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, 1997

                                      OR

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

         For the transition period from ____________ to ____________

                        Commission File Number 0-9747


                      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 12, 1997,  13,019,425  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, 1997

                            TABLE OF CONTENTS


                     PART I .  FINANCIAL INFORMATION

                                                                       Page
Item 1.    Financial Statements:                                       ---- 

           Consolidated Balance Sheets
           April 30, 1997 and January 31, 1997...........................3

           Consolidated Statements of Operations
           Three month periods ended April 30, 1997 and 1996.............4

           Consolidated Statements of Cash Flows
           Three month periods ended April 30, 1997 and 1996.............5

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

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations....................................11



                          PART II. OTHER INFORMATION

Items 1. - 6............................................................17


Signatures .............................................................18



                                       2

<PAGE>
                         EXCALIBUR TECHNOLOGIES CORPORATION

                            CONSOLIDATED BALANCE SHEETS
                       (in thousands, except per share data)
<TABLE>
<CAPTION>
                     ASSETS                                 
                                                         April 30,  January 31,
                                                           1997        1997
                                                        (unaudited)   
                                                         --------    -------- 
<S>                                                      <C>         <C>
Current Assets:
   Cash and cash equivalents .........................   $  3,014    $  2,685
   U.S. government securities, at cost ...............      5,479       8,427
   Accounts receivable, net of allowance for
      doubtful accounts of $369 and $367, respectively      7,453       9,383
   Prepaid expenses and other ........................      1,318       1,655
                                                         --------    --------
        Total current assets .........................     17,264      22,150

Equipment and leasehold improvements, net of
     accumulated depreciation of $4,569 and
     $4,179, respectively ............................      2,755       2,939
Other assets .........................................        949       1,058
                                                         --------    --------
                                                         $ 20,968    $ 26,147
                                                         ========    ========
      LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable ..................................   $  1,319    $  1,680
   Accrued expenses ..................................      2,228       2,310
   Deferred revenues .................................      2,569       2,693
   Deferred compensation .............................        490         901
                                                         --------    --------
        Total current liabilities ....................      6,606       7,584
                                                         --------    --------
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, par value $0.01, 40,000
        shares authorized; 12,726 and 12,449
        shares issued and outstanding, respectively ..        127         124
   Additional paid-in capital ........................     62,199      61,830
   Accumulated deficit ...............................    (48,176)    (43,619)
   Cumulative translation adjustment .................        (59)        (43)
                                                         --------    --------
        Total shareholders' equity ...................     14,362      18,563
                                                         --------    --------
                                                         $ 20,968    $ 26,147
                                                         ========    ========
</TABLE>
     The accompanying notes to the consolidated financial statements are an
               integral part of these consolidated balance sheets.

                                        3
<PAGE>
<TABLE>
<CAPTION>

                         EXCALIBUR TECHNOLOGIES CORPORATION

                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                    (unaudited)
                       (in thousands, except per share data)

                                          Three Months Ended
                                               April 30,
                                           1997        1996
                                         --------   ---------
<S>                                      <C>         <C>
REVENUES:     
   Software...........................   $  2,259    $  2,979
   Maintenance .......................      1,194       1,022
                                         --------    --------
                                            3,453       4,001
                                         --------    --------
EXPENSES:
   Sales and marketing ...............      3,592       3,103
   Research and product
     development .....................      1,701       1,414
   General and administrative ........      1,102         855 
   Cost of software revenues .........        752         221
   Cost of maintenance revenues ......        301         324
   Restructuring costs................        577          --
                                         --------    --------
                                            8,025       5,917
                                         --------    --------

Operating loss .......................     (4,572)     (1,916)

OTHER INCOME / (EXPENSES):
   Interest income, net ..............        118         191
   Equity in net loss of affiliate ...       (103)         --
                                         --------    --------

Net loss .............................     (4,557)     (1,725)
                                        

Dividends on preferred stock .........          3           3
                                         --------    --------

Net loss applicable to common stock ..   $ (4,560)   $ (1,728)
                                         ========    ========

Net loss per common share.............   $  (0.36)   $  (0.14)
                                         ========    ========
Weighted-average number of common
   shares outstanding ................     12,520      12,183
                                         ========    ========

