SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

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

                  For the quarterly period ended April 30, 1999

                                       OR

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

           For the transition period from ____________ to ____________

                          Commission File Number 0-9747


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



                    Delaware                          85-0278207
        (State or other jurisdiction of            (I.R.S. Employer
         incorporation or organization)            Identification No.)

        1921 Gallows Road, Suite 200, Vienna, Virginia         22182
           (Address of principal executive offices)         (Zip Code)

       Registrant's telephone number, including area code: (703) 761-3700



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 the  filing
requirements for the past 90 days. Yes |X| No __

As of June 11, 1999,  14,345,528  shares of the  registrant's  Common Stock, par
value $.01 per share, were outstanding.





<PAGE>





                    EXCALIBUR TECHNOLOGIES CORPORATION

                       QUARTERLY REPORT ON FORM 10-Q
                   FOR THE QUARTER ENDED APRIL 30, 1999

                             TABLE OF CONTENTS


                      PART I . FINANCIAL INFORMATION


Item 1.  Financial Statements:                                Page

         Consolidated Balance Sheets
         April 30, 1999 (unaudited) and January 31, 1999........ 3

         Consolidated  Statements of Operations and
         Comprehensive Income (Loss) (unaudited)
         Three months ended April 30, 1999 and 1998............. 4

         Consolidated  Statements of Cash Flows (unaudited)
         Three months ended April 30, 1999 and 1998............. 5

         Notes to Consolidated Financial Statements............. 6

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations................... 10



                    PART II. OTHER INFORMATION

Items 1. - 6................................................... 20


Signatures..................................................... 21















                                       2


<PAGE>
                       EXCALIBUR TECHNOLOGIES CORPORATION
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except per share data)

                                                       April 30,     January 31,
                  ASSETS                                 1999           1999
                                                      (unaudited)
                                                      -----------   ------------
Current Assets:
   Cash and cash equivalents ........................    $  9,224      $  5,851
   Short term investments ...........................         178           --
   Accounts receivable, net of allowance for doubtful
      accounts of $480 and $660, respectively .......       6,894         6,402
   Prepaid expenses and other .......................       2,450         2,291
                                                         --------      --------
       Total current assets .........................      18,746        14,544

Equipment and leasehold improvements,
   net of accumulated depreciation of
   $7,331 and $6,986, respectively ..................       2,033         2,034
Other assets ........................................       2,371         3,134
                                                         --------      --------
      Total assets ..................................    $ 23,150      $ 19,712
                                                         ========      ========
   LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Current portion of capital lease obligations .....    $     20      $    --
   Accounts payable .................................       1,617         1,933
   Accrued expenses .................................       1,439         1,829
   Deferred revenues ................................       2,836         2,690
   Deferred compensation ............................          80            86
                                                         --------      --------
       Total current liabilities ....................       5,992         6,538
                                                         --------      --------
   Capital lease obligations, net of current portion           17           --
                                                         --------      --------
       Total liabilities ............................       6,009         6,538
                                                         --------      --------
Shareholders' Equity:
  5% Cumulative convertible preferred stock,
      $0.01 par value,preference in liquidation
      $10 per share, 1,000 shares authorized;
      27 shares issued and outstanding ..............         271           271
   Common stock, $0.01 par value, 40,000 shares
      authorized; 14,337 and 13,689 shares
      issued and outstanding, respectively ..........         143           137
   Additional paid-in capital .......................      74,411        68,631
   Accumulated deficit ..............................     (57,680)      (55,798)
   Accumulated other comprehensive loss .............          (4)          (67)
                                                         --------      --------
       Total shareholders' equity ...................      17,141        13,174
                                                         --------      --------
       Total liabilities and shareholders' equity ...    $ 23,150      $ 19,712
                                                         ========      ========

              The accompanying notes are an integral part of these
                       consolidated financial statements.
                                       3
<PAGE>

                       EXCALIBUR TECHNOLOGIES CORPORATION
                                AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS AND
                        OTHER COMPREHENSIVE INCOME (LOSS)
                                   (unaudited)
                      (in thousands, except per share data)

                                                      Three Months Ended
                                                           April 30,
                                                     1999             1998
                                                   --------         --------
REVENUES:
  Software ...................................     $  6,527         $  3,731
  Maintenance ................................        1,232            1,324
                                                   --------         --------
                                                      7,759            5,055
                                                   --------         --------
EXPENSES:
  Cost of software revenues ..................        1,023              681
  Cost of maintenance revenues ...............          544              314
  Sales and marketing ........................        3,894            3,228
  Research and product development ...........        2,489            1,898
  General and administrative .................        1,278            1,223
                                                   --------         --------
                                                      9,228            7,344
                                                   --------         --------

Operating loss ...............................       (1,468)          (2,289)

OTHER INCOME / (EXPENSES):
  Interest income, net .......................           58               62
  Equity in net loss of affiliate ............          (41)            (117)
  Write-off of investment in affiliate .......         (430)             --
                                                   --------         --------
Net loss .....................................       (1,882)          (2,344)

Dividends on preferred stock .................            3                3
                                                   --------         --------
Net loss applicable to common stock ..........     $ (1,885)        $ (2,347)
                                                   ========         ========

Basic and diluted net loss per common share ..     $  (0.14)        $  (0.18)

Weighted-average number of
  common shares outstanding ..................       13,927           13,219

Other comprehensive income (loss):
Net loss .....................................     $ (1,882)        $ (2,344)
   Foreign currency translation adjustment ...           63              (40)
                                                   --------         --------
Comprehensive loss ...........................     $ (1,819)        $ (2,384)
                                                   ========         ========

