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 July 31, 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 September 11, 1997,  13,063,647  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 July 31, 1997

                            TABLE OF CONTENTS


                     PART I .  FINANCIAL INFORMATION


Item 1.    Financial Statements:                                      Page

           Consolidated Balance Sheets
           July 31, 1997 and January 31, 1997........................... 3

           Consolidated Statements of Operations
           Three and six month periods ended July 31, 1997 and 1996..... 4

           Consolidated Statements of Cash Flows
           Six month periods ended July 31, 1997 and 1996............... 5

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

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations................................... 12



                          PART II. OTHER INFORMATION

Items 1 - 6............................................................ 21


Signatures ............................................................ 22





<PAGE>

                      EXCALIBUR TECHNOLOGIES CORPORATION

                         CONSOLIDATED BALANCE SHEETS
                    (in thousands, except per share data)

                      ASSETS                      July 31, 1997     January 31, 
                                                    (unaudited)         1997
                                                   ------------    ------------
Current Assets:
   Cash and cash equivalents .....................    $  4,179        $  2,685 
   U.S. government securities, at cost ...........       3,889           8,427
   Accounts receivable, net of allowance for
      doubtful accounts of $292 and $367, 
      respectively ...............................       6,137           9,383
   Prepaid expenses and other ....................         987           1,655
                                                      ---------       --------- 
        Total current assets .....................      15,192          22,150

Equipment and leasehold improvements, net of
   accumulated depreciation of $4,943 and $4,179,
   respectively ..................................       2,553           2,939
Other assets .....................................       1,398           1,058
                                                      ---------       --------- 
                                                      $ 19,143        $ 26,147
                                                      =========       =========

      LIABILITIES AND SHAREHOLDERS' EQUITY 
Current Liabilities:
   Accounts payable...............................    $    773        $  1,680
   Accrued expenses...............................       1,891           2,310
   Deferred revenues..............................       2,886           2,693
   Deferred compensation..........................         446             901
                                                      ---------       --------- 
        Total current liabilities.................       5,996           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; 13,049 and 12,449 shares
      issued and outstanding, respectively........         130             124
   Additional paid-in capital.....................      64,220          61,830
   Accumulated deficit............................     (51,397)        (43,619)
   Cumulative translation adjustment..............         (77)            (43)
                                                      ---------       ---------
        Total shareholders' equity................      13,147          18,563
                                                      ---------       ---------
                                                      $ 19,143        $ 26,147
                                                      =========       =========

     The accompanying notes to the consolidated financial statements are an
               integral part of these consolidated balance sheets.

                                       3
<PAGE>


                      EXCALIBUR TECHNOLOGIES CORPORATION

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

                                       Three Months Ended     Six Months Ended
                                             July 31,              July 31,
                                         1997       1996       1997       1996
                                      ---------  ---------  ---------  ---------
REVENUES:      
   Software ........................  $  3,864   $  3,262   $  6,123   $  6,241
   Maintenance .....................     1,321      1,057      2,515      2,079
                                      ---------  ---------  ---------  ---------
                                         5,185      4,319      8,638      8,320
                                      ---------  ---------  ---------  ---------

EXPENSES:
   Sales and marketing .............     3,375      3,521      6,967      6,624
   Research and product development      1,569      1,456      3,270      2,870
   Acquired in-process research and      
     development ...................     1,284         --      1,284         --
   General and administrative ......     1,106      1,085      2,208      1,940
   Cost of software revenues .......       699        322      1,450        543
   Cost of maintenance revenues ....       313        412        615        736
   Restructuring costs .............        --         --        577         --
                                      ---------  ---------  ---------  ---------
                                         8,346      6,796     16,371     12,713
                                      ---------  ---------  ---------  ---------
Operating loss .....................    (3,161)    (2,477)    (7,733)    (4,393)