          The  accompanying notes to the consolidated  financial  statements are
               an integral part of these consolidated statements.
</TABLE>

                                        4
<PAGE>
<TABLE>
<CAPTION>
                         EXCALIBUR TECHNOLOGIES CORPORATION

                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (unaudited)
                                   (in thousands)
                                                     For the Three Months Ended
                                                                April 30,
                                                            1997        1996
                                                         ---------   ---------
<S>                                                      <C>         <C>  
Cash Flows from Operating Activities:
   Net loss ..........................................   $ (4,557)   $ (1,725)
   Adjustments to reconcile net loss to net
   cash used in operating activities:
        Depreciation and amortization ................        399         270
        Equity in net loss of affiliate ..............        103          --   
        Loss on disposal of assets ...................         --           7
   Changes in operating assets and liabilities:
        Accounts receivable, net .....................      1,968         (50)
        Prepaid expenses and other ...................        347        (429) 
        Accounts payable and accrued expenses ........       (576)       (781)
        Deferred revenues ............................       (121)       (275) 
                                                         --------    --------
   Net cash used in operating activities .............     (2,437)     (2,983)
                                                         --------    --------
Cash Flows from Investing Activities:
   Purchase of investments ...........................     (3,474)    (10,591)
   Proceeds from maturities of investments ...........      6,422       3,835 
   Purchases of equipment and leasehold improvements .       (215)       (622) 
                                                         --------    --------
   Net cash provided by (used in) investing activities      2,733      (7,378) 
                                                         --------    --------
Cash Flows from Financing Activities:
   Proceeds from the issuance of common stock ........        107       8,809  
   Repayment of notes payable ........................        (25)         (5)
                                                         --------    --------
   Net cash provided by financing activities .........         82       8,804
                                                         --------    --------
The Effect of Exchange Rate Changes on Cash ..........        (49)         21
                                                         --------    -------- 
Net Increase (Decrease) in Cash and Cash Equivalents .        329      (1,536)

Cash and Cash Equivalents, beginning of period .......      2,685       2,903 
                                                         --------    --------
Cash and Cash Equivalents, end of period .............   $  3,014    $  1,367
                                                         ========    ========
Supplemental Disclosures of Cash Flow Information:
  Use of deferred compensation to purchase 
  common stock .......................................   $    394    $      4
                                                         ========    ========
</TABLE>
          The  accompanying notes to the consolidated  financial  statements are
               an integral part of these consolidated statements.

                                        5
<PAGE>



                      EXCALIBUR TECHNOLOGIES CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                April 30, 1997


(1)    THE COMPANY

The  consolidated   financial  statements  include  the  accounts  of  Excalibur
Technologies Corporation  ("Excalibur");  Excalibur Technologies  International,
Ltd.  ("ETIL"),  a  wholly-owned   subsidiary;   and  ConQuest  Software,   Inc.
("ConQuest"),  a company  that was  acquired in July 1995.  These  entities  are
collectively   referred  to  hereinafter  as  the  "Company."  All   significant
intercompany  transactions  and accounts have been  eliminated.  Certain amounts
presented in the prior year's  financial  statements  have been  reclassified to
conform with the current fiscal year presentation.

The Company designs, develops, and markets knowledge retrieval software products
capable of  supporting  text and visual  data.  The Company  offers  consulting,
training,  product maintenance and systems 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  $4,557,000  in the three months ended April
30, 1997, and incurred net losses that totaled  $17,445,000  over the last three
complete fiscal years. The accumulated  deficit of the Company at April 30, 1997
was $48,176,000.  The combined balance of cash, cash equivalents and investments
in  marketable  securities  was reduced by  $2,619,000 in the three months ended
April 30, 1997 to a balance of $8,493,000 at the end of the period.

The  Company's  operations  are  subject  to  certain  risks  and  uncertainties
including,  among  others,  actual and  potential  competition  by entities with
greater  financial  resources,  experience and market presence than the Company;
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;  certain  technology  risks;  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.