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

                                       4

<PAGE>

                EXCALIBUR TECHNOLOGIES CORPORATION
                         AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (unaudited)
                          (in thousands)

                                                     For the Three Months Ended
                                                                 April 30,
                                                             1999         1998
                                                           --------     --------
Cash Flows from Operating Activities:
   Net loss ..........................................     $(1,882)     $(2,344)
   Adjustments to reconcile net loss to net
      cash used in operating activities:
       Depreciation and amortization .................         406          370
       Bad debt expense ..............................          40          125
       Equity in net loss of affiliate ...............          41          117
       Write-off of investment in affiliate ..........         430          --
   Changes in operating assets and liabilities:
       Accounts receivable ...........................        (579)       1,380
       Prepaid expenses and other ....................          93         (689)
       Accounts payable and accrued expenses .........        (690)        (335)
       Deferred revenues .............................         165          (31)
                                                           -------      -------
   Net cash used in operating activities .............      (1,976)      (1,407)
                                                           -------      -------
Cash Flows from Investing Activities:
   Purchase of investments ...........................        (178)         --
   Proceeds from maturities of investments ...........         --         1,496
   Other assets ......................................         --           (96)
   Purchases of equipment and leasehold improvements .        (330)        (306)
                                                           -------      -------
   Net cash provided by (used in) investing activities        (508)       1,094
                                                           -------      -------
Cash Flows from Financing Activities:
   Proceeds from the exercise of stock options .......         999          262
   Gross proceeds from the issuance of common stock ..       5,037           50
   Issuance cost in connection with private placement         (256)         --
   Repayment of capital lease obligations ............          (9)         --
                                                           -------      -------
   Net cash provided by financing activities .........       5,771          312
                                                           -------      -------

The Effect of Exchange Rate Changes on Cash ..........          86         (101)
                                                           -------      -------

Net Increase (Decrease) in Cash and Cash Equivalents .       3,373         (102)

Cash and Cash Equivalents, beginning of period .......       5,851        4,939
                                                           -------      -------
Cash and Cash Equivalents, end of period .............     $ 9,224      $ 4,837
                                                           =======      =======

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


                                       5
<PAGE>


                       EXCALIBUR TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 April 30, 1999


(1)   THE COMPANY

The  consolidated   financial  statements  include  the  accounts  of  Excalibur
Technologies Corporation ("Excalibur") and its wholly owned subsidiaries.  These
entities  are  collectively  referred  to  hereinafter  as  the  "Company."  All
significant intercompany transactions and accounts have been eliminated.

The Company designs, develops and markets enterprise-wide accurate, scalable and
secure  knowledge  retrieval and digital  asset  management  software  solutions
capable of supporting  paper,  text,  image and video data.  The Company  offers
consulting,  training, product maintenance and system implementation services in
support of its software  products.  The Company  licenses its software  products
directly to commercial  businesses  and  government  agencies  throughout  North
America,  Europe and other parts of the world and also  distributes its software
products to end users through  license  agreements with  value-added  resellers,
system  integrators,   original  equipment  manufacturers  and  other  strategic
partners.

The Company  incurred a net loss of $1.9 million in the three month period ended
April 30, 1999 and has incurred cumulative losses of approximately $19.4 million
over the last three fiscal years. The accumulated  deficit at April 30, 1999 was
$57.7  million.  The  Company's  operations  are  subject to  certain  risks and
uncertainties  including,  among others,  the dependence  upon the timing of the
closing on sales of large software licenses; actual and potential competition by
entities with greater financial  resources,  experience and market presence than
the Company;  rapid technological  changes; the success of the Company's product
marketing  and  product  distribution  strategies;  the  risks  associated  with
acquisitions and international expansion; the need to manage growth; the need to
retain key personnel and protect intellectual  property; and the availability of
additional capital financing on terms acceptable to the Company.


(2)   SIGNIFICANT ACCOUNTING POLICIES

Financial Statement Presentation

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  reporting  period.
Actual results could differ from those estimates.

These consolidated  financial statements are unaudited and have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission  regarding  interim  financial  reporting.  Accordingly,  they do not
include all of the  information  and  footnotes  required by generally  accepted
accounting  principles for complete  financial  statements,  and it is suggested

                                       6
<PAGE>


that these  consolidated  financial  statements be read in conjunction  with the
consolidated  financial  statements,  and the  notes  thereto,  included  in the
Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1999.
In the opinion of  management,  the  consolidated  financial  statements for the
fiscal  periods  presented  herein include all  adjustments  that are normal and
recurring  which are  necessary  for a fair  statement  of the  results  for the
interim  periods.  The results of  operations  for the three month  period ended
April 30,  1999 are not  necessarily  indicative  of the  results for the entire
fiscal year ending January 31, 2000.

Revenue Recognition

The American  Institute of Certified Public  Accountants has issued Statement of
Position 97-2,  "Software  Revenue  Recognition,"  ("SOP 97-2") that  supersedes
Statement of Position 91-1. The Company has  implemented SOP 97-2 in fiscal year
1999 and it has not had a material  financial  impact on the  Company.

Revenues  from  the sale of  computer  software  licenses  are  recognized  upon
shipment of product provided that the fee is fixed and determinable,  persuasive
evidence of an agreement  exists and  collection of the resulting  receivable is
considered probable.  Revenues related to agreements with customers that contain
future performance requirements are recognized when the performance requirements
are satisfied.  Revenues related to customer support agreements are deferred and
recognized ratably over the term of the respective agreements, which are usually
one year in length.

