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, 1996 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                 Name of Each Exchange on Which Registered
 -------------------                 -----------------------------------------
 Common Stock par value $1.00 per share      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 26, 1997 was approximately $45,060,795.

The number of shares of the registrant's  Common Stock  outstanding on March 26,
1997 was 15,020,265.

                       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.



                                                       1

<PAGE>




                                                  WORLDCORP, INC.

                                          1996 ANNUAL REPORT ON FORM 10-K

                                                 TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                         Page


PART I

<S>        <C>                                                                                            <C>
Item 1.    Business.........................................................................................3

Item 2.    Properties......................................................................................19

Item 3.    Legal Proceedings...............................................................................19

Item 4.    Submission of Matters to a Vote of Security Holders.............................................19


PART II

Item 5.    Market for Registrant's Common Stock and Related Security Holder Matters........................20

Item 6.    Selected Financial Data.........................................................................21

Item 7.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations...........................................................................22

Item 8.    Financial Statements and Supplementary Data.....................................................42

Item 9.    Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure........................................................................77


PART III

Item 10.   Directors and Executive Officers of the Registrant..............................................77

Item 11.   Executive Compensation..........................................................................78

Item 12.   Security Ownership of Certain Beneficial Owners and Management..................................78

Item 13.   Certain Relationships and Related Transactions..................................................78


PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K.................................79
</TABLE>


                                                       2

<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 leading
provider  of  long-range  passenger  and  cargo air  transportation  outsourcing
services to major international airlines under fixed rate, multi-year contracts.
World Airways also leads a contractor  teaming  arrangement  that is the largest
single  supplier of  commercial  aircraft  to the United  States Air Force's Air
Mobility Command ("U.S. Air Force" of "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 which  2,000,000  shares of its common  stock were
issued and sold by World Airways and 900,000  shares were sold by WorldCorp.  At
December 31, 1996,  WorldCorp  and MHS owned  6,915,915  shares,  or 61.3%,  and
1,990,000 shares,  or 17.6%,  respectively,  of the outstanding  common stock of
World Airways. The balance was publicly traded.

       On March 14,  1997,  World  Airways  announced  that  Charles W.  Pollard
departed as President  and Chief  Executive  Officer.  Pursuant to the company's
bylaws, T. Coleman Andrews, III, Chairman of the Board, will act as President on
an interim basis pending the hiring of a new CEO.

       The  managements  of WorldCorp and World Airways are currently  exploring
ways to  maximize  value for the  shareholders  of each  company.  WorldCorp  is
currently  evaluating the  feasibility of a disposition of its interest in World
Airways through a secondary offering or a sale to a third party. There can be no
assurances, however, that any such transactions will ultimately be consummated.

       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.   InteliData   concentrates   on  three  markets:   (1)  consumer
telecommunications;  (2) electronic commerce;  and (3) interactive  services. At
December  31,  1996,  WorldCorp  owned  9,179,273  shares of  InteliData,  or an
ownership  interest of approximately  28.9%.  Following this merger, the Company
reports its  proportionate  share of  InteliData's  financial  results using the
equity method of accounting.

       In September 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.  As of March 24, 1997, the Company had purchased  1,362,500 shares
of its Common Stock for an aggregate  cost of $7.8 million.  WorldCorp  does not
intend to purchase any additional shares at this time.

       The  Private  Securities  Litigation  Reform Act of 1995 (the  "Act") was
recently  passed by Congress.  The Company  desires to take advantage of the new
"safe harbor"  provisions in 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 1996 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.

                                                       3

<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   (Nasdaq:INTD)   concentrates   on  three   markets:   (1)  consumer
telecommunications; (2) electronic commerce; and (3) interactive services.

WORLD AIRWAYS

       World Airways is a leading  global  provider of long-range  passenger and
cargo air transportation  outsourcing  services to major international  airlines
under fixed rate, multi-year  contracts.  Airline operations account for 100% of
its operating revenue and operating income. World Airways' passenger and freight
operations  employ 13 wide- body aircraft  which are operated  under  contracts,
primarily 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 offer 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 the largest single supplier of commercial  aircraft 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 the
growing and profitable 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  (see  Management's  Discussion  and
Analysis of Financial Condition and Results of Operations ("MD&A")).

       World  Airways'  operating  philosophy  is to build on its existing  ACMI
contracts  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 maximizes 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 the Pacific Rim,  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 ideally  suited to the Pacific Rim market.  World Airways'
aircraft permit its customers to serve less dense  international  routes where a
Boeing 747 would  provide  excess  capacity.  World  Airways has operated in the
Pacific Rim almost since its  inception,  and believes that it has developed the
ability to serve this market well.

       World Airways  substantially  increases  its  potential  customer base by
being  able to serve both  passenger  and cargo  customers.  The  Company  flies
passenger,  cargo and  passenger/cargo  convertible  aircraft  that the  Company
believes permit the Company to target emerging opportunities.  World Airways has
been providing safe,  reliable ACMI 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 developed long-term  relationships with
a number  of major  international  airlines  and  with  the  USAF  (see  "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.
These  contracts  have  increased the  year-round  usage of its aircraft  fleet,
reduced the seasonality of its business and contributed to its recently improved
operating performance.


                                                       4

<PAGE>




       Malaysian  Airlines.  World  Airways has  provided  wet lease  service 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  owns 17.6% of World
Airways as of December 31, 1996, also owns 29.1% of Malaysian Airlines.  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.  In 1996,  World Airways  provided three aircraft for Hadj operations.
World Airways  recently  entered into a new 32-month  agreement  for  year-round
operations  (including the Hadj) with Malaysian Airlines whereby it will provide
two  aircraft  with  cockpit  crews,  maintenance  and  insurance  to  Malaysian
Airlines'  newly-formed  charter  division  through May 1999.  World  Airways is
currently  in  preliminary  discussions  with  Malaysian  Airlines  regarding  a
potential  eleven-month  reduction in the  utilization  of one of these aircraft
during the 32-month term of the contract.

       Until  recently,  World  Airways  operated  four  passenger  aircraft for
Malaysian Airlines under the multi-year agreements described above. The contract
for two of the four passenger  aircraft for Malaysian  Airlines expired in March
1997.  While World Airways is deploying these two aircraft in the 1997 Hadj, and
will  actively  re-market the aircraft  thereafter,  it can provide no assurance
that it will be able to redeploy the two aircraft, beginning June 1997, at price
and utilization levels at least as favorable as under the terms of the Malaysian
Airlines contracts.

     World Airways originally  operated 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 the Philippine Airlines contracts. World Airways and
Malaysian  Airlines are currently  discussing the future  redeployment  of these
aircraft  back  into  Malaysian  Airlines'  operations  in  order  to  meet  the
contract's  original  obligations.  World  Airways  can  provide no  assurances,
however, that it will, in fact, be able to redeploy these two aircraft back into
Malaysian  Airlines'  operations to meet the  contract's  original  obligations.
Revenues  associated  with these  contracted  obligations  are included in World
Airways' backlog included herein.

       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 1996,  approximately  200,000  Indonesians  traveled to
Jeddah for the Hadj pilgrimage.  During the 1996 Hadj pilgrimage,  World Airways
provided passenger service to Garuda with seven aircraft,  flying  approximately
40,000  Indonesians  on  Company  aircraft.   Due  to  World  Airways'  capacity
constraints during the period of Hadj flying, World Airways reached an agreement
with Garuda to operate six aircraft during the 1997 pilgrimage.

       Philippine  Airlines.  In May 1996, World Airways entered into a new ACMI
contract with Philippine Airlines, thereby further expanding its presence in the
Pacific Rim. World Airways presently  operates four MD-11 passenger aircraft for
Philippine  Airlines under an agreement,  with high minimum monthly  utilization
levels. World Airways,  however,  has recently received a written  communication
from Philippine  Airlines in which the airline  contends that its leases for all
four  aircraft  expire on November 15, 1997.  World  Airways  believes that this
position is contrary to the understanding of the parties that each of the MD-11s
are to be leased by Philippine  Airlines for a period of 18 months from delivery
of each aircraft.  The parties are currently  discussing the length of the lease
term for these aircraft. World Airways can provide no assurances,  however, that
Philippine Airlines will agree to lease any of the four MD-11 passenger aircraft
beyond November 15, 1997, or that it will be able to secure other business at as
favorable price and utilization levels.

       Also,  subsequent to year-end,  at Philippine  Airlines'  request,  World
Airways agreed to a payment plan with respect to Philippine  Airlines' wet lease
obligations  for several  months  beginning in March 1997.  Although  Philippine
Airlines  is  current  on this  payment  plan to date,  if  Philippine  Airlines
defaults  on this  payment  plan,  or fails to meet its monthly  aircraft  lease
obligations,  this  development,  if not offset by other business,  would have a
material  adverse effect on the cash flows,  financial  condition and results of
operation of World Airways.

