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, 1998

                                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 3, 1998, 13,610,702 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, 1998

                       TABLE OF CONTENTS


                PART I .  FINANCIAL INFORMATION


Item 1.  Financial Statements:                                        Page

         Consolidated Balance Sheets
         July 31, 1998 and January 31, 1998............................ 3

         Consolidated Statements of Operations
         Three and six month periods ended July 31, 1998 and 1997...... 4

         Consolidated  Statements of Cash Flows 
         Six month periods ended July 31, 1998 and 1997................ 5

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

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



                    PART II. OTHER INFORMATION

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


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


















                                       2
<PAGE>

                EXCALIBUR TECHNOLOGIES CORPORATION

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

                  ASSETS                                  July 31,   January 31,
                                                            1998         1998 
                                                         (unaudited)
                                                          ----------  ----------
Current Assets:
     Cash and cash equivalents .........................   $  6,476    $  4,939
     U.S. government securities, at cost ...............        987       1,496
     Accounts receivable, net of
        allowance for doubtful accounts
        of $651 and $527, respectively .................      7,596       9,189
     Prepaid expenses and other ........................      1,626       1,071
                                                           --------    --------
         Total current assets ..........................     16,685      16,695

  Equipment and leasehold improvements,
     net of accumulated depreciation of 
     $6,287 and $5,614,respectively ....................      2,170       2,267
  Other assets .........................................        924       1,083
                                                           --------    --------
                                                           $ 19,779    $ 20,045
                                                           ========    ========
     LIABILITIES AND SHAREHOLDERS' EQUITY
  Current Liabilities:
     Accounts payable ..................................   $  2,224    $  2,106
     Accrued expenses ..................................      1,459       1,886
     Deferred revenues .................................      2,652       2,708
     Deferred compensation .............................        247         247
                                                           --------    --------
         Total current liabilities .....................      6,582       6,947
                                                           --------    --------

  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 ...        321         271
     Common stock, par value $0.01, 40,000 shares
        authorized; 13,606 and 13,179 shares issued 
        and outstanding, respectively ..................        136         132
     Additional paid-in capital ........................     68,424      64,714
     Accumulated deficit ...............................    (55,610)    (51,945)
     Cumulative translation adjustment .................        (74)        (74)
                                                           --------    --------
         Total shareholders' equity ....................     13,197      13,098
                                                           --------    --------
                                                           $ 19,779    $ 20,045
                                                           ========    ========


     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       Six Months Ended
                                               July 31,                July 31,
                                           1998        1997        1998        1997
                                         ---------   ---------   ---------   ---------
<S>                                      <C>         <C>         <C>         <C>     
REVENUES:
  Software ...........................   $  4,834    $  3,864    $  8,565    $  6,123
  Maintenance ........................      1,322       1,321       2,646       2,515
                                         ---------   ---------   ---------   ---------
                                            6,156       5,185      11,211       8,638
                                         ---------   ---------   ---------   ---------
EXPENSES:
  Sales and Marketing ................      3,430       3,375       6,658       6,967
  Research and product development ...      1,782       1,569       3,680       3,270
  Acquired in-process research
    & development ....................       --         1,284        --         1,284
  General and administrative .........      1,019       1,106       2,242       2,208
  Cost of software revenues ..........        839         699       1,520       1,450
  Cost of maintenance revenues .......        338         313         652         615
  Restructuring costs ................       --          --          --           577
                                         ---------   ---------   ---------   ---------
                                            7,408       8,346      14,752      16,371
                                         ---------   ---------   ---------   ---------

Operating loss .......................     (1,252)     (3,161)     (3,541)     (7,733)

OTHER INCOME/ (EXPENSES):
     Interest income, net ............         81          99         143         217
     Equity in net loss of affiliate .       (101)       (159)       (218)       (262)
                                         ---------   ---------   ---------   ---------
Net loss .............................     (1,272)     (3,221)     (3,616)     (7,778)
Dividends on preferred stock .........          3           3           7           7
                                         ---------   ---------   ---------   ---------
Net loss applicable to common stock ..   $ (1,275)   $ (3,224)   $ (3,623)   $ (7,785)
                                         =========   =========   =========   =========
Basic and Diluted net loss per
common share .........................   $  (0.09)   $  (0.25)   $  (0.27)   $  (0.60)
                                         =========   =========   =========   =========

Weighted-average number of common
shares outstanding ...................     13,546      13,017      13,385      12,916
                                         =========   =========   =========   =========