OTHER INCOME/ (EXPENSES):
     Interest income, net ..........        99        223        217        414
     Equity in net loss of affiliate      (159)       (59)      (262)       (59)
                                      ---------  ---------  ---------  ---------
Net loss ...........................    (3,221)    (2,313)    (7,778)    (4,038)

Dividends on preferred stock .......         3          3          7          7
                                      ---------  ---------  ---------  ---------
Net loss applicable to common stock   $ (3,224)  $ (2,316)  $ (7,785)  $ (4,045)

Net loss per common share ..........  $   (.25)  $  (0.19)  $   (.60)  $  (0.33)
                                      =========  =========  =========  =========
Weighted-average number of common
shares outstanding .................    13,017     12,363     12,916     12,274
                                      =========  =========  =========  =========



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

                                       4
<PAGE>

                      EXCALIBUR TECHNOLOGIES CORPORATION

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (unaudited)
                                (in thousands)

                                                       Six Months Ended July 31,
                                                           1997        1996
                                                        ----------  ----------
Cash Flows from Operating Activities:
   Net loss ..........................................   $ (7,778)   $ (4,038)
   Adjustments to reconcile net loss to net cash used
      in operating activities:
        Depreciation and amortization ................        799         605
        Acquired in-process research and development .      1,284          --   
        Equity in net loss of affiliate ..............        262          59
        Loss on disposal of assets ...................         --           8
   Changes in operating assets and liabilities:
        Accounts receivable, net .....................      3,319         617
        Prepaid expenses and other ...................        613        (426)
        Accounts payable and accrued expenses ........     (1,476)     (1,133)
        Deferred revenues ............................        183        (440)
                                                         ---------   ---------
   Net cash used in operating activities .............     (2,794)     (4,748)
                                                         ---------   ---------

Cash Flows from Investing Activities:
   Purchase of investments ...........................     (8,856)    (12,053)
   Proceeds from maturities of investments ...........     13,394       8,646
   Loan to / investment in affiliate .................        (95)       (488)
   Acquisition, net of cash used .....................         55          --
   Purchases of equipment and leasehold improvements .       (355)     (1,443)
                                                         ---------   ---------
   Net cash provided by (used in) investing activities      4,143      (5,338)
                                                         ---------   ---------

Cash Flows from Financing Activities:
   Proceeds from the issuance of common stock ........        269       9,435
   Repayment of notes payable ........................        (40)         (5)
                                                         ---------   ---------
   Net cash provided by financing activities .........        229       9,430
                                                         ---------   ---------

The Effect of Exchange Rate Changes on Cash ..........        (84)        (76)
                                                         ---------   ---------

Net Increase (Decrease) in Cash and Cash Equivalents .      1,494        (732)

Cash and Cash Equivalents, beginning of period .......      2,685       2,903
                                                         ---------   ---------

Cash and Cash Equivalents, end of period .............   $  4,179    $  2,171
                                                         =========   =========

     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

                                July 31, 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;  ConQuest Software, Inc. ("ConQuest"),
a company that was  acquired in July 1995;  and  Interpix  Software  Corporation
("Interpix"),  a company  that was  acquired  in May 1997.  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 net losses of $3,221,000  and  $7,778,000 in the three and
six month  periods  ended July 31,  1997,  and  incurred net losses that totaled
$17,445,000 over the last three complete fiscal years.  The accumulated  deficit
of the Company at July 31, 1997 was  $51,397,000.  The combined balance of cash,
cash  equivalents  and  investments  in  marketable  securities  was  reduced by
$3,044,000  in the six months ended July 31, 1997 to a balance of  $8,068,000 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 and six month
periods  ended July 31, 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.

The American Institute of Certified Public Accountants has approved for exposure
a draft  Statement  of Position  (the  "Exposure  Draft")  that would  supersede
Statement of Position 91-1,  "Software  Revenue  Recognition." If implemented in
its current  form,  the Exposure  Draft would be effective  for years  beginning
after December 15, 1996. Management believes that the proposed changes would not
have a material adverse financial impact on the Company.