       U.S.   Air  Force.   World   Airways  has  provided   international   air
transportation  to the U.S. Air Force since 1956. The overall  downsizing of the
U.S. military,  combined with a need to respond quickly to the growing number of
global  regional  conflicts  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.  Although  World Airways'
agreements with the USAF provide for full service contracts with certain minimum
performance requirements,  it has risks similar to an ACMI agreement because the
USAF agreements are cost-plus contracts at attractive rates.


                                                       5

<PAGE>




       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 44% 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 $52.8 million for the
government's 1996-97 fiscal year.

       The current annual  contract  commenced on October 1, 1996 and expires on
September  30,  1997.  These  contracts  provide for a fixed level of  scheduled
business from the U.S. Air Force with  opportunities  for additional  short-term
expansion  business on an ad hoc basis as needs arise. Due to the utilization of
a  significant  number of its  aircraft  under  multi-year  contracts  and other
contractual  commitments,  it is  unlikely  that World  Airways  will be able to
accept  all  of the  available  expansion  business.  Although  overall  Defense
Department spending is being reduced, the level of the U.S. Air Force's contract
awards has remained relatively constant in recent years. World Airways, however,
cannot  determine  how  future  cuts in  military  spending  may  affect  future
operations with the U.S.
Air Force.

     Although  World  Airways'  customers bear the financial risk of filling the
World Airways' 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 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, 1996 of $468.0  million,  compared to $462.0
million at  December  31,  1995.  Approximately  $253.5  million of the  backlog
relates  to 1997  operations.  World  Airways'  backlog  for  each  contract  is
determined  by  multiplying  the minimum  number of block hours  (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  destination)
guaranteed under the applicable contract by the specified hourly rate under such
contract.  Approximately  60% and 20% of the backlog  relates to its  multi-year
contracts with Malaysian Airlines and Philippine Airlines,  respectively.  While
the percentage of its 1997 block hour capacity that is currently  under contract
exceeds the comparable percentage in the past several years, World Airways still
has substantial  uncontracted capacity in the third and fourth quarters of 1997.
In addition,  a significant  portion of World Airways' current  contracts expire
near the end of 1997. 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 1997 and beyond. World Airways' financial results
and financial  condition  would be affected  adversely if it is unable to secure
additional business to reduce this excess capacity.

       The  information   regarding  major  customers  and  foreign  revenue  is
contained in Note 18 "Segments and Major  Customers" of the Company's  "Notes to
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):
<TABLE>
<CAPTION>

                                                                           Year Ended December 31,
                                                                      ---------------------------------
                                                                      1996           1995          1994
                                                                      ----           ----          ----

<S>                                                               <C>            <C>            <C>
       Flight Operations - Passenger                              $    257.6     $   168.0      $  134.6
       Flight Operations - Cargo                                        39.3          64.6          39.3
</TABLE>

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

                                                       6

<PAGE>



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 achieve the growth anticipated by its
strategic  plan  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 its current partners,  could adversely
affect  the size of the USAF  contracts,  if any,  which  are  awarded  to World
Airways in future years.

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 1997, World Airways' flight operations  associated with the Hadj
pilgrimage will occur from March 15 to May 20. 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.  World
Airways believes that its contracts with Malaysian  Airlines and the USAF should
lessen the effect of these seasonal factors.

       The quarterly financial data is contained in Note 21 "Unaudited Quarterly
Results" of the Company's "Notes to Financial Statements" in Item 8.

NEW MD-11ER AIRCRAFT

       In 1996,  World Airways  entered into two 24-year  leases with  McDonnell
Douglas to operate a new extended-  range model of the  McDonnell  Douglas MD-11
(see "MD&A -  Liquidity  and  Capital  Resources  - Capital  Commitments").  The
aircraft, known as the MD-11ER, is capable of flying nonstop between such cities
as Zurich and Santiago, New York and Johannesburg, and Los Angeles and Shanghai.
The  jetliner's  increased  range  is due  to a  combination  of the  following:
engineering innovations;  aerodynamics improvements that minimize aircraft drag;
major reductions in the airframe weight;  significantly increased fuel capacity;
and a higher  allowable  maximum  takeoff  weight that provides the heavier fuel
load without loss of payload.

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.
Fluctuations  in the  price of fuel have not had a  significant  impact on World
Airways' operations in recent years because, in general, its ACMI contracts with
its  customers  limit World  Airways'  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 World Airways.




                                                       7

<PAGE>



REGULATORY MATTERS

       World Airways is subject to government  regulation  and control under the
U.S. laws and the laws of the various countries in which it operates. It is also
governed by bilateral services  agreements between the U.S. and the countries to
which it provides airline  service.  World Airways is subject to Title 49 of the
United  States  Code (the  "Transportation  Code"),  under which the DOT and the
Federal  Aviation  Administration  (the "FAA")  exercise  regulatory  authority.
Additionally,  foreign governments assert jurisdiction over air routes and fares
to and from the U.S., airport operation rights, and facilities access.

       World Airways has periodically received  correspondence from the FAA with
respect to minor noncompliance  matters. Most recently, as the FAA has increased
its scrutiny of U.S. airlines, it was assessed a preliminary fine of $810,000 in
connection  with certain  minor  security  violations by ground  handling  crews
contracted by World Airways for services at foreign airport  locations.  In each
of  these  instances,   World  Airways  was  in  compliance  with  international
regulations,  but not the more  stringent U.S.  requirements.  World Airways has
taken steps to comply with the U.S.  requirements  and  believes  that any fines
ultimately  imposed  by the FAA will not have a material  adverse  effect on the
financial  condition or results of operations  of the company.  World Airways is
subject to the  Transportation  Code,  under which the DOT and the FAA  exercise
regulatory authority. Generally, the FAA has regulatory jurisdiction over flight
operations,   including  equipment,  personnel,  maintenance  and  other  safety
matters. To assure compliance with its operational  standards,  the FAA requires
air carriers to obtain operating,  airworthiness and other  certificates,  which
may be suspended or revoked for cause.  The FAA also conducts  safety audits and
has the power to impose  fines and other  sanctions  for  violations  of airline
safety  regulations.  The DOT maintains  authority over international  aviation,
subject to review by the President of the U.S. and has jurisdiction  over unfair
trade practices and consumer  protection  policies on domestic and international
routes and fares. Additionally, foreign governments assert jurisdiction over air
routes and fares to and from the U.S.,  airport  operation rights and facilities
access.

       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 its 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 its international
operations, (iii) the Environmental Protection Agency (the

                                                       8

<PAGE>



"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.

       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 charter  services in
which it 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,  it 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 it fails to pass such inspection or otherwise fails to maintain
satisfactory performance levels, if it 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 its 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 it 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 1, 1997, World Airways had 726 full time employees classified
as follows:
<TABLE>
<CAPTION>

                                                                                  Number of
                  Classification                                             Full-Time Employees
                  --------------                                             -------------------
<S>                                                                                  <C>
                  Management.....................................................      9
                  Administrative and Operations..................................    324
                  Cockpit Crew (including pilots)................................    323
                  Flight Attendants (active).....................................     70
                                                                                     ---
                      Total Employees............................................    726
                                                                                     ===

</TABLE>

                                                       9

<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 June
1998.

       World Airways'  flight  attendants are also  represented by the Teamsters
under a collective  bargaining  agreement  that became  amendable  in 1992.  The
parties exchanged their opening contract  proposals in 1992. In June 1996, World
Airways signed a new four year labor agreement with the Teamsters which provides
for  retroactive  pay  increases  for  the  flight   attendants  and  work  rule
flexibility and lengthened duty time rules for World Airways.  The agreement was
ratified  by the  flight  attendants  in  August  1996.  World  Airways'  flight
attendants  challenged the use of foreign flight  attendant crews on its 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  recently  denied 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 it to
first actively seek  profitable  business  opportunities  that require using its
flight   attendants,   before  World  Airways  may  accept  wet  lease  business
opportunities that use the flight attendants of its customers. World Airways can
provide no assurances as to how the imposition of this  requirement  will affect
its 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 Company
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 of 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 in order to effect the merger  ("Merger") of US
Order and Colonial  Data.  The Merger was  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 Merger was consummated with each share of
outstanding  US Order and  Colonial  Data common stock being  exchanged  for one
share of  InteliData  common  stock.  The  Merger was  treated as a purchase  of
Colonial  Data by US Order.  At December  31,  1996,  WorldCorp's  ownership  in
InteliData  was  28.9%.   Following  this  Merger,   the  Company   reports  its
proportionate share of InteliData's financial results using the equity method of
accounting.

       Effective  September 30, 1996,  US Order  acquired the business of Braun,
Simmons & Co. ("Braun  Simmons") for  approximately  $7.0 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.  Braun Simmons was an  information
engineering firm  specializing in the development of home banking and electronic
commerce  solutions  for  financial   institutions.   The  acquisition   expands
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
and financial services industries through its three business divisions: consumer
telecommunications, electronic commerce and interactive services.