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

</TABLE>

                                       4
<PAGE>


                EXCALIBUR TECHNOLOGIES CORPORATION

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

                                                       Six Months Ended July 31,
                                                             1998        1997
                                                           ---------   ---------
Cash Flows from Operating Activities:
     Net loss ..........................................   $ (3,616)   $ (7,778)
     Adjustments to reconcile net loss to net
        cash used in operating activities:
         Depreciation and amortization .................        731         799
         In-process R&D costs ..........................       --         1,284
         Equity in net loss of affiliate ...............        218         262
     Changes in operating assets and liabilities:
         Accounts receivable, net ......................      1,616       3,319
         Prepaid expenses and other ....................       (581)        613
         Accounts payable and accrued expenses .........       (306)     (1,476)
         Deferred revenues .............................        (64)        183
                                                           ---------   ---------
     Net cash used in operating activities .............     (2,002)     (2,794)
                                                           ---------   ---------

  Cash Flows from Investing Activities:
     Purchase of investments ...........................       (984)     (8,856)
     Proceeds from maturities of investments ...........      1,493      13,394
     Loan to / Investment in affiliate .................        (96)        (95)
     Acquisition, net of cash used .....................       --            55
     Purchases of equipment and leasehold improvements .       (579)       (355)
                                                           ---------   ---------
     Net cash provided by (used in) investing activities       (166)      4,143
                                                           ---------   ---------

  Cash Flows from Financing Activities:
     Proceeds from the issuance of common stock ........      3,714         269
     Repayment of notes payable ........................       --           (40)
                                                           ---------   ---------
     Net cash provided by financing activities .........      3,714         229
                                                           ---------   ---------
  The Effect of Exchange Rate Changes on Cash ..........         (9)        (84)
                                                           ---------   ---------
  Net Increase in Cash and Cash Equivalents ............      1,537       1,494

  Cash and Cash Equivalents, beginning of period .......      4,939       2,685
                                                           ---------   ---------
  Cash and Cash Equivalents, end of period .............   $  6,476    $  4,179
                                                           =========   =========


     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, 1998


(1)   THE COMPANY

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

The Company designs,  develops and markets knowledge retrieval software products
capable of supporting  paper,  text,  image and video 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 $1,272,000  and  $3,616,000 in the three and
six month  periods  ended July 31,  1998,  and  incurred net losses that totaled
$16,383,000 over the last three complete fiscal years.  The accumulated  deficit
of the Company at July 31, 1998 was  $55,610,000.  The Company's  operations are
subject  to  certain  risks  and  uncertainties  including,  among  others,  the
dependence upon the timing of the closing of large software licenses; actual and
potential  competition by entities with greater financial resources,  experience
and market presence than the Company;  rapid technological  changes; the success
of the Company's  product  marketing and product  distribution  strategies;  the
risks associated with  acquisitions  and  international  expansion;  the need to
manage  growth;  the need to  retain  key  personnel  and  protect  intellectual
property;  and  the  availability  of  additional  capital  financing  on  terms
acceptable to the Company.


(2)   SIGNIFICANT ACCOUNTING POLICIES

Financial Statement Presentation

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

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


                                       6
<PAGE>

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, 1998.
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, 1998 are not  necessarily  indicative of the results for
the entire fiscal year ending January 31, 1999.


Revenue Recognition

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

The American  Institute of Certified Public  Accountants has issued Statement of
Position 97-2,  "Software  Revenue  Recognition,"  ("SOP 97-2") that  supersedes
Statement of Position 91-1. The Company has  implemented SOP 97-2 and it has not
had a material 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, 1998 and
1997.


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 July  31,  1998  and  January  31,  1998,  the  aggregate  fair  value of the
securities  based  upon  quoted  market  prices  was  $987,000  and  $1,497,000,
respectively.






                                       7
<PAGE>

Net Loss Per Common Share

In February 1997, the Financial Accounting Standards Board, ("FASB") issued SFAS
No.  128,  "Earnings  Per  Share."  SFAS  No.  128 is  effective  for  financial
statements  issued for periods  ending after  December 15, 1997.  The  financial
statements  presented  have been prepared in accordance  with SFAS No. 128. SFAS
No. 128  requires  dual  presentation  of basic and diluted  earnings  per share
("EPS").  Basic EPS  includes no dilution  and is computed by dividing  net loss
available to common stockholders by the weighted average number of common shares
outstanding  for the  period.  Diluted  loss per share  includes  the  potential
dilution that would occur if securities or other contracts to issue common stock
were  exercised or  converted  into common  stock.  Stock  options,  warrants to
purchase common stock and cumulative  convertible  preferred stock were excluded
from the  computation  of  diluted  loss per  share  as  their  effect  would be
anti-dilutive.  As a result,  the basic and diluted  loss per share  amounts are
identical.


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
(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 period and the  elimination of the Company's  share of gross profit
included in ETNV's  prepaid  license fees at July 31, 1998 and 1997, is included
in equity in net loss of affiliate in the accompanying consolidated statement of
operations  for the three and six month periods ended July 31, 1998 and 1997. At
July 31,  1998,  the balance of advances and the  investment,  included in other
assets  in the  accompanying  consolidated  balance  sheets  net of  accumulated


                                       8
<PAGE>

amortization  and the Company's share of the net loss of ETNV, was $423,000.  At
January 31, 1998, the balance of advances and the investment,  included in other
assets  in the  accompanying  consolidated  balance  sheets  net of  accumulated
amortization and the Company's share of the net loss of ETNV, was $544,000.