Customization is sometimes involved in the development of a software solution by
the Company. Under these circumstances,  the Company's revenues are derived from
fixed    price    contracts    and    revenue    is    recognized    using   the
percentage-of-completion  method  based  on the  relationship  of  actual  costs
incurred  to total  costs  estimated  to be  incurred  over the  duration of the
contract.

Cash, Cash Equivalents and Short Term Investments

The Company considers all highly liquid  investments  purchased with an original
maturity  of  three  months  or less to be cash  equivalents.  Cash  equivalents
consist of funds deposited in money market accounts.  Consequently, the carrying
amount of cash and cash equivalents approximate fair value. The balance of short
term investments at April 30, 1999 consisted of a certificate of deposit pledged
to collateralize a letter of credit required for a leased facility.

Net Loss Per Common Share

Basic loss per common share includes no dilution and is computed by dividing net
loss available to common  stockholders by the weighted  average number of common
shares  outstanding  for the period.  Diluted loss per common share includes the
potential  dilution that would occur if  securities or other  contracts to issue
common stock were exercised or converted into common stock.  Options to purchase
2,475,225 shares of common stock and cumulative convertible preferred stock that
were  outstanding  at April 30,  1999 were not  included in the  computation  of
diluted  loss per common  share as their  effect  would be  anti-dilutive.  As a
result, the basic and diluted loss per common share amounts are identical.


                                       7

<PAGE>

Income Taxes

Deferred taxes are provided utilizing the liability method, whereby deferred tax
assets are recognized for deductible  temporary  differences  and operating loss
and tax credit  carryforwards  and deferred tax  liabilities  are recognized for
taxable temporary differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax bases. Deferred tax
assets and  liabilities  are adjusted for the effects of changes in tax laws and
rates on the date of  enactment.  Deferred tax assets are reduced by a valuation
allowance  when, in the opinion of  management,  it is more likely than not that
some portion or all of the deferred tax assets will not be realized. The Company
has provided a full valuation allowance against its net deferred tax asset as of
April 30, 1999 and January 31, 1999, respectively.

Segment Reporting

The Company  operates as a single segment.  For the three months ended April 30,
1999,  revenues from two individual  customers  comprised  approximately 17% and
10%,  respectively.  Revenues  derived  from  sales  to  agencies  of  the  U.S.
Government were approximately 12% of total revenues for the current quarter.


(3)   INVESTMENT IN AFFILIATE

In  July  1996,  the  Company  authorized  the  use of  its  name  by  Excalibur
Technologies N.V. ("ETNV"),  a Belgian company incorporated in June 1996 for the
purpose of selling and marketing the  Company's  products and services  within a
large  territory  including  most of  Northern  Europe  and Italy.  The  Company
contributed approximately $488,000 in cash to ETNV in consideration for 13.2% of
its  voting  capital  stock.  In May  1999,  the  Company  terminated  its  1996
distribution  agreement  with ETNV because  ETNV failed to pay to Excalibur  the
minimum  required  license  fees  for the  quarter  ended  January  31,  1999 of
approximately $900,000 as well as an additional  approximately $400,000 that was
due on  April  20,  1999.  Promptly  after  giving  notice  of such  termination
Excalibur  commenced  a lawsuit  in the  United  States  District  Court for the
Eastern District of Virginia seeking as damages such unpaid minimum license fees
and other amounts due and owing from ETNV.

In  connection  with the  original  organization  of ETNV,  the  Company  issued
warrants to purchase  148,500  shares of the  Company's  common stock to certain
shareholders  of ETNV.  The warrants were  exercisable  at a price of $22.00 per
share for a term of seven  years  but only if ETNV  achieved  certain  financial
objectives.  The value of the warrants on the date of grant was  estimated to be
$758,000  and  was  included,  net  of  amortization,  in  other  assets  in the
consolidated  balance sheet at April 30, 1998. As a result of the termination of
the Company's  distribution  agreement with ETNV, the  unamortized  value of the
warrants and investment costs totaling  $430,000 were written off in the quarter
ended April 30, 1999.

Prior to termination of the distribution agreement,  the Company's investment in
ETNV was accounted for using the equity method. The original investment exceeded
the  Company's  share of the  underlying  net  assets  of ETNV by  approximately
$827,000.   The  excess  was  being  amortized  over  a  five-year  period.  The
amortization  of the excess,  as well as the Company's  share of ETNV's net loss
for the  period  and the  elimination  of the  Company's  share of gross  profit


                                       8
<PAGE>

included in ETNV's  prepaid  license fees at April 30, 1999 and 1998 is included
in equity in net loss of affiliate in the accompanying  consolidated  statements
of  operations  for the three  months  ended  April 30,  1999 and 1998.  The net
balance of the  investment  in and  advances to ETNV of $471,000 was included in
other assets in the accompanying consolidated balance sheet at January 31, 1999.
That  account  had a net  balance of  $430,000  when it was  written  off in the
quarter ended April 30, 1999.  No revenue  related to the agreement was recorded
in the first quarter of the current year. Revenue of $330,000 was recognized for
the quarter ended April 30, 1998.


(4)    CAPITALIZATION

Stock Offerings

In March 1999 the Company  completed a private  placement of 500,000 shares (the
"Shares") of its common stock to unaffiliated accredited investors, most of whom
are institutional  investors. The Shares were sold at a purchase price of $10.00
per share,  resulting  in net  proceeds  to the  Company of  approximately  $4.7
million. Net proceeds from the placement will be used to fund ongoing operations
and general corporate purposes of the Company.  The Company filed a registration
statement under the Securities Act of 1933 covering resale of the Shares on June
4, 1999.  The Shares were sold  pursuant to an exemption  from the  registration
requirements of the Securities Act of 1933.