     The  consumer  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  a  smart  telephone,  the
Telesmart 4000/Intelifone(TM), which provides consumers call management features
and the ability to access numerous network services and interactive applications
via telephones.  InteliData  currently  offers a line of Caller ID adjunct units
and telephones  with  integrated  Caller ID, small  business  telecommunications
systems  and  high-end  consumer   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  a  financial   institution's  back  office,   offering
outsourcing  for data  entry,  telemarketing,  customer  service  and  technical
support.  InteliData currently receives its electronic commerce revenues largely
from  the  sale  of  products  and  services  to  Visa   International   Service
Association, Inc. ("Visa") member banks.



                                                       10

<PAGE>



       On  August  1,  1994,  US  Order  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.  InteliData's  right to future  royalty  payments from Visa is
subject to a cumulative  offset amount  aggregating  $880,000 and,  accordingly,
InteliData  does not expect to begin receiving  royalty  payments until at least
the second half of 1997. Visa formed Visa InterActive, Inc. ("Visa InterActive")
around the technology and personnel acquired from US Order,  including 54 former
employees of US Order. Visa InterActive also has agreed, through 2000, to inform
Visa member banks that InteliData is a preferred  provider of certain electronic
commerce products and services.

       The interactive  services division 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").  InteliData  intends to sell interactive
applications directly to end users and through other companies, including telcos
and  wireless   communications   companies.   InteliData's  current  interactive
applications  include electronic national directory  assistance lookup,  one-way
alpha-numeric  paging,  one-way internet e-mail, a personal  directory data save
and restore  function and  information  services such as news,  weather,  sports
scores, stock quotes, lottery results and horoscopes.

INDUSTRY BACKGROUND

     InteliData  maintains   operations  in  three  primary  markets:   consumer
telecommunications, electronic commerce and interactive services.

     Consumer  Telecommunications.   The  consumer  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 addition,  there are mergers pending among
certain RBOCs and further industry consolidation may occur in the future. 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
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 device located near the telephone
(in the case of an adjunct unit) or on a display screen located on the telephone
(in the case of an integrated  Caller ID telephone).  InteliData  estimates that
the current  penetration rate of Caller ID service is  approximately  15% 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 call  disposition,  a subscriber  who receives a
call waiting  signal can look at the display  screen on the smart  telephone 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 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 of 1996 has
effected basic changes in the telecommunications regulatory

                                                       11

<PAGE>



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 U.S.  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, this order has been challenged and, as of March 1, 1997, the
effectiveness  has been  stayed  in the U.S.  Court of  Appeals  for the  Eighth
Circuit. In December 1996, the FCC issued a Notice of Proposed Rule Making 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.  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 products
and 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.

       Interactive   Services.   The  interactive   services  division  provides
SmartTime(R)  services to customers  delivering  personalized  information  to a
variety of small screen  devices,  including  screen  telephones,  alpha-numeric
pagers,  PCS/cellular  telephones and addressable  personal  communicators.  The
division provides  operating online and batch  interactive  services directed at
consumers  of small  screen  devices.  Although it builds some of its  services,
InteliData is essentially an aggregator of other data sources and purchases data
from many of the same suppliers as its competitors.

PRODUCTS AND SERVICES

     InteliData's  business strategy is to develop products and services to meet
the  needs  of  its   customers   in  each  of  its  three   markets:   consumer
telecommunications,  electronic  commerce and interactive  services.  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  that its  products  position
InteliData to offer support services and interactive service  applications which
are expected to generate recurring monthly fee revenue.

       Consumer  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 and leasing of its Caller ID products. InteliData's other consumer
telecommunications   products  and  services  include   integrated   telephones,
ADSI-compatible smart telephones,  small business telecommunication systems, and
repair and refurbishment.

       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,  InteliData
supports Visa  InterActive  with  products and services  which  facilitate  bill
payment and bill presentment. InteliData's products and services are designed to
provide  consumers  the  ability  to  access  and  utilize  their  bank  account
information.  They are also  designed  to provide  financial  institutions  with
connectivity  to the Visa  InterActive  host computer system as well as to other
third party payment processors.

       Interactive Services.  InteliData's strategy is to deploy its interactive
services on its smart  telephones  as well as other smart  telephones  and small
screen devices,  such as  alpha-numeric  pagers and PDAs,  manufactured by other
companies. InteliData intends to sell interactive service applications to RBOCs,
telcos  and  end  users  through  retail  markets  and  direct  sales  programs.
InteliData's   current  interactive  service   applications  include  electronic
national directory  assistance lookup,  one-way  alpha-numeric  paging,  one-way
internet  e-mail  and a  personal  directory  data  save and  restore  function.
Additionally,  InteliData offers services providing news, weather, stock quotes,
sports

                                                       12

<PAGE>



scores,  and  horoscopes.  These  are  applications  that  will  allow the smart
telephone user to receive periodically updated application-specific  information
in  an  on-line  format.  In  the  future,  InteliData  expects  to  expand  its
interactive  services by offering two-way internet e-mail, which will enable the
user to not only send an e-mail  message  to an  internet  address,  but also to
receive an e-mail  message  from an internet  address.  As of December 31, 1996,
InteliData has not generated revenues from its interactive services division.

MARKETING AND DISTRIBUTION

       InteliData  sells  its  products  and  services  to  telephone  operating
companies,  retailers and financial institutions in the United States.  Revenues
from  InteliData's  joint venture  partner,  an RBOC and an  electronic  banking
service provider,  were approximately 20%, 13% and 11% of total revenues for the
year ended December 31, 1996.

       Consumer    Telecommunications.    InteliData    markets   its   consumer
telecommunications  products and services through  employees in its direct sales
force and  marketing  department  as well as  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 with RBOCs, direct marketing, direct sales, and retail.

       InteliData  maintains  direct  fulfillment  arrangements  with  Ameritech
Corporation   ("Ameritech"),   Bell  Atlantic   Corporation  ("Bell  Atlantic"),
BellSouth  Corporation  ("BellSouth"),  NYNEX Corporation  ("NYNEX") and Pacific
Bell ("PacBell") and continually seeks to strengthen its current telco marketing
alliances and to develop new alliances.

     Electronic Commerce. There are three distinct marketing channels within the
electronic commerce market: bill payment, bill presentment and account access.

       Visa  InterActive  has designated the Company as a preferred  provider of
certain  of  the  Company's  bill  payment  products  and  services.  One of the
Company's  strategies with Visa is to increase the number of subscribers for the
Company's  bill pay products and services  with the goal of growing  monthly fee
revenues. Visa is the largest consumer payment system in the world.

       Visa markets its bill payment and bill presentment  services  directly to
its  member  banks.  Once a Visa  member  bank  signs  a  commitment  to  deploy
electronic  commerce  services  through the Visa  Bill-Pay  System,  an extended
roll-out period of the bank's  electronic  commerce  services  begins.  In March
1996, Microsoft, Inc. entered into an agreement with Visa InterActive to include
an  interface  that will  allow  users of  Microsoft's  Money  personal  finance
software  package to access Visa  InterActive's  electronic bill payment system.
Royalties due InteliData from Visa will be equal to $.666 per month per bill pay
customer whose transactions are processed by Visa InterActive's bill pay system.
InteliData's  right to receive these quarterly  royalty payments is subject to a
cumulative  offset of $73,000  per  quarter  beginning  January 1, 1995  through
December 31, 1997.

       As of December 31, 1996, Visa InterActive had announced  commitments from
69 financial institutions for the Visa Bill-Pay System. However, due to the time
necessary to install and implement the system for each bank,  only 58 banks have
rolled out the system in small,  limited  markets and have enrolled a relatively
small number of customers.  There can be no assurances as to the banks' ultimate
success with this program or the number of customers  that  ultimately  will use
the program.  Announced  customers of Visa  InterActive  include  Merrill Lynch,
Fleet Bank,  First Union,  Fidelity  Investments,  First Tennessee Bank National
Association,  Star Bank, Zions Bank and Deposit Guarantee.  InteliData  believes
its relationship  with Visa InterActive  keeps the Company in close contact with
Visa, its banks and the end users of electronic  commerce  services.  InteliData
believes that this  relationship  will enable the Company to continue to develop
complementary  products and  services,  such as  applications  software for Visa
member  banks,  and  potentially  enable it to have  access to Visa's  worldwide
member banks. There can be no assurance,  however,  that InteliData's  marketing
efforts will be  successful  or that Visa will not reassess  its  commitment  to
InteliData at any time in the future.

       InteliData's  marketing  strategy in the bill  presentment  channel is to
offer  its  bill  presentment   products  and  services  directly  to  financial
institutions as well as to billers using the Visa ePay system. In December 1995,
Visa commenced its ePay electronic bill-payment programs with several major U.S.
financial   institutions.   Visa's  two-way  ePay  standard   allows   financial
institutions to implement a fully  electronic,  seamless,  back-end bill payment
system.  The ePay  system is  patented  in the United  States and is expected to
significantly reduce remittance-processing

                                                       13

<PAGE>



inefficiencies for participating  financial  institutions and organizations that
bill for goods and services. In addition, the system will enable billers to send
invoices electronically to their customers who pay bills on-line.