For the three and six month  periods ended July 31, 1998,  the Company  recorded
total revenues of $255,000 and $585,000,  respectively,  related to the software
license with ETNV.  The Company  recorded  $502,000 for the comparable six month
period  in the  prior  fiscal  year,  all of which was  recorded  in the  second
quarter.


(4)   ISSUANCES OF COMMON STOCK

During the first six months of the  current  fiscal  year,  the  Company  issued
approximately 97,000 shares of common stock upon the exercise of options ranging
in price from $2.07 to $10.38 per share, resulting in total cash proceeds to the
Company of approximately $414,000. In addition, the Company issued approximately
4,700 shares of common stock to  participants  of the  employee  stock  purchase
plan.  In the first half of last fiscal  year,  the  exercise  of stock  options
resulted in total cash proceeds of approximately  $89,000 and the utilization of
$438,000 in deferred compensation.

On May 15, 1998,  the Company  completed a private  placement of 325,000  shares
(the "Shares") of its common stock to an unaffiliated financial institution. The
Company  sold the Shares at a purchase  price of $10.00 per share,  resulting in
proceeds to the Company of $3,250,000.  The  transaction  was placed directly by
the Company. The Company plans to use the proceeds to finance ongoing operations
and for general corporate purposes.  Subsequent to May 15, 1999, the investor in
the private  placement has the right to cause the Company to file a registration
statement under the Securities Act of 1933 covering the Shares.  The Shares were
sold  pursuant  to an  exemption  from  the  registration  requirements  of  the
Securities Act of 1933.


(5)   RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 130,
"Reporting  Comprehensive  Income,"  ("SFAS  130"),  during the first quarter of
fiscal 1999. SFAS 130 requires  companies to report as comprehensive  income all
changes in equity during a period,  except those resulting from  investments and
distributions  to owners,  in financial  statements for the period in which they
are recognized.  Included within accumulated other comprehensive  income are the
cumulative amounts for foreign currency  translation  adjustments.  There was no
foreign currency translation  adjustment for the six months ended July 31, 1998.
The foreign  currency  translation  adjustment for the six months ended July 31,
1997 was  $(34,000).  The Company's  comprehensive  income for the three and six
months in the period  ending July 31, 1998 was  $(1,232,000)  and  $(3,616,000),
respectively. The Company's comprehensive income for the comparable periods last
fiscal year was $(3,239,000) and $(7,812,000), respectively.

In 1997, SFAS No. 131,  "Disclosure  about Segments of an Enterprise and Related
Information"  was issued and is effective for the fiscal year ending January 31,
1999 year-end  reporting.  The Company is evaluating this statement to determine
the impact on its reporting and disclosure requirements.


                                       9
<PAGE>

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

Overview

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

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

The Company  believes that it is the  technology  leader in providing  accurate,
scalable, secure,  knowledge-retrieval  software solutions capable of supporting
knowledge assets of most media types including paper documents, text, images and
video.  Excalibur's  products enable users to search and retrieve these types of
data through  intranets,  local-area and wide-area  networks,  extranets and the
Internet.  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.

The Company's  software  products are designed to enable  individuals to quickly
search and  retrieve  relevant  information  residing  on a  LAN/WAN,  intranet,
paper-based archive,  extranet,  video archive or the Internet. The market today
for the Company's products  generally  consists of two segments,  text knowledge
retrieval  and video  indexing  and  retrieval.  The market  for text  knowledge
retrieval  products  consists  of  electronic  publishing,   online  information
services, global corporate intranets,  paper archival systems as well as market,
business  and  government  intelligence.  The  market  for  video  indexing  and
retrieval  solutions  includes  application  and  website  developers,   certain
government agencies as well as commercial media,  entertainment and broadcasting
companies.


                                       10
<PAGE>

The Company  analyzes its business  based on these two business  segments.  Text
knowledge  retrieval  products include the RetrievalWare  family of products and
EFS. Visual products  include Visual  RetrievalWare,  VAE and Screening Room, an
advanced end-to-end solution for real-time  capturing,  analyzing,  cataloguing,
browsing,  searching and retrieving  video over  intranets and  extranets,  that
began shipping in the second quarter.

The following chart  represents  revenues and expenses (in thousands of dollars)
attributable  to the text and  visual  businesses  for the  three  and six month
periods  ending July 31, 1998 and 1997.  Expenses for each  business  consist of
expenses directly  attributable to the business unit and allocated  expenses and
exclude  restructuring  costs, merger costs and acquired in-process research and
development costs.