During the first quarter of the current  fiscal year, the Company issued 143,000
shares of common  stock upon the  exercise  of options  resulting  in total cash
proceeds of $1,005,000 and the  utilization of $6,000 of deferred  compensation.
Additionally  the Company issued 4,000 shares of common stock to participants of
the employee stock purchase plan resulting in cash proceeds of $38,000.


(5)   RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
133,  "Accounting  for  Derivative  Instruments  and Hedging  Activities."  This
statement  establishes  accounting and reporting  standards requiring that every
derivative  instrument,  including certain  derivative  instruments  embedded in
other  contracts,  be  recorded  in the  balance  sheet  as  either  an asset or
liability  measured at its fair value.  The statement also requires that changes
in the  derivative's  fair value be recognized in earnings unless specific hedge
accounting  criteria are met. The Company  believes the adoption of SFAS No. 133
will not have a material effect on the financial statements.

The American  Institute of Certified Public  Accountants has issued Statement of
Position 98-9,  "Modification of SOP-97-2,  Software Revenue  Recognition,  With
Respect to Certain Transactions." SOP 98-9 is effective for revenue transactions
entered into in the  Company's  fiscal year 2001.  The Company has evaluated SOP
98-9 and does not  believe  its  adoption  will  have a  material  effect on the
financial statements.






                                       9

<PAGE>

Item 2.    Management's   Discussion   and  Analysis  of  Financial
Condition and Results of Operations

Overview

The  statements  contained  in this  report that are not purely  historical  are
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the  Securities  Exchange Act of 1934,  including
without  limitation  statements  about  the  Company's  expectations,   beliefs,
intentions or strategies  regarding the future. All  forward-looking  statements
included in this report are based on information available to the Company on the
date  hereof  and  the  Company   assumes  no  obligation  to  update  any  such
forward-looking  statements.  The  forward-looking  statements  contained herein
involve  risks and  uncertainties.  The  Company's  actual  results could differ
materially  from those  anticipated  in these  forward-looking  statements  as a
result of certain factors, including those set forth in this report.

The Company  principally  earns  revenues  from the  licensing  of its  software
products to commercial  businesses  and  government  agencies  throughout  North
America,  Europe and other parts of the world. The Company licenses its software
to end-users directly and also distributes its software products through license
agreements with value-added  resellers,  system integrators,  original equipment
manufacturers and other strategic partners. Revenues are provided under software
licenses with new  customers  and from the related sale of product  maintenance,
training  and  implementation  support  services.  Additions  to the  number  of
authorized users,  upgrades to newer product versions and the renewal of product
maintenance arrangements by customers pursuant to existing licenses also provide
revenues to the Company.  Under software  maintenance  contracts,  customers are
typically  entitled to receive  telephone  support,  software  bug fixes and new
releases of particular software products when and if they are released.

The Company's  software  products are designed to enable  individuals to quickly
search and  retrieve  relevant  information  residing  on a  LAN/WAN,  intranet,
paper-based archive,  extranet,  video archive or the Internet through a unified
web-based  user  interface.  There  are  generally  two  markets  today  for the
Company's  products,  text knowledge retrieval and video indexing and retrieval.
The  market  for  text  knowledge  retrieval  products  consists  of  electronic
publishing,  online  information  services,  global corporate  intranets,  paper
archival systems as well as market,  business and government  intelligence.  The
market for video  indexing and  retrieval  solutions  includes  application  and
website  developers,  certain  government  agencies as well as commercial media,
entertainment  and broadcasting  companies.  Text knowledge  retrieval  products
include the  RetrievalWare  family of products and EFS. Visual products  include
Visual  RetrievalWare,  VAE and Screening Room, an advanced  end-to-end solution
for  real-time  capturing,  analyzing,  cataloguing,   browsing,  searching  and
retrieving video over intranets and extranets, that began shipping in the second
quarter of fiscal year 1999.

The following chart  represents  revenues and expenses (in thousands of dollars)
attributable  to the text and visual  product  lines for the three month periods
ending April 30, 1999 and 1998. Expenses for each product line consist of direct
and allocated expenses.




                                       10

<PAGE>

                                      Text Products           Visual Products
                                      -------------           ---------------
                                    Three months ended      Three months ended
                                         April 30,               April 30,
                                     1999        1998        1999         1998
                                   --------    --------    --------    --------
Total Revenue ..................   $  6,849    $  4,861    $    910    $    194
Operating Expenses .............      7,027       5,881       2,201       1,463
                                   --------    --------    --------    --------
Operating Income (Loss) ........   $   (177)   $ (1,020)   $ (1,291)     (1,269)
                                   ========    ========    ========    ========


The Company believes that in addition to other competitive advantages,  it holds
a competitive  advantage in that the Company's products accommodate the indexing
and  retrieval of multiple  data types.  The Company  expects that over time, as
video becomes a more common data type, these two markets will merge.


Results of Operations

Revenues
--------
Total  revenues  increased 54% in the first quarter of the current year over the
first quarter last year.  Revenue from the Company's  flagship product Excalibur
RetrievalWare  increased  64% in the first  quarter of the current  year to $5.6
million from $3.4 million in the first quarter of the prior year.  RetrievalWare
revenue  represented 86% of software product revenue in the first quarter of the
current year compared to 92% in the first  quarter last year.  Revenues from the
Visual  Products  Group rose to $0.9  million in the current  quarter  from $0.2
million in the first quarter last year.  Revenue from the Visual  Products Group
now  represents  14% of  software  product  revenue  compared to 4% in the first
quarter last year. Due to the Company's  transition from the EFS product line to
RetrievalWare,  there were no sales of EFS in the first  quarter of the  current
year compared to sales of $0.1 million in the first quarter last year.