Research and Development Costs

No product  development  costs were  capitalized,  and there were no capitalized
costs not yet  amortized,  during the six month  periods ended July 31, 1997 and
1996.

Stock-Based Compensation

Effective  for the  financial  statements  as of January 31,  1997,  the Company
adopted Statement of Financial Accounting Standard ("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.




                                       7
<PAGE>

Income Taxes

Due to the net losses reported for the six month periods ended July 31, 1997 and
1996, no income taxes were provided in the 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 rate
of exchange during the period. Gains or losses from translating foreign currency
financial  statements are accumulated in a separate  component of  shareholders'
equity.


Net Loss Per Common Share

Net loss per common  share has been  computed by dividing  the net loss for each
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.

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 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 July 31, 1997 and January 31, 1997,  the
aggregate  fair value of the  securities  based upon  quoted  market  prices was
$3,889,000 and $8,428,000, respectively.




                                       8
<PAGE>

Supplemental Cash Flow Information (in thousands)
                                                     Six Months Ended
                                                          July 31,
                                                      1997      1996
                                                    --------  --------
Non-cash investing and financing activities:
   Use of deferred compensation to purchase 
     common stock                                   $   438    $   33
   Issuance of warrants to purchase common stock         --       758
   Common stock issued for acquisition                1,822        --

Details of acquisition:
   Fair value of assets acquired                    $   583    $   --   
   In-process research and development acquired       1,284        --
   Liabilities assumed                                   21        --
   Stock issued                                       1,822        --
                                                    -------    ------
   Cash paid                                             24        --
Cash acquired                                            79        --
                                                    -------    ------
Net cash received in acquisition                    $    55    $   --   
                                                    =======    ======



(3)    ACQUISITION OF INTERPIX SOFTWARE CORPORATION

On May  5,  1997,  the  Company  acquired  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 purchase method of accounting
has been applied to this acquisition  transaction and, accordingly,  the results
of  operations  of Interpix  have been  included in the  Company's  consolidated
results of  operations  for the three and six month  periods ended July 31, 1997
from the date of  acquisition.  The results of operations  for Interpix prior to
the acquisition were not significant.

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
total purchase price included the value of the Excalibur shares, $1,822,000, and
out-of  -pocket  acquisition  costs,  $45,000.  It was  allocated  to the assets
purchased and the  liabilities  assumed based upon their fair values on the date
of acquisition.  Approximately $1,284,000 of the purchase price was allocated to
research and development projects in process and was expensed in the three month
period ended July 31, 1997. The excess of the purchase price over the fair value
of the net assets of Interpix was approximately $545,000. This amount represents
intangible  assets  related to the  completed  technology  base,  the  assembled
workforce and  tradenames  acquired,  and has been recorded as goodwill which is
being amortized on a straight-line basis over five years. The amount of goodwill
amortization  for the  three  and six  month  periods  ended  July 31,  1997 was
approximately $27,000.





                                       9
<PAGE>

(4)    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
(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.  In July 1997, the Company loaned
ETNV approximately $95,000.

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  period,  is  included  in equity in net loss of  affiliate  in the
accompanying  consolidated  statements of operations for the three and six month
periods ended July 31, 1997 and 1996. The balance of the investment, included in
other assets in the accompanying balance sheets at July 31, 1997 and January 31,
1997, was $806,000 and $973,000,  respectively,  net of accumulated amortization
of $603,000 and $341,000, respectively.


(5)    ISSUANCES OF COMMON STOCK

During the first six months of the  current  fiscal  year,  the  Company  issued
approximately 296,000 shares of common stock upon the exercise of employee stock
options ranging in price from $1.04 to $11.64 per share, resulting in total cash
proceeds to the Company of approximately $89,000 and the utilization of $438,000
in deferred  compensation.  In addition,  approximately  28,000 shares of common
stock were issued to  participants  of the employee  stock  purchase  plan at an
aggregate  purchase  price of  approximately  $182,000.  The  exercise  of stock
options  provided  total cash  proceeds of  approximately  $1,047,000 in the six
month period ended July 31, 1996.