<TABLE>
<CAPTION>
                         Text Business       Visual Business       Text Business      Visual Business
                         -------------       ---------------       -------------      ---------------
                       Three months ended  Three months ended     Six months ended    Six months ended
                            July 31,            July 31,              July 31,            July 31,
                         1998     1997       1998      1997       1998       1997      1998      1997
                        ----------------   ------------------    ------------------  ------------------
<S>                     <C>      <C>       <C>       <C>         <C>       <C>       <C>       <C>    
Total Revenue           $5,966   $5,028    $   190   $   157     $10,827   $ 8,439   $   384   $   199
Operating Expenses       6,054    5,842      1,354     1,220      11,935    12,103     2,817     2,407
                        ----------------   ------------------    ------------------  ------------------
Operating Income (Loss) $  (88)  $ (814)   $(1,164)  $(1,063)    $(1,108)  $(3,664)  $(2,433)  $(2,208)
                        ----------------   ------------------    ------------------  ------------------
</TABLE>


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


Results of Operations

Total  revenues  for  the  second  fiscal  quarter  ended  July  31,  1998  were
$6,156,000,  a 19% increase over total  revenues of $5,185,000  reported for the
same quarter last fiscal year.  The Company  incurred a net loss for the quarter
ended July 31, 1998 of $1,272,000,  or $0.09 per common share, compared to a net
loss of  $3,221,000,  or $0.25 per common  share,  for 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
quarter ended July 31, 1997 was $1,937,000.

For the six months ended July 31,  1998,  total  revenues  were  $11,211,000  an
increase of 30% over total revenues of $8,638,000 reported for the corresponding
period last year. The Company  incurred a net loss of  $3,616,000,  or $0.27 per
common share, in the first six months of the current year compared to a net loss
of  $7,778,000,  or $0.60  per  common  share,  in the same  period  last  year.
Excluding the Interpix charge  identified  above and a  restructuring  charge of
$577,000  recorded in the first  quarter of the prior fiscal year,  the net loss
for the six months ended July 31, 1997 was $5,917,000.

                                       11
<PAGE>

Total expenses in the second quarter were $7,408,000,  which  represented an 11%
decrease  from total  expenses of  $8,346,000  in the second  quarter last year.
Total  expenses  for the second  quarter in the prior  fiscal year  included the
Interpix charge for in-process research and development of $1,284,000. Excluding
the  Interpix  charge,  expenses  in the  second  quarter  of the  current  year
increased approximately 5% from the second quarter in the prior year.

Total  expenses for the six months ended July 31, 1998 were  $14,752,000,  a 10%
decrease from total  expenses of  $16,371,000  reported for the same period last
year.  Excluding  both the  restructuring  charge and the Interpix  charge which
occurred in the first six months of the prior  year,  total  expenses  increased
approximately 2% from the corresponding six month period last year.

The charts below  summarize the  components of revenues and expenses,  including
the amounts  expressed as a percentage of total revenues,  for the three and six
month periods  ended July 31, 1998 and 1997,  and the  percentage  change in the
amounts between fiscal periods (dollars in thousands).

-------------------------------------------------------------------------------
                               Components of Revenue and Expenses  
                                   Three Months Ended July 31,        Increase/
                                     1998                 1997       (Decrease)
                              -----------------    -----------------  ---------
                                  $        %           $        %          $
                              --------  -------    --------  -------  ---------
Revenues:
 RetrievalWare                $  4,543     74 %    $  3,354     65 %      35 %
 EFS                               116      2           376      7       (69)
 Visual Products Group             175      3           134      3        31  
                              --------   ------    --------   ------    ------
 Total Software                  4,834     79         3,864     75        25
 Maintenance                     1,322     21         1,321     25         0
                              ========   ======    ========   ======    ======
  Total revenues              $  6,156    100 %    $  5,185    100 %      19 %
                              ========   ======    ========   ======    ======
Expenses:
 Sales and marketing          $  3,430     56 %    $  3,375     65 %       2 %
 Research and product            
   development                   1,782     29         1,569     30        14
 General and administrative      1,019     16         1,106     21        (8)
 Costs of sales                  1,177     19         1,012     20        16
 Acquisition of in-process              
   research and development        --      --         1,284     25        --
                              ========   ======    ========   ======    ======
  Total expenses              $  7,408    120 %    $  8,346    161 %     (11)%
                              ========   ======    ========   ======    ======










