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

                                   FORM 10-K

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

                  For the fiscal year ended: December 31, 1997
                         Commission File Number 1-5351

                                WORLDCORP, INC.
             (Exact name of registrant as specified in its charter)

                              DELAWARE 94-3040585
        (State of incorporation) (I.R.S. Employer Identification Number)

              13873 Park Center Road, Suite 490, Herndon, VA 22071
                    (Address of Principal Executive Offices)

                 (703) 834-9200 (Registrant's telephone number)

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

Title of Each Class: Common Stock par value $1.00 per share

Name of Each Exchange on Which Registered: New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No

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

The aggregate market value of the Common Stock held by non-affiliates of the
registrant on March 31, 1998 was approximately
$11,888,015.

The number of shares of the registrant's Common Stock outstanding on March 31,
1998 was 13,883,243.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of WorldCorp, Inc.'s Notice of Annual Stockholder's Meeting and Proxy
Statement, to be filed within 120 days after the end of the registrant's fiscal
year, are incorporated into Part III of this Report.

<PAGE>

WORLDCORP, INC.
1997 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

                                                                           Page
PART I
  ITEM 1.           BUSINESS                                                  3
  ITEM 2.           PROPERTIES                                               17
  ITEM 3.           LEGAL PROCEEDINGS                                        18
  ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF
                       SECURITY HOLDERS                                      18
PART II
  ITEM 5.           MARKET FOR REGISTRANT'S COMMON STOCK &
                    RELATED SECURITY HOLDER MATTERS                          19
  ITEM 6.           SELECTED FINANCIAL DATA                                  20
  ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS                   21
  ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA              46
  ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                       ON ACCOUNTING AND FINANCIAL DISCLOSURE                47
PART III
  ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE
                       REGISTRANT                                            47
  ITEM 11.          EXECUTIVE COMPENSATION                                   48
  ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                       OWNERS AND MANAGEMENT                                 48
  ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS           48

PART IV
  ITEM 14.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                       REPORTS ON FORM 8-K                                   49
<PAGE>
PART I

ITEM 1.  BUSINESS

WorldCorp, Inc., a Delaware corporation ("WorldCorp" or the "Company"), was
organized in March 1987 to serve as the holding company for World Airways, Inc.,
a Delaware corporation ("World Airways"), which was organized in March 1948 and
is the predecessor to the Company. Currently, WorldCorp owns positions in
companies that operate in two distinct business areas.

WorldCorp's aviation services subsidiary, World Airways, is a global provider of
long-range passenger and cargo air transportation outsourcing services to major
international airlines under fixed rate contracts. World Airways also leads a
contractor teaming arrangement that is one of the largest suppliers of
commercial aircraft to the United States Air Force's Air Mobility Command ("U.S.
Air Force" or "USAF"). World Airways was a wholly-owned subsidiary in 1993. In
February 1994, pursuant to an October 1993 agreement, WorldCorp sold 24.9% of
its ownership in World Airways to MHS Berhad ("MHS"), a Malaysian aviation
company. Effective December 31, 1994, the Company increased its ownership in
World Airways to 80.1% through the purchase of 5% of World Airways common stock
held by MHS. In October 1995, World Airways completed an initial public
offering. In September, 1997, World Airways purchased 3,227,000 shares of its
common stock from WorldCorp. As a result, at December 31, 1997, WorldCorp owned
approximately 46.3% of World Airways. Accordingly, beginning in September, 1997,
WorldCorp reports its proportionate share of World Airways' financial results
using the equity method of accounting. In January, 1998, MHS sold 773,000 shares
of its World Airways common stock to World Airways. Effective January 23, 1998,
WorldCorp and MHS own 51.2% and 16.8%, respectively, of the outstanding common
stock of World Airways, with the balance publicly traded.

WorldCorp also had an ownership interest in US Order, Inc. ("US Order"), a
company which provided products and services for two markets: home banking and
smart telephones. In August 1996, US Order and Colonial Data Technologies Corp.
("Colonial Data") entered into an Agreement and Plan of Merger pursuant to which
US Order and Colonial Data would be merged (the "Mergers") with and into a new
public company, InteliData Technologies Corporation ("InteliData"). Pursuant to
the Mergers which were consummated on November 7, 1996, InteliData became the
successor corporation to US Order. The Mergers were treated as a purchase of
Colonial Data by US Order. Following the Mergers, WorldCorp reports its
proportionate share of InteliData's financial results using the equity method of
accounting. InteliData develops and markets products and services for the
telecommunications and financial services industries through its
telecommunications and electronic commerce business divisions. At December 31,
1997, WorldCorp owned 9,179,273 shares of InteliData, or an ownership interest
of approximately 29.4%

On April 20, 1998, WorldCorp consummated a transaction pursuant to which it
acquired an 80% interest in Paper Acquisition Corp., a Delaware corporation
("Paper"). Paper was organized by Sun Capital Partners, Inc. ("Sun Capital") to
acquire and operate specialty paper businesses. In December 1996, Paper acquired
and consolidated two companies that produce a variety of coated papers and
specialty inks which are sold to business forms manufacturers. For the 12 months
ended December 31, 1997, Paper had approximately $48 million (unaudited) of
sales.

Pursuant to the transaction, (i) WorldCorp exchanged seven-year warrants to
acquire 35% (after the exercise of such warrants and the WorldCorp Acquisition
Corp. options described below) of the issued and outstanding capital stock of
WorldCorp Acquisition Corp. a Delaware corporation ("WorldCorp Acquisition"),
held by WorldCorp for certain of the shares of Paper held by the Paper
shareholders (the warrants are exercisable after one-year, at an exercise price
of 125% of the estimated fair market value of the WorldCorp Acquisition stock at
April 20, 1998 and payable with a seven-year, full-recourse, interest only
note)(ii) WorldCorp contributed all of its shares of World Airways and the Paper
shares received above, to WorldCorp Acquisition Corp., in exchange for 80% of
the issued and outstanding capital stock of WorldCorp Acquisition and (iii) the
holders of Paper contributed their shares of capital stock of Paper in exchange
for (A) 20% of the issued and outstanding capital stock of WorldCorp
Acquisition, (B) the assumption of approximately $15 million of debt, net of
cash and investments, of Paper, (C) $15 million of 8% interest only promissory
notes of WorldCorp Acquisition due in April 2003, (D) $1 million of 8%
promissory notes of WorldCorp Acquisition due in March 1999 and (E) an earn-out
based on the

<PAGE>
earnings before interest, taxes, depreciation and amortization of Paper during
the next five years. The earn-out is payable, including interest at 10%, in
September 2002. WorldCorp has pledged all of its shares of common stock of both
WorldCorp Acquisition and InteliData, and WorldCorp Acquisition has pledged all
of its shares of common stock of both World Airways and Paper to the current
Paper shareholders to collateralize the notes and the earn-out.

WorldCorp and WorldCorp Acquisition have entered into a consulting agreement
with Sun Capital, which through an affiliate owned approximately 85% of the
issued and outstanding shares of Paper immediately prior to the transaction,
pursuant to which Sun Capital will receive $500,000 per year for financial
consulting. Sun Capital also received seven-year options to acquire
approximately 20% and 10% (after the execise of such options and the warrants
described above) of the issued and outstanding shares of common stock of
WorldCorp and WorldCorp Acquisition, respectively, which options vest over five
years. The exercise prices of these options is 125% of the fair market value of
the underlying stock at April 20, 1998, and are payable with seven-year, full
recourse, interest only notes.

The WorldCorp Board of Directors unanimously approved the acquisition of Paper
because, among other things, Paper will provide WorldCorp and WorldCorp
Acquisition with a platform for WorldCorp and WorldCorp Acquisition to pursue
their growth strategy and with additional operating cash flow. Although the
acquisition of Paper will not resolve WorldCorp's liquidity issues, it is
intended to build long-term value for WorldCorp's stockholders.

The Company desires to take advantage of the "safe harbor" provisions in the
Private Securities Litigation Reform Act of 1995 (the "Act"). Therefore, this
report contains forward looking statements that are subject to risks and
uncertainties, including, but not limited to, the impact of competitive
products, product demand and market acceptance risks, reliance on key strategic
alliances, fluctuations in operating results and other risks detailed from time
to time in the Company's filings with the Securities and Exchange Commission.
These risks could cause the Company's actual results for 1998 and beyond to
differ materially from those expressed in any forward looking statements made
by, or on behalf of, the Company.

The principal executive offices of WorldCorp are located at Washington Dulles
International Airport in The Hallmark Building, 13873 Park Center Road, Herndon,
Virginia 20171. WorldCorp's telephone number is (703) 834-9200.

WORLD AIRWAYS

World Airways is a global provider of long-range passenger and cargo air
transportation outsourcing services to major international airlines under fixed
rate contracts. Airline operations account for 100% of its operating revenue and
operating income. World Airways' passenger and freight operations employ 12
wide-body aircraft which are operated under contracts, a substantial portion of
which are with Pacific Rim airlines. These contracts generally require World
Airways to supply aircraft, crew, maintenance and insurance ("ACMI" or "wet
lease"), while its customers are responsible for a large portion of the other
operating costs, including fuel. World Airways' airline customers have
determined that outsourcing a portion of their wide-body passenger and cargo
requirements can be less expensive, and offers greater operational and financial
flexibility, than purchasing new aircraft and additional spare parts required
for such aircraft. World Airways also leads a contractor teaming arrangement
that is one of the largest suppliers of commercial aircraft to the U.S. Air
Force.

In July 1996, World Airways restructured its business to focus on ACMI contract
services. As such, World Airways ceased all scheduled passenger and scheduled
charter services as of October 27, 1996, taking a one-time charge for estimated
loss on disposal of $21.0 million as of June 30, 1996.

World Airways' operating philosophy is to build on its existing ACMI
relationships to achieve a strong platform for future growth. World Airways
concentrates on ACMI contracts because such contracts shift yield, load factor
and cost risks to the customer. The customer bears the risk of filling the
aircraft with passengers or cargo and assumes a large portion of the operating
expenses, including fuel. World Airways has elected to emphasize its ACMI
business because World Airways perceives a number of opportunities created by a

<PAGE>
global economy, particularly growth in second and third world economies where
the demand for airlift exceeds capacity. World Airways attempts to maximize
profitability by combining its multi-year ACMI contracts with short term,
higher-yielding ACMI agreements which meet the peak seasonal requirements of its
customers. World Airways responds opportunistically to rapidly changing market
conditions by maintaining a flexible fleet of aircraft that can be deployed in a
variety of configurations.

World Airways focuses its marketing efforts on countries where rapid economic
development drives demand for its services. World Airways believes that its
modern fleet of long-range medium- density wide-body MD-11 and DC10-30 aircraft 
are well suited to these less dense international routes and provide superior 
economics as compared to other popular aircraft such as the Boeing 747 which 
has greater capacity.

World Airways substantially increases its potential customer base by being able
to serve both passenger and cargo customers. World Airways flies passenger,
cargo and passenger/cargo convertible aircraft that World Airways believes
permit World Airways to target emerging opportunities. World Airways has been
providing safe, reliable services for almost 50 years. World Airways has flown
for the USAF since 1956, for Malaysian Airlines System Berhad ("Malaysian
Airlines") since 1981, and for Garuda Indonesia ("Garuda") since 1973.

Customers

Over the years, World Airways has had relationships with a number of major
international airlines and with the USAF (see "Management's Discussion and
Analysis of Financial Condition and Results of Operations ("MD&A") -
Customers"). World Airways' growth strategy is based, first and foremost, upon
providing the highest level of service to these customers, thereby maintaining
and expanding the amount of business being done through long-term contracts.

The information regarding major customers and foreign revenue is contained in
Note 19 "Major Customers" of the Company's "Notes to Consolidated Financial
Statements" in Item 8. 

Information concerning the classification of products within the air
transportation industry comprising 10% or more of World Airways' operating
revenues from continuing operations is presented in the following table (in
millions):

                                        Year Ended December 31,
                                  ---------------------------------
                                   1997         1996          1995
                                   ----         ----          ----
Flight Operations - Passenger     $267.3       $257.6        $168.0
Flight Operations - Cargo           39.5         39.3          64.6

Competition and Seasonality

See MD&A and Note 22 "Unaudited Quarterly Results" of the Company's 
"Notes to Consolidated Financial Statements" in Item 8.

Aviation Fuel

World Airways' source of aviation fuel is primarily from major oil companies,
under annual delivery contracts, at often frequented commercial locations, and
from United States military organizations at military bases. World Airways'
current fuel purchasing policy consists of the purchase of fuel within seven
days in advance of all flights based on current prices set by individual
suppliers. More than one supplier is under contract at several locations. World 
Airways purchases no fuel under long-term contracts nor does it enter into 
futures or fuel swap contracts.

The air transportation industry in general is affected by the price and
availability of aviation fuel. Both the cost and availability of aviation fuel
are subject to many economic and political factors and events occurring
throughout the world and remain subject to the various unpredictable economic
and market factors that affect the supply of all petroleum products.

<PAGE>
Fluctuations in the price of fuel have not had a significant impact on the World
Airways' operations in recent years because, in general, World Airways' ACMI
contracts with its customers limit its exposure to increases in fuel prices.
However, a substantial increase in the price or the unavailability of aviation
fuel could have a material adverse effect on the air transportation industry in
general and the financial condition and results of operations of the World
Airways.

Regulatory Matters

Since it was founded in 1948, World Airways has been authorized to engage in
commercial air transportation by the Department of Transportation (the "DOT") or
its predecessor agencies. World Airways is currently authorized to engage in the
scheduled and charter air transportation of combination (persons, property and
mail) and all-cargo services between all points in the U.S., its territories and
possessions. It also holds worldwide charter authority for both combination and
all-cargo operations. In addition, World Airways is authorized to conduct
scheduled combination services to the foreign points listed in its DOT
certificate. World Airways also holds certificates of authority to engage in
scheduled all-cargo services to a limited number of foreign destinations.

World Airways is subject to the jurisdiction of the FAA with respect to aircraft
maintenance and operations, including flight operations, equipment, aircraft
noise, ground facilities, dispatch, communications, training weather
observation, flight time, crew qualifications, aircraft registration and other
matters affecting air safety. The FAA requires each air carrier to obtain an
operating certificate and operations specifications authorizing the carrier to
operate to particular airports on approved international routes using specified
equipment. These certificates and specifications are subject to amendment,
suspension, revocation or termination by the FAA. In addition, all of World
Airways' aircraft must have and maintain certificates of airworthiness issued or
approved by the FAA. World Airways currently holds an FAA air carrier operating
certificate and operations specifications under Part 121 of the Federal Aviation
Regulations. The FAA has the authority to suspend temporarily or revoke
permanently the authority of World Airways or its licensed personnel for failure
to comply with regulations promulgated by the FAA and to assess civil penalties
for such failures.

Under the Airport Noise and Capacity Act of 1990 and related FAA regulations,
World Airways' aircraft fleet must comply with certain Stage 3 noise
restrictions by certain specified deadlines. All of World Airways' aircraft
currently meet the Stage 3 noise reduction requirement, which is currently the
most stringent FAA noise requirement. FAA regulations require compliance with
the Traffic Alert and Collision Avoidance System ("TCAS"), approved airborne
windshear warning system and aging aircraft regulations.

Additional laws and regulations have been proposed from time to time which could
significantly increase the cost of airline operations by imposing additional
requirements or restrictions on operations. Laws and regulations have been
considered from time to time that would prohibit or restrict the ownership and
transfer of airline routes or slots. There is no assurance that laws and
regulations currently enacted or enacted in the future will not adversely affect
World Airways' ability to maintain its current level of operating results.

Several aspects of airline operations are subject to regulation or oversight by
Federal agencies other than the DOT or FAA. For instance, labor relations in the
air transportation industry are generally regulated under the Railway Labor Act,
which vests in the National Mediation Board certain regulatory powers with
respect to disputes between airlines and labor unions arising under collective
bargaining agreements. In addition, World Airways is subject to the jurisdiction
of other governmental entities, including (i) the FCC regarding its use of radio
facilities pursuant to the Federal Communications Act of 1934, as amended, (ii)
the Commerce Department, the Customs Service, the Immigration and Naturalization
Service, and the Animal and Plant Health Inspection Service of the Department of
Agriculture regarding World Airways' international operations, (iii) the
Environmental Protection Agency (the "EPA") regarding compliance with standards
for aircraft exhaust emissions and (iv) the Department of Justice regarding
certain merger and acquisition transactions. The EPA regulates operations,
including air carrier operations, which affect the quality of air in the U.S.
World Airways has made all necessary modifications to its operating fleet to
meet fuel-venting requirements and smoke emissions standards issued by the EPA.

<PAGE>
World Airways' international operations are generally governed by the network of
bilateral civil air transport agreements providing for the exchange of traffic
rights between governments which then select and designate air carriers
authorized to exercise such rights. In the absence of a bilateral agreement,
such international air services are governed by principles of comity and
reciprocity. Bilateral provisions pertaining to the wet lease services in which
World Airways is primarily engaged vary considerably depending on the particular
country. Most bilateral agreements into which the U.S. has entered permit either
country to terminate the agreement with one year's notification to the other. 
In the event a bilateral agreement is terminated, international air service 
between the affected countries is governed by the principles of comity and 
reciprocity.

Certain airports served by World Airways are subject to slot allocations
administered by the governments of the countries in which such airports are
located or by coordinating committees comprising airline representatives. A
"slot" is an authorization to take off or land at the designated airport within
a specified time window. In the past, World Airways has generally been
successful in obtaining the slots it needs in order to conduct planned
operations. There can be no assurance, however, that it will be able to do so in
the future because, among other factors, government policies regulating the
distribution of slots, both in the U.S., and in foreign countries, are subject
to change.

Pursuant to federal law, no more than 25% of the voting interest in World
Airways may be owned or controlled by foreign citizens. In addition, under
existing precedent and policy, actual control must reside in U.S. citizens. As a
matter of regulatory policy, the DOT has stated that it would not permit
aggregate equity ownership of a domestic air carrier by foreign citizens in an
amount in excess of 49%. World Airways fully complies as of the date hereof with
these U.S. citizen ownership requirements.

Due to its participation in CRAF, World Airways is subject to inspections
approximately every two years by the military as a condition of retaining its
eligibility to perform military charter flights. The last such inspection was
undertaken in 1996 and the next is anticipated to occur in 1998. As a result of
such inspections, World Airways has been required to implement measures, such as
the establishment of a crew resource management course, beyond those required by
the DOT, FAA and other government agencies. The USAF may terminate its contract
with World Airways if World Airways fails to pass such inspection or otherwise
fails to maintain satisfactory performance levels, if World Airways loses its
airworthiness certificate or if the aircraft pledged to the contracts lose their
U.S. registry or are leased to unapproved carriers.

World Airways believes it is in compliance in all material respects with all
requirements necessary to maintain in good standing its operating authority
granted by the DOT and its air carrier operating certificate issued by the FAA.
A modification, suspension or revocation of any of World Airways' DOT or FAA
authorizations or certificates could have a material adverse effect upon World
Airways. World Airways also is subject to state and local laws and regulations
at locations where it operates and the regulations of various local authorities
which operate the airports it serves. Certain airport operations have adopted
local regulations which, among other things, impose curfews and noise abatement 
regulations. While World Airways believes it is currently in compliance in all 
material respects with all appropriate standards and has all required licenses 
and authorities, any material non-compliance by World Airways therewith or the 
revocation or suspension of licenses or authorities could have a material 
adverse effect on World Airways.

Employees

As of March 2, 1998, World Airways had 801 full time employees classified as
follows:
 
Classification                                Number of Full-Time Employees
--------------                                -----------------------------
Management                                                8
Administrative and Operations                           298
Cockpit Crew (including pilots)                         298
Flight Attendants (active)                              197
                                                        ---
    Total Employees                                     801
                                                        ===
<PAGE>
World Airways' cockpit crew members, who are represented by the International
Brotherhood of Teamsters (the "Teamsters"), are subject to a four-year
collective bargaining agreement that will become amendable in July 1998.
Approximately 37% of World Airways' employees are covered under the collective
bargaining agreement. World Airways expects to begin negotiations in April 1998
and cannot predict the outcome of the negotiations or their possible impact on
World Airways' financial condition and results of operations.

World Airways' flight attendants, who are also represented by the Teamsters, are
subject to a four-year collective bargaining agreement that will expire in
August 2000. World Airways' flight attendants argued the "scope clause" of the
collective bargaining agreement had been violated by World Airways and
challenged the use of foreign flight attendant crews on World Airways' flights
for Malaysian Airlines and Garuda Indonesia which has historically been World
Airways' operating procedure. World Airways is contractually obligated to permit
its Southeast Asian customers to deploy their own flight attendants. While the
arbitrator in this matter denied in 1997 the union's request for back pay to
affected flight attendants for flying relating to the 1994 Hadj, the arbitrator
concluded that World Airways' contract with its flight attendants requires World
Airways to first actively seek profitable business opportunities that require
using World Airways' flight attendants, before World Airways may accept wet
lease business opportunities that use the flight attendants of World Airways'
customers. Subsequently, in 1997, the flight attendants challenged and filed
"scope clause" grievances with respect to four separate wet-lease contracts.
World Airways and the Teamsters are presently in discussions regarding these
grievances.  At this time, however, World Airways can give no assurance that 
these discussions will be successful and the grievances will not be submitted 
to formal arbitration. World Airways can provide no assurance as to how the 
resolution of this matter will affect World Airways' financial condition and 
results of operations.

World Airways' aircraft dispatchers are represented by the Transport Workers
Union (the "TWU"). This contract became amendable on June 30, 1993. In May 1995,
the parties reached agreement with respect to a new four-year contract. This
contract was ratified on February 7, 1996. Fewer than 12 World Airways employees
are covered by this collective bargaining agreement.

World Airways is unable to predict whether any of its employees not currently
represented by a labor union, such as its maintenance personnel, will elect to
be represented by a labor union or collective bargaining unit. The election by
such employees for representation in such an organization could result in
employee compensation and working condition demands that could have a material
adverse effect on the financial results of World Airways.

InteliData

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

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

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

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

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

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

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

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

Industry Background

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

Telecommunications

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

In order to deploy intelligent network services, the telcos have been upgrading
their telecommunications networks to support a set of standards, known as the
Intelligent Networks ("IN"). IN supports open, distributed switching and
processing capabilities and allows the telcos to create, modify and deploy new

<PAGE>
services quickly and economically. In addition, Bell Communications Research,
Inc. has developed the Analog Display Services Interface ("ADSI"), a standard
protocol for the simultaneous transmission of data and voice information between
an information source and a subscriber's telephone or other communications
device such as a smart telephone.

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

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

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

Electronic Commerce

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

<PAGE>
Products and Services

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

Telecommunications

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

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

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

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

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

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

Small Business Telecommunications Systems. InteliData, through one of its 
subsidiaries, distributes small business telecommunications systems and multi-
line telephones. The small business telecommunications systems include analog 

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

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

Electronic Commerce

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

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

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

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

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

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

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

<PAGE>
Marketing and Distribution

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

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

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

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

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

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

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

<PAGE>
Electronic Commerce

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

Competition

Telecommunications

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

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

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

InteliData believes that the principal competitive factors in the markets for
its telecommunications products and services are knowledge of the requirements
of the various RBOCs and other telcos, product reliability, product design, the
quality of repair and support services, customer service and support, and price
relative to performance. InteliData competes in the market for its
telecommunications products and services principally on the basis of its
relationships with telcos, product design and reliability, low product pricing
and flexibility of marketing alternatives, including leasing.

Electronic Commerce

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

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

Product Development

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

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

Telecommunications

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

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

Electronic Commerce

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

Manufacturing

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

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

In the United States, InteliData's manufacturing operations are limited to the
testing, quality control and shipping of finished products and the purchase and
inventory management of two key components of InteliData's products.

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

Government Regulation

Telecommunications

The regulatory environment relating to the telecommunications industry is
undergoing rapid and significant changes. The Telecommunications Act has
effected basic changes in the telecommunications regulatory scheme. The
intention of the Telecommunications Act is to enhance competition in all
telecommunications markets and bring new packages, lower prices and increased
innovation to telephone customers in the United States. The FCC issued its first
major order under the Telecommunications Act in August 1996 which constitutes
the FCC's initial measures to implement certain sections of the

Telecommunications Act relating to interconnection between carriers and the
provision of access to unbundled services. However, portions of this order, most
significantly its pricing provisions, have been successfully challenged in the
U.S. Court of Appeals for the Eighth Circuit. The U.S. Supreme Court has agreed
to review the Eighth Circuit's decision overturning those provisions. In
December 1996, the FCC issued a Notice of Proposed Rulemaking which suggests
rules concerning the implementation of the Telecommunications Act provisions
relating to RBOC manufacture of telecommunications and customer premises
equipment. Although the FCC has not yet implemented the regulations relating to
those provisions, the proposed regulations would permit RBOCs to manufacture
products that support Caller ID and other intelligent network services subject
to certain conditions. The U.S. District Court for the Northern District of
Texas has declared the Telecommunications Act's manufacturing provisions, among
others, unconstitutional. The decision has been stayed pending review by the
U.S. Court of Appeals for the Fifth Circuit. InteliData is unable to predict
what effect, if any, the Telecommunications Act and the emerging regulatory
scheme under the Telecommunications Act will have on Caller ID service or
InteliData's business generally.

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

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

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

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

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

Electronic Commerce

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

Patents, Proprietary Rights and Licenses

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

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

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

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

<PAGE>
Employees

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

ITEM 2.  PROPERTIES

Flight Equipment

At December 31, 1997, World Airways' aggregate operating fleet consisted of 12
leased aircraft as follows (see Note 13 "Long-Term Obligations" of the Company's
"Notes to Consolidated Financial Statements" in Item 8):

                                                Capacity
                                ------------------------------------
Aircraft(a)                     Passenger(seats)(b)     Cargo (Tons)    Total(c)
-----------                     -------------------     ------------    --------

McDonnell Douglas MD-11                  409                 --             3
McDonnell Douglas MD-11F                  --                 95             1
McDonnell Douglas MD-11CF                410                 90             2
McDonnell Douglas MD-11ER                409                 --             2
McDonnell Douglas DC10-30                350                 --             3
McDonnell Douglas DC10-30CF              380                 65             1
                                                                            -
         Total                                                             12
                                                                           ==
Notes

(a)      "F" aircraft are freighters, "CF" are convertible freighters and may
         operate in either passenger or freight configurations. "ER" aircraft
         maintain extended-range capabilities. Aircraft with no letter
         designation are passenger-only aircraft.
(b)      Based on standard operating configurations. Other configurations are
         occasionally used.
(c)      Lease terms expire between 1998 and 2020 (assuming exercise of all
         lease extensions).

Ground Facilities

WorldCorp and World Airways lease office space located near Washington Dulles
International Airport which houses their corporate headquarters and
substantially all of their administrative employees.

In addition, World Airways leases additional office and warehouse space in
Wilmington, Delaware; Philadelphia, Pennsylvania; New York, New York; Los
Angeles, California; Kuala Lumpur, Malaysia; Yakota, Japan; and Frankfurt,
Germany. Additional small offices and maintenance material storage space are
leased at often frequented airports to provide administrative and maintenance
support for commercial and military contracts.

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

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

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

<PAGE>
ITEM 3.  LEGAL PROCEEDINGS

For a description of the Company's current legal proceedings, see Note 21,
"Commitments and Contingencies" of the Company's "Notes to Consolidated
Financial Statements" in Item 8.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security stockholders during the fourth
quarter of 1997.

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK & RELATED SECURITY
         HOLDER MATTERS

The Company's common stock is traded on the New York Stock Exchange under the
symbol "WOA". The high and low sales prices of the Company's common stock, as
reported on the New York Stock Exchange for each quarter in the last two fiscal
years, are as follows:

                                                   Common Stock
                                            --------------------------
                                                High            Low
                                                ----            ---
1997
         Fourth Quarter                     $    2 1/8       $   7/8
         Third Quarter                          2 3/4          1 11/16
         Second Quarter                         3 1/2          2 1/2
         First Quarter                          4 1/2          2 7/8

1996
         Fourth Quarter                     $   6 1/2       $  4
         Third Quarter                          6 3/4          4 1/2
         Second Quarter                         9 3/4          6 3/8
         First Quarter                         10 3/4          8 5/8

In March 1992, the Company filed with the Securities and Exchange Commission
("SEC") a registration statement on Form S-3 registering $60.0 to $90.0 million
of Convertible Subordinated Debentures due 2004 (the "Debentures"). On May 26,
1992, $65.0 million of the Debentures were issued. The Debentures are
convertible into WorldCorp common stock at $11.06 per share and bear an annual
interest rate of 7%. Semi-annual interest payments are due on May 15 and
November 15. In September 1996, the Company issued $10.0 million, 10% Senior
Subordinated Notes due September 2000 (the "Notes").

The Company did not declare any cash dividends in 1997 or 1996 and does not plan
to do so in the foreseeable future. The Indenture governing the Notes, and the
Indenture governing the Company's Debentures, in certain circumstances, restrict
the Company from paying dividends or making distributions on its common stock.
Under the terms of certain borrowing arrangements, WorldCorp has pledged all of
its shares of World Airways and InteliData (see Notes 23 of the Company's
"Notes to Consolidated Financial Statements" in Item 8).

