from $2,621,000 for the three months ended September 30, 1997
to $2,342,000 for the three months ended September 30, 1998 and decreased
$1,113,000 from $7,469,000 for the nine months ended September 30, 1997 to
$6,356,000 for the nine months ended September 30, 1998. This decrease is a
result of the Company carrying out an increasing amount of development work at
its lower-cost Bangalore, India facility instead of using outside consultants or
employees working in the United States. This effect was partially offset by an
increase in U.S.-based development personnel as a result of the ICVerify
acquisition. In addition, the Company's financed a portion of its development
work in the first nine months of 1998 through development contracts with its
joint ventures and strategic allies. The Company plans to continue to perform a
significant amount of research and development. Its ability to continue to
finance a portion of its research and development with revenues from work paid
for by joint ventures and strategic allies is uncertain. Accordingly, research
and development expenses could increase in the future. To date, all of the
Company's software development costs have been expensed as incurred. The Company
will continue to expense such costs until it can demonstrate that it may realize
future benefits from costs incurred on its software.
 
     Sales and Marketing.  Sales and marketing expenses consist primarily of
compensation expense and advertising and marketing costs. Sales and marketing
expenses increased $1,002,000 from $2,635,000 for the three months ended
September 30, 1997 to $3,637,000 for the three months ended September 30, 1998
and increased $3,523,000 from $7,718,000 for the nine months ended September 30,
1997 to $11,241,000 for the nine months ended September 30, 1998. A large
portion of 1998 sales and marketing expense was related to raising brand
awareness of CyberCash through television and magazine advertisements. In
addition, during the quarters ended June 30 and September 30, 1998 the Company
began promoting ICVerify's payment system software products. The Company
anticipates that its sales and marketing expenses will continue to be
significant.
 
     General and Administrative.  General and administrative expenses consist
primarily of compensation expense and fees for professional services and other
expenses associated with the general management and administration of the
Company. General and administrative expenses increased $416,000 from $1,451,000
for the three months ended September 30, 1997 to $1,866,000 for the three months
ended September 30, 1998 and increased $750,000 from $4,691,000 for the nine
months ended September 30, 1997 to $5,441,000 for the nine months ended
September 30, 1998. This increase is primarily due to an increase in shareholder
related activities, an increase in personnel as a result of the ICVerify
acquisition and costs related to the upgrading of the administrative computer
infrastructure. The Company anticipates that its general and administrative
expenses will continue to be significant as it continues to develop and expand
its operations.
 
     Restructuring Charge.  Restructuring charges consist of severance and other
expenses related to reduction-in-force of the Company's employee base. In
February 1997 and June 1998, the Company reduced the size of its employee base
by approximately 10% and 20%, respectively which resulted in costs of $344,000
and $609,000, respectively.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     At September 30, 1998, the Company had cash and cash equivalents of
$16,403,000, which represented an increase of $3,181,000 over cash and cash
equivalents of $13,222,000 at December 31, 1997. This increase was the result of
net cash proceeds of $32,862,000 from the Company's private placement of its
Series D Preferred Stock on February 5 and July 14, 1998 and sale of common
stock to three of the Company's
 
                                       12
<PAGE>   13
 
directors, $8,780,000 from sales of short-term investments and non-cash expenses
of $5,548,000 for depreciation, amortization and compensation expense related to
stock options. This was offset by the $16,250,000 in cash consideration given in
the acquisition of ICVerify, a net loss of $22,907,000, cash outflows for
capital expenditures of $5,604,000 and investment in affiliates of $1,002,000.
Other less significant items also affected changes in the Company's cash
position during the period.
 