                                       12
                                       
<PAGE>
-------------------------------------------------------------------------------
                               Components of Revenue and Expenses  
                                     Six Months Ended July 31,        Increase/
                                     1998                 1997       (Decrease)
                              -----------------    -----------------  ---------
                                  $        %           $        %          $
                              --------  -------    --------  -------  ---------
Revenues:
 RetrievalWare                $  7,977     71 %    $  5,189     60 %      54 %
 EFS                               228      2           779      9       (71)
 Visual Products Group             360      3           155      2       132    
                              --------   ------    --------   ------    ------
 Total Software                  8,565     76         6,123     71        40
 Maintenance                     2,646     24         2,515     29         5
                              ========   ======    ========   ======    ======
  Total revenues              $ 11,211    100 %    $  8,638    100 %      30 %
                              ========   ======    ========   ======    ======
Expenses:
 Sales and marketing          $  6,658     59 %     $ 6,967     81 %      (4)%
 Research and product
   development                   3,680     33         3,270     38        13
 General and administrative      2,242     20         2,208     25         2
 Costs of sales                  2,172     20         2,065     24         5
 Restructuring costs                --     --           577      7        --
 Acquisition of in-process
   research and development         --     --         1,284     15        --
                              ========   ======    ========   ======    ======
     Total expenses           $ 14,752    132 %    $ 16,371    190 %     (10)%
                              ========   ======    ========   ======    ======

While overall  revenues  increased 19% in the second quarter of the current year
over the second quarter last year,  software product revenue  increased 25%. For
the six months ended July 31, 1998,  overall revenues  increased 30% including a
40%  increase in  software  revenues  over the same  period  last year.  Revenue
increases  are largely  attributable  to two  factors.  The first is a continued
increase in demand for Excalibur RetrievalWare. The Company believes this demand
is  being   driven   by   increasing   awareness   of  value   associated   with
high-performance  search and  retrieval  applications  emphasizing  accuracy and
scalability at both the departmental and enterprise levels. Product revenue from
the Company's  flagship  product  Excalibur  RetrievalWare  increased 35% in the
current  quarter to $4,543,000  from  $3,354,000 in the comparable  quarter last
year.  RetrievalWare  sales increased 54% in the first six months of the current
year  to  $7,977,000  from  $5,189,000  in  the  comparable  period  last  year.
RetrievalWare  sales were 93% of software revenue in the first six months of the
current year compared to 85% in the first six months of the prior year. With the
availability of RetrievalWare FileRoom, software revenue from EFS is now minimal
and  represented 2% of total software  revenue in the current quarter and 3% for
the first six  months of the  current  year.  Software  revenue  from the Visual
Products Group increased 132% to $360,000 in the first six months of the current
year  compared to  $155,000  in the first six months of the prior  year.  Visual
Products revenue  represented 4% of software revenue for the three and six month
periods  ended July 31, 1998.  Maintenance  revenue of  $1,322,000 in the second
quarter this year was flat when compared to maintenance revenue of $1,320,000 in
the same period last year,  and  increased  5% to  $2,646,000  in the six months
ended July 31, 1998 from  $2,515,000  in the same  period last year.  The modest
growth in maintenance revenue results from the Company's transition from the EFS
product  line to  RetrievalWare  Fileroom.  With  the  transition,  the  Company

                                       13
<PAGE>

diminished its investment in EFS development and there have  resultantly been no
further  enhancements  made to the  product.  Maintenance  renewals for EFS have
declined  in  fiscal  year 1999 when  compared  to the same  three and six month
periods last year.  Revenue  results in the first six months of the current year
were primarily a result of the efforts of a direct sales force.

Software  revenue from North American  sales,  which were  approximately  69% of
total  software  revenues  in the second  quarter,  increased  31% from the same
quarter last year.  International  software revenues increased 15% in the second
quarter  compared with last year.  Software  revenues from North American sales,
which were  approximately 66% of total software revenues in the six months ended
July 31, 1998,  increased  35% from the  corresponding  six month period of last
year.  International software revenues increased  approximately 50% in the first
six months of this year from the same period last year.

A second area  contributing to revenue growth is increasing  interest from large
software and hardware companies looking to provide  high-performance  search and
retrieval  as part of their  product  offerings.  In the  second  quarter of the
current year, the Company signed a multi-year,  multi-million  dollar licensing,
development and distribution  agreement with  StorageTek,  a provider of network
storage. The comprehensive agreement,  which the Company believes to be the most
significant  in  its  history,  gives  StorageTek  immediate  rights  to  bundle
Excalibur's  advanced  search and retrieval  products with its  high-performance
network  storage  products and then sell the packages as enhanced  solutions for
knowledge management and digital content management initiatives.  StorageTek has
committed to a prepaid  license in the moderate seven figure range for licensing
fees over 18 months and will also pay  royalties on resale of current  Excalibur
products and future products to be jointly  developed.  In the second quarter of
this year, the Company recognized $276,000 of revenue related to the agreement.