The approximate number of stockholders of record at April 14, 1998 is 2,273
and does not include those stockholders who hold shares in street name accounts.
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

WORLDCORP, INC. AND SUBSIDIARIES
Selected Financial Data
(in thousands except per share data)
<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                             -------------------------------------------------------------------------------
                                                 1997             1996              1995           1994           1993
                                                 ----             ----              ----           ----           ----
<S>                                          <C>              <C>            <C>              <C>            <C>
RESULTS OF OPERATIONS:
Operating revenues                           $   216,092 (a)  $  313,672     $    246,572     $   182,147    $     179,932
Operating expenses                               203,393 (a,b)   310,935          240,279         200,959 (f)      203,177(h)
Operating income (loss)                           12,699 (a)       2,737            6,293        (18,812)         (23,245)
Earnings (loss) from continuing operations
    before income taxes and minority interest   (14,000) (c)       8,509 (d)       65,685 (e)      10,496 (g)     (33,698)
Earnings (loss) from continuing operations      (19,128)           7,437           64,158           8,308         (30,945)
Discontinued operations, net of tax and
    minority interest                                 --        (19,191)          (3,950)              --               --
Net earnings (loss)                             (19,128)        (11,754)           60,208           8,308         (30,945)

Basic earnings (loss) per share (i):
    Continuing operations                    $    (1.29)      $     0.46     $       4.01       $    0.54     $     (2.12)
    Discontinued operations                           --          (1.19)           (0.24)              --               --
    Net earnings (loss)                           (1.29)          (0.73)             3.77            0.54           (2.12)

Diluted earnings (loss) per share (i):
    Continuing operations                    $         *      $      *       $       2.99       $       *     $         *
    Discontinued operations                            *             *             (0.17)              --              --
    Net earnings (loss)                                *             *               2.82               *               *

FINANCIAL POSITION:
Cash and short-term investments              $     4,659      $   14,509     $     78,661       $   8,828     $     17,584
Total assets                                      16,832         176,363          202,089          98,536           98,119
Long-term obligations including
    current maturities                            74,626         114,794          122,700         119,032          129,049
Common stockholders' deficit                    (59,930)        (40,337)         (23,297)        (88,193)        (101,073)

</TABLE>
*   Amounts are anti-dilutive.

<PAGE>

(a) As a result of World Airways' purchase of 3,227,000 shares of its common
    stock from the Company, beginning September 18, 1997, the Company reports
    its share of World Airways' results of operations under the equity method of
    accounting. As a result, beginning September 18, 1997, operating revenues
    and expenses relate entirely to the operations of WorldCorp.

(b) Includes a $0.9 million reversal of aircraft costs incurred in 1996 relating
    to reimbursements for disputed spare engine lease charges and a $1.0 million
    reversal of accrued maintenance expense in excess of the cost of an overhaul
    of a DC-10 aircraft.

(c) Includes a $17.6 million gain on the sale of World Airways' stock, offset by
    a $8.7 million loss on purchases of equity by World Airways and a write-off
    of approximately $20.3 million of restructuring charges by InteliData.

(d) Includes the $41.3 million net gain realized on the issuance of stock by
    InteliData to effect the Merger of US Order and Colonial Data in November 
    1996; a $2.4 million net loss on other stock transactions of World Airways
    and InteliData; partially offset by approximately $23.6 million of one-time
    noncash Merger related charges (see Notes 4 and 5).

(e) Includes the $51.3 million gain realized on US Order's offering in June 1995
    and other stock transactions (see Note 5) and the $16.0 million gain 
    realized on World Airways' offering in October 1995 (see Note 4).

(f) Includes a $4.2 million reversal of excess accrued maintenance reserves
    associated with the expiration of three DC10 aircraft leases in 1994.

(g) Includes a $27.0 million gain on the sale of 24.9% of World Airways common
    stock (see Note 4) and a $14.5 million gain on the sale of US Order's bill
    payment operations (see Note 5).

(h) Includes $2.3 million of termination fees related to the early return of
    three DC10-30 aircraft.

(i) Earnings per share for the periods presented have been calculated in
    accordance with Financial Accounting Standards Board's Statement of
    Financial Accounting Standard No. 128, Earning Per Share.

<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

Management's  Discussion and Analysis of Financial Condition and Results of
Operations  presented  below  relates  to  the  operations  of  WorldCorp,  Inc.
("WorldCorp"  or "the  Company")  as  reflected  in its  consolidated  financial
statements.  These statements  primarily  include the accounts of World Airways,
Inc.  ("World  Airways").  On February  28,  1994,  pursuant to an October  1993
agreement,  the  Company  sold 24.9% of its  ownership  in World  Airways to MHS
Berhad  ("MHS"),  a Malaysian  aviation  company.  Effective  December 31, 1994,
WorldCorp  repurchased  5% of World  Airways'  common stock from MHS. In October
1995,  World Airways  completed an initial  public  offering in which  2,000,000
shares  were issued and sold by World  Airways  and 900,000  shares were sold by
WorldCorp.  On September 18, 1997, World Airways  purchased  3,227,000 shares of
its common stock from WorldCorp (the  "Purchase").  As a result of the Purchase,
the Company's ownership percentage in World Airways was reduced to 46.3% and, as
such,  beginning  September  18,  1997,  WorldCorp  reports  its  share of World
Airways'  net  assets  and  results of  operations  under the  equity  method of
accounting.  At December 31, 1997,  WorldCorp and MHS owned 3,702,586 shares, or
46.3%,  and  1,990,000  shares,  or  24.9%,  respectively,   of  World  Airways'
outstanding common stock. The balance was publicly traded.

On August 26, 1997, World Airways completed a private offering, issuing $50.0
million of 8% convertible senior subordinated debentures (the "Debentures") due
in 2004 (the "Offering"). The Debentures were subsequently registered with the
Securities and Exchange Commission. The Debentures are unsecured obligations,
convertible into shares of World Airways' common stock at $8.90 per share,
subject to adjustment in certain events, and subordinated to all present and
future senior indebtedness of World Airways. In the event of a change in control
of World Airways, as defined, the holders of the Debentures could require World
Airways to repurchase the outstanding Debentures. The Debentures are not
redeemable by World Airways prior to August 26, 2000. In connection with the
Offering, and pursuant to an agreement entered into on August 20, 1997, World
Airways purchased 3,227,000 shares of its common stock from WorldCorp on
September 18, 1997, for approximately $24.7 million. Therefore, at December 31,
1997, WorldCorp owned approximately 46.3% of World Airways. In accordance with a
shareholders agreement, dated as of February 3, 1994, as amended, among
WorldCorp, MHS Berhad ("MHS") and World Airways, if WorldCorp were to dispose of
its holdings in World Airways with the result that WorldCorp's ownership
interest in World Airways falls below 51% of the outstanding shares of common
stock, then MHS may either sell its shares to a third party or require WorldCorp
to sell a pro rata number of shares held by MHS to the party purchasing
WorldCorp's World Airways shares. Therefore, as a result of the Purchase, MHS
had the right to sell, and accordingly sold 773,000 shares of its World Airways
common stock to World Airways (the "MHS Purchase") for approximately $5.9
million, effective January 23, 1998. Effective January 23, 1998,
WorldCorp and MHS own approximately 51.2% and 16.8%, respectively, of World
Airways, with the balance publicly traded.

WorldCorp also had an ownership  interest in US Order, Inc. ("US Order"), a
company which provided  products and services for two markets:  home banking and
smart telephones. In August 1996, US Order and Colonial Data Technologies Corp.
("Colonial Data") entered into an Agreement and Plan of Merger pursuant to which
US Order and Colonial Data would be merged with and into a new public  company,
InteliData  Technologies Corporation  ("InteliData").  Pursuant to this Merger,
which was consummated on November  7, 1996,  InteliData  became the  successor
corporation  to US Order.  The Merger was treated as a purchase of Colonial Data
by US Order. Following this Merger, WorldCorp reports its proportionate share of
InteliData's financial results using the  equity  method of  accounting.  At
December 31, 1997, WorldCorp owned 9,179,273 shares, representing approximately
29.4%, of InteliData.

The Company desires to take advantage of the "safe harbor" provisions in the
Private Securities Litigation Reform Act of 1995 (the "Act"). Therefore, this
report contains forward looking statements that are subject to risks and
uncertainties, including, but not limited to, the impact of competitive
products, product demand and market acceptance risks, reliance on key strategic
alliances, fluctuations in operating results and other risks detailed from time
to time in the Company's filings with the Securities and Exchange Commission.
These risks could cause the Company's actual results for 1998 and beyond to
differ materially from those expressed in any forward looking statements made
by, or on behalf of, the Company.

<PAGE>
OVERVIEW

WorldCorp owns positions in companies that operate in two distinct business
areas. World Airways (Nasdaq:WLDA) provides worldwide passenger and cargo air
transportation to major international airlines, the U.S. Air Force, and
international tour operators, with a fleet of MD-11 and DC10-30 aircraft.
InteliData develops and markets products and services for the telecommunications
and financial services industries through its telecommunications and electronic
commerce business divisions. 

World Airways

World Airways is a global provider of long-range passenger and cargo air
transportation  outsourcing services to major international  airlines under
fixed rate contracts.  World Airways' passenger and freight operations employ 12
wide-body aircraft which are currently  operated under contracts,  a substantial
portion  of which are with  Pacific  Rim  airlines.  These  contracts  generally
require  World  Airways to supply  aircraft,  crew,  maintenance  and  insurance
("ACMI" or "wet lease"),  while World Airways'  customers are  responsible for a
large portion of the other operating  expenses,  including fuel.  World Airways'
airline  customers have determined that outsourcing a portion of their wide-body
passenger  and cargo  requirements  can be less  expensive,  and offers  greater
operational  and  financial  flexibility,   than  purchasing  new  aircraft  and
additional  spare parts required for such  aircraft.  World Airways also leads a
contractor  teaming  arrangement  that  is  one  of  the  largest  suppliers  of
commercial  airlift  services  to the United  States Air  Force's  Air  Mobility
Command ("U.S. Air Force" or "USAF").

In July 1996, World Airways  restructured its business to focus on ACMI contract
services.  As such, World Airways ceased all scheduled  passenger and scheduled
charter services as of October 27, 1996, taking  a  one-time charge  of  $21.0
million  as  of  June  30,  1996  (see "Discontinuation  of Scheduled  Service
Operations").

World Airways generally charges customers on a block hour basis rather than
a per seat or per pound  basis.  "Block  hours" are defined as the elapsed  time
computed  from the moment the  aircraft  first  moves under its own power at the
point of  origin to the time it comes to rest at its  final  destination.  World
Airways provides most services under two types of contracts: wet lease contracts
and full service  contracts.  Under wet lease contracts,  World Airways provides
the aircraft,  cockpit crew, maintenance and insurance and the customer provides
all other operating services and bears all other operating  expenses,  including
fuel and fuel servicing,  marketing costs  associated with obtaining  passengers
and/or cargo,  airport  passenger and cargo handling fees,  landing fees,  cabin
crews,  catering,  ground handling and aircraft push-back and de-icing services.
Under full service  contracts,  World Airways  provides fuel,  catering,  ground
handling, cabin crew and all related support services as well. Accordingly, 
World Airways generally charges a lower rate per block hour for wet lease 
contracts than full service contracts, although it does not necessarily earn a
lower profit. Because of shifts in the mix between full service contracts and 
wet lease contracts, fluctuations in revenues are not necessarily indicative
of volume trends or profitability. It is important, therefore, to measure World
Airways' business volume by block hours flown and to measure profitability by
operating income per block hour.

World Airways' operating philosophy is to build on its existing ACMI
relationships to achieve a strong platform for future growth. World Airways
concentrates on ACMI contracts which shift yield, load factor and certain cost
risks to the customer. The customer bears the risk of filling the aircraft with
passengers or cargo and assumes a portion of the operating expenses, including
fuel.  World  Airways has elected to emphasize  its ACMI  business  because
World Airways  perceives a number of  opportunities  created by a growing global
economy,  particularly  growth in second  and third  world  economies  where the
demand  for  airlift  exceeds  capacity.  World  Airways  attempts  to  maximize
profitability  by  combining  its  multi-year  ACMI  contracts  with short term,
higher-yielding ACMI agreements which meet the peak seasonal requirements of its
customers.  World Airways responds  opportunistically to rapidly changing market
conditions by maintaining a flexible fleet of aircraft that can be deployed in a
variety of configurations.

<PAGE>
As noted above, World Airways has focused its business on ACMI contract
services. As is common in the air transportation industry, World Airways has
relatively high fixed aircraft costs. World Airways operates a fleet of eight
MD-11 and four DC10-30 wide-body aircraft, and while World Airways believes that
the lease rates on its MD-11 aircraft are favorable relative to lease rates of
other MD-11 operators, World Airways' MD-11 aircraft have higher lease costs
(although lower operating costs) than its DC10-30 aircraft. Therefore, achieving
high average daily utilization of its aircraft (particularly its MD-11 aircraft)
at attractive yields are important factors to World Airways' financial results.
In addition to fixed aircraft costs, a portion of World Airways' labor costs are
fixed due to monthly minimum guarantees to cockpit crewmembers and flight
attendants.Factors  that  affect  World  Airways'  ability to achieve  high
utilization  in its ACMI business  include the  compatibility  of World Airways'
aircraft with customer needs and World Airways' ability to react on short notice
to customer  requirements  (which can be unpredictable due to changes in traffic
rights,  aircraft  delivery  schedules and aircraft  maintenance  requirements).
Other  factors that affect the ACMI  business  include  particular  domestic and
foreign regulatory requirements, as well as a trend toward aviation deregulation
which is increasing the number of alliances and code share arrangements.

Significant Customer Relationships

In 1997, World Airways' business relied heavily on its contracts with Malaysian
Airline System Berhad ("Malaysian Airlines"), Philippine Airlines, Inc.
("Philippine Airlines"), P.T. Garuda Indonesia ("Garuda") and the U.S. Air
Force. For the year ended December 31, 1997, these customers provided
approximately 21%, 31%, 10% and 25%, respectively, of World Airways' revenues
and 23%, 34%, 11% and 16%, respectively, of total block hours. In 1996, these
customers provided approximately 34%, 15%, 13%, and 25%, respectively, of World
Airways' revenues and 42%, 17%, 14%, and 17%, respectively, of total block hours
flown from continuing operations.

Malaysian  Airlines.  World  Airways  has  provided  wet lease  services to
Malaysian  Airlines  since 1981,  providing  wet lease  services  for  Malaysian
Airlines'  scheduled  passenger  and cargo  operations  as well as  transporting
passengers  for the annual  Hadj  pilgrimage.  MHS,  which  owned 16.8% of World
Airways as of January  23,  1998,  also owns 28% of  Malaysian  Airlines.  World
Airways  also  entered  into a  32-month  agreement  for  year-round  operations
(including the Hadj) with Malaysian  Airlines whereby World Airways is providing
two  passenger  aircraft  with  cockpit  crews,  maintenance  and  insurance  to
Malaysian  Airlines'  newly-formed  charter division through May 1999.  However,
World  Airways  agreed  to a five  month  reduction  in the  utilization  of one
aircraft  during 1997,  although the aircraft was redeployed in other  activity.
Malaysian  Airlines has not informed  World Airways of any  reductions for 1998.
World Airways  provided  three aircraft for 1997 Hadj  operations.  MAS received
notice from the Malaysian Hadj Board that MAS would not  participate in the 1998
Hadj pilgrimage.  As a result,  MAS entered into an agreement on behalf of World
Airways  for World  Airways to  provide  two DC-10  aircraft  to fly in the 1998
Indian Hadj.

World Airways has a long-term contract to operate three MD-11 cargo aircraft for
Malaysian Airlines. However, beginning in July 1996, and as mutually agreed by
the parties, World Airways redeployed two cargo aircraft, which had been
operating under these contracts, into another contract which ended in February
1998. World Airways and Malaysian Airlines are currently discussing the
redeployment of these aircraft back into Malaysian Airlines' operations during
1998 in order to meet the contracts' original obligations. World Airways can
provide no assurances, however, that World Airways will, in fact, be able to do
so. 

Malaysian Airlines is subject to the financial difficulties associated with
the adverse economic conditions in Malaysia and the Asia Pacific Region, but it
has remained current with its payments for committed block hour minimums
provided in the contracts. Failure by Malaysian Airlines to meet its aircraft
lease obligations, if not offset by other business, would have a material
adverse effect on the financial condition, cash flows and results of operations
of World Airways.

<PAGE>
Garuda. World Airways has flown for Garuda periodically since 1973 and yearly
since 1988. Since 1988, World Airways has been one of the largest providers of
passenger services to Indonesia for the Hadj pilgrimage. The Indonesian Hadj
pilgrimage is the world's largest due to the size of Indonesia's Islamic
population. In 1997, approximately 40,000 of the 200,000 Indonesians who
traveled to Jeddah for the Hadj pilgrimage flew on World Airways' aircraft.
World Airways has reached an agreement with Garuda to operate six aircraft
during the 1998 pilgrimage.

Philippine Airlines. World Airways had agreements with Philippine Airlines to
operate four passenger aircraft until November 1997. As a result of the economic
distress experienced in the Philippines, World Airways negotiated to terminate
the agreements on two of the aircraft effective in August 1997, and
received monthly termination payments totaling $3.0 million through the original
end of the agreements in November 1997. In addition, the contracts on the
remaining two aircraft were extended until February 1998 and the per block hour
rates for those two aircraft were reduced slightly. The two aircraft which were
removed from Philippine Airlines service were redeployed by World Airways under
agreements with other customers. The contract with Philippine Airlines expired
in February 1998.

U.S. Air Force. World Airways has provided international air transportation to
the U.S. Air Force since 1956. In exchange for requiring pledges of aircraft to
the Civil Reserve Air Fleet ("CRAF") for use in times of national emergency, the
U.S. Air Force grants awards to CRAF participants for peacetime transportation
of personnel and cargo. Although World Airways' agreements with the USAF provide
for full service contracts with certain minimum performance requirements, World
Airways has risks similar to an ACMI agreement because the USAF agreements are
cost-plus contracts at attractive rates. The overall downsizing of the U.S.
military places a premium on the mobility of the U.S. armed forces. This is
reflected in the stable size over the past several years of the USAF's
procurement of commercial airlift services. It is uncertain, however, what
impact, if any, the instability within the Middle East will have upon World
Airways' future flight operations.

The USAF awards points to air carriers acting alone or through teaming
arrangements in proportion to the number and type of aircraft such carriers make
available to CRAF. World Airways utilizes such teaming arrangements to maximize
the value of potential awards. World Airways leads a contractor teaming
arrangement that enjoys a large market share of the USAF's overall commercial
airlift requirement. During a period in which the U.S. military downsized
substantially, World Airways' portion of the fixed USAF award increased from
$15.6 million for the government's 1992-93 fiscal year, to $73.4 million for the
government's 1997-98 fiscal year. The current annual contract commenced on
October 1, 1997 and expires on September 30, 1998. World Airways, however,
cannot determine how future cuts in military spending may affect future
operations with the U.S. Air Force.

VASP. World Airways leased a cargo plane to Viacao Aereo Sao Paulo ("VASP"),a
Brazilian airline, under an ACMI contract which began in June 1997 and
terminated prior to December 31, 1997. World Airways also during 1997 entered
into a Memorandum of Agreement with VASP for the lease of two MD-11 passenger
aircraft for a six-month term with a six-month renewal option. This contract was
not finalized in 1997 and World Airways currently is not contracting with VASP
for any aircraft. The aircraft intended for VASP have been redeployed to other
customers of World Airways.

Although World Airways' customers bear the financial risk of filling World
Airways' aircraft with passengers or cargo, World Airways can be affected
adversely if its customers are unable to operate World Airways' aircraft
profitably, or if one or more of World Airways' customers experience a material
adverse change in their market demand, financial condition or results of
operations. Under these circumstances, World Airways can be adversely affected
by receiving delayed or partial payments or by receiving customer demands for
rate and utilization reductions, flight cancellations, and/or early termination
of their agreements.

As a result of these and other contracts, World Airways had an overall contract
backlog at December 31, 1997 of $305.8 million, compared to $468.0 million at
December 31, 1996. Approximately $199.4 million of the backlog relates to

<PAGE>
operations during 1998. World Airways' backlog for each contract is determined
by multiplying the minimum number of block hours guaranteed under the applicable
contract by the specified hourly rate under such contract. Approximately 57% of
the backlog relates to its contracts with Malaysian Airlines, included in which
are the revenues associated with the three cargo aircraft for Malaysian Airlines
(see "Significant Customer Relationships - Malaysian Airlines" for further
discussion of these contracts). Consistent with prior years, World Airways has
substantial uncontracted capacity in the third and fourth quarters of 1998 and
beyond. Although there can be no assurance that it will be able to secure
additional business to reduce this excess capacity, World Airways is actively
seeking customers for 1998 and beyond, and has historically been successful in
obtaining new customers. World Airways' financial results and financial
condition would be affected adversely if World Airways is unable to secure
additional business to reduce this excess capacity.

The information regarding major customers and foreign revenue is contained in
Note 19 "Major Customers" of WorldCorp's "Notes to Consolidated Financial
Statements" in Item 8.

Competition

The market for outsourcing air passenger and cargo ACMI services is highly
competitive. Certain of the passenger and cargo air carriers against which World
Airways competes possess substantially greater financial resources and more
extensive facilities and equipment than those which are now, or will in the
foreseeable future become, available to World Airways. World Airways believes
that the most important bases for competition in the ACMI outsourcing business
are the age of the aircraft fleet, the passenger, payload and cubic capacities
of the aircraft, and the price, flexibility, quality and reliability of the air
transportation service provided. Competitors in the ACMI outsourcing market
include MartinAir Holland, Tower Air and American TransAir and all-cargo
carriers, such as Atlas Air, Gemini Air Cargo, Polar Air Cargo and Kitty Hawk,
and scheduled and non-scheduled passenger carriers which have substantial belly
capacity. The ability of World Airways to continue to grow depends upon its
success in convincing major international airlines that outsourcing some 
portion of their air passenger and cargo business remains more cost-effective
than undertaking passenger or cargo operations with their own incremental
capacity and resources.

The allocation of military air transportation contracts by the USAF is based
upon the number and type of aircraft a carrier, alone or through a teaming
arrangement, makes available for use in times of national emergencies. The
formation of competing teaming arrangements comprised of larger partners than
those sponsored by World Airways, an increase by other air carriers in their
commitment of aircraft to the emergency program, or the withdrawal of World
Airways' current partners, could adversely affect the size of the USAF
contracts, if any, which are awarded to World Airways in future years.

Cyclical Nature of Air Carrier Business

World Airways operates in a challenging business environment. The air
transportation industry is highly sensitive to general economic conditions.
Since a substantial portion of passenger airline travel (both business and
personal) is discretionary, the industry tends to experience severe adverse
financial results during general economic downturns and can be adversely
affected by unexpected global political developments. The financial results of
air cargo carriers are also adversely affected by general economic downturns due
to the reduced demand for air cargo transportation. In 1993 and 1994, the
combination of a generally weak global economy and the depressed state of the
air transportation industry adversely affected World Airways' operating
performance.

Seasonality

Historically, World Airways' business has been significantly affected by
seasonal factors. During the first quarter, World Airways typically experiences
lower levels of utilization and yields due to lower demand for passenger and
cargo services relative to other times of the year. World Airways experiences
higher levels of utilization and yields in the second quarter, principally due
to peak demand for commercial passenger services associated with the annual Hadj
pilgrimage. In 1998, World Airways' flight operations associated with the Hadj

<PAGE>
pilgrimage will occur from February 28 to May 12. Because the Islamic calendar
is a lunar-based calendar, the Hadj pilgrimage occurs approximately 10 to 12
days earlier each year relative to the Western (Gregorian) calendar. As a
result, revenues resulting from future Hadj pilgrimage contracts will continue
to shift from the second quarter to the first quarter over the next several
years.

Geographic Concentration

World Airways derives a significant percentage of its revenues and block hours
from its operations in the Pacific Rim region. Any further economic decline or
any military or political disturbance in this area may interfere with World
Airways' ability to provide service in this area. In 1997, the affects of the
adverse economic conditions in Malaysia and Indonesia and other countries in the
Asia Pacific Region included a national liquidity crisis, significant
depreciation in the value of the ringgit and rupiah, higher domestic interest
rates, reduced opportunity for refinancing or refunding of maturing debts, and a
general reduction in spending throughout the region. These conditions and
similar conditions in other countries in the Asia Pacific Region could have a
material adverse effect on the operations of Malaysian Airlines and Garuda
Indonesia, and therefore on the operations of World Airways. However, management
also believes these conditions could provide new opportunities to wet lease
aircraft to airlines customers, particularly those who have deferred or canceled
new aircraft orders but are still in need of providing additional airlift.

Utilization of Aircraft

Due to the large capital costs of leasing and maintaining World Airways'
aircraft, each of World Airways' aircraft must have high utilization at
attractive rates in order for World Airways to operate profitably. Although
World Airways' strategy is to enter into long-term contracts with its customers,
the terms of World Airways' existing customer contracts are substantially
shorter than the terms of World Airways' lease obligations with respect to the
aircraft. As mentioned above, a significant portion of World Airways' contract
backlog at December 31, 1997, relates to its multi-year contracts with Malaysian
Airlines which is subject to the financial difficulties associated with the
adverse economic conditions in Malaysia and the Asia Pacific region. In
addition, World Airways has substantial uncontracted capacity in the third and
fourth quarters of 1998 and beyond. There can be no assurance that World Airways
will be able to enter into additional contracts with new or existing customers
or that it will be able to obtain enough additional business to fully utilize
each aircraft. World Airways' financial position and results of operations could
be materially adversely affected even by relatively brief periods of low
aircraft utilization and yields. In order to maximize aircraft utilization,
World Airways does not intend to acquire new aircraft unless such aircraft would
be necessary to service existing needs or World Airways has obtained additional
ACMI contracts for the aircraft to service. World Airways is seeking to obtain
additional ACMI contracts with new and existing customers, to which such new
aircraft would be dedicated when placed in service, but World Airways can
provide no assurance that it will obtain new ACMI contracts or that existing
ACMI contracts will be renewed or extended.

Aircraft Fleet

World Airways' strategy is to attempt to ensure that each of the aircraft in its
fleet is to a large extent contractually dedicated by World Airways to the
service of one or more customers, with limited aircraft available to provide
back-up capability. Therefore, in the event the use of one or more of World
Airways' aircraft was lost, World Airways might have difficulty fulfilling its
obligations under one or more of these contracts, if it were unable to obtain
substitute aircraft. On October 24, 1997, one of World Airways' MD-11 aircraft
was damaged upon landing. The aircraft was out of service for approximately two
and a half months while certain repairs were made. World Airways expects
insurance to cover repair and certain related costs, but World Airways' loss of
revenues that would have been generated by the aircraft's use had an adverse
effect on World Airways' financial condition and results of operations for the
fourth quarter of 1997.

<PAGE>
Maintenance

Engine maintenance accounts for most of World Airways' annual maintenance
expenses. Typically, the hourly cost of engine maintenance increases as the
aircraft ages. World Airways outsources major airframe maintenance and power
plant work to several suppliers. World Airways has a 10-year contract expiring
in August 2003 with United Technologies Corporation's Pratt & Whitney Group for
all off-wing maintenance on the PW 4462 engines that power its MD-11 aircraft.
Under this contract, the manufacturer agreed to provide such maintenance
services at a cost not to exceed specified rates per hour during the term of the
contract. The specified rates per hour are subject to annual escalation,
increasing substantially in 1998. Accordingly, while World Airways believes the
terms of this agreement have resulted in lower engine maintenance costs than it
otherwise would incur, engine maintenance costs will increase substantially
during the last five years of the agreement. World Airways began to accrue these
increased expenses in 1997 and such expenses will continue to increase during
the remainder of the term of the contract as World Airways' aircraft fleet ages.

Operating Losses

While World Airways generated operating income each year from 1987 through 1992
and in 1995, it sustained operating losses in 1993 and 1994 of $7.3 million and
$5.2 million, respectively, and net losses of $9.0 million in each of these two
years. For the year ended December 31, 1996, World Airways incurred a net loss
of $14.0 million, which resulted from operating losses incurred in World
Airways' scheduled service operations, which were discontinued in 1996, and the
related estimated loss on disposal. Earnings from continuing operations were 
$18.4 million for 1996. While World Airways generated operating income for the
year ended December 31, 1997 of $16.9 million, there can be no assurance that
World Airways will be able to continue generating operating income for 1998 or
future years.

InteliData

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

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

The excess purchase price over the fair value of net assets acquired resulted in
goodwill of $49.5 million in connection with the Mergers, and $1.9 million in
connection with the Braun Simmons Acquisition which were being amortized on a
straight-line basis over fifteen years and seven years, respectively. Based on
rapid market and technological changes in 1997, the goodwill generated from
these transactions was considered impaired and was written-off in the third
quarter of 1997. The impairment was based on the excess of the carrying value of
the assets over the assets' fair values. The fair value of the assets were
generally determined as the estimates of future cash flows generated by the
assets.

In connection with the Mergers and the Braun Simmons Acquisition, InteliData
charged, as of the respective dates of such transactions, in-process research
and development expenses of $72.3 million for the Mergers and $4.9 million for
the Braun Simmons Acquisition, for purchased in-process technology that had not
reached technological feasibility as of the respective dates of such
transactions and which did not have alternative future uses.

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

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

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

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

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

Successful Implementation of Business Strategy

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

Developing Marketplace

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

Fluctuations in Operating Results

InteliData may experience fluctuations in quarterly operating results due to a
variety of factors, some of which are beyond InteliData's control. These include
the size and timing of customer orders, changes in InteliData's pricing policies

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

Reliance on Caller ID Revenues

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

Concentration of Distribution of Products and Services

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

Technological Considerations

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

<PAGE>
Dependence on Foreign Production

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

Competition

Telecommunications

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

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

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

Electronic Commerce

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

Dependence on Key Employees

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

<PAGE>
Regulation

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

In the United States,  Caller ID and other intelligent network services are
subject to federal and state regulation. Caller ID and other intelligent network
services may in the future be subject to further  regulation by the federal
government,  state public utility commissions and other regulatory  authorities,
as well as court challenges,  including possible challenges due to protests from
special  interest  groups that  object to such  services on the basis of privacy
concerns.  A series of FCC orders effective December 1, 1995, require all
United States  telephone  service  providers with  Signaling  System 7 switching
architecture  to  transmit  to  each  other  without  charge  Caller  ID  number
information on interstate  calls within the United States (except for public pay
phones, hotel and motel lines, and party lines). FCC orders also require that by
March 28,  1998,  telcos  that  offer  Caller ID service  must  provide to their
telephone subscribers without charge per-call blocking and unblocking mechanisms
to block  and  unblock  the  transmission  of their  Caller  ID  information  on
interstate calls and must inform subscribers that their telephone numbers may be
identified  to a called  party  and how to use  these  blocking  and  unblocking
capabilities

Volatility of Stock Price

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

Limited Proprietary Protection

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

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

<PAGE>
Limited Sources of Supply

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

RESULTS OF OPERATIONS

World Airways

As previously discussed, on September 18, 1997, World Airways purchased
3,227,000 shares of its common stock from the Company for approximately $24.7
million in cash (the "Purchase"). As a result of the Purchase, the Company's
ownership percentage in World Airways was reduced to 46.3%.