On May 7, 1997,  the Board of  Directors  authorized a repricing  program  which
allowed  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  and the 1995 Stock Option  Plans 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.  Options to  purchase  approximately  1,176,000  shares of
common stock were  repriced.  Stock  options that have been  repriced may not be
exercised until November 8, 1997.






                                       10
<PAGE>

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 of in excess of 25% of the Company's  outstanding common stock,
acted  as  the  placement  agent  in  this  transaction  and  received  a fee of
approximately $350,000.


(6)   RESTRUCTURING COSTS

       The Company  reorganized  its sales  force and made other  changes to its
overall  organization  in April 1997.  In  connection  with these  changes,  the
Company reduced its workforce by approximately  10% and recorded a restructuring
charge of $577,000  in the first  quarter.  The charge  primarily  consisted  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 were substantially  completed in
the second quarter of the current fiscal year.





                                       11
<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.

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
purchase method of accounting has been applied to this  acquisition  transaction
and,  accordingly,  the results of  operations of Interpix have been included in
the Company's  consolidated  results of  operations  for the three and six month
periods ended July 31, 1997 from the date of  acquisition.  The  shareholders of
Interpix  received  275,000  shares of common stock of Excalibur in exchange for
all of the outstanding common stock of Interpix. Approximately $1,284,000 of the
purchase price was allocated to research and development projects in process and
was expensed in the three month  period  ended July 31, 1997.  The excess of the
purchase  price  over  the  fair  value  of  the  net  assets  of  Interpix  was
approximately  $545,000.  This amount represents  certain intangible assets, and
has been recorded as goodwill which is being amortized on a straight-line  basis
over five years.












                                       12
<PAGE>

Results of Operations

Total  revenues  for  the  second  fiscal  quarter  ended  July  31,  1997  were
$5,185,000,  an increase of 20% over total  revenues of $4,319,000  reported for
the  corresponding  fiscal quarter last year. The Company incurred a net loss of
$3,221,000,  or $0.25 per common share, in the second quarter  compared to a net
loss of $2,313,000, or $0.19 per common share, in the second quarter last fiscal
year. Excluding the charge of $1,284,000 for in-process research and development
costs  related  to the  acquisition  of  Interpix,  the net loss for the  second
quarter ended July 31, 1997 was $1,937,000.

For the six months ended July 31,  1997,  total  revenues  were  $8,638,000,  an
increase of 4% over total  revenues of  $8,320,000  reported for the same fiscal
period last year. The Company  incurred a net loss of  $7,778,000,  or $0.60 per
common share,  in the first six months of the current  fiscal year compared to a
net loss of $4,038,000  million,  or $0.33 per common share,  in the same fiscal
period last year.  Excluding the Interpix charge identified above and a $577,000
charge recorded in the first quarter related to the restructuring of operations,
the net loss for the six months ended July 31, 1997 was $5,917,000.

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 and six month periods ended July 31, 1997 and 1996, and the percentage
change in the amounts between fiscal periods (dollars in thousands).