       InteliData  also  is  developing  products  and  services  for  financial
institutions who want to provide their customers with products and services that
allow  customers the ability to access  certain  information  from their banking
accounts,  much as they do with touch tone telephones  today,  but over personal
computers and screen based telephones as well.

     Interactive  Services.  InteliData's  strategy in the interactive  services
market  is to build a  subscriber  base for its  bundle of  interactive  service
applications   on  its  own  smart   telephones  and  on  small  screen  devices
manufactured  by other  companies.  In this regard,  InteliData  gains access to
telco  customers  through its  existing  relationships  with the RBOCs and other
telcos.  InteliData  believes  that the  marketing of smart  telephones  and the
interactive  services will be more  successful  when a consumer can subscribe to
network  services and purchase the telephone  from a single  source,  especially
when the payment for the equipment can be made either on an installment basis or
by monthly  lease  payments  through the  subscriber's  telephone  bill. In 1996
InteliData  began  selling its  interactive  content  through  retail stores and
related  outlets.  InteliData  expects to be able to expand this channel  during
1997 and also make its services  available on telephones  and other small screen
devices   manufactured   by  others.   InteliData  has   identified   additional
distribution channels for its interactive services that it will begin to develop
during 1997 such as wireless communications or paging companies.

COMPETITION

     Consumer  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  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 telephones  offered
by  Panasonic  Co.   ("Panasonic"),   Sony  Corp.  ("Sony"),   Thomson  Consumer
Electronics,  Inc.  ("Thomson") and US Electronics,  Inc. ("US Electronics") and
other companies.

     The smart telephone  marketed by InteliData is subject to competition  from
smart telephones marketed by Philips Electronics,  N.V.  ("Phillips"),  Northern
Telecom and CIDCO as well as other emerging  platforms for  interactive  service
applications   delivered  through  personal   computers  and  cable  television.

       InteliData's  competitors,  including Philips and Northern Telecom,  have
already  introduced  smart  telephones  that  include   technological   features
incorporated in its Telesmart 4000 smart telephone product. Visa InterActive and
Philips  have  announced  that  they  have  entered  into a letter  of intent to
collaborate  on a  series  of  projects,  including  the  development  of a Visa
InterActive  banking  application  on a Philips  smart  telephone.  Any bill pay
transaction  generated by a Phillips  smart  telephone that is processed by Visa
InterActive will  potentially  generate a royalty payment due to InteliData from
Visa.

     InteliData   expects   competition   in  the  markets   for  its   consumer
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   consumer
telecommunications  products and 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's   Telesmart    4000/IntelifoneTM   smart   telephone   product
incorporates  newer DSP  technology.  Although  it is  currently  unaware of any
efforts by its  competitors to deploy DSP technology in their smart  telephones,
InteliData  expects that its competitors will attempt to replicate the Telesmart
4000/IntelifoneTM  smart telephone DSP design if it is commercially  successful.
InteliData  expects that as the market for smart telephones  grows, it will face
competition from traditional  personal computer on-line service providers,  such
as America  Online,  Inc.,  Prodigy,  Inc. and CompuServe  Corp, as well as from
personal computer software companies such as Intuit, Inc. ("Intuit") and Novell,
Inc.
                                                       14

<PAGE>




       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 consumer  telecommunications  products and services are knowledge of the
requirements of the various RBOCs and other telcos, product reliability, product
design,  the quality of its repair and support  services,  customer  service and
support,  and price relative to performance.  InteliData  competes in the market
for its consumer  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   compete  with  services  offered  by  a  number  of  competitors  and
competition  may  intensify  as a result of new market  entrants.  Banks such as
Citibank,  NationsBank  and Bank of America have developed  electronic  commerce
products for their own customers and, in the future, may offer these services to
other banks. Non-banks, such as EDS and First Data Corporation, also may develop
electronic  commerce  products  to offer to banks.  Computer  software  and data
processing  companies,  such as Intuit, also offer electronic commerce services.
Visa competes with other organizations, including MasterCard International, Inc.
("MasterCard"),  which  offers its  Masterbanking  electronic  commerce  service
through  CheckFree  Corporation.  InteliData's  success in  electronic  commerce
depends in large part on the ultimate success of Visa and on the ability of Visa
InterActive and Visa member banks to successfully  market electronic commerce to
their customers.  In addition,  the success of InteliData's  electronic commerce
strategy depends on the ability of Visa member banks to maintain market share in
an environment of disintermediation.

       Many  competitors  exist  for  InteliData's   various  banking  products,
including  other   manufacturers  of  touch-tone   response  systems,   such  as
Periphonics Corporation and Syntellect Inc., other financial software companies,
such as ACI, and  financial  services  software and service  companies,  such as
Hogan Systems,  Inc. and M&I Data Services,  Inc.  InteliData  believes that its
primary  competition for its customer support services to the customer will come
from  financial  institutions  and third  parties that choose to offer  customer
support  services either  directly  through Visa's  customer  support  messaging
standard ("CSMS") product or on their own.

       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,  in conjunction  with
Visa, 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,  and by building reliable products and
offering those products at reasonable prices.

     Interactive Services. The industry for interactive services is emerging and
there  is  potential  for a  number  of  companies  to  enter  the  marketplace.
Currently, InteliData's primary competitor is SmartServe Online, Inc.

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 by  increasing  the
number  of  personnel  in  the  product  development   department  and  focusing
management  efforts in the area of  product  development.  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.

       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 audio and data
transaction processing and messaging software and customer support services. 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

                                                       15

<PAGE>



and development personnel is important to InteliData's continued success.

       The  interactive  services  division's  product  development  efforts are
focused on expanding  the services and the range of content that can be provided
as well as the number of devices to which the services can be delivered.

MANUFACTURING

       InteliData's  primary  equipment  manufacturer  is STL and certain of its
affiliates, which have ISO 9000 series certified facilities located in Hong Kong
and 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
integrated corded and cordless telephones and small business  telecommunications
products. The facilities of InteliData's suppliers are supplemented, in part, by
its own limited  manufacturing  facilities in Connecticut.  The  availability or
cost of its 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.

       InteliData  does not  have any  production  contracts  with its  assembly
contractors.   InteliData's   principal   manufacturer  performs   comprehensive
inspection and  statistical  process control  testing,  utilizing its 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 its 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 it
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

     Consumer  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  innovations  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,  this order has been
challenged and, as of March 1, 1997, the effectiveness of some of its provisions
has been stayed in the U.S. Court of Appeals for the Eighth Circuit. In December
1996,  the FCC issued a Notice of Proposed  Rule  Making  which  suggests  rules
concerning the implementation of the  Telecommunications Act provisions relating
to the 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.  The Company 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.  Although 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.


                                                       16

<PAGE>



       An  FCC  order,  which  rules  promulgated  thereunder  became  effective
December  1,  1995  (the  "FCC  Order"),  requires  all U.S.  telephone  service
providers  with 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 and party  lines).  The FCC's order also  requires
that  telcos  that offer  Caller ID  service  must  provide  to their  telephone
subscribers   without  charge  a  per-call  blocking   mechanism  to  block  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 this blocking capability.

       Although the FCC Order 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,  its 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.  It has been issued a patent for its "Block
the Blocker" feature and has also applied for a patent on certain aspects of its
Caller ID on Call Waiting  product.  However,  there can be no assurance  that a
patent will be issued to InteliData for its Caller ID on Call Waiting product or
that such patent, if issued, will afford effective protection of its technology.
InteliData filed for patents on certain new features developed by itself for use
in  the  ADSI  smart  telephone  and  certain  of  its  transaction   processing
technology, but there can be no assurances that such patents will be granted, or
if granted, 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 its  proprietary  technology or misuse the technology to
which it 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.



                                                       17

<PAGE>



       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 it to cease using, or
obtain a license to use, intellectual property rights of such parties.

EMPLOYEES

       At December 31, 1996, InteliData had approximately 348 employees, of whom
327 were full-time.  Of the employees, 62 were engaged in product development or
research  and  development,  104 were engaged in customer  service,  and 44 were
engaged  in selling  and  marketing.  InteliData  has no  collective  bargaining
agreements  with its  employees  and  believes  that its  relationship  with its
employees is good.

                                                       18

<PAGE>



ITEM 2.  PROPERTIES

FLIGHT EQUIPMENT

       At December 31, 1996, World Airways' aggregate  operating fleet consisted
of thirteen leased  aircraft as follows (see Note 13 "Long-Term  Obligations" of
the Company's "Notes to Consolidated Financial Statements" in Item 8):
<TABLE>
<CAPTION>

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

<S>                                                        <C>                   <C>               <C>
       McDonnell Douglas MD-11                             409                   --                  4
       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                                                                                 13
</TABLE>

       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 1997 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 the 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.  InteliData also leases
other, less significant sales and product development facilities.  Additionally,
InteliData  owns  a  building  located  in  New  Milford,  Connecticut.  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 the company.