                                       6
<PAGE>

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
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, 1997.
In the  opinion  of  management,  the  comparative  and  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 months ended
April 30,  1997 are not  necessarily  indicative  of the  results for the entire
fiscal year ending January 31, 1998.

Revenue Recognition

Revenues  from  the sale of  computer  software  licenses  are  recognized  upon
shipment of product provided that no significant  vendor  obligations remain and
that  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 terms of the respective agreements,  which are usually one year
in length. Maintenance revenues that are bundled with initial licensing fees are
deferred and recognized over the terms of the related maintenance periods, which
are typically 90 days long.

Research and Development Costs

No product  development  costs were  capitalized,  and there were no capitalized
costs not yet amortized, during the three month periods ended April 30, 1997 and
1996.

Cash, Cash Equivalents and Marketable Securities

For purposes of the balance  sheets and  statements  of cash flows,  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.  U.S.  government  securities are considered
investments  and  are  excluded  from  cash  equivalents   regardless  of  their
maturities.  Under the Statement of Financial  Accounting  Standard ("SFAS") No.
115,  "Accounting For Certain  Investments in Debt and Equity  Securities,"  the
Company  considers its  marketable  securities as  held-to-maturity  securities.
Accordingly,  marketable  securities,  consisting  entirely  of U.S.  government
securities, are carried at cost, adjusted for premium and discount amortization.
At April  30,  1997 and  January  31,  1997,  the  aggregate  fair  value of the
securities  based upon  quoted  market  prices was  $5,479,000  and  $8,428,000,
respectively.

                                       7
<PAGE>

Stock-Based Compensation

Effective  for the  financial  statements  as of January 31,  1997,  the Company
adopted SFAS No. 123, "Accounting for Stock-Based Compensation." As permitted by
this  pronouncement,  the Company is continuing  to apply the  provisions of APB
Opinion No. 25 and related Interpretations in accounting for awards to employees
and directors  made pursuant to its employee  stock plans.  However,  fair value
accounting is applied to transactions  involving the Company's issuance of stock
options or other equity  instruments  for the  acquisition  of goods or services
from nonemployees.

Income Taxes

Due to the net losses  reported for the three month periods ended April 30, 1997
and 1996, no income taxes were provided in the periods.

Net Loss Per Common Share

Net loss per common  share has been  computed by  dividing  the net loss for the
period,  plus dividends on preferred  stock, by the  weighted-average  number of
common shares  outstanding  during each period.  Common stock equivalents (stock
options, warrants and cumulative convertible preferred stock) were excluded from
the net loss per share  computations for the periods presented herein because of
their anti-dilutive effect.

The Company will be required to apply the provisions of SFAS No. 128,  "Earnings
Per Share," commencing with its consolidated financial statements for the fiscal
quarter and year ending  January 31, 1998.  The  pronouncement  provides for the
presentation  of basic and diluted  earnings per share  ("EPS"),  replacing  the
currently required primary and fully-diluted EPS. The basic EPS will be computed
by dividing reported earnings  available to common  shareholders by the weighted
average  number of shares  outstanding  during the  period.  Diluted EPS will be
computed in a manner similar to  fully-diluted  EPS,  except for certain changes
including the way that the treasury stock method may be applied to determine the
dilution for stock options and warrants.  Companies  will be required to restate
prior-period EPS to conform with the new statement.  The Company does not expect
that the  application of the new standard will have a material  effect on future
EPS presentations or on EPS amounts reported in prior periods.

Translation of Foreign Financial Statements

Assets and  liabilities  of foreign  operations are translated at the period-end
rate of exchange.  Statements of operations  are translated at the average rates
of exchange during the period. Gains or losses from translating foreign currency
financial  statements are accumulated in a separate  component of  shareholders'
equity.


(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 granted
to ETNV an exclusive license to distribute  certain of the Company's products to
other authorized resellers and customers in the territory for approximately five

                                       8
<PAGE>

(5) years.  The Company  contributed  approximately  $488,000 in cash to ETNV in
order to purchase 13.2% of ETNV's voting capital stock.  In connection  with the
organization  of ETNV,  the  Company  also issued  warrants to purchase  148,500
shares of the  Company's  common  stock to  certain  shareholders  of ETNV.  The
warrants are exercisable at a price of $22.00 per share for seven years but only
if ETNV achieves certain financial objectives.