                                                                 
                                    Three Months Ended July 31,       Increase
                                     1997                 1996       (Decrease)
                              -----------------    -----------------  ---------
                               Amount   Percent     Amount   Percent   Percent
                              --------  -------    --------  -------  ---------
Revenues:
 RetrievalWare                $  3,488     67 %    $  1,622     38 %     115 %
 EFS                               376      7         1,640     38       (77)
                              --------   ------    --------   ------    ------
  Total software                 3,864     74         3,262     76        18
 Maintenance                     1,321     26         1,057     24        25
                              ========   ======    ========   ======    ======
  Total revenues              $  5,185    100 %    $  4,319    100 %      20 %
                              ========   ======    ========   ======    ======
Expenses:
 Sales and marketing          $  3,375     65 %    $  3,521     81 %      (4)%
 Research and product            
   development                   1,569     30         1,456     34         8
 Acquired in-process              
   research and development      1,284     25            --     --       n/a
 General and administrative      1,106     21         1,085     25         2    
 Costs of sales                  1,012     20           734     17        38
 Restructuring costs                --     --            --     --        --
                              ========   ======    ========   ======    ======
  Total expenses              $  8,346    161 %    $  6,796    157 %      23 %
                              ========   ======    ========   ======    ======




                                       13
<PAGE>
                                                                 
                                     Six Months Ended July 31,        Increase
                                     1997                 1996       (Decrease)
                              -----------------    -----------------  ---------
                               Amount   Percent     Amount   Percent   Percent
                              --------  -------    --------  -------  ---------
Revenues:
 RetrievalWare                $  5,353     62 %    $  2,844     34 %      88 %
 EFS                               770      9         3,397     41       (77)
                              --------   ------    --------   ------    ------
  Total software                 6,123     71         6,241     75        (2)
 Maintenance                     2,515     29         2,079     25        21
                              ========   ======    ========   ======    ======
  Total revenues              $  8,638    100 %    $  8,320    100 %       4 %
                              ========   ======    ========   ======    ======
Expenses:
 Sales and marketing          $  6,967     81 %     $ 6,624     80 %       5 %
 Research and product
   development                   3,270     38         2,870     35        14
 Acquired in-process
   research and development      1,284     15            --     --       n/a
 General and administrative      2,208     25         1,940     23        14
 Costs of sales                  2,065     24         1,279     15        61
 Restructuring costs               577      7            --     --       n/a
                              ========   ======    ========   ======    ======
     Total expenses           $ 16,371    190 %    $ 12,713    153 %      29 %
                              ========   ======    ========   ======    ======



Software  revenues  increased by 18%, to $3,864,000  in the second  quarter from
$3,262,000  in last  year's  fiscal  second  quarter,  due  primarily  to a 199%
increase in service  revenues  that  include  implementation  support,  software
development and training  services  provided to a variety of customers.  Service
revenues  were  approximately  18% of  total  software  revenues  in the  second
quarter.  License fee revenues  increased 4% between fiscal  periods.  Excalibur
RetrievalWare  software  revenues  increased  115% in the  second  quarter  over
comparable  revenues  for the  second  quarter  last  year,  and  now  represent
approximately  90% of  total  software  revenues,  and  67% of  total  revenues.
Software  revenues from North American sales,  which were  approximately  66% of
total  software  revenues  in the  second  quarter,  increased  by 34%  from the
corresponding  fiscal  quarter of last  year.  International  software  revenues
declined by  approximately  3% in the second  quarter  compared with last year's
second quarter.

For the six months  ended  July 31,  1997,  total  software  revenues  decreased
slightly,  to $6,123,000  in the current year from  $6,241,000 in the six months
ended  July  31,  1996.  However,   Excalibur  RetrievalWare  software  revenues
increased  by 88% compared to the prior fiscal  year.  Service  revenues,  which
represented approximately 21% of total software revenues in the six months ended
July 31, 1997,  increased by 217% between years.  Software  license fee revenues
declined 17% between years.  Software revenues from North American sales,  which
were  approximately  69% of total software revenues in the six months ended July
31, 1997, increased by 6% from the corresponding  six-month period of last year.
International  software  revenues  declined by approximately  15% in the current
year compared with last year.