ITEM 3.  LEGAL PROCEEDINGS

       For a description of the Company's  current legal  proceedings,  see Note
20,  "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 1996.

                                                       19

<PAGE>



                                                      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:
<TABLE>
<CAPTION>


                                                                Common Stock
                                                           ---------------------

                                                           High              Low
                                                           ----             ----

                   1996

<S>                                                   <C>              <C>
                      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

                   1995

                      Fourth Quarter                  $   12 1/4       $     7 7/8
                      Third Quarter                       13 5/8             9 3/4
                      Second Quarter                      12 7/8             8 3/4
                      First Quarter                       10                 7 1/4
</TABLE>

     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 1996 or 1995 and does not
plan to do so in the foreseeable  future. The Purchase  Agreement  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 granted to the lenders a security interest in all of the
World Airways and InteliData  shares owned by the Company.  (See Notes 12 and 13
of the Company's "Notes to Consolidated Financial Statements" in Item 8).

     The approximate number of shareholders of record at March 15, 1997 is 2,518
and does not include those shareholders who hold shares in street name accounts.


                                                       20

<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,
                                             ------------------------------------------------------------------
                                                 1996          1995          1994           1993           1992
                                             ------------  ------------  ------------   ------------   --------
RESULTS OF OPERATIONS:
----------------------
<S>                                          <C>          <C>            <C>            <C>           <C>
Operating revenues                           $  313,672   $   246,572    $   182,147    $  179,932    $  180,416
Operating expenses                              310,935       240,279        200,959(c)    203,177(e)    217,271
Operating income (loss)                           2,737         6,293        (18,812)      (23,245)      (36,855)(f)
Earnings (loss) from continuing operations
    before income taxes, minority interest,
    extraordinary item and change in
    accounting principle                          8,509(a)     65,685(b)      10,496(d)    (33,698)      (44,692)
Earnings (loss) from continuing operations
    before extraordinary item and change in
    accounting principle                          7,437        64,158          8,308       (30,945)      (42,891)
Discontinued operations, net of tax and
    minority interest                           (19,191)       (3,950)
Extraordinary gain (loss) on acquisition
    of debt, net                                      --           --             --            --        (3,253)
Change in accounting principle                        --           --             --            --        (1,973)
Net earnings (loss)                             (11,754)       60,208          8,308       (30,945)      (48,117)

Primary earnings (loss) per share:
    Continuing operations                    $     0.45   $      3.75    $      0.54    $    (2.12)   $    (3.02)
    Discontinued operations                       (1.15)        (0.23)            --             --            --
    Gain (loss) from acquisition of debt              --           --             --             --        (0.23)
    Change in accounting principle                    --           --             --             --        (0.14)
    Net earnings (loss)                           (0.70)         3.52           0.54         (2.12)        (3.39)

Fully diluted earnings (loss) per share:
    Continuing operations                    $         *  $      2.99    $      0.53    $         *   $         *
    Discontinued operations                            *        (0.17)            --             --            --
    Gain (loss) from acquisition of debt              --           --             --             --            --
    Change in accounting principle                    --           --             --             --            --
    Net earnings (loss)                                *         2.82           0.53              *             *

FINANCIAL POSITION:
Cash and short-term investments              $    14,509  $    78,661    $     8,828    $    17,584   $    14,769
Total assets                                     178,963      202,089         98,536         98,119        93,346
Long-term obligations including
    current maturities                           114,794      122,700        119,032        129,049       104,192
Common stockholders' deficit                     (40,337)     (23,297)       (88,193)      (101,073)      (76,362)
</TABLE>

*   Fully diluted earnings per share are anti-dilutive.

(a)  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).
(b)  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).
(c)  Includes a $4.2 million  reversal of excess  accrued  maintenance  reserves
     associated with the expiration of three DC10 aircraft leases in 1994.
(d)  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).
(e)  Includes  $2.3 million of  termination  fees related to the early return of
     three DC10-30 aircraft.
(f)  Includes a $31.4  million loss on the sale of Key  Airlines,  Incorporated,
     and $4.1 million  related to  settlement  of contract  claims with the U.S.
     Government related to Operation Desert Shield/Desert Storm.

                                                       21

<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.  At December 31, 1996,  WorldCorp and MHS owned 6,915,915  shares, or
61.3%,  and  1,990,000  shares,  or  17.6%,  respectively,   of  World  Airways'
outstanding  common  stock.  The  remaining  balance was  publicly  traded.  The
managements  of WorldCorp  and World  Airways are  currently  exploring  ways to
maximize  value for the  shareholders  of each  company.  WorldCorp is currently
evaluating  the  feasibility  of a disposition  of its interest in World Airways
through  a  secondary  offering  or a sale to a  third  party.  There  can be no
assurances, however, that any such transactions will ultimately be consummated.

       On March 14,  1997,  World  Airways  announced  that  Charles W.  Pollard
departed as President  and Chief  Executive  Officer.  Pursuant to the company's
bylaws, T. Coleman Andrews, III, Chairman of the Board, will act as President on
an interim basis pending the hiring of a new CEO.

     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.   InteliData   concentrates   on  three  markets:   (1)  consumer
telecommunications;  (2) electronic commerce;  and (3) interactive  services. At
December  31,  1996,  WorldCorp  owned  9,179,273  shares of  InteliData,  or an
ownership  interest of approximately  28.9%.  Following this Merger, the Company
reports its  proportionate  share of  InteliData's  financial  results using the
equity method of accounting.

       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.  As of March 24, 1997,  the Company had  purchased
1,362,500  shares of its Common  Stock for an  aggregate  cost of $7.8  million.
WorldCorp does not intend to purchase any additional shares at this time.

       The  Private  Securities  Litigation  Reform Act of 1995 (the  "Act") was
recently  passed by Congress.  The Company  desires to take advantage of the new
"safe harbor"  provisions in 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 1997 and beyond to differ  materially from those expressed in
any forward looking statements made by, or on behalf of, the Company.

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   (Nasdaq:INTD)   concentrates   on  three   markets:   (1)  consumer
telecommunications; (2) electronic commerce; and (3) interactive services.

     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,  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. As of December 31, 1996, WorldCorp has
substantial  parent  company  debt service  obligations.  In order to meet these
obligations and its

                                                       22

<PAGE>



general and administrative costs in 1997, the Company must use its existing cash
and either sell shares of World Airways or InteliData,  or issue additional debt
or equity.  Under the terms of certain  borrowing  arrangements,  WorldCorp  has
pledged all of its shares of World Airways and  InteliData as collateral for the
borrowings.

WORLD AIRWAYS

       World Airways is a leading  global  provider of long-range  passenger and
cargo air transportation  outsourcing  services to major international  airlines
under fixed rate,  multi-year  contracts.  World Airways'  passenger and freight
operations  employ 13 wide-body  aircraft  which are  currently  operated  under
contracts,  primarily  with  Pacific Rim  airlines.  These  contracts  generally
require  World  Airways to supply  aircraft,  crew,  maintenance  and  insurance
("ACMI"  or "wet  lease"),  while it's  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  offer  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 the largest single supplier 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 the
growing and profitable 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.

       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.

     As is  common  in  the  air  transportation  industry,  World  Airways  has
relatively high fixed aircraft costs.  While it 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 it financial results.  In addition to
fixed  aircraft  costs,  a portion  of its labor  costs are fixed due to monthly
minimum guarantees to cockpit crewmembers and flight attendants.

CUSTOMERS

     Historically,  World Airways'  business has relied heavily on its contracts
with  Malaysian  Airline  System  Berhad  ("Malaysian  Airlines"),  P.T.  Garuda
Indonesia   ("Garuda")  and  the  U.S.  Air  Force.   These  customers  provided
approximately  34%, 13%, and 25%,  respectively,  of World Airways' revenues and
42%, 14%, and 17%, respectively, of total block hours from continuing operations
during 1996. For 1995, these customers provided approximately 42%, 11%, and 21%,
respectively,  of its revenues and 48%,  11%,  and 13%,  respectively,  of total
block  hours  from  continuing  operations.  In 1996,  World  Airways  commenced
operations for Philippine Airlines,  Inc. ("Philippine Airlines") providing four
MD-11 aircraft under year-round wet lease contracts.  These operations  provided
approximately  15% and 17% of World  Airways'  revenues  and  block  hours  from
continuing operations, respectively, during 1996. World Airways expects that the
agreement with Philippine Airlines will continue to have a substantial impact on
its revenues and block hours in 1997.

     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  owns 17.6% of World
Airways as of December 31, 1996,
                                                       23

<PAGE>



also owns 29.1% of Malaysian Airlines.  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. In 1996, World Airways provided
three aircraft for Hadj  operations.  World Airways  recently entered into a new
32-month agreement for year-round operations (including the Hadj) with Malaysian
Airlines  whereby it will provide two aircraft with cockpit  crews,  maintenance
and insurance to Malaysian Airlines'  newly-formed  charter division through May
1999.  World  Airways is currently in  preliminary  discussions  with  Malaysian
Airlines regarding a potential  eleven-month reduction in the utilization of one
of these aircraft during the 32-month term of the contract.