The Company's  investment in ETNV is accounted for using the equity method.  The
investment  exceeded the Company's share of the underlying net assets of ETNV by
approximately  $827,000,  including  $758,000  attributable  to the value of the
warrants  discussed in the preceding  paragraph.  The excess is 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  current  fiscal  quarter,  is  included  in  equity in net loss of
affiliate in the accompanying consolidated statement of operations for the three
months ended April 30, 1997.  The balance of the  investment,  included in other
assets in the  accompanying  balance  sheets at April 30,  1997 and  January 31,
1997, was $870,000 and $973,000,  respectively,  net of accumulated amortization
of $444,000 and $341,000, respectively.


(4)    ISSUANCES OF COMMON STOCK

During  the first  quarter  of the  current  fiscal  year,  the  Company  issued
approximately  270,000  shares of common  stock  upon the  exercise  of  options
ranging  in price  from  $1.04 to $11.64  per  share,  resulting  in total  cash
proceeds to the Company of approximately $60,000 and the utilization of $394,000
in deferred  compensation.  In  addition,  approximately  5,000 shares of common
stock were issued to  participants  of the employee  stock  purchase  plan.  The
exercise of stock options provided total cash proceeds of approximately $432,000
in the first quarter of last fiscal year.

On March 8, 1996, the Company completed a private placement of 350,000 shares of
the Company's  common stock at an offering price of $25.00 per share,  resulting
in net proceeds of approximately  $8,388,000.  Allen & Company  Incorporated,  a
beneficial  owner  excluding  affiliates of  approximately  25% of the Company's
outstanding  common stock, acted as the placement agent  in this transaction and
received a fee of approximately $350,000.


(5)    RESTRUCTURING COSTS

The Company has implemented  changes to its  organization  by  reorganizing  its
sales force and forming a new  business  unit,  the Visual  Business  Group.  In
connection with these changes, in the first quarter,  the Company committed to a
reduction of its  workforce by  approximately  10% and recorded a  restructuring
charge of $577,000 at April 30, 1997. The charge primarily consists of severance
pay and medical and other severance benefits for nineteen  terminated  employees
in sales, development, marketing and administrative functions. Cash expenditures
made pursuant to the restructuring will be completed substantially in the second
quarter of the current fiscal year.

                                       9
<PAGE>

(6)   SUBSEQUENT EVENTS

Acquisition of Interpix

On May 5, 1997, the Company acquired Interpix Software Corporation ("Interpix"),
located in Santa Clara, California, a privately-owned company and developer of a
commercial  technology  enabling  the  collection,   indexing,   management  and
presentation  of multimedia  data on the Internet and corporate  intranets.  The
shareholders of Interpix received 275,000 shares of common stock of Excalibur in
exchange  for all of the  outstanding  common  stock of  Interpix.  The purchase
method of  accounting  will be  applied  to this  acquisition  transaction.  The
Company is in the  process  of  allocating  the  purchase  price to the  various
acquired  assets  and it  believes,  based  on its  preliminary  analysis,  that
approximately  $1,284,000 will be allocated to research and development projects
in process and expensed in the second quarter of the current fiscal year.

Repricing of Stock Options

On May 7, 1997,  the Board of  Directors  authorized a repricing  program  which
allows  active  current  employees  to  elect  to  reprice  all or some of their
outstanding  options to purchase  common stock of  Excalibur,  granted under the
1989 Incentive Plan and the 1995 Stock Option Plan and ranging in exercise price
from $5.50 to $29.53 per share, to $4.75,  the closing price of Excalibur common
stock on May 7, 1997. Any options that an optionholder elects to reprice may not
be exercised until November 7, 1997. Options to purchase approximately 1,226,275
shares of common stock are eligible to be repriced.

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

Overview

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.