The Company's consolidated results for the year ended December 31, 1997 include
the results of World Airways for the period prior to the Purchase. Following the
Purchase, the Company reports its proportionate share of World Airways'
financial results using the equity method of accounting. For the year ended
December 31, 1997, the Company's portion of World Airways' loss for the period
after the Purchase approximated $0.5 million and is recorded in "equity in
earnings (loss) of affiliates, net" in the accompanying consolidated statement
of operations.

The following represents selected financial information (in thousands) for World
Airways:

                                         Year Ended December 31,
                                       -------------------------
                                           1997           1996
                                           ----           ----
Operating Revenues:
Flight operations                      $  306,800     $  296,930
Flight operations subcontracted
  to other carriers                         2,058         11,726
Other                                         554            931
                                          -------        -------
Total operating revenue                   309,412        309,587
                                          -------        -------
                                          
Operating Expenses:
Flight                                     71,845         69,128
Maintenance                                65,972         60,462
Aircraft costs                             91,422         85,227
Fuel                                       17,615         19,255
Flight operations subcontracted
  to other carriers                         2,603         12,932
Promotions, sales and commissions           9,569         8,229
Depreciation and amortization               8,651         8,032
General and administrative                 24,878        24,677
                                          -------       -------
Total operating expenses                  292,555       287,942
                                          -------       -------
Operating income                       $   16,857   $    21,645
                                       ==========   ===========

Results of operations discussed herein relate to World Airways' operations for
all of 1997.

Year Ended December 31, 1997 Compared to Year Ended December 31,
1996

Total block hours decreased 6,745 hours, or 13%, to 43,780 hours in 1997 from
50,525 hours in 1996, with an average of 12.9 available aircraft per day in 1997
compared to 14.1 in 1996.  Average daily utilization (block hours flown per
day per  aircraft)  decreased  to 9.3 hours in 1997  from 9.8 hours in 1996.  In

<PAGE>
1997,  World  Airways  continued to obtain a higher  percentage  of its revenues
under wet lease  contracts as opposed to full service  contracts.  In 1997,  wet
lease contracts  accounted for 81% of total block hours, an increase from 68% in
1996.

Continuing Operations

Block hours from continuing operations decreased slightly to 43,780 hours in
1997 from 43,897 hours in 1996.

Operating Revenues. Revenues from flight operations increased $9.9 million, or
3%, in 1997 to $306.8 million from $296.9 million in 1996. Revenues in 1997
included approximately $11.2 million related to minimum guarantee payments
received from Malaysian Airlines for flying levels which did not meet the
minimum monthly levels specified in the contracts, and $3.0 million related to
contract modification payments received from Philippine Airlines, for which
World Airways incurred no related variable costs.

Operating Expenses.  Total operating expenses increased
$4.7million, or 2%, in 1997 to $292.6 million from $287.9 million
in 1996.

Flight operations expenses include all expenses related directly to the
operation of the aircraft other than aircraft costs, fuel and maintenance. Also
included are expenses related to flight dispatch and flight operations
administration. Flight operations expenses increased $2.7 million, or 4%, in
1997 to $71.8 million from $69.1 million in 1996. This increase resulted
primarily from higher crew costs relating to an accrual for the profit sharing
bonus plan, an increase in wage rates including an increase in the guarantee
payment, and an increase in training costs relating to crewmember attrition,
partially offset by the shift in the mix of business from full service to wet
lease operations. Flight attendant costs remained consistent despite the
shift to wet lease operations as a result if flight attendants receiving
minimum guarantee payments.

Maintenance expenses increased $5.5 million, or 9%, in 1997 to $66.0 million
from $60.5 million in 1996. This increase resulted primarily from the increase
in the number of aircraft dedicated to World Airways' continuing operations and
the integration of additional aircraft into the fleet during 1996. In addition,
World Airways experienced an increase in costs associated with the MD-11
aircraft and related engines as a result of certain manufacturer guarantees and
warranties which began to expire in 1995 and will fully expire by 1998. World
Airways expects its maintenance expense to increase further in 1998 due to
escalations in the specified rates per hour under World Airways' maintenance
agreement. The increase was partially offset by a reversal in 1997 of $1.0
million of accrued maintenance expense in excess of the cost of an overhaul of a
DC-10 aircraft. 

Aircraft costs increased $6.2 million, or 7%, in 1997 to $91.4 million  from  
$85.2  million  in 1996.  This  increase  resulted  from the increase  in the
number of  aircraft  dedicated  to World  Airways'  continuing  operations,
primarily due to the lease of two MD-11ER  aircraft in March 1996, and the lease
of  additional  spare  engines  necessary to maintain the expanded  fleet.  This
increase was partially offset by the reversal of  approximately  $0.9 million in
lease costs,  which had been recorded in 1996, as a result of a settlement  with
the engine  manufacturer  for  reimbursements  related to disputed  spare engine
lease charges.  

Fuel expenses decreased $1.7 million,  or 9%, in 1997 to $17.6 million from
$19.3  million in 1996.  This  decrease is due  primarily to the shift from full
service to wet lease  operations where World Airways is not responsible for fuel
costs. This decrease was partially offset by an increase in price per gallon.

Promotions, sales and commissions increased $1.4 million, or 17%, in 1997 to
$9.6 million from $8.2 million in 1996. This increase resulted primarily from an
increase in commissions related to increased flying during 1997 under the
Philippine Airlines contracts.

Depreciation and amortization increased $0.7 million, or 9%, in 1997 to $8.7
million from $8.0 million in 1996. This increase resulted primarily from
depreciation on the increased levels of spare parts required to support the
additional MD-11 aircraft described above, partially offset by a decrease in the
amortization of certain intangible assets.

<PAGE>
General and administrative expenses increased $0.2 million, or 1%, in 1997 to
$24.9 million from $24.7 million in 1996. This increase was primarily due to the
hiring of additional administrative personnel, beginning in the second quarter
of 1996, necessary to support the growth in World Airways' core business and
related marketing efforts and an increase in property tax accruals.  This 
increase was partially offset by a reduction in certain legal and professional
fees.

Discontinued Operations

World Airways commenced service between Tel Aviv and New York in July 1995. In
the first quarter of 1996, World Airways generated $4.2 million in losses
related to these operations. In the second quarter of 1996, World Airways
expanded its scheduled service operations with service between the United States
and South Africa and introduced scheduled charter operations between the United
States and various destinations within Europe. As World Airways was unable to
operate these scheduled service operations profitably, in July 1996, World
Airways announced its decision to exit its scheduled service operations by
October 1996 and focus its operations on its core wet lease operations.
Consistent with this decision, World Airways ceased all scheduled operations as
of October 27, 1996. As a result, World Airways' scheduled service operations
were reflected as discontinued operations as of June 30, 1996, and prior period
results were restated to reflect scheduled service operations as discontinued
operations. Loss from discontinued operations (net of income tax effect)
approximated $11.7 million for the year ended December 31, 1996. In addition, an
estimated loss on disposal of $21.0 million (net of income tax effect) was
recorded as of June 30, 1996. World Airways recognized an additional $0.5
million of expense in the fourth quarter of 1997 and believes that substantially
all the costs relating to the disposal have been recorded as of December 31,
1997. World Airways is subject to claims arising as a result of the
discontinuance of its scheduled service operations, but World Airways believes
it has substantial defenses to these actions.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Total block hours increased 13,183 hours, or 35%, to 50,525 hours in 1996 from
37,342 hours in 1995, with an average of 14.1 available aircraft per day in 1996
compared to 10.3 in 1995. Average daily utilization (block hours flown per day
per aircraft) decreased to 9.8 hours in 1996 from 9.9 hours in 1995. In 1996,
World Airways continued to obtain a higher percentage of its revenues under wet
lease contracts as opposed to full service contracts. In 1996, wet lease
contracts accounted for 68% of total block hours, consistent with 70% in 1995.
Total operating revenues increased $67.2 million, or 28%, to $309.6 million in
1996 from $242.4 million in 1995.

Continuing Operations

Block hours from continuing operations increased 8,269 hours, or 23%, to 43,897
hours in 1996 from 35,628 hours in 1995.

Operating Revenues. Revenues from flight operations increased $64.3 million, or
28%, to $296.9 million in 1996 from $232.6 million in 1995. This increase was
primarily attributable to an increase in military flying and an increase in
revenues generated from its 1996 Hadj operations and services to certain
international carriers, partially offset by a decrease in cargo operations
resulting from a shift in the mix of business during 1996.

Operating Expenses.  Total operating expenses increased $61.4
million, or 27%, in 1996 to $287.9 million from $226.5 million in
1995.

Flight operations expenses include all expenses related directly to the
operation of the aircraft other than aircraft cost, fuel and maintenance. Also
included are expenses related to flight dispatch and flight operations
administration. Flight operations expenses increased $5.5 million, or 9%, in
1996 to $69.1 million from $63.6 million in 1995. This increase resulted
primarily from an increase in block hours flown and higher crew costs and
up-front training expenses in connection with the integration of additional
aircraft into the fleet. These increases were partially offset by a decrease in
accrued profit sharing expenses. In 1995, World Airways accrued profit sharing
expenses as a result of earnings experienced during that period. No such accrual
was necessary in 1996 as a result of losses from the discontinuation of
scheduled service operations.

<PAGE>
Maintenance expenses increased $18.7 million, or 45%, in 1996 to $60.5 million
from $41.8 million in 1995. This increase resulted primarily from the
integration of additional aircraft into the fleet and a corresponding increase
in block hours flown. In addition, World Airways experienced an increase in
costs associated with the MD-11 aircraft and related engines as a result of
certain manufacturer guarantees and warranties which began to expire in 1995 and
will fully expire by 1998.

Aircraft costs increased $17.9 million, or 27%, in 1996 to $85.2 million from
$67.3 million in 1995. This increase was primarily due to the lease of two
MD-11ER aircraft in the first quarter of 1996 and the lease of incremental
DC10-30 aircraft which began in the second and fourth quarters of 1995 and the
first quarter of 1996, partially offset by the return of two DC10-30 aircraft to
the lessor in the third quarter of 1995.

Fuel expenses increased $2.6 million, or 16%, in 1996 to $19.3 million from
$16.7 million in 1995. This increase is due primarily to an increase in fuel
utilized in connection with its military operations and a slight increase in
price per gallon.

Promotions, sales and commissions increased $4.6 million in 1996 to $8.2 million
from $3.6 million in 1995. This increase resulted primarily from commissions
paid in connection with the new Philippine Airlines contract and an increase in
teaming arrangement commissions associated with the larger fixed-award
contract received from the U.S. Air Force beginning October 1995.

Depreciation and amortization increased $1.9 million, or 31%, in 1996 to $8.0
million from $6.1 million in 1995. This increase resulted primarily from an
increase in spare parts required to support the additional MD-11 aircraft and
incremental DC10-30 aircraft described above.

General and administrative expenses increased $6.5 million, or 36%, in 1996 to
$24.7 million from $18.2 million in 1995. This increase was primarily due to the
hiring of additional administrative personnel necessary to support the growth in
its core business and an increase in certain legal and professional fees.

InteliData

As previously discussed, in August 1996, US Order and Colonial Data entered into
an Agreement and Plan of Merger pursuant to which US Order and Colonial Data
were merged with and into a new public company, InteliData. Pursuant to the
Mergers on November 7, 1996, InteliData became the successor corporation to US
Order. As of November 7, 1996, WorldCorp's ownership interest in InteliData was
approximately 28.9%.

The Company's consolidated results for 1996 and 1995 include the results of US
Order for the period in 1996 prior to the Merger, and for the twelve months
ended December 31, 1995, respectively. Following the Merger, the Company reports
its proportionate share of InteliData's financial results using the equity
method of accounting. See "Other Income (Expense)-Equity in Loss of Affiliate."

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

The following represents selected financial information (in thousands) for
InteliData for the year ended December 31, 1997, compared to the year ended
December 31,1996:

                                          Year Ended December 31,
                                    ---------------------------------
                                        1997                   1996
                                        ----                   ----
Revenues
  Telecommunications                $   56,358            $   10,942
  Electronic commerce                    3,951                 2,957
                                        ------                ------

     Total revenues                     60,309                13,899
                                        ------                ------
<PAGE>
Cost of revenues
  Telecommunications                $   41,385            $    8,791
  Electronic commerce                    2,129                 1,657
                                        ------                ------
    Total cost of revenues              43,514                10,448
                                        ------                ------ 
    Gross profit                        16,795                 3,451

Operating expenses
General and administrative              14,826                16,121
Selling and marketing                   13,891                 2,011
Research and development                 9,691                 2,649
Unusual charges                         69,691                78,782
                                       -------               -------   
Total operating expenses               108,099                99,563
                                       -------               -------
Operating loss                      $ (91,304)            $ (96,112)
                                      ========              ========

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

For the year ended December 31, 1997, InteliData's revenues were $60.3 million,
including $56.4 million generated by the telecommunications division primarily
resulting from marketing and promotional campaigns for Caller ID units and
services conducted by telcos and InteliData. In addition, InteliData realized an
increase in revenues generated from its electronic commerce division which
totalled approximately $3.9 million in 1997, attributed primarily to revenues
generated by the professional service and maintenance contracts associated with
the expansion of the division's software sales. This increase was partially
offset by the elimination of customer service support provided to Visa-member
banks during the second half of 1997. During 1997, InteliData transitioned from
providing primarily back-end support to financial institutions to selling
software that assists financial institutions in processing customers who bank
remotely, either from a personal computer or telephone. InteliData expects that
revenues generated in the electronic commerce division in 1998 will be a direct
result of software sales and the related consulting business.

InteliData's cost of revenues for 1997 increased to $43.5 million, including
$41.4 million from its telecommunications division. Gross profit margins for the
telecommunications and electronic commerce divisions were 27% and 46%,
respectively, for 1997, compared to 20% and 44%, respectively, in 1996. Gross
profit margins for the telecommunications division increased due to the Mergers
and the change in product mix and increased margins on the U.S. West lease base.
The increase in gross profit margin for the electronic commerce division is
attributed to a change in the products and services offered between the two
periods. During 1997, InteliData experienced declining gross margins in Caller
ID products because the market matured and competition increased. InteliData
expects its gross margin percentages to vary in future periods based upon the
revenue mix between product sales and services revenues and based upon the
composition of services revenues earned during the period.

InteliData's total operating expenses were $108.1 million during 1997. Included
in the 1997 operating expenses were unusual charges of $69.7 million associated
primarily with a strategic repositioning of InteliData's telecommunications
division based on recent events in the marketplace and a corporate
restructuring. In connection with this repositioning and corporate
restructuring, InteliData evaluated its financial position and determined that
it would be appropriate to charge to operations the remaining unamortized costs
of intangible assets due to impairment, adjust inventory carrying amounts to the
lower of cost or market, and reflect certain restructuring charges, including
charges for separation agreements with employees and charges associated with the
termination of a joint venture agreement. Additionally, InteliData adjusted the
carrying value of a receivable from the sale of stock for an advertising credit
based on its expected use of the credit. Such charges aggregated $49.8 million

<PAGE>
for the impairment of intangible assets; $11.3 million for inventories and
commitments; $2.4 million for restructuring charges and separation agreements;
$3.7 million for assets relating to the joint venture; and $2.5 million for
impairment of the advertising credits. The impairment was measured based on the
excess of the net carrying value of the assets over the assets' fair values. The
fair values of the assets were generally determined based on estimates of future
cash flows to be generated by the assets. The charges related to the joint
venture are associated with the termination of the Worldwide Telecom joint
venture by InteliData in the third quarter of 1997.

General and administrative expenses decreased primarily as a result of expenses
related to 1996 losses in the amount of $2.8 million related to InteliData's
investment in Home Financial Network, Inc. ("HFN"), a development stage personal
computer software company, and the associated goodwill. The Company believed its
investment in HFN was impaired based on its history of losses. In 1997, $1.3
million of losses for the HFN investment were incurred along with increased
expenses associated with employing certain general and administrative personnel
for a full year in 1997 and increased litigation expenses during 1997.   Also
contributing to the difference were the amortization of intangible assets
and nonrecurring charges for certain customer service operations. As a result of
InteliData's increased marketing efforts to promote its residential and small
business telecommunications product lines to retail markets and to regional Bell
operating companies and other telephone operating companies, selling and
marketing  expenses  increased  during  1997  compared  to  1996.  Finally,
research  and  development  costs  increased  during  1997  primarily  from  the
developing, designing, and testing of new products and services. InteliData has
been  actively engaged in research and development  since its  inception  and
expects that these activities will be essential to the operations of InteliData
in the future.

Year Ended December 31, 1996 Compared to Year Ended December 31,
1995

Operating Revenue. InteliData's operating revenues reported by WorldCorp
decreased by $0.1 million from $4.2 million for the full year of 1995 to $4.1
million for the period of 1996 prior to the Merger, primarily due to a reduced
10-month 1996 reporting period versus a 12-month reporting period in 1995.

Operating Expenses. InteliData's operating expenses reported by WorldCorp
increased by $9.7 million from $9.5 million for the twelve months ended December
31, 1995 to $19.2 million for the period of 1996 prior to the Merger.
InteliData's operating expenses include cost of revenue, general and
administrative expenses, research and development costs, and advertising and
promotion expenses. The increases in InteliData's operating expenses were
attributable to employee related expenses for increases in personnel,
amortization of intangible assets, increases in research and development costs,
higher sales and marketing expenses and the write-off of in-process research and
development expenses related to technology that had not reached technological
feasibility and did not have alternative future uses, which was purchased in the
Braun Simmons acquisition in September 1996.

On November 7, 1996, US Order and Colonial Data were merged with and into
InteliData. As described above, following the Mergers, WorldCorp reports its
share of InteliData's financial results under the equity method of accounting.
As a result of the Mergers, during 1996, InteliData reported one-time, noncash
merger related charges of approximately $72.3 million, of which WorldCorp
recorded its 28.9% share, or $20.9 million. These charges related to the
write-off of in-process research and development expenses for purchased in-house
technology that had not reached technological feasibility as of the date of the
Mergers with Colonial Data and did not have alternative future uses. The
remaining $2.4 million loss represents WorldCorp's proportionate share of
InteliData's operating results for the period following the Merger.

WorldCorp

Operating Expenses

General and administrative expenses decreased by $1.6 million for the year ended
December 31, 1997 to $2.2 million from $3.8 million during the comparable 1996
period. This decrease was primarily due to a reduction of legal fees, bank fees
and wages.

<PAGE>
General and administrative expenses decreased by $0.5 million for the year ended
December 31, 1996 to $3.8 million from $4.3 million in the comparable 1995
period. This decrease was primarily due to a reduction in legal and professional
fees.

Other Income (Expense)

Equity in Earnings (Loss) of Affiliates, Net. On September 18, 1997, World
Airways purchased 3,227,000 shares of its common stock from WorldCorp for
approximately $24.7 million in cash. As a result of the purchase, the Company's
ownership percentage in World Airways was reduced to 46.3% and, as such,
beginning September 18, 1997, WorldCorp reports its share of World Airways' net
assets and results of operations under the equity method of accounting. The
Company's portion of World Airways' loss for the period after the purchase
approximated $0.5 million and is recorded in "equity in earnings (loss) of
affiliates, net."

The Company's equity in the losses of InteliData, described above, approximated
$26.5 million and $23.3 million for the years ended December 31, 1997 and 1996,
respectively.

Gain (Loss) on Issuances (Purchases) of Equity by Affiliates, Net and Gain on
Sales of Subsidiaries' Stock. As a result of the purchase by World Airways of
3,227,000 shares of its common stock from WorldCorp, WorldCorp recognized a gain
on sale of its common stock of World Airways of approximately $17.6 million in
1997, which was partially offset by a $8.7 million loss on purchases of equity
by World Airways.

As a result of the Mergers in 1996, WorldCorp recognized a gain on the issuance
of equity by InteliData of $42.6 million which was partially offset by the
elimination of approximately $1.3 million of goodwill related to US Order. Also,
in 1996, the Company recognized a gain of $1.8 million associated with US
Order's issuance of stock to acquire Braun Simmons. Finally, the Company
recorded a loss of approximately $4.2 million as a result of World Airways'
purchase of treasury stock during 1996.

Interest Expense. Interest expense decreased $2.1 million, or 18% in 1997 to
$9.6 million in 1997 from $11.7 million in 1996. The decrease is primarily due
to the extinguishment of the $25.0 million subordinated notes in September 1996,
partially offset by the addition of the $10.0 million Senior Subordinated Notes
entered into on September 30, 1996.

Other, Net. Other expenses decreased by $1.6 million from expense of $1.6
million in 1996 to income of $0.03 million in 1997, primarily due to a $1.6
million loss in 1996 representing US Order's proportionate share of losses of an
affiliate accounted for under the equity method.

Other expenses increased by $3.3 million from income of $1.7 million in 1995 to
expense of $1.6 million in 1996, primarily due to a $1.6 million loss 
representing US Order's proportionate share of losses of an affiliate accounted
for under the equity method.

LIQUIDITY AND CAPITAL RESOURCES

The Company is a highly leveraged holding company. As a holding company, all of
WorldCorp's funds are generated through its positions in World Airways and
InteliData, which have not paid dividends on common stock since 1992. At
December 31, 1997, World Airways has a working capital deficit of $1.8 million
and has substantial debt and lease commitments. At December 31, 1997, InteliData
has working capital of $32.4 million, with no long-term debt. World Airways'
ability to pay dividends is currently restricted under certain borrowing
arrangements. Additionally, World Airways and InteliData currently intend to 
retain their future earnings, if any, to fund the growth and development of
their businesses and, therefore, do not anticipate paying any cash dividends in 
the foreseeable future.

As of December 31, 1997, WorldCorp has $4.7 million in cash and cash equivalents
and has substantial parent company repayment obligations for 1998, including
principal and interest of approximately $15.6 million for 1998.  Included in

<PAGE>
this amount is $10.0 million of senior subordinated notes outstanding.
Subsequent to year-end, the Company prepaid $5.0 million of the senior
subordinated notes and the remaining $5.0 million may be required to be prepaid
in the near term in the event the Company does not meet the minimum "Asset
Value" requirement, as defined, at the end of any quarter. Subsequent to
year-end, World Airways loaned the Company $2.0 million, which was used by
WorldCorp to pay debt obligations. In order to meet its debt service obligations
and its general and administrative costs, the Company must use its cash and
either sell shares of World Airways or InteliData, or obtain additional
financing, refinance existing borrowings or obtain concessions from its lenders.
WorldCorp has pledged all of its shares of World Airways and InteliData as
collateral for certain borrowings (see Item 1 - Business).

Although management intends to attempt to refinance certain of its borrowings or
arrange for concessions from its lenders, there can be no assurance that these
efforts will be successful. As a result, substantial doubt exists regarding the
Company's ability to meet its obligations in 1998 and to continue as a going
concern.

For a separate discussion of factors affecting World Airways' and Intelidata's
liquidity and capital resources, refer to Exhibits 10.58 and 10.59,
respectively.

Cash Flows from Operating Activities

Operating activities provided $24.0 million in cash for the year ended December
31, 1997 compared to using $25.4 million of cash in the comparable period in
1996. This increase in cash in 1997 resulted primarily from World Airways
providing cash from operating activities for the period January 1, 1997, through
September 17, 1997, due to an increase in net earnings and a decrease in
accounts receivable partially offset by a decrease in accounts payable.

Cash Flows from Investing Activities

Investing activities used $61.3 million in cash for the year ended December 31,
1997 compared to using $26.0 million in the comparable period in 1996. This
increase in cash used resulted primarily from the reduction of the Company's
consolidated cash as a result of the Company's change to the equity method of
accounting for its investment in World Airways. This increase was partially
offset by a reduction in World Airways' purchases of rotable spare parts during
1997.

Cash Flows from Financing Activities

Financing activities provided $29.5 million in cash for the year ended December
31, 1997 compared to using $10.6 million in the comparable period in 1996. In
1997, the Company received $23.7 million, net from the sale of 3,227,000 shares
of its World Airways' common stock. In addition, the Company increased its net
borrowings by $10.6 million during 1997. In 1996, the Company and World Airways
purchased 1,337,500 and 718,000 shares respectively, of their common stock in
the fourth quarter of 1996.

Financing Developments

On August 29, 1996, the Company entered into a bridge loan (the "Bridge Loan")
with a financial institution pursuant to which the Company borrowed $25.0
million and subsequently retired its existing 13 7/8% Subordinated Notes of the
same amount. The Bridge Loan was due September 29, 1997 and earned interest of
LIBOR plus 2.5%, payable monthly. On September 30, 1996, the Company entered
into a purchase agreement (the "Purchase Agreement") which contained a series of
Senior Subordinated Notes ("Notes") totaling $10.0 million which was used to
retire $10.0 million of the Bridge Loan in October 1996. The remaining balance
on the Bridge Loan of $15.0 million was repaid in September 1997.

As  described  above,  subsequent  to  year-end,  the Company  prepaid $5.0
million of the Notes  pursuant to  mandatory  prepayment  obligations  under the
Indenture governing the Notes (the "Indenture").  The Company may be required to
prepay the remaining $5 million  outstanding under the Notes if it does not meet
the minimum "Asset Value"  requirement,  as defined,  at the end of any quarter.
There can be no assurance  that the Company will  satisfy  such  requirement  in
1998.

<PAGE>
Subsequent to year-end, the World Airways loaned the Company $2.0 million, which
was used by Company to pay debt obligations. The loan is collateralized by one
million of World Airways' stock owned by the Company and bears interest at prime
plus 2.5% and is due April 28, 1998.

OTHER MATTERS

Legal and  Administrative  Proceedings  

World Airways and WorldCorp (the "World Defendants") were defendants in
litigation brought by the Committee of Unsecured Creditors of Washington
Bancorporation in August 1992, captioned Washington Bancorporation v. Boster et.
al., Adv. Proc. 92-0133 (Bankr. D.D.C.) (the "Boster Litigation"). Under a
settlement agreement, the plaintiff agreed to dismiss with prejudice the Boster
Litigation against all defendants, including the World Defendants, with each
party to bear its own costs. Under the settlement agreement, the World
Defendants do not have any further liability in the Boster Litigation.

World Airways has periodically received correspondence from the FAA with 
respect to minor noncompliance matters.  In November 1996, as the FAA has 
increased its scrutiny of U.S. airlines, World Airways was assessed a 
preliminary fine of $810,000 in connection with certain security violations by
ground handling crews contracted by World Airways for services at foreign 
airport locations. Under 49 U.S.C., Section 46301, any violation of
pertinent provisions of 49 U.S.C. Subsection 40101 or related rules is subject
to a civil penalty for each violation. Upon review of the evidence or facts and
circumstances relating to the violation, the statute allows for the compromise
of proposed civil penalties. The penalties were proposed by the FAA in
connection with recent inspections at foreign airport facilities and relate
primarily to ground handling services provided by World Airways' customers in
connection with their operations; specifically, the inspection procedures of its
aircraft, passengers and associated cargo. In each of these instances, World
Airways was in compliance with international regulations, but not the more
stringent U.S. requirements, despite the fact that the flights in question did
not originate or terminate in the United States. World Airways has taken steps
to comply with the U.S. requirements. In September 1997, the Company entered
into a consent order and settlement agreement with the FAA in connection with
the above-mentioned alleged violations. Pursuant to this agreement, the Company
is liable for the sum of $610,000, of which $405,000 was paid in September. The
remaining $205,000 was suspended and will be forgiven if the Company complies
with the provisions of the settlement agreement, including not incurring any
security violations during the one year period following the execution of the
settlement agreement. While World Airways believes it is currently in compliance
in all material respects with all appropriate standards and has all required
licenses and authorities, any material non-compliance by World Airways therewith
or the revocation or suspension of licenses or authorities could have a material
adverse effect on the financial condition or results of operations of World
Airways.

In connection with the discontinuance of World Airways' scheduled service
operations, it is subject to claims by various third parties and may be subject
to further claims in the future. One claim has been filed in connection with its
discontinuance of scheduled service to South Africa, seeking approximately $37.8
million in compensatory and punitive damages, has been settled by the parties
for approximately $0.7 million. Also, a claim has been filed in Germany against
World Airways by a tour operator seeking approximately $3.5 million in
compensation related to the cancellation of a summer program in 1996. World
Airways believes it has substantial defenses to this action, although no
assurance can be given of the eventual outcome of this litigation.

In addition, the Company is party to routine litigation and administrative
proceedings incidental to its business, none of which is believed by the Company
to be likely to have a material adverse effect on the financial condition of the
Company.

Employees

The Company employs four individuals. The majority of its administrative
requirements are performed by employees of World Airways. The Company is charged
an appropriate monthly fee for these services.

<PAGE>
World Airways' cockpit crew members, who are represented by the International
Brotherhood of Teamsters (the "Teamsters"), are subject to a four-year
collective bargaining agreement that will become amendable in July 1998.
Approximately 37% of World Airways' employees are covered under the collective
bargaining agreement. World Airways expects to begin negotiations in April 1998
and cannot predict the outcome of the negotiations or their possible impact on
World Airways' financial condition and results of operations.