       Until  recently,  World  Airways  operated  four  passenger  aircraft for
Malaysian Airlines under the multi-year agreements described above. The contract
for two of the four passenger  aircraft for Malaysian  Airlines expired in March
1997.  While World Airways is deploying these two aircraft in the 1997 Hadj, and
will actively  re-market the aircraft  thereafter,  World Airways can provide no
assurance  that it will be able to redeploy  the two  aircraft,  beginning  June
1997, at price and  utilization  levels at least as favorable as under the terms
of the Malaysian Airlines contracts.

     World Airways originally  operated 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 the Philippine Airlines contract. World Airways and
Malaysian  Airlines are currently  discussing the future  redeployment  of these
aircraft  back  into  Malaysian  Airlines'  operations  in  order  to  meet  the
contracts'  original  obligations.  World  Airways  can  provide no  assurances,
however, that it will, in fact, be able to redeploy these two aircraft back into
Malaysian  Airlines'  operation  to meet the  contracts'  original  obligations.
Revenues  associated  with these  contractual  obligations are included in World
Airways' backlog amount included herein.

       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 1996,  approximately  200,000  Indonesians  traveled to
Jeddah for the Hadj pilgrimage.  During the 1996 Hadj pilgrimage,  World Airways
provided passenger service to Garuda with seven aircraft,  flying  approximately
40,000  Indonesians  on  company  aircraft.   Due  to  World  Airways'  capacity
constraints during the period of Hadj flying, World Airways reached an agreement
with Garuda to operate six aircraft during the 1997 pilgrimage.

       Philippine  Airlines.  In May 1996, World Airways entered into a new ACMI
contract with Philippine Airlines, thereby further expanding its presence in the
Pacific Rim. World Airways presently  operates four MD-11 passenger aircraft for
Philippine  Airlines under an agreement,  with high minimum monthly  utilization
levels. World Airways,  however,  has recently received a written  communication
from Philippine  Airlines in which the airline  contends that its leases for all
four  aircraft  expire on November 15, 1997.  World  Airways  believes that this
position is contrary to the understanding of the parties that each of the MD-11s
are to be leased by Philippine  Airlines for a period of 18 months from delivery
of each aircraft.  The parties are currently  discussing the length of the lease
term for these aircraft. World Airways can provide no assurances,  however, that
Philippine Airlines will agree to lease any of the four MD-11 passenger aircraft
beyond  November  15, 1997,  or that World  Airways will be able to secure other
business at as favorable price and utilization levels.

       Also,  subsequent to year-end,  at Philippine  Airlines'  request,  World
Airways agreed to a payment plan with respect to Philippine  Airlines' wet lease
obligations  for several  months  beginning in March 1997.  Although  Philippine
Airlines  is  current  on this  payment  plan to date,  if  Philippine  Airlines
defaults  on this  payment  plan,  or fails to meet its monthly  aircraft  lease
obligations,  this  development,  if not offset by other business,  would have a
material  adverse effect on the cash flows,  financial  condition and results of
operation of World Airways.

       U.S.   Air  Force.   World   Airways  has  provided   international   air
transportation  to the U.S. Air Force since 1956. The overall  downsizing of the
U.S. military,  combined with a need to respond quickly to the growing number of
global  regional  conflicts  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.  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.



                                                       24

<PAGE>



       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 44% 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 $52.8 million for the
government's 1996-97 fiscal year.

       The current annual  contract  commenced on October 1, 1996 and expires on
September  30,  1997.  These  contracts  provide for a fixed level of  scheduled
business from the U.S. Air Force with  opportunities  for additional  short-term
expansion business on and ad hoc basis as needs arise. Due to the utilization of
a significant  number of World Airways' aircraft under multi-year  contracts and
other contractual commitments, it is unlikely that it will be able to accept all
of  the  available  expansion  business.  Although  overall  Defense  Department
spending is being reduced,  the level of the U.S. Air Forces contract awards has
remained  relatively  constant in recent years. World Airways,  however,  cannot
determine how future cuts in military spending may affect future operations with
the U.S. Air Force.

       Although World Airways's customers bear the financial risk of filling the
World Airways' 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 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, 1996 of $468.0  million,  compared to $462.0
million at  December  31,  1995.  Approximately  $253.5  million of the  backlog
relates  to 1997  operations.  World  Airways'  backlog  for  each  contract  is
determined  by  multiplying  the minimum  number of block hours  (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  destination)
guaranteed under the applicable contract by the specified hourly rate under such
contract. Approximately 60% and 20% of the backlog relates to its contracts with
Malaysian Airlines and Philippine Airlines,  respectively.  While the percentage
of its 1997 block hour capacity  that is currently  under  contract  exceeds the
comparable  percentage  in the past  several  years,  World  Airways  still  has
substantial  uncontracted  capacity in the third and fourth quarters of 1997. In
addition,  a significant portion of World Airways' current contracts expire near
the end of 1997.  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 1997 and beyond. World Airways' financial results
and financial  condition  would be affected  adversely if it is unable to secure
additional business to reduce this excess capacity.

       The  information   regarding  major  customers  and  foreign  revenue  is
contained in Note 18 "Segments and Major  Customers" of the Company's  "Notes to
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 achieve the growth anticipated by its
strategic  plan  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

                                                       25

<PAGE>



aircraft to the emergency  program,  or the  withdrawal of it 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  its  operating  performance.
Although World Airways  recently has  experienced a growth in demand,  such that
block hours flown from continuing operations increased in 1996 by 23% over 1995,
there can be no assurance that this level of growth will continue.

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 1997, World Airways' flight operations  associated with the Hadj
pilgrimage will occur from March 15 to May 20. 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.  World
Airways believes that its contracts with Malaysian  Airlines and the USAF should
lessen the effect of these seasonal factors.

GEOGRAPHIC CONCENTRATION

       World Airways derives a significant  percentage of its revenues and block
hours from its  operations  in the  Pacific Rim  region.  While it believes  the
Pacific  Rim region is a growth  market  for air  transportation,  any  economic
decline or any military or political disturbance in this area may interfere with
World Airways' ability to provide service in this area and could have a material
adverse  effect on the  financial  condition  or  results of  operations  of the
company.

UTILIZATION OF AIRCRAFT

     Due to the large  capital  costs of leasing and  maintaining  its aircraft,
each of World Airways'  aircraft must have high  utilization at attractive rates
in order for it to operate  profitably.  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 the aircraft.  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  results  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 it 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 it can provide no assurance that it will
obtain new ACMI  contracts or that  existing ACMI  contracts  will be renewed or
extended.

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

                                                       26

<PAGE>



at a cost  not to  exceed  specified  rates  per  hour  during  the  term of the
contract.  Its maintenance  costs associated with the MD-11 aircraft and PW 4462
engines have been significantly  reduced due in part to manufacturer  guarantees
and  warranties  which  began to expire in 1995 and which will  fully  expire by
1998.  In  addition,  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 will
begin to accrue  these  increased  expenses in 1997.  Therefore,  World  Airways
expects that maintenance expenses will continue to increase during the remainder
of the term of the contract as its 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
its 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.  There can be no assurance  that World  Airways will be
able to generate operating income in 1997 or future years.

INTELIDATA

     InteliData was  incorporated in order to effect the mergers of US Order and
Colonial  Data.  The Merger was  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 Merger was  consummated  with each share of outstanding
US Order  and  Colonial  Data  common  stock  being  exchanged  for one share of
InteliData  common stock.  The Merger was treated as a purchase of Colonial Data
by US Order.  At December 31, 1996,  WorldCorp's  ownership  in  InteliData  was
approximately 28.9%. Following this Merger,  WorldCorp reports its proportionate
share of InteliData's financial results using the equity method of accounting.

       On October 4, 1996,  US Order  acquired the business of Braun,  Simmons &
Co., ("Braun Simmons"), for approximately $7.0 million consisting of cash and US
Order common stock and including US Order transaction  costs.  Braun Simmons was
an information  engineering firm specializing in the development of home banking
and electronic  commerce solutions for financial  institutions.  The acquisition
expands   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
and financial services industries through its three business divisions: consumer
telecommunications, electronic commerce and interactive services.

       The consumer  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  a  smart  telephone,  the
Telesmart  4000/IntelifoneTM,  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 and
telephones with integrated Caller ID, small business  telecommunications systems
and high-end consumer 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  a  financial   institution's  back  office,   offering
outsourcing  for data  entry,  telemarketing,  customer  service  and  technical
support.  InteliData currently receives its electronic commerce revenues largely
from  the  sale  of  products  and  services  to  Visa   International   Service
Association, Inc. ("Visa") member banks.


                                                       27

<PAGE>



       The interactive  services division 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")  telephones and
personal digital  assistants  ("PDAs").  InteliData  intends to sell interactive
applications directly to end users and through other companies, including telcos
and  wireless   communications   companies.   InteliData's  current  interactive
applications  include electronic national directory  assistance lookup,  one-way
alpha-numeric  paging,  one-way internet e-mail, a personal  directory data save
and restore  function and  information  services such as news,  weather,  sports
scores, stock quotes, lottery results and horoscopes.

