================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                             ----------------------

For the fiscal year ended: DECEMBER 31, 1997    Commission File Number 000-21685

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

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

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

           Securities registered pursuant to Section 12(b) of the Act:

          Title of Each Class Name of Each Exchange on Which Registered

                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock par value $.001 per share

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
                                         -----      -----

State by check mark if disclosure of delinquent  filers  pursuant to Item 405 of
Regulation S-K is not contained herein,  and will not be contained,  to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].

The  aggregate  market value of the Common Stock held by  non-affiliates  of the
registrant on March 1, 1998, was approximately $65,142,000.  In determining this
figure,  the  Registrant  has assumed that all of its  directors  and  executive
officers are affiliates.  Such assumptions should not be deemed to be conclusive
for any other purpose.

The number of shares of the  registrant's  Common Stock  outstanding on March 1,
1998 was 31,170,949.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of InteliData  Technologies  Corporation's Proxy Statement for its 1998
Annual  Stockholder  Meeting,  to be filed  within 120 days after the end of the
registrant's fiscal year, are incorporated into Part III of this Report.

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<PAGE>


                       INTELIDATA TECHNOLOGIES CORPORATION

                         1997 ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
PART I
------
Item 1.    Business............................................................3

Item 2.    Properties.........................................................17

Item 3.    Legal Proceedings..................................................17

Item 4.    Submission of Matters to a Vote of Stockholders....................17


PART II
-------
Item 5.    Market for Registrant's Common Stock and Related
           Stockholder Matters................................................18

Item 6.    Selected Financial Data............................................19

Item 7.    Management's Discussion and Analysis of Financial Condition and
           Results of Operation...............................................20

Item 8.    Financial Statements and Supplementary Data........................38

Item 9.    Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure...........................................65


PART III
--------
Item 10.   Directors and Executive Officers of the Registrant.................66

Item 11.   Executive Compensation.............................................68

Item 12.   Security Ownership of Certain Beneficial Owners and Management.....68

Item 13.   Certain Relationships and Related Transactions.....................68


PART IV
-------
Item 14.   Exhibits, Financial Statement Schedules and Reports on
           Form 8-K...........................................................69

<PAGE>
                                     PART I

ITEM 1.  BUSINESS
-----------------

GENERAL

         InteliData  Technologies  Corporation  ("InteliData" or the "Company"),
was incorporated on August 23, 1996 under the Delaware  General  Corporation Law
in order to effect the mergers  ("Mergers")  of US Order,  Inc. ("US Order") and
Colonial Data Technologies  Corp.  ("Colonial Data"). The Mergers were announced
on August 5, 1996, when US Order and Colonial Data entered into an Agreement and
Plan of Merger  ("Merger  Agreement").  On  November 7, 1996,  the Mergers  were
consummated  with each share of  outstanding  US Order and Colonial  Data common
stock being exchanged for one share of InteliData  common stock.  Accounting for
the Mergers was treated as a purchase of Colonial Data by US Order. Accordingly,
financial  statements of the Company  included  herein reflect the results of US
Order  through  November  7, 1996 and the  consolidated  results of US Order and
Colonial Data thereafter.

         Effective  September 30, 1996, US Order acquired the business of Braun,
Simmons & Co., an Ohio  corporation  ("Braun  Simmons"),  for  approximately  $7
million  consisting  of cash and US Order common  stock (and  including US Order
transaction  costs)  pursuant to the merger of Braun  Simmons into US Order (the
"Braun Simmons Acquisition").  Braun Simmons was an information engineering firm
specializing  in  the  development  of  home  banking  and  electronic  commerce
solutions for financial  institutions.  The  acquisition  expanded the Company's
product line for both large and small financial institutions.

         The  business of the  Company  consists  of the  businesses  previously
conducted by US Order,  Colonial  Data and  Colonial  Data's  subsidiaries.  The
Company develops and markets  products and services for the  telecommunications,
retail and  financial  services  industries  through  its two  primary  business
divisions:  telecommunications and electronic commerce.

         The   telecommunications   division   designs,   develops  and  markets
telecommunications  products that support  intelligent  network  services  being
developed and implemented by the regional Bell operating companies ("RBOCs") and
other telephone companies  ("telcos").  The Company has concentrated its product
development  and marketing  efforts on products that support Caller ID and other
emerging intelligent network services,  including smart telephones which provide
consumers call management  features and the ability to access  numerous  network
services and  interactive  applications  via  telephone.  The Company  currently
offers a line of Caller ID  adjunct  units,  smart  telephones,  small  business
telecommunications  systems  and  high-end  telecommunications   equipment.  The
Company also repairs and refurbishes  telecommunications products for commercial
customers  and  provides  other  services  that  support  the   development  and
implementation of intelligent network services.

         The electronic commerce division develops and markets software products
and  implementation  services  to assist  financial  institutions  in their home
banking and electronic  bill payment  initiatives.  The products are designed to
assist  consumers in accessing  and  transacting
<PAGE>
business  with  their  banks and  credit  unions  electronically,  and to assist
financial  institutions  in  connecting to and  transacting  business with third
party  processors.  The services focus on consulting and maintenance  agreements
that support the Company's products.

         In 1994,  the Company sold its bill payment  operations  and technology
(the "Visa  Bill-Pay  System") to Visa for cash and the right to future  royalty
payments which are based on the number of customers  utilizing the Visa Bill-Pay
System. In August 1997, Integrion Financial Network ("Integrion")  acquired Visa
InterActive,  and certain  rights in the Visa  Bill-Pay  System,  from Visa.  In
October  1997,  the  Company  surrendered  the right to certain  future  royalty
payments in  exchange  for  $5,000,000  in cash from Visa.  The cash  payment is
recorded as deferred  revenue and is being  recognized into electronic  commerce
revenues over a two year period.

         During the fourth quarter of 1997, the Company  announced its intention
to sell the  interactive  services  division  which was  established  to provide
interactive  applications  for use on smart  telephones  and other small  screen
devices,  such as alpha-numeric pagers,  Personal  Communication Systems ("PCS")
devices and personal digital assistants ("PDAs"). The discontinued operations of
the  interactive  services  division  are not  considered  to be material to the
overall financial statements.

         The  Company's   principal  executive  offices  are  located  at  13100
Worldgate Drive, Suite 600, Herndon,  Virginia 20170 and its telephone number is
(703) 834-8500.


INDUSTRY BACKGROUND

         The  Company  maintains  operations  in  two  primary  markets:
telecommunications and electronic commerce.

Telecommunications

         The   telecommunications   division   designs,   develops  and  markets
telecommunications  products that support  intelligent  network  services  being
developed  and  implemented  by  RBOCs  and  other  telcos.   Deregulation   and
technological advances have intensified  competition among existing operators of
telecommunication networks and encouraged the entrance of new service providers.
In the United States,  competition  among RBOCs,  other telcos and long distance
carriers and new service providers that have entered the local and long distance
markets,   has  increased   and  may  increase   further  as  a  result  of  the
Telecommunications  Act of  1996  (the  "Telecommunications  Act")  or  industry
consolidation.  RBOCs and other telcos are responding to increasing  competition
by, among other things, introducing value-added, intelligent network services.

         In order to deploy intelligent  network services,  the telcos have been
upgrading their telecommunications networks to support a set of standards, known
as the Intelligent Networks ("IN"). IN supports open,  distributed switching and
processing  capabilities and allows the telcos
<PAGE>
to create, modify and deploy new services quickly and economically. In addition,
Bell  Communications  Research,  Inc. has developed the Analog Display  Services
Interface  ("ADSI"),  a standard  protocol for the simultaneous  transmission of
data and voice  information  between an  information  source and a  subscriber's
telephone or other communications device such as a smart telephone.

         One of the first  intelligent  network  service  offerings by RBOCs and
telcos was Caller ID, a service  that  provides  information  about the incoming
call,  including  the number and name of the caller and the time and date of the
call,  enabling  that  information  to be displayed  on a screen  located on the
telephone (an  integrated  telephone) or on a device located near the telephone,
in  the  case  of  an  adjunct  unit.  InteliData  estimates  that  the  current
penetration  rate  of  Caller  ID  service  is  approximately  25% of the  total
subscribers   in  those  areas  in  the  United   States  that  have  Caller  ID
capabilities.

         By deploying the ADSI protocol in the telecommunications network, RBOCs
and other telcos will be able to offer additional  intelligent  network services
and  third-party  interactive  applications.  ADSI-based  services  will include
Caller ID on Call Waiting  together with call  disposition.  By  subscribing  to
Caller ID on Call Waiting  with  Disposition,  a subscriber  who receives a Call
Waiting  signal can look at the  Caller ID  display  screen and see the name and
number of the calling party before  deciding  whether to answer the call, send a
prerecorded message telling the calling party to wait, forward the call to voice
mail, conference both calls together or drop the line. Additional services which
can be supported  through ADSI include  on-line  directory  assistance,  e-mail,
paging, news, weather, stock quotes and other information.

         The regulatory environment relating to the telecommunications  industry
is undergoing  rapid and significant  changes.  The  Telecommunications  Act has
effected  basic  changes  in  the  telecommunications   regulatory  scheme.  The
intention  of  the  Telecommunications  Act  is to  enhance  competition  in all
telecommunications  markets and bring new  packages,  lower prices and increased
innovation   to  telephone   customers  in  the  United   States.   The  Federal
Communications  Commission  ("FCC")  issued  its  first  major  order  under the
Telecommunications  Act in August,  1996  which  constitutes  the FCC's  initial
measures  to  implement  sections  of the  Telecommunications  Act  relating  to
interconnection  between  carriers  and the  provision  of access  to  unbundled
services.  However,  portions  of this  order,  most  significantly  its pricing
provisions,  have been successfully  challenged in the U.S. Court of Appeals for
the  Eighth  Circuit.  The U.S.  Supreme  Court has  agreed to review the Eighth
Circuit's  decision  overturning  those  provisions.  In December  1996, the FCC
issued a Notice of Proposed  Rulemaking  which  suggests  rules  concerning  the
implementation  of  the  Telecommunications  Act  provisions  relating  to  RBOC
manufacture of telecommunications and customer premises equipment.  Although the
FCC has not yet implemented the regulations  relating to those  provisions,  the
proposed  regulations  would permit RBOCs to  manufacture  products that support
Caller ID and other emerging  intelligent  network  services  subject to certain
conditions.  The U.S.  District  Court for the  Northern  District  of Texas has
declared the Telecommunications  Act's manufacturing  provisions,  among others,
unconstitutional.  The decision has been stayed pending review by the U.S. Court
of Appeals for the Fifth Circuit.  The Company is unable to predict what effect,
if any, the  Telecommunications Act and the emerging
<PAGE>
regulatory  scheme  under  the  Telecommunications  Act will  have on  Caller ID
service or the Company's business generally.

Electronic Commerce

         The  electronic   commerce  division  provides  software  products  and
implementation  services to financial  institutions  whose processes and systems
are  subject  to  regulatory  approvals.  Electronic  commerce  is a  developing
marketplace.  Financial institutions are expanding their electronic home banking
services to permit customers not only to review historical account  information,
but also to engage in transactions such as paying bills and transferring  funds.
The  Company's  future  growth and  profitability  will  depend,  in part,  upon
consumer acceptance of electronic home banking.


PRODUCTS AND SERVICES

         The Company's  business strategy is to develop products and services to
meet  the  needs  of its  customers  in the  telecommunications  and  electronic
commerce  markets.  The Company develops products and services for the RBOCs and
other telcos, financial institutions and their customers. The Company strives to
develop products with broad appeal that are easy-to-use,  practical, inexpensive
and built around common industry standards.  The Company believes its electronic
commerce  products  position  the Company to offer  support  services  which are
expected to generate recurring monthly fee revenue.

Telecommunications

         Since  introducing the first  commercially  available Caller ID unit in
1987,  the Company has developed and marketed  Caller ID products with increased
functionality  to meet  the  needs  of its RBOC and  other  telco  customers.  A
substantial  majority of the Company's revenues are derived from the sale of its
Caller ID products.  The following represent  the  Company's  telecommunications
products and services:

   Entry Level Caller ID Adjunct Devices
   -------------------------------------

         The  Company  provides  low-priced,   entry  level  Caller  ID  devices
primarily to support RBOC marketing and  promotional  campaigns in which a telco
may give away or  subsidize  the  purchase of a Caller ID adjunct  device when a
consumer  subscribes  for the service.  The Company  believes that RBOCs utilize
lower-priced  products to reduce or eliminate the initial  consumer  expenditure
required to obtain the service and, as a result, may subsequently achieve higher
penetration rates for Caller ID in selected  markets.  The Company's entry level
Caller ID adjunct devices have suggested retail prices of $19.99 to $29.99.
<PAGE>
   Full-Featured Caller ID Adjunct Devices
   ---------------------------------------

         The   Company's   full-featured   products   display  all   transmitted
information  before  the  incoming  telephone  call is  answered  and store this
information   in  memory.   Among  the  features   available  on  the  Company's
full-featured  products  are  memory  capacity  for up to 99 calls,  a  "blocked
call"/"new  call" light,  a patented  "Block the Blocker"  feature,  a bilingual
display and a "message  waiting  alert" light that  indicates to a network voice
mail  subscriber  that a new voice mail  message has been  received.  "Block the
Blocker" is a feature that detects when call block is used by a caller, delivers
a message to that caller that the Caller ID subscriber  does not accept  blocked
calls and  disconnects the call. The Company's  full-featured  Caller ID adjunct
devices have suggested retail prices of $29.99 to $59.99.

   Caller ID on Call Waiting
   -------------------------

         Caller ID on Call Waiting allows a subscriber to combine both Caller ID
and Call Waiting  network  services,  to view the  directory  name and telephone
number  of an  incoming  call as the  Call  Waiting  signal  is  delivered.  The
Company's  Caller ID on Call  Waiting  adjunct  device also allows a consumer to
store  approximately  85 names and  numbers  in  memory.  The  Caller ID on Call
Waiting adjunct device has a suggested retail price of $69.99.

   Call Manager
   ------------

         The Call  Manager is a  sophisticated  Caller ID device that works with
both single-data and multi-data message services.  The Call Manager stores up to
75 of the most recent names and numbers called. The product  incorporates a wide
variety of telco provided network services,  including Caller ID on Call Waiting
with  Disposition,  into a compact  adjunct.  The Call  Manager  has a suggested
retail price of $89.99.

   Smart Telephones
   ----------------

         The Company offers a line of smart  telephones with  integrated  Caller
ID,  Caller ID on Call  Waiting and  preprogrammed  keys to support  intelligent
network services. The Company's ADSI-Compatible smart telephone was designed and
developed by the Company and is being  marketed under the  Intelifone(TM)  brand
name. The smart telephone incorporates a graphics display screen,  magnetic card
reader,  alpha-numeric  keypad,  V.22 modem and a  processor.  It also  supports
Caller ID with  Disposition,  the integration of Caller ID on Call Waiting and a
visual message waiting indicator.  The Company's smart telephones have suggested
retail prices of $99.99 to $199.99.

   Small Business Telecommunications Systems
   -----------------------------------------

         The  Company,  through  one  of  its  subsidiaries,  distributes  small
business   telecommunications  systems  and  multi-line  telephones.  The  small
business  telecommunications systems include analog and digital key systems that
allow  up to 128  individual  telephone  lines  to be  serviced  from  the  same
operating  system.  These small  business  systems are sold through
<PAGE>
independent  dealers that install and service the  products.  The IPS  telephone
systems and  multi-line  telephones  are also sold through  retail  stores.  The
Company  markets  its  small  business   telecommunications   systems  to  small
businesses and small office/home  office ("SOHO")  consumers who are looking for
an easy-to-install communications system at a reasonable price.

   Repair and Refurbishment
   ------------------------

         The Company has provided telephone repair and refurbishment services to
telcos and  certain  telephone  equipment  manufacturers  for a wide  variety of
telecommunications  products,  including  corded and  cordless  telephones,  key
telephone business systems,  cellular  telephones and leased telephone products.
During the year ended  December 31, 1997,  the Company's  service  customer base
included Nitsuko America Corp.,  TIE/communications,  Inc. ("TIE") and Motorola,
Inc.

Electronic Commerce

         The Company's strategy in the electronic  commerce market is to support
financial  institutions by providing products and services that help them deploy
home banking to their customers. In addition, during the first half of 1997, the
Company  supported  Visa  InterActive  and Visa member  banks with  products and
services  which  facilitate  bill payment and bill  presentment.  The  Company's
products  and  services  are  designed  to provide  financial  institutions  the
capability to process  banking  transactions  from multiple  channels  including
personal computers, internet or telephone. The following represent the Company's
electronic commerce products and services:

   Interpose(TM)  Financial Engine
   -------------------------------

         The  Interpose  Financial  Engine  is the heart of the  Company's  home
banking software system.  It runs on the financial  institution's  host computer
system, providing real-time connectivity to remote delivery channels. Along with
this critical host connection,  Interpose provides robust customer profiling and
control over system security. Its Advanced Financial Message Set gives banks the
functionality to offer a complete range of online financial services.

   Interpose(TM) OFX Server
   ------------------------

         The  Interpose  OFX  Server  allows  a  financial  institution  to take
advantage of the Open Financial  Exchange  ("OFX")  standard to directly support
customers  who  use  Intuit  Quicken(R),   Microsoft  Money(R),  Home  Financial
Network's Home ATM(TM),  and other OFX compliant  client  software.  It supports
synchronized  information  across  all  delivery  channels,  including  personal
computers, the internet and telephones.
<PAGE>
   Interpose(TM) Bill Payment Warehouse
   ------------------------------------

         The Interpose Bill Payment  Warehouse  provides a software  solution to
financial  institutions that automates bill payment  processing while giving the
financial  institution the benefit of tracking  payment activity and integrating
delivery channels.

   MoneyClip(TM)
   -------------

         The MoneyClip smart card system allows financial  institutions to offer
a secure  banking  system  based  on  smart  cards  with  digital  certificates.
MoneyClip  can turn  almost any  personal  computer  into a smart  card  reader,
providing home banking security and building an infrastructure  for stored value
and  internet  commerce   applications.   The  smart  card  contains  a  digital
certificate  that permits access to bank account  information and  transactions,
letting users bank from any internet connected personal computer with a 3.5-inch
disk drive.

   Product Support Services
   ------------------------

         The  Company  offers  its  clients  consulting  services  to  assist in
implementation,  training and  customization  on a time and materials  basis and
provides maintenance services and software upgrades pursuant to agreements which
are typically renewable on an annual basis.

   Customer Support Services
   -------------------------

         The Company offered  bank-branded turnkey customer service to financial
institutions in support of its consumer access products.  The Company's customer
service  operation  was open seven days a week,  18 hours a day. If a bank chose
the  Company to provide  customer  service,  the  Company  typically  received a
start-up  fee from that bank and a per  minute  fee per  customer.  The  Company
discontinued its customer support services in the second quarter of 1997.


MARKETING AND DISTRIBUTION

         The Company  sells its products  and  services to  telephone  operating
companies,  retailers and financial institutions in the United States.  Revenues
from Bell  Atlantic,  Worldwide  Telecom and the US West lease base  represented
19%, 19% and 14% of total revenues for the year ended December 31, 1997.

Telecommunications

         The  Company  markets  its  telecommunications  products  and  services
through 22  employees in its direct sales force and  marketing  department,  and
currently  uses  14  independent  sales  representative   firms.  The  Company's
distribution  strategy is to make its products  available to potential end users
through   multiple   distribution   channels   including:   direct   fulfillment
arrangements, direct marketing, retailers and others as described below.
<PAGE>
   Direct Fulfillment Arrangements
   -------------------------------

         The Company sells  telecommunications  products to RBOC subscribers and
other telco subscribers  through direct fulfillment  arrangements with Ameritech
Corporation   ("Ameritech"),   Bell  Atlantic   Corporation  ("Bell  Atlantic"),
BellSouth Corporation ("BellSouth") and SBC Communications Inc. ("SBC"). In most
instances,  the telco  representatives  market  both  Caller ID service  and the
Company's  equipment to subscribers and transmit equipment orders to the Company
electronically  on a daily basis. The Company then ships its equipment  directly
to the  subscribers  and bills the telco which,  in turn,  bills its subscribers
directly or through a third party. As part of promotional campaigns,  some RBOCs
may elect to purchase  Caller ID units from the Company and  distribute  them to
their subscribers free of charge. The Company provides an 800 number for service
and  support to help the  subscriber  understand  how to  utilize  the Caller ID
service and equipment.

         The Company continually seeks to strengthen its current telco marketing
alliances and to develop new alliances.  The Company  believes that marketing of
Caller ID service and  equipment  is more  successful  when the  subscriber  can
subscribe to Caller ID service and purchase or lease Caller ID equipment  from a
single  source,  especially  when payment for equipment can be made either on an
installment  basis  or  by  monthly  lease  payments  through  the  subscriber's
telephone bill. The Company believes that subscriber satisfaction with Caller ID
service is enhanced when the subscriber  receives  Caller ID equipment  promptly
after  ordering  the  service  and is  provided  an 800 number for  service  and
support.

   Direct Marketing on Behalf of Telcos
   ------------------------------------

         During 1997, the Company was a party to a joint venture  agreement with
the direct marketing firm of Blau Marketing Technologies, Inc. The joint venture
operated through a jointly owned corporation,  Worldwide Telecom Partners,  Inc.
("Worldwide  Telecom"),  which  was 50%  owned by each of the  joint  venturers.
Worldwide Telecom provided direct marketing services to Ameritech, Bell Atlantic
and SBC under several separate programs and has completed  numerous programs for
Caller ID, Call Answering and Call Waiting services.  InteliData supplied Caller
ID units and  product  management  services  for  Worldwide  Telecom.  The joint
venture agreement was terminated by the Company in the third quarter of 1997.