World Airways' flight attendants, who are also represented by the Teamsters, are
subject to a four-year collective bargaining agreement that will expire in
August 2000. World Airways' flight attendants argued the "scope clause" of the
collective bargaining agreement had been violated by World Airways and
challenged the use of foreign flight attendant crews on World Airways' flights
for Malaysian Airlines and Garuda Indonesia which has historically been World
Airways' operating procedure. World Airways is contractually obligated to permit
its Southeast Asian customers to deploy their own flight attendants. While the
arbitrator in this matter denied in 1997 the union's request for back pay to
affected flight attendants for flying relating to the 1994 Hadj, the arbitrator
concluded that World Airways' contract with its flight attendants requires World
Airways to first actively seek profitable business opportunities that require
using World Airways' flight attendants, before World Airways may accept wet
lease business opportunities that use the flight attendants of World Airways'
customers. Subsequently, in 1997, the flight attendants challenged and filed
"scope clause" grievances with respect to four separate wet-lease contracts.
World Airways and the Teamsters are presently in discussions regarding these
grievances. At this time, however, World Airways can give no assurance that
these discussions will be successful and the grievances will not be submitted to
formal arbitration. World Airways can provide no assurances as to how the
resolution of this matter will affect World Airways' financial condition and
results of operations.

World Airways' aircraft dispatchers are represented by the Transport Workers
Union (the "TWU"). This contract became amendable on June 30, 1993. In May 1995,
the parties reached agreement with respect to a new four-year contract. This
contract was ratified in February 1996. Fewer than 12 World Airways employees
are covered by this collective bargaining agreement.

World Airways is unable to predict whether any of its employees not currently
represented by a labor union will elect to be represented by a labor union or
collective bargaining unit. The election by such employees of representation in
such an organization could result in employee compensation and working condition
demands that could have a material adverse effect on the financial results of
World Airways.

Dividend Policy

WorldCorp  has never paid any  dividends and does not plan to do so for the
foreseeable  future.  The  Indenture  governing  the  Notes,  and the  Indenture
governing  the  Company's  Debentures,  in certain  circumstances,  restrict the
Company from paying dividends or making  distributions on its common stock. As a
holding company, all of WorldCorp's funds are generated through its positions in
World  Airways and  InteliData,  neither of whom intend to pay  dividends in the
foreseeable  future.  In addition,  World  Airways'  ability to pay dividends is
currently  restricted  under  a  borrowing   arrangement.   Also,  see  Note  23
"Subsequent Event" of the Company's "Notes to Consolidated Financial Statements"
in Item 8.

Income Taxes

As of December 31, 1997, the Company has net operating loss carryforwards
("NOLs") for federal income tax purposes of approximately $63.0 million. There
can be no assurance that the operations of the Company will generate taxable
income in future years so as to allow the Company to realize a tax benefit from
its net operating loss carryforwards ("NOLs"). The NOLs are subject to
examination by the IRS and thus, are subject to adjustment or disallowance
resulting from any such IRS examination. In addition, an ownership change of the
Company, as defined in the Internal Revenue Code, may occur in the future and
may result in the imposition of a lower annual limitation on the Company's NOLs
existing at the time of any such ownership change. 

<PAGE>
As a result of certain  transactions  with MHS in 1994, World Airways is no
longer consolidated with the Company for income tax purposes. As of December 31,
1997,  World Airways had NOLs for federal  income tax purposes of $92.2 million,
which is only  available  to  offset  future  federal  taxable  income  of World
Airways.  Of this  amount,  $27.8  million is subject to a $6.9  million  annual
limitation resulting from an ownership change,  pursuant to the Internal Revenue
Code  of  1986,  as  amended,  which  occurred  in  1991.  In  addition,  future
transactions  in the  stock of the  Company,  World  Airways  or World  Airways'
stockholders could cause an additional ownership change at World Airways,  which
could result in a substantial  reduction in the annual  limitation in the use of
World Airways' NOLs and the loss of a substantial  portion of the NOLs available
to World Airways.

Year 2000

The Company has begun a comprehensive review of its computer system to identify
the systems that could be affected by the "Year 2000" issue and is developing an
implementation  plan to  resolve  the issue.  The Year 2000  problem is the
result of computer  programs  being written using two digits rather than four to
define  the  applicable   year.   Any  of  the  Company's   programs  that  have
time-sensitive  software may recognize a date using "00" as the year 1900 rather
than  the  year  2000.   This  could  result  in  a  major  system   failure  or
miscalculations.  The Company  presently  believes that, with  modifications  to
existing software and converting to new software, the Year 2000 problem will not
pose significant  operational  problems for the Company's computer systems as so
modified and converted.  However,  if such  modifications and conversion are not
completed  timely,  the Year 2000 problem may have a material impact on the
operations  of the  Company.  The  Company  has not yet  estimated  the  cost of
modifying its computer systems.

Effects Of New Accounting Standards

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 (FAS No. 130), "Reporting Comprehensive
Income". FAS No. 130 established standards for the reporting and display of
comprehensive income and its components in the financial statements. The Company
is required to adopt the provisions of this Statement for fiscal years beginning
after December 15, 1997. Earlier application is permitted, however, upon
adoption the Company will be required to reclassify previously reported annual
and interim financial statements. The Company believes that the disclosure of
comprehensive income in accordance with the provisions of FAS No. 130 will not
materially impact the manner of presentation of its financial statements as
currently and previously reported. 

In June 1997, the Financial  Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 (FAS No. 131), "Disclosure about Segments
of an Enterprise and Related  Information".  FAS No. 131 requires the Company to
present certain  information about operating  segments and related  information,
including geographic and major customer data, in its annual financial statements
and in  condensed  financial  statements  for  interim  periods.  The Company is
required to adopt the  provisions of this  Statement for fiscal years  beginning
after  December  15, 1997.  Earlier  application  is  permitted,  however,  upon
adoption  the Company  will be required to restate  previously  reported  annual
segment and related  information  in accordance  with the  provisions of FAS No.
131. The Company has not  completed  its analysis of the impact on the financial
statements that will be caused by the adoption of this Statement.

Inflation

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

<PAGE>



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                        WORLDCORP, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                     ASSETS
                                 (in thousands)



                                                              December 31,
                                                              ------------
                                                         1997             1996
                                                         ----             ----
CURRENT ASSETS

Cash and cash equivalents, including restricted
  cash of $447 at December 31, 1996 (Note 21)      $     4,659      $    12,462

Restricted cash and short-term investments
  (Notes 8, 12 and 21)                                      --            2,047

Trade accounts receivable, less allowance for
  doubtful accounts of $413 at December 31, 1996
  (Note 12)                                                 --           15,460

Other receivables                                          214            4,667

Due from affiliate, net (Note 6)                            --            5,548

Prepaid expenses and other current assets
  (Notes 9 and 20)                                          57            8,314

Assets held for sale (Notes 10 and 13)                      --              500
                                                         -----           ------

         Total current assets                            4,930           48,998
                                                         -----           ------

ASSETS HELD FOR SALE (Notes 10 and 13)                      --            3,425

EQUIPMENT AND PROPERTY (Notes 10 and 13)
Flight and other equipment                               3,114           75,191
Equipment under capital leases                             173           11,639
                                                         -----           ------
                                                         3,287           86,830
Less accumulated depreciation and amortization           3,026           21,357
                                                         -----           ------

Net equipment and property                                 261           65,473
                                                         -----           ------

LONG-TERM OPERATING DEPOSITS (Note 13)                      --           15,951

INVESTMENT IN AFFILIATES (Notes 4 and 5)                 8,344           36,299

OTHER ASSETS AND DEFERRED CHARGES, NET
  (Notes 5, 6, 9 and 20)                                 2,454            5,145

INTANGIBLE ASSETS, NET (Note 11)                           843            1,072
                                                        ------          -------

TOTAL ASSETS                                       $    16,832      $   176,363
                                                        ======          =======

                                                                    (Continued)


<PAGE>



                        WORLDCORP, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                  (continued)
                  LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
                        (in thousands except share data)

                                                             December 31,
                                                             ------------
                                                         1997              1996
                                                         ----              ----
CURRENT LIABILITIES
Notes payable (Note 12)                               $     --      $    26,386
Current maturities of long-term obligations
  (Note 13)                                              9,626            9,990
Accounts payable                                           187           23,939
Due to affiliate, net (Notes 4 and 6)                      259            1,767
Net liabilities of discontinued operations (Note 3)         --            1,834
Unearned revenue                                            --            3,046
Accrued maintenance in excess of reserves paid              --            9,770
Accrued salaries and wages (Note 20)                       610           10,344
Accrued interest                                           818              981
Accrued taxes                                               99            1,249
                                                        ------           ------
Total current liabilities                               11,599           89,306
                                                        ------          -------

LONG-TERM OBLIGATIONS, NET (Note 13)                    65,000          104,804
                                                        ------          -------

OTHER LIABILITIES
Deferred gain from sale leaseback transactions,
  net of accumulated amortization of $19,099 as of
  December 31, 1996                                         --            6,252
Accrued postretirement benefits (Note 16)                   --            2,545
Accrued maintenance in excess of reserves paid              --            6,867
Other                                                      163            3,378
                                                        ------          -------
Total other liabilities                                    163           19,042
                                                        ------          -------

TOTAL LIABILITIES                                       76,762          213,152
                                                        ------          -------

MINORITY INTEREST (Notes 4 and 6)                           --            3,548

COMMON STOCKHOLDERS' DEFICIT (Notes 5, 12, 
  13, 14, 15, 16 and 20) 
Common stock, $1 par value, (60,000,000 
  shares authorized, 16,642,511 shares issued 
  and 13,883,243 shares outstanding at 
  December 31, 1997 and 16,420,350 shares issued 
  and 15,020,265 shares outstanding at 
  December 31, 1996)                                    16,643           16,617
Additional paid-in capital                              43,966           43,824
Deferred compensation                                     (25)            (591)
Unrealized gain on investments of affilates                125               --
Accumulated deficit                                  (110,494)         (91,366)
ESOP guaranteed bank loan (Notes 13 and 16)                 --            (805)
Treasury stock, at cost (2,759,266 and 1,596,766
  shares in 1997 and 1996, respectively)
  (Notes 1, 4 and 16)                                 (10,145)          (8,016)
                                                      --------         --------
TOTAL COMMON STOCKHOLDERS' DEFICIT                    (59,930)         (40,337)
                                                      --------         --------

COMMITMENTS AND CONTINGENCIES (Notes 2, 3, 4, 6, 
  12, 13, 15, 16, 18, 19 and 21)

TOTAL LIABILITIES AND COMMON STOCKHOLDERS'
DEFICIT                                            $    16,832      $   176,363
                                                     =========          =======

See accompanying Notes to Consolidated Financial Statements


<PAGE>
                        WORLDCORP, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                        (in thousands except share data)

                                           Years ended December 31,
                                           ------------------------
                                     1997              1996             1995
                                     ----              ----             ----
OPERATING REVENUES (Note 19)
World Airways                     $ 216,092        $ 309,587          $ 242,386
InteliData                               --            4,085              4,186
                                    -------          -------            -------
Total operating revenues            216,092          313,672            246,572
                                    -------          -------            -------

OPERATING EXPENSES
World Airways:
Flight                               47,892           71,121             65,223
Maintenance (Notes 6, 13 and 21)     44,698           60,462             41,843
Aircraft costs (Notes 6 and 13)      65,046           85,227             67,331
Fuel                                 10,660           19,255             16,704
Flight operations subcontracted
  to other carriers                   2,367           12,932              9,096
Promotions, sales and commissions     6,919            6,236              1,995
Depreciation and amortization         5,795            8,032              6,056
General and administrative           17,818           24,677             18,240
                                     ------           ------             ------
Total operating expenses -
World Airways                       201,195          287,942            226,488
                                    -------          -------            -------

InteliData:
Total operating expenses -
InteliData                               --           19,190              9,457
                                    -------           ------              -----

WorldCorp:
General and administrative            2,198            3,803              4,334
                                    -------            -----              -----
Total operating expenses            203,393          310,935            240,279
                                    -------          -------            -------

OPERATING INCOME                     12,699            2,737              6,293
                                     ------            -----              -----

OTHER INCOME (EXPENSE)
Interest expense (Notes 12 and 13)  (9,575)          (11,680)          (12,586)
Interest income                         931            3,389              2,909
Equity in earnings (loss) of
  affiliates, net (Notes 4 and 5)  (26,975)          (23,273)                --
Gain (loss) on issuances
  (purchases) of equity by
  affiliates, net (Notes 4 and 5)   (8,726)           38,886             43,676
Gain on sales of subsidiaries'
  stock (Notes 4 and 5)              17,615              --              23,717
Other, net                               31           (1,550)             1,676
                                    -------           ------              -----
Total other income (expense), net  (26,699)            5,772             59,392
                                   -------             -----             ------

EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
AND MINORITY INTEREST              (14,000)            8,509             65,685

INCOME TAX EXPENSE (Note 18)          (350)             (504)             (661)

MINORITY INTEREST                   (4,778)             (568)             (866)
                                    ------              ----              ----

EARNINGS (LOSS) FROM CONTINUING
OPERATIONS                         (19,128)            7,437             64,158

DISCONTINUED OPERATIONS (Note 3)
Loss from discontinued operations
  (less applicable income tax 
   benefit of $83 in 1996)              --           (11,720)           (5,250)
Loss on disposal (less applicable
  income tax benefit of $562 in
  1996)                                 --           (20,655)                --
                                    ------           -------           --------

LOSS FROM DISCONTINUED OPERATIONS
BEFORE MINORITY INTEREST                --           (32,375)           (5,250)

MINORITY INTEREST                       --            13,184              1,300
                                   -------            ------              -----

LOSS FROM DISCONTINUED OPERATIONS       --           (19,191)           (3,950)
                                   -------            -------            ------

NET EARNINGS (LOSS)               $(19,128)        $ (11,754)         $  60,208
                                  ========         =========          =========
                                                                   (Continued)


<PAGE>



                        WORLDCORP, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Continued)




                                            Years ended December 31,
                                            ------------------------
                                      1997            1996             1995
                                      ----            ----             ----

BASIC EARNINGS (LOSS) PER
SHARE (Note 17)

Continuing operations           $    (1.29)     $     0.46       $    4.01
Discontinued operations                 --          (1.19)          (0.24)
                                     -----           -----           -----
Net earnings (loss)             $    (1.29)     $   (0.73)      $     3.77
                                ==========      =========       ==========

WEIGHTED AVERAGE
SHARES OUTSTANDING               14,804,356      16,153,227      15,988,365
                                 ==========      ==========      ==========

DILUTED EARNINGS (LOSS) PER
SHARE (Note 17)

Continuing operations           $         *     $         *      $     2.99
Discontinued operations                   *               *          (0.17)
                                 ----------      ----------           -----
Net earnings (loss)             $         *     $         *      $     2.82
                                ===========     ===========       ==========

DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING                        *               *      22,994,866
                                ===========     ===========      ==========


* Amounts are anti-dilutive.



See accompanying Notes to Consolidated Financial Statements


<PAGE>

                        WORLDCORP, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CHANGES
                        IN COMMON STOCKHOLDERS' DEFICIT
                 Years Ended December 31, 1997, 1996, and 1995
                        (in thousands except share data)
<TABLE>
<CAPTION>
                                                                                              Employee
                                                                   Unrealized                Stock Owner-                Total
                                          Additional              Gain/Loss on                ship Plan   Treasury       Common
                                 Common    Paid-in    Deferred    Investments of Accumulated  Guaranteed   Stock,     Stockholders'
                                 Stock     Capital  Compensation   Affiliates     Deficit     Bank Loan    at cost      Deficit
                                 -----     -------  ------------   ----------     -------     ---------    -------      -------

<S>                            <C>         <C>      <C>        <C>               <C>         <C>        <C>            <C>
BALANCE AT
DECEMBER 31, 1994              $  15,492   $37,563  $ (1,102)  $       --        $(139,806)  $      --  $    (340)     $(88,193)

Exercise of 559,568 options
  and warrants (Notes 14 and 15)     560     2,503         --          --               --          --          --         3,063
Employee Stock Ownership Plan
  guaranteed bank loan                --        --         --          --               --     (1,370)          --       (1,370)
Grant of stock options                --       615      (615)          --               --          --          --            --
Amortization of deferred
  compensation                        --     (260)      1,164          --               --          --          --           904
Issuance of stock (Note 5)           302     1,789         --          --               --          --          --         2,091
Net earnings                          --        --         --          --           60,208          --          --        60,208
                                  ------    ------     ------      ------         --------      ------      ------        ------

BALANCE AT
DECEMBER 31, 1995              $  16,354   $42,210   $  (553)   $      --       $ (79,598)   $ (1,370)  $    (340)     $(23,297)

Exercise of 254,456 options
  and warrants                       254     1,245         --          --               --         --           --         1,499
Employee Stock Ownership Plan
  guaranteed bank loan (Note 16)      --        --         --          --               --        565           --           565
Grant of stock options
  and warrants (Notes 13 and 14)       9       594      (200)          --               --        --            --           403
Amortization of deferred
  compensation                        --     (225)        162          --               --        --            --          (63)
Purchase of common stock, at
  cost (Note 1)                       --        --         --          --               --        --       (7,676)       (7,676)
Other                                 --        --         --          --             (14)        --            --          (14)
Net loss                              --        --         --          --         (11,754)        --            --      (11,754)
                                  ------    ------     ------      ------          -------    ------        ------      -------

BALANCE AT
DECEMBER 31, 1996              $  16,617   $43,824   $  (591)  $       --        $(91,366)   $ (805)      $ (8,016)    $(40,337)

Issuance of stock (Note 20)           26        55         --          --              --        --             --            81

World Airways Employee Stock
  Ownership Plan guaranteed
  bank loan (Note 16)                 --        --         --          --              --       805             --           805

Amortization of deferred
  compensation                        --        --         73          --              --        --             --            73

Cancellation of options
  previously granted                  --     (676)        493          --              --        --             --         (183)

Grant of warrants (Note 13)           --       231         --          --              --        --             --           231

Purchase of common stock,
  at cost (Note 1)                    --        --         --          --              --        --        (2,129)       (2,129)

Unrealized gain/loss on
  investments of affiliates           --        --         --         125              --        --            --            125

Cancellation of accrued stock
  options by affiliate                --       532         --          --              --        --            --            532

Net loss                              --        --         --          --        (19,128)        --            --       (19,128)
                                     ------    ------     ------      ------      -------     -----       -------        -------

BALANCE AT
DECEMBER 31, 1997              $  16,643   $43,966   $   (25)  $      125      $(110,494)        --      $(10,145)      $(59,930)
                               =========   =======   =======   ==========      =========      =====       ========       ========
</TABLE>

See accompanying Notes to Consolidated Financial Statements


<PAGE>


                        WORLDCORP, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

                                                 Years ended December 31,
                                                 ------------------------
                                            1997           1996           1995
                                            ----           ----           ----
CASH AND CASH EQUIVALENTS AT BEGINNING
  OF YEAR (Note 7)                        $ 12,462     $  74,443     $    8,160
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)                       (19,128)      (11,754)         60,208
Adjustments to reconcile net earnings
  (loss) to cash provided (used) by 
  operating activities:
     Depreciation and amortization           6,251        10,361          8,043
     Deferred gain recognition               (704)       (1,058)        (1,063)
     Deferred aircraft rent payments, net       --            --            153
     Loss (gain) on purchases (issuances)
       of equity by affilates, net           8,726      (38,886)       (43,676)
     Gain on sales of subsidiaries' stock (17,615)            --       (23,717)
     Minority interest in earnings (loss)
       of subsidiaries                       4,778      (12,616)          (434)
     Equity in (earnings) loss of 
       affiliates, net                      26,975        23,273             --
     Equity loss in investee of subsidiary      --         1,641             --
     Gain on sale of equipment and property  (299)          (32)          (462)
     Writedown of assets held for sale          --           400             --
     Deferred compensation expense             566           162            904
     Loss on disposal of discontinued
       operations                               --         1,734             --
     Other                                     468           870            570
     Changes in certain assets and
          liabilities, net of effects of
          non-cash transactions:
        Decrease (increase) in accounts
          receivable                         8,078      (10,607)       (11,013)
        Decrease (increase) in restricted
          short-term investments               941       (2,171)        (3,550)
        Decrease (increase) in deposits,
          prepaid expenses and other assets  3,654           399        (3,528)
        (Decrease) increase in accounts
          payable, accrued expenses and other 
          liabilities                        (391)        22,195         11,500
        Increase (decrease) in unearned
          revenue                            1,693       (7,206)          4,806
        (Decrease) increase in air traffic
          liability                             --       (2,073)          2,332
                                            ------       ------           -----
Net cash provided (used) by operating
  activities                                23,993      (25,368)          1,073
                                            ------      -------           -----
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to equipment and property        (4,166)      (12,620)       (24,286)
Proceeds from disposal of equipment
  and property                                 946           735          1,768
Purchase of investments                         --       (1,345)          (219)
Cash of InteliData at date of Merger            --      (12,800)             --
Cash of World Airways at Purchase         (58,050)            --             --
                                          -------       --------       --------
Net cash used by investing activities     (61,270)      (26,030)       (22,737)
                                          -------       -------         -------
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in line of credit
  borrowing arrangement, net              (12,226)         5,031        (1,051)
Issuance of debt                            50,000        47,144         25,278
Repayment of debt                         (27,135)      (51,172)       (33,187)
Proceeds from stock transactions                --         1,499          4,353
Proceeds from sales of equity by
  subsidiaries                                  --         2,177         64,453
Proceeds from sales of subsidiaries'
  stock, net                                23,687            --         28,986
Purchase of common stock                   (2,129)       (7,676)             --
Purchase of common stock of subsidiary       (476)       (7,361)             --
Debt issuance costs                        (2,247)         (225)             --
Payment of dividends by subsidiary              --            --          (885)
                                           -------      --------          ----
Net cash (used) provided by financing
  activities                                29,474      (10,583)         87,947
                                            ------      -------          ------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS                       (7,803)      (61,981)         66,283
                                           ------       -------          ------
CASH AND CASH EQUIVALENTS AT END
OF YEAR (Note 7)                        $   4,659     $   12,462     $   74,443
                                        =========     ==========     ==========

See accompanying Notes to Consolidated Financial Statements


<PAGE>



WORLDCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

WorldCorp, Inc. ("WorldCorp" or "the Company") was organized in March 1987
to serve as the holding company for World Airways, Inc., ("World Airways").
WorldCorp owns positions in companies that operate in two distinct business
areas. World Airways provides worldwide passenger and cargo air transportation
to major international airlines, the U.S. Air Force, and international tour
operators, with a fleet of MD-11 and DC10-30 aircraft. InteliData Technologies
Corporation ("InteliData") concentrates on two markets: telecommunications and
electronic commerce.

WorldCorp has an ownership interest in World Airways, a leading provider of
long range passenger and cargo air transportation, serving customers in three
distinct markets: major international air carriers; the U.S. Government and
international tour operators in leisure passenger markets. World Airways'
business relies heavily on its contracts with Malaysian Airline System Berhad
("Malaysian Airlines"), P.T. Garuda Indonesia ("Garuda") and the U.S. Air Force
(see Note 19).

On August 26, 1997, World Airways completed a private offering, issuing
$50.0 million of 8% convertible senior subordinated debentures (the
"Debentures") due in 2004 (the "Offering"). The Debentures were subsequently
registered with the Securities and Exchange Commission. The Debentures are
unsecured obligations, convertible into shares of World Airways common stock at
$8.90 per share, subject to adjustment in certain events, and subordinated to
all present and future senior indebtedness of World Airways. In the event of a
change in control of World Airways, as defined, the holders of the Debentures
could require World Airways to repurchase the outstanding Debentures. The
Debentures are not redeemable by World Airways prior to August 26, 2000. In
connection with the Offering, and pursuant to an agreement entered into on
August 20, 1997,World Airways purchased 3,227,000 shares of its common stock
from WorldCorp on September 18, 1997, for approximately $24.7 million (the
"Purchase"). Therefore, at December 31, 1997, WorldCorp owned approximately
46.3% of World Airways. In accordance with a shareholders agreement, dated as of
February 3, 1994, as amended, among WorldCorp, MHS Berhad ("MHS") and World
Airways, if WorldCorp were to dispose of its holdings in World Airways with the
result that WorldCorp's ownership interest in World Airways falls below 51% of
the outstanding shares of common stock, then MHS may either sell its shares to a
third party or require WorldCorp to sell a pro rata number of shares held by MHS
to the party purchasing WorldCorp's shares. Therefore, as a result of the
Purchase, MHS had the right to sell, and accordingly sold, 773,000 shares of its
World Airways common stock to World Airways (the "MHS Purchase") for
approximately $5.9 million, effective January 23, 1998. Effective January 23,
1998, WorldCorp owns approximately 51.2% of World Airways.

WorldCorp also has an ownership interest in InteliData, a company which is
engaged in providing products and services for two primary markets:
telecommunications and electronic commerce. InteliData designs, develops and
markets telecommunications products including Caller ID adjuncts and integrated
and smart telephones and markets small business systems to retailers and
distributors. InteliData also develops products and services for financial
institutions to assist in home banking and electronic bill payment initiatives.
During the fourth quarter of 1997, InteliData announced its intention to sell
the interactive services division which was established to provide interactive
applications for use on smart telephones and other small screen devices, such as
alpha-numeric pagers, Personal Communications Systems ("PCS") devices and
personal digital assistants ("PDAs").

During the third quarter of 1996, the Company announced its intention to
purchase up to 2.5 million shares of its publicly-traded common stock pursuant
to open market transactions. During the fourth quarter of 1996, the Company
purchased 1,337,500 shares of its common stock for an aggregate cost of $7.7
million. During 1997, the Company purchased an additional 1,162,500 shares of
its common stock for an aggregate cost of $2.1 million. WorldCorp does not
intend to purchase any additional shares at this time.

<PAGE>


Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
WorldCorp; its wholly owned subsidiaries WorldCorp Investments, Inc. and World
Airways Cargo, Inc., its interest in World Airways through September 18, 1997
and its interest in InteliData through November 7, 1996. During 1997, two other
wholly owned subsidiaries, World Flight Crew Services, Inc. and World Games,
Inc., were dissolved. All significant intercompany balances have been
eliminated.

On November 7, 1996, US Order and Colonial Data Technologies Corp.
("Colonial Data") merged with and into InteliData ("Merger"). Effective with
this Merger, InteliData became the successor corporation to US Order. As a
result of the Merger, WorldCorp's ownership percentage in InteliData was reduced
to 28.9% and, as such, beginning November 7, 1996, WorldCorp reports its share
of InteliData's net assets and results of operations under the equity method of
accounting.

On September 18, 1997, World Airways purchased 3,227,000 shares of its
common stock from the Company for approximately $24.7 million in cash. As a
result of the Purchase, the Company's ownership percentage in World Airways was
reduced to 46.3% and, as such, beginning September 18, 1997, WorldCorp reports
its share of World Airways' net assets and results of operations under the
equity method of accounting. Effective January 23, 1998, MHS sold 773,000 shares
of its World Airways common stock to World Airways (see Note 6) for
approximately $5.9 million. Therefore, effective January 23, 1998, WorldCorp
owns approximately 51.2% of World Airways.

Use of Estimates

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

Cash Equivalents

For purposes of the Statements of Cash Flows, the Company considers all
highly liquid investments purchased with an original maturity of ninety days or
less to be cash equivalents.

Revenue Recognition

World Airways recognizes revenue as the services are provided.

Earnings (Loss) Per Common Share

Statement of Financial Accounting Standards No. 128, Earnings Per Share,
("FAS 128") became effective for the year ended December 31, 1997, and required
restatement of previously reported earnings per share data. FAS 128 provides for
the calculation of basic and diluted earnings per share.

Basic earnings (loss) per common shares is computed by dividing net
earnings (loss) by the weighted average number of common shares outstanding
during the period. Diluted earnings (loss) per common share also includes common
equivalent shares outstanding during the period. The Company's common equivalent
shares consist of stock options, convertible securities and warrants.

Equipment and Property

Equipment and property are stated at cost or, if acquired under capital
leases, at the present value of the minimum lease payments.

Provisions for  depreciation and amortization of equipment and property are
computed over estimated  useful lives or the term of the lease, if shorter,  for
capital leases, by the straight-line  method, with estimated salvage values of 0
- 15%. Estimated useful lives of equipment and property are as follows:

DC10 and MD-11 flight equipment                 15-16 years
Other equipment and property                     5-10 years

<PAGE>
Deferred gains realized in connection with sale-leasebacks of aircraft and
equipment are amortized over the periods of the respective leases.

Aircraft Maintenance

Major airframe maintenance and engine overhauls are expensed using the
accrual method of accounting. The accrual method provides for estimating the
cost of the initial overhaul and accruing the cost, based on an hourly rate, to
the overhaul. At that time, the actual cost of overhaul is charged to the
accrual, with any deficiency or excess charged or credited to expense. The cost
of the next overhaul is then estimated, based on the new rate, and accrued to
that overhaul, at which time the process is repeated. Certain of the World
Airways' leases require it to make monthly payments to the lessor for estimated
maintenance costs to be incurred. Modifications performed in response to
Airworthiness Directives issued by the Federal Aviation Administration are
capitalized at cost. Routine maintenance and general repairs are expensed as
incurred.

Assets Held for Sale

Assets held for sale are recorded at the lower of cost or estimated net
realizable value. Net realizable value is based on the estimated fair value
(measured by using a current selling price for similar assets) less estimated
selling costs.

Impairment of Long-lived Assets

The Company reviews its long-lived assets for impairment whenever events or
circumstances indicate that the carrying amount of an asset may not be
recoverable. To the extent that the future undiscounted net cash flows expected
to be generated from an asset are less than the carrying amount of the asset, an
impairment loss will be recognized based on the difference between the asset's
carrying amount and its estimated fair market value.

Intangible Assets

The excess of cost over the estimated fair value of the Company's share of
its affiliate's net assets at the date of acquisition is being amortized over
approximately 6 years, using the straight-line method (see Note 11).

Other Assets and Deferred Charges

Contract enhancements, pre-operating costs and debt issuance costs are
amortized on a straight line basis over certain estimated periods (see Notes 6
and 9).

Income Taxes

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

The results of World Airways' and InteliData's operations are not included
in the Company's consolidated income tax returns.