The Company  also reached an agreement  with Lernout & Hauspie  (L&H),  a global
leader in advanced  speech and language  solutions for  computers,  automobiles,
telecommunications,  embedded  products,  consumer  goods and the Internet.  The
agreement  calls for L&H to  integrate  RetrievalWare  with their  multi-lingual
language  libraries  enabling  them to create new  products  capable of advanced
cross-lingual search. In the second quarter of this year, the Company recognized
$900,000 of revenue related to the agreement, which represents the entire amount
payable to the Company.

In addition to numerous  upgrades to existing  customers,  some of the Company's
new RetrievalWare  customers included Bull Information  Systems,  Zeneca,  major
government agencies including the General Services  Administration,  and several
other state and local government installations.  The Company also signed new OEM
agreements with DALiM and Sherpa  Corporation and continued to expand agreements
with existing partners such as GTE and Korea Data Networks.

Sales and  marketing  costs  increased  2% in the  quarter  to  $3,430,000  from
$3,375,000 last year but decreased 4% to $6,658,000 from $6,967,000 in the first
six months of the current year compared to last year. The  restructuring  in the
first quarter of fiscal year 1998 resulted in reduced salaries, benefits, travel
and other employee related costs that have remained  relatively  constant during
the current  year.  While the higher  volume of sales in the first six months of
the  current  year  resulted in  increased  commission  expense  compared to the
corresponding  period  last year,  these  higher  commissions  were  offset by a
reduction in the level of marketing program expenditures by $164,000 compared to
the first six months of last fiscal year.

                                       14
<PAGE>

Total research and product  development costs increased 14% to $1,782,000 in the
second  quarter of the  current  year  compared  with  $1,569,000  in the second
quarter last year.  For the six months ended July 31, 1998,  total  research and
development  costs  increased 13% to $3,680,000 from $3,270,000 in the first six
months of the prior year. Text and Visual  research and  development  costs both
increased  as the  Company  continued  to invest  in new  products  and  enhance
existing  products.  Text  expenses,  included  in total  research  and  product
development  costs,  increased  10% in the first six months of the  fiscal  year
compared  to the prior year due to  increased  headcount  and  employee  related
expenses  as the Company  released  Excalibur  RetrievalWare  Version 6.6 in the
second  quarter.  Version 6.6 features  several major  enhancements  including a
knowledge  plug-in  architecture  and new  plug-ins  for  extending  access  and
retrieval from major  groupware  platforms such as Microsoft  Exchange and Lotus
Notes.  Other enhancements  include extended security  features,  the ability to
recognize  and  highlight  proper  names  and  entities,  and an  enhanced  user
interface.  Overall, Excalibur RetrievalWare now supports more than 200 document
formats  including  Microsoft  Office '97.  Visual  expenses,  included in total
research and product development costs, increased 17% in the first six months of
the current year  compared to the same period last year in  preparation  for the
release of Excalibur  Screening Room.  Consulting  expenses  represented a major
portion of that increase.

General  and  administrative  expenses  decreased  8% in the  second  quarter to
$1,019,000  from  $1,106,000 in the comparable  quarter last year. For the first
six months of the current year General and administrative  expenses increased 2%
to $2,242,000 from $2,208,000 in the first six months of the prior year. General
and  administrative  expenses have remained  relatively equal to their levels in
the prior fiscal year.

Costs of sales  increased 16% to $1,177,000 in the second quarter of the current
year from  $1,012,000  last year.  For the first six months of the current  year
costs of sales  increased  5% to  $2,172,000  from  $2,065,000  in the first six
months of the prior year. The increase is directly attributable to the increased
sales volume in the current  year.  Costs of sales  expressed as a percentage of
total sales was 19% for the second  quarter of the current year  compared to 20%
for the second quarter last year and decreased to 20% in the first six months of
the current year from 24% in the first six months of the prior year.

Net interest income declined to $81,000 and $143,000, respectively, in the three
and  six  month   periods  ended  July  31,  1998  from  $99,000  and  $217,000,
respectively, in the comparable periods 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 $101,000 in the second  quarter,  and $218,000 for the six
months  ended  July  31,  1998.  The  Company's  equity  in the loss of ETNV was
$159,000 and  $262,000,  respectively  for the three and six month periods ended
July 31, 1997.










                                       15

<PAGE>

Liquidity and Capital Resources

In the six months ended July 31, 1998, the Company's  combined  balance of cash,
cash  equivalents  and  investments  in  marketable   securities   increased  by
$1,028,000 to $7,463,000 as summarized  below (in  thousands).  At July 31, 1998
and January 31, 1998,  investments  in marketable  securities  consisted of U.S.
Treasury Bills with maturities of less than one year.