         Beginning in 1998, the Company has contracted  with telcos  directly to
market  services on behalf of the telcos.  The Company  expects to  aggressively
compete in this marketplace.

   Retail and Other Customer Sales
   -------------------------------

         The Company sells Caller ID units,  smart telephones and small business
telephone  systems to national,  regional and local  retailers and private label
customers.  A substantial portion of the Company's retail sales are made through
manufacturers' representatives or distributors with the support of the Company's
sales personnel.  The Company's retail customers  include Sears,  Roebuck & Co.,
Staples, Inc. and OfficeMax,  Inc. among others. In addition,  the
<PAGE>
Company sells its small business telephone systems and multi-line  telephones to
small business dealers and distributors.

Electronic Commerce

         The  Company  concentrates  its  marketing  efforts on direct  sales to
financial institutions. Currently, the Company is marketing to the top 200 banks
in the United  States and  targeting  financial  institutions  that have a large
percentage of customers  interested in home and remote  banking.  The Company is
developing  products and services to assist  financial  institutions who want to
provide their  customers  with the ability to access  certain  information  from
their bank  accounts and complete  transactions  with the bank  concerning  bill
payments,  loan payments,  online transfers and other  transactions  from remote
locations  via touch  tone  telephones,  personal  computers  and  screen  based
telephones.


COMPETITION

Telecommunications

         The  market  for  the   Company's   products  and  services  is  highly
competitive   and  subject  to  increased   competition   resulting  from  rapid
technological change as well as increased  competition resulting from changes in
the  telecommunications  regulatory  environment,   telecommunications  industry
consolidation  and  the  emergence  of new  market  entrants.  At  present,  the
Company's  principal  competitors in the market for Caller ID products are CIDCO
Incorporated  ("CIDCO"),  Lucent  Technologies,  Inc.  ("Lucent")  and  Northern
Telecom,  Ltd.  ("Northern  Telecom").  The  Company's  Caller ID products  also
compete with Caller ID adjuncts and telephones offered by Panasonic,  Sony Corp.
("Sony"), Thomson Consumer Electronics, Inc. ("Thomson"), TT Systems Corporation
("TT Systems"), US Electronics, Inc. ("US Electronics") and other companies.

         The Company expects competition to increase in the future from existing
and new competitors,  possibly including telcos or other current customers, from
network  switch-based  services and from the increased  application  of cellular
technology.  The  Company's  primary  current and potential  competitors  in the
market for products that support intelligent network services have substantially
greater financial, marketing and technical resources than the Company. Increased
competition  could  materially  and adversely  affect the  Company's  results of
operations  through,  among other things,  price  reductions  and loss of market
share.

         The Company  competes with a large number of competitors for its repair
services and other services  supporting the  development and  implementation  of
intelligent network services. Several of the Company's competitors in the market
for  such  services  have  substantially   greater   financial,   marketing  and
technological  resources  than the Company.  There can be no assurance  that the
Company  will be able to continue to compete  successfully  against its existing
competitors  or  that  it will be  able  to  compete  successfully  against  new
competitors.
<PAGE>
         The Company  believes  that the  principal  competitive  factors in the
markets for its  telecommunications  products and services are  knowledge of the
requirements of the various RBOCs and other telcos, product reliability, product
design,  the  quality of repair  and  support  services,  customer  service  and
support,  and price relative to performance.  The Company competes in the market
for its telecommunications products and services principally on the basis of its
relationships with telcos,  product design and reliability,  low product pricing
and flexibility of marketing alternatives, including leasing.

Electronic Commerce

         The   Company's   electronic   commerce   products  and  services  face
competition  from  several  types of  competitors.  Some banks  have  elected to
develop  internally  their own home  banking  solutions  instead  of  purchasing
products and services from the Company or third parties. Banks may also contract
with service bureaus,  such as Checkfree  Corp.,  Security First Network Bank or
Online  Resources,  Inc., to obtain electronic  commerce  services.  Finally,  a
number of other software companies, including Edify Corp., Corillian Corporation
and Destiny Software Corporation,  offer products and services that compete with
those of the Company.

         The  Company  expects  that  competition  in all of  these  areas  will
increase in the near future.  The Company believes that a principal  competitive
factor in its  markets is the ability to offer an  integrated  system of various
electronic commerce products and services. Competition will be based upon price,
performance,  customer  service and the  effectiveness  of  marketing  and sales
efforts.  The  Company  competes  in its  various  markets  on the  basis of its
relationships  with  strategic  partners,  by  developing  many of the  products
required  for  complete  solutions,  by  leveraging  market  experience,  and by
building reliable products and offering those products at reasonable prices.


PRODUCT DEVELOPMENT

         The  Company  operates  in  industries  that are  rapidly  growing  and
changing.  In efforts to improve  the  Company's  position  with  respect to its
competition,  the Company has increased its product  development efforts and has
focused management efforts in the area of product development. In 1997, 1996 and
1995,  the  Company's  research  and  development  expenditures,   exclusive  of
nonrecurring  in-process  research and  development  expenses  were  $9,691,000,
$2,649,000 and $1,067,000, respectively.

         At December 31, 1997, 43 employees were engaged in product  development
including  14 in  the  telecommunications  division  and  29 in  the  electronic
commerce division.

Telecommunications

         The Company's product  development  efforts are focused on new products
that support intelligent network services,  product enhancements,  international
standards  compliance and the continued  improvement  of hardware  components to
reduce   manufacturing   costs.  The  Company's
<PAGE>
product development group is experienced in engineering products for high-volume
assembly,  stressing low-cost  manufacturing  design while maintaining  quality,
consistency  and  reliability.   The  Company's  products  utilize   proprietary
electrical, mechanical and software design.

         Standard  Telecommunications Ltd. ("STL") of Hong Kong, an affiliate of
the Company's principal  manufacturer,  provides additional design,  engineering
and product  development  support services to the Company from time to time on a
subcontract  basis. The Company also utilizes the engineering  resources of some
of its other manufacturers.

Electronic Commerce

         The electronic  commerce  division's  product  development  efforts are
focused on software  and systems for  electronic  banking.  In  particular,  the
Company  applies its research and development  expenditures to data  transaction
processing  and  messaging   software.   The  electronic  commerce  industry  is
characterized  by rapid  change.  To keep  pace with this  change,  the  Company
maintains  an  aggressive  program  of new  product  development  and  dedicates
considerable  resources  to  research  and  development  to further  enhance its
existing  products and to create new products and  technologies.  The  Company's
ability to attract and retain highly skilled research and development  personnel
is important to the Company's continued success.


MANUFACTURING

         The Company's primary  equipment  manufacturer in the past has been STL
and certain of its affiliates,  which have ISO 9000 series certified  facilities
located in the People's  Republic of China, for the manufacture of its Caller ID
units,  smart  telephones  and other  products.  In  addition,  the  Company has
established   relationships   with  other  ISO  9000  series   certified   Asian
manufacturers  for its smart  telephones and small  business  telecommunications
products.  The facilities of the Company's suppliers are supplemented,  in part,
by the  Company's  own limited  manufacturing  facilities  in  Connecticut.  The
availability  or cost of the  Company's  products may be affected by  political,
economic  or  labor  conditions  in  the  countries  where  those  products  are
manufactured,  including the 1997 return of Hong Kong to China,  by fluctuations
in currency  exchange rates and by other factors.  In addition,  a change in the
tariff  structure or other trade  policies of the United States could  adversely
affect the Company's foreign manufacturing strategies.

         The Company does not have any  production  contracts  with its assembly
contractors.   The  Company's  principal   manufacturer  performs  comprehensive
inspection and  statistical  process  control  testing,  utilizing the Company's
internally  designed automated testing  equipment.  To date, the Company has not
experienced significant returns of defective products.

         In the  United  States,  the  Company's  manufacturing  operations  are
limited to the testing,  quality  control and shipping of finished  products and
the purchase and  inventory  management  of two key  components of the Company's
products.
<PAGE>
         The key components  used in the Company's  products are currently being
purchased  from two  sources,  except for its  application  specific  integrated
circuit ("ASIC") chips,  which are purchased from a single source.  Although the
Company  believes it could develop other sources for each of the  components for
its  products,  the process  could take  several  months,  and the  inability or
refusal  of any such  source to  continue  to  supply  components  could  have a
material adverse effect on the Company pending the development of an alternative
source.


GOVERNMENT REGULATION

Telecommunications

         The regulatory environment relating to the telecommunications  industry
is undergoing  rapid and significant  changes.  The  Telecommunications  Act has
effected  basic  changes  in  the  telecommunications   regulatory  scheme.  The
intention  of  the  Telecommunications  Act  is to  enhance  competition  in all
telecommunications  markets and bring new  packages,  lower prices and increased
innovation to telephone customers in the United States. The FCC issued its first
major order under the  Telecommunications  Act in August 1996 which  constitutes
the   FCC's   initial   measures   to   implement   certain   sections   of  the
Telecommunications  Act  relating to  interconnection  between  carriers and the
provision of access to unbundled services. However, portions of this order, most
significantly its pricing provisions,  have been successfully  challenged in the
U.S. Court of Appeals for the Eighth Circuit.  The U.S. Supreme Court has agreed
to review  the  Eighth  Circuit's  decision  overturning  those  provisions.  In
December  1996,  the FCC issued a Notice of Proposed  Rulemaking  which suggests
rules concerning the  implementation  of the  Telecommunications  Act provisions
relating  to  RBOC  manufacture  of  telecommunications  and  customer  premises
equipment.  Although the FCC has not yet implemented the regulations relating to
those  provisions,  the proposed  regulations  would permit RBOCs to manufacture
products that support Caller ID and other  intelligent  network services subject
to certain  conditions.  The U.S.  District  Court for the Northern  District of
Texas has declared the Telecommunications Act's manufacturing provisions,  among
others,  unconstitutional.  The decision has been stayed  pending  review by the
U.S.  Court of Appeals for the Fifth  Circuit.  The Company is unable to predict
what effect,  if any,  the  Telecommunications  Act and the emerging  regulatory
scheme  under the  Telecommunications  Act will have on Caller ID service or the
Company's business generally.

         In the United States,  Caller ID and other intelligent network services
offered by telcos are  subject to  federal  and state  regulation.  Caller ID is
currently  available  in all 50 states and the  District of  Columbia.  However,
during  the  past  several  years,  protests  by  special  interest  groups  and
regulatory  concerns  regarding  the privacy  aspects of the  service  have been
effective  in both  slowing down the  regulatory  approval  process and, in most
states,  requiring  free per-call or per-line call blocking to be offered by the
telcos,  thereby allowing a caller to prevent the display of his or her name and
number.

         A series of FCC orders  require all U.S.  telephone  service  providers
with signaling system 7 ("SS7") switching architecture to transmit to each other
without  charge  Caller ID number
<PAGE>
information on interstate  calls within the United States (except for public pay
phones, hotel and motel lines, and party lines). FCC orders also require that by
March 28,  1998,  telcos  that  offer  Caller ID service  must  provide to their
telephone subscribers without charge per-call blocking and unblocking mechanisms
to block  and  unblock  the  transmission  of their  Caller  ID  information  on
interstate calls and must inform subscribers that their telephone numbers may be
identified  to a called  party  and how to use  these  blocking  and  unblocking
capabilities.

         Although the initial FCC order  setting  forth these  requirements  was
implemented   December  1,  1995,   several   factors  may  delay,   prevent  or
substantially  limit the  implementation  or market acceptance of Caller ID. The
availability  of Caller ID  service in a  particular  area  requires  end-to-end
interconnection of SS7 networks between telcos and other carriers.  Further, the
FCC Order requires telcos to offer free per-call  blocking for interstate  calls
to all customers to protect  privacy  interests and permits state public utility
commissions to authorize  per-line blocking for interstate calls. Such blocking,
if widely adopted, could limit the usefulness and marketability of the Caller ID
service.

         The California  Public  Utilities  Commission  and AT&T Corp.  ("AT&T")
filed  petitions  for  review  of the FCC  Order in  federal  court  challenging
portions of the FCC Order.  Although  the FCC Order  withstood  that  particular
challenge,   other   parties  have  also  objected  to,  sought  delays  in  the
implementation of or sought clarification of the FCC Order. In addition,  in the
future,  Caller ID  service  may be  subject  to  additional  state and  federal
legislation,  regulation and court challenges.  The Company is unable to predict
what effect, if any, further legislation,  regulation, court challenges or other
objections may have on the FCC Order or Caller ID service.

         The Company's smart telephone products are subject to regulation by the
FCC. Among other  requirements,  the Company's smart telephones must comply with
Parts 15 and 68 of the FCC's regulations.

Electronic Commerce

         The banking  market  which the Company has  targeted  for  marketing is
highly  regulated.  The banking  industry,  although it has  recently  undergone
significant deregulation,  remains quite regulated at both the federal and state
levels.   Interpretation,    implementation   or   revision   of   banking   and
telecommunications  regulations can accelerate or hinder the ultimate success of
the Company and its products.


PATENTS, PROPRIETARY RIGHTS AND LICENSES

         The Company holds limited  patent or registered  intellectual  property
rights with  respect to its  products.  The Company has been issued a patent for
its "Block the  Blocker"  feature and  certain  aspects of its Caller ID on Call
Waiting product.  However, there can be no assurance that the patent will afford
effective protection of the Company's technology.  The Company also holds or has
filed for patents on certain new  features  developed  by the Company for use in
the ADSI
<PAGE>
smart telephone and certain of its transaction processing technology,  but there
can be no assurances that such patents will have any commercial value.

         The Company  additionally  relies on trade secret laws to establish and
maintain  its  proprietary  rights to its  products.  Although  the  Company has
obtained confidentiality agreements from its key executives and engineers in its
product development group, there can be no assurance that third parties will not
independently  develop  the  same  or  similar  alternative  technology,  obtain
unauthorized  access to the  Company's  proprietary  technology  or  misuse  the
technology to which the Company has granted access.

         The Company  has rights to practice  the  inventions  under  certain of
Lucent's Caller ID patents. These patents are also licensed to others, including
the Company's  competitors.  Lucent receives  royalties from sales and leases of
the  Company's  Caller ID  products  other  than to Lucent.  The Lucent  license
agreement has no  expiration  date but is terminable by Lucent for breach on two
months' written notice unless within such time all specified  breaches have been
remedied.  If the Lucent license were  terminated and the Company were unable to
negotiate a new patent  license  agreement  with  Lucent,  the Company  would no
longer be  authorized  to  manufacture  or sell Caller ID products in the United
States other than to the RBOCs and to Lucent. Additionally, under the agreement,
the Company granted Lucent a non-exclusive,  royalty-free license to all patents
on inventions which are improvements or modifications  based upon the technology
licensed from Lucent.

         The Company does not believe that its products and services infringe on
the  rights  of  third  parties.   From  time  to  time,  third  parties  assert
infringement claims against the Company. There can be no assurance that any such
assertion  will not result in costly  litigation or require the Company to cease
using, or obtain a license to use, intellectual property rights of such parties.


EMPLOYEES

         At December 31, 1997, the Company had approximately  280 employees,  of
whom 265 were  full-time.  The Company has no collective  bargaining  agreements
with its  employees  and believes  that its  relationship  with its employees is
good.

<PAGE>

ITEM 2.  PROPERTIES
-------------------

         The  Company is  headquartered  in Herndon,  Virginia,  where it leases
30,000 square feet of office space from an unaffiliated party. The lease expires
in August  1999.  The Company  also leases  other,  less  significant  sales and
product development facilities.

         Additionally,  the  Company  owns a building  located  in New  Milford,
Connecticut  which  consists  of  approximately   63,000  square  feet.  Certain
environmental  contamination  occurred  in the  part  of the  facility  formerly
occupied  by another  tenant and the  Connecticut  Department  of  Environmental
Protection performed a clean-up and removed such contamination. The Company does
not believe the foregoing will have a materially adverse effect on the Company.

         The Company  believes that its facilities are suitable and adequate for
the current and foreseeable future business of the Company, however, the Company
will continue to assess its warehousing and office space needs.


ITEM 3.  LEGAL PROCEEDINGS
--------------------------

         The Company is not currently a party to any material  litigation.  From
time to time,  the Company is a party to routine  litigation  incidental  to its
business.  Management does not believe that the resolution of any or all of such
routine  litigation  will be likely  to have a  material  adverse  effect on the
Company's financial condition or results of operations.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
--------------------------------------------------------

         None.

<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
---------------------------------------------------------
         STOCKHOLDER MATTERS
         -------------------

         Since November 8, 1996,  the Company's  common stock has been traded on
the Nasdaq National Market under the symbol INTD. US Order's common stock prices
were  reported  for the period  through  November 7, 1996 and were traded on the
Nasdaq  National  Market under the symbol  USOR.  Colonial  Data's  common stock
prices are  reported  for the period  through  November 7, 1996.  Subsequent  to
February 9, 1996,  Colonial Data common stock was traded on the Nasdaq  National
Market under the symbol CDTX.  Prior to February 9, 1996,  Colonial  Data common
stock was traded on the American Stock Exchange.  The table below sets forth the
high and low quarterly  sales prices for the common stock of US Order,  Colonial
Data and InteliData as reported in published  financial sources for each quarter
during the last two years:

<TABLE>
                                                            Price Range of Common Stock
                                 ---------------------------------------------------------------------------------
                                       US Order                    Colonial Data                 InteliData
                                 -------------------------      ------------------------    ----------------------
                                 High           Low             High           Low          High          Low
                                 ----           ---             ----           ---          ----          ---
     <S>                         <C>            <C>             <C>            <C>          <C>           <C>
     1997
         Fourth Quarter             *             *                *             *            $3  15/16    $1  1/4
         Third Quarter              *             *                *             *             5  3/8       2  3/4
         Second Quarter             *             *                *             *             6  1/4       4  1/8
         First Quarter              *             *                *             *             8  5/8       4  7/8

     1996
         Fourth Quarter           $11  7/8       $8  1/4         $11  5/8       $8  3/8       10  7/8       6
         Third Quarter             15  1/4        8  15/16        15  1/4        8  1/2       **           **
         Second Quarter            22  1/2       13               23  5/8       14  7/8       **           **
         First Quarter             24  1/4       16  3/4          25  1/4       15  7/8       **           **

       *  No trading  market was  available  for US Order and Colonial Data after
          November 7, 1996.
       ** No established  public trading market for InteliData common stock
          existed prior to November 8, 1996.
</TABLE>

         The Company has never declared or paid any cash dividends on its common
stock. The Company currently  intends to retain its future earnings,  if any, to
fund the  development  and  growth  of its  business  and,  therefore,  does not
anticipate  paying any cash  dividends  in the  foreseeable  future.  Any future
decision  concerning the payment of dividends on the Company's common stock will
depend  upon  the  results  of  operations,   financial  condition  and  capital
expenditure plans of the Company,  as well as such other factors as the Board of
Directors, in its sole discretion, may consider relevant.

         The number of stockholders of record at March 1, 1998 was 622, and does
not include those stockholders who hold shares in street name accounts.

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA
--------------------------------

                     INTELIDATA TECHNOLOGIES CORPORATION (1)
                             SELECTED FINANCIAL DATA
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
                                                                           Year Ended December 31,
                                               ------------------------------------------------------------------------------
                                                  1997             1996             1995             1994             1993
                                               ----------       ----------       ----------       ----------       ----------
<S>                                            <C>              <C>              <C>              <C>              <C>
RESULTS OF OPERATIONS:

Revenues                                       $   60,309       $   13,899       $    4,186       $    1,432       $      905
Cost of revenues                                   43,514           10,448            2,470            1,013              908
Operating expenses                                108,099  (2)      99,563  (2)       6,877           10,584  (2)      10,540  (4)
                                               ----------       ----------       ----------       ----------       ----------
Operating loss                                    (91,304)         (96,112)          (5,161)         (10,165)         (10,543)

Net income (loss)                                 (90,094)         (95,727)          (4,718)           3,713  (3)     (11,225)
Preferred dividend requirement                         --               --              681            1,895            1,042
                                               ----------       ----------       ----------       ----------       ----------
Net income (loss) applicable to common
      shareholders                             $  (90,094)      $  (95,727)      $   (5,399)      $    1,818       $  (12,267)

Basic income (loss) per common share(5)        $    (2.85)      $    (5.21)      $    (0.50)      $     0.36  (6)  $    (2.45)
Basic weighted average shares outstanding(5)       31,574           18,370           10,772            5,000  (6)       5,000

FINANCIAL POSITION (as of December 31):

Cash, cash equivalents and
   short-term investments                      $   11,359       $   39,062       $   25,120       $    2,568       $    3,444
Total assets                                       54,401          143,746           40,252            4,637            7,694
Long-term obligations                                  --               --               --            4,833            4,231
Stockholders' equity (deficit)                     37,069          124,289           37,733           (6,466)          (5,849)

<FN>
(1)  Results  reflect the  operations of US Order for the periods  presented and
     operations  of Braun  Simmons  since  September  30, 1996 and Colonial Data
     since November 7, 1996.