     The Company currently anticipates that its existing cash resources,
supplemented by future cash flows from operations, will be sufficient to meet
the Company's anticipated cash needs, including working capital, for at least
twelve to fifteen months. Thereafter, the Company may need to raise additional
funds. The Company may need to raise additional funds sooner than anticipated in
order to fund more rapid expansion, to develop new or enhanced services, to
respond to competitive pressures or to acquire complementary businesses or
technologies. If the Company does raise additional funds through the issuance of
equity securities, the percentage ownership of the stockholders of the Company
will be reduced, stockholders may experience additional dilution, or such equity
securities may have rights, preferences or privileges senior to those of the
holders of the Company's Common Stock. There can be no assurance that additional
financing will be available now or in the future. If adequate funds are not
available or are not available on acceptable terms, the Company may be unable to
develop or enhance its services, take advantage of future opportunities, or
respond to competitive pressures, which could have a material adverse effect on
the Company's business, financial condition or operating results.
 
ITEM 3.  QUALITATIVE AND QUANTITATIVE MARKET RISK DISCLOSURE.
 
     Not Applicable.
 
                                       13
<PAGE>   14
 
                                    PART II
 
                               OTHER INFORMATION
 
ITEM 1.  LEGAL PROCEEDINGS
 
     On August 13, 1998, a class action lawsuit was filed in the Delaware
Chancery Court against the Company, its Board of Directors, and James J. Condon,
the Chief Financial Officer. The suit claims that the "continuing director"
provision of the shareholder rights plan adopted by the Board of Directors on
June 26, 1998 violated Delaware law and sought injunctive relief and unspecified
damages. The Company understands that the law firm representing the plaintiffs
has filed several similar suits against other companies that have similar
provisions in their shareholder rights plans. The Company believes that the
rights plan is in compliance with Delaware law. Nevertheless, to avoid the
expense and distraction of protracted litigation, it has engaged in settlement
discussions with counsel for the plaintiff class with a view toward settling the
suit. If the Company is unable to reach a settlement agreement, it will defend
the suit aggressively. While the litigation and settlement discussions are in an
early stage, the Company does not believe that the suit will have a material
adverse effect on the Company.
 
ITEM 2.  CHANGES IN SECURITIES
 
     As of the date of this report, the holders of the Company's Series C
Convertible Preferred Stock have converted all 15,000 shares of Series C
Preferred Stock into an aggregate of 1,301,343 shares of Common Stock.
 
     As of the date of this report, the holders of the Company's Series D
Preferred Stock had converted an aggregate of 24,000 shares of Series D
Preferred Stock into an aggregate of 2,953,806 shares of Common Stock. 6,000
shares of Series D Preferred Stock remain outstanding.
 
     On September 16, 1998, William Melton, President and Chief Executive of the
Company of the completed the purchase of 350,000 shares of the Company's Common
Stock for an aggregate of $3.5 million. In addition, Michael L. Rothschild, a
director of the Company, purchased 10,000 shares of the Company's Common Stock
for an aggregate of $100,000.
 
     On July 17, 1998, Garen K. Staglin, a director of the Company, purchased
16,700 shares of the Company's Common Stock for an aggregate of $200,000.
 
     In November 1998, the Company issued three warrants to First USA Bank, a
subsidiary of BancOne Corporation (collectively, the "FUSA Warrants") in
connection with the two parties entering into an agreement for First USA to
market the Company's InstaBuy(TM) service, built on the Company's new Agile
Wallet(TM) platform. The warrants collectively give First USA the right to
purchase up to 2,200,000 shares of common stock of the Company, subject to
adjustment as provided in the FUSA Warrants. Under the first warrant, 600,000
shares of Common Stock may be acquired from January 1, 1999 through June 30,
1999 at a per share price of $12.50. From July 1, 1999 through December 31,
1999, these same shares may be acquired at a per share price of $17.00. From
January 1, 2000 through September 30, 2003, these same shares may be acquired at
a per share price of $32.00. Under the second warrant, 600,000 shares of Common
Stock may be acquired from January 1, 1999 through December 31, 1999 at a per
share price of $17.00. From January 1, 2000 through September 30, 2003, these
same shares may be acquired at a per share price of $32.00. Under the third
warrant, 1,000,000 shares of Common Stock may be acquired from January 1, 1999
through September 30, 2003 at the per share price of $32.00.
 