                         July 31,     January 31,   
                           1998          1998         Change
                         ---------     ---------     ---------
          Cash and cash
           equivalents   $  6,476      $  4,939      $  1,537
          Investments         987         1,496          (509)
                         =========     =========     =========
             Total       $  7,463      $  6,435      $  1,028
                         =========     =========     =========


During  the six months  ended July 31,  1998,  cash of  $2,002,000  used to fund
operating activities was less than the net loss of $3,616,000 due primarily to a
significant  reduction  in the level of  accounts  receivable.  The  balance  of
accounts  receivable  declined by $1,616,000.  Other non-cash charges offsetting
cash used in operations were  depreciation  and amortization of $731,000 and the
Company's  share of the net loss of ETNV and  amortization  of the excess of the
Company's  investment  over  the  underlying  net book  value  of ETNV  totaling
$218,000.  Increased  prepaid  expenses and reductions in accounts  payable used
$887,000.

The maturity of Treasury  Bills  provided net cash of $1,493,000  during the six
months of the current year. Treasury Bill purchases used $984,000.  Purchases of
equipment and leasehold improvements used $579,000.

Proceeds of $3,250,000 were provided by a private placement of 325,000 shares of
common stock to an  unaffiliated  financial  institution  at a purchase price of
$10.00 per share.  Cash of $464,000 was  provided  from the exercise of employee
stock options and issuances of stock under the employee stock purchase plan.

Despite the reduction in the balance of accounts receivable during the first six
months of the current year, the number of days sales outstanding ("DSO") at July
31, 1998 remained the same as it was at January 31, 1998. This can be attributed
to the  large  amount  of  revenue  generated  near  the  end of  each  quarter.
Management believes that the allowance for doubtful accounts of $651,000 at July
31, 1998 is adequate.

Factors That May Affect Future Results

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


                                       16
<PAGE>

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

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

Despite the  uncertainties  in its revenue  patterns,  the  Company's  operating
expenses  are based  upon  anticipated  revenue  levels  and such  expenses  are
incurred on an approximately ratable basis throughout a quarter. As a result, if
expected  revenues are  deferred or otherwise  not realized in a quarter for any
reason, the Company's business,  operating results and financial condition would
be materially adversely affected.

Primarily due to large operating losses incurred by the Company,  its balance of
cash, cash equivalents and investments declined substantially since the proceeds
of  approximately  $8,388,000  from a  private  placement  in  March  1996  were
received. As a result, during the second quarter this year, as described in Note
4 of the  Consolidated  Financial  Statements,  the Company  completed a private
placement sale of 325,000 shares of common stock for $10 per share, resulting in
proceeds of $3,250,000.

Various factors,  including those discussed above,  have somewhat  inhibited the
overall revenue growth that management had expected in the prior fiscal year. As
a result,  near the end of the first quarter of fiscal year 1998, the short-term
revenue  expectations of management were moderated and planned expenditures were
reduced.  As  discussed  previously,   the  Company  reduced  its  workforce  by
approximately  10% from the number of employees at April 30, 1997.  In addition,
the Company postponed certain  long-range  programs and curtailed other expenses
in order to achieve an overall reduction in expenditures. Marketing efforts were
focused on the  increase  of  current  year  revenues.  The  Company  made other
organizational  changes in order to sharpen the focus of product development and
business  development  efforts on selected video  applications  of the Excalibur
Visual RetrievalWare technology.





                                       17
<PAGE>

Management  believes that the changes and  initiatives  discussed  above and the
investments of time and money in the training of the sales force, improved sales
productivity  and  the  overall  financial  performance  of  the  Company  since
inception of such changes.  Quarterly  revenues  increased  steadily  throughout
fiscal year 1998 and  revenues  for the first six months of the  current  fiscal
year have increased 30% over the total revenue reported for the same period last
fiscal  year.  The level of  quarterly  costs and  expenses  was reduced and has
remained relatively flat over the past several quarters. However, some increases
in expenses  are expected as revenues  increase and the Company  ships new video
products throughout the current fiscal year. Including the receipt of $3,250,000
in proceeds from the private  placement on May 15, 1998, 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  current   fiscal  year.
Historically,  the  Company  has used  primarily  cash  provided by sales of its
common stock to fund its  operating  losses.  If the actions taken by management
are not effective in achieving  profitable operating results, the Company may be
required to pursue  additional  external  sources of  financing in the future 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.

As of  January  31,  1998,  the  Company  had  significant  net  operating  loss
carryforwards  ("NOLs") of  approximately  $68 million.  The deferred tax assets
representing the benefits of the NOLs have been offset completely by a valuation
allowance due to the Company's lack of an earnings history. The Company incurred
a net loss of  $3,616,000  for the six month  period ended July 31, 1998 and has
incurred  cumulative  losses of  approximately  $16,383,000  over the last three
fiscal  years.  The  accumulated  deficit of the  Company  at July 31,  1998 was
$55,610,000.  The  realization  of the  benefits  of the  NOLs is  dependent  on
sufficient taxable income in future fiscal years. Lack of future earnings,  or a
change in the  ownership of the Company,  could  adversely  affect the Company's
ability  to  utilize  the  NOLs.  Further,  because  there  was a change  in the
ownership of ConQuest in fiscal year 1996, the Company's ability to utilize NOLs
relating to ConQuest of approximately $3,233,000 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 Company believes that inflation has not had a material effect on the results
of its operations to date.