Total  software  revenue  increased  75% in the first  quarter this year to $6.5
million from $3.7 million in the first quarter last year. International software
revenues  increased 51% to $2.0 million in the first quarter of the current year
from $1.4 million in the first quarter last year.

The charts below  summarize the  components of revenues and expenses,  including
the amounts  expressed as a percentage  of total  revenues,  for the three month
periods ended April 30, 1999 and 1998, and the percentage  change in the amounts
between fiscal periods (dollars in thousands).











                                       11

<PAGE>

                                Components of Revenue and Expenses    Increase/
                                   Three Months Ended April30,       (Decrease)
                                     1999                1998
                                --------------      --------------      ------
                                        % of               % of
                                        total              total
                                 $    revenues       $    revenues         %
                                --------------      --------------      ------
  Revenues:
   RetrievalWare ............   $5,642    73 %      $3,434    68 %        64 %
   EFS ......................      --     --           112     2        (100)
   Visual Products Group ....      885    11           185     4         378
                                --------------      --------------      ------
  Total Software ............    6,527    84         3,731    74          75
  Maintenance ...............    1,232    16         1,324    26          (7)
                                --------------      --------------      ------
     Total revenues .........   $7,759   100 %      $5,055   100 %        53 %
                                --------------      --------------      ------
  Expenses:
   Costs of sales ...........   $1,567    20 %      $  995    20 %        57 %
   Sales and marketing ......    3,894    50         3,228    64          21
   Research and product
     development ............    2,489    32         1,898    38          31
   General and administrative    1,278    16         1,223    24           4
                                --------------      --------------      ------
     Total expenses .........   $9,228   119 %      $7,344   145 %        26 %
                                --------------      --------------      ------

Revenue increases continue to be driven by three primary areas of growth.  These
include  increased  sales to  organizations  with major  intranets and corporate
portal  installations,  increased  sales to Internet  businesses and web content
providers,  and increased  indirect sales via major integration and distribution
partnerships.

The  first  area  of  revenue  growth  came  from  sales  of   RetrievalWare  to
organizations  with large intranets seeking to implement high performance search
and retrieval  software or replace existing search  technology.  Typically these
are maturing  corporate intranet sites dealing with expanding amounts of content
and multimedia  datatypes  that need to be effectively  accessed and utilized by
the organization. Software license sales to the intranet or knowledge management
market  were 50% of all  software  license  sales in the  first  quarter  of the
current year and 57% in the first quarter of the prior year.

A second area of revenue growth came from sales of Excalibur  RetrievalWare  and
WebExpress to Internet web portals looking to provide customers with an enhanced
search experience.  Typically these are online businesses who place a high value
on their content and whose  customers  demand the most accurate  search  results
from the  greatest  amount of  information.  In the first  quarter,  the Company
signed a new agreement with  Information  Handling  Services Group ("IHS"),  the
world's  largest  single  source  of   engineering,   technical  and  regulatory
information. Revenues derived from IHS were 10.4% of total revenues in the first
quarter.  Overall, there are now more than 40 companies using Excalibur products
to power  online  information  services  and  applications.  Sales  to  Internet
businesses  and  web  content  providers  represented  20% of  software  license
revenues in the first  quarter of the current year  compared to 17% in the first
quarter last year.

                                       12
<PAGE>

The third  area of growth  came  from  existing  OEM  partners  such as  Storage
Technology Corporation ("StorageTek"). The Company's partnership with StorageTek
calls for the joint development of advanced  solutions called Network Appliances
which are integrated software, tape and disk storage solutions that enable fast,
easy and  intelligent  management  of large  amounts  of  corporate  information
ranging from  electronic  text to video.  Currently there are two new appliances
that have been built upon Excalibur  RetrievalWare and Excalibur  Screening Room
products.  The Media Management Network Appliance  utilizing Excalibur Screening
Room was  shipped  in April of 1999,  while the  MessageVault  e-mail  appliance
utilizing Excalibur RetrievalWare is scheduled to be shipped in June of 1999. In
the first quarter of the current year, the Company recognized approximately $1.3
million from the StorageTek  agreement.  To date,  revenue of approximately $3.6
million has been recognized from the StorageTek  agreement.  The balance will be
recognized  as revenue over the remainder of the current  fiscal year.  Overall,
the  Company's  indirect  sales  strategy  continues to focus on  strategic  OEM
agreements that provide real revenue opportunity. OEM relationships provided 30%
of license  revenue for the first  quarter of the current  year  compared to 26%
during the same period last year.

Maintenance  revenue  dropped 7% in the first  quarter this year to $1.2 million
from $1.3  million in the first  quarter  last year.  The decrease is due to the
continued  transition of the business from EFS to  RetrievalWare  as well as the
increase  in  revenues  from  OEM  agreements  that  do  not  have   significant
maintenance  components.  While the EFS customer base in general is not renewing
their maintenance  contracts,  the RetrievalWare  base of maintenance  contracts
continues to grow as RetrievalWare license sales grow, but the overall effect is
a flattening of maintenance revenue in the current fiscal year.

Costs of Sales
--------------
Costs of sales increased 58% to $1.6 million in the first quarter of the current
year from $1.0 million in the first  quarter last year.  The increase is related
primarily to the sales volume increase. Costs of sales expressed as a percentage
of total sales was 20% in both the first  quarter of the current year as well as
last year.