Postretirement Benefits Other Than Pensions

World Airways' cockpit crewmembers and eligible dependents are covered
under postretirement health care benefits to age 65. World Airways accounts for
the benefit costs in accordance with Statement of Financial Accounting Standards
No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions
("FAS 106"). World Airways funds the benefit costs on a pay-as-you-go (cash)
basis.

Transactions in Subsidiaries'/Affiliates' Stock

Gains or losses realized in connection with the issuance, sale or purchase
of stock by a subsidiary/affiliate are recognized in income by the Company (see
Notes 4 and 5).

<PAGE>

Accounting for Stock-Based Compensation

Prior to January 1, 1996, the Company accounted for its stock option plan
in accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations.
As such, compensation expense would be recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. On
January 1, 1996, the Company adopted SFAS No. 123, Accounting for Stock-Based
Compensation ("SFAS No. 123") , which permits entities to recognize as expense
over the vesting period the fair value of all stock-based awards on the date of
grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS No. 123 had been
applied. The Company has elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123
(see Note 15). In addition, in accordance with SFAS 123, the Company applies
fair value as the measurement basis for transactions in which equity instruments
are issued to nonemployees (as defined) (see Note 14).

2.    OPERATING ENVIRONMENT

The Company is a highly leveraged holding company. As a holding company,
all of WorldCorp's funds are generated through its positions in World Airways
and InteliData, which have not paid dividends on common stock since 1992. At
December 31, 1997, World Airways has a working capital deficit of $1.8 million
and has substantial debt and lease commitments. At December 31, 1997, InteliData
has working capital of $32.4 million, with no long-term debt. World Airways'
ability to pay dividends is currently restricted under certain borrowing
arrangements. Additionally, World Airways and InteliData currently intend to
retain their future earnings, if any, to fund the growth and development of
their business and, therefore, do not anticipate paying any cash dividends in
the foreseeable future.

As of December 31, 1997, WorldCorp has $4.7 million in cash and cash
equivalents, and has parent company repayment obligations, including principal
and interest, of approximately $15.6 million for 1998. Included in this amount
is $10.0 million of senior subordinated notes outstanding. Subsequent to
year-end, the Company prepaid $5.0 million of the senior subordinated notes and
the remaining $5.0 million may be required to be prepaid in the near term in the
event the Company does not meet the minimum "Asset Value" requirement, as
defined, at the end of any quarter (see Note 13). Subsequent to year-end, World
Airways loaned the Company $2.0 million, which was used by WorldCorp to pay debt
obligations. In order to meet its debt service obligations and its general and
administrative costs, the Company must use its cash and either sell shares of
World Airways or InteliData, obtain additional financing, refinance existing
borrowings or obtain concessions from its lenders. WorldCorp has pledged all of
its shares of World Airways and InteliData as collateral for certain borrowings
(see Note 23). At December 31, 1997, based on quoted market prices, the market
value of the Company's 3,702,586 shares of World Airways and 9,179,273 shares of
InteliData, approximated $25.5 million and $16.9 million, respectively.

Although management intends to attempt to refinance certain of its
borrowings or arrange for concessions from its lenders, there can be no
assurance that these efforts will be successful. As a result, substantial doubt
exists regarding the Company's ability to meet its obligations in 1998 and to
continue as a going concern.

3.    DISCONTINUED OPERATIONS

World Airways commenced its scheduled service operations between Tel Aviv
and New York in July 1995 and commenced its scheduled service operations between
the U.S. and South Africa in June 1996. In addition, in May 1996 World Airways
commenced its scheduled charter operations between the United States and
Germany, Switzerland, Ireland, and the United Kingdom. However, World Airways
was unable to operate these scheduled service operations profitably.

<PAGE>
Therefore, in July 1996, World Airways announced its decision to exit its
scheduled service operations by October 1996 and focus its operations on its
core business: operating aircraft under contracts with international carriers,
the U.S. Government, and international tour operators. Consistent with this
decision, World Airways ceased all scheduled operations as of October 27, 1996.
As a result, World Airways' scheduled service operations were reflected as
discontinued operations as of June 30, 1996, and prior period results were
restated to reflect scheduled service operations as discontinued operations.
Loss from discontinued operations (net of income tax effect) approximated $11.7
million for the year ended December 31, 1996. In addition, an estimated loss on
disposal of $21.0 million (net of income tax effect), which was recorded as of
June 30, 1996, included the following: $13.6 million for estimated operating
losses during the phase-out period; a $2.6 million estimated loss to be incurred
in connection with sub-leasing DC-10 aircraft which will not be utilized in
World Airways' operations subsequent to the phase-out of scheduled service
operations; a $2.3 million writeoff of related leasehold improvements; and $2.0
million for passenger reprotection expenses. World Airways recognized an
additional $0.5 million of expense in the fourth quarter of 1997 and believes
that substantially all of the costs relating to the disposal have been incurred
as of December 31, 1997. World Airways is subject to certain claims arising as a
result of the discontinuance of its scheduled service operations (see Note 21),
but World Airways believes it has substantial defenses to these actions.

4.    INVESTMENT IN WORLD AIRWAYS

On February 28, 1994, pursuant to an October 1993 agreement, the Company sold
24.9% of its 100% ownership in World Airways to MHS Berhad ("MHS"), a Malaysian
aviation company. Effective December 31, 1994, WorldCorp repurchased 5% of World
Airways' common stock from MHS (see Note 6).

On August 8, 1995, World Airways filed a registration statement on Form S-1 with
the Securities and Exchange Commission to register 2,900,000 shares of World
Airways' common stock. The offering was completed on October 12, 1995 at an
offering price of $12.50 per share. Of the 2,900,000 shares registered,
2,000,000 shares were issued and sold by World Airways which resulted in an
$11.9 million net gain to the Company, and 900,000 shares were sold by the
Company, resulting in a $4.1 million net gain. Net proceeds received from the
offering by the Company and World Airways approximated $10.2 million and $22.8
million, respectively. At December 31, 1996, the Company and MHS owned
approximately 61.3% and 17.6%, respectively, of the outstanding common stock of
World Airways. The remaining shares were publicly traded.

In the third quarter of 1996, World Airways announced its intention to
purchase up to one million shares of its publicly-traded common stock pursuant
to open market transactions. During the fourth quarter of 1996, World Airways
purchased 718,000 shares of its common stock for an aggregate cost of $7.4
million. In January 1997, World Airways repurchased an additional 52,000 shares
of its common stock for an aggregate cost of $0.5 million. World Airways does
not intend to purchase any additional shares at this time. As a result of the
1996 treasury stock purchases, the Company recognized a $4.2 million loss on
purchases of equity by subsidiaries.

In connection with World Airways' issuance of $50.0 million of 8%
convertible senior subordinated debentures on August 26, 1997, (the" Offering"),
and pursuant to an agreement entered into on August 20, 1997, World Airways
purchased 3,227,000 shares of its common stock from the Company on September 18,
1997 for approximately $23.7 million in cash, net of expenses incurred of
approximately $1.0 million. As a result of this transaction, the Company
recognized a $17.6 million gain on the sale of its common stock of World
Airways, which was partially offset by a $8.7 million loss on purchases of
equity by World Airways. As a result of this Purchase, the Company's ownership
percentage in World Airways was reduced to 46.3%.

The Company's consolidated results for the year ended December 31, 1997
include the results of World Airways for the period prior to the Purchase.
Following the Purchase, the Company reports its proportionate share of World
Airways' financial results using the equity method of accounting. As such,
WorldCorp's investment in World Airways is included as investment in affiliates
in the accompanying balance sheet at December 31, 1997. The Company's portion of
World Airways' loss for the period after the Purchase approximated $0.5 million
and is recorded in equity in earnings (loss) of affiliates, net in the
accompanying consolidated statement of operations for the year ended December
31, 1997.

<PAGE>
The following represents summarized financial information (in thousands) for
World Airways:

                                                       Year ended December 31,
                                                                 1997
                                                       -----------------------
     Results of operations:

         Operating revenues                                  $  309,412
         Operating expenses                                     292,555
         Operating income                                        16,857
         Earnings from continuing operations                     11,967
         Net earnings                                            11,452


                                                           At December 31,
                                                                   1997
                                                           ---------------
     Financial position:

         Current assets                                      $   54,085
         Noncurrent assets                                       95,063
         Current liabilities                                     55,905
         Noncurrent liabilities                                  98,014

5.   INVESTMENT IN INTELIDATA

Formation

On September 10, 1990, the Board of Directors of WorldCorp unanimously
authorized WorldCorp to enter into and consummate a Stock Purchase Agreement
dated as of September 14, 1990 (the "Stock Purchase Agreement"), under which
WorldCorp agreed to purchase Series A Preferred Stock ("the Preferred Stock")
issued by US Order. The Board of Directors of the Company authorized the
purchase of US Order as part of the Company's continuing efforts to diversify
its interests. In connection with this agreement, the Company was granted an
option to purchase the common stock held by the founding shareholders. Mr. Gorog
is Chairman of the Board of InteliData and a director of WorldCorp. Mr. Gorog,
together with certain members of his immediate family (the "Founders"), were
majority owners of US Order.

On August 25, 1994, the Company's Board of Directors approved the exercise
of WorldCorp's option to purchase 4.8 million shares of US Order common stock
held by the Founders. Under the terms of this agreement, prior to December 31,
1994, WorldCorp paid $0.4 million in cash to the Founders in exchange for
498,794 shares of US Order common stock, increasing WorldCorp's ownership of
voting stock to 52%. Effective February 16, 1995, WorldCorp purchased the
remaining 4.3 million shares of US Order common stock with 302,282 shares of
WorldCorp common stock, $0.3 million in cash, and $1.1 million in the form of
notes due to the Founders. These notes were paid in 1995. As a result of this
option exercise, WorldCorp increased its ownership in US Order's voting stock to
approximately 89% in February 1995.

In August 1996, WorldCorp exercised 346,429 warrants to purchase an
equivalent number of shares of US Order's common stock at $4.00 per share.

Sale of Banking Operations

On August 1, 1994, US Order sold its electronic banking and bill payment
operations to Visa International Services Association, Inc. ("Visa") (which
subsequently transferred these assets to a wholly owned subsidiary, Visa
InterActive) for cash and the right to future royalty payments which are based
on the number of customers utilizing the Visa Bill-Pay System. In August 1997,
Integrion Financial Network ("Integrion") acquired Visa InterActive, and certain
rights in the Visa Bill-Pay System, from Visa. In October 1997, InteliData
surrendered the right to certain future royalty payments in exchange for $5.0
million in cash from Visa. InteliData recorded the cash payment as deferred
revenue and is recognizing it into electronic commerce revenues over a two year
period.

<PAGE>
Initial Public Offering

In June 1995, US Order completed an initial public offering of 4,427,500
shares of its common stock at an offering price of $14.75 per share. Of the
4,427,500 shares sold, 3,062,500 were issued and sold by US Order which resulted
in a gain of approximately $27.0 million to the Company, and 1,365,000 shares
were sold by the Company resulting in a gain of approximately $19.6 million. Net
proceeds from the offering to the Company and US Order approximated $18.7
million and $41.6 million, respectively. In conjunction with the offering, the
US Order preferred stock previously held by the Company was converted to common
stock. As a result of the above transactions, WorldCorp owned 56.9% of the
outstanding common stock of US Order at December 31, 1995.

Acquisitions

On October 18, 1995, US Order acquired a 40% equity interest in Home
Financial Network, Inc. ("HFN"), a newly formed, development stage personal
computer software company that plans to develop and deliver electronic financial
products and services to consumers, through the issuance of 296,746 shares of
its common stock valued at $5.0 million. As a result, the Company recognized a
$2.5 million gain on issuances of equity by subsidiaries.

Effective September 30, 1996, US Order acquired the business of Braun,
Simmons & Co. ("Braun Simmons"), an information engineering firm specializing in
the development of home banking and electronic commerce solutions for financial
institutions, for $2.0 million and 375,000 shares of US Order common stock. As a
result, the Company recorded a gain on issuances of equity by subsidiary of $1.8
million as of September 30, 1996. The acquisition was accounted for under the
purchase method of accounting. US Order expensed $4.9 million of the purchase
price which was allocated to in-process research and development with no
alternative future use. As discussed further below, based on rapid market and
technological changes in 1997, the goodwill generated from this transaction was
written-off in the third quarter of 1997.

Colonial Data Merger

On April 6, 1995, US Order entered into a stock exchange agreement with
Colonial Data. Pursuant to the terms of the agreement, on June 8, 1995, US Order
exchanged 230,000 shares of its common stock, valued at the initial public
offering price of $14.75 per share, or $3.4 million, for 170,743 shares of
Colonial Data's unregistered common stock (valued based on the average closing
price of Colonial Data's stock for the twenty trading days preceding the date of
the exchange) which was equivalent to the value of US Order stock exchanged. The
Company recognized a gain on issuances of equity by subsidiaries of $2.0 million
as a result of the exchange of this stock. The fair value of this investment at
December 31, 1995 was approximately $3.5 million, based on the quoted market
price of the stock, and was held for purposes other than trading.

On November 7, 1996, US Order and Colonial Data were merged with and into
InteliData, a newly formed corporation, through an exchange of stock ("Merger").
Upon consummation of the Merger, each outstanding share of US Order common stock
was converted into one share of InteliData common stock and each outstanding
share of Colonial Data common stock was converted into one share of InteliData
common stock. The transaction was accounted for as a purchase of Colonial Data
by US Order. Pursuant to this transaction, InteliData became the successor
corporation to US Order. As a result of the Merger, WorldCorp recognized a gain
on issuances of equity by subsidiaries of $42.6 million, which was offset by the
elimination of approximately $1.3 million of goodwill related to US Order. As a
result of the Merger, WorldCorp's ownership percentage in InteliData was reduced
to 28.9% and, as such, WorldCorp began reporting its share of InteliData's net
assets and results of operations under the equity method of accounting. As a
result of the Merger, InteliData reported non-cash, merger related charges of
approximately $72.3 million, of which the Company recorded its pro rata share,
or $20.9 million. These charges related to the write-off of in-process research
and development expenses for purchased in-process technology that had not
reached technological feasibility as of the date of the Merger and did not have
alternative future uses. The remaining $2.4 million equity in loss of affiliate
for 1996 represents the Company's share of InteliData's operating results for
the period following the Merger. As discussed further below, based on rapid
market and technological changes in 1997, the goodwill generated from the Merger
was written-off in the third quarter of 1997.

<PAGE>

Due to equity transactions by InteliData in 1997, WorldCorp's ownership
percentage in InteliData was 29.4% at December 31, 1997. As such, WorldCorp's
investment in InteliData is included in investment in affiliates in the
accompanying balance sheets at December 31, 1997 and 1996 and its share of
InteliData's losses for the periods from November 7, 1996 through December 31,
1996, and for the year ended December 31, 1997 are shown as equity in earnings
(loss) of affiliates, net in the accompanying statements of operations for the
years ended December 31, 1997 and 1996.

During the third quarter of 1997, InteliData announced a strategic
repositioning and determined that it would be appropriate to charge to
operations the remaining unamortized costs of intangible assets due to
impairment, adjust inventory carrying amounts to the lower of cost or market,
and to reflect certain restructuring charges. The impairment was based on the
excess of the carrying value of the assets over the assets' fair values. These
items resulted in an aggregate charge of $69.1 million to InteliData's
operations, of which the Company recorded its pro rata share, or $20.3 million.

Summarized financial information of InteliData is as follows (in thousands):

                                                     Year ended December 31,
                                                     -----------------------
                                                       1997             1996
                                                       ----             ----
Results of operations:

Revenues                                           $    60,309      $    13,899
Cost of revenues                                        43,514           10,448
Gross profit                                            16,795            3,451
Operating loss                                        (91,304)         (96,112)
Net loss applicable to common shareholders            (90,094)         (95,727)

                                                        At December 31,
                                                        ---------------
                                                     1997             1996
                                                     ----             ----
Financial position:

Current assets                                     $    47,821      $    82,989
Noncurrent assets                                        6,580           60,757
Current liabilities                                     15,457           19,457
Noncurrent liabilities                                   1,875               --

Shown below is the  Company's  unaudited pro forma  condensed  consolidated
results of operations for the years ended December 31, 1996 and 1995,  excluding
the impact of the  non-recurring  charges for acquired  in-process  research and
development  and the impact of the gain on issuances  of equity by  subsidiaries
relating to the Braun Simmons and Colonial Data  acquisitions and as though both
companies  had been  acquired and merged into  InteliData as of the beginning of
InteliData's  fiscal  years  1996 and 1995 (in  thousands,  except for per share
data):

                                                       Year ended December 31,
                                                       -----------------------
                                                         1996             1995
                                                         ----             ----

         Revenues                                  $   309,587      $   242,386
         Net income (loss)                            (27,252)           64,925
         Net income (loss) per share:
              Basic                                     (1.69)             4.06
              Diluted                                     *                3.02

*    Amounts are anti-dilutive.

This method of combining historical financial statements for the
preparation of the unaudited pro forma condensed consolidated financial
information is for presentation only. The unaudited pro forma condensed
consolidated financial information is provided for illustrative purposes only
and is not necessarily indicative of the consolidated financial position or
consolidated results of operations that would have been reported had the Mergers
occurred at the beginning of the year, nor do they represent a forecast of the
consolidated financial position or results of operations for any future period.

<PAGE>

6.   TRANSACTIONS WITH MHS AND MALAYSIAN AIRLINES

On October 30, 1993, WorldCorp, World Airways, and MHS entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") pursuant to which MHS,
subject to satisfactory completion of its due diligence investigations, agreed
to purchase 24.9% of World Airways' common stock for $27.4 million in cash.
Under this Agreement, World Airways would receive upon closing $12.4 million to
fund its working capital requirements. The remaining $15.0 million would be paid
to WorldCorp to add to its cash reserves. WorldCorp received $2.7 million prior
to December 31, 1993 as an advance on the sales price. At the time of the
signing of the Stock Purchase Agreement, World Airways was a wholly-owned
subsidiary of WorldCorp. On February 28, 1994, WorldCorp, World Airways, and MHS
concluded the transaction according to the terms described above. Under the
agreement, if at any time after October 30, 1996 World Airways registers
additional common stock under the Securities Act of 1933, MHS has the right to
demand the registration of its shares of the Company's common stock. Under a
shareholders agreement, MHS has the right to nominate two members to the
Company's board of directors and WorldCorp has agreed to vote its shares of
common stock to elect such nominees. Also, if without the prior written consent
of MHS: (1) World Airways sells all or substantially all of its business; or (2)
World Airways fundamentally changes its line of business, then MHS has the
option to require WorldCorp to purchase all or part of MHS's shares at fair
market value. Fair market value is defined to be not less than the aggregate of
the costs borne by MHS in acquiring and holding its World Airways shares.
Management of World Airways has indicated that it does not have any current
intent to take any such actions without the prior consent of MHS or the
directors nominated by MHS. The shareholders agreement also provides that if
WorldCorp's ownership interest in World Airways falls below 51% of the
outstanding shares of common stock, then MHS may either sell its shares to a
third party or require WorldCorp to sell a pro rata number of shares held by MHS
to the party purchasing WorldCorp's shares. MHS also has a right of first
refusal to purchase shares of common stock issued by World Airways or sold by
WorldCorp and to purchase additional shares of common stock to maintain its
ownership percentage in World Airways.

In connection with World Airways' Offering on August 26, 1997 (see Notes 1
and 13), World Airways purchased 3,227,000 shares of its common stock from
WorldCorp on September 18, 1997 for approximately $24.7 million. Therefore, at
December 31, 1997, MHS owned approximately 24.9% of World Airways' common stock.
In accordance with the shareholders agreement, when World Airways purchased the
3,227,000 shares of common stock from WorldCorp in September 1997, MHS had the
right to sell, and accordingly sold, 773,000 shares of its World Airways common
stock to World Airways for approximately $5.9 million, effective January 23,
1998, thereby reducing MHS's ownership interest in World Airways to 16.8%.

During 1994, MHS acquired 32% of Malaysian Airlines, the flag carrier of
Malaysia. Due mainly to the issuance of additional shares of common stock by
Malaysian Airlines during 1996, MHS owns 28% of Malaysian Airlines at December
31, 1997. World Airways has provided service to Malaysian Airlines since 1981,
providing aircraft for integration into Malaysian Airlines' scheduled passenger,
cargo and charter operations as well as transporting passengers for the annual
Hadj pilgrimage. Malaysian Airlines is one of World Airways' largest customers
(see Note 19).

Effective December 31, 1994, WorldCorp entered into a 6% note payable to
MHS in the amount of $8.5 million, due December 31, 1995, in exchange for 5% of
World Airways' common stock held by MHS and the execution of certain multi-year
contracts between World Airways and Malaysian Airlines. The shares were pledged
as security for the note payable. The note was repaid in accordance with the
agreement. Of the $8.5 million consideration paid by WorldCorp to MHS, $3.0
million was attributable to the contract enhancements discussed above. This
amount is included in other assets and deferred charges and in contributed
capital in the accompanying balance sheet at December 31, 1996 (see Note 9).
Because WorldCorp reports its share of World Airways' net assets and results of
operations under the equity method of accounting, there is no corresponding
amount in the accompanying balance sheet at December 31, 1997. The amount
attributable to the contract enhancements is being amortized over the terms of
the related Malaysian Airlines contracts, approximately two to five years.
Amortization expense for the period January 1, 1997 to September 17, 1997
approximated $0.3 million.

<PAGE>

In late 1994, World Airways entered into a series of multi-year contracts,
with expiration dates ranging from 1997 to 2000, to provide aircraft to
Malaysian Airlines. World Airways also entered into a 32-month agreement for
year-round operations (including the Hadj) with Malaysian Airlines whereby World
Airways is providing two passenger aircraft with cockpit crews, maintenance and
insurance to Malaysian Airlines' newly-formed charter division through May 1999.
However, in 1997, World Airways agreed to a five month reduction in the
utilization of one aircraft during 1997 although that aircraft was redeployed.
Malaysian Airlines has not informed World Airways of any reductions for 1998.
World Airways provided three aircraft for the 1997, 1996 and 1995 Hadj
operations. MAS received notice from the Malaysian Hadj Board that MAS would not
participate in the 1998 Hadj pilgrimage. As a result, MAS entered into an
agreement on behalf of World Airways for World Airways to provide two DC-10
aircraft to fly in the 1998 Indian Hadj.

World Airways has a long-term contract to operate three MD-11 cargo
aircraft for Malaysian Airlines. However, beginning in July 1996, and as
mutually agreed by the parties, World Airways redeployed two cargo aircraft,
which had been operating under these contracts, into another contract which
ended in February 1998.World Airways and Malaysian Airlines are currently
discussing the redeployment of these aircraft back into Malaysian Airlines'
operations during 1998 in order to meet the contracts' original obligations.
World Airways can provide no assurances, however, that World Airways will, in
fact, be able to do so (see Note 19).

As of December 31, 1996, World Airways had $5.5 million included in due
from affiliate, in the accompanying balance sheet. Included in this balance are
certain reimbursable operating costs of $0.6 million due from Malaysian Airlines
incurred by World Airways pursuant to the currently operated contracts. In
addition, included in the amount shown as due to affiliate in the accompanying
balance sheet is $1.4 million of aircraft rent owed to Malaysian Airlines at
December 31, 1996.

During 1995, World Airways entered into agreements with Malaysian Airlines
to lease two DC10-30 aircraft. The aircraft were delivered in June and December
1995 and had original lease terms of 26 and 36 months, respectively. The leases
on the two aircraft expire in August 1999 and December 1998. In March 1996,
World Airways leased two additional DC-10-30 aircraft from Malaysian Airlines.
These additional aircraft were not expected to be utilized after the
discontinuance of the Company's scheduled service operations in October 1996
(see Note 3). Therefore, effective December 31, 1996, the parties mutually
agreed to terminate the lease agreement for the additional two aircraft. In
March 1997, World Airways entered into an agreement with Malaysian Airlines to
lease an incremental DC10-30 aircraft on a short-term basis to support its peak
flying season. The aircraft was returned at the end of the Hadj program. Rent
expense and maintenance reserve payments related to these aircraft leased from
Malaysian Airlines amounted to $5.1 million, $12.6 million and $1.6 million for
the period January 1, 1997 to September 17, 1997 and for the years ended
December 31,1996 and 1995, respectively.

7.   SUPPLEMENTAL INFORMATION -- STATEMENTS OF CASH FLOWS

Additional information pertaining to certain cash payments and noncash
investing and financing activities is as follows (in thousands):

                                 For the years ended December 31,
                                 --------------------------------
                               1997            1996              1995
                               ----            ----              ----
Cash paid for:
Interest                  $   9,243      $   12,377       $    12,130
Income taxes                    255             412               711

Due to the Purchase, on September 18, 1997, WorldCorp began reporting its
share of World Airways' net assets and results of operations under the equity
method of accounting. Therefore, only non-cash transactions relating to World
Airways operations through September 17, 1997 are described herein.

In 1997, World Airways entered into a capital lease, valued at $0.8
million, with a lessor to lease an auxiliary power unit over a 32 month term
beginning in July 1997. World Airways made principal payments of $0.05 million
between January 1 and September 17, 1997.

<PAGE>

In January 1996, World Airways agreed to purchase an additional engine and
received a commitment from the engine manufacturer to finance 85% of its
purchase price over a seven-year term (see Note 13). In June 1997, World Airways
took delivery of the engine and signed a note for $6.3 million, of which $0.1
million was repaid between January 1, 1997 and September 17, 1997.

World Airways purchased a spare engine which was delivered in March 1996.
The engine cost approximately $8.0 million. World Airways entered into an
agreement with the engine's manufacturer to finance 80% of the purchase price
over a seven-year term (see Note 13).World Airways made payments of $0.4
million, $0.4 million and $1.2 million towards this purchase during the period
January 1, 1997 to September 17, 1997 and for the years ended December 31, 1996
and 1995, respectively.

In March 1996, World Airways entered into an agreement with McDonnell
Douglas to lease two MD-11ER aircraft (see Note 13). World Airways entered into
a simultaneous agreement with McDonnell Douglas to finance MD-11 spare parts.
World Airways can borrow a total of $9.0 million of which $3.0 million became
available with the delivery of each aircraft and an additional $3.0 million
became available in December 1996. Borrowings under the agreement were $1.5
million and $6.4 million during the period January 1, 1997 to September 17, 1997
and for the year ended December 31, 1996, respectively, and payments of $0.7
million and $0.5 million were made in these periods, respectively.

8.    SHORT-TERM INVESTMENTS

At December 31, 1996, short-term investments consist of cash pledged as
collateral for letters of credit with original maturities in excess of ninety
days, and expiration dates within one year, and cash collateralizing a loan with
a financial institution (see Note 12).

9.    OTHER ASSETS AND DEFERRED CHARGES

Other assets and deferred charges consist of the following (in thousands):
                                                        December 31,
                                                        ------------
                                                     1997              1996
                                                     ----              ----
Debt issuance costs, net                      $      1,417      $     1,763
Long-term notes receivable (Note 20)                   787              529
Deferred contract cost (Note 6)                         --            1,509
Aircraft integration costs, net                         --            1,094
Long-term investment                                   250              250
                                                       ---              ---
                                              $      2,454      $     5,145
                                              ============      ===========

Debt issuance costs consist of the costs of issuing the Convertible
Subordinated Debentures due 2004 and are being amortized over the term of the
debt instrument using the effective interest method (see Note 13). The debt
issuance costs relating to the Bridge Loan due in 1997 (see Note 12) were
included in the accompanying balance sheet at December 31, 1996, but were fully
amortized when the loan was paid off in 1997.

Aircraft integration costs consist of pre-operating costs incurred in
connection with integrating the new MD-11 aircraft into World Airways' fleet
(see Note 13). These costs, consisting primarily of flight crew training, are
being amortized on a straight-line basis over a five-year period.

Long-term investment consists of an investment in a company which is
accounted for under the cost basis method.

Prepaid expenses and other current assets at December 31, 1997 consists of
prepaid insurance. At December 31, 1996, prepaid expenses also included World
Airways' prepaid insurance of approximately $4.9 million and prepaid rent of
approximately $2.5 million.

World Airways' prepaid expenses and aircraft integration costs, net are not
included in the December 31, 1997 balance sheet due to the change in WorldCorp's
accounting for its investment in World Airways to the equity method on September
18, 1997 as a result of the Purchase.

<PAGE>

10.   ASSETS HELD FOR SALE

Assets held for sale consisted primarily of DC10 and B727 rotables with a
net book value of $3.9 million as of December 31, 1996. World Airways has
consigned these parts with a third party to be sold over a reasonable period of
time with the objective of maximizing the proceeds from the sales. As a result
of the discontinuance of World Airways' scheduled service operations in 1996
(see Note 3), and the termination of two DC10 lease agreements in December 1996
(see Note 6), World Airways consigned additional DC10 rotables with the third
party during 1997. Accordingly, the net book value of these parts of $1.7
million was reclassified from flight and other equipment to assets held for sale
in the accompanying balance sheet at December 31, 1996. During the fourth
quarters of 1997 and 1996, World Airways wrote-down assets held for sale by $0.5
million and $0.4 million, respectively, to reflect the estimated fair value of
the parts less estimated selling costs. As a result of the Purchase on September
18, 1997, WorldCorp began reporting its share of World Airways' net assets and
results of operation under the equity method of accounting. Therefore, there is
no balance in assets held for sale in the accompanying balance sheet at December
31, 1997. During the third quarter of 1997, WorldCorp recognized a $0.3 million
gain on its sale of the remaining B727 rotables to the third party, which is
included in other income in the accompanying statement of operations for the
year ended December 31, 1997.

11.   INTANGIBLE ASSETS

As a result of various transactions in the capital stock of US Order
through 1995, the Company recorded approximately $5.2 million of goodwill, which
is being amortized over approximately six years using the straight-line method.
As a result of the sale of a portion of its stock of US Order pursuant to US
Order's initial public offering during 1995, approximately $1.9 million of this
goodwill was eliminated and offset against the gain on sale of stock. As a
result of the merger of US Order and Colonial Data with and into InteliData
during 1996, approximately $1.3 million of goodwill was eliminated and offset
against the gain on issuances of equity by affiliates (see Note 5).