The  Company   believes   that  it  is  the   technology   leader  in  providing
enterprise-wide,   accurate,  scaleable,  secure,  knowledge-retrieval  software
solutions  capable of  supporting  both text and image  information  assets.  It
believes that these  qualities  differentiate  its software  products from other
search engines,  toolkits,  and text retrieval products. The Company's Excalibur
RetrievalWare  and Excalibur  Visual  RetrievalWare  products  deliver a unified
software  solution  for text and  visual  knowledge  retrieval.  The  Company is
committed  to  empowering   organizations   by  enabling   people  to  transform
information  into  knowledge  and is focused on the  high-end  of the market for
knowledge retrieval.

Results of Operations

Total  revenues  for  the  first  fiscal  quarter  ended  April  30,  1997  were
$3,453,000,  a 14% decrease over total  revenues of $4,001,000  reported for the
same quarter last fiscal year.  The Company  incurred a net loss for the quarter
ended April 30, 1997 of $4,557,000, or $0.36 per common share, compared to a net
loss of $1,725,000, or $0.14 per common share, for the first quarter last fiscal
year.

Total  expenses  for the Company were  $8,025,000  in the first  quarter,  which
represented  a 36%  increase  from total  expenses  of  $5,917,000  in the first
quarter last fiscal year.  As discussed  below,  total  expenses for the current
quarter   included  a   restructuring   charge  of  $577,000,   and  there  were
quarter-to-quarter increases in all cost categories.

Management  believes that three primary factors  adversely  impacted the revenue
performance of the Company in the quarter.

First, the slow ramp up of a significant  number of sales personnel  contributed
to lower than  expected  revenues in North  America.  Total  revenues  for North
America were  approximately  $2,698,000 in the current year quarter;  comparable
revenues  were  $3,149,000 a year ago. Due to  unexpected  turnover  among sales
personnel, the Company spent considerable resources training a largely new sales
force in the first quarter.  The new personnel were subjected to a prolonged and
thorough  sales  training and product  familiarization  program that  management
believes will result in more  effective  selling in the future,  but the program
kept these sales personnel out of the field during this time.

                                       11
<PAGE>
The second factor causing the lower  revenues  related to the failure to close a
joint development  agreement with a strategic  business partner that the Company
had  expected  to close in the first  quarter.  Several  factors  affecting  the
partner's  business  prevented  them from signing this  agreement.  Although the
Company has a continuing and solid relationship with this partner,  there can be
no assurances that the expected agreement will occur.

Third,  the  slow  ramp  up of  revenues  generated  by  the  Company's  Belgian
affiliate, Excalibur Technologies N.V. ("ETNV"), resulted  in an interruption of
revenue  recorded by the Company  related to this  arrangement.  As explained in
Note 3 to the Consolidated  Financial  Statements  contained herein, the Company
licensed the use of its name and certain  software  products to this  affiliated
company in July 1996.  The license  agreement  provides  that ETNV make  minimum
license fee payments to the Company each quarter,  including  quarterly payments
of  $625,000  in  the  current  year  which   represent   software   revenue  of
approximately  $500,000 per quarter.  The  Company's  management  believes  that
progress has been made in starting up this operation including the establishment
of sales and support offices in several European countries and the building of a
pipeline of business  opportunities.  However,  sales are not closing as fast as
expected,  net losses  have been  incurred  since  inception,  and  ETNV's  cash
reserves have been reduced.  Due to the slower than expected  growth of ETNV, no
software  revenue  was  recorded  by the  Company in the  current  quarter.  The
shareholders  of ETNV include a company that was a  significant  reseller of the
Company's  products and that  contributed  its  operations to ETNV in connection
with its  formation.  The  Company's  revenues  for the first  quarter last year
included over $270,000 related the previous reseller agreement. Due primarily to
these items, the revenues from international  operations of the Company declined
11% to approximately $755,000 in the current quarter from $852,000 last year.