(2)  Operating expenses for 1997 include  $69,691,000 of unusual charges related
     to impairment of assets and restructuring  charges.  Operating expenses for
     1996  include   $77,214,000  of   nonrecurring   in-process   research  and
     development  expenses related to the Mergers and Braun Simmons Acquisition.
     Operating  expenses  in 1994  include a $3.25  million  payment  to certain
     employees to cancel certain  outstanding  vested options in connection with
     the sale of the Company's bill pay  operations to Visa.  Visa required that
     all  employees  of the Company  who became  employees  of Visa  InterActive
     cancel  their  outstanding   vested  options  to  eliminate  any  potential
     conflicts of interest. As a result, the Company's shareholders and Board of
     Directors  agreed to pay all active and full-time  employees of the Company
     (excluding  William F. Gorog,  Chief Executive  Officer and Chairman of the
     Board) an aggregate  of $3.25  million for the  cancellation  of 675,334 of
     their  outstanding  and vested options with exercise prices ranging between
     $0.98 and $4.00 per share. Of the $3.25 million, approximately $2.1 million
     was paid to employees of the Company who became Visa InterActive  employees
     as of August 1, 1994.

(3)  Includes gain of  approximately  $14.5 million on the sale of the Company's
     electronic banking and bill pay operations to Visa on August 1, 1994.

(4)  Operating  expenses in 1993 include  write-downs  of terminals and terminal
     components of approximately $1.5 million.

(5)  All net income  (loss) per common  share data and weighted  average  shares
     outstanding data has been restated for SFAS 128, Earnings Per Share.

(6)  Diluted  income per common  share was $0.12 and  diluted  weighted  average
     shares outstanding was 14,906,000.
</FN>
</TABLE>
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
----------------------------------------------------------
         CONDITION AND RESULTS OF OPERATIONS
         -----------------------------------

OVERVIEW

         InteliData  Technologies  Corporation  ("InteliData" or the "Company"),
was incorporated on August 23, 1996 under the Delaware  General  Corporation Law
in order to effect the mergers  ("Mergers")  of US Order,  Inc. ("US Order") and
Colonial Data Technologies  Corp.  ("Colonial Data"). The Mergers were announced
on August 5, 1996, when US Order and Colonial Data entered into an Agreement and
Plan of Merger  ("Merger  Agreement").  On  November 7, 1996,  the Mergers  were
consummated  with each share of  outstanding  US Order and Colonial  Data common
stock being exchanged for one share of InteliData  common stock.  Accounting for
the Mergers was treated as a purchase of Colonial Data by US Order. Accordingly,
the financial  statements of the Company  included herein reflect the results of
US Order through November 7, 1996 and the  consolidated  results of US Order and
Colonial Data thereafter.

         Effective  September 30, 1996, US Order acquired the business of Braun,
Simmons & Co., an Ohio  corporation  ("Braun  Simmons"),  for  approximately  $7
million  consisting  of cash and US Order common  stock (and  including US Order
transaction  costs),  pursuant to a merger of Braun  Simmons  into US Order (the
"Braun Simmons Acquisition").  Braun Simmons was an information engineering firm
specializing  in  the  development  of  home  banking  and  electronic  commerce
solutions  for financial  institutions.  The  acquisition  expands the Company's
product line for both large and small financial institutions.

         The excess  purchase  price over the fair value of net assets  acquired
resulted  in  goodwill  of  $49,483,000  in  connection  with the  Mergers,  and
$1,898,000 in connection  with the Braun  Simmons  Acquisition  which were being
amortized  on  a  straight-line  basis  over  fifteen  years  and  seven  years,
respectively.  Based on rapid  market and  technological  changes  in 1997,  the
goodwill  generated  from these  transactions  was  considered  impaired and was
written-off in the third quarter of 1997. The impairment was based on the excess
of the carrying value of the assets over the assets' fair values. The fair value
of the assets were  generally  determined  as the estimates of future cash flows
generated by the assets.

         In connection with the Mergers and the Braun Simmons  Acquisition,  the
Company  charged,  as of the respective dates of such  transactions,  in-process
research and development  expenses of $72,300,000 for the Mergers and $4,914,000
for the Braun Simmons Acquisition,  for purchased in-process technology that had
not  reached  technological  feasibility  as of the  respective  dates  of  such
transactions and which did not have alternative future uses.

         The  business of the  Company  consists  of the  businesses  previously
conducted  by US Order and  Colonial  Data.  The  Company  develops  and markets
products  and  services  for  the   telecommunications  and  financial  services
industries  through its  telecommunications  and  electronic  commerce  business
divisions.

         The   telecommunications   division   designs,   develops  and  markets
telecommunications  products that support  intelligent  network  services  being
developed and implemented by the
<PAGE>
regional  Bell  operating  companies  ("RBOCs")  and other  telephone  companies
("telcos").  The Company has concentrated its product  development and marketing
efforts  on  products  that  support  Caller ID and other  emerging  intelligent
network  services,  including  smart  telephones  which provide  consumers  call
management  features  and the ability to access  numerous  network  services and
interactive  applications via telephone.  The Company currently offers a line of
Caller ID adjunct units,  smart  telephones,  small business  telecommunications
systems and high-end telecommunications  equipment. The Company also repairs and
refurbishes  telecommunications  products for commercial  customers and provides
other services that support the  development and  implementation  of intelligent
network services.

       The  electronic  commerce  division  develops  and markets  products  and
services to assist  financial  institutions in their home banking and electronic
bill payment  initiatives.  The  products  are  designed to assist  consumers in
accessing  and   transacting   business  with  their  banks  and  credit  unions
electronically,  and to  assist  financial  institutions  in  connecting  to and
transacting business with third parties,  including data processors and billers.
The services focus on consulting  and  maintenance  agreements  that support the
Company's products.

         The  Company  has  initiated a  comprehensive  process to evaluate  its
current  business  strategy,   including   customer   relationships  and  market
opportunities. This could result in restructuring charges in 1998.

         During the fourth quarter of 1997, the Company  announced its intention
to sell the  interactive  services  division  which was  established  to provide
interactive  applications  for use on smart  telephones  and other small  screen
devices,  such as alpha-numeric pagers,  Personal  Communication Systems ("PCS")
devices and personal digital assistants ("PDAs"). The discontinued operations of
the  interactive  services  division  are not  considered  to be material to the
overall financial statements.


RESULTS OF OPERATIONS - YEARS ENDED DECEMBER 31, 1997 AND 1996

         The  consummation  of the Mergers on November 7, 1996 and the  required
accounting presentation of the historical financial statements had a significant
impact on the results of  operations  for 1997  compared  to 1996.  Consolidated
total revenues and all categories of expenses are significantly  greater in 1997
than  1996  because  1997  results  include a full  year of  operations  for all
businesses  and 1996 results only include  approximately  two months of Colonial
Data's operations and three months of Braun Simmons' operations.

Revenues

         The Company's revenues were $60,309,000 in 1997 compared to $13,899,000
in 1996.  Telecommunications  revenues  increased  $45,416,000 to $56,358,000 in
1997 from $10,942,000 in 1996.  Telecommunications revenues in 1997 consisted of
$37,198,000 from Caller ID adjuncts and smart telephones,  $8,306,000 from small
business  telephone  equipment,  $8,570,000 from the lease of Caller ID adjuncts
and telephones and $2,284,000  from repair and other  services.  Contributing to
the  telecommunications  revenues  in 1997  were  sales  of  $11,628,000  to
<PAGE>
the Company's direct marketing joint venture,  Worldwide Telecom Partners,  Inc.
The joint venture was  terminated in the third quarter of 1997.  During the year
ended December 31, 1997, the Company sold 1,398,500  Caller ID adjuncts,  72,137
telephones and 6,480 multi-line, small business systems.

         Telecommunications  revenues  for 1996  consisted  of  $7,938,000  from
Caller ID adjuncts and smart telephones,  $506,000 from small business telephone
equipment,  $1,838,000  from the lease of Caller ID adjuncts and  telephones and
$660,000 from product management, repair and other services. Contributing to the
telecommunications  revenues  in 1996  were  sales of  $2,845,000  to  Worldwide
Telecom Partners, Inc. During 1997, the Company sold fewer units than originally
anticipated  because the Company did not  participate  in as many telco programs
and  promotional  campaigns that sell high volumes of product as the Company and
Colonial  Data did prior to the  Mergers in 1996.  The  Company  intends to work
aggressively  to be a  primary  supplier  and  marketer  for  telco  promotional
campaigns in 1998.

         The  electronic   commerce  division  revenues  increased  $994,000  to
$3,951,000 in 1997 from  $2,957,000 in 1996. The primary reason for the increase
was  from  revenues  generated  by  the  professional  service  and  maintenance
contracts  associated  with the  Company's  software  sales.  This  increase was
partially  offset by the  elimination of customer  service  support  provided to
Visa-member banks during the second half of 1997. The Company's customer support
services were remarketed by Visa InterActive,  Inc. ("Visa InterActive") to Visa
member  banks under the  Company's  reseller  agreement  with Visa  InterActive.
During  1997,  the Company  earned  $1,041,000  by  providing  customer  support
services to the Visa-member banks,  $1,040,000 from software and hardware sales,
$868,000 from professional  services and maintenance contracts for the Company's
software  programs,  recognized  $625,000 from deferred  revenues related to the
agreement  between  Visa and the Company for the Visa Bill Pay System  royalties
and earned $377,000 from monthly service fees.

         During 1996, the electronic commerce division earned revenues primarily
from services  derived from three sources:  customer support  services,  monthly
service  fees and software and software  related  consulting  fees.  The Company
recorded  $1,203,000  from its  customer  support  services,  $561,000  from its
monthly  service  fees and  $1,193,000  from its software  sales and  consulting
business during 1996.

         During 1997, the Company transitioned from providing primarily back-end
support to financial  institutions  to selling  software that assists  financial
institutions in processing  customers who bank remotely,  either from a personal
computer or  telephone.  The Company  expects  that  revenues  generated  in the
electronic  commerce  division in 1998 will be a direct result of software sales
and the related consulting business.

Cost of Revenues and Gross Profit

         The Company's cost of revenues  increased by $33,066,000 to $43,514,000
for 1997 compared to  $10,448,000 in 1996.  Telecommunications  cost of revenues
increased by  $32,594,000  to  $41,385,000  for 1997 compared to $8,791,000  for
1996.  Contributing  to the  telecommunications  cost of revenues  for 1997 were
$27,852,000 from the sale of Caller ID
<PAGE>
adjuncts and smart  telephones;  $7,299,000  from the sale of  multi-line  small
business systems; $4,718,000 from leasing Caller ID adjuncts and telephones; and
$1,516,000  from  the  repair  and  services  business.  Gross  profit  for  the
telecommunications  division  increased  $12,822,000  to  $14,973,000  for  1997
compared to $2,151,000 for 1996. Gross profit margin for the  telecommunications
division  increased  to 27% for 1997  compared to 20% for 1996.  The increase is
primarily related to the Mergers and the change in the product mix and increased
margins on the US West lease base, which earned 45% gross profit margins in 1997
compared to 40% gross profit margins in 1996.  Gross profit margins for the year
ended  December 31, 1997 from Caller ID adjunct and telephone  sales,  and small
business telephone systems sales were 27% and 18%, respectively.

         Cost  of  revenues  for  the  electronic  commerce  division  increased
$472,000 to $2,129,000 for 1997 compared to $1,657,000 for 1996. The increase in
cost of revenues is a direct  result of the increase in  revenues.  Gross profit
margins for the electronic  commerce division increased two percentage points to
46% for 1997 compared to 44% for 1996.  The increase in gross profit  margins is
attributed  to a change in the  product  and  services  offered  between the two
periods.

         During 1997, the Company experienced  declining gross margins in Caller
ID products because the market matured and competition increased.

         The Company  expects  its gross  margin  percentages  to vary in future
periods based upon the revenue mix between  product sales and services  revenues
and based upon the composition of services revenues earned during the period.

General and Administrative

         General and administrative expenses decreased $1,295,000 to $14,826,000
in 1997 from  $16,121,000  in 1996. The decrease was primarily  attributable  to
expenses related to losses in the amount of $2,801,000  related to the Company's
investment in Home Financial Network, Inc. ("HFN"), a development stage personal
computer software company, and the associated goodwill. The Company believed its
investment  in HFN was  impaired  based  on its  history  of  losses.  In  1997,
$1,267,000 of losses for the HFN  investment  were incurred along with increased
expenses associated with employing certain general and administrative  personnel
for a full year in 1997 and  increased  litigation  expenses  during 1997.  Also
contributing  to the difference were the  amortization of intangible  assets and
nonrecurring charges for certain customer service operations.

         In the future, the Company expects that aggregate recurring general and
administrative  expenses  will  decrease  as the  Company  aggressively  pursues
options to reduce fixed overhead  costs.  During 1998, the Company  expects that
general and  administrative  expenses  will  decrease due to  implementation  of
measures  to reduce  overhead,  except as the Company  upgrades  its systems and
operations in anticipation of the potential for increased business.

Selling and Marketing

         Selling and marketing expenses increased  $11,880,000 to $13,891,000 in
1997 from
<PAGE>
$2,011,000 in 1996.  Telecommunications  division selling and marketing expenses
aggregated $11,758,000 for the year ended December 31, 1997. Contributing to the
selling and marketing  expenses were  $3,775,000 for the Company's  labor force,
travel and professional services,  $2,938,000 for advertising,  sales promotion,
and trade shows,  $2,162,000 to support customer service for product support and
facilitating sales orders and,  $1,126,000 for royalties.  The increase from the
prior year is primarily  related to the  introduction  of new products to market
including the introduction of two new small business telephone systems at retail
and through the distributor  channel and a summer campaign to sell the Company's
smart telephones.

         Electronic  commerce  division  selling and marketing  expenses for the
year ended December 31, 1997 aggregated $2,133,000.  Contributing to the selling
and marketing expenses were $1,704,000 for the Company's labor force, travel and
professional services and $130,000 for advertising and trade shows.

         The Company  expects its selling,  advertising  and promotion  expenses
will decrease substantially in 1998 due to cost saving factors being implemented
by the Company's management.

Research and Development

         Research and development  costs  increased  $7,042,000 to $9,691,000 in
1997 compared to $2,649,000  in 1996.  The Company has been actively  engaged in
research and development  since its inception and expects that these  activities
will be essential to the  operations of the Company in the future.  Research and
development related expenses for the  telecommunications and electronic commerce
divisions were $3,477,000 and $4,602,000, respectively. In addition, the Company
invested  $1,612,000 in research and development efforts for interactive service
applications.  Research  and  development  expenses  for the  telecommunications
division  were  largely  attributable  to  developing,   designing  and  testing
higher-end smart telephones and to lower the cost of Caller ID adjunct units.

       The  electronic   commerce  division   primarily  invested  research  and
development  expenses in writing  the  Interpose  Financial  Engine for the Open
Financial  Exchange  ("OFX")  standard.  Interpose  provides a turnkey  software
system to allow financial institutions to: integrate multiple delivery channels,
including the Internet,  PC software and the telephone;  connect directly to the
customer  without the use of a third party  processor;  and  integrate  multiple
"back end"  processors  for bill payment,  credit card and mortgage  processing,
brokerage, and other products.

Unusual Charges

         For the year ended December 31, 1997, the Company announced a strategic
repositioning  of the  Company's  telecommunications  division  based on  recent
events in its marketplace and a corporate restructuring. In connection with this
repositioning and corporate  restructuring,  the Company's  management evaluated
its financial  position and determined that it would be appropriate to charge to
operations  the  remaining   unamortized  costs  of  intangible  assets  due  to
impairment,  adjust  inventory  carrying amounts to the lower of cost or market,
and reflect  certain  restructuring  charges,  including  charges for separation
agreements with employees and charges
<PAGE>
associated with the termination of a joint venture agreement.  Additionally, the
Company  adjusted the carrying value of a receivable  from the sale of stock for
an advertising credit based on the Company's  expected use of the credit.  Total
unusual charges for the year aggregated $69,691,000 which includes:  $49,812,000
for the  impairment  of  intangible  assets;  $11,333,000  for  inventories  and
commitments;  $2,437,000 for  restructuring  charges and separation  agreements;
$3,653,000  for assets  relating to the  Worldwide  Telecom joint  venture;  and
$2,456,000  for  impairment  of the  advertising  credits.  The  impairment  was
measured  based on the excess of the net  carrying  value of the assets over the
assets'  fair  values.  The fair value of the assets were  generally  determined
based on  estimates  of future cash flows to be  generated  by the  assets.  The
charges  related to the joint venture are associated with the termination of the
joint venture by the Company in the third quarter of 1997.

         For the year ended December 31, 1996, the Company  recorded a provision
for corporate  restructuring  during the fourth  quarter of 1996 of  $1,568,000.
This amount  consists of $1,323,000 in  facilities  consolidations,  $175,000 in
relocation  expenses for certain  employees  and $70,000 for the  write-down  of
processing  equipment.  Additionally,  in  connection  with  the  Braun  Simmons
Acquisition  and the Mergers in September and November 1996,  respectively,  the
Company  charged  in-process  research and  development  expenses for  purchased
in-process technology that had not reached  technological  feasibility as of the
date of the  Mergers  and  the  Braun  Simmons  Acquisition  and  did  not  have
alternative future uses. Amounts charged to in-process  research and development
were based on independent  appraisals and totaled $4,914,000 and $72,300,000 for
the Braun Simmons Acquisition and the Mergers, respectively.

Other Income, Net

         Other income,  net increased $861,000 to $1,271,000 in 1997 compared to
$410,000  in 1996.  The  increase  is  largely  associated  with  the  Company's
investment losses recorded during 1996 for the Company's  proportionate share of
losses of HFN and the  amortization of the excess of the purchase price over the
Company's share of the equity in net assets of HFN.

Income Taxes

         Income  taxes  increased  to $61,000 in 1997 from $25,000 in 1996 based
primarily  on state  income  taxes  incurred in  connection  with the  Company's
operations.   At  December  31,  1997,   the  Company  had  net  operating  loss
carryforwards for federal income tax purposes of approximately $50 million which
expire by 2012.  However,  use of these net operating losses in future years may
be limited under  applicable tax laws and regulations as a result of the Mergers
and the Braun Simmons acquisition.

Net Loss and Weighted Average Shares

         As a result of the foregoing  factors,  basic loss applicable to common
shareholders  decreased to  $90,094,000  in 1997 from  $95,727,000  in 1996. The
basic weighted average shares increased to 31,574,000 in 1997 from 18,370,000 in
1996. The increase in basic weighted average shares resulted  primarily from the
shares  issued in connection  with the Mergers.  The basic loss per common share
decreased to $2.85 in 1997 from $5.21 in 1996.
<PAGE>

RESULTS OF OPERATIONS - YEARS ENDED DECEMBER 31, 1996 AND 1995

         The  consummation  of the Mergers on November 7, 1996 and the  required
accounting presentation of the historical financial statements had a significant
impact on the results of  operations  for 1996  compared  to 1995.  Consolidated
total revenues and all categories of expenses are significantly  greater in 1996
than 1995  because  1996 results  include  approximately  two months of Colonial
Data's operations and three months of Braun Simmons' operations and 1995 results
do not include any of Colonial Data's and Braun Simmons' operations.

Revenues

         The Company's  revenues were $13,899,000 in 1996 compared to $4,186,000
in 1995. Telecommunications revenues increased $9,125,000 to $10,942,000 in 1996
from  $1,817,000  in 1995.  Telecommunications  revenues  in 1996  consisted  of
$7,938,000  from Caller ID adjuncts and smart  telephones,  $506,000  from small
business  telephone  equipment,  $1,838,000 from the lease of Caller ID adjuncts
and telephones and $660,000 from product management,  repair and other services.
Contributing to the telecommunications revenues in 1996 were sales of $2,845,000
to Worldwide  Telecom  Partners,  Inc.  Telecommunication  revenues in 1995 were
generated  primarily from the sale and supporting  services for smart telephones
developed by the Company.

         Electronic   commerce  division  revenues   increased  by  $588,000  to
$2,957,000 in 1996 from $2,369,000 in 1995. The increase is primarily attributed
to the  increase  in customer  service  support  provided to Visa member  banks.
Service  fees in 1996 and 1995 were  generated  primarily  from  three  sources:
customer support  services,  monthly service fees, and nonrecurring  development
fees for smart telephone  applications.  The Company's customer support services
were remarketed by Visa  InterActive,  Inc. ("Visa  InterActive") to Visa member
banks under the Company's reseller agreement with Visa InterActive.

Cost of Revenues and Gross Profit

         The Company's  cost of revenues  increased by $7,978,000 to $10,448,000
for 1996  compared to $2,470,000  in 1995.  Telecommunications  cost of revenues
contributed 84% to the total cost of revenues for 1996.  Telecommunications cost
of  revenues   consisted  of  $7,045,000  from  Caller  ID  products  and  smart
telephones,  $426,000 from small business equipment, $1,105,000 from the US West
Caller ID lease base and  $215,000  from the repair and service  business.  As a
result of the Mergers,  and change in product mix in 1996, gross margins related
to  telecommunications  revenues were 20% in 1996 compared to 4% in 1995.  Gross
margins from the  Company's  leasing  activities  in the US West lease base were
approximately 40% for 1996. As a result of the Braun Simmons Acquisition,  gross
margins related to electronic  commerce revenues  decreased to 44% from 69%. The
combined  operations  result in a decrease in the Company's overall gross margin
to 25% in 1996 from 41% in 1995.
<PAGE>
General and Administrative

         General  and   administrative   expenses   increased   $10,338,000   to
$16,121,000 in 1996 from  $5,783,000  during the comparable  period in 1995. The
increase was primarily  attributable to expenses related to the write-off in the
fourth  quarter  of  $2,801,000  related  to the  Company's  investment  in Home
Financial Network,  Inc. ("HFN"), a development stage personal computer software
company, and the associated goodwill. The Company believes its investment in HFN
was impaired based on its history of losses.  Also  contributing to the increase
was  rent  expense,  employee  related  expenses  for  increases  in  personnel,
amortization of intangible assets and nonrecurring  charges for certain customer
service operations.