12.   NOTES PAYABLE

In 1993, World Airways entered into an $8.0 million revolving line of
credit borrowing arrangement which is collateralized by certain receivables
which were sold to the bank with recourse. Borrowing availability under the line
is based on the amount of eligible receivables. This borrowing arrangement was
amended effective June 30, 1996 (see Note 13). At December 31, 1996, World
Airways had minimal unused borrowing capacity and borrowings under the line of
credit were $6.8 million. Upon completion of the Offering (see Notes 1 and
13),World Airways repaid the outstanding balance on the line. Therefore, at
December 31, 1997, there was no outstanding balance or borrowing capacity on the
revolving line of credit.

Subsequent to December 31, 1997, World Airways amended its Credit Agreement
with BNY Financial Corporation ("BNY"). The amended line has a borrowing
capacity of up to $25.0 million, subject to borrowing base amounts related to
receivables and spare parts inventory, as defined. The amended arrangement
contains certain dividend restrictions and certain covenants related to World
Airways' financial condition and operating results, including quarterly net
worth and net income (loss) requirements and debt coverage requirements.
Borrowings under this amended Credit Agreement are collateralized by certain
receivables, inventory, and equipment.

A $4.6 million note bearing interest at 3.8% is included in notes payable
at December 31, 1996. The note was fully paid during 1997.

On August 29, 1996, the Company entered into a bridge loan (the "Bridge
Loan") with a financial institution pursuant to which the Company borrowed $25.0
million and subsequently retired its existing 13 7/8% Subordinated Notes of the
same amount. The Bridge Loan was due September 29, 1997 and earned interest of
LIBOR plus 2.5%, payable monthly. On September 30, 1996, the Company entered
into a purchase agreement (the "Purchase Agreement") which contained a series of
Senior Subordinated Notes ("Notes") totaling $10.0 million which was used to
retire $10.0 million of the Bridge Loan in October 1996 (See Note 13). The
remaining balance on the Bridge Loan of $15.0 million was repaid in September
1997.

In the first quarter of 1997, WorldCorp entered into a $1.0 million margin
loan with Scott & Stringfellow, Inc., whereby WorldCorp pledged approximately
400,000 shares of InteliData common stock which WorldCorp owns as collateral for
such loan (the "Margin Loan"). The Company did not draw any funds on the loan
and the InteliData shares have been returned to WorldCorp.

<PAGE>

13.   LONG-TERM OBLIGATIONS

Long-Term Debt

Long-term obligations of the Company at December 31 are as follows (in
thousands):
                                                         1997           1996
                                                         ----           ----
WorldCorp:

Senior Subordinated Notes -- 
with interest at 10% payable semi-annually
beginning March 31, 1997 (net of 
unamortized discount of $0.4 million and $0.3
million at December 31, 1997 and 1996,
respectively) (Note 12).                                9,603          9,675

Convertible Subordinated Debentures due 2004
 -- with interest at 7% payable semi-annually
 beginning May 15, 1992.                               65,000         65,000

Unsecured promissory note due 1997 -- with
interest at 6% payable quarterly beginning
May 8, 1994.                                               --            900

Capitalized lease obligations                              23             67

World Airways:

Note payable due 1999 -- with principal 
and interest at 7.25% payable monthly,
collateralized by one Pratt & Whitney 
PW4462 engine.                                     $       --     $    4,393


Note payable due 2003 -- with principal 
and interest at 9.98% payable monthly,
collateralized by one Pratt and Whitney
PW4462 engine.                                             --          6,018


Spare parts loan due 1998 -- with principal
and interest at 8.5% payable monthly,
collateralized by certain MD-11 spare parts.               --          3,229

Spare parts loan due 2003 -- with principal
and interest at 8.5% payable monthly
collateralized by certain MD-11 spare parts.               --          2,581

Spare parts loan due 2003 -- with principal
and interest at 10% payable monthly,
collateralized by certain MD-11 spare parts.               --          5,929

Aircraft spare parts security agreement 
payable to bank due 1999, net ofdiscount
of $0.2 million -- with interest at the 
greater of the federal funds rate plus
2.5% or the prime rate plus 2% (10.25% 
at December 31, 1996),collateralized by
certain rotables.                                          --          7,372

Employee Saving and Stock Ownership Plan
guaranteed bank loan (Note 16)                             --            805

Capitalized lease obligations                              --          7,683

Deferred aircraft rent                                     --          1,142
                                                       ------          -----

Total                                                  74,626        114,794

Less current maturities                                 9,626          9,990
                                                        -----          -----

Total long-term obligations, net                   $   65,000     $  104,804
                                                   ==========     ==========

<PAGE>

The estimated fair value of the Convertible Subordinated Debentures at
December 31, 1997 approximated $26.9 million. The Company believes that the
carrying values of the other amounts outstanding under the above debt agreements
approximate fair value.

In May 1992, the Company issued $65.0 million of Convertible Subordinated
Debentures due 2004 (the "WorldCorp Debentures"). The WorldCorp Debentures are
convertible into WorldCorp common stock at $11.06 per share, subject to
adjustment in certain events, and bear an annual interest rate of 7%.
Semi-annual interest payments are due on May 15 and November 15. The terms of
this indenture cause World Airways not to pay dividends upon the occurrence of
any events of default by the Company under the indenture. The indenture also
restricts the Company's ability to pay dividends or make other distributions on
its common stock.

On August 29, 1996, the Company entered into a bridge loan (the "Bridge
Loan") with a financial institution pursuant to which the Company borrowed $25.0
million and subsequently retired its existing 13 7/8% Subordinated Notes of the
same amount (see Note 12).

The Company entered into a purchase agreement (the "Purchase Agreement") on
September 30, 1996 which contained a series of Senior Subordinated Notes
totaling $10.0 million which was used to retire $10.0 million of the Bridge Loan
in October 1996. The Notes are payable in three installments through September
2000 and earn interest of 10%, payable semi-annually. Sinking fund payments
equal to 20% of the then outstanding principal balance are required to be made
on each of September 30, 1998 and September 30, 1999. In connection with the
Purchase Agreement, the Company granted warrants to the lenders to purchase up
to 120,000 shares of the Company's common stock, at $6.00 per share, subject to
certain adjustments. The Company may also be required to issue up to an
additional 80,000 warrants contingent upon certain market conditions. These
warrants were valued at approximately $0.6 million (see Note 14). Under the
terms of the Purchase Agreement, the Company is not permitted to pay cash
dividends. Also, WorldCorp is obligated under certain conditions to make certain
mandatory prepayments of the Notes. The Purchase Agreement states that if the
Asset Value, as defined, at the end of any fiscal quarter is less than $70.0
million, then WorldCorp shall prepay 50% of each of the outstanding Notes within
60 days of the end of such fiscal quarter. If the Asset Value at the end of any
fiscal quarter is less than $50.0 million, then WorldCorp shall prepay all of
the outstanding Notes within 60 days of the end of such fiscal quarter. If
WorldCorp sells any shares of common stock of InteliData, 20% of the net
proceeds received by WorldCorp upon such sale must be used to prepay the then
outstanding Notes within 30 days. "Asset Value" is defined to mean (i) the
market value of the common stock of World Airways and InteliData beneficially
owned by the Company and the common stock of any other subsidiary of the Company
beneficially owned by the Company which is listed on an exchange or quoted on
the NASDAQ National Market plus (ii) the value of all other tangible assets of
the Company. Also under the Purchase Agreement, Senior Indebtedness of the
Company shall not exceed $50.0 million. As of December 31, 1997, the Asset Value
was $56.8 million. Therefore, subsequent to year end, the Company prepaid $5.0
million of the Notes. The Company may not meet the $50.0 million Asset Value
requirement as of March 31, 1998, in which event, the Company would be required
to prepay the remaining $5.0 million outstanding under the Notes. The Company
has classified the outstanding balance of the Notes as a current liability as of
December 31, 1997.

Subsequent to December 31, 1997, the Company borrowed $2.0 million from
World Airways, the proceeds from which were used by the Company to repay a
portion of the Notes. This loan is collateralized by 1.0 million of World
Airways' shares owned by WorldCorp, bears interest at prime plus 2.5%, and is
due on April 28, 1998.

On August 26, 1997, World Airways completed a private offering, issuing
$50.0 million of 8% convertible senior subordinated debentures (the
"Debentures") due in 2004 (the "Offering"). The Debentures were subsequently
registered with the Securities and Exchange Commission. The Debentures are
unsecured obligations, convertible into shares of World Airways' common stock at
$8.90 per share, subject to adjustment in certain events, and subordinated to
all present and future senior indebtedness of World Airways. In the event of a
change in control of World Airways, as defined, the holders of the Debentures
could require World Airways to repurchase the outstanding Debentures. The
Debentures are not redeemable by World Airways prior to August 26, 2000. World
Airways used the net proceeds of the Offering to purchase approximately 4.0
million shares of its common stock (see Notes 1, 4 and 6), repay certain
indebtedness, increase working capital and for general corporate purposes. After
completion of the Offering, World Airways repaid approximately $3.8 million,
which was outstanding on the aircraft spare parts security agreement.

<PAGE>

Due to the Purchase, effective September 18, 1997, WorldCorp began
reporting its share of World Airways' net assets and results of operations under
the equity method of accounting. Accordingly, no World Airways debt balances are
recorded in the accompanying balance sheet at December 31, 1997.

Subsequent to December 31, 1997, World Airways amended its Credit Agreement
with BNY, which included the aircraft security agreement and the $8.0 million
revolving line of credit borrowing (see Note 12), to provide for up to a $25.0
million revolving line of credit borrowing (see Note 12). In 1996, in connection
with a previous amendment, World Airways granted warrants to BNY to purchase up
to 50,000 shares of authorized but unissued common stock. The warrants were
granted at an exercise price of $8.00 per share which was equal to the market
price of World Airways' stock at the date of grant. All warrants were vested and
became fully exercisable at the date of grant and expire on December 31, 1999.
The per share weighted-average fair value of warrants granted was $3.615 on the
date of grant using the Black Scholes option-pricing model with the following
weighted-average assumptions: expected dividend yield of 0.0%, risk free
interest rate of 6.0%, expected life of 3 years and expected volatility of
61.0%. World Airways recorded $0.2 million related to the warrants which will be
amortized into interest expense over the terms of the related debt.

In September 1995, World Airways entered into an agreement with a lessor to
purchase a spare engine, previously under lease, for $5.5 million. World Airways
paid $0.5 million upon closing and signed a note for the $5.0 million balance.
The note bears interest at a rate of 7.25% and is payable over a 40-month period
at $69,000 a month, with the balance of $3.3 million due on January 29, 1999.
World Airways purchased an additional spare engine, which was delivered in March
1996, at a cost of approximately $8.0 million. World Airways entered into an
agreement with the engine's manufacturer to finance 80% of the purchase price
over a seven-year term at an interest rate of 9.98%. World Airways made payments
of $1.2 million and $0.4 million towards this purchase in September 1995 and
January 1996, respectively.

In January 1996, World Airways agreed to purchase an additional engine for
approximately $7.2 million and received a commitment from the engine
manufacturer to finance 85% of its purchase price over a seven-year term with an
interest rate to be fixed at the time of delivery. In June 1997, World Airways
took delivery of the engine and signed a note for $6.3 million. The note bears
interest at a rate of 8.18% and is payable over an 84-month period at
approximately $48,000 per month, with the balance of $2.2 million due on June
18, 2004.

During 1993, World Airways negotiated with several of its lessors to defer
approximately $14.7 million of lease payments on eight aircraft. In addition,
during 1995 and 1994 World Airways deferred approximately $0.7 million of rent,
pursuant to the 1993 agreement. Of these amounts, World Airways repaid
approximately $14.5 million through 1997.

The following table shows the aggregate annual amount of scheduled
WorldCorp principal maturities (in thousands) of debt outstanding at December
31, 1997, excluding capital lease obligations:

1998                                                    $   10,000
1999                                                            --
2000                                                            --
2001                                                            --
2002                                                            --
Thereafter                                                  65,000
                                                            ------
Total                                                       75,000
Less: unamortized debt discount                              (397)
                                                             ----
Total                                                   $   74,603
                                                        ==========

The above scheduled principal maturities do not include World Airways'
borrowings since WorldCorp began recording its share of World Airways' net
assets and results of operations under the equity method of accounting as of
September 18, 1997.

<PAGE>

Capital Leases

The present value of the obligations under WorldCorp capital leases at
December 31, 1997, calculated using a rate of 8.9%, amounted to approximately
$23,000, net of imputed interest of approximately $1,000, is due in 1998.

Property under capital leases consists of equipment leases and are
amortized over the lease terms or expected useful life of the assets. As a
result of the Purchase, WorldCorp began reporting its share of World Airways'
net assets and results of operations under the equity method of accounting as of
September 18, 1997. Accumulated amortization under capital leases was $0.1
million and $4.3 million at December 31, 1997 and 1996, respectively.
Amortization expense of property under capital leases totaled approximately $0.5
million for the period January 1, 1997 through September 17, 1997 and $0.7
million for the years ended December 31, 1996 and 1995.

Operating Leases

 In October 1992 and January 1993, World Airways signed a series of
agreements with International Lease Finance Corporation ("ILFC"), McDonnell
Douglas Corporation, GATX Capital Corporation, and United Technologies
Corporation's Pratt & Whitney Group ("Pratt and Whitney") to lease seven new
McDonnell Douglas MD-11 aircraft and associated engines under initial lease
terms of two to five years. World Airways returned one aircraft in August 1997.
The remaining six aircraft leases contain annual renewal options in years six
through fifteen of the lease term. If these renewal options are not exercised,
World Airways is required to pay a substantial penalty to the lessor. Under the
terms of the lease agreements, World Airways may be required to pay additional
rent in excess of the fixed monthly amounts depending on block hours flown.

 In February 1992, World Airways signed 12-year operating leases for two
McDonnell Douglas DC10-30 passenger aircraft. In July 1993, World Airways
returned these aircraft to their lessor. Certain matters related to the
termination of these leases were resolved in 1995 and resulted in a gain to
World Airways of approximately $0.8 million. This gain is included in other
income in 1995.

World Airways' MD-11 leases contain options to purchase the aircraft at
various times throughout the lease terms. Long-term deposits consist primarily
of deposits on the MD-11 leases. As part of the lease agreements, World Airways
was assigned purchase options for four additional MD-11 aircraft. In 1992, World
Airways made non-refundable deposits to McDonnell Douglas toward the option
aircraft. In March 1996, World Airways entered into an agreement with McDonnell
Douglas to lease two MD-11ER aircraft. Under this agreement, World Airways is
leasing each aircraft for a term of 24 years with an option to return the
aircraft after a seven year period, subject to fixed termination fees of $2.8
million per aircraft. The non-refundable deposits of $1.2 million previously
paid to McDonnell Douglas towards options on four MD-11 aircraft were applied to
the deposits required on the MD-11ER aircraft. World Airways entered into a
simultaneous agreement with McDonnell Douglas to finance MD-11 spare parts.
World Airways can borrow a total of $9.0 million of which $3.0 million became
available with the delivery of each aircraft and an additional $3.0 million
became available in December 1996. Net borrowings under the agreement were $6.3
million and $5.9 million at December 31, 1997 and 1996, respectively. McDonnell
Douglas retains a purchase money lien in the purchased parts. In connection with
this lease agreement, World Airways agreed to assume an existing lease of two
additional MD-11 freighter aircraft for 20 years, beginning in 1999, in the
event the existing lessee terminates its lease with McDonnell Douglas at that
time.

Effective August 1997, World Airways entered into an agreement with one of
its lessors to return a passenger MD-11 aircraft. The aircraft was returned in
September 1997. In conjunction with the aircraft return, World Airways forfeited
security deposits of $0.2 million and paid an additional $0.2 million to the
lessor in 1998.

In October 1997, one of World Airways' MD-11 aircraft was damaged upon its
landing at Montevideo, Uruguay. The aircraft was out of service until January
1998 while certain repairs were made. World Airways expects insurance to cover
the majority of repair and certain related costs.

In 1995, World Airways entered into three DC10-30 aircraft leases with
lease terms, as amended, expiring in September 1998, December 1998 and August
1999. In addition, another DC-10 aircraft lease expires in January 2003.

<PAGE>

As of December 31, 1997, World Airways' fleet consisted of three passenger
MD-11 aircraft, one freighter MD- 11 aircraft, two convertible MD-11 aircraft,
two MD-11ER aircraft, three passenger DC10-30 aircraft, and one DC10-30
convertible aircraft.

World Airways extended the lease terms on two spare engines during 1996.
One lease, originally expiring on December 31, 1995, was extended until February
1998. This lease was classified as a capital lease at December 31, 1995, but
became an operating lease under the new agreement. The other engine was extended
three years from its original April 20, 1996 termination date. During 1997,
World Airways reached a settlement with its engine manufacturer for
reimbursements related to disputed spare engine lease charges. As a result of
this settlement, during 1997, World Airways reversed aircraft costs of $0.9
million originally recorded during 1996. In addition, World Airways received the
use, at no charge, of one spare engine through September 30, 1998.

During 1997, World Airways' lease for its headquarters space expired, and
World Airways entered into a new agreement with the lessor to lease the space
until 2003. As part of the lease agreement, the lessor agreed to finance certain
leasehold improvements provided that World Airways meets specific net worth
requirements. As a result of World Airways' purchase of 3,227,000 shares on
September 18, 1997 (see Note 1), World Airways was not in compliance with this
covenant. World Airways and the lessor are currently discussing possible
amendments to the agreement.

As a result of the Purchase, WorldCorp began reporting its share of World
Airways' net assets and results of operations under the equity method of
accounting as of September 18, 1997. Rental expense for continuing operations,
primarily relating to aircraft leases, totaled approximately $64.7 million,
$84.6 million, and $66.7 million for the period January 1 through September 17,
1997 and for the years ended December 31, 1996 and 1995 respectively.

WorldCorp has no future annual  minimum  rental  payment  obligations.  The
following is a schedule of World Airways' future annual minimum rental payments,
principally  aircraft  rentals  (excluding  variable  portions),  required under
operating  leases that have initial or remaining  noncancellable  lease terms in
excess of one year as of December 31, 1997 (in thousands):


1998                                       $         79,500
1999                                                 72,772
2000                                                 72,831
2001                                                 72,989
2002                                                 73,148
Thereafter                                          612,817
                                                    -------
Total                                      $        984,057
                                           ================

These future annual minimum rental payments include all option years. Under
the terms of certain of the MD-11 leases, if the options are not exercised,
World Airways must pay a substantial penalty to the lessor, consisting of either
a fixed penalty or a penalty based on the number of block hours flown since
delivery of the aircraft. World Airways intends to exercise the options under
these leases.

14.  COMMON STOCK PURCHASE WARRANTS

BNYFC Warrants

On December 7, 1993, in connection with a revolving line of credit facility
and an aircraft parts security agreement (see Notes 12 and 13), the Company
granted to Bank of New York Financial Corporation ("BNYFC") warrants expiring
December 7, 1996 to purchase 250,000 shares of the Company's common stock, at a
price of $6.15 per share. During 1996, 150,000 warrants were exercised and the
remaining 100,000 warrants expired unexercised. Therefore, at December 31, 1997,
there were no WorldCorp BNYFC warrants outstanding.

<PAGE>

1989  Executive Warrants

During 1989, the Company entered into warrant agreements with certain
officers of the Company providing for the issuance of warrants ("the 1989
Executive Warrants") to purchase a total of 745,000 shares of the Company's
common stock at an exercise price of $5.50; such warrants vested at differing
rates over 60 months. The 1989 Executive Warrants expired on August 31, 1997.
During 1995, 141,083 warrants were exercised. As of December 31, 1997, 603,917
of these warrants had been canceled or expired.

1996 Purchase Agreement Warrants

On September 30, 1996, in connection with the Purchase  Agreement (see Note
13), the Company entered into an agreement to issue up to 200,000 warrants.  The
warrants  are fully  exercisable  when  granted.  120,000 of the  warrants  were
granted on September  30, 1996 and expire on September  30, 2000.  The remaining
80,000  warrants  were issuable as to 40,000 each on October 1, 1997 and October
1, 1998 and expire on September 30, 2001 and  September 30, 2002,  respectively,
and are contingent upon certain market  conditions.  The conditions for granting
the first  40,000  warrants  were met  during  1997,  rendering  these  warrants
issuable.  The warrants  have an exercise  price of $6.00 per share,  subject to
certain adjustments.

The per share weighted-average fair value of warrants granted during 1996
was $2.99 on the date of grant using the Black Scholes option-pricing model with
the following weighted-average assumptions: dividend yield of 0.0%, risk- free
interest rate of 6.1%, expected life of 4 years and expected volatility of 62%.

The Company recorded $0.6 million related to the warrants which will be
amortized into interest expense over the term of the related debt.

15.   STOCK OPTIONS

On July 19, 1988, the Board of Directors approved the WorldCorp, Inc. 1988
Stock Option Plan (the "1988 Plan"). The 1988 Plan was amended and restated on
May 13, 1992. The 1988 Plan calls for one share of WorldCorp common stock to be
issued upon exercise of one stock option. Warrants issuable under the 1988 Plan,
as amended, shall not exceed 2,800,000 in the aggregate. Options may be granted
to employees and directors at the discretion of the Administrative Committee of
the 1988 Plan. In 1990, the 1988 Plan was amended to change the vesting
percentage to 20% per year beginning on the grant date provided that the grantee
was still an employee of the Company or a subsidiary. These options expire at
the earlier of the stated expiration, which shall not exceed ten years from the
date of grant, or at a certain period of time after the termination of the
participants' employment with the Company. Stock options are granted with an
exercise price at least equal to the stock's fair market value at the date of
grant.

 In August 1994, the Company granted 1,050,000 options to an officer and a
board member of the Company. These options become vested at various times
through May 2004. During 1997, 1996 and 1995, approximately $0.1 million, $0.2
million and $0.7 million, respectively, of compensation expense was recognized
in connection with the vested portion of these options. These options expire at
the earlier of the stated expiration, or a certain period of time after the
termination of the participants' employment with the Company.

The per share weighted-average fair value of stock options granted during
1997, 1996 and 1995 was $1.20, $4.59 and $7.21, respectively, on the date of
grant using the Black Scholes option-pricing model with the following
weighted-average assumptions:


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

Expected dividend yield          0.00%               0.00%             0.00%
Risk-free interest rate           5.8%        6.2% to 6.5%      5.3% to 5.6%
Expected life (in years)       5 to 10             5 to 10            5 to 8
Expected volatility         58% to 61%          56% to 59%        58% to 59%

<PAGE>

The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options
which were granted with an exercise price at least equal to the stock's fair
market value at the date of grant, in the consolidated financial statements. Had
the Company determined compensation cost based on the fair value at the grant
date for its stock options under SFAS No. 123, the Company's net earnings (loss)
would have been changed to the pro forma amounts indicated below:

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

 Net earnings (loss)   As reported      $  (19,128)  $   (11,754)   $    60,208

                       Pro forma           (20,534)      (12,760)        59,433

Basic earnings (loss)
per common equivalent
share                  As reported      $    (1.29)  $     (0.73)   $      3.77
                       Pro forma             (1.39)        (0.79)          3.72

Diluted earnings
(loss) per common
equivalent share       As reported      $        *   $          *   $      2.82
                       Pro forma                 *              *          2.78

* Amounts are anti-dilutive

Pro forma net earnings reflects only options granted in 1997, 1996 and
1995. Therefore, the full impact of calculating compensation cost for stock
options under SFAS No. 123 is not reflected in the pro forma net earnings
amounts presented above because compensation cost is reflected over the options'
vesting period of six months to 10 years and compensation cost for options
granted prior to January 1, 1995 is not considered.

Stock option activity during the periods indicated is as follows:

                                    Number of
                                     Options           Weighted-Average
                                   Outstanding          Exercise Prices
                                   -----------          ---------------

Balance at December 31, 1994        2,322,404              $      5.68
Granted                                50,000                     7.06
Exercised                           (418,485)                     5.47
Forfeited                           (100,000)                     9.64
Expired                              (25,000)                     9.07
                                     -------                      ----

Balance at December 31, 1995        1,828,919              $      5.48
Granted                               225,000                     6.14
Exercised                           (104,456)                     5.52
Forfeited                                  --                       --
Expired                             (125,845)                     6.28
                                    --------                      ----

Balance at December 31, 1996        1,823,618              $      5.50
Granted                               275,000                     1.86
Exercised                                  --                       --
Forfeited                           (431,667)                     5.04
Expired                              (99,117)                     6.09
                                     -------                      ----


Balance at December 31, 1997        1,567,834              $     4.96
                                    =========              ==========

At December 31, 1997, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $1.75 to $12.23 and 5.7
years, respectively. The following table summarizes the stock options

<PAGE>

outstanding and exercisable at December 31, 1997:

           Stock Options Outstanding                Stock Options Exercisable
           -------------------------                -------------------------

                          Weighted        Weighted
Range of      Number of    Average         Average     Number of      Weighted
Exercise      Options      Remaining Life  Exercise     Options       Average
Price         Outstanding  (Years)         Price      Exercisable Exercise Price
-----         -----------  -------         -----      ----------- --------------

$ 1.75 - 2.00   275,000      9.8          $ 1.86        52,083       $ 1.99
  4.01 - 5.00   870,000      6.1            4.51       820,000         4.51
  5.01 - 6.00   155,000      1.3            5.63       155,000         5.63
  7.01 - 8.00    79,223      2.5            7.49        79,223         7.49
 9.01 - 10.00   163,611      1.9            9.55       163,611         9.55
12.01 - 13.00    25,000      5.7           12.23        25,000        12.23
              ---------                              ---------
              1,567,834                              1,294,917
              =========                              =========

At December 31, 1997 and 1996, the number of options exercisable was
1,294,917 and 1,324,244, respectively, and the weighted-average exercise price
of those options was $5.51 and $5.50, respectively.

World Airways has adopted separate stock option plans for members of its
board of directors, employees and consultants.

16.  EMPLOYEE BENEFIT PLANS

During 1989, the Company adopted an Employee Stock Ownership Plan (the
"ESOP") for the benefit of employees not covered by collective bargaining
agreements. The ESOP is designed as a stock bonus plan which qualifies for
favorable tax treatment under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"), and as an employee stock ownership plan under
Section 4975(e)(7) of the Code. In addition, the ESOP includes a "cash or
deferred arrangement" under Section 401(k) of the Code.

During 1989, the ESOP acquired 450,000 shares of common stock from Violet
June Daly and 450,000 shares of common stock from the Estate of Edward J. Daly.
The purchase price in each transaction was $4.00 per share or a total of $3.6
million.

In 1990, the ESOP was replaced by the Employee Savings and Stock Ownership
Plan ("the WorldCorp KSOP"). Participation in the WorldCorp KSOP was limited to
employees not covered under a collective bargaining agreement. Employees could
elect to invest Salary Deferral Contributions in either the WorldCorp Stock Fund
or in other investment funds. The WorldCorp KSOP provided employer matching
contributions in the WorldCorp Stock Fund at a rate determined by the Board of
Directors, but at no less than 50% of the salary deferral contribution. The
employer matching contribution rate in the WorldCorp Stock Fund for 1997, 1996
and 1995 was 100%. The employer matching contribution in other investment funds
was at the rate of 33 1/3% of the Salary Deferral Contribution. The Company
charged approximately $0.01 million, $0.2 million and $0.3 million to expense
for its contributions in 1997, 1996 and 1995, respectively.

The Board of Directors of World Airways adopted an Employee Savings and
Stock Ownership Plan (the "Plan") effective October 1, 1996. The Plan is
intended to allow employees not covered by collective bargaining agreements, as
well as certain WorldCorp and WorldCorp Investments, Inc. employees, to share in
the growth and prosperity of World Airways, to encourage participants to save on
a tax-favored basis, and to provide participants an opportunity to accumulate
capital for their future economic security. The Plan is an amendment and
continuation of the WorldCorp KSOP. As a result of various business
developments, the vast majority of the participants in the WorldCorp KSOP were
World Airways employees. For that reason, in 1996, World Airways and WorldCorp
agreed that World Airways should assume WorldCorp's obligation under the
WorldCorp KSOP. In connection with that action, the Trustees exchanged the
unallocated shares of WorldCorp common stock held by the WorldCorp KSOP for a
like-value of shares in World Airways common stock. World Airways also made a
special contribution of $50,000 to the Plan.

<PAGE>

The WorldCorp KSOP originally assumed bank financing from its predecessor
plan, the WorldCorp Employee Stock Ownership Plan. This obligation was paid off
by WorldCorp in 1994 and the WorldCorp KSOP agreed to repay WorldCorp the amount
of the bank loan. The WorldCorp KSOP refinanced its debt to WorldCorp through a
margin loan obtained in January 1995 and amended in May 1996 in the amount of
$1.5 million. As discussed above, effective October 1, 1996, World Airways and
WorldCorp agreed that World Airways should assume WorldCorp's obligation under
the WorldCorp KSOP. Principal payments of $90,000 are due quarterly and a final
principal payment of $0.1 million is due May 1998. Interest is payable quarterly
at the call loan rate plus 1.5%. The margin loan is collateralized by
approximately 59,677 of the unallocated shares of common stock owned by the Plan
at December 31, 1997. World Airways is required to make minimum annual
discretionary contributions to the Plan in an amount necessary to pay principal
and interest due on the margin loan to the extent that other contributions to
the Plan are insufficient to make such payments. Contributions were sufficient
to make the required principal and interest payments during 1997.

The Plan will continue to hold the shares of WorldCorp common stock that
were allocated to the participants' accounts before October 1, 1996. No
additional shares of WorldCorp common stock will be allocated under the Plan on
or after that date. Instead, participants will have the opportunity to receive
future allocations of World Airways common stock.