Operating Expenses
------------------
Sales and marketing  expenses  increased 21% in the quarter ended April 30, 1999
to $3.9 million from $3.2 million in the first  quarter last year,  representing
50% and 64% of total  revenues,  respectively.  The number of  employees  in the
sales and marketing departments has increased from the prior year to promote and
support the increased sales effort, including the StorageTek product line, which
did not exist in the first quarter of the prior year.  The decrease in sales and
marketing  expenses  as a  percentage  of total  revenues is  attributed  to the
increased revenues in the current quarter.

Total research and product  development  costs  increased 31% to $2.5 million in
the first  quarter of the current year  compared  with $1.9 million in the first
quarter  last year.  The  increase  in  absolute  dollars is largely  due to the
creation of the joint development lab with StorageTek.  The lab,  established in
the third  quarter of fiscal  1999,  has  integrated  StorageTek  products  with
Excalibur's advanced products for crawling, indexing, searching,  retrieving and
distributing all enterprise  digital content,  to create advanced solutions that
make enterprise-wide  information assets easier to archive, access and leverage.


                                       13
<PAGE>

Based on expected demand,  efforts were  accelerated to complete  development of
these  StorageTek  network  appliance  products.  Text and Visual  research  and
development  expenses  also  increased in the first  quarter of the current year
compared to last year as the Company  continued to invest in the  enhancement of
its  RetrievalWare  and Visual product lines. In the first quarter,  the Company
released  Excalibur  Screening  Room 2.0, a web-based,  end-to-end  solution for
real-time capturing, analyzing, cataloguing, browsing, searching, retrieving and
publishing  video,  as well as related  closed-caption  text and metadata,  in a
range of applications.  The Company also expects to release RetrievalWare 6.7 in
the second half of this year.

General and  administrative  expenses  increased 4% in the first quarter to $1.3
million from $1.2 million in the first quarter last year,  representing  16% and
24%  of  total  revenues,  respectively.  The  increase  in  dollar  amounts  is
attributable to additional management  information systems personnel and related
costs necessary to support the overall increased staffing of the Company.

Net interest  income  declined  slightly to $58,000 in the first  quarter of the
current year from $62,000 in the  comparable  period last year due to a slightly
lower rate of return on invested funds. Prior to termination of the distribution
agreement with the Company's affiliate ETNV in May 1999, the Company's equity in
the net loss of ETNV was $42,000 for the quarter  ended April 30, 1999.  For the
three month period ended April  30,1998,  the equity in the net loss of ETNV was
$117,000.  The  remaining  balance of the  investment  in ETNV of  $430,000  was
written  off in the  current  quarter  as a  result  of the  termination  of the
distribution agreement with ETNV.
































                                       14

<PAGE>


Liquidity and Capital Resources

In the three months  ended April 30, 1999,  the  Company's  combined  balance of
cash, cash equivalents and short term  investments  increased by $3.5 million to
$9.4 million as summarized below (in thousands).  At April 30, 1999, investments
consist of a certificate of deposit pledged to collateralize a letter of credit.

                           April 30,  January 31,
                             1999         1999       Change
                          ----------  -----------  ----------
          Cash and cash
            equivalents   $   9,224   $   5,851    $  3,373
          Short term
           investments          178          --         178
                          ----------  -----------  ----------
            Total         $   9,402   $   5,851    $  3,551
                          ==========  ===========  ==========


Cash of $2.0 million  used to fund  operating  activities  was more than the net
loss of $1.9 million for the three months ended April 30, 1999. Non-cash charges
totaling $0.9 million offsetting cash used in operations  included  depreciation
and amortization of $0.4 million.  Also included in the non-cash charges was the
Company's  amortization  of the  excess  of the  Company's  investment  over the
underlying  net book  value  of ETNV and the  write  off of the  balance  of the
investment in ETNV totaling $0.4 million.  These non-cash charges were offset by
a $0.6 million increase in the balance of accounts receivable and a $0.7 million
reduction in accounts payable and accrued expenses.

In the first quarter of the current year investing activities used $0.5 million.
The purchase of a certificate  of deposit used $0.2  million,while  purchases of
equipment and leasehold improvements used $0.3 million.

Net  proceeds of $4.7 million  were  provided by a private  placement of 500,000
shares  of common  stock  sold at $10.00  per share to  unaffiliated  accredited
investors,  most of whom are institutional  investors.  Cash of $1.1 million was
provided  from the  exercise of employee  stock  options and  issuances of stock
under the employee stock purchase plan.

The high sales  volume and increase in the level of accounts  receivable  during
the first  quarter of the current year  resulted in an increase in the number of
days sales outstanding  ("DSO") at April 30, 1999.  Management believes that the
allowance for doubtful  accounts of $480,000 at April 30, 1999 is adequate.


Factors That May Affect Future Results

The Company's  business  environment is  characterized  by intense  competition,
rapid technological  changes,  changes in customer requirements and emerging new
market segments.  Consequently,  to compete  effectively,  the Company must make
frequent  new  product  introductions  and  enhancements  while  protecting  its
intellectual  property,  retain its key personnel and deploy sales and marketing
resources  to take  advantage of new business  opportunities.  Future  operating
results  will be  affected  by the  ability of the Company to expand its product


                                       15
<PAGE>

distribution  channels and to manage the expected growth of the Company.  Future
results may also be impacted by the  effectiveness  of the Company in  executing
future  acquisitions  and integrating the operations of acquired  companies with
those of the Company.  Failure to meet any of these  challenges  could adversely
affect future operating results.