The following chart  summarizes the components of revenues and the categories of
expenses, including the amounts expressed as a percentage of total revenues, for
the three month periods ended April 30, 1997 and 1996, and the percentage change
in the amounts between fiscal quarters (dollars in thousands).
                                                                        
                                    Three Months Ended April 30,       Increase
                                      1997                 1996       (Decrease)
                                ----------------     ----------------    -------
                                 Amount      %        Amount      %         %
                                -------   ------     -------   ------    -------
Revenues:
     RetrievalWare              $ 1,865     54 %     $ 1,222     30 %      53  %
     EFS                            394     11         1,757     44       (78)
                                -------   ------     -------   ------    -------
 Total Software                   2,259     65         2,979     74       (24)
 Maintenance                      1,194     35         1,022     26        17
                                -------   ------     -------   ------    -------
       Total revenues           $ 3,453    100 %     $ 4,001    100 %     (14) %
                                =======   ======     =======   ======    =======
Expenses:
     Sales and marketing        $ 3,592    104 %     $ 3,103     78 %      16  %
     Research and
     product development          1,701     49         1,414     35        20
     General and administrative   1,102     32           855     21        29
     Costs of sales               1,053     30           545     14        93
     Restructuring costs            577     17            --     --       100
                                -------   ------     -------   ------    -------
           Total expenses       $ 8,025    232 %     $ 5,917    148 %      36  %
                                =======   ======     =======   ======    =======
                                       12
<PAGE>

Software  revenues  related  to  Excalibur  RetrievalWare  increased  53% in the
current  quarter to $1,865,000  from  $1,222,000 in the comparable  quarter last
year, and  constituted 54% of total  revenues.  The increase  included growth in
revenues related to training and implementation support. Excalibur RetrievalWare
software  revenues  were 30% of total  revenues in the first  quarter last year.
Excalibur EFS software revenues declined 78% in the quarter from $1,757,000 last
year to $394,000 in the current year,  reflecting the Company's efforts to focus
its sales promotion and marketing efforts on the Excalbur  RetrievalWare product
line and the lack of  revenues  related  to ETNV as  discussed  above.  Combined
software  revenues  decreased  24% in the quarter from  $2,979,000 a year ago to
$2,259,000 in the current  year.  Due primarily to the expansion of the customer
base by the  addition of Excalibur  RetrievalWare  users,  maintenance  revenues
increased by 17% to  $1,194,000  in the current  quarter from  $1,022,000 in the
first quarter last year.

Software  revenues for the current quarter  included  revenues of  approximately
$606,000 related to the recently-announced license of Excalibur RetrievalWare to
United  Airlines.  The airline intends to use the Company's  software to provide
more  than  20,000  mechanics  and  engineers  worldwide  with the most  current
maintenance  information via its global corporate network.  Initial revenue from
this  license  represented  27% and 18%,  respectively,  of  software  and total
revenues for the first quarter of the current fiscal year.

Sales and marketing costs increased by 16% in the quarter,  from $3,103,000 last
year to  $3,592,000  in the  current  year,  due to an increase in the number of
sales and marketing  employees.  The increase in the number of employees between
fiscal  quarters,  which  occurred  primarily in corporate  marketing and at the
Company's international sales operation located in the United Kingdom,  resulted
in higher  salary  expense  and  related  personnel  costs  including  benefits,
telephone  costs,   equipment  depreciation  and  travel  costs.  These  expense
increases  were  partially  offset by a  reduction  in  expenditures  related to
marketing  programs.  The Company  employed 71 people in the sales and marketing
areas at April 30, 1997.  There were 65 sales and  marketing  employees at April
30, 1996.

Research and product  development  costs  increased by 20% to  $1,701,000 in the
first quarter of the current fiscal year compared with  $1,414,000 last year due
primarily to an expansion of the technical staff responsible for the development
and enhancement of the Excalibur  RetrievalWare  product line. The Company began
to ship a major release of Excalibur RetrievalWare, version 6.0, near the end of
the year. This increase in personnel resulted in an increase in salaries expense
primarily,  and also increases in related  expenses such as benefits,  equipment
costs and  depreciation.  The Company had a total of 57 research and development
employees at April 30, 1997; there were 45 such employees at April 30, 1996.

General and  administrative  expenses increased by 29% in the current quarter to
$1,102,000 from $855,000 in the comparable  quarter last year. Since last year's
first  quarter,  the  Company  has  added  employees  to  the  human  resources,
contracts,  management  information  systems and financial planning and analysis
functions,  thereby increasing  salaries expense  primarily.  Related costs also
increased  including  equipment,  telephone and other office  costs.  Consulting
expense  increased  between quarters due to the use of temporary  technicians in
the  current  year for  projects  to improve  the  Company's  internal  data and
communications network.