Selling and Marketing

         Selling and marketing  expenses  increased  $1,984,000 to $2,011,000 in
1996 from  $27,000 in 1995.  The  increase is  attributed  primarily  to selling
expenses of $914,000 for the telecommunications division and selling expenses of
$714,000 for the interactive  services division relating to an increase in sales
personnel  and a  substantial  increase in  advertising  and marketing for smart
telephones  which were  introduced  in retail  stores and  outlets in the fourth
quarter of 1996.

Research and Development

         Research and  development  costs were  $2,649,000  in 1996  compared to
$1,067,000  in 1995.  The Company  has been  actively  engaged in  research  and
development  since its  inception  and  expects  that these  activities  will be
essential  to  the  operations  of  the  Company  in the  future.  Research  and
development  related expenses for 1996 were largely  attributable to developing,
designing  and  testing the  Company's  next  generation  smart  telephone,  the
Telesmart  4000/Intelifone(TM)  smart  telephone,  and  electronic  bill payment
software for the electronic commerce division.

Unusual Charges

         The Company recorded a provision for corporate restructuring during the
fourth  quarter of 1996 of  $1,568,000.  This amount  consists of  $1,323,000 in
facilities consolidations, $175,000 in relocation expenses for certain employees
and $70,000 for the write-down of processing equipment.

         In  connection  with the Braun Simmons  Acquisition  and the Mergers in
September  and  November  1996,  respectively,  the Company  charged  in-process
research and development expenses for purchased  in-process  technology that had
not  reached  technological  feasibility  as of the date of the  Mergers and the
Braun Simmons  Acquisition  and did not have  alternative  future uses.  Amounts
charged  to  in-process  research  and  development  were  based on  independent
appraisals  and  totaled  $4,914,000  and  $72,300,000  for  the  Braun  Simmons
Acquisition and the Mergers, respectively.
<PAGE>
Other Income, Net

         Other income decreased  $33,000 or 7% to $410,000 in 1996 from $443,000
in 1995.  The decrease is largely  associated  with  recognizing  the  Company's
proportionate  share of losses of HFN and the  amortization of the excess of the
purchase price over the Company's share of the equity in net assets of HFN. This
decrease was offset in part by an increase in interest income  attributed to the
Company investing funds raised in its June 1995 initial public offering.

Income Taxes

         Income  taxes  increased  to  $25,000  in 1996  from  $0 in 1995  based
primarily  on state  income  taxes  incurred in  connection  with the  Company's
operations.   At  December  31,  1996,   the  Company  had  net  operating  loss
carryforwards for federal income tax purposes of approximately $38 million which
expire by 2011.  However,  use of these net operating losses in future years may
be limited under  applicable tax laws and regulations as a result of the Mergers
and the Braun Simmons Acquisition.

Net Loss and Weighted Average Shares

         As a result of the foregoing  factors,  basic loss applicable to common
shareholders increased to $95,727,000 in 1996 from $5,399,000 in 1995. The basic
weighted average shares increased to 18,370,000 in 1996 from 10,772,000 in 1995.
The increase  resulted  primarily from the shares issued in connection  with the
Mergers.


RESULTS OF OPERATIONS - QUARTERS ENDED DECEMBER 31, 1997, 1996 AND 1995
(UNAUDITED)

The following  table sets forth  selected  consolidated  statement of operations
data for the three months ended December 31, 1997, 1996 and 1995 (in thousands):

                                  1997            1996             1995
                               ----------      ----------       ----------

     Revenues                  $   10,174      $   10,962       $    1,286
     Cost of revenues               7,809           8,474              229
                               ----------      ----------       ----------
     Gross profit                   2,365           2,488            1,057
     Operating expenses             9,429          85,022            2,492
     Other income (expense)        (1,180)            525              164
                               ----------      ----------       ----------
     Net loss                  $   (8,244)     $  (82,009)      $   (1,271)
                               ==========      ==========       ==========

         The Company's  revenues decreased 7% to $10,174,000 in 1997 compared to
an  increase  of 752% to  $10,962,000  for 1996 from  $1,286,000  for 1995.  The
decrease  from 1996 to 1997 is the result of fewer  telecommunications  programs
and telco  promotional  campaigns that  contribute to larger sales volumes.  The
increase   from  1995  to  1996  is   attributed   to  the   operations  of  the
telecommunications division subsequent to the Mergers. Revenues from the sale or
lease of Caller ID products represented  $6,754,000 or 66% of the total revenues
for the  fourth  quarter
<PAGE>
of 1997.  Revenues  from the sale or lease of  Caller  ID  products  represented
$7,793,000 or 71% of the total revenues for the fourth quarter of 1996.

         The cost of revenues represented 77%, 77% and 18% of total revenues for
the quarters ended December 31, 1997, 1996 and 1995, respectively.  Such results
yielded  gross  profit  margins of 23%,  23% and 82% for the same  periods.  The
decrease in margins  between 1995 and 1996 is  attributed to the product mix. In
1995,  the Company  earned  most of its  revenues  from  services  and  software
programs with low direct costs of revenues.  Most product sales in 1996 were for
lower-end model Caller ID adjuncts which yield a lower margin.

         The increase in recurring  operating  expenses is largely attributed to
the cost of general and administrative  labor,  litigation  expenses and selling
and marketing  expenses.  Fourth quarter 1997 legal expenses associated with the
defense  and  settlement  of a patent  claim and  associated  with a  settlement
agreement  with a joint  venture  aggregated  approximately  $1 million.  Fourth
quarter 1997 other expenses include the impairment of a long-term  investment in
HFN of $1,267,000 representing a full write-off of the investment.  Nonrecurring
fourth  quarter  operating  expenses,  recorded  in  1996,  included  in-process
research and development  costs,  aggregating  $77,214,000 that were expensed in
connection with the Mergers and the Braun Simmons  Acquisition.  Other operating
expenses in 1996 include  nonrecurring  charges for $4,369,000 for restructuring
costs and impairment of a long-term investment in HFN. The remaining increase is
attributable  to operational  costs  associated  with  additional  personnel and
operating  facilities  in  Connecticut,  Ohio and  Virginia  as a result  of the
Company's growth and the Mergers and the Braun Simmons Acquisition.


LIQUIDITY AND CAPITAL RESOURCES

         During 1997,  the  Company's  cash,  cash  equivalents  and  short-term
investments decreased by $27,703,000 resulting from funding operating losses and
accounts receivable increases and acquiring  inventories,  capital equipment and
treasury  stock. At December 31, 1997, the Company had $11,359,000 in cash, cash
equivalents  and  short-term  investments.  To improve the yield on its cash and
equivalent holdings, in 1997, the Company invested in financial instruments that
are  diversified  among high credit  quality  securities.  The  investments  are
reported at cost, which approximates  market value, and are classified as either
short-term investments or cash equivalents.  Additionally, at December 31, 1997,
the Company had working  capital of  $32,364,000  with no  long-term  debt.  The
Company's total assets exceeded total liabilities by $37,069,000.

         The Company's cash requirements for operating,  investing and financing
activities  in 1997 were  financed  primarily by cash acquired in the Mergers in
the fourth quarter of 1996.

         The  Company's  principal  needs  for  cash in 1997  were  for  funding
operating  losses,  investments  in property,  plant and  equipment  and to fund
working capital,  primarily related to inventories and accounts receivable.  The
Company funded an increase in accounts  receivable and inventories of $4,054,000
and $5,954,000,  respectively for the year ended December 31, 1997. The increase
in accounts  receivable  is  attributed  to the timing of receipts  for products
shipped
<PAGE>
relating to the  telecommunications  division.  The increase in inventories  was
primarily  associated  with two new lines of small  business  systems  that were
introduced to the retail and distributor channels in the fourth quarter of 1997.
The  Company's  cash  position  benefited  from a decrease  in prepaid  expenses
related to prepaid  insurance and deposits of $1,897,000.  The Company increased
its total  liabilities,  other than borrowings and net of noncash  activities by
$184,000 from the prior year.

         Net cash provided by investing activities  aggregated $1,691,000 during
1997,  primarily  from the  sale of  short-term  investments  in the  amount  of
$3,114,000, offset in part by the purchase of capital equipment in the amount of
$1,423,000.

         Net cash used in  financing  activities  aggregated  $2,431,000  during
1997,  primarily  from  the  acquisition  of  treasury  stock in the  amount  of
$2,064,000 and the payment of short-term borrowings of $500,000,  offset in part
by proceeds from the issuance of common stock in the amount of $133,000.

         The Company maintained a credit agreement  aggregating  $15,000,000 for
cash  advances and letters of credit.  As of December 31, 1997,  the Company had
$1,500,000  outstanding under this line of credit and $6,469,000  outstanding in
letters of credit. Since December 31, 1997, the Company has paid all outstanding
amounts.  As of December  31,  1997,  the Company did not meet the  tangible net
worth and the debt service coverage covenants with its bank.  Subsequently,  the
Company received a waiver for the covenant violations from the bank.

         The Company's  primary needs for cash in the future are for investments
in product development,  working capital, the financing of operations, strategic
ventures,  potential  acquisitions,  capital expenditures and the upgrade of the
Company's systems and operations.  In order to meet the Company's needs for cash
over the next twelve  months,  the Company will utilize  existing  cash and seek
financing from a financial  institution.  Additionally,  the Company may utilize
funds it expects to generate from operations in the second half of 1998.


INFLATION

         The Company  believes that  inflation has not had a material  effect on
the Company's sales and revenue during the past three years.


YEAR 2000 COMPLIANCE

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

         The Company  has  identified  all  significant  applications  that will
require  modification  to ensure Year 2000  Compliance.  Internal  and  external
resources are being used to make the
<PAGE>
required  modifications and test Year 2000 Compliance.  The modification process
of all significant  applications is substantially complete. The Company plans on
completing the testing process of all  significant  applications by December 31,
1998.

         In addition, the Company has communicated with others with whom it does
significant  business to determine their Year 2000 Compliance  readiness and the
extent to which the Company is  vulnerable  to any third party Year 2000 issues.
However,  there can be no guarantee that the systems of other companies on which
the  Company's  systems  rely will be  timely  converted,  or that a failure  to
convert  by another  company,  or a  conversion  that is  incompatible  with the
Company's systems, would not have a material adverse effect on the Company.

         The total cost to the Company of these Year 2000 Compliance  activities
has not been and is not anticipated to be material to its financial  position or
results of operations  in any given year.  These costs and the date on which the
Company plans to complete the Year 2000  modification and testing  processes are
based on management's  best  estimates,  which were derived  utilizing  numerous
assumptions  of future events  including the continued  availability  of certain
resources,  third party modification plans and other factors. However, there can
be no guarantee  that these  estimates will be achieved and actual results could
differ from those plans.


RECENT ACCOUNTING PRONOUNCEMENTS

         Statement  of  Financial  Accounting  Standards  No. 130 ("SFAS  130"),
"Reporting  Comprehensive  Income",  was  issued  by  the  Financial  Accounting
Standards  Board in June 1997.  This Statement  requires that all items that are
required  to  be  recognized  under   accounting   standards  as  components  of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial  statements.  The Company will adopt SFAS
130 beginning January 1, 1998.

         Statement  of  Financial  Accounting  Standards  No. 131 ("SFAS  131"),
"Disclosures  about  Segments of an  Enterprise  and Related  Information",  was
issued by the Financial  Accounting Standards Board in June 1997. This Statement
establishes  standards for reporting  information  about  operating  segments in
annual financial statements and requires reporting of selected information about
operating segments in interim financial reports issued to stockholders.  It also
establishes  standards  for related  disclosures  about  products and  services,
geographic  areas  and  major  customers.  The  Company  is in  the  process  of
finalizing its determination of its reportable  segments under SFAS 131 and will
adopt SFAS 131 for the year ending December 31, 1998.


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

         The Company  desires to take advantage of the "safe harbor"  provisions
of the Private  Securities  Litigation Reform Act of 1995. The Company wishes to
caution  readers that the following  important  factors,  among others,  in some
cases have affected the Company's actual
<PAGE>
results,  and could cause the Company's  actual results for 1998 and beyond,  to
differ  materially from those expressed in any  forward-looking  statements made
by, or on behalf of, the Company.

Successful Implementation of Business Strategy

     During  1997,  as the market for  telecommunications  products and services
changed, the Company reorganized its telecommunications business in an effort to
streamline its operations and focus its telecommunications business on providing
customer  acquisition  services to telcos and on  developing  a market for small
office/home  office (SOHO)  products.  The Company also continues to conduct its
electronic  commerce  business,  selling  software  to  banks.  There  can be no
assurances that the Company will be able to successfully implement this business
strategy or effectively fund and grow two distinctly separate lines of business.

Developing Marketplace

         Electronic commerce and  telecommunications are developing markets. The
Company's future growth and  profitability  will depend,  in part, upon consumer
acceptance of electronic home banking and telecommunications  technologies. Even
if these markets experience  substantial growth,  there can be no assurance that
the Company's  products and services will be commercially  successful or benefit
from such  growth.  Much of the  Company's  success in the home  banking  market
depends on the  financial  institutions'  success in marketing to the  consumer.
Much of the Company's  success in the  telecommunications  market depends on the
Company's ability to meet design  specifications  and delivery  requirements for
its  products  and  services.  There  can  be no  assurance  of  the  timing  of
introduction of,  necessary  regulatory  approvals for, or market  acceptance of
these services and applications.

Fluctuations in Operating Results

         The Company may experience  fluctuations in quarterly operating results
due to a variety of  factors,  some of which are beyond the  Company's  control.
These include the size and timing of customer  orders,  changes in the Company's
pricing  policies  or those of its  competitors,  new product  introductions  or
enhancements  by  competitors,  delays in the  introduction  of new  products or
product  enhancements  by the  Company  or by its  competitors,  customer  order
deferrals in anticipation of upgrades and new products, market acceptance of new
products,  the  timing  and  nature  of  sales,  marketing,   and  research  and
development expenses by the Company and its competitors,  the timing of programs
offering Caller ID or other intelligent network services by a telco, disruptions
in  sources  of  supply,  the  effects  of  regulation  on  Caller  ID and other
intelligent network services, the timing and extent of promotional activities by
a telco,  changes in  service  charges by a telco,  other  changes in  operating
expenses,  personnel  changes and  general  economic  conditions.  Additionally,
certain  RBOCs  have  recently  merged  and the  Company is unable to assess the
future  effect  on  the  Company  of  these   mergers  and  of  other   possible
consolidations  in the  telecommunications  industry.  No assurance can be given
that such quarterly  variations  will not occur in the future and,  accordingly,
the results of any one quarter may not be indicative  of the  operating  results
for future quarters.
<PAGE>
Reliance on Caller ID Revenues

         A substantial majority of the Company's revenues are derived from sales
and  leases of its  Caller ID  products.  Caller ID is a mature  market  and the
Company has experienced declining gross margins from increased competition.  The
sale or lease of these  products is directly  linked to the  implementation  and
promotion of Caller ID service by telcos. The timing of such  implementation may
be  affected  by  government  regulation,  by changes in the  telecommunications
industry  resulting from changes in the regulatory and competitive  environment,
by switch and software upgrades and by other factors.  There can be no assurance
that telcos will continue to introduce and promote this service  successfully or
that it will gain widespread  market  acceptance.  Delays in the introduction of
Caller ID service in local markets or failure of this service to gain widespread
market acceptance would materially and adversely affect the Company's  business,
operating results and financial condition.

Concentration of Distribution of Products and Services

         The  Company  sells its  telecommunications  products  and  services to
telcos,  individual telephone  subscribers,  other equipment  manufacturers on a
private label basis ("private label  customers") and retail chains. In addition,
the Company  leases its  products to  individual  telco  subscribers.  Sales and
leases  to  individual  telco   subscribers  are  largely  dependent  on  direct
fulfillment distribution arrangements with certain RBOCs and other telcos. Since
the  Company  views  the  telcos  with  which it  maintains  direct  fulfillment
relationships  as its  customers,  it considers  its customer  base to be highly
concentrated.  The Company's  current  telco  fulfillment  arrangements  are not
exclusive and may be terminated by either party.  The loss of any one or more of
the  Company's  major   customers  or  the   termination  of  its   distribution
arrangements with any telco or the failure to be selected for significant orders
or programs by a telco  could  materially  and  adversely  affect the  Company's
business, operating results, and financial condition. In addition, consolidation
in  the  telecommunications   industry  or  changes  in  the  telecommunications
regulatory environment could result in the loss of such customers or business.

InteliData Common Stock Owned by WorldCorp

         As of December 31, 1997, WorldCorp beneficially owned approximately 29%
of the outstanding  common stock of the Company.  WorldCorp is highly leveraged,
and therefore requires  substantial funds to meet debt service requirements each
year. As a result of WorldCorp's cash  requirements,  it may be required to sell
shares of the  Company's  common stock from time to time and such sales,  or the
threat of such sales,  could have a material  adverse effect on the market price
for the Company's  common stock.  In addition,  the Company's Board of Directors
has  seven  members,  three of whom  also  serve on the  Board of  Directors  of
WorldCorp. As a result of membership on the Company's Board and stock ownership,
WorldCorp may have a significant influence on the decisions made by the Company.
<PAGE>
Technological Considerations

         The  Company's   business   activities  are   concentrated   in  fields
characterized by rapid and significant  technological advances.  There can be no
assurance that the Company will remain  competitive  technologically or that the
Company's products, processes or services will continue to be reflective of such
advances. Failure to introduce new products or product enhancements that achieve
market  acceptance on a timely basis could  materially and adversely  affect the
Company's business,  operating results and financial condition.  There can be no
assurance that the Company will not encounter unanticipated technical, marketing
or other problems or delays relating to new products, features or services which
the Company has  recently  introduced  or which it may  introduce in the future.
Moreover, there can be no assurance that the Company's new products, features or
services will be successful,  that the introduction of new products, features or
services by the Company's  competitors  will not materially and adversely affect
the sales of the Company's existing products or that the Company will be able to
adapt  to  future  changes  in  the  telecommunications  industry.  Most  of the
Company's  competitors  and potential  competitors  have  significantly  greater
financial,  technological  and  research  and  development  resources  than  the
Company.

Dependence on Foreign Production

         The  Company's  Caller  ID  units  and  certain  other  products,   are
manufactured by companies with facilities in Hong Kong, Taiwan, and the People's
Republic  of  China.  These  facilities  are  supplemented,  in  part,  by other
manufacturers  in Asia for certain  smart  telephone and small  business  system
products  and  by  limited   manufacturing   facilities  in   Connecticut.   The
availability  or cost of  these  telecommunications  products  may be  adversely
affected by political,  economic or labor conditions in Hong Kong, Taiwan or the
People's Republic of China, including the 1997 return of Hong Kong to China, and
by fluctuations in currency exchange rates. In addition,  a change in the tariff
structure or other trade  policies of the United States or countries  from which
InteliData  will import  products could adversely  affect  InteliData's  foreign
manufacturing strategies.

Competition

   Telecommunications
   ------------------

         The market for the Company's products is highly competitive and subject
to increased  competition  resulting from rapid technological  change as well as
resulting  from  changes  in  the  telecommunications   regulatory  environment,
telecommunications  industry  consolidation  and  the  emergence  of new  market
entrants. At present, the Company's principal competitors are CIDCO, Lucent, and
Northern  Telecom.  The Company's Caller ID products also compete with Caller ID
adjuncts and telephones offered by Panasonic,  Sony,  Thomson, TT Systems and US
Electronics.

         The   Company   expects    competition   in   the   markets   for   its
telecommunications  products  and services to increase in the future and expects
competition from existing and new competitors,  possibly  including RBOCs, other
telcos or other current customers, as well as from network
<PAGE>
switch-based services and from the increased application of cellular technology.
The Company's  primary  current and potential  competitors in the market for its
telecommunications  products and services have substantially  greater financial,
marketing and technical resources than the Company. Competition could materially
and  adversely  affect  the  Company's  results  of  operations   through  price
reductions and loss of market share.

         The Company  competes with a large number of competitors for its repair
services and other services  supporting the  development and  implementation  of
intelligent network services. Several of the Company's competitors in the market
for  such  services  have  substantially   greater   financial,   marketing  and
technological  resources  than the Company.  There can be no assurance  that the
Company  will be able to continue to compete  successfully  against its existing
competitors  or  that  it will be  able  to  compete  successfully  against  new
competitors.

   Electronic Commerce
   -------------------

         The market for interactive  products and services is highly competitive
and subject to rapid  innovation and  technological  change,  shifting  consumer
preferences and frequent new product  introductions.  The Company's home banking
products and services  compete with services  offered by a number of competitors
and  competition  may intensify as a result of new market  entrants.  Banks have
developed home banking products for their own customers and, in the future,  may
offer these  services to other  banks.  Non-banks  also may develop home banking
products to offer to banks. Computer software and data processing companies also
offer home banking services. The Company expects that competition in these areas
will increase in the near future.

Dependence on Key Employees

         The Company is highly  dependent on certain key executive  officers and
technical employees to manage the operations and business of the Company as well
as to implement the business plans of the Company on an ongoing basis.  The loss
of any such key employees could have an adverse impact on the future  operations
of the Company.

Regulation

         The   Telecommunications   Act  of  1996  and   regulations  or  orders
promulgated thereunder may result in or accelerate changes in various aspects of
the  telecommunications  industry,  including the competitive  environment,  the
delivery  and pricing of various  telecommunications  products  and services and
possible  consolidation.  Although the Company is unable to predict what effect,
if any, the Telecommunications Act of 1996 or other regulatory  developments may
have upon the  telecommunications  industry or the Company's business,  any such
effects  could have a material  adverse  impact on the future  operations of the
Company.