The Company's quarterly operating results have varied  substantially in the past
and are likely to vary  substantially  from quarter to quarter in the future due
to a variety of factors. In particular, the Company's period-to-period operating
results  are  significantly  dependent  upon the timing of the  closing of large
license  agreements.  In this regard, the purchase of the Company's products can
require a significant  capital  investment  from a potential  customer which the
customer  generally  views  as a  discretionary  cost  that can be  deferred  or
canceled due to budgetary or other  business  reasons and can involve long sales
cycles of six  months or more.  Estimating  future  revenues  is also  difficult
because the Company  ships its products  soon after an order is received and, as
such does not have a significant  backlog.  Thus, quarterly license fee revenues
are  heavily  dependent  upon a  limited  number of  orders  for large  licenses
received  and  shipped  within  the same  quarter.  Moreover,  the  Company  has
generally  recorded a  significant  portion of its total  quarterly  license fee
revenues in the third month of a quarter, with a concentration of these revenues
occurring in the last half of that third month.  This  concentration of revenues
is influenced by customer tendencies to make significant capital expenditures at
the end of a fiscal  quarter.  The Company  expects  these  revenue  patterns to
continue for the foreseeable  future.  Despite the  uncertainties in its revenue
patterns,  the Company's  operating expenses are based upon anticipated  revenue
levels  and  such  expenses  are  incurred  on an  approximately  ratable  basis
throughout  a  quarter.  As a result,  if  expected  revenues  are  deferred  or
otherwise  not  realized in a quarter for any reason,  the  Company's  business,
operating  results  and  financial  condition  would  be  materially   adversely
affected.

As of January  31,  1999,  the  Company  had net  operating  loss  carryforwards
("NOLs") of approximately $68 million.  The deferred tax assets representing the
benefits of the NOLs have been offset completely by a valuation allowance due to
the Company's lack of an earnings  history.  The Company  incurred a net loss of
$1.9 million for the three months ended April 30, 1999. The accumulated  deficit
of the  Company at April 30,  1999 was $57.7  million.  The  realization  of the
benefits of the NOLs is dependent on sufficient  taxable income in future fiscal
years.  Lack of future  earnings,  or a change in the  ownership of the Company,
could  adversely  affect the  Company's  ability to utilize  the NOLs.  Further,
because there was a change in the ownership of ConQuest in fiscal year 1996, the
Company's  ability to utilize NOLs  relating to ConQuest of  approximately  $3.2
million may be  limited.  Despite  the NOL  carryforwards,  the Company may have
income tax liability in future years due to the  application of the  alternative
minimum tax rules of the Internal Revenue Code.

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  reporting  period.
Actual results could differ from those estimates.

The Company believes that inflation has not had a material effect on the results
of its operations to date.

                                       16
<PAGE>


Year 2000

On July 29, 1998,  the  Securities  and Exchange  Commission  issued  additional
guidance on disclosures  that public  companies  should make related to the Year
2000.  The new release was effective for the Company's  October 31, 1998 interim
reporting.  In addition  to  historical  information,  the  disclosure  contains
forward-looking statements within the meaning of the "safe harbor" provisions of
the Private Securities  Litigation Reform Act of 1995. Such statements are based
on  management's  current  expectations  and are subject to a number of factors,
risks and  uncertainties  which could cause actual results to differ  materially
from those described in the forward-looking statements.

State of Readiness
------------------
The  Company  currently  has  facilities  in six  locations,  each of  which  is
responsible for its own development information technology systems, herein known
as "Non-IT systems",  while corporate  information  technology  systems,  herein
known as "IT  systems",  are  managed by the  Company's  Management  Information
Systems  department  ("MIS").  For the  purposes  of Year 2000  compliance,  the
corporate  MIS  department  is managing the task of  verifying  that all Company
systems are date  compliant,  including  reviewing and analyzing all development
platforms,  not directly under MIS control.  This umbrella process was initiated
in order to ensure the Company would be able to continue developing its products
without  disruption  after January 1, 2000. To ensure that Non-IT and IT systems
are, or will be,  compliant;  the Company  has  undertaken  a full survey of all
systems within the Company at all locations. This survey covers all user desktop
and laptop systems; all IT systems, servers, and operating systems; all critical
applications,   including  financial,   accounting,  corporate  database,  human
resources and administrative systems; and all Non-IT systems, servers, operating
systems and third party coding products.  The majority of the Company's  efforts
regarding  Year 2000  readiness are  associated  with  internal data  processing
systems.  In all material  respects,  products  manufactured  by the Company are
already  Year 2000  compliant,  although  the  individual  platforms  upon which
product(s) are developed are still under review and analysis.  Due to the recent
upgrade of many of the  Company's IT systems,  the majority of these systems are
either currently  prepared for Year 2000 in all material  respects or are in the
process of being upgraded to standardized  systems and  applications  which will
meet this objective. Most IT systems and applications which are deemed Year 2000
compliant  by the  software  vendors are tested by the  Company to verify  these
claims.  At this time,  critical  financial,  accounting and corporate  database
systems have been tested, and Non-IT systems are in the process of being tested.
These testing  proportions  are related to both the magnitude and perceived risk
of system non-compliance and future testing will be scheduled in accordance with
these criteria.  For the remaining IT systems and the Non-IT systems, plans with
critical dates are being developed to monitor the Company's  progress toward the
overall objective of Year 2000 compliance.  The Company's  anticipates readiness
for Year 2000 by early in the fourth quarter of fiscal year 2000.