                                       13
<PAGE>

Costs of sales  increased by 93% between  quarters,  from  $545,000 last year to
$1,053,000 in the current year. The increase  relates  primarily to the addition
of three  training  instructors  and the  formation of a product  implementation
group which had 7 employees at April 30, 1997. At April 30, 1996, this group did
not exist.  The increase in the number of  employees in these areas  resulted in
additional salaries expense, as well as increased overhead costs. Costs of sales
in the first  quarter of the current  year also  included the costs of new users
manuals  and  other   documentation   related  to  the   release  of   Excalibur
RetrievalWare  discussed  above and an  updated  version  of the  Excalibur  EFS
product.  The costs of the customer  support  group  declined  slightly  between
quarters.

The Company  implemented  changes to its  organization by reorganizing its sales
force and forming a new business unit, the Visual  Business Group. In connection
with these changes,  in the first quarter,  the Company committed to a reduction
of its workforce by  approximately  10% and recorded a  restructuring  charge of
$577,000.  The charge  primarily  consists of  severance  pay and  benefits  for
terminated employees.

Net interest income declined to $118,000 in the current quarter from $191,000 in
the  comparable  quarter last year due to a decrease in the level of  investment
securities  held. The Company's  equity in the loss of its affiliate,  ETNV, was
$103,000  in the  quarter.  There was no  corresponding  item in the prior  year
period as ETNV was not formed until June 1996.


Liquidity and Capital Resources

In the three months  ended April 30, 1997,  the  Company's  combined  balance of
cash, cash  equivalents and  investments in marketable  securities  decreased by
$2,619,000 to $8,493,000 as summarized  below (in thousands).  At April 30, 1997
and January 31, 1997,  investments  in marketable  securities  consisted of U.S.
Treasury Bills with maturities of less than one year.

                                 April 30,   January 31,
                                   1997         1997       Change
                                 ---------    --------    --------
             Cash and cash
                equivalents       $ 3,014     $ 2,685     $   329
             Investments            5,479       8,427      (2,948)
                                  -------     -------     -------
                Total             $ 8,493     $11,112     $(2,619)
                                  =======     =======     =======

During the three months ended April 30,  1997,  cash was used to fund  operating
activities and to purchase computer and other equipment. The amount of cash used
in operations during the first quarter,  $2,437,000,  was less than the net loss
for the quarter,  $4,557,000,  due primarily to a  significant  reduction in the
level of accounts  receivable.  The balance of accounts  receivable  declined by
$1,928,000.

The Company  received  approximately  $107,000  cash  proceeds  from the sale of
common stock  during the quarter  ended April 30,  1997.  In addition,  deferred
compensation  balances  totaling  $394,000 were utilized in connection  with the
exercise of stock options during the quarter.

                                       14
<PAGE>

Despite the reduction in the balance of accounts  receivable during the quarter,
the  number  of days  sales  outstanding  ("DSO")  at April  30,  1997  remained
relatively  constant.  The balance of accounts  with  payment  terms  beyond the
normal  practice of 30 to 45 days  decreased in the  quarter,  but the effect of
this reduction on the DSO was mitigated by the large amount of revenue generated
near the end of the quarter. Management believes that the allowance for doubtful
accounts of $369,000 at April 30, 1997 is adequate.

Factors That May Affect Future Results

Primarily  due to the  large  operating  losses  incurred  by the  Company,  the
Company's  balance  of cash,  cash  equivalents  and  investments  has  declined
substantially  in the last  twelve  months.  Various  factors,  including  those
discussed  above,  have  inhibited the revenue growth that  management  expected
during  this  period.  As a  result,  the  short-term  revenue  expectations  of
management have been moderated,  and adjustments in current spending levels have
been  made.  As  discussed  above  and in Note 5 to the  Consolidated  Financial
Statements   contained  herein,   the  Company  has  reduced  its  workforce  by
approximately  10% from the number of employees at April 30, 1997,  and,  with a
few select  exceptions  in the sales and  development  areas,  has curtailed the
hiring of new employees. In addition, the Company has postponed certain programs
and  expenses  in  order  to  achieve  an  overall  reduction  in  expenditures.
Management believes that these actions, and the investments of time and money in
the training of the sales force, will improve sales  productivity,  and will not
adversely  affect the Company's  ability to compete  effectively  throughout the
remainder of this fiscal year.