                                       14
<PAGE>

The current  year-to-date  revenues  were  adversely  impacted  by factors  that
affected  the  Company's  first  quarter  performance.  First,  the ramp-up of a
significant  number  of  sales  personnel  contributed  to lower  than  expected
revenues in North America. 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
resulted in more effective selling in second quarter, but the program kept these
sales  personnel  out of the field during the  beginning  of the current  fiscal
year.  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 half of the fiscal  year.  Several
factors  affecting  the  partner's  business  prevented  them from  signing this
agreement. Although the Company has a continuing relationship with this partner,
there can be no assurances that the expected agreement will occur. Third, due to
the slower than expected growth of the Company's  Belgian  affiliate,  Excalibur
Technologies  N.V.  ("ETNV"),  no software  revenue  related to ETNV's  software
distribution license was recorded by the Company in the first quarter.

As  explained  in  Note 4 to the  Consolidated  Financial  Statements  contained
herein,  the Company licensed the use of its name and certain software  products
to ETNV 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.  Consequently,  in the current fiscal year, software
revenues have been recorded only when minimum license fees are received in cash.
Software  revenues  for the three  and six month  periods  ended  July 31,  1997
included  approximately  $502,000 in revenues related to the minimum license fee
for the second  quarter that was paid by ETNV.  Software  revenues for the three
and six month periods ended July 31, 1996  contained  revenues of  approximately
$360,000 related to the license arrangement with ETNV.

In the second  quarter of the current  fiscal  year,  the Company  also  derived
software revenues from expanded  software license  agreements with several other
important  existing  customers,  including the Chicago Tribune;  the Los Angeles
Times;   Automatic  Data  Processing,   Inc.  (ADP);  and  various  intelligence
organizations.  Excalibur RetrievalWare was selected by new customers in various
industries needing  mission-critical  knowledge retrieval  solutions,  including
Sony Marketing Inc.; Koch Industries, Inc.; eWorks! Inc.; and federal, state and
local government organizations. Software revenues in the first quarter also were
derived from license  agreements  with various North American and  international
customers,  most  notably  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 a global corporate network.

Due  primarily  to the  expansion  of the  customer  base with the  addition  of
Excalibur  RetrievalWare  users,   maintenance  revenues  increased  by  25%  to
$1,321,000  in the second  quarter from  $1,057,000  in the second  quarter last
year,  and by 21% to  $2,515,000  in the six  months  ended  July 31,  1997 from
$2,079,000 in the corresponding period of last year.


                                       15
<PAGE>

Sales and marketing costs  decreased by 4% in the second quarter,  to $3,375,000
in the current year from  $3,521,000  last year, due to cost reduction  measures
taken at the end of the first quarter.  The workforce  reduction and sales force
reorganization actions announced at that time included a reduction in the number
of sales and marketing  employees.  The resulting decrease in salary expense and
recruiting  costs more than  offset the  increase in sales  commissions  for the
quarter. The Company also reduced the level of marketing program expenditures in
the second quarter by approximately  $102,000 compared to the prior fiscal year.
For the six months ended July 31, 1997, sales and marketing  expenses  increased
by 5% compared  with the prior fiscal year,  to  $6,967,000  in the current year
from $6,624,000 in the prior year, due to a 16% increase in such expenditures in
the first  quarter.  The Company  employed 64 people in the sales and  marketing
areas at July 31, 1997. There were 73 sales and marketing  employees at July 31,
1996.

Total research and product  development costs increased by 96%, to $2,853,000 in
the second  quarter of the current  fiscal year  compared with  $1,456,000  last
year,  due primarily to the  acquisition  of Interpix.  For the six months ended
July 31, 1997, research and development costs increased by 59%, to $4,554,000 in
the current year from $2,870,000 in the six months ended July 31, 1996. Included
in such costs for both current year periods are a $1,284,000  charge  related to
the acquired  in-process  research and development  projects of Interpix and the
costs of the Interpix product  development  staff since the date of acquisition.
Excluding  the  in-process  projects  charge,  research  and  development  costs
increased by approximately 8% and 14%, respectively,  in the three and six month
periods ended July 31, 1997 compared with the corresponding periods of the prior
fiscal year. In the current  fiscal year,  the Company has reduced the number of
software  engineers  supporting the EFS software product resulting in an overall
reduction in the number of research and development  employees to 52 at July 31,
1997.  There was a total of 60 research  and  development  employees at July 31,
1996.