UNCERTAINTY AS TO FUTURE FINANCIAL RESULTS

       InteliData   believes  that  the  Merger  will  offer  opportunities  for
long-term efficiencies that should positively affect future operating results of
the combined companies. However, the combined companies will be more complex and
diverse than either US Order or Colonial Data individually,  and the combination
and  continued  operation of their  distinct  business  operations  will present
difficult  challenges for its management due to the increased time and resources
required  in the  management  effort.  While  the  management  and the  board of
InteliData  believe that the  combination  can be effected in a manner that will
realize the value of the two companies,  neither management group has experience
in  combinations  of  this  size or  complexity.  Accordingly,  there  can be no
assurance  that  the  process  of  effecting  the  business  combination  can be
effectively  managed to realize  the  operational  efficiencies  anticipated  to
result from the Merger.

       Following  the Merger,  in order to maintain and increase  profitability,
the  combined  company  will  need  to  successfully  integrate  and  streamline
overlapping  functions.  The two predecessor companies had different systems and
procedures in many  operational  areas that must be rationalized and integrated.
There can be no assurances that  integration  will be  accomplished  smoothly or
successfully.  The  difficulties  of such  integration  may be  increased by the
necessity  of   coordinating   geographically   separated   organizations.   The
integration  of  certain  operations  following  the  Merger  will  require  the
dedication of management  resources that may temporarily distract attention from
the  day-to-day  business  of the  combined  companies.  Failure to  effectively
accomplish  the  integration  of the two  companies'  operations  could  have an
adverse effect on InteliData's results of operation and financial condition.

DEVELOPING MARKETPLACE

       Home  banking  and smart  telephones  are  developing  markets.  Consumer
preferences in interactive  technologies are difficult to predict.  InteliData's
future growth and profitability  will depend, in part, upon consumer  acceptance
of electronic  home banking and smart telephone  technologies  and a significant
expansion in the consumer market for  telephone-based  interactive  applications
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 smart  telephone  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.  InteliData faces competition in these markets
from  other  emerging  interactive   applications   delivered  through  personal
computers, cable television and Integrated Service Digital Network ("ISDN").

FLUCTUATIONS IN OPERATING RESULTS

       Historically, US Order and Colonial Data have experienced fluctuations in
quarterly  operating  results,   and  accordingly,   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 or the royalty payments from Visa  InterActive,  if any, changes
in  InteliData's  pricing  policies  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 regional Bell operating  companies have entered into merger  agreements.
InteliData is unable to assess the

                                                       28

<PAGE>



future  effect on the company of these  mergers,  if  consummated,  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.  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  its  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 its 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 it has recently introduced
or which it may  introduce  in the future.  Moreover,  there can be no assurance
that  its new  products,  features  or  services  will be  successful,  that the
introduction of new products,  features or services by its competitors  will not
materially and adversely affect the sales of InteliData's  existing  products or
that it  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.

DEPENDENCE ON FOREIGN PRODUCTION

       InteliData's  Caller ID units and certain other  products,  including the
smart telephone, the Telesmart 4000/IntelifoneTM,  are manufactured by companies
with  facilities  in Hong Kong,  Malaysia,  and the People's  Republic of China.
These facilities are supplemented,  in part, by other  manufacturers in Asia for
certain  integrated  telephone and small business system products and by limited
manufacturing  facilities  in  Connecticut.  The  availability  or cost of these
Caller ID units and smart  telephones  may be adversely  affected by  political,
economic or labor conditions in Hong Kong,  Malaysia 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.

RESTRICTIONS FROM THE VISA AGREEMENT

       As a  condition  of  Visa's  acquisition  of  InteliData's  bill  payment
operations and technology (the "Visa Bill-Pay

                                                       29

<PAGE>



System"),  InteliData has agreed to work  exclusively with Visa in certain areas
and to refrain from certain activities that are in competition with Visa and its
affiliates.  These  covenants may increase its reliance upon Visa.  InteliData's
dependence on Visa, and the terms of the agreement between the parties, may have
a material adverse effect on InteliData.

IMPORTANCE OF STRATEGIC ALLIANCES

       One of  InteliData's  business  strategies is to  manufacture or sell its
products and services through strategic alliances.  The success of this strategy
will depend to an extent both on the ultimate success of its strategic  partners
as well as on the ability of its partners to  successfully  market  InteliData's
products and services. There can be no assurance that any alliance partners will
view their alliance with  InteliData as significant  for their own businesses or
that they will not reassess  their  commitment  to InteliData at any time in the
future.

COMPETITION

       Consumer  Telecommunications.  The market for  InteliData's  products  is
highly  competitive  and  subject to rapid  technological  change.  At  present,
InteliData's  principal  competitors  are CIDCO,  Lucent and  Northern  Telecom.
InteliData's  Caller ID products also compete with Caller ID telephones  offered
by Panasonic, Sony, Thomson and US Electronics.

       Marketing of InteliData's  smart telephone is subject to competition from
smart telephones marketed or developed by Philips, Northern Telecom and CIDCO as
well as other emerging platforms for interactive  applications delivered through
personal computers and cable television.  InteliData expects  competition in the
markets for its consumer 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 consumer  telecommunications  products and services  have  substantially
greater financial,  marketing and technical  resources than itself.  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 its 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.  Visa competes with other
organizations,  including MasterCard International,  Inc. ("MasterCard"),  which
offers its  Masterbanking  home banking service through  CheckFree  Corporation.
Many  competitors  exist  for  its  various  banking  products  including  other
manufacturers of touch-tone response systems, other financial software companies
and financial services software and service companies.  InteliData believes that
its  primary  competition  for its  customer  support  services  will  come from
financial  institutions  and third parties that choose to offer customer support
services either  directly  through Visa's customer  support  messaging  standard
("CSMS") product or on their own.  InteliData expects that competition in all of
these areas will increase in the near future.

     Interactive Services. The industry for interactive services is emerging and
there  is  potential  for a  number  of  companies  to  enter  the  marketplace.
Currently, InteliData's primary competitor is SmartServe Online, Inc.

RELATIONSHIP WITH VISA

       US Order sold the Visa  Bill-Pay  System to Visa on August 1,  1994,  for
approximately  $15.0 million in cash, the assumption of certain  liabilities and
rights to a 72-month royalty period commencing January 1, 1995 and ending

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<PAGE>



December 31, 2000 (the "Royalty  Period").  Visa subsequently  transferred these
assets to Visa InterActive,  its wholly owned subsidiary. The royalty obligation
is based on the number of customers who use the Visa Bill-Pay  System during the
Royalty Period. The agreement with Visa expressly provides that the royalty will
apply only if the means by which a customer  makes an  electronic  bill  payment
involves the use of a "significant portion" of the Visa Bill-Pay System.

       Royalties  to  InteliData  are  calculated  and paid by Visa  InterActive
quarterly  during the Royalty  Period.  Because the amount of the  royalties  to
InteliData is dependent  upon the number of customers that use the Visa Bill-Pay
System on a monthly basis during the Royalty Period,  InteliData  cannot provide
any assurances of the amount of royalties,  if any, that will be payable by Visa
InterActive to InteliData.  The royalty payment will be reduced for each quarter
through  December 31, 1997,  by an offset amount (the "Visa  Offset")  which was
initially set at $73,000.  If the royalty payment that would otherwise be due in
respect of a quarter is smaller  than the  offset  amount for that  quarter,  no
royalty payment will be made to InteliData,  and the difference  between $73,000
and the royalty  otherwise due will increase the size of the Visa Offset for the
next quarter.  The aggregate amount of the Visa Offset for the Royalty Period is
$880,000.  InteliData did not receive any royalty  revenue from Visa in 1996 due
to the Visa  Offset and does not expect to receive  any  royalty  revenue  after
application of the Visa Offset through at least the end of the second quarter of
1997.

       In addition, under the terms of its agreement with Visa, Visa InterActive
is not obligated to pay royalties to  InteliData  for active bank  customers who
utilize home banking and bill payment technology independently developed by Visa
InterActive. If Visa InterActive independently develops or acquires its own home
banking  and bill  payment  technology  which  does  not use or  build  upon its
technology, this could have a material adverse effect on the amount of royalties
payable by Visa InterActive to InteliData.  As a condition of Visa's acquisition
of the Visa Bill-Pay System, InteliData has agreed to work exclusively with Visa
in certain areas and to refrain from certain  activities that are in competition
with Visa and its affiliates. These covenants may increase InteliData's reliance
upon Visa.

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.

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.  An order  issued by the FCC  effective  December 1, 1995,
requires 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 and party  lines).  The FCC's order also  requires that telcos that offer
Caller ID service must provide to their telephone  subscribers  without charge a
per-call  blocking  mechanism  to block  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  this  blocking
capability.

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.