         In the United States,  Caller ID and other intelligent network services
are subject to federal  and state  regulation.  Caller ID and other  intelligent
network  services  may in the future be subject  to  further  regulation  by the
federal  government,  state  public  utility  commissions  and other  regulatory
authorities,  as well as court challenges,  including possible challenges due to
<PAGE>
protests from special  interest groups that object to such services on the basis
of privacy concerns.  A series of FCC orders effective December 1, 1995, require
all United States telephone  service providers with Signaling System 7 switching
architecture  to  transmit  to  each  other  without  charge  Caller  ID  number
information on interstate  calls within the United States (except for public pay
phones,  hotel and motel lines, and party lines).  The FCC's orders also require
that by March 28,  1999,  telcos that offer  Caller ID service  must  provide to
their  telephone  subscribers  without charge  per-call  blocking and unblocking
mechanisms to block and unblock the  transmission of their Caller ID information
on interstate calls and must inform subscribers that their telephone numbers may
be  identified  to a called party and how to use these  blocking and  unblocking
capabilities.

Volatility of Stock Price

         The market price of the  Company's  stock has  experienced  significant
volatility.  The stock market has experienced  volatility that has  particularly
affected the market  prices of equity  securities  of many high  technology  and
developmental stage companies and that has often been unrelated to the operating
performance of such companies. Factors such as announcements of the introduction
of new products or services by the Company or its competitors, market conditions
in the banking, telecommunications and other emerging growth company sectors and
rumors relating to the Company or its competitors may have a significant  impact
on the market price of the Company's stock.

Limited Proprietary Protection

         The  Company  possesses  limited  patent  or  registered   intellectual
property rights with respect to its technology. The Company depends in part upon
its proprietary technology and know-how to differentiate its products from those
of its  competitors  and works  independently  and from time to time with  third
parties  with respect to the design and  engineering  of its own  products.  The
Company also relies on a combination of contractual rights and trade secret laws
to protect its proprietary technology. There can be no assurance,  however, that
the Company will be able to protect its technology or  successfully  develop new
technology  or gain access to such  technology or that third parties will not be
able to develop similar  technology  independently  or that competitors will not
obtain unauthorized access to the Company's proprietary  technology,  that third
parties will not misuse the technology to which the Company has granted  access,
or that the  Company's  contractual  or legal  remedies  will be  sufficient  to
protect the Company's interests in its proprietary technology.

         Certain of  Lucent's  Caller ID patents  are  licensed by Lucent to the
Company and others,  including the Company's competitors.  If the Lucent license
were  terminated  and the Company were unable to negotiate a new patent  license
agreement with Lucent,  the Company would no longer be authorized to manufacture
or sell Caller ID products in the United  States  other than to the RBOCs and to
Lucent, and the Company's business would be materially and adversely affected.
<PAGE>
Limited Sources of Supply

         The key components  used in the Company's  products are currently being
purchased from multiple sources,  except for its application specific integrated
circuit ("ASIC") chips,  which are purchased from a single source.  Although the
Company  believes it could develop other sources for each of the  components for
its  products,  the process  could take  several  months,  and the  inability or
refusal  of any such  source to  continue  to  supply  components  could  have a
material adverse effect on the Company pending the development of an alternative
source.

<PAGE>

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-----------------------------------------------------


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Consolidated Financial Statements

      Consolidated Balance Sheets as of December 31, 1997 and 1996............39

      Consolidated Statements of Operations for the Years Ended
        December 31, 1997, 1996 and 1995......................................40

      Consolidated Statements of Stockholders' Equity (Deficit) for the
      Years Ended December 31, 1997, 1996 and 1995............................41

      Consolidated Statements of Cash Flows for the Years Ended
        December 31, 1997, 1996 and 1995......................................42

      Notes to Consolidated Financial Statements for the Years Ended
        December 31, 1997, 1996 and 1995......................................43


Independent Auditors' Reports.................................................63

<PAGE>

                       INTELIDATA TECHNOLOGIES CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996
                        (in thousands, except share data)

<TABLE>
                                                                                        1997            1996
                                                                                    ------------    ------------
<S>                                                                                 <C>             <C>
ASSETS
  CURRENT ASSETS
     Cash and cash equivalents                                                      $      2,055    $     26,644
     Short-term investments                                                                9,304          12,418
     Accounts receivable, net of allowances of $5,679
         in 1997 and $1,788 in 1996 (Notes 14 and 16)                                     13,088          12,925
     Inventories (Notes 5 and 16)                                                         23,020          28,420
     Prepaid expenses and other current assets                                               354           2,582
                                                                                    ------------    ------------
         Total current assets                                                             47,821          82,989

  NONCURRENT ASSETS
     Costs in excess of net assets acquired (Note 3)                                          --          50,061
     Property, plant and equipment, net (Note 6)                                           6,249           9,143
     Other assets                                                                            331           1,553
                                                                                    ------------    ------------
TOTAL ASSETS                                                                        $     54,401    $    143,746
                                                                                    ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
  CURRENT LIABILITIES
     Accounts payable                                                               $      3,659    $      4,684
     Accrued expenses and other liabilities (Note 7)                                       7,527          12,380
     Deferred revenues (Note 2)                                                            2,771             393
     Short-term borrowings (Note 8)                                                        1,500           2,000
                                                                                    ------------    ------------
         Total current liabilities                                                        15,457          19,457

  NONCURRENT LIABILITIES
     Deferred revenues (Note 2)                                                            1,875              --
                                                                                    ------------    ------------
TOTAL LIABILITIES                                                                         17,332          19,457

COMMITMENTS AND CONTINGENCIES (Note 15)

STOCKHOLDERS' EQUITY (Note 10)
    Preferred stock, $0.001 par value; authorized 5,000,000 shares;
      no shares issued and outstanding                                                        --              --
    Common stock, $0.001 par value; authorized 60,000,000 shares; issued
      31,862,449 shares in 1997 and 31,816,693 shares in 1996; outstanding
      31,180,949 shares in 1997 and 31,816,693 shares in 1996                                 32              32
    Additional paid-in capital                                                           245,699         243,757
    Treasury stock, at cost                                                               (2,064)             --
    Receivable from sale of stock                                                             --          (2,456)
    Deferred compensation                                                                    (18)           (133)
    Unrealized gain on investments                                                           425              --
    Accumulated deficit                                                                 (207,005)       (116,911)
                                                                                    ------------   -------------
TOTAL STOCKHOLDERS' EQUITY                                                                37,069         124,289
                                                                                    ------------    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $     54,401    $    143,746
                                                                                    ============    ============

          See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

                       INTELIDATA TECHNOLOGIES CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                      (in thousands, except per share data)

<TABLE>

                                                                         1997             1996              1995
                                                                      -----------      -----------       -----------
<S>                                                                   <C>              <C>               <C>
Revenues
     Telecommunications                                               $    56,358      $    10,942       $     1,817
     Electronic commerce                                                    3,951            2,957             2,369
                                                                      -----------      -----------       -----------
         Total revenues                                                    60,309           13,899             4,186
                                                                      -----------      -----------       -----------
Cost of revenues
     Telecommunications                                                    41,385            8,791             1,747
     Electronic commerce                                                    2,129            1,657               723
                                                                      -----------      -----------       -----------
         Total cost of revenues                                            43,514           10,448             2,470
                                                                      -----------      -----------       -----------

         Gross profit                                                      16,795            3,451             1,716

Operating expenses (Notes 3 and 9)
     General and administrative                                            14,826           16,121             5,783
     Selling and marketing                                                 13,891            2,011                27
     Research and development                                               9,691            2,649             1,067
     Unusual charges (Note 11)                                             69,691           78,782                --
                                                                      -----------      -----------       -----------
         Total operating expenses                                         108,099           99,563             6,877
                                                                      -----------      -----------       -----------

         Operating loss                                                   (91,304)         (96,112)           (5,161)
                                                                      -----------      -----------       -----------

Other income (expense)
     Interest, net                                                          1,271            1,445               684
     Other, net                                                                --           (1,035)             (241)
                                                                      -----------      -----------       -----------
         Total other income, net                                            1,271              410               443
                                                                      -----------      -----------       -----------

Loss before income taxes                                                  (90,033)         (95,702)           (4,718)
Income taxes (Note 13)                                                         61               25                --
                                                                      -----------      -----------       -----------

Net loss                                                                  (90,094)         (95,727)           (4,718)
Preferred dividend requirement (Note 10)                                       --               --              (681)
                                                                      -----------      -----------       -----------

Net loss applicable to common shareholders                            $   (90,094)     $   (95,727)      $    (5,399)
                                                                      ===========      ===========       ===========

Basic loss per common share                                           $     (2.85)     $     (5.21)      $     (0.50)
                                                                      ===========      ===========       ===========

Basic weighted average shares                                              31,574           18,370            10,772
                                                                      ===========      ===========       ===========


          See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

                       INTELIDATA TECHNOLOGIES CORPORATION
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                 (in thousands)

<TABLE>
                               Series A      Series C
                              Convertible   Convertible                Addit-          Recei-           Unreal-
                               Preferred     Preferred     Common      ional           vable    Defer-  ized
                                 Stock         Stock        Stock      Paid-   Trea-   from     red     Gain on Accum-
                             ------------- ------------- ------------  in      sury    Sale     Compen- Invest- ulated
                             Shares Amount Shares Amount Shares Amount Capital Stock   of Stock sation  ments   Deficit      Total
                             ------ ------ ------ ------ ------ ------ ------- ------- -------- ------- ------- ---------- ---------
<S>                          <C>    <C>    <C>    <C>    <C>    <C>    <C>     <C>     <C>      <C>     <C>     <C>        <C>
Balance at December 31, 1994  5,204  $  5   1,148  $  1   5,121  $  5  $12,489 $   --  $(2,500) $  --      --   $ (16,466) $ (6,466)
 Sale of common stock
  in public offering, net        --    --     --     --   3,062     3   41,643     --       --     --      --          --    41,646
 Conversion of preferred
  stock to common stock      (5,204)   (5) (1,148)   (1)  6,352     6      --      --       --     --      --          --        --
 Issuance of common stock:
  Long-term investment           --    --     --     --     230    --    3,392     --       --     --      --          --     3,392
  Investment in affiliate,
   net                           --    --     --     --     297     1    5,046     --       --     --      --          --     5,047
  Exercise of options
   and warrants                  --    --     --     --     468     1    1,419     --       --     --      --          --     1,420
 Deferred compensation on
  grant of stock options         --    --     --     --     --     --      486     --       --   (486)     --          --        --
 Compensation expense            --    --     --     --     --     --      --      --       --    225      --          --       225
 Dividends paid - Series A       --    --     --     --     --     --   (1,577)    --       --     --      --          --    (1,577)
 Dividends paid - Series B       --    --     --     --     --     --     (141)    --       --     --      --          --      (141)
 Dividends paid - Series C       --    --     --     --     --     --   (1,107)    --       --     --      --          --    (1,107)
 Use of advertising credits      --    --     --     --     --     --      --      --       12     --      --          --        12
 Net loss                        --    --     --     --     --     --      --      --       --     --      --      (4,718)   (4,718)
                             ------ ------ ------ ------ ------ ------ ------- ------- -------- ------- ------- ---------- ---------
Balance at December 31, 1995     --    --     --     --  15,530    16   61,650     --   (2,488)  (261)     --     (21,184)   37,733
 Issuance of common stock:
  Braun Simmons Acquisition      --    --     --     --     375    --    4,170     --       --     --      --          --     4,170
  Merger with Colonial Data      --    --     --     --  15,406    15  179,103     --       --     --      --          --   179,118
  Exercise of options
   and warrants                  --    --     --     --     730     1    2,176     --       --     --      --          --     2,177
  Employee stock
   purchase plan                 --    --     --     --       6    --       50     --       --     --      --          --        50
 Retirement of common stock
  for long-term investment       --    --     --     --    (230)   --   (3,392)    --       --     --      --          --    (3,392)
 Use of advertising credits      --    --     --     --     --     --      --      --       32     --      --          --        32
 Compensation expense            --    --     --     --     --     --      --      --       --    128      --          --       128
 Net loss                        --    --     --     --     --     --      --      --       --     --      --     (95,727)  (95,727)
                             ------ ------ ------ ------ ------ ------ ------- ------- -------- ------- ------- ---------- ---------
Balance at December 31, 1996     --    --     --     --  31,817    32  243,757     --   (2,456)  (133)     --    (116,911)  124,289
 Issuance of common stock:
  Employee stock purchase
   plan                          --    --     --     --      45    --      128     --       --     --      --          --       128
  Exercise of options            --    --     --     --       1    --        5     --       --     --      --          --         5
 Cancellation of accrued
  stock options                  --    --     --     --     --     --    1,809     --       --     --      --          --     1,809
 Purchase of treasury stock      --    --     --     --    (682)   --      --   (2,064)     --     --      --          --    (2,064)
 Charge-off of advertising
  credits                        --    --     --     --     --     --      --      --    2,456     --      --          --     2,456
 Compensation expense            --    --     --     --     --     --      --      --       --    115      --          --       115
 Unrealized gains on
  investments                    --    --     --     --     --     --      --      --       --     --     425          --       425
 Net loss                        --    --     --     --     --     --      --      --       --     --      --     (90,094)  (90,094)
                             ------ ------ ------ ------ ------ ------ ------- ------- -------- ------- ------- ---------- ---------
Balance at December 31, 1997     -- $  --     -- $   --  31,181 $  32 $245,699 $(2,064) $   --  $ (18)  $ 425   $(207,005) $ 37,069
                             ====== ====== ====== ====== ====== ====== ======= ======= ======== ======= ======= ========== =========
          See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

                       INTELIDATA TECHNOLOGIES CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                 (in thousands)


<TABLE>
                                                                    1997              1996             1995
                                                                 ----------        ----------       ----------
<S>                                                              <C>               <C>              <C>

Cash flows from operating activities
  Net loss                                                       $  (90,094)       $  (95,727)      $   (4,718)
  Adjustments to reconcile net loss to net cash used in
      operating activities:
  Impairment of assets and advertising credits                       51,052                --               --
  In-process research and development                                    --            77,214               --
  Depreciation and amortization                                       7,335             2,725              619
  Provision for losses on accounts receivable                         3,891                --               --
  Change in inventory reserves                                       11,354                --               --
  Equity in loss of long-term investments                                --             2,801              316
  Deferred compensation expense                                         115               128              225
  Other non-cash activities                                             425              (101)            (162)
  Changes in certain assets and liabilities, net of effects
      of non-cash transactions including acquisitions:
    Accounts receivable                                              (4,054)           (2,318)            (681)
    Inventories                                                      (5,954)           (1,020)            (802)
    Prepaid expenses and other current assets                         1,897            (1,404)             155
    Other assets                                                         --             3,742              (87)
    Accounts payable                                                 (1,025)            3,033              485
    Accrued expenses                                                 (3,044)            1,702              589
    Deferred revenue                                                  4,253               388                5
    Due from (to) affiliates                                             --                --             (113)
                                                                 ----------        ----------       ----------
      Net cash used in operating activities                         (23,849)           (8,837)          (4,169)
                                                                 ----------        ----------       ----------

Cash flows from investing activities
  Purchase of short-term investments                                     --           (12,418)              --
  Purchases of property, plant and equipment                         (1,423)           (2,304)          (1,064)
  Change in restricted cash                                              --             3,309           (3,309)
  Proceeds from sale of other assets, net                                --               231              683
  Sale of short-term investments                                      3,114                --               --
  Acquisitions, net of cash acquired                                     --            17,578               --
                                                                 ----------        ----------       ----------
       Net cash provided by (used in) investing activities            1,691             6,396           (3,690)
                                                                 ----------        ----------       ----------

Cash flows from financing activities
  Proceeds (payments) related to borrowings                            (500)            2,000           (4,633)
  Proceeds from issuances of common stock, net of discount              133             2,177           43,420
  Payments to acquire treasury stock                                 (2,064)               --               --
  Payments for redemption of preferred stock                             --                --           (4,925)
  Payment of preferred stock dividends                                   --                --           (2,684)
  Other financing activities                                             --              (212)            (767)
                                                                 ----------        ----------       ----------
        Net cash provided by (used in) financing activities          (2,431)            3,965           30,411
                                                                 ----------        ----------       ----------

        Increase (decrease) in cash and cash equivalents            (24,589)            1,524           22,552

Cash and cash equivalents, beginning of year                         26,644            25,120            2,568
                                                                 ----------        ----------       ----------

Cash and cash equivalents, end of year                           $    2,055        $   26,644       $   25,120
                                                                 ==========        ==========       ==========


          See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

                       INTELIDATA TECHNOLOGIES CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


(1)      ORGANIZATION

         InteliData Technologies Corporation ("InteliData" or the "Company"), is
engaged  in  providing   products   and   services  for  two  primary   markets:
telecommunications  and electronic commerce.  The Company designs,  develops and
markets telecommunications  products,  including Caller ID adjuncts,  integrated
and smart  telephones,  and markets  small  business  systems to  retailers  and
distributors.  The Company also  develops  products  and services for  financial
institutions to assist in home banking and electronic bill payment initiatives.

         During the fourth quarter of 1997, the Company  announced its intention
to sell the  interactive  services  division  which was  established  to provide
interactive  applications  for use on smart  telephones  and other small  screen
devices,  such as alpha-numeric pagers,  Personal  Communication Systems ("PCS")
devices and personal digital assistants ("PDAs"). The discontinued operations of
the  interactive  services  division  are not  considered  to be material to the
overall financial statements.

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)      Consolidation - The consolidated  financial  statements include the
accounts of the Company  after  elimination  of all  intercompany  balances  and
transactions.  Certain items from the 1996 and 1995  financial  statements  have
been reclassified to conform to the 1997 financial statement presentation.

(b)      Accounting Estimates - 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  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the period. Actual results could differ from those estimates. The Company
considers  the  impairment  of  long-lived  assets based on an assessment of the
asset's  ability  to  contribute  to  the  profitability  of the  Company  using
estimates of expected future cash flows. The Company records inventory  reserves
based on current market conditions.

(c)      Revenue  Recognition - Revenue is recorded  when  products  and  repair
merchandise are shipped to the customer.  Lease revenue is recorded based on the
units in service at the end of the prior month since these leases are cancelable
at any  time.  The  Company  recognizes  service  revenue  from  consulting  and
maintenance contracts as the services are provided.

(d)      Cash and Cash Equivalents - The Company considers all non-restricted
highly liquid investments with original maturities of three months or less to be
cash  equivalents.   Cash  and  cash  equivalents  are  stated  at  cost,  which
approximates market.
<PAGE>
(e)      Short-term Investments - The Company reports its short-term investments
in  marketable  securities  as  available-for-sale  with  any  unrealized  gains
(losses)  reflected as a separate  component of stockholders'  equity.  Realized
gains or  losses  are  determined  on the  first-in,  first-out  method  and are
reflected  in net  income.  Short-term  investments  are  reported at cost which
approximates fair value.

(f)      Inventories - Inventories  are stated at the lower of cost or market,
with cost determined on a weighted average basis.

(g)      Property, Plant and Equipment - Property, plant and equipment is stated
at cost.  Equipment  under  capital  lease is stated at the lower of the present
value of  minimum  lease  payments  at the  beginning  of the lease  term or the
estimated fair value of the equipment at the inception of the lease.

         Depreciation  of  property  and  equipment  is  calculated   using  the
straight-line method over the estimated useful lives of the assets as follows:

                         Category                 Years
                  -------------------------       -----
                  Building and improvements        5-20
                  Leasehold improvements           5-15
                  Leased equipment                  2-5
                  Equipment                         3-7
                  Molds and tools                   3-5

         Equipment  held under  capital  lease and  leasehold  improvements  are
amortized using the straight-line method over the lease term or estimated useful
life, whichever is shorter. The cost and accumulated depreciation of assets sold
or retired  are removed  from the  respective  accounts  and any gain or loss is
reflected in income. Maintenance and repairs are charged to expense as incurred.

(h)      Intangible  Assets - The Company  carried its intangible  assets at
December 31, 1996,  including  costs in excess of net assets  acquired and other
intangible  assets, at cost which were amortized using the straight-line  method
over 2 to 15 years.  Other intangible assets are reported in other assets on the
balance sheet.

(i)      Deferred Revenues - The Company received five million dollars from Visa
as a result of an agreement whereby the Company surrendered the right to certain
future royalty payments. The cash payment is recorded in deferred revenue and is
being recognized in electronic commerce revenues over a two year period.

(j)      Income Taxes - Income taxes are accounted  for in accordance  with the
asset and liability  method.  Deferred tax assets and liabilities are recognized
for  the  future  tax  consequences  attributable  to  differences  between  the
financial  statement  carrying  amounts of existing  assets and  liabilities and
their  respective tax bases.  Deferred tax assets and  liabilities  are measured
using  enacted  tax rates  expected  to apply to taxable  income in the years in
which those temporary
<PAGE>
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in income in the
period that includes the enactment date.

(k)      Accounting for  Stock-Based  Compensation - The Company  applies APB
Opinion  No.  25 and  related  interpretations  in  accounting  for  its  plans.
Statement of Financial  Accounting Standards No. 123 "Accounting for Stock-Based
Compensation"  ("SFAS  123") was issued by the  Financial  Accounting  Standards
Board in 1995 and, if fully adopted, changes the methods for recognition of cost
on plans similar to those of the Company. The Company has elected to continue to
apply the provisions of APB Opinion No. 25 and provide the pro forma  disclosure
provisions of SFAS 123.