In the second  quarter,  the Company  announced  the  availability  of Excalibur
RetrievalWare  6.1.  This release  features  Excalibur  WebSynchro  and advanced
profiling and  summarization  capabilities,  and represents the Company's  first
product that integrates  advanced  search and retrieval  technology with the web
crawling capabilities obtained from Interpix. Development efforts are proceeding
on a version of the product containing document imaging capabilities. Management
expects  this  release to  facilitate  the  transition  of current  EFS users to
Excalibur RetrievalWare.

General and  administrative  expenses  increased by 2% in the current quarter to
$1,106,000  from  $1,085,000 in the  comparable  quarter last year.  For the six
months ended July 31, 1997, general and  administrative  costs increased by 14%,
to $2,208,000  in the current year from  $1,940,000 in the six months ended July
31, 1996.  Since last year's first quarter,  the Company has moved its corporate
headquarters to a larger  facility and 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  office rent,  telephone,  depreciation and other equipment
costs although  recruiting and moving costs have  declined.  Consulting  expense
decreased  between quarters due to a reduction in the use of external  resources
for investor relations and strategic planning.




                                       16
<PAGE>

Costs of sales  increased  by 38%, to  $1,012,000  in the current  quarter  from
$734,000  in the second  quarter  last year.  For the six months  ended July 31,
1997,  cost of sales  increased by 61%, to  $2,065,000  in the current year from
$1,279,000 in the six months ended July 31, 1996. The increase relates primarily
to the addition of three  training  instructors  and the  formation of a product
implementation  group which had 8 employees at July 31, 1997.  At July 31, 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 for the three and six month  periods ended July 31, 1997 also included the
costs of implementation  project  subcontractors  and increased costs related to
the resale of third-party software products. Costs of sales in the first quarter
of  the  current  year  included  the  costs  of new  users  manuals  and  other
documentation  related to the 6.0  release  of  Excalibur  RetrievalWare  and an
updated version of the Excalibur EFS product.  The costs of the customer support
group have declined in the current fiscal year,  resulting in decreased costs of
maintenance in the three and six month periods ended July 31, 1997 compared with
the corresponding periods of last year.

As  indicated  above,  the  Company  reorganized  its sales force and made other
changes  to the  overall  organization  at the end of the first  quarter  of the
current fiscal year. In connection  with these changes,  the Company reduced its
workforce by approximately  10% and recorded a restructuring  charge of $577,000
in the first  quarter.  The charge  primarily  consisted  of  severance  pay and
benefits for terminated employees.

Net interest income declined to $99,000 and $217,000, respectively, in the three
and  six  month  periods  ended  July  31,  1997  from  $223,000  and  $414,000,
respectively, in the comparable fiscal periods of last year due to a decrease in
the level of investment securities held. The Company's equity in the net loss of
ETNV was $159,000 in the current quarter,  and $262,000 for the six months ended
July 31, 1997. The Company's  equity in ETNV's net loss was $59,000 for both the
three and six month periods ended July 31,  1996--ETNV was not formed until July
1996.

Liquidity and Capital Resources

In the six months ended July 31, 1997, the Company's  combined  balance of cash,
cash  equivalents  and  investments  in  marketable   securities   decreased  by
$3,044,000 to $8,068,000 as summarized  below (in  thousands).  At July 31, 1997
and January 31, 1997,  investments  in marketable  securities  consisted of U.S.
Treasury Bills with maturities of less than one year.