     The number of shares of Common Stock that may be acquired pursuant to the
FUSA Warrants may be subject to adjustment in the event the Company pays a stock
dividend or makes a stock distribution on its Common Stock, effects a stock
split or reverse stock split, or distributes rights, options or warrants to all
holders of the Company's Common Stock.
 
     The Company will not register the FUSA Warrants pursuant to the Securities
Act of 1933, as amended, in reliance upon representations made by FUSA that is
an "accredited investor" within the meaning of
 
                                       14
<PAGE>   15
 
Rule 501(a) of Regulation D and that it is acquiring the FUSA Warrants for its
own account for investment only and not with a view toward the public sale or
distribution thereof. Under the FUSA Warrants, the Company has agreed to
register the Common Stock acquired upon exercise of the FUSA Warrants under
certain specified circumstances set forth more fully therein.
 
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
 
     None.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
 
     None.
 
ITEM 5.  OTHER INFORMATION
 
     In order to present a proposal at the 1999 Annual Meeting of Stockholders,
a CyberCash Stockholder must provide written notice of the proposal to the
Company no later than March 31, 1999 at 2100 Reston Parkway, Reston, Virginia
22091, Attention: General Counsel. The Company intends to use discretionary
voting authority with respect to any matter brought before the 1999 annual
meeting of which the Company has not received written notice by March 31, 1999.
 
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
 
     (a) Exhibits
 
<TABLE>
           <S> <C>
           4.1   Form of Warrant 98-1 dated as of November 6, 1998 between
                 the Company and First USA Bank.
           4.2   Form of Warrant 98-2 dated as of November 6, 1998 between
                 the Company and First USA Bank.
           4.3   Form of Warrant 98-3 dated as of November 6, 1998 between
                 the Company and First USA Bank.
           27    Financial Data Schedule
</TABLE>
 
     (b) Reports on Form 8-K
 
     On February 10, 1998, the Company filed a Form 8-K that reported under
items 5 and 7 the closing of a private placement of convertible preferred stock
on February 5, 1998.
 
     On March 18, 1998, the Company filed a Form 8-K that reported under item 5
that, on March 16, 1998, the Company had entered into a non-binding agreement to
acquire ICVerify, Inc., of Oakland, California for 2,300,000 shares of the
Company's Common Stock and $16,250,000 in cash.
 
     On May 1, 1998, the Company filed a Form 8-K that reported under items 2
and 7 therein the consummation of the Company's acquisition of ICVerify in a
merger transaction.
 
     On May 27, 1998, the Company filed a Form 8-K/A, under which it submitted
the financial statements and pro forma financial information prescribed by Rule
3-05 of Regulation S-X and Article 11 of Regulation S-X, respectively, in
connection with the acquisition of ICVerify.
 
     On June 30, 1998, the Company filed a form 8-K that reported under item 5
therein the Company's preliminary estimate of revenues for the quarter ending
June 30, 1998.
 
     On July 2, 1998, the Company filed a Form 8-K that reported under item 5
and 7 the adoption of a shareholder Rights Plan on June 26, 1998.
 
     On July 16, 1998, the Company filed a Form 8-K that reported under items 5
and 7 the closing of a private placement of convertible preferred stock on July
16, 1998.
 
     On September 18, 1998, the Company filed a Form 8-K and Form 8-K/A that
reported under item 5 the sale of common stock on September 16, 1998.
 
                                       15
<PAGE>   16
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
 
                                          CYBERCASH, INC.
                                          (Registrant)
 
                                          /s/ WILLIAM N. MELTON
                                          William N. Melton
                                          President and Chief Executive Officer
Date: November 13, 1998
 
                                          /s/ JAMES J. CONDON
                                          James J. Condon
                                          Chief Operating Officer
                                          and Chief Financial Officer
Date: November 13, 1998
 
                                       16