(l)      Loss per Common  Share - Basic loss per common share is computed by
dividing net loss, after deducting preferred stock dividend requirements, by the
basic weighted average number of shares of common stock  outstanding  during the
year. Diluted loss per common share includes common stock equivalents consisting
of stock  options.  Diluted loss per share is not  presented  because of the net
losses.  Dilutive  stock  options  that were not  included in the loss per share
computation  because they would have been  antidilutive  for 1997, 1996 and 1995
were approximately 3,250,000, 3,000,000 and 2,400,000, respectively.

         Statement of Financial Accounting Standards No. 128, Earnings Per Share
("SFAS 128") establishes new standards for computing and presenting earnings per
share  ("EPS").  It replaces the  presentation  of primary and fully diluted EPS
with a presentation of basic EPS and diluted EPS,  requires a dual  presentation
on the face of the financial statements,  and requires a reconciliation of basic
EPS to diluted  EPS.  The  presentation  of basic EPS and diluted EPS would have
been the same as EPS actually reported for the respective periods because of net
losses.  All prior net loss per share  amounts  have been  named  basic loss per
share and such amounts were not changed by this required restatement.

         Dividend  requirements  on all series of the Company's  preferred stock
prior to the redemption or conversion of such preferred  stock are deducted from
net income or loss  applicable to common  shareholders in computing net loss per
common share. The preferred dividend requirement was $681,000 for the year ended
December 31, 1995.

(m)      New Accounting  Pronouncements - Statement of Financial Accounting
Standards  No. 130,  Reporting  Comprehensive  Income ("SFAS 130") was issued in
June 1997 and is effective for financial statements beginning after December 15,
1997.  The  statement  establishes  new  standards  for reporting and display of
comprehensive income and its components (revenues,  expenses, gains, and losses)
in a full set of general-purpose financial statements. The impact of SFAS 130 on
future financial statement presentations will be to show comprehensive income.

         Statement of Financial  Accounting Standards No. 131, Disclosures about
Segments of an  Enterprise  and Related  Information  ("SFAS 131") was issued in
June 1997 and is effective for financial statements beginning after December 15,
1997.  This  Statement  establishes  standards for the way that public  business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
<PAGE>
operating segments in interim financial reports issued to shareholders.  It also
establishes  standards  for related  disclosures  about  products and  services,
geographic  areas,  and major  customers.  Management has not yet determined the
impact of SFAS 131 on future financial statement presentations.

(3)      ACQUISITIONS

         On November 7, 1996 US Order,  Inc. ("US Order") and Colonial Data were
merged  with  and  into  InteliData  Technologies  Corporation,  a newly  formed
corporation,  through an exchange of stock ("Mergers"). Upon consummation of the
Mergers,  each outstanding share of US Order common stock was converted into one
share of  InteliData  common stock and each  outstanding  share of Colonial Data
common  stock was  converted  into one share of  InteliData  common  stock.  The
transaction  was  accounted  for as a  purchase  of  Colonial  Data by US Order.
Accordingly,  the  historical  financial  results of US Order are the historical
financial results of InteliData.

         Effective September 30, 1996 Braun, Simmons & Co. ("Braun Simmons"),  a
firm  specializing  in the  development of home banking and electronic  commerce
solutions  for  financial  institutions,  was merged  into US Order (the  "Braun
Simmons  Acquisition").  This  merger was  accounted  for as a purchase of Braun
Simmons by US Order.  US Order  acquired all of the  outstanding  stock of Braun
Simmons for $2 million and 375,000 shares of the Company's common stock.

(a)      Unaudited Pro Forma Condensed Consolidated Financial Information

         The unaudited pro forma condensed consolidated statements of operations
for the years  ended  December  31, 1996 and 1995 give effect to the Mergers and
the Braun Simmons Acquisition as if each was completed as of January 1, 1995 and
combines US Order's, Braun Simmons' and Colonial Data's statements of operations
for each of those  periods.  Such  statements  of  operations do not include the
combined effect of the $77 million  nonrecurring charges for in-process research
and  development.  However,  such  statements  do  reflect  adjustments  for the
elimination  of  historical  transactions  between US Order,  Braun  Simmons and
Colonial Data, amortization of goodwill and related income tax effects.

         The unaudited pro forma condensed consolidated financial information is
provided for illustrative purposes only and is not necessarily indicative of the
consolidated financial information that would have been reported had the mergers
occurred  on the  dates  indicated,  nor do they  represent  a  forecast  of the
consolidated  financial  information  for any future  period.  The unaudited pro
forma condensed consolidated financial information should be read in conjunction
with the historical financial statements and accompanying notes of the Company.
<PAGE>
         Shown  below  is  the  unaudited  pro  forma   condensed   consolidated
statements of operations for the combined  businesses of US Order, Braun Simmons
and Colonial Data (in thousands, except per share amounts).
<TABLE>

Year Ended December 31, 1995:
                                              Historical                                                     Pro Forma
                                  ----------------------------------------                                   ----------
                                  US Order   Braun Simmons   Colonial Data     Adjustments    Reference      InteliData
                                  --------   -------------   -------------     -----------   -------------   ----------
<S>                               <C>        <C>             <C>               <C>           <C>             <C>
Revenues......................... $  4,186        $  1,841       $  74,194         $    --                    $  80,221
                                                                                        --
Cost of revenues.................    2,470           1,024          44,240           1,089              (2)      48,823
Gross profit.....................    1,716             817          29,954          (1,089)             (2)      31,398
Operating expenses...............    6,877             826          11,056           5,494              (3)      24,253
Operating income (loss)..........   (5,161)             (9)         18,898          (6,583)          (2)(3)       7,145
Net income (loss)................   (4,718)            (29)         12,523          (4,313)    (2)(3)(4)(5)       3,463
Basic income (loss) per share.... $  (0.50)                      $    0.87                                    $    0.14
Diluted income (loss) per share.. $  (0.50)                      $    0.84                                    $    0.11
</TABLE>

<TABLE>
Year Ended December 31, 1996:
                                              Pro Forma                                                      Pro Forma
                                  ----------------------------------------                                   ----------
                                  US Order   Braun Simmons   Colonial Data     Adjustments    Reference      InteliData
                                  --------   -------------   -------------     -----------   ------------    ----------
<S>                               <C>        <C>             <C>               <C>           <C>             <C>
Revenues......................... $  4,227        $  3,653       $  63,987       $  (1,894)           (1)    $   69,973
Cost of revenues.................    3,832           2,272          43,490             101         (1)(2)        49,695
Gross profit.....................      395           1,381          20,497          (1,995)           (2)        20,278
Operating expenses...............   19,911           1,284          18,312           2,285            (3)        41,792
Operating income (loss)..........  (19,516)             97           2,185          (4,280)        (2)(3)       (21,514)
Net income (loss)................  (19,349)             67             688           4,011   (2)(3)(4)(5)       (14,583)
Basic and diluted income (loss)
  per share...................... $  (1.20)                      $    0.04                                   $    (0.46)
</TABLE>

         Pro Forma Adjustments

         The following pro forma adjustments have been made to the unaudited pro
forma condensed consolidated financial information:

(1)      Reflects the elimination of intercorporate transactions.

(2)      Reflects the  amortization  associated  with an  allocation  of the
purchase  price of Colonial Data for its lease base of $1.9 million to recognize
the excess of the estimated  fair market value over the carrying  amount and its
amortization on a straight-line basis over five years.

(3)      Reflects  the  allocation  of purchase  price to  developed  technology
and goodwill.  Such developed  technology is amortized on a straight-line  basis
over two years;  goodwill is amortized on a straight-line basis over 7 years for
Braun Simmons and 15 years for Colonial Data.

(4)      Reflects accrual of the transactions and other related costs. Estimated
costs  incurred by Colonial Data relating to the Mergers of $2 million have been
reflected  as expenses in the pro forma  statement  of  operations  for the year
ended December 31, 1995.  Estimated costs incurred by Braun Simmons  relating to
the Braun Simmons  Acquisition of $50,000 have been reflected as expenses in the
pro forma  consolidated  condensed  statement of  operations  for the year ended
December 31, 1995.
<PAGE>
(5)      Reflects the effect of the  combination  of Braun  Simmons', US Order's
and Colonial  Data's  operations  and the above  adjustments  on income taxes. A
valuation  allowance  has been  recognized  for the pro forma net  deferred  tax
assets  of  InteliData,  relating  primarily  to  operating  loss  carryforwards
generated  by US Order prior to the Mergers and the Braun  Simmons  Acquisition,
based on an assessment of the likelihood of recoverability of such amounts. As a
result of the Mergers and the Braun Simmons  Acquisition,  the use of US Order's
operating loss carryforwards may be limited in future years.

(b)      Purchase Accounting   (in thousands)

         The purchase amount of Braun Simmons was:

                  Fair value of common stock issued                      $4,170
                  Cash consideration                                      2,000
                  US Order transaction costs                                913
                                                                         ------
                           Total                                         $7,083
                                                                         ======

         The purchase amount was allocated for Braun Simmons as follows:

                  Current assets                                         $  700
                  Equipment and other                                       286
                  In-process research and development                     4,914
                  Goodwill                                                1,898
                  Liabilities assumed                                      (715)
                                                                         ------
                           Total                                         $7,083
                                                                         ======

         The purchase amount of Colonial Data was:

                  Fair value of common stock issued                    $179,118
                  Fair value of employee stock options and warrants       2,805
                  Cost of previous investment in Colonial Data            3,393
                  US Order transaction costs                              1,309
                                                                       --------
                           Total                                       $186,625
                                                                       ========

         The purchase amount was allocated for Colonial Data as follows:

                  Current assets                                       $ 60,488
                  Lease base                                              3,747
                  Equipment and other                                     5,754
                  In-process research and development                    72,300
                  Developed technology                                    1,418
                  Goodwill                                               49,483
                  Liabilities assumed                                    (6,565)
                                                                       --------
                           Total                                       $186,625
                                                                       ========

         The  allocation  of the  purchase  amounts  to both Braun  Simmons  and
Colonial  Data  tangible  and  identifiable   intangible  assets  was  based  on
independent  appraisals of the estimated  fair value of certain of those assets.
Such   appraisals   indicated   approximately   $5  million  and  $72   million,
respectively,  for  purchased  in-process  research  and  development  for Braun
Simmons and Colonial Data, respectively,  which was expensed by the Company upon
each closing, as the
<PAGE>
technologies  had  not  reached  technological  feasibility  and  did  not  have
alternative  future  uses.  The  unaudited  pro  forma  condensed   consolidated
statements  of  operations  do not include this  one-time  charge for  purchased
in-process technology as it represents a material nonrecurring charge.

(c)      Income (Loss) Per Share

         US Order's  historical  loss per share for the year ended  December 31,
1995 includes $681,000 of preferred dividend requirement which has been deducted
from  historical  net  loss in  determining  net  loss  attributable  to  common
stockholders. All of US Order's series of preferred stock, including accumulated
dividends,  were  redeemed  or  converted  to  common  stock in June  1995.  The
historical   preferred   dividend   requirement   has  been  excluded  from  the
computations of pro forma income (loss) per share.

         The weighted average shares used in the computations of pro forma basic
and  diluted  income  (loss) per share  assumes  that the  shares  issued in the
acquisition  of Braun  Simmons and the total  number of shares  exchanged in the
Mergers  and the  Braun  Simmons  Acquisition,  net of  canceled  intercorporate
investment  shares,  were outstanding for all periods  presented.  The impact of
outstanding  stock options and warrants of the Company has been considered using
the treasury stock method.

(4)      SEGMENT REPORTING

         The   Company   maintains    operations   in   two   primary   markets:
telecommunications and electronic commerce. Intersegment sales are not material.
Operating  loss in these two market  divisions  represents  total  revenues less
operating expenses,  and excludes general corporate  expenses,  other income and
expense and income taxes.  Identifiable assets are those assets employed in each
segment's  operation,  including an  allocated  value to each segment of cost in
excess of net assets acquired.  Corporate  assets consist  primarily of cash and
cash  equivalents,  investments,  and assets not employed in the  production  of
goods or services. Segment financial information is as follows (in thousands):

<TABLE>
                                                     Telecom-         Electronic
                                                    munications        Commerce      Corporate      Consolidated
                                                    -----------       ----------     ----------     ------------
         <S>                                        <C>               <C>            <C>            <C>

         1997
         ----
         Revenues                                   $    56,358       $    3,951         $   --     $    60,309
         Operating loss                                 (68,116)          (6,588)       (16,600)        (91,304)
         Identifiable assets                             40,816              845         12,740          54,401
         Depreciation and amortization                    5,990              450            895           7,335
         Capital expenditures                               907              163            353           1,423

         1996
         ----
         Revenues                                   $    10,942       $    2,957         $   --     $    13,899
         Operating loss                                 (79,014)          (9,072)        (8,026)        (96,112)
         Identifiable assets                             97,801            7,932         38,013         143,746
         Depreciation and amortization                    1,484              198          1,043           2,725
         Capital expenditures                               110              771          1,423           2,304
</TABLE>
<PAGE>
         Operating  losses  for  1997  for  the  telecommunications,  electronic
commerce and corporate  divisions include charges associated with the impairment
of  assets,  including  goodwill  and  advertising  credits,  were  $60,853,000,
$2,035,000  and  $4,331,000,  respectively.  Operating  loss  for  1996  for the
telecommunications and electronic commerce divisions include in-process research
and development  expenses of $72,300,000 and $4,914,000,  respectively.  Segment
information  for 1995 is not  presented  as the Company  did not  operate  under
separate business markets during these periods.

(5)      INVENTORIES

         Inventories consist of the following at December 31 (in thousands):

                                       1997          1996
                                     --------      --------
                 Finished goods      $ 21,912      $ 23,577
                 Raw materials          1,108         4,843
                                    ---------    ----------
                                     $ 23,020      $ 28,420
                                     ========      ========

         The  Company's  inventories  have been reduced by reserves  aggregating
$11,354,000 at December 31, 1997.

(6)      PROPERTY, PLANT AND EQUIPMENT

         Property,  plant and equipment consists of the following at December 31
(in thousands):

                                              1997           1996
                                            --------       --------
                Land and building           $  1,623       $  1,482
                Equipment                      5,801          4,491
                Leased equipment               3,053          4,366
                Leasehold improvements           834            852
                Furniture and fixtures           589            678
                                            --------       --------
                                              11,900         11,869
                Accumulated depreciation      (5,651)        (2,726)
                                            --------       --------
                                            $  6,249       $  9,143
                                            ========       ========

(7)      ACCRUED EXPENSES AND OTHER LIABILITIES

         Accrued  expenses  and  other liabilities consists of the following at
December 31 (in thousands):

                                                            1997         1996
                                                          --------     --------
         Accrued selling expenses                         $  1,363     $    740
         Accrued professional and insurance                  1,176          669
         Accrued wages and related expenses                  1,040        2,387
         Accrued compensation expense                          954        2,805
         Accrued inventory and equipment                       933          713
         Accrued corporate restructuring and acquisition       636        2,476
         Accrued tax liabilities                               408        1,100
         Other liabilities                                   1,017        1,490
                                                          --------     --------
                                                          $  7,527     $ 12,380
                                                          ========     ========
<PAGE>
(8)      BORROWINGS

         In May 1996, the Company entered into a credit facility  agreement with
a bank that provides for borrowings of up to  $15,000,000  for cash advances and
letters of credit.  The loan is secured by  substantially  all of the  Company's
assets and bears  interest at an annual rate equal to the bank's prime rate. The
bank's  prime  rate was  8.50%  and  8.25% as of  December  31,  1997 and  1996,
respectively.  As of December 31, 1997, the Company had  $1,500,000  outstanding
under the line of credit and had  available  $7,031,000  for cash  advances  and
letters of credit.  The weighted average interest rate,  maximum amount borrowed
and  average  amount  borrowed  in 1997 were  8.49%,  $2,100,000  and  $326,000,
respectively.  The carrying  amount of the  borrowings  at December 31, 1997 and
December 31, 1996 represent the fair values at the same dates, respectively. The
loan agreement contains restrictive covenants, the most significant of which are
certain financial ratios and prohibition of dividends.  As of December 31, 1997,
the Company did not meet the tangible  net worth and the debt  service  coverage
covenants  of its  credit  agreement  with  the bank  and was put on  notice  of
default. Subsequently, the Company received a waiver for the covenant violations
from the bank.

         Interest expense was $53,000, $2,000 and $286,000  for the years ended
December  31,  1997,  1996 and 1995,  respectively.  Cash paid for  interest was
$53,000, $16,000 and $324,000 in 1997, 1996 and 1995, respectively.

(9)      RELATED-PARTY TRANSACTIONS

(a)      Strategic Business Partner

         In August 1994,  the Company sold its  electronic  banking and bill pay
operations  (the  "Visa  Bill-Pay   System")  to  Visa.  As  part  of  the  Visa
transaction,  the  Company's  president  was  appointed  to,  and the  Company's
chairman was named an advisor to, the board of  directors  of Visa  InterActive.
Included in service fee revenues are $751,000,  $1,219,000 and $737,000 in 1997,
1996 and 1995, respectively, related to services provided by the Company to Visa
InterActive and Visa  banks/members.  Included in the accompanying  consolidated
balance sheets are receivables due from Visa InterActive totaling $581,000 as of
December 31, 1996 which was paid in 1997. In August 1997,  Visa  InterActive was
sold to an unrelated party and the Company's  officers  resigned from their Visa
InterActive board positions.

(b)      Primary Investor

         The  chairman of the board of directors of the Company is a director of
WorldCorp,  Inc.  ("WorldCorp"),  the  Company's  primary  investor.  Two  other
directors  of the  Company  are  also  members  of the  board  of  directors  of
WorldCorp. WorldCorp owned approximately 29% of the Company's outstanding voting
stock as of December 31, 1997 and 1996.

         The Company had a $3,500,000  long-term  note that was redeemed in June
1995 with a portion of the proceeds from the sale of common stock in its initial
public  offering.  Interest  expense on this long-term note was $216,000 for the
year ended  December 31,  1995.  WorldCorp  also paid  certain of the  Company's
personnel costs including salary, benefits, business and other
<PAGE>
related costs for which the Company was billed on a  cost-reimbursed  basis.  In
November 1996, the Company  terminated this relationship with WorldCorp.  During
the  years  ended  December  31,  1996 and  1995,  the  Company  paid  WorldCorp
approximately   $439,000   and   $207,000,   respectively,   related   to  these
arrangements.  At December  31, 1997 and 1996,  the Company was not  indebted to
WorldCorp for significant amounts.

(c)      Investment in Joint Venture

         On August 4, 1997,  the Company  provided  notice to its joint  venture
partner, Blau Marketing Technologies, Inc. ("BMT") of its intention to terminate
the parties'  joint  venture in Worldwide  Telecom  Partners,  Inc.  ("Worldwide
Telecom")   effective   September   5,   1997.   The  joint   venture   provided
telecommunications   products   combined   with   marketing   services   to  the
telecommunications industry. As of September 30, 1997, the Company wrote-off its
investment in the joint  venture and provided for certain  reserves for accounts
receivable due from the joint venture.

         The Company's subsidiary filed suit in September 1997 against Worldwide
Telecom, BMT and an officer of BMT in Connecticut Superior Court seeking payment
by  Worldwide  Telecom  of  past  due  accounts  receivable  in  the  amount  of
approximately  $11.0 million and making certain other claims including breach of
contract.  BMT filed a separate  suit  against the  Company and its  subsidiary,
Worldwide  Telecom and an officer of the  Company on October  31, 1997  alleging
breach of contract and making certain other claims and seeking damages in excess
of $15,000.  In January  1998,  the Company  settled out of court with BMT in an
agreement  whereby  the  Company  received  the  remaining  ownership  shares in
Worldwide Telecom and cash of $1 million.

(d)      Long-term Investments

         On October 18, 1995, the Company acquired an equity  interest in HFN, a
newly formed, development stage personal computer software company that plans to
develop and deliver electronic financial products and services to consumers.  In
1996, the Company  recorded  losses in its investment in HFN of $2,801,000.  The
Company  believes its  investment was impaired based on the history of losses of
HFN.

(10)     STOCKHOLDERS' EQUITY

(a)      Stock Options

         The Company sponsors  the following  stock  option  plans  which  cover
substantially  all  employees  and  certain  directors:  the US Order 1991 Stock
Option Plan ("1991  Plan"),  the Colonial  Data 1994  Long-Term  Incentive  Plan
("Colonial Data Plan"),  the US Order 1995 Incentive Plan ("1995 Plan"),  the US
Order 1995 Non-Employee  Directors' Stock Option Plan ("1995 Directors'  Plan"),
the  InteliData   1996  Incentive  Plan  ("1996  Plan"),   the  InteliData  1996
Non-Employee Directors' Stock Option Plan ("1996 Non-Employee Directors' Plan"),
the InteliData 1997 Executive Plan, and Additional Plans.
<PAGE>
         1991 Plan
         ---------

         The  Company  had reserved  3,000,000  shares  of common  stock for the
exercise of options  under this plan.  Options are granted for  purchases of the
same number of shares of the Company's common stock. For the 1991 Plan,  options
typically  vest  monthly  over a period of three to five years and expire  after
eight years.  However,  no vesting occurs until after the employee has completed
one year of service with the Company.  The 1991 Plan was terminated in May 1995.
As of December 31, 1997,  there were  1,157,365  shares  vested and  exercisable
under the 1991 Plan.