Under the Plan, employees may elect to invest salary deferral contributions
in either the World Airways Stock Fund or in other investment funds. The Plan
provides employer matching contributions in the World Airways Stock Fund at a
rate determined by the Board of Directors, but at no less than 50% of the salary
deferral contribution. The employer matching contribution rate in the other
investment funds is 33 1/3% of the salary deferral contribution. World Airways
expensed approximately $ 0.2 million for its contributions to the Plan for the
period January 1, 1997 through September 17, 1997.

The World Airways' Crewmembers Target Benefit Plan is a defined
contribution plan covering flight engineers and pilots with contributions based
upon defined wages. It is a tax-qualified retirement plan under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code"). Pension expense
for the Target Benefit plan totaled $1.4 million, $2.5 million, and $1.9 million
for the period January 1, 1997 through September 17, 1997 and for the years
ended December 31, 1996, and 1995, respectively.

Until September 1996, World Airways' flight attendants participated in the
World Airways' Flight Attendant Target Benefit Plan, which was a tax-qualified
retirement plan under Section 401(a) of the Code. Under the collective
bargaining agreement between World Airways and the flight attendants,
represented by the International Brotherhood of Teamsters ("Teamsters"), that
was signed in June 1996 and ratified by the flight attendants in August 1996,
the World Airways' Flight Attendant Target Benefit Plan was terminated in
September 1996. World Airways is required under the agreement to make certain
monthly payments on behalf of the flight attendants to the Teamsters subsequent
to the termination of the previous plan. Pension contributions made to the
Teamsters on behalf of the flight attendants totaled $0.3 million and $0.1
million for the period January 1, 1997 through September 17, 1997, and the
fourth quarter of 1996, respectively. Pension expense relating to the Flight
Attendant Target Benefit Plan totaled $0.5 million and $0.2 million for the
first three quarters of 1996 and the year ended 1995, respectively.

Effective January 1, 1994, World Airways adopted the World Airways, Inc.
Retroactivity and Profit Sharing Bonus Plan ("the 1994 Profit Sharing Plan").
The 1994 Profit Sharing Plan provides for the payment of retroactive pay to
certain DC10 crewmembers for the period July 1, 1992 to August 15, 1994, as well
as for certain profit sharing payments. Distributions under the 1994 Profit
Sharing Plan are equal to 20% of World Airways defined earnings, subject to an
annual limitation of 10% of the total annual aggregate compensation of World
Airways employees participating in the 1994 Profit Sharing Plan in that year.
This is not a tax-qualified retirement plan under Section 401(a) of the Code.
World Airways distributed approximately $1.7 million in 1996 pertaining to 1995
results, which included the retroactive payment required under the plan. World
Airways did not make any 1997 distributions pertaining to 1996 results. World
Airways expects to distribute approximately $2.6 million in 1998 pertaining to
1997 results.

World Airways' cockpit crewmembers and eligible dependents are covered
under postretirement health care benefits to age 65. World Airways accounts for
the cost of health benefits in accordance with FAS 106 which requires accrual
accounting for all postretirement benefits other than pensions. World Airways
funds the benefit costs on a pay-as-you- go (cash) basis.

<PAGE>

A summary of the net periodic postretirement benefit costs for the period
January 1, 1997 through September 17, 1997 and for the years ended December 31,
1996 and 1995 is as follows:

                                    1997             1996              1995
                                    ----             ----              ----
Service cost                   $   118,000    $    176,000      $   118,000
Interest cost on accumulated
postretirement benefit
obligation                          78,000         100,000          134,000

Net amortized gain                (38,000)          (38,000)         (40,000)
                                  -------           -------          -------
Net periodic postretirement
benefit cost                   $   158,000      $    238,000      $   212,000
                               ===========      ============      ===========

As a result  of the  Purchase,  beginning  September  18,  1997,  WorldCorp
reports its share of World  Airways' net assets and results of operations  under
the equity method of accounting.  Therefore, there is no amount included for the
accrued  postretirement  benefit obligation in the accompanying balance sheet at
December 31, 1997.  However,  the  following  table shows the  components of the
World Airways accumulated  postretirement  benefit obligation as of December 31,
1997 and 1996:

                                                     1997             1996
                                                     ----             ----

Retirees and dependents                         $   863,000      $    789,000
Fully eligible, active participants                 183,000           229,000
Not fully eligible participants                   1,706,000         1,527,000
                                                  ---------         ---------
                                                $ 2,752,000      $  2,545,000
Less: plan assets                                        --                --
                                                  ---------         ---------
Accrued postretirement benefit obligation       $ 2,752,000      $  2,545,000
                                                ===========      ============

The assumed discount rate used to measure the accumulated postretirement
benefit obligation for 1997 and 1996 was 6.75%. The medical cost trend rate in
1998 was 7.5% trending down to an ultimate rate in 2021 of 4.0%. A one
percentage point increase in the assumed health care cost trend rates for each
future year would have increased the aggregate of the service and interest cost
components of 1997 net periodic postretirement benefit cost by $28,000 and would
have increased the accumulated postretirement benefit obligation as of December
31, 1997 by $121,000.

 Near the end of 1997, the Company entered into employment agreements with
two of its senior executives. Under these agreements, the Company granted the
employees options to purchase 475,000 and 100,000 shares of InteliData and World
Airways' stock, respectively, owned by the Company. The exercise prices of the
InteliData options range from $2.98 to $3.00, and the exercise price of the
World Airways' options is $7.92. The per share weighted-average fair values of
the InteliData options and the World Airways' options at the date of the grant
were $2.01 and $5.08, respectively. The Company is amortizing the estimated fair
value of these options of $1.5 million over the vesting periods of the options,
which range from two years to ten years, with accelerated vesting under certain
circumstances. The Company expensed approximately $0.2 million during 1997
relating to these options.

Near the end of 1997, the Company also agreed to adopt a supplemental
executive retirement plan for one of its executives, which is expected to
require certain funding in 1998 and 1999.

<PAGE>

17.      EARNINGS PER SHARE

 Earnings per share ("EPS") for the years ended December 31, 1997,  1996 and
1995 are computed as follows:

                                    For the Year Ended December 31, 1997
                                    ------------------------------------

                                Earnings           Shares             Per-Share
                              (Numerator)      (Denominator)           Amount
                              -----------      -------------           ------
Basic EPS
Loss from continuing
operations                $  (19,128,000)        14,804,356      $       (1.29)
                                                                         ======

Effect of Dilutive
Securities
7% convertible debentures       4,550,000         5,877,034
                                ---------         ---------
Diluted EPS
Loss available to common
 stockholders             $  (14,578,000)        20,681,390      $           *
                          ==============         ==========       ============


                              For the Year Ended December 31, 1996
                              ------------------------------------

                              Earnings             Shares             Per-Share
                             (Numerator)        (Denominator)           Amount
                             -----------        -------------           ------

Basic EPS
Earning from continuing
operations                    $ 7,437,000        16,153,227      $         0.46
                                                                          =====
Effect of Dilutive
Securities 
Options                                --           530,970
7% convertible debentures       4,550,000         5,877,034
                                ---------         ---------
Diluted EPS
Earnings available to common
stockholders                 $ 11,987,000        22,561,231      $            *
                             ============        ==========      =============

                                 For the Year Ended December 31, 1995
                                 ------------------------------------

                                 Earnings          Shares             Per-Share
                                (Numerator)     (Denominator)           Amount
                                -----------     -------------           ------
Basic EPS
Earnings from continuing
operations                    $  64,158,000      15,988,365      $         4.01
                                                                        =======
Effect of Dilutive
Securities 
Options                                  --       1,129,467
7% convertible debentures         4,550,000       5,877,034
-                                 ---------       ---------
Diluted EPS
Earnings available to common
stockholders                  $  68,708,000       22,994,866      $        2.99
                              =============       ==========      =============

* Amounts are anti-dilutive.

<PAGE>

18.     FEDERAL AND STATE INCOME TAXES

Income tax expense attributable to earnings from continuing operations
consists of (in thousands):

                                     For the years ended December 31,
                                     --------------------------------
                                    1997             1996             1995
                                    ----             ----             ----

U.S. Federal                   $     350      $     504        $       573
State                                 --             --                 88
                                     ---            ---                ---
Income tax expense             $     350      $     504        $       661
                               =========      =========        ===========

There is no deferred tax expense or benefit for the years ended December
31, 1997, 1996, and 1995.

 Income tax expense attributable to earnings (loss) from continuing
operations for the years ended December 31, 1997, 1996, and 1995 differed from
the amounts computed by applying the U.S. Federal income tax rate of 34 percent
for the years ended December 31, 1997, 1996 and 1995 as a result of the
following (in thousands):

                                         For the years ended December 31,
                                         --------------------------------
                                     1997             1996             1995
                                     ----             ----             ----
Expected Federal income tax
  expense(benefit) at the
  statutory rate                 $   (6,385)    $     2,700    $    22,038
Change in valuation allowance,
  net of change attributed to
  discontinued operations losses       6,207        (3,339)             --
Amounts attributable to
  (earnings)/loss of subsidiaries
  not consolidated for tax purposes       --            --         (3,115)
Income tax expense of
  subsidiaries not consolidated
  for tax purposes                       350            --             296
Loss (gain) on issuances
  (purchases) of equity by
  affiliates not consolidated 
  for tax purposes                        --            --        (14,850)
Amortization of goodwill                  --            --             283
Book/tax difference in gain on
  sales of subsidiaries stock             --            --           (252)
Generation (utilization) of net
  operating loss and capital 
  loss carryforwards                      --            --         (3,640)
Federal alternative minimum tax
  and environmental tax                   --            --             231
State income tax expense, net of
  Federal benefit                         --            --              58
Other                                    178         1,143           (388)
                                         ---         -----           ----
Income tax expense               $       350      $    504      $      661
                                 ===========      ========      ==========

<PAGE>

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

                                                   1997                1996
                                                   ----                ----
Deferred tax assets:
Net operating loss carryforwards             $    21,419        $    18,111
Investment in affiliate                            8,648             14,480
Deferred compensation                                  8                199
Accruals not deductible for tax                       67                 24
Compensated absences, primarily due
  to accrual for financial statement
  purposes                                            16                 10
                                                  ------             ------
Gross deferred tax assets                         30,158             32,824
Less:  valuation allowance                        29,484             23,277
                                                  ------             ------
Net deferred tax assets                              674              9,547
                                                  ------              -----
Deferred tax liabilities:
Investment in affiliate                              630              9,499
Property and equipment                                44                 48
                                                  ------              -----
Gross deferred tax liabilities                       674              9,547
                                                  ------              -----
Net deferred income taxes                    $        --        $        --
                                                  ======              =====

The  valuation  allowance for deferred tax assets as of January 1, 1996 was
$20.1  million.  The net change in the total  valuation  allowance  for the year
ended December 31, 1996 was an increase of $ 3.2 million and an increase of $6.2
million for the year ended December 31, 1997.

 As of December 31, 1997, the Company has approximately $ 63.0 million of
net operating loss carryforwards, which expire as follows (in millions):

                           2005                      5.8
                           2007                     15.2
                           2008                     11.2
                           2009                     10.1
                           2010                      1.1
                           2011                     10.2
                           2012                      9.4
                                                     ---
                                                  $ 63.0
                                                  ======

There can be no assurance that the operations of the Company will generate
taxable income in future years so as to allow the Company to realize a tax
benefit from its net operating loss carryforwards ("NOLs"). The NOLs are subject
to examination by the IRS and thus, are subject to adjustment or disallowance
resulting from any such IRS examination. In addition, an ownership change of the
Company, as defined in the Internal Revenue Code, may occur in the future and
may result in the imposition of a lower annual limitation on the Company's NOLs
existing at the time of any such ownership change.

As a result of certain transactions with MHS in 1994 (see Note 6), World
Airways is no longer consolidated with the Company for income tax purposes. As
of December 31, 1997, World Airways had NOLs for federal income tax purposes of
approximately $92.2 million, which is only available to offset future federal
taxable income of World Airways. Of this amount, $ 27.8 million is subject to a
$6.9 million annual limitation resulting from an ownership change, pursuant to
the Internal Revenue Code of 1986, as amended, which occurred in 1991. In
addition, future transactions in the stock of the Company, World Airways or
World Airways' stockholders could cause an additional ownership change at World
Airways, which could result in a substantial reduction in the annual limitation
in the use of World Airways' NOLs and the loss of a substantial portion of the
NOLs available to World Airways.

<PAGE>

19.   MAJOR CUSTOMERS

The Company owns positions in companies that operate in two distinct
business areas. As of December 31, 1997, the Company owned approximately 46.3%
of the outstanding common stock of World Airways, a provider of worldwide
passenger and cargo air transportation for commercial and government customers.
The Company also owns 29.4% of InteliData, a company which concentrates on two
markets: telecommunications and electronic commerce.

As a result of the Purchase (see Note 1), as of September 18, 1997,
WorldCorp began reporting its share of World Airways' net assets and results of
operations under the equity method of accounting which is included in equity in
earnings (loss) of affiliates, net in the accompanying statements of operations.
Results of operations for the period prior to the Purchase are included in
WorldCorp's consolidated results of operations. Information concerning customers
for years in which their revenues comprised 10% or more of the Company's
consolidated operating revenues is presented in the following table (in
thousands):

                               For the Period       Year ended December 31,
                              January 1, 1997       -----------------------
                                Through                
                              September 17, 1997    1996              1995
                              ------------------    ----              ----

Malaysian Airlines              $    51,143      $   105,410      $   100,934
U.S. Department of Defense
(including U.S. Air Force)           45,114           79,029           52,889
Philippine Airlines                  75,889           46,516               --
P. T. Garuda Indonesia               30,627           39,849           26,263
Look Charters                            --            3,749            3,677

World Airways has provided wet lease services to Malaysian Airlines since
1981, providing wet lease services for Malaysian Airlines' scheduled passenger
and cargo operations as well as transporting passengers for the annual Hadj
pilgrimage. MHS, which owned 16.8% of World Airways as of January 23, 1998, also
owns 28% of Malaysian Airlines. World Airways also entered into a 32-month
agreement for year-round operations (including the Hadj) with Malaysian Airlines
whereby World Airways is providing two passenger aircraft with cockpit crews,
maintenance and insurance to Malaysian Airlines' newly-formed charter division
through May 1999. However, World Airways agreed to a five month reduction in the
utilization of one aircraft during 1997, although the aircraft was redeployed in
other activity. Malaysian Airlines has not informed World Airways of any
reductions for 1998. World Airways provided three aircraft for 1997 Hadj
operations. MAS received notice from the Malaysian Hadj Board that MAS would not
participate in the 1998 Hadj pilgrimage. As a result, MAS entered into an
agreement on behalf of World Airways for World Airways to provide two DC-10
aircraft to fly in the 1998 Indian Hadj.

World Airways has a long-term contract to operate three MD-11 cargo
aircraft for Malaysian Airlines. However, beginning in July 1996, and as
mutually agreed by the parties, World Airways redeployed two cargo aircraft,
which had been operating under these contracts, into another contract which
ended in February 1998. World Airways and Malaysian Airlines are currently
discussing redeployment of these aircraft back into Malaysian Airlines'
operations during 1998 in order to meet the contracts' original obligations.
World Airways can provide no assurances, however, that World Airways will, in
fact, be able to do so.

World Airways' contract with the U.S. Air Force expires in September 1998.
World Airways anticipates that future renewals of the U.S. Air Force contract
will be on an annual basis.

World Airways has provided service to PT Garuda Indonesia ("Garuda") since
1973 and has operated under an annual Hadj contract since 1988. World Airways
operated six aircraft in the 1997 Garuda Hadj and seven aircraft in the 1996
Garuda Hadj. World Airways will operate six aircraft for the 1998 Garuda Hadj.

<PAGE>

World Airways had agreements with Philippine Airlines to operate four
passenger aircraft until November 1997. As a result of the economic distress
experienced in the Philippines, World Airways negotiated to terminate the
agreements on two of the aircraft effective in August 1997, and received monthly
termination payments totaling $3.0 million through the original end of the
agreements in November 1997. In addition, the contracts on the remaining two
aircraft were extended until February 1998 and the per block hour rates for
those two aircraft were reduced slightly. The two aircraft which were removed
from Philippine Airlines service were redeployed by World Airways under
agreements with other customers. The contract with Philippine Airlines expired
in February 1998.

World Airways provided service to Look Charters under an annual contract
from 1992 through 1996. In 1996 and 1995, World Airways performed operations for
a summer charter program transporting passengers between Paris, France and
various locations in the United States and Mexico.

Although World Airways' strategy is to enter into long-term contracts with
its customers, the terms of its existing customer contracts are substantially
shorter than the terms of World Airways' lease obligations with respect to its
aircraft. World Airways' financial results could be materially adversely
affected even by relatively brief periods of low aircraft utilization and
yields. Consistent with prior years,World Airways has substantial uncontracted
capacity in the third and fourth quarters of 1998 and beyond. In addition, as
further described below, its major customer, Malaysian Airlines, is subject to
the financial difficulties associated with the adverse economic conditions in
Malaysia and the Asia Pacific Region. Although there can be no assurance that it
will be able to secure additional business to reduce this excess capacity, World
Airways is actively seeking customers for 1998 and beyond, and has historically
been successful in obtaining new customers.

A substantial portion of World Airways' business in 1997 was with two
customers: Malaysian Airlines and Philippine Airlines. The contract with
Philippine Airlines expired in February, 1998. In 1997, World Airways received
approximately $11.2 million in revenue associated with minimum guarantee
payments from Malaysian Airlines and $3.0 million in contract modification
payments from Philippine Airlines, not associated with aircraft flying and
related costs. As of December 31, 1997, Malaysian Airlines and Philippine
Airlines owed World Airways $2.6 million and $1.0 million, respectively,
primarily related to reimbursable costs incurred by World Airways. A substantial
portion of World Airways' contracted business in 1998 is with Malaysian Airlines
and Garuda Indonesia. Although World Airways' customers bear the financial risk
of filling its aircraft with passengers or cargo,World Airways can be affected
adversely if its customers are unable to operate its aircraft profitably, or if
one or more of its customers experience a material adverse change in their
market demand, financial condition or results of operations. Under these
circumstances,World Airways can be adversely affected by receiving delayed or
partial payments or by receiving customer demands for rate and utilization
reductions, flight cancellations, and/or early termination of their agreements.

In 1997, the affects of the adverse economic conditions in Malaysia and
Indonesia and other countries in the Asia Pacific Region included a national
liquidity crisis, significant depreciation in the value of the ringgit and
rupiah, higher domestic interest rates, reduced opportunity for refinancing or
refunding of maturing debts, and a general reduction in spending throughout the
region. These conditions and similar conditions in other countries in the Asia
Pacific Region could have a material adverse effect on the operations of
Malaysian Airlines and Garuda Indonesia, and therefore on the operations of
World Airways. However, management also believes these conditions could provide
new opportunities to wet lease aircraft to airlines customers, particularly
those who have deferred or canceled new aircraft orders but are still in need of
providing additional airlift.

<PAGE>

All export contracts are denominated in U.S. dollars as are substantially
all of the related expenses. The classification between domestic and export
revenues is based on entity definitions prescribed in the economic regulations
of the Department of Transportation. Information concerning World Airways'
export revenues from continuing operations is presented in the following table
(in thousands):

                               For the Period         Year ended December 31,
                              January 1, 1997         -----------------------
                                Through                
                              September 17, 1997        1996              1995
                              ------------------        ----              ----
Operating Revenues:
Domestic                          $    47,190      $    91,516      $    59,278
Export   -  Malaysia                   51,143          105,410          100,934
         -  Philippines                75,889           46,516               --
         -  Indonesia                  30,627           39,849           26,263
         -  Belgium                     9,136               --               --
         -  France                         --            3,749            6,897
         -  Other                       2,107           22,547           49,014
                                        -----           ------           ------
Total                             $   216,092      $   309,587      $   242,386
                                  ===========      ===========      ===========

20.   RELATED PARTY TRANSACTIONS

Effective November 10, 1988, T. Coleman Andrews', III employment agreement
to serve as Chief Executive Officer and President of WorldCorp, which was
originally entered into in August 1986, was extended an additional five years to
August 1, 1994. In connection with the employment agreement, Mr. Andrews had
also entered into a Supplemental Incentive Agreement ("the Incentive Agreement")
with WorldCorp that provided for a bonus in the amount of $1.3 million plus
interest earned at 8.91% to be paid to Mr. Andrews on August 1, 1994, provided
he was still an employee of WorldCorp at that time. In connection with this
employment arrangement, the Company loaned Mr. Andrews $1.3 million on January
10, 1989. Mr. Andrews executed and delivered to the Company a full recourse
promissory note dated January 10, 1989. The principal amount of the note was due
and payable on December 31, 1994 and interest accrued quarterly and was payable
at maturity at a fixed rate of 8.91% per annum. Effective December 1993, the
Company and Mr. Andrews terminated the Incentive Agreement and entered into a
new agreement. In connection with the new agreement, the Company paid Mr.
Andrews in December 1993 (approximately seven months early) $0.2 million due him
under the Incentive Agreement. The new agreement delays payment to Mr. Andrews
of the balance due under the Incentive Agreement and provides that the Company
will make four annual installment payments of $0.4 million beginning January 2,
1995, plus interest earned at 3.83% in 1995 and 1996 and 5.07% in 1997 and 1998.
The first three payments were made as scheduled in 1995, 1996 and 1997. The
remaining and final payment under the Incentive Agreement was made on January 2,
1998. At the same time, Mr. Andrews agreed to cancel his previous promissory
note dated January 10, 1989 and issue a full recourse promissory note dated
December 29, 1993. The principal amount of $1.8 million is payable in annual
installments of varying amounts beginning January 1, 1994 and payable every
February 1 thereafter until 1998. Interest is payable at 3.83% in 1995 and 1996
and 5.07% in 1997 and 1998. Mr. Andrews has reduced the principal balance of his
obligation to the Company by $1.1 million. Mr. Andrews and the Company entered
into a new two year employment agreement as of October 1, 1997 to serve as
Chairman of the Company. In October, 1997, Mr. Andrews entered into a promissory
note for $0.9 million representing the remaining amounts due to the Company
under the previous note, payable in annual installments beginning February 28,
1998 through February 28, 2001, bearing interest at 6.1%. The Incentive
Agreement amounts are included in accrued wages in the accompanying consolidated
balance sheets. As of December 31, 1997 and 1996, $0 and $0.4 million,
respectively, of the promissory note are included in prepaid expenses and other
current assets and $0.8 million and $0.5 million, respectively, are included in
other assets and deferred charges in the accompanying consolidated balance
sheets.

As of December 31, 1997, WorldCorp owns approximately 29.4% of the
outstanding common stock of InteliData (see Note 5). The former Chairman of the
Board of Directors of WorldCorp is also one of the founders of US Order, and is
currently the Chairman of the Board of InteliData.

Effective January 23, 1998 and December 31, 1997, MHS owned approximately
16.8% and 24.9%, respectively, of the outstanding common stock of World Airways.
Effective December 31, 1997, MHS owned approximately 28% of the outstanding
common stock of Malaysian Airlines. Malaysian Airlines is one of World Airways'
largest customers (see Notes 6 and 19).

<PAGE>

During 1997 the Company issued 26,000 shares of common stock to members of
the Board of Directors of the Company as compensation for their services.

Bain & Company,  Inc. provided  consulting  services of approximately  $0.2
million to the Company during 1995. A former principal of Bain & Company is also
a member of the Board of Directors of WorldCorp.

21.   COMMITMENTS AND CONTINGENCIES

Litigation and Claims

World Airways and WorldCorp  (the "World  Defendants")  were  defendants in
litigation  brought  by the  Committee  of  Unsecured  Creditors  of  Washington
Bancorporation in August 1992, captioned Washington Bancorporation v. Boster et.
al., Adv. Proc. 92-0133 (Bankr. D.D.C.) (the "Boster Litigation").  Under a 1997
settlement agreement,  the plaintiff agreed to dismiss with prejudice the Boster
Litigation  against all defendants,  including the World  Defendants,  with each
party  to bear  its  own  costs.  Under  the  settlement  agreement,  the  World
Defendants do not have any further liability in the Boster Litigation.

World Airways' cockpit crew members, who are represented by the
International Brotherhood of Teamsters (the "Teamsters"), are subject to a
four-year collective bargaining agreement that will become amendable in July
1998. Approximately 37% of World Airways' employees are covered under this
collective bargaining agreement. World Airways expects to begin negotiations in
April 1998 and cannot predict the outcome of the negotiations or their possible
impact on World Airways' financial condition and results of operations.

World Airways' flight attendants, who are also represented by the
Teamsters, are subject to a four-year collective bargaining agreement that will
expire in August 2000. World Airways' flight attendants argued the "scope
clause" of the collective bargaining agreement had been violated by World
Airways and challenged the use of foreign flight attendant crews on World
Airways' flights for Malaysian Airlines and Garuda Indonesia which has
historically been World Airways' operating procedure. World Airways is
contractually obligated to permit its Southeast Asian customers to deploy their
own flight attendants. While the arbitrator in this matter denied in 1997 the
Union's request for back pay to affected flight attendants for flying relating
to the 1994 Hadj, the arbitrator concluded that World Airways' contract with its
flight attendants requires World Airways to first actively seek profitable
business opportunities that require using World Airways' flight attendants,
before World Airways may accept wet lease business opportunities that use the
flight attendants of World Airways' customers. Subsequently, in 1997, the flight
attendants challenged and filed "scope clause" grievances with respect to four
separate wet-lease contracts. World Airways and the Teamsters are presently in
discussions regarding these grievances. At this time, however, World Airways can
give no assurance that these discussions will be successful and the grievances
will not be submitted to formal arbitration. World Airways can provide no
assurance as to how the resolution of this matter will affect World Airways'
financial condition and results of operations.

World Airways has periodically received correspondence from the FAA with
respect to minor noncompliance matters. In November 1996, as the FAA has
increased its scrutiny of U.S. airlines, World Airways was assessed a
preliminary fine of $810,000 in connection with certain security violations by
ground handling crews contracted by World Airways for services at foreign
airport locations. Under 49 U.S.C., Section 46301, any violation of pertinent
provisions of 49 U.S.C. Subsection 40101 or related rules is subject to a civil
penalty for each violation. Upon review of the evidence or facts and
circumstances relating to the violation, the statute allows for the compromise
of proposed civil penalties. The penalties were proposed by the FAA in
connection with recent inspections at foreign airport facilities and relate
primarily to ground handling services provided by World Airways' customers in
connection with their operations; specifically, the inspection procedures of its
aircraft, passengers and associated cargo. In each of these instances, World
Airways was in compliance with international regulations, but not the more
stringent U.S. requirements, despite the fact that the flights in question did
not originate or terminate in the United States. World Airways has taken steps
to comply with the U.S. requirements. In September 1997, World Airways entered
into a consent order and settlement agreement with the FAA in connection with

<PAGE>

the above-mentioned alleged violations. Pursuant to this agreement, World
Airways is liable for the sum of $610,000, of which $405,000 was paid in
September. The remaining $205,000 was suspended and will be forgiven if World
Airways complies with the provisions of the settlement agreement, including not
incurring any security violations during the one year period following the
execution of the settlement agreement. While World Airways believes it is
currently in compliance in all material respects with all appropriate standards
and has all required licenses and authorities, any material non-compliance by
World Airways therewith or the revocation or suspension of licenses or
authorities could have a material adverse effect on the financial condition or
results of operations of World Airways.

In connection with the discontinuance of World Airways' scheduled service
operations, World Airways is subject to claims by various third parties and may
be subject to further claims in the future. One claim which had been filed in
connection with World Airways' discontinuance of scheduled service to South
Africa, and which sought approximately $37.8 million in compensatory and
punitive damages, has been settled by the parties for approximately $0.7
million. Also, a claim has been filed in Germany against the Company by a tour
operator seeking approximately $3.5 million in compensation related to the
cancellation of a summer program in 1996. World Airways believes it has
substantial defenses to this action, although no assurance can be given of the
eventual outcome of this litigation.

The Company is involved in various other claims and legal actions arising
in the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial condition.

Contingent Rental Payments

In July 1993, World Airways returned certain DC10-30 aircraft to the lessor
(see Note 13). As a result of this early lease termination, World Airways is
responsible, until 2004 for one aircraft and 2005 for the second aircraft, for
one- third of any deficit in rent incurred in future leases of the aircraft, up
to $100,000 monthly per plane, with an overall combined cap of $1,850,000. World
Airways incurred $984,000 for rent shortfalls through December 1996. World
Airways' remaining contingent liability related to this matter approximates
$866,000.

Letters of Credit

At December 31, 1996, restricted cash and short-term investments included
customer deposits held in escrow and cash pledged as collateral for various
letters of credit facilities issued by a bank on World Airways' behalf totaling
$1.0 million, with expiration dates occurring in 1997. At December 31, 1997,
there were no outstanding letters of credit.

MD-11 Engine Maintenance Agreement

Engine maintenance accounts for most of World Airways' annual maintenance
expenses. Typically, the hourly cost of engine maintenance increases as the
aircraft ages. World Airways outsources major airframe maintenance and power
plant work to several suppliers. World Airways has a 10-year contract expiring
in August 2003 with United Technologies Corporation's Pratt & Whitney Group for
all off-wing maintenance on the PW 4462 engines that power its MD-11 aircraft.
Under this contract, the manufacturer agreed to provide such maintenance
services at a cost not to exceed specified rates per hour during the term of the
contract. The specified rates per hour are subject to annual escalation,
increasing substantially in 1998. Accordingly, while World Airways believes the
terms of this agreement have resulted in lower engine maintenance costs than it
otherwise would incur, engine maintenance costs will increase substantially
during the last five years of the agreement. World Airways began to accrue these
increased expenses in 1997 and such expenses will continue to increase during
the remainder of the term of the contract as World Airways' aircraft fleet ages.