Costs to Address Year 2000 Issues
---------------------------------
Historical  and  estimated  costs of  remediation  to this  point  have not been
material.  The Company has resolved IT systems  compliance issues through normal
replacement  and upgrades of software.  Non-IT systems are being  addressed on a
case by case basis through the use of existing MIS resources. Most of the Non-IT


                                       17
<PAGE>

systems remedial  activity to this point has involved  applying low or zero cost
patches to operating  systems and  platforms  using  existing  MIS  resources to
achieve a date compliance  level. The Company will continue to monitor Year 2000
remediation costs and will update its estimate of future  remediation  costs, if
any, as it completes its Non-IT systems analysis.

Key Considerations and Contingency Plans
----------------------------------------
At the current time, the Company's Year 2000  readiness  plan  anticipates  that
both IT and Non-IT systems and  applications  will be Year 2000 compliant in all
material  respects  by early in the  fourth  quarter of fiscal  year 2000.  This
assessment is based on the Company's  analysis to date and detailed  findings at
its  Vienna,  Virginia  and  Columbia,  Maryland  locations.  There  can  be  no
assurance, however, of complete compliance based on the status to date. However,
since the Company is not  dependent  upon any single IT or Non-IT system for the
majority  of its  revenue,  it is unlikely  that any single  system will have an
adverse  effect on the Company as a whole.  Contingency  plans will  involve the
procurement  of newer  platforms  for Non-IT  systems and the  temporary  use of
standardized  commercial  off-the-shelf  replacement modules for IT applications
and  business  functions.  While at present  there are no  indications  that any
contingency  plans will be necessary or that there will be revenue  disruptions,
there can be no assurances that this will necessarily be the case.


EURO Conversion
---------------

On January 1, 1999, the exchange rates of eleven countries (Germany, France, the
Netherlands,  Austria,  Italy, Spain, Finland,  Ireland,  Belgium Portugal,  and
Luxembourg)  were fixed  amongst one another  and became the  currencies  of the
EURO.  The currencies of the eleven  countries will remain in circulation  until
mid-2002.  The EURO currency will be introduced on January 1, 2002.  The Company
does not expect future  balance sheets and statements of earnings and cash flows
to be materially impacted by the EURO Conversion.


New Accounting Pronouncements

In June 1998, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
133,  "Accounting  for  Derivative  Instruments  and Hedging  Activities."  This
statement  establishes  accounting and reporting  standards requiring that every
derivative  instrument,  including certain  derivative  instruments  embedded in
other  contracts,  be  recorded  in the  balance  sheet  as  either  an asset or
liability  measured at its fair value.  The statement also requires that changes
in the  derivative's  fair value be recognized in earnings unless specific hedge
accounting  criteria are met. The Company  believes the adoption of SFAS No. 133
will not have a material effect on the financial statements.

The American  Institute of Certified Public  Accountants has issued Statement of
Position 98-9,  "Modification of SOP-97-2,  Software Revenue  Recognition,  With
Respect to Certain Transactions." SOP 98-9 is effective for revenue transactions
entered into in the  Company's  fiscal year 2001.  The Company has evaluated SOP
98-9 and does not  believe  its  adoption  will  have a  material  effect on the
financial statements.


                                       18

<PAGE>

Market Risk

The Company's market risk is principally confined to changes in foreign currency
exchange  rates and  potentially  adverse  effects of differing tax  structures.
International  sales are made  mostly from ETIL,  the  Company's  foreign  sales
subsidiary,  and are  typically  denominated  in British  pounds.  The Company's
exposure to foreign exchange rate fluctuations  arises in part from intercompany
accounts in which  royalties  on ETIL sales are charged to ETIL and  recorded as
intercompany receivables on the books of the U.S. parent company. The Company is
also exposed to foreign exchange rate  fluctuations as the financial  results of
ETIL are translated into U.S. dollars in consolidation.  As exchange rates vary,
those results when translated may vary from  expectations  and adversely  impact
overall expected profitability.



                                       19

<PAGE>


                    PART II-- OTHER INFORMATION


Item 1.    Legal Proceedings
-------

On May 3, 1999 the Company  commenced a lawsuit against  Excalibur  Technologies
N.V.  (ETNV) in the United  States  District  Court for the Eastern  District of
Virginia  seeking as damages unpaid license fees and other amounts due and owing
from ETNV pursuant to a distribution  agreement  between the Company and ETNV of
approximately $1.4 million.


Item 2.    Changes in Securities                       None.
-------


Item 3.    Defaults upon Senior Securities             None.
-------


Item 4.    Submission of Matters to Vote of Security Holders  None.
-------


Item 5.    Other Information                           None.
-------


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

Two Forms 8-K were filed during the first quarter of fiscal year 2000.

On February 19, 1999,  the Company  filed a Form 8-K for Item 5,  reporting  the
date of its Annual  Meeting of  Shareholders  and the  deadline  for  receipt of
shareholder  proposals  intended for  presentation  by such  shareholders at the
Annual Meeting.

On March 26, 1999,  the Company filed a Form 8-K for Item 5, reporting a private
placement of 500,000 shares of its common stock.






                                       20
<PAGE>






                             SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

               EXCALIBUR TECHNOLOGIES CORPORATION



June 11, 1999                  By: /s/ Patrick C. Condo
                                   --------------------
                               Patrick C. Condo
                               President and Chief Executive Officer
                               (Principal Executive Officer)


June 11, 1999                  By: /s/ James H. Buchanan
                                   ---------------------
                               James H. Buchanan
                               Chief Financial Officer
                               (Principal Financial and Accounting Officer)