         Colonial Data Plan
         ------------------

         Colonial  Data's board of directors  authorized the issuance of options
for purchase of common stock for key employees.  The options  entitle the holder
to purchase the  Company's  common stock at the fair market value at the date of
grant.  Colonial  Data's  board  of  directors  as  part of its  1994  Long-Term
Incentive  Plan  authorized  500,000 shares of stock to be available for grants.
The options vest  periodically  through 2000 and expire in 2006 and expire after
10 years  from the date of  grant.  The  Colonial  Data Plan was  terminated  in
November  1996.  As of December 31, 1997,  there were 98,165  shares  vested and
exercisable under the Colonial Data Plan.

         1995 Plan
         ---------

         The  Company  had  reserved  1,000,000  shares of common  stock for the
exercise of options  under this plan.  Options are granted for  purchases of the
same number of shares of the Company's common stock. For the 1995 Plan,  options
typically  vest  monthly  over a period of three to five years and expire  after
eight years from the date of grant.  However,  no vesting occurs until after the
employee has completed  one year of service with the Company.  The 1995 Plan was
terminated in November  1996. As of December 31, 1997,  there were 70,576 shares
vested and exercisable under the 1995 Plan.

         1995 Directors' Plan
         --------------------

         The  Company  had  reserved  250,000  shares  of  common  stock for the
exercise of options  under this plan.  Options were granted for purchases of the
same number of shares of the  Company's  common stock.  For the 1995  Directors'
Plan,  options vest  monthly  over a three year period  beginning on the date of
grant and expire ten years  subsequent to the date of grant. The grant price for
the plan was based on the  average of the  closing  Nasdaq  market  price of the
Company's stock on the thirty trading days preceding the date of the grant.  The
1995  Directors'  Plan was terminated in November 1996. As of December 31, 1997,
there were 3,958 shares vested and exercisable under the 1995 Directors' Plan.

         1996 Plan
         ---------

         The  Company  had  reserved  1,500,000  shares of common  stock for the
exercise of options  under this plan.  Options are granted for  purchases of the
same number of shares of the
<PAGE>
Company's common stock. The exercise price of each option shall not be less than
eight-five  percent (85%) of the fair market value of the Company's common stock
on the date the  option is granted  and an  option's  maximum  term is 10 years.
Options  for  existing  employees  are  granted  by the board of  directors  and
typically vest ratably over four years. Options granted to new hires are awarded
at the  discretion of the Company's  management  in accordance  with  guidelines
approved by the board of directors.  However, typically, no vesting occurs until
after the employee  has  completed  one year of service with the Company.  As of
December 31, 1997,  there were 60,000  shares vested and  exercisable  under the
1996 Plan.

         1996 Non-Employee Directors' Plan
         ---------------------------------

         The Company reserved 200,000 shares of common stock for the exercise of
options under this plan. Options are granted for each non-employee  director who
qualifies for  participation  under the plan.  The exercise price of each option
shall be the fair market  value as defined in the plan of the  Company's  common
stock  and an  option's  maximum  term is 10  years.  For the 1996  Non-Employee
Directors' Plan,  options vest monthly over a period of one year. As of December
31,  1997,  there  were  12,496  shares  vested and  exercisable  under the 1996
Non-Employee Directors' Plan.

         1997 Executive Plan
         -------------------

         The  Company's  Compensation  Committee  approved  the  reservation  of
1,425,000  shares of common stock for the exercise of options in connection with
a newly hired  officer's  agreeing to be employed by the Company under this plan
subject  to the  approval  of the board of  directors.  The  board of  directors
approved  this  plan in  February  1998.  Options  are  granted  by the board of
directors and vest according to different schedules:  925,000 options are vested
in equal annual increments over three years;  500,000 options vest at the end of
eight years but may be accelerated with certain  performance  milestones.  As of
December 31, 1997,  there were no shares vested and  exercisable  under the 1997
Executive Plan.

         Stock Option Repricing
         ----------------------

         In order to motivate and retain employees, on May 21, 1997, the Company
offered employees  participating in the Company's Stock Option Plans, except for
the Chairman of the Board and the Chief  Executive  Officer,  the opportunity to
replace any  remaining  unvested  stock options as of May 21, 1997 with an equal
number of options at an  exercise  price of $6.00,  which was above the  closing
market price on such date.  Approximately,  642,000  stock options with exercise
prices ranging from $6.38 to $23.75 were replaced.  The replacement options vest
over three years from May 21, 1997 in equal  annual  increments.  As part of the
process for the Company's  recruitment of a senior executive officer in December
1997,  the Company's  president  and chief  executive  officer  agreed to cancel
425,000  options with an exercise price of $3.00  previously  granted to him. In
consideration of this cancellation of options, the Compensation Committee of the
board of directors  repriced 850,000 options previously granted to the executive
(of which  750,000 were  vested) from an exercise  price of $7.13 to an exercise
price of $1.80.  The vesting  schedule for the repriced options was also changed
to provide that 425,000  options are vested and the  remaining  425,000  options
will  vest  in  2002,  but  will  accelerate
<PAGE>
upon certain stock performance  milestones.  The Compensation Committee approved
the repricing in February 1998.

         Additional Plans
         ----------------

         In  addition  to  options  issued in 1995  under both the 1991 and 1995
Plans,  the Company  issued  15,000  options to three of its five  non-affiliate
directors  and 25,000  options to a  non-affiliate  who  helped in  arranging  a
placement of Series C preferred stock. Each of these grants has a $7.13 exercise
price. The 45,000 options issued to non-affiliate  directors vest monthly over a
three-year  period,  and the 25,000 options granted to the non-affiliate  vested
immediately.  As of December 31, 1997, of these 45,000  options,  30,000 options
have  been  canceled,  and  options  for  39,166  shares  of  common  stock  are
exercisable under the plan.

         A summary of the  changes in stock  options  for each of the  Company's
stock option plans is as follows:

                                           Exercise Prices
                                           ---------------      Number
                 Description                Min        Max    of Options
                 -----------                ---        ---    ----------

          December 31, 1994               $0.98      $7.13     2,430,921
            Granted                       $7.13     $23.75       406,400
            Exercised                     $0.98      $7.13      (373,106)
            Canceled                      $0.98     $21.00       (22,510)
                                                              ----------
          December 31, 1995               $0.98     $23.75     2,441,705
            Acquired in Mergers           $0.21     $20.38       474,800
            Granted                       $7.00     $23.50       756,530
            Exercised                     $0.98     $18.75      (353,182)
            Canceled                      $0.98     $23.13      (195,294)
                                                              ----------
          December 31, 1996               $0.21     $23.75     3,124,559
            Granted                       $1.63      $6.00     2,916,450
            Exercised                     $4.50      $4.50        (1,000)
            Canceled                      $0.21     $23.75    (1,305,796)
                                                              ==========
          December 31, 1997               $0.21     $23.75     4,734,213
                                                              ==========

         During 1996 and 1995, the Company  recognized  $128,000 and $225,000 of
compensation  expense,  respectively,  in  connection  with  options  granted at
exercise  prices below the estimated  fair market value of the Company's  common
stock at the date of grant.  As of  December  31,  1997,  deferred  compensation
relating  to these  grants  was  $18,000,  which  will be  recognized  over  the
remaining vesting period.

(b)      Stock Compensation Plans

         At December  31,  1997,  the Company has eight stock-based compensation
plans.  The  Company  applies  Accounting  Principles  Board  Opinion No. 25 and
related  Interpretations in accounting for stock options granted under the stock
compensation  plans. Had compensation cost for the Company's stock  compensation
plans been  determined  based on the fair value at the grant dates for the 1997,
1996 and 1995 awards under those plans,  the  Company's  net loss and basic loss
per share for the years ended  December 31, 1997,  1996 and 1995 would have been
<PAGE>
$95,180,000 and $3.01 per share; $99,341,000 and $5.41 per share; and $5,674,000
and $0.53 per  share,  respectively.  Stock  compensation  expense  for 1995 was
calculated  for the period  from the initial  public  offering to the end of the
year.

         The weighted  average fair value of options  granted during 1997,  1996
and 1995 was $2.57, $16.69 and $11.36 per share, respectively. The fair value of
options  granted  was  estimated  on the date of grant  using the  Black-Scholes
option  pricing  model  with the  following  weighted  average  assumptions:  no
dividend  yield,  expected  volatility  of 85%, and a risk free interest rate of
6.00%.

<TABLE>
                                                        Options Outstanding                  Options Exercisable
                                                -------------------------------------       ----------------------
                                                                             Weighted                     Weighted
Plan Description                                               Weighted      Average                      Average
----------------               Range of           Number        Average      Exercise      Number of      Exercise
                            Exercise Prices     of Options       Life        Price          Options       Price
                           -----------------    ----------    ----------     ------         -------       -----
<S>                        <C>                  <C>           <C>            <C>            <C>           <C>
1991 Plan                    $0.98 - $9.50      1,697,383     5.3 years      $2.78       1,157,365       $2.79
Colonial Data Plan           $3.00 - $20.38       186,776     9.2 years      $6.11          98,165       $6.21
1995 Plan                    $6.00 - $23.75       359,754     6.2 years      $8.72          70,576      $18.24
1995 Directors' Plan        $18.86 - $18.86         7,500     9.8 years     $18.86           3,958      $18.86
1996 Plan                    $1.80 - $6.00        997,800     8.7 years      $3.98          60,000       $5.99
1996 Non-Employee
  Directors' Plan            $5.03 - $5.03         20,000     9.3 years      $5.03          12,496       $5.03
1997 Executive Plan          $1.63 - $1.63      1,425,000     8.7 years      $1.63              --          --
Additional Plans             $7.13 - $7.13         40,000     7.0 years      $7.13          39,166       $7.13
</TABLE>

         The Company has options  outstanding and  exercisable in varying  price
ranges. The schedule below details the Company's options by price range:

                             Options Outstanding            Options Exercisable
                      -----------------------------------  ---------------------
                                                Weighted                Weighted
                                    Weighted    Average                 Average
      Range of          Number       Average    Exercise   Number of    Exercise
   Exercise Prices    of Options      Life      Price       Options     Price
  -----------------   ----------   ----------   ------      -------     -----
    $0.98 - $1.63     1,826,811    6.9 years    $1.48        401,811    $0.98
    $1.64 - $3.00     1,480,578    8.2 years    $2.29        469,078    $1.86
    $3.01 - $4.70       174,426    6.0 years    $4.20        111,641    $4.16
    $4.71 - $7.00       834,595    7.4 years    $5.80         82,496    $5.81
    $7.01 - $10.50      323,860    4.8 years    $7.39        292,773    $7.36
   $10.51 - $23.75       93,943    5.8 years   $18.43         83,927   $18.33

(c)      Employee Stock Purchase Plan

         Under the Employee Stock  Purchase Plan,  approved in 1996, the Company
is  authorized  to issue up to 500,000  shares of common stock to its  full-time
employees,  nearly all of whom are eligible to  participate.  Under the terms of
the Plan, employees can choose each period to have up to twenty percent of their
annual base  earnings  withheld to purchase  the  Company's  common  stock.  The
purchase   price   of  the   stock   is  85   percent   of  the   lower  of  its
beginning-of-period  or end-of-period  market price. The Employee Stock Purchase
Plan's first period began  January 2, 1997.  During the year ended  December 31,
1997,  the Company issued 44,307 shares of stock
<PAGE>
under the plan.  The Company had an employee  stock  purchase  plan in existence
during 1996, however, there was not a significant number of shares of stock sold
under the Plan in 1996.

(d)      Treasury Stock

         On August 12, 1997,  the Company  announced that its board of directors
authorized  a stock  repurchase  program  whereby the Company is  authorized  to
repurchase  from time to time up to two million  shares of the Company's  common
stock from the open  market.  As of  December  31,  1997,  the  Company had paid
$2,064,000 to repurchase 681,500 shares of its common stock.

(e)      Receivable from Sale of Stock

         In connection  with a private  placement  offering in 1993, the Company
received  $2,500,000  in  advertising   credits.   The  Company  has  recognized
advertising  credits  aggregating $44,000 through 1996. During the third quarter
of 1997,  the Company  wrote-off the  advertising  credits based on the expected
lack of use of the credit.  As of December 31, 1996, the receivable from sale of
stock  was  included  in  the  accompanying  balance  sheet  as a  reduction  of
stockholders' equity.

(f)      Subsequent Event

         In January 1998, the Company  announced that its Board of Directors has
adopted a  Stockholder  Rights Plan.  The rights are designed to assure that all
the Company's  stockholders receive fair and equal treatment in the event of any
proposed  takeover of the Company and to guard against  partial  tender  offers,
open  market  accumulations  and other  tactics to gain  control of the  Company
without paying all stockholders a control premium.

         Terms  of  the   Stockholder   Rights  Plan   provide  for  a  dividend
distribution of one right for each share of common stock to holders of record at
the close of business on February 6, 1998. Shareholders will be able to exercise
the rights  only in the event,  with  certain  exceptions,  an  acquiring  party
accumulates 20 percent or more of the Company's  voting stock, or if a party (an
acquiring person) announces an offer to acquire 20 percent or more without prior
approval of the Company's Board of Directors.  The rights will expire on January
21, 2008. Each right initially will entitle the holder to buy one one-thousandth
of a share of a new series of preferred stock at a price of $13.

         In addition,  upon the  occurrence  of certain  events,  holders of the
rights will be entitled to purchase either the Company's  common stock or shares
in an acquiring  person at half of market  value.  Further,  at any time after a
person or group acquires 20 percent or more of the Company's  outstanding voting
stock,  the board of directors  may, at its option,  exchange part or all of the
rights (other than rights held by the acquiring person,  which will become void)
for shares of the Company's common stock on a one-for-one basis. The rights will
therefore  cause  substantial  dilution  to a person or group that  acquires  20
percent  or more of the  Company's  common  stock on terms not  approved  by the
board.
<PAGE>
(11)     CORPORATE RESTRUCTURING AND UNUSUAL CHARGES

         The Company recorded a provision for corporate restructuring during the
fourth  quarter of 1996 of  $1,568,000.  This amount  consists of  $1,323,000 in
facilities   consolidations,   $175,000  in  relocation   expenses  for  certain
employees,  and $70,000 for the write-down of duplicative  processing equipment.
During 1997, the Company incurred $301,000 in facilities  consolidation costs in
the second  quarter  when it closed its customer  service  location in Virginia,
incurred $90,000 in relocation costs for certain  employees during the first and
second  quarter,   and  incurred  $70,000  for  the  write-down  of  duplicative
processing  equipment in the first  quarter.  The  remaining  $1,107,000  of the
accrual for corporate  restructuring  costs was associated with other facilities
consolidations  that did not occur  because the Company  recognized  the need to
retain such  facilities  for product  development  during 1997 and  accordingly,
these expenses were reversed back into income during the second quarter of 1997.

         The Company recorded a provision for corporate restructuring during the
third  quarter of 1997 of  $1,003,000.  This  amount  consists  of  $771,000  in
employee  reduction and related  matters,  $190,000 in obsolete  equipment,  and
$42,000 in facilities  closings.  As of December 31, 1997, the Company  incurred
employee reductions and relocation expenses  aggregating $177,000 and write-down
for obsolete  equipment of  $190,000.  As of December 31, 1997,  the Company has
$636,000 in remaining  restructuring accruals recorded on its books.  Management
believes that these costs will be incurred by the Company in 1998.

         During the third  quarter of 1997 the  Company  announced  a  strategic
repositioning  of the  Company's  telecommunications  division  based on  recent
events  in its  marketplace.  In  connection  with  this  repositioning  and the
aforementioned corporate  restructuring,  the Company's management evaluated its
financial  position and  determined  that it would be  appropriate  to charge to
operations  the  remaining   unamortized  costs  of  intangible  assets  due  to
impairment,  adjust  inventory  carrying amounts to the lower of cost or market,
and reflect certain  additional  restructuring  charges,  including  charges for
separation agreements with employees and charges associated with the termination
of a joint venture  agreement.  Additionally,  the Company adjusted the carrying
value of a receivable from the sale of stock for an advertising  credit based on
the  Company's  expected  use of the credit.  Such third  quarter  1997  unusual
charges  aggregated   $49,246,000  for  the  impairment  of  intangible  assets;
$11,333,000  for  inventories  and  commitments;  $1,003,000  for  restructuring
charges (see above); $1,434,000 for separation agreements; $3,653,000 for assets
relating to the joint venture;  and $2,456,000 for impairment of the advertising
credits.  The  impairment  was based on the excess of the carrying  value of the
assets over the assets' fair values. The fair value of the assets were generally
determined as the estimates of future cash flows generated by the assets.

(12)     EMPLOYEE 401(K) SAVINGS PLAN

         The Company adopted a defined contribution plan ("Plan") that qualifies
for  preferential  tax treatment  under Section  401(a) of the Internal  Revenue
Code.  Participation  in the Plan is  available  to  employees  who are at least
twenty-one years of age and have three months of service.  Company contributions
to the Plan are based on a  percentage  of employee  contributions  and were not
significant. Administrative expenses for the Plan were paid for by the Company.
<PAGE>
(13)     INCOME TAXES

         Income  taxes  consist of  current  state  income  taxes of $61,000 and
$25,000 for the years ended December 31, 1997 and 1996, respectively.

         A reconciliation of taxes computed at the statutory federal tax rate on
loss  before  income  taxes to the actual  income tax  expense is as follows (in
thousands):

<TABLE>
                                                                        YEARS ENDED DECEMBER 31,
                                                             --------------------------------------------
                                                                 1997             1996            1995
                                                             -----------      -----------     -----------
<S>                                                          <C>              <C>             <C>

         Income tax benefit computed at the statutory rate   $   (31,512)     $   (33,496)    $    (1,604)
         Book expenses not deductible for tax purposes            27,190           28,378             129
         Generation of net operating loss carryforwards            4,383            5,118           1,475
         State income tax net of federal benefit                      61               25              --
                                                             -----------      -----------     -----------
                 Income taxes                                $        61      $        25     $        --
                                                             ===========      ===========     ===========
</TABLE>

         The tax effects of temporary differences that give rise to  significant
portions of the  deferred  tax assets and  liabilities  at December 31, 1997 and
1996, are as follows (in thousands):

                                                           1997          1996
                                                         --------      --------
         Deferred tax assets:
         Net operating loss carryforwards                $ 20,469      $ 15,942
         Capitalized start-up expenditures                     --           341
         Accounts receivable and inventory revaluation      9,811         6,394
         Equipment and property                               122           137
         General business credit carryforward                 489           489
         Alternative minimum tax carryforward                  60            60
         Other                                                 --           128
                                                         --------      --------
              Total gross deferred tax asset               30,951        23,491
         Valuation allowance                              (30,951)      (22,210)
                                                         --------      --------
              Net deferred tax assets                          --         1,281

         Deferred tax liability:
         Accounts payable and accrued liabilities              --        (1,281)

         Net deferred taxes                              $     --      $     --
                                                         ========      ========

         The net changes in the total  valuation  allowance  for the years ended
December  31,  1997 and 1996 were an  increase of  $8,741,000  and  $13,239,000,
respectively.

         At December 31, 1997, the Company had net operating loss  carryforwards
for federal income tax purposes of  approximately  $50 million,  which expire in
2007 through 2012, general business tax credits of approximately $490,000, which
expire in 2005 through 2010, and an alternative  minimum tax credit carryforward
of approximately  $60,000, which may be carried
<PAGE>
forward indefinitely and used to offset future regular taxable income.  Included
in the Company's net operating loss  carryforward is  approximately  $3,521,000,
related to exercises of employee stock options, which, if utilized in the future
to reduce  taxable  income,  will be  credited  directly to  additional  paid-in
capital. Cash paid for income taxes was not significant in 1997, 1996 and 1995.

(14)     MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

         Financial  instruments that  potentially  subject the Company to credit
risk consist  principally of trade  receivables.  The Company sells its products
primarily to telephone operating companies, retailers and financial institutions
in the United States. The Company believes that the concentration of credit risk
in its trade  receivables is  substantially  mitigated by the Company's  ongoing
credit evaluation  process.  The Company does not generally  require  collateral
from customers. The Company establishes an allowance for doubtful accounts based
upon  factors  surrounding  the credit  risk of specific  customers,  historical
trends and other  information.  Historically,  the Company has not  incurred any
significant credit related losses.

         Revenues from Bell  Atlantic,  Worldwide  Telecom and the US West lease
base  represented 19%, 19% and 14% of total revenues for the year ended December
31, 1997, respectively.  Revenues from Worldwide Telecom, the US West lease base
and Visa InterActive represented 20%, 13% and 11% of total revenues for the year
ended  December  31,  1996.  Revenues  from  Visa  InterActive  and a  financial
institution  were 27% and 11% of total  revenues for the year ended December 31,
1995.

         Accounts receivable from Worldwide Telecom,  the US West lease base and
Bell Atlantic represent 52%, 25% and 16% of the total accounts  receivable as of
December 31, 1997.  Accounts  receivable from Worldwide  Telecom and the US West
lease base represented 24% and 12% of the total accounts  receivable at December
31, 1996.

(15)     COMMITMENTS AND CONTINGENCIES

(a)      Leases

         The Company  leases  facilities  and  equipment  under  cancelable  and
noncancellable  operating  lease  agreements.  The facility leases are for terms
from one to nine years.  Rent expense was $1,054,000,  $907,000 and $234,000 for
the years ended December 31, 1997, 1996 and 1995, respectively.