<PAGE>

22.   UNAUDITED QUARTERLY RESULTS

The results of the Company's quarterly operations (unaudited) for 1997 and
1996 are as follows (in thousands except per share amounts):

                                                  Quarter Ended
                        -------------------------------------------------------
                        March 31  June 30  September 30  December 31  Total Year
                        --------  -------  ------------  -----------  ----------
    1997

Operating revenues     $ 78,748 $  81,928    $ 55,416     $    --  (1) $ 216,092

Operating income (loss)   6,022     5,488 (2)   1,543 (3)    (354) (1)    12,699

Earnings (loss) from
  continuing operations     709     (213)    (14,119) (4)  (5,505)      (19,128)

Net earnings (loss)    $    709 $   (213)  $ (14,119)    $ (5,505)    $ (19,128)

Basic earnings (loss)
  per common equivalent
  share(7):            $   0.05 $  (0.01)  $   (0.94)    $  (0.39)    $   (1.29)

Diluted earnings
  (loss) per common
  equivalent share(7): $      * $       *  $       *     $      *     $        *

1996

Operating revenues     $ 66,691 $  87,056  $  76,461     $ 83,464     $  313,672

Operating income
  (loss)                (6,673)    11,449    (5,738)        3,699 (5)      2,737

Earnings (loss) from
  continuing operations (6,592)     4,379    (4,147)       13,797 (6)      7,437

Discontinued operations
  (less applicable tax
  benefit)              (2,481)  (16,897)       107            80       (19,191)

Net earnings (loss)    $(9,073) $(12,518) $ (4,040)      $ 13,877     $ (11,754)

Basic earnings (loss)
  per common equivalent
  share(7):
  Continuing operations (0.41)  $   0.27  $  (0.25)      $   0.90     $     0.46
  Discontinued
    operations          (0.15)    (1.03)       0.01          0.01         (1.19)
                        -----     -----        ----          ----          -----
Net earnings (loss)    $(0.56)  $ (0.76)  $  (0.24)      $   0.91     $   (0.73)
                       ======   =======   ========       ========      =========

Diluted earnings 
  (loss) per common 
  equivalent share(7):
  Continuing 
     operations        $     *  $      *  $       *      $   0.70     $        *
  Discontinued
     operations              *         *          *          0.01              *
                          ----      ----       ----          ----           ----
Net earnings (loss)    $     *  $      *  $       *      $   0.71     $        *
                        ======   =======   ========       ========     =========

 *   Amounts are anti-dilutive.

(1) - As a result of the Purchase, beginning September 18, 1997, the
Company reports its share of World Airways' results of operations under the
equity method of accounting. As a result, during the fourth quarter, operating
revenues and expenses relate entirely to the operations of WorldCorp (Notes 1
and 4).

(2) - Operating expenses include a $1.0 million reversal of accrued
maintenance expense in excess of the cost of an overhaul of a DC-10 aircraft.

(3) - Operating expenses include a $2.3 million reversal of aircraft costs
incurred in 1996 and the first six months of 1997, relating to reimbursements
for disputed spare engine lease charges (see Note 13).

(4) - Includes a $17.6 million gain on the sale of World Airways' stock,
offset by a $8.7 million loss on purchases of equity by World Airways, and a
write-off of approximately $20.3 million of restructuring charges by InteliData.

(5) - Includes a net gain of $37.1 million on issuances (purchases) of
equity by subsidiaries (see Notes 4 and 5).

(6) - Includes the reversal of maintenance costs, which had been accrued
throughout 1996, of $1.5 million relating to the termination of two DC10-30
aircraft in December 1996 (see Notes 6 and 13).

(7) - Earnings per share for the periods presented have been calculated in
accordance with Financial Accounting Standard Board's Statement of Financial
Accounting Standard No. 128, Earnings Per Share.

<PAGE>

23.  SUBSEQUENT EVENT

On April 20, 1998, WorldCorp consummated a transaction pursuant to which it
acquired an 80% interest in Paper Acquisition Corp., a Delaware corporation
("Paper"). Paper was organized by Sun Capital Partners, Inc. ("Sun Capital") to
acquire and operate specialty paper businesses. In December 1996, Paper acquired
and consolidated two companies that produce a variety of coated papers and
specialty inks which are sold to business forms manufacturers. For the 12 months
ended December 31, 1997, Paper had approximately $48 million (unaudited) of
sales.

Pursuant to the transaction, (i) WorldCorp exchanged seven-year warrants to
acquire 35% (after the exercise of such warrants and the WorldCorp Acquisition
Corp. options described below) of the issued and outstanding capital stock of
WorldCorp Acquisition Corp., a Delaware corporation ("WorldCorp Acquisition"),
held by WorldCorp for certain of the shares of Paper held by the Paper
shareholders (the warrants are exercisable after one-year, at an exercise price
of 125% of the estimated fair market value of the WorldCorp Acquisition stock at
April 20, 1998 and payable with a seven-year, full-recourse, interest only note)
(ii) WorldCorp contributed all of its shares of World Airways and the Paper
shares received above, to WorldCorp Acquisition Corp., in exchange for 80% of
the issued and outstanding capital stock of WorldCorp Acquisition and (iii) the
holders of Paper contributed their shares of capital stock of Paper in exchange
for (A) 20% of the issued and outstanding capital stock of WorldCorp
Acquisition, (B) the assumption of approximately $15 million of debt, net of
cash and investments, of Paper, (C) $15 million of 8% interest only promissory
notes of WorldCorp Acquisition due in April 2003, (D) $1 million of 8%
promissory notes of WorldCorp Acquisition due in March 1999 and (E) an earn-out
based on the earnings before interest, taxes, depreciation and amortization of
Paper during the next five years. The earn-out is payable, including interest at
10%, in September 2002. WorldCorp has pledged all of its shares of common stock
of both WorldCorp Acquisition and InteliData, and WorldCorp Acquisition has
pledged all of its shares of common stock of both World Airways and Paper to
current Paper shareholders to collateralize the notes and the earn-out. The
notes contain various restrictive covenants, including dividend restrictions on
WorldCorp and its subsidiaries, limitations on transfers of cash to WorldCorp,
as well as cross-default provisions. Upon an event of default, the noteholders
may assume control of the WorldCorp Acquisition board and the pledged
collateral.

WorldCorp and WorldCorp Acquisition have entered into a consulting agreement
with Sun Capital, which through an affiliate owned approximately 85% of the
issued and outstanding shares of Paper immediately prior to the transaction,
pursuant to which Sun Capital will receive $500,000 per year for financial
consulting. Sun Capital also received seven-year options to acquire
approximately 20% and 10% (after the exercise of such options and the warrants
described above) of the issued and outstanding shares of common stock of
WorldCorp and WorldCorp Acquisition, respectively, which options vest over five
years. The exercise prices of these options is 125% of the fair market value of
the underlying stock at April 20, 1998 and are payable with seven-year full
recourse interest only notes.

The WorldCorp Board of Directors unanimously approved the acquisition of Paper
because, among other things, Paper will provide WorldCorp and WorldCorp
Acquisition with a platform for WorldCorp and WorldCorp Acquisition to pursue
their growth strategy and with additional operating cash flow. Although the
acquisition of Paper will not resolve WorldCorp's liquidity issues, it is
intended to build long-term value for WorldCorp's stockholders.


<PAGE>



INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
WorldCorp, Inc.:


We have audited the accompanying consolidated balance sheets of WorldCorp,
Inc. and subsidiaries (WorldCorp) as of December 31, 1997 and 1996, and the
related consolidated statements of operations, changes in common stockholders'
deficit and cash flows for each of the years in the three-year period ended
December 31, 1997. In connection with our audits of the consolidated financial
statements, we also have audited the related financial statement schedule as
listed in Item 14(a)(2) herein. These consolidated financial statements and
financial statement schedule are the responsibility of WorldCorp's management.
Our responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits. We did not
audit the consolidated financial statements of InteliData Technologies
Corporation and subsidiaries ("InteliData"), a 29.4% and 28.9% investee company,
as of and for the years ended December 31, 1997 and 1996, respectively.
WorldCorp's investment in InteliData was $ 10.4 million and $ 37.4 million at
December 31, 1997 and 1996, respectively, and its equity in the loss of
InteliData was $ 26.5 million and $ 31.8 million for the years ended December
31, 1997 and 1996, respectively. The consolidated financial statements of
InteliData were audited by other auditors whose report has been furnished to us,
and our opinion, insofar as it relates to the amounts included for InteliData,
is based solely on the report of the other auditors.

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

In our opinion, based on our audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of WorldCorp, Inc. and subsidiaries as
of December 31, 1997 and 1996, and the results of their operations and their
cash flows for each of the years in the three- year period ended December 31,
1997, in conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
2 to the consolidated financial statements, in order to meet its debt service
obligations for 1998, the Company must obtain additional financing, refinance
existing borrowings or obtain concessions from its lenders. These matters raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
consolidated financial statements and financial statement schedule do not
include any adjustments that might result from the outcome of this uncertainty.



                                            KPMG PEAT MARWICK LLP



Washington, D.C.
February 16, 1998, except as to notes
     2 and 23, which are as of
     April 20, 1998


<PAGE>



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

None.

                                                     PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors

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

Executive Officers

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

  Name Age                                  Position Held

T. Coleman Andrews, III  43  Chairman of the Board,  Director and of WorldCorp
                             and Chairman of the Board and Director of World
                             Airways and InteliData

Patrick F. Graham        58  President, Chief Executive Officer, Principal
                             Accounting Officer and  Director of WorldCorp, and
                             Director of InteliData

Mr. T. Coleman Andrews III was elected Chairman of the Board in 1997. Prior to
that he served as Chief Executive Office and President since June 1987. He has
served as Chairman of the Board of World Airways since 1986. On March 14, 1997,
World Airways announced that Charles W. Pollard departed as President and Chief
Executive Officer. Pursuant to the Company's bylaws, Mr. Andrews acted as
President and Chief Executive Officer on an interim basis pending the hiring of
Russell L. Ray Jr. as Chief Executive Officer in April, 1997. He has served as a
Director of InteliData Technologies Corporation (and its predecessor, US Order,
Inc.) since 1990. From 1978 through 1986, he was affiliated with Bain & Company,
Inc. an international strategy consulting firm. At Bain, he was elected partner
in 1982 and was a founding general partner in 1984 of the Bain Capital Fund, a
private venture capital partnership. Prior to his experience with Bain, Mr.
Andrews served in several appointed positions in the White House for the Ford
Administration.

Mr Patrick F. Graham was appointed as President and Chief Operating Officer of
World Corp in November 1997. Mr. Graham has been a director of WorldCorp since
October 1992. Prior to joining WorldCorp Mr. Graham was a Director of Bain &
Company, Inc., a management consulting firm based in Boston, Massachusetts. Mr.
Graham co- founded the firm in 1973. In addition to his primary responsibilities
with Bain clients, he has also served as Bain's Vice Chairman and Chief
Financial Officer. Prior to the start of Bain & Company, Mr. Graham was Group
Vice President with the Boston Consulting Group. His previous experience also
includes positions with IBM, Ford Motor Company, and as a captain in the U.S.
Army. Mr. Graham received an M.B.A. with Distinction from Stanford University's
Graduate School of Business. He holds a B.A. from Knox College, where he
graduated magna cum laude, was elected to Phi Beta Kappa and is currently on the
Board of Trustees. Mr. Graham also serves as a director of InteliData
Technologies Corporation.

Beneficial Ownership Reporting

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


<PAGE>



ITEM 11.  EXECUTIVE COMPENSATION

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

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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



<PAGE>



                                                      PART IV

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

(a) The following documents are filed as part of this report:

(1)     Financial Statements

The following  consolidated  financial  statements  of WorldCorp,  Inc. and
subsidiaries are filed herewith:

Consolidated Balance Sheets, December 31, 1997 and 1996

Consolidated Statements of Operations, Years Ended
December 31, 1997, 1996, and 1995

Consolidated Statements of Changes in Common Stockholders'
Deficit, Years Ended December 31, 1997, 1996 and 1995

Consolidated Statements of Cash Flows, Years Ended
December 31, 1997, 1996 and 1995

Notes to Consolidated Financial Statements

Independent Auditors' Report

(2)     Financial Statement Schedule

Schedule
 Number

II.     Valuation and Qualifying Accounts


NOTE: All other schedules are omitted because the requisite information is
either presented in the financial statements or notes thereto or is not present
in amounts sufficient to require submission of the schedules.

Status of Prior Documents

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

<PAGE>
(3)      Index to Exhibits

Exhibit
No.                                          Exhibit

3.1       Certificate of Incorporation of WorldCorp,  Inc. dated March 16, 1987.
          (Filed as Exhibit 3.1 to WorldCorp,  Inc.'s Registration  Statement on
          Form S-4  (Commission  File No.  33012735) filed on March 19, 1987 and
          incorporated herein by reference.)

3.2       Amended and Restated  Bylaws of  WorldCorp,  Inc.  dated  November 13,
          1987. (Filed as Exhibit 3.1 to WorldCorp, Inc.'s Annual Report on Form
          10-K for the fiscal  year ended  December  31,  1987 and  incorporated
          herein by reference.)

4.6       First  Supplemental  Indenture  dated as of February  22, 1994 between
          WorldCorp,  Inc. and The First  National  Bank of Boston,  as Trustee.
          (Filed  as  Exhibit  4.6 to  WorldCorp,  Inc's  Form S-3  Registration
          Statement  (Commission  file No.  33-60247) filed on June 15, 1995 and
          incorporated herein by reference.)

4.8       Stock Option  Agreement  dated as of April 1, 1995 between  WorldCorp,
          Inc. and Patrick F. Graham.  (Filed as Exhibit 4.8 to WorldCorp  Inc's
          Form S-3 Registration  Statement  (Commission file No. 33-60247) filed
          on June 15, 1995 and incorporated herein by reference.)

10.1      Merger Agreement and Plan of Reorganization dated as of April 28, 1987
          by and  among  World  Airways,  Inc.,  World  Merger  Corporation  and
          WorldCorp, Inc. (Filed as Exhibit 10.50 to WorldCorp,  Inc.'s Form S-2
          Registration  Statement (Commission File No. 33-1358276) filed on July
          31, 1987 and incorporated herein by reference.)

10.2      Form  of  Assumption  Agreement  dated  as  of  June  23,  1987  among
          WorldCorp, Inc., World Airways, Inc. and each Indemnified Party (Filed
          as Exhibit 10.60 to WorldCorp,  Inc.'s Form S-2 Registration Statement
          (Commission  File  No.   33-1358276)   filed  on  July  31,  1987  and
          incorporated herein by reference.)

10.3      Agreement between World Airways, Inc. and Flight Attendants
          represented by International Brotherhood of Teamsters.  (Filed
          reference as Exhibit 10.67 to WorldCorp, Inc.'s Form S-3 Registration
          Statement (Commission File No. 2-91998) filed on December 10, 1987
          and incorporated herein by reference.)

10.4      Office Lease - The Hallmark  Building  dated as of May 16, 198 between
          WorldCorp, Inc. and GT Renaissance Centre Limited Partnership.  (Filed
          as Exhibit 10.36 to  WorldCorp,  Inc.'s Annual Report on Form 10-K for
          the fiscal year ended  December  31, 1989 and  incorporated  herein by
          reference.)

10.5      Lease Amendment dated as of June 27, 1989 between  WorldCorp,  Inc and
          GT Renaissance Centre Limited Partnership.  (Filed as Exhibit 10.37 to
          WorldCorp, Inc.'s Annual Report on Form 10-K for the fiscal
          year ended December 31, 1989 and incorporated herein by reference.)

10.6      Office Lease - The Hallmark  Building  dated as of September  20, 1989
          between  World  Airways,   Inc.  and  GT  Renaissance  Centre  Limited
          Partnership. (Filed as Exhibit 10.38 to WorldCorp, Inc's Annual Report
          on form  10-K  for  the  fiscal  year  ended  December  31,  1989  and
          incorporated herein by reference.)

10.7      Warrant  Agreement dated as of July 22, 1989 between  WorldCorp,  Inc.
          and Charles W. Pollard.  (Filed as Exhibit  10.45 to WorldCorp  Inc.'s
          Annual Report on Form 10-K for the fiscal year ended December 31, 1989
          and incorporated herein by reference.)

<PAGE>
10.8      WorldCorp,  Inc.  Employee Savings and Stock Ownership Plan. (Filed as
          Exhibit 10.49 to WorldCorp,  Inc.'s Annual Report on Form 10-K for the
          fiscal  year  ended  December  31,  1989 and  incorporated  herein  by
          reference.)

10.9      Amendment No. 1 to WorldCorp Inc. Employee Savings and Stock
          Ownership Plan.  (Filed as Exhibit 10.50 to WorldCorp, Inc.'s
          Annual Report on Form 10-K for the fiscal year ended December 31,
          1989 and incorporated herein by reference.)

10.10     Aircraft  Lease  Agreement  dated as of January 15, 1991 between World
          Airways,  Inc.  and  First  Security  Bank of Utah,  N.A.,  not in its
          individual  capacity,  but solely as Owner Trustee.  (Filed as Exhibit
          10.47 to  WorldCorp,  Inc.'s Annual Report on Form 10-K for the fiscal
          year ended December 31, 1990 and incorporated herein by reference.)

10.11     Aircraft Lease Agreement for Aircraft Serial Number 48518 dated as
          of September 30, 1992 between World Airways, Inc. and International
          Lease Finance Corporation.  Incorporated herein by reference.

10.12     Aircraft Lease Agreement for Aircraft Serial Number 48519 dated as
          of September 30, 1992 between World Airways, Inc. and International
          Lease Finance Corporation. Incorporated herein by reference.

10.13     Aircraft Lease Agreement for Aircraft Serial Number 48633 dated as
          of September 30, 1992 between World Airways, Inc. and International
          Lease Finance Corporation. Incorporated herein by reference.

10.14     Aircraft Lease Agreement for Aircraft Serial Number 48631 dated as
          of September 30, 1992 between World Airways, Inc. and International
          Lease Finance Corporation. Incorporated herein by reference.

10.15     Aircraft Lease Agreement for Aircraft Serial Number 48632 dated as
          of September 30, 1992 between World Airways, Inc. and International
          Lease Finance Corporation. Incorporated herein by reference.

10.16     Accounts Receivable Management and Security Agreement dated as
          of December 7, 1993 between World Airways, Inc. and BNY
          Financial Corporation. Incorporated herein by reference.

10.17     Amendment No. 1 To Aircraft Lease Agreement for Aircraft Serial
          Number 48518 dated as of November 1993 between World Airways,
          Inc. and International Lease Finance Corporation.  Incorporated
          herein by reference.

10.18     Amendment No. 2 to Aircraft Lease Agreement for Aircraft Serial
          Number 48518 dated as of March 8, 1993 between World Airways,
          Inc. and International Lease Finance Corporation.  Incorporated
          herein by reference.

10.19     Amendment No. 2 to Aircraft Lease Agreement for Aircraft Serial
          Number 48437 dated as of March 31, 1993 between World Airways,
          Inc. and International Lease Finance Corporation.  Incorporated
          herein by reference.

10.20     Amendment No. 3 to Aircraft Lease Agreement for Aircraft Serial
          Number 48437 dated as of April 15, 1993 between World Airways,
          Inc. and International Lease Finance Corporation.  Incorporated
          herein by reference.

10.21     Acquisition Agreement Among VISA International Service Association, US
          Order, Inc, and WorldCorp, Inc, dated as of July 15, 1994.
          Incorporated herein by reference.

10.22     Stock Purchase Agreement by and among World Airways,  Inc., WorldCorp,
          Inc., and Malaysian Helicopter Services Berhad dated as of October 30,
          1993. Incorporated herein by reference.

10.23     Stock Registration Rights Agreement between World Airways, Inc.
          and Malaysian Helicopter Services Berhad dated as of October 30,
          1993.  Incorporated herein by reference.

<PAGE>
10.24     Shareholders Agreement between Malaysian Helicopter Services
          Berhad and WorldCorp, Inc., and World Airways, Inc. dated as of
          February 3, 1994.  Incorporated herein by reference.

10.25     Amendment No. 1 to Shareholders Agreement dated as of February 28,
          1994, among WorldCorp, World Airways, and MHS.
          Incorporated herein by reference.

10.26     Stock Option Agreement dated as of August 1, 1994 ("Grant Date")
          between WorldCorp, Inc. and William F. Gorog.  Incorporated
          herein by reference.

10.27     Employment Agreement dated as of August 1, 1994 between US
          Order, Inc. and John C. Backus, Jr.   Incorporated herein by 
          reference.

10.28     Employment Agreement dated as of August 19, 1994 between
          WorldCorp, Inc. and T. Coleman Andrews, III.   Incorporated
          herein by reference.

10.29     Stock Option Agreement dated as of August 19, 1994 ("Grant Date")
          by and between WorldCorp, Inc. and T. Coleman Andrews, III.
          Incorporated herein by reference.

10.30     Agreement between World Airways, Inc. and the International
          Brotherhood of Teamsters representing the Cockpit Crewmembers
          employed by World Airways, Inc. dated August 15, 1994-June 30, 1998.
          Incorporated herein by reference.

10.31     Aircraft  Services  Agreement  dated September 26, 1994 by and between
          World Airways, Inc. ("World") and Malaysian Airlines.
          Incorporated herein by reference.

10.32     Freighter Services Agreement dated October 1, 1994 by and between
          World Airways, Inc. and Malaysian Airline System Berhad.
          Incorporated herein by reference.

10.33     World Airways, Inc. 1995 AMC Contract F11626-94-D0027 dated
          October 1, 1994 between World Airways, Inc. and Air Mobility Command.
          Incorporated herein by reference.

10.34     Stock Purchase  Agreement (the  "Agreement")  dated as of December 31,
          1994  by  and  between  MHS  Berhad,  a  Malaysian   corporation  (the
          "Shareholder")  and  WorldCorp,  Inc.,  a  Delaware  corporation  (the
          "Purchaser"). Incorporated herein by reference.

10.35     Amendment No. 1 to Passenger Aircraft Services and Freighter
          Services Agreement dated December 31, 1994 by and between World
          Airways, Inc. and Malaysian Airline System Berhad.  Incorporated
          herein by reference.

10.36     Customer  Agreement  between WorldCorp ESSOP and Scott & Stringfellow,
          Inc. dated January 11, 1995 for a margin loan.
          Incorporated herein by reference.

10.37     Side Letter dated January 11, 1995 from Scott & Stringfellow,  Inc. to
          William F.  Gorog,  Trustee of  WorldCorp  Employee  Savings and Stock
          Ownership Plan for a margin loan to the WorldCorp ESSOP.
          Incorporated herein by reference.

10.38     Guarantee Agreement dated January 11, 1995 by WorldCorp, Inc.
          ("Guarantor") for the benefit of Scott & Stringfellow, Inc. (the
          "Lender").   Incorporated herein by reference.

10.39     Registration Rights Agreement dated as of January 11, 1995 by and
          between WorldCorp, Inc. and Scott & Stringfellow, Inc.
          Incorporated herein by reference.

<PAGE>
10.40     Side Letter  dated  January 11, 1995 from  WorldCorp,  Inc. to Scott &
          Stringfellow,  Inc. regarding  commitment to make contributions to the
          WorldCorp Employee Savings and Stock Ownership Plan (the "ESSOP"), for
          the duration of the Scott & Stringfellow loan to the ESSOP.
          Incorporated herein by reference.

10.41     Amendment No. 2 to Passenger Aircraft Services and Freighter
          Aircraft Service Agreement dated February 9, 1995 by and between
          World Airways, Inc. and Malaysian Airline System Berhad.
          Incorporated herein by reference.

10.42     Amendment No. 2 to Aircraft Lease Agreement for Aircraft Serial
          Number 48519 dated as of April 23, 1993 between World Airways, Inc.
          and International Lease Finance Corporation.   Incorporated herein
          by reference.

10.43     Amendment No. 3 to Aircraft Lease Agreement for Aircraft Serial
          Number 48519 dated as of April 1993 between World Airways, Inc.
          and International Lease Finance.   Incorporated herein by reference.

10.44     Aircraft Lease Agreement for Aircraft Serial Number 48437 dated
          as of September 30, 1992 between World Airways, Inc. and
          International Lease Finance Corporation.  Incorporated herein
          by reference.

10.45     Amendment No. 2 to Aircraft Lease Agreement for Aircraft Serial
          Number 48631 dated as of April 28, 1995 between World Airways, Inc.
          and International Lease Finance Corporation.

10.46     Amendment No. 2 to Aircraft Lease Agreement for Aircraft Serial
          Number 48632 dated as of April 28, 1995 between World Airways, Inc
          and International Lease Finance Corporation.  Incorporated herein
          by reference.

10.47     Amendment (No. 1) to the Accounts Receivable Management and
          Security Agreement between World Airways, Inc. and BNY Financial
          Corporation dated March 15, 1995 and effective as of January 1, 1995.
          Incorporated herein by reference.

10.48     Amendment No. 2 to the Accounts Receivable Management and
          Security Agreement between World Airways, Inc. and BNY Financial
          Corporation dated August 1995.   Incorporated herein by reference.

10.49     Long Term Aircraft Charter Agreement dated August 20, 1986 between
          World Airways, Inc. and Malaysian Airline System Berhad.
          Incorporated herein by reference.

10.50     Amendment dated April 10, 1991 to the Long Term Aircraft Charter
          Agreement dated August 20, 1986 between World Airways, Inc. and
          Malaysian Airline System Berhad.  Incorporated herein by reference.

10.51     Amendment No. 3 to the Freighter Services Agreement by and
          between World Airways, Inc. and Malaysian Airline System
          Berhad dated May, 1995.  Incorporated herein by reference.

10.52     FY1996 Contractor Team Agreement among World Airways, Inc.,
          Continental Airlines, Inc., Emery Worldwide Airlines, Inc., Evergreen
          International Airlines, Inc., Miami Air International, Inc., Northwest
          Airlines, Inc. and Rich International Airways, Inc. dated April 3, 
          1995.  Incorporated herein by reference.

10.53     Maintenance Agreement between Malaysian Airline System Berhad
          and World Airways, Inc. dated March 1, 1995.  Incorporated herein
          by reference.

10.54     Form of Master Services Agreement between World Airways, Inc.
          and the Company.  Incorporated herein by reference.

10.55     1996 U.S. Air Force Contract dated October 1, 1995 between World
          Airways, Inc. and Air Mobility Command.  Incorporated herein
          by reference.

<PAGE>
10.56     Amendment No. 3 to the Accounts Receivable Management and
          Security Agreement between World Airways, Inc. and BNY Financial
          Corporation dated as of September 28, 1995.   Incorporated
          herein by reference.

10.57     Amendment No. 4 to the Accounts Receivable Management and Security
          Agreement between World Airways, Inc. and BNY Financial Corporation
          dated as of September 28, 1995.   Incorporated herein by reference.

10.58     Form 10-K for the fiscal year ended December 31, 
          1997 for World Airways, Inc.                            Filed Herewith

10.59     Form 10-K for the fiscal year ended December 31, 
          1997 for InteliData Technologies Corporation, Inc.      Filed Herewith

10.60     Employment Agreement, by and between the Company
          and T. Coleman Andrews, III                             Filed Herewith

10.61     Employment Agreement, by and between the Company
          and Patrick F. Graham                                   Filed Herewith

11        Statement on Calculation of Earnings (Loss) 
          Per Common Share.                                       Filed Herewith

21        Subsidiaries of the Registrant WorldCorp, Inc.          Filed Herewith

23.1      Consent of KPMG Peat Marwick LLP.                       Filed Herewith

23.2      Consent of Deloitte & Touche LLP.                       Filed Herewith

27        Financial Data Schedule for the year ended
          December 31, 1997.                                      Filed Herewith

<PAGE>

1 Confidential treatment of portions of the Agreement has been granted by the
Commission. The copy filed as an exhibit omits the information subject to
confidentiality request. Confidential portions so omitted have been filed
separately with the Commission.

(b)      Reports on Form 8-K

Form 8-K dated September 18, 1997 was filed with the Securities and Exchange
Commission on October 3, 1997.


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

<PAGE>



 SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


WORLDCORP,  INC.

By   /s/ Patrick F. Graham
Patrick F. Graham
Chief Executive Officer, President, and Principal
Accounting Officer



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

Signature                         Title              Date




/s/ Patrick F. Graham             Chief Executive Officer,      April 20, 1998
(Patrick F. Graham)               President, and Principal
                                  Accounting Officer



/s/ T. Coleman Andrews, III       Director and                 April 20, 1998
(T. Coleman Andrews, III)         Chairman of the Board



/s/ Gideon Argov                  Director                     April 20, 1998
(Gideon Argov)



/s/ James E. Colburn              Director                      April 20, 1998
(James E. Colburn)



/s/ William F. Gorog              Director                      April 20, 1998
(William F. Gorog)


<PAGE>



SCHEDULE II

WORLDCORP, INC. AND CONSOLIDATED SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the years ended December 31, 1997, 1996 and 1995
(in thousands)






                                 Balance at   Charged to   Deductions   Balance
                                 beginning    costs and    charged to  at end of
                                 of period    expenses      reserves    period
                                 ---------    --------      --------    ------

Allowance for Doubtful
Accounts

Year ended December 31, 1997   $    413    $     413  (1)  $     --  $       --
                                  ========    =========       ======    =======

Year ended December 31, 1996   $    322    $     236       $    145  $      413
                                  ========    =========       ======    =======

Year ended December 31, 1995   $     81    $     414       $    173  $      322
                                  ========    =========       ======    =======



Valuation Allowance for
Deferred Tax Assets

Year ended December 31, 1997   $ 23,277   $   6,207        $    --   $    29,484
                                =======     =======          ======      =======

Year ended December 31, 1996   $ 20,113   $   3,164        $    --   $    23,277
                                =======     =======          ======      =======

Year ended December 31, 1995   $ 13,973   $   6,140        $    --   $    20,113
                                =======     =======          ======      =======


(1) Due to the Purchase, WorldCorp began reporting its share of World Airways'
net assets and results of operations under the equity method of accounting as of
September 18, 1997. Therefore, allowance for doubtful accounts relating to World
Airways is not included in the December 31, 1997 consolidated balance
sheet.