                          July 31,     January 31,   
                            1997          1997        Change
                         ---------     ---------     ---------
          Cash and cash
           equivalents   $  4,179      $  2,685      $  1,494
          Investments       3,889         8,427        (4,538)
                         =========     =========     =========
             Total       $  8,068      $ 11,112      $ (3,044)
                         =========     =========     =========





                                       17
<PAGE>


During  the six  months  ended July 31,  1997,  cash was used to fund  operating
activities,  and to  purchase  computer  and  other  equipment  with  a cost  of
$355,000.  The Company also made a $95,000 loan to ETNV. The amount of cash used
in  operations  during  the six  months  ended July 31,  1997,  $2,794,000,  was
substantially less than the net loss for the period,  $7,778,000,  due primarily
to a significant reduction in the level of accounts receivable and other current
assets.  The amount of cash provided by the $3,319,000  reduction in the balance
of  accounts  receivable  and the  $613,000  reduction  in the  balance of other
current  assets  was offset  somewhat  by the use of  $1,476,000  cash to reduce
accounts payable and accrued liabilities. The net loss for the current year also
included  non-cash  charges  totaling  $2,345,000.  Cash was  provided  from the
maturity of  Treasury  Bills,  $4,538,000,  and the  exercise of employee  stock
options,  $269,000.  Net  cash  of  $55,000  was  provided  as a  result  of the
acquisition of Interpix.

Last year,  cash used in operations  during the first six months was $4,748,000,
fixed asset additions were $1,443,000 and the initial investment of $488,000 was
made in ETNV.  However, in March 1996, the Company completed a private placement
sale of its common  stock  that  provided  net cash  proceeds  of  approximately
$8,388,000,  and the exercise of stock options by employees provided  $1,047,000
cash.

Due to the  reduction in the balance of accounts  receivable  during the current
fiscal year, including accounts with payment terms beyond the normal practice of
30 to 45 days,  the number of days sales  outstanding  ("DSO") at July 31,  1997
declined  from the number at January  31,  1997.  Management  believes  that the
allowance for doubtful accounts of $292,000 at July 31, 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 five fiscal quarters. Various factors, including those
discussed above pertaining to the first quarter of the current fiscal year, have
inhibited the revenue growth that management  expected during this period.  As a
result,  the short-term revenue  expectations of management were moderated,  and
planned  expenditures  were  reduced.  As  discussed  above and in Note 6 to the
Consolidated  Financial  Statements  contained  herein,  the Company 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,  curtailed
the hiring of new employees. In addition, the Company 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,  has improved sales  productivity,  and has not
adversely  affected the Company's ability to compete  effectively in the current
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.  The Company  expects to release  this  version of the
product by the end of the current  fiscal  year.  As  discussed in Note 3 to the
Consolidated  Financial  Statements,  the Company  completed the  acquisition of
Interpix in May 1997. 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.

                                       18
<PAGE>

In  addition,  the  Company  has made other  organizational  changes in order 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 slow
down the use of cash by the Company.  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.

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.







                                       19
<PAGE>

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  info@excalib.com  or visited at its
web site at www.excalib.com.







                                       20
<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

(a) The 1997 Annual Meeting of Shareholders was held on July 23, 1997.

(b) The  following  individuals  were elected to serve as the Board of 
Directors for the terms expiring at the 1998 Annual Meeting:

                                         Number of Shares Voted
                                         ----------------------
                                     
                                             For       Withheld
                                             ---       --------

                 Donald R. Keough         9,365,872     266,132
                 Patrick C. Condo         9,312,801     319,203
                 Richard M. Crooks, Jr    9,355,169     276,835
                 John S. Hendricks        9,366,508     265,496
                 W. Frank King III        9,374,211     257,793
                 John G. McMillian        9,366,022     265,982
                 Philip J. O'Reilly       9,349,630     282,374
                 Shaun C. Viguerie        9,352,530     279,474





(c) No other business came before the meeting.


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 5 to the  Consolidated  Financial
Statements contained herein.




                                       21
<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



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



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






                                       22
<PAGE>