         Future minimum lease payments under noncancellable operating leases
with initial or remaining terms in excess of one year at December 31, 1997, were
as follows (in thousands):

                                            Year ending December 31,
                                            ------------------------
           1998                                      $  1,017
           1999                                           641
           2000                                            92
                                                     --------
              Total minimum lease payments           $  1,750
                                                     ========
<PAGE>
(b)      Royalties

         The  Company has a license  relating  to certain  Caller ID patents and
technology with Lucent  Technologies,  Inc.  ("Lucent").  For licensed  products
leased,  sold or put in use, the Company  pays a royalty to Lucent.  The Company
also pays a royalty for the sale of Caller ID or other  products  using  certain
RBOC  names in  marketing  channels  other than  sales  directly  to the RBOC or
through an agency program on behalf of the RBOC.  Royalty expense was $1,225,000
and  $106,000  for the year ended  December  31,  1997 and for the  period  from
November 7, 1996 through December 31, 1996, respectively.

(c)      Letters of Credit

         The Company was contingently  liable for outstanding  letters of credit
for overseas purchases  totaling  $6,469,000 and $4,500,000 on December 31, 1997
and 1996, respectively.

(d)      Patent Matters

         The Company does not believe that its products and services infringe on
the  rights  of  third  parties.   From  time  to  time,  third  parties  assert
infringement claims against InteliData.  There can be no assurance that any such
assertion  will not result in costly  litigation or require the Company to cease
using, or obtain a license to use, intellectual property rights of such parties.

(e)      Environmental Matters

         The Company  was  informed  that  certain  environmental  contamination
existed  in the part of the  Company's  premises  formerly  occupied  by another
tenant and that the  Connecticut  Department  of  Environmental  Protection  has
performed  a clean-up  and removed  such  contamination.  The  Company  does not
believe that the foregoing will have a material  adverse effect on the Company's
consolidated financial position or results of operations.

(f)      Litigation

         The Company is not currently a party to any material  litigation.  From
time to time,  the Company is a party to routine  litigation  incidental  to its
business.  Management does not believe that the resolution of any or all of such
routine  litigation  will be likely  to have a  material  adverse  effect on the
Company's financial condition or results of operations.
<PAGE>
(16)     VALUATION AND QUALIFYING ACCOUNTS

         The  components of significant  valuation and  qualifying  accounts for
the years ended December 31, 1996 and 1997 were as follows (in thousands):

                                                 Allowance for
                                                    Doubtful        Reserve for
                                                    Accounts        Inventories
                                                 -------------      -----------

        Balance, December 31, 1995               $          63      $        --
               Acquired in Mergers                       1,725               --
                                                 -------------      -----------
        Balance, December 31, 1996                       1,788               --
               Charged to costs and expenses             4,279           11,354
               Write-offs                                 (388)              --
                                                 -------------      -----------
        Balance, December 31, 1997               $       5,679      $    11,354
                                                 =============      ===========

(17)     UNAUDITED QUARTERLY FINANCIAL DATA

         The results of the Company's  quarterly  operations for the years ended
December 31, 1997 and 1996 were (in thousands, except per share amounts):

<TABLE>
                                              First         Second      Third (1)     Fourth (2)       Total
                                            ---------      ---------    ----------    ----------     ----------
<S>                                         <C>            <C>          <C>           <C>            <C>

         1997
         ----
         Revenues                           $  21,564      $  16,863    $   11,708    $   10,174     $   60,309
         Operating loss                          (251)        (5,130)      (78,859)       (7,064)       (91,304)
         Income (loss) before income taxes        188         (2,817)      (79,160)       (8,244)       (90,033)
         Net income (loss)                        165         (2,837)      (79,178)       (8,244)       (90,094)
         Basic income (loss) per common
            share                           $    0.01      $   (0.09)   $    (2.51)   $    (0.26)    $    (2.85)
         Diluted net income (loss) per
            common share                    $    0.00      $   (0.09)   $    (2.51)   $    (0.26)    $    (2.85)

         1996
         ----
         Revenues                               1,326      $     548    $    1,063    $   10,962     $   13,899
         Operating loss                        (2,033)        (3,145)       (8,451)      (82,483)       (96,112)
         Loss before income taxes              (1,988)        (3,206)       (8,524)      (81,984)       (95,702)
         Net loss                              (1,988)        (3,206)       (8,524)      (82,009)       (95,727)
         Basic and diluted loss per
            common share(3)                 $   (0.13)     $   (0.20)   $    (0.53)   $    (3.21)    $    (5.21)

<FN>
         (1) During the third quarter of 1997, the Company announced a strategic
             repositioning and determined that it would be appropriate to charge
             to operations the remaining  unamortized costs of intangible assets
             due to impairment,  and inventory  carrying amounts to the lower of
             cost or market, and to reflect certain restructuring  charges. Such
             transactions  resulted in an  aggregate  charge of  $69,125,000  to
             operations.

         (2) On November 7, 1996, US Order,  Inc. and Colonial Data Technologies
             Corp. consummated a Plan and Agreement of Merger. Operations of the
             Company  subsequent  to November 7, 1996 reflect the  operations of
             the business of US Order and  Colonial  Data  combined.  The fourth
             quarter of 1996 also includes  in-process  research and development
             charges of $77,214,000 and restructuring charges of $1,568,000.

         (3) Loss per share numbers are not necessarily additive due to current
             year activities and rounding differences.
</FN>
</TABLE>

<PAGE>

                          INDEPENDENT AUDITORS' REPORT




BOARD OF DIRECTORS AND STOCKHOLDERS
INTELIDATA TECHNOLOGIES CORPORATION
HERNDON, VIRGINIA

We have  audited the  accompanying  consolidated  balance  sheets of  InteliData
Technologies  Corporation  and  subsidiaries  (the "Company") as of December 31,
1997  and  1996,  and  the  related   consolidated   statements  of  operations,
stockholders'   equity,   and  cash  flows  for  the  years  then  ended.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements referred to above present
fairly,  in  all  material  respects,   the  financial  position  of  InteliData
Technologies  Corporation and subsidiaries as of December 31, 1997 and 1996, and
the results of their  operations  and their cash flows for the years then ended,
in conformity with generally accepted accounting principles.




DELOITTE & TOUCHE LLP

Hartford, Connecticut
February 4, 1998

<PAGE>

                          INDEPENDENT AUDITORS' REPORT




BOARD OF DIRECTORS AND STOCKHOLDERS
INTELIDATA TECHNOLOGIES CORPORATION

We  have  audited  the  accompanying   consolidated  statements  of  operations,
stockholders'  equity (deficit),  and cash flows for the year ended December 31,
1995.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the results of operations and cash flows of
InteliData  Technologies  Corporation  for the year ended  December 31, 1995, in
conformity with generally accepted accounting principles.




                                                           KPMG PEAT MARWICK LLP

Washington, D.C.
February 5, 1996

<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
---------------------------------------------------------
         ACCOUNTING AND FINANCIAL DISCLOSURE
         -----------------------------------

         None.

<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------

Directors

         The Company incorporates herein by reference the information concerning
directors contained in its Proxy Statement for its 1998 Stockholder's Meeting to
be filed within 120 days after the end of the  Company's  fiscal year (the "1998
Proxy Statement").

Executive Officers

         The following table sets forth the names and ages of all executive
officers  of the  Company  and all  positions  and  offices  within the  Company
presently held by such executive officers:

         Name           Age                  Position Held
         ----           ---                  -------------

 William F. Gorog        72        Chairman of the Board

 John C. Backus, Jr.     39        President and Chief Executive Officer,
                                   Electronic Commerce Division

 Brian A. Bogosian       41        President and Chief Executive Officer,
                                   Telecommunications Division

 John W. Hillyard        41        Vice President and Chief Financial Officer

 Albert N. Wergley       50        Vice President, General Counsel and Secretary

 Mark L. Baird           43        Vice President, Operations


WILLIAM  F. GOROG has served as  Chairman  and  director  of the  Company  since
November  1996.  Mr.  Gorog had served as  Chairman of US Order from May 1990 to
November 1996.  From October 1987 until founding US Order in May 1990, he served
as chairman of the board of Arbor International,  an investment management firm.
From 1982 to 1987,  he served as president  and chief  executive  officer of the
Magazine  Publishers  of America,  an  association  representing  the  principal
consumer publications in the United States. During the Ford Administration,  Mr.
Gorog served as deputy  assistant  to the  President  for  Economic  Affairs and
Executive  Director of the Council on International  Economic  Policy.  Prior to
that time, he founded and served as chief executive officer of DataCorp.,  which
developed the Lexis and Nexis  information  systems for legal and media research
and which was subsequently sold to the Mead Corporation.  He currently serves as
a director of WorldCorp.
<PAGE>
JOHN C.  BACKUS,  JR.  has been Chief  Executive  Officer  since  April 1997 and
President and a director of the Company since November 1996.  Prior to November,
1996,  he had worked at US Order since its  inception  in 1990 and had served as
President,  Chief Operating Officer and a director of US Order since 1994. Prior
to working with US Order,  Mr.  Backus worked for six years at WorldCorp and its
subsidiaries  holding a variety of executive  positions including vice president
of corporate development, vice president of finance, and vice president of sales
and marketing at a WorldCorp subsidiary.  Prior to joining WorldCorp, Mr. Backus
worked for Bain & Company,  Inc.,  a  worldwide  strategy  consulting  firm with
approximately  1,200  employees,  in its consulting  and venture  capital groups
where he focused on consumer  products and  services.  Mr.  Backus serves on the
board of directors of World Airways, Inc. and Home Financial Network.

BRIAN A.  BOGOSIAN has served as President  and Chief  Executive  Officer of the
Company's  Telecommunications  division  since  December  1997 and as a director
since  January  1998.   Before   joining  the  Company,   he  was  president  of
USTeleCenters,  a marketer of local  exchange  services  for the  Regional  Bell
Operating Companies,  since 1988. Prior thereto, he was Senior Vice President of
AIM Telecom,  a New Jersey based  telephone  equipment  company.  Before AIM, he
served  in  management  positions  with  Bell  Atlantic,  Southern  New  England
Telephone, and CTC Communications.

JOHN W. HILLYARD has served as Vice President and Chief Financial Officer of the
Company since January  1997.  Prior  thereto,  Mr.  Hillyard was executive  vice
president and chief financial  officer of Vision  Technologies LLC, an assembler
and seller of computers and  peripherals  from August 1996 to January 1997. From
May 1985 to August  1996,  he was the chief  financial  officer  of Deluxe  Data
Systems,  Inc., an electronic funds transfer services company.  From May 1982 to
May 1985, he was vice president of finance for Hogan Systems,  Inc., a developer
of an integrated line of application software for large financial  institutions.
Mr. Hillyard is a Certified Public Accountant.

ALBERT N.  WERGLEY  has  served as Vice  President  and  General  Counsel of the
Company since November  1996.  From May 1995 to November 1996, he served as Vice
President and General  Counsel of US Order.  From 1986 to 1994,  Mr. Wergley was
vice president and general counsel of Verdix  Corporation (now Rational Software
Corporation),  a manufacturer of software development tools. Previous to that he
was associated  with the McLean,  Virginia  office of the law firm of Reed Smith
Shaw & McClay and with the law firm of Howrey & Simon in Washington, D.C.

MARK L. BAIRD has served as Vice  President of  Operations  of the Company since
November 1996. Mr. Baird had served as Director of Staff  Operations and then as
Vice President of Operations for Colonial Data since July 1994. Prior to joining
Colonial  Data,  Mr. Baird was vice  president of  Consolidated  Asset  Recovery
Corporation, a subsidiary of the Chase Manhattan Bank of Connecticut, N.A., with
responsibilities related primarily to special asset management. Prior to joining
Chase Manhattan,  Mr. Baird held various  positions,  most recently as assistant
vice president of The Bank Mart, a mutual savings bank. Prior to that, Mr. Baird
was  assistant  to the  chairman of the Bodine  Corporation,  a  privately  held
machine tool manufacturer.
<PAGE>
Beneficial Ownership Reporting

         The Company  incorporates herein by reference the information  required
by Item 405 of Regulation S-K contained in its 1998 Proxy Statement.


ITEM 11. EXECUTIVE COMPENSATION
-------------------------------

         The Company incorporates herein by reference the information concerning
executive compensation contained in the 1998 Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------

         The Company incorporates herein by reference the information concerning
security ownership of certain beneficial owners and management  contained in the
1998 Proxy Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

         The Company incorporates herein by reference the information concerning
certain  relationships  and  related  transactions  contained  in the 1998 Proxy
Statement.

<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
-------------------------------------------------------------------------

(a)  1.   FINANCIAL STATEMENTS

          See Item 8 of this Report

     2.   FINANCIAL STATEMENT SCHEDULES

          See Item 8 of this Report

     3.   EXHIBITS   (* denotes filed herewith)

          Status of Prior Documents
          InteliData's  Annual  Report  on  Form  10-K  for the  year  ended
          December 31, 1997, at the time of filing with the  Securities  and
          Exchange   Commission,   shall  modify  and  supersede  all  prior
          documents  filed  pursuant  to  Sections  13, 14, and 15(d) of the
          Securities  Exchange  Act of 1934 for  purposes  of any  offers or
          sales of any securities  after the date of such filing pursuant to
          any  Registration  Statement or Prospectus  filed  pursuant to the
          Securities  Act  of  1933,  as  amended,   which  incorporates  by
          reference such Annual Report on Form 10-K.

          2.1    Agreement  and Plan of Merger  dated as of August 5, 1996,
                 between  Colonial Data  Technologies  Corp.  and US Order,
                 Inc.  (Incorporated  herein by reference to the  Company's
                 Registration   Statement   on  Form   S-4,   File   Number
                 333-11081).

          2.2     Amendment No. 1 dated as of November 7, 1996, by and among
                  US Order,  Inc.,  Colonial  Data  Technologies  Corp.  and
                  InteliData  Technologies  Corporation to the Agreement and
                  Plan of Merger.  (Incorporated  herein by reference to the
                  Company's  Current  Report  on Form  8-K  filed  with  the
                  Commission on November 12, 1996).

          3.1     Certificate of Incorporation  of  InteliData  Technologies
                  Corporation.  (Incorporated herein  by  reference  to  the
                  Company's Registration Statement on Form S-4,  File Number
                  333-11081).

          3.2     Bylaws of InteliData Technologies Corporation. (Incorporated
                  herein by reference to the Company's  Registration Statement
                  on Form S-4, File Number 333-11081).

          10.1    US Order, Inc. 1991 Stock Option Plan. (Incorporated herein
                  by reference to the US Order Registration Statement on Form
                  S-1, File Number 33-90978).
<PAGE>
          10.2    US Order, Inc. 1995 Incentive Plan.  (Incorporated herein by
                  reference  to the US Order  Registration  Statement  on Form
                  S-1, File Number 33-90978).

          10.3    US Order, Inc. Non-Employee  Directors' and Directors' Stock
                  Option  Plans.  (Incorporated  herein by reference to the US
                  Order  Registration  Statements  on Form S-8,  File  Numbers
                  333-2348 and 333-2346).

          10.4    Stock Option Agreement,  dated as of August 1, 1994, between
                  US Order, Inc. and John C. Backus, Jr.  (Incorporated herein
                  by reference to the US Order Registration  Statement on Form
                  S-1, dated June 1, 1995, File Number 33-90978).

          10.5    Amendment  No. 1, dated as of May 1, 1995,  to Stock  Option
                  Agreement  between US Order,  Inc. and John C.  Backus,  Jr.
                  (Incorporated   herein   by   reference   to  the  US  Order
                  Registration Statement on Form S-1, File Number 33-90978).

          10.6    Employment  Agreement,  dated  as of July 1,  1996,  between
                  Colonial  Data  Technologies  Corp.  and  Robert J.  Schock.
                  (Incorporated   herein  by   reference   to  the   Company's
                  Registration Statement on Form S-4, File Number 333-11081).

          10.7    Technical   Information   and  Patent  License   Agreement
                  effective  as of August 1,  1987 by and  between  American
                  Telephone and  Telegraph  and Colonial  Data  Technologies
                  Corp.  (Incorporated  herein by  reference to the Colonial
                  Data Report on Form 10-Q for the quarter  ended  September
                  30, 1989, File Number 0-15562).

          10.8    Colonial Data Technologies Corp. 401(k) Plan.  (Incorporated
                  herein by reference to the Colonial Data Report on Form 10-K
                  for the year ended December 31,
                  1994, File Number 0-15562).

          10.9    Agreement, dated as of March 1, 1996 between Colonial Data
                  Technologies  Corp.  and Robert J.  Schock.  (Incorporated
                  herein by reference  to the  Colonial  Data Report on Form
                  10-Q for the  quarter  ended March 31,  1996,  File Number
                  0-15562).

          10.10   Amended and Restated Loan and Security  Agreement  between
                  Colonial  Technologies  Corp. and People's Bank, dated May
                  3, 1996. (Incorporated herein by reference to the Colonial
                  Data  Report on Form 10-Q for the  quarter  ended June 30,
                  1996, File Number 0-15562).

          10.11   Revolving Credit Note between Colonial  Technologies Corp.
                  and People's Bank, dated May 3, 1996. (Incorporated herein
                  by reference to the Colonial  Data Report on Form 10-Q for
                  the quarter ended June 30, 1996, File Number 0-15562).
<PAGE>
          10.12   Guaranty  Agreement  between  Colonial  Data  Technologies
                  Corp. and People's Bank, dated May 3, 1996.  (Incorporated
                  herein by reference  to the  Colonial  Data Report on Form
                  10-Q for the  quarter  ended June 30,  1996,  File  Number
                  0-15562).

          10.13   Bond Purchase  Agreement by and among CDT Realty Corp. and
                  80  Pickett  District  Associates,  L.L.C.,  dated  as  of
                  September 13, 1996.  (Incorporated  herein by reference to
                  the  Company's  Report on Form 10-Q for the quarter  ended
                  September 30, 1996, File Number 000-21685).

          10.14   InteliData  Technologies  Corporation  1996 Incentive  Plan.
                  (Incorporated   herein  by   reference   to  the   Company's
                  Registration Statement on Form S-8, File Number 333-16115).

          10.15   InteliData Technologies  Corporation Non-Employee Directors'
                  Stock Option Plan.  (Incorporated herein by reference to the
                  Company's  Registration  Statement on Form S-8,  File Number
                  333-16117).

          10.16   InteliData Technologies  Corporation Employee Stock Purchase
                  Plan.  (Incorporated  herein by reference  to the  Company's
                  Registration Statement on Form S-8, File Number 333-16121).

          10.17   Aircraft  Lease  Agreement  between CDT Corp.  and  Colonial
                  Data Technologies Corp. (Incorporated herein by reference to
                  Exhibit 10 to  Registrant's  Report on Form 10-K of the year
                  ended December 31, 1996, File Number 000-21685).

          10.18   Employment   Agreement   dated  August  11,  1997  between
                  InteliData  Technologies  Corporation  and John C. Backus,
                  Jr.  (Incorporated  herein by  reference  to Exhibit 10 to
                  Registrant's  Report  on Form  10-Q of the  quarter  ended
                  September 30, 1997, File Number 000-21685).

        * 10.19   Consulting Agreement dated May 7, 1997 between InteliData
                  Technologies Corporation and Robert J. Schock.

        * 10.20   Employment and Non-Competition Agreement dated December 17,
                  1997 between InteliData Technologies Corporation and Mark L.
                  Baird.

        * 10.21   Employment and Non-Competition Agreement dated December 17,
                  1997 between InteliData Technologies Corporation and John W.
                  Hillyard.

        * 10.22   Employment and Non-Competition Agreement dated December 17,
                  1997 between InteliData Technologies Corporation and Albert N.
                  Wergley.
<PAGE>
          16.1    Letter from KPMG Peat Marwick LLP. (Incorporated herein by
                  reference to the Company's Current Report on Form 8-K filed
                  with the Commission on November 27, 1996).

        * 21.1    InteliData Technologies Corporation List of Significant
                  Subsidiaries.

        * 23.1    Consent of Deloitte & Touche LLP.

        * 23.2    Consent of KPMG Peat Marwick LLP.

          27.1    Financial Data Schedule, December 31, 1997.

          27.2    Financial Data Schedule, March 31, 1997 (restated).


(b)    REPORTS ON FORM 8-K

       The Company filed a Current  Report on Form 8-K with the  Securities  and
Exchange Commission on January 21, 1998.

                          * * * * * * * * * * * * * * *

<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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.

                               INTELIDATA TECHNOLOGIES CORPORATION

                               By      /s/ John C. Backus, Jr.
                                       -----------------------------------------
                                       John C. Backus, Jr.
                                       President and Chief Executive Officer of
                                       Electronic Commerce Division and Director
                                       (Principal Executive Officer)

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
     report  has been  signed  below by the  following  persons on behalf of the
     Registrant and in the capacities and on the dates indicated.

<TABLE>
Signature                      Title                                   Date
---------                      -----                                   ----
<S>                            <C>                                     <C>

/s/ John C. Backus, Jr.        President and Chief Executive Officer   March 30, 1998
-----------------------        of Electronic Commerce Division and
John C. Backus, Jr.            Director (Principal Executive Officer)

/s/ William F. Gorog           Chairman of the Board and Director      March 30, 1998
--------------------
William F. Gorog

/s/ Brian A. Bogosian          President and Chief Executive Officer   March 30, 1998
---------------------          of Telecommunications Division
Brian A. Bogosian              and Director

/s/ John W. Hillyard           Vice President and Chief Financial      March 30, 1998
-------------------            Officer (Principal Financial and
John W. Hillyard               Accounting Officer)

/s/ T. Coleman Andrews, III    Director                                March 30, 1998
---------------------------
T. Coleman Andrews, III

/s/ Patrick F. Graham          Director                                March 30, 1998
---------------------
Patrick F. Graham

/s/ John J. McDonnell, Jr.     Director                                March 30, 1998
--------------------------
John J. McDonnell, Jr.

/s/ L. William Seidman         Director                                March 30, 1998
----------------------
L. William Seidman
</TABLE>