The text  development  staff is focused on the completion of a product that will
facilitate  the  transition of the  installed  customer base of Excalibur EFS to
Excalibur  RetrievalWare.  Although  delays have been  experienced,  the Company
expects  to begin  shipping  this  product in the third  quarter of the  current
fiscal year. As discussed in Note 6 to the  Consolidated  Financial  Statements,
the Company recently completed the acquisition of Interpix Software Corporation.
Through this  acquisition,  the Company  added  complementary  technology  which
management   believes   will  enhance  the  web  crawling  and  web   publishing
capabilities of its products in Internet and intranet environments. In addition,
the Company  recently  announced the formation of the Visual  Business  Group to
sharpen the focus on developing opportunities for Excalibur Visual RetrievalWare
and to increase the pace of product development and release.

Management  believes  that the changes and  initiatives  discussed  above should
position the Company to perform  better  during the rest of the year, to improve
operating results, and to slow down the use of cash. Management does not believe
that the Company's business is declining.  Consequently,  the current balance of
cash, cash  equivalents and investments is expected to be sufficient to fund the
Company's  current  projected cash needs for the remainder of the current fiscal
year.

Historically,  the  Company  has used  primarily  cash  provided by sales of its
common  stock  to fund  its  operating  losses.  Should  the  actions  taken  by
management be  ineffective in reducing the net losses and the use of cash in the
next several quarters, the Company may be required to pursue additional external
sources of financing to support its operations and capital  requirements.  There
can be no  assurances  that external  sources of financing  will be available if
required,  or that such financing  will be available on terms  acceptable to the
Company.

                                       15
<PAGE>

The market for the  Company's  software  products  is  growing  rapidly  and the
Company's business environment is characterized by rapid technological  changes,
changes in customer requirements and new emerging market segments. Consequently,
to compete effectively, the Company must make frequent new product introductions
and enhancements  and deploy sales and marketing  resources to take advantage of
new business opportunities. The Company's operations are also subject to certain
other risks and  uncertainties  including,  among others,  the  effectiveness of
actual and potential  competition,  the success of the  Company's  relationships
with its strategic  partners and other  distributors of the Company's  products,
and the risks associated with acquisitions and international expansion.  Failure
to meet any of these challenges could adversely affect future operating results.

The  Company  has  significant  net  operating  loss  carryforwards  ("NOLs") of
approximately $59 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  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  Software,  Inc.  ("ConQuest") in July 1995,
the  Company's  ability to utilize  NOLs  relating to ConQuest of  approximately
$3,233,000 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 foregoing  discussion may also contain  comments about  management's  future
expectations,   performance,   plans  and  prospects   which  might   constitute
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Act of 1995.  There can be no assurances that expected future results
will be  achieved.  Actual  results  may  differ  materially  from  management's
expectations  as the result of the various  important  factors  discussed  above
including,  but not limited to, the success of our relationships  with strategic
partners,  the Company's ability to continue to develop competitive products and
make  timely  product  releases,  the  effects of  competition,  and the rapidly
changing marketplace.

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

The Company can be contacted  via e-mail at  inof@excalib.com  or visited at its
web sit at www.excalib.com.




                                       16
<PAGE>



                         PART II-- OTHER INFORMATION

Item 1.     Legal Proceedings                                    None.
-------

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
-------

On May 16, 1997,  the Company  filed a report on Form 8-K  announcing  the stock
option  repricing  program  discussed  in Note 6 to the  Consolidated  Financial
Statements contained herein.


                                       17

<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 12, 1997                          By: /s/ Patrick C. Condo
                                       ------------------------
                                       Patrick C. Condo
                                       President and Chief Executive Officer



June 12, 1997                          By: /s/ James H. Buchanan
                                       -------------------------
                                       James H. Buchanan
                                       Chief Financial Officer



                                       18