                                       18
<PAGE>

Other Factors

On July 29, 1998,  the  Securities  and Exchange  Commission  issued  additional
guidance on disclosures  that public  companies  should make related to the Year
2000.  The new release is effective for the  Company's  October 31, 1998 interim
reporting.  The Company is  evaluating  this guidance to determine the impact on
its reporting and disclosure requirements.

The Company is in the process of identifying  operating and application software
challenges  related to the year 2000.  While the Company expects to resolve year
2000 compliance issues substantially  through normal replacement and upgrades of
software,  there can be no  assurance  that  there will not be  interruption  of
operations or other limitations of system functionality or that the Company will
not  incur  substantial  costs  to  avoid  such  limitations.   Any  failure  to
effectively monitor, implement or improve the Company's operational,  financial,
management and technical support systems could have a material adverse effect on
the Company's business and consolidated results of operations.


New Accounting Pronouncements

In 1997, SFAS No. 131,  "Disclosure  about Segments of an Enterprise and Related
Information"  was issued and is effective for the fiscal year ending January 31,
1999 year-end  reporting.  The Company is evaluating this statement to determine
the impact on its reporting and disclosure requirements.

The American  Institute of Certified Public  Accountants has issued Statement of
Position 97-2,  "Software  Revenue  Recognition,"  ("SOP 97-2") that  supersedes
Statement  of  Position  91-1.  SOP 97-2,  "Software  Revenue  Recognition,"  is
effective  for revenue  transactions  entered  into by the Company in its fiscal
year ending  January 31, 1999. The Company has  implemented  SOP 97-2 and it has
not had a material financial impact on the Company.

























                                       19
<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
-------
           The 1998 Annual Meeting of Shareholders was held June 18, 1998.

           a) The  following  individuals  were elected to serve as the Board of
           Directors for the terms expiring at the 1999 Annual meeting:

                                  Number of Shares Voted
                                  ----------------------

                                    For          Withheld
                                    ---------------------
           Donald R. Keough         11,489,964   242,499
           Patrick C. Condo         11,417,494   314,969
           Richard M. Crooks, Jr.   11,482,954   249,509
           John S. Hendricks        11,490,004   242,459
           W. Frank King III        11,490,004   242,459
           John G. McMillian        11,489,824   242,639
           Philip J. O'Reilly       11,489,664   242,799


           b) The shareholder proposal described in the Proxy Statement received
           the following number of votes:

                                    For          Against       Withheld
                                    -----------------------------------
                                    899,988      7,565,630     480,450


Item 5.    Other Information
-------
           In the second  quarter of the  current  year,  the  Company  signed a
           multi-year,   multi-million   dollar   licensing,   development   and
           distribution  agreement  with  StorageTek,   a  provider  of  network
           storage.  The  comprehensive  agreement  gives  StorageTek  immediate
           rights to bundle  Excalibur's  advanced search and retrieval products
           with its high-performance  network storage products and then sell the
           packages as enhanced  solutions for knowledge  management and digital
           content management initiatives.  In addition, the agreement calls for
           StorageTek  and Excalibur to jointly  develop a new class of advanced
           information  management  solutions.   These  solutions  will  combine
           StorageTek's  storage  technologies  with  Excalibur's  advanced text


                                       20
<PAGE>

           retrieval  and video asset  management  products to create  complete,
           off-the-shelf,   turn-key   solutions   targeting  specific  markets.
           StorageTek  has committed to a prepaid  license in the moderate seven
           figure  range for  licensing  fees  over 18 months  and will also pay
           royalties on resale of current Excalibur products and future products
           to be jointly developed.  To facilitate rapid time-to-market of these
           solutions,  Excalibur and StorageTek  are creating a joint  solutions
           development lab that will be located in Louisville, Colorado and will
           be staffed by dedicated Excalibur and StorageTek engineers.  This lab
           will produce these new content management products which will be sold
           by StorageTek worldwide.


Item 6.    Exhibits and Reports on Form 8-K
-------
           On May 29, 1998,  the Company  filed a report on Form 8-K  announcing
           the  private  placement  of  325,000  shares of its  common  stock as
           discussed  in  Note  4  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 14, 1998                    By: /s/ Patrick C. Condo
                                          --------------------
                                          Patrick C. Condo
                                          President and Chief Executive Officer
                                          (Principal Executive Officer)


September 14, 1998                    By: /s/ James H. Buchanan
                                          ---------------------
                                          James H. Buchanan
                                          Chief Financial Officer
                                          (Principal Financial and 
                                           Accounting Officer)



























                                       22