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Factors such as announcements of the introduction of new products or services by
InteliData or its  competitors,  announcements of joint  development  efforts or
corporate  partnerships  in  the  interactive   applications  industry,   market
conditions in the banking,  telecommunications and other emerging growth company
sectors and rumors  relating  to it 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 its 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 its  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.

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 it
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
-------------

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 the 1996 to $287.9 million from $226.5 million in 1995.


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       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 $5.9 million,  or 9%, in
1996 to $71.1  million  from  $65.2  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
is necessary in 1996 as a result of losses from the discontinuation of scheduled
service operations.  In addition,  World Airways expects that its training costs
will increase in 1997 as a result of crewmember attrition.

       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. As discussed  previously,  World Airways  expects its
maintenance  expense to increase  in 1997 due to  escalations  in the  specified
rates per hour under its maintenance agreement.

       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 $4.2 million in 1996 to $6.2
million  from $2.0  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.

Discontinued Operations
-----------------------

       For its scheduled  service  operations,  World Airways  commenced service
between  Tel Aviv and New York in July 1995 and  commenced  service  between the
United  States  and South  Africa  in June  1996.  In  addition,  World  Airways
commenced  scheduled charter  operations  between the United States and Germany,
Switzerland,  Ireland,  and the  United  Kingdom  in May  1996.  World  Airways,
however, 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
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 have been
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 its
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

                                                       33

<PAGE>



reprotection  expenses.  World Airways incurred  approximately  $18.9 million of
these costs during the six months ended  December 31, 1996 and it believes  that
its remaining  accrual for estimated losses on disposal will be adequate to meet
the remaining  costs to be incurred during the phase-out  period.  In connection
with the  discontinuance of its scheduled service  operations,  World Airways is
subject to claims by various third parties and may be subject to further  claims
in the future (see "Other Matters - Legal and Administrative Proceedings").

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

       Total block hours increased 10,885 hours, or 41%, to 37,342 hours in 1995
from 26,457 hours in 1994, with an average of 10.3 available aircraft per day in
1995 compared to 8.2 in 1994.  Average daily utilization  (block hours flown per
day per  aircraft)  increased  to 9.9 hours in 1995  from 8.8 hours in 1994.  In
1995,  World  Airways  continued to obtain a higher  percentage  of its revenues
under wet lease  contracts as opposed to full service  contracts.  In 1995,  wet
lease  contracts  accounted  for 70% of total block hours,  up from 63% in 1994.
Total operating revenues  increased $78.8 million,  or 44%, to $259.5 million in
1995 from $180.7 million in 1994.

Continuing Operations
---------------------

       Block hours from continuing  operations increased 9,171 hours, or 35%, to
35,628 hours in 1995 from 26,457 hours in 1994.

       Operating  Revenues.  Revenues  from flight  operations  increased  $58.7
million,  or 34%, to $232.6  million in 1995 from $173.9  million in 1994.  This
increase was  primarily  attributable  to a $58.4  million  increase in revenues
generated from the new multi-year  contracts  with Malaysian  Airlines.  Average
daily utilization for these contracts was 11.2 hours in 1995. In addition, World
Airways  realized an increase in revenues  associated  with  services to certain
international  carriers.  Partially offsetting these increases was a decrease in
revenues associated with the 1995 summer charter programs to Europe.

       Revenues from flight operations subcontracted to other carriers increased
$3.2 million for 1995 to $8.6 million from $5.4 million in 1994.  This  increase
resulted  primarily  from  its  need to  subcontract  certain  flights  to other
carriers due to peak airlift  requirements  for the 1995 Hadj  pilgrimage.  This
increase was  partially  offset by the  subservice  of certain  contracts in the
fourth  quarter of 1994  primarily to make aircraft  capacity  available for the
commencement  of  operations  under  its  multi-year  contracts  with  Malaysian
Airlines.

     Operating  Expenses.  Total operating expenses increased $40.6 million,  or
22%, in 1995 to $226.5 million from $185.9 million in 1994.

       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 $7.4 million,  or 13%, in
1995 to $65.2  million  from  $57.8  million  in 1994.  This  increase  resulted
primarily from the following:  an increase in block hours flown;  higher cockpit
crew levels  associated  with the  integration  of additional  aircraft into the
fleet in 1995; and an increase in accruals  under World Airways'  profit sharing
plans for its crewmembers  during 1995. These factors were partially offset by a
shift from full service to basic contracts.

       Maintenance  expenses  increased $15.6 million,  or 60%, in 1995 to $41.8
million from $26.2 million in 1994.  This  increase  resulted  primarily  from a
non-recurring  1994 reversal of $4.2 million of excess reserves  associated with
the expiration of three DC10-30  aircraft leases and the increase in block hours
flown in 1995 and lower costs associated with reduced  maintenance  requirements
of new MD-11 aircraft and the guarantees and warranties received from the engine
and aircraft  manufacturers  of the MD-11  aircraft and related  engines,  which
guaranties and warranties began to expire in 1995.

       Aircraft costs increased $13.4 million,  or 25%, in 1995 to $67.3 million
from $53.9 million in 1994.  This increase was primarily due to the lease of two
additional  MD-11  convertible  aircraft  in the first  quarter  of 1995 and the
short-term  lease of  incremental  DC10-30  aircraft  which  began in the fourth
quarter of 1994 and second  quarter of 1995,  partially  offset by the return of
three lower-cost DC10-30 aircraft to the lessor in the third quarter of 1994.



                                                       34

<PAGE>




       Fuel expenses  decreased $0.2 million in 1995 to $16.7 million from $16.9
million in 1994.  This decrease is due primarily  from a shift from full service
to basic  contracts  in 1995 under which World  Airways is not  responsible  for
fuel,  partially  offset  by an  increase  in fuel  uplifted  for  military  and
scheduled service operations.

       Promotions,  sales and commissions increased $0.9 million in 1995 to $2.0
million from $1.1 million in 1994.  This  increase  resulted  primarily  from an
increase in joint venture  commissions  associated  with the larger  fixed-award
contract received from the U.S. Air Force beginning October 1995.

       Depreciation and amortization  increased $2.1 million, or 53%, in 1995 to
$6.1 million from $4.0 million in 1994. 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 as well as the  amortization of
certain MD-11 aircraft integration costs and other deferred costs.

       General and administrative  expenses  decreased $2.3 million,  or 11%, in
1995 to $18.2  million from $20.5  million in 1994.  This decrease was primarily
due to a decrease in certain legal and  professional  fees,  partially offset by
the hiring of additional marketing personnel.

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 this Merger 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.

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.

       In the future,  InteliData  expects that aggregate  recurring general and
administrative  expenses will increase as the company  grows.  The amount of any
increase will depend on the products and services  offered by InteliData and its
alliances and strategic partners.  In particular,  InteliData expects that these
expenses will increase as it upgrades its systems and operations in anticipation
of the  potential for increased  business in 1997.  InteliData  also expects its
advertising and promotion  expenses will increase  substantially  in 1997 due to
the  further  marketing  efforts  within  the  consumer  telecommunications  and
interactive services division.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

       Operating  Revenue.  US  Order's  operating  revenues  increased  by $2.8
million  from $1.4  million in 1994 to $4.2  million in 1995.  The  increase was
primarily  related  to the  sale  of US  Order's  products,  such  as its  smart
telephones, which it began selling through its "preferred provider" relationship
with Visa in 1995.


                                                       35

<PAGE>



       Operating  Expenses.  US Order's  operating  expenses  decreased  by $1.9
million  from $11.4  million in 1994 to $9.5  million in 1995.  The decrease was
primarily  from a one time  payment to certain  employees in August 1994 of $3.3
million made in conjunction  with the August 1, 1994 sale of US Order's bill pay
operations  where Visa required that all US Order employees who became employees
of Visa  InterActive  cancel their vested  options to  eliminate  any  potential
conflict of  interest.  The  decrease  was also due to reduced  advertising  and
promotion expenses in 1995.

WORLDCORP
---------

       General and  administrative  expenses decreased $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.

       General and  administrative  expenses increased $0.7 million for the year
ended  December 31, 1995 to $4.3 million from $3.6 million during the comparable
1994 period.  This increase  resulted  primarily from goodwill  amortization and
compensation expense associated with executive stock options in 1995.

OTHER INCOME (EXPENSE)
----------------------

       Equity in Loss of  Affiliate.  On November 7, 1996, US Order and Colonial
Data were merged with and into  InteliData.  As described  above,  following the
Merger,  WorldCorp reports its share of InteliData's financial results under the
equity  method of  accounting.  As a result of the Merger,  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 Merger 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.

     Gain (Loss) on Issuances  (Purchases)  of Equity by  Subsidiaries,  Net and
Gain on Sales of  Subsidiaries'  Stock. As a result of the US Order and Colonial
Data merger, WorldCorp recognized a gain on the issuance of equity by InteliData
of $42.6  million  which was 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.

       In April 1995, US Order filed a  registration  statement on Form S-1 with
the  Securities  and  Exchange  Commission  to register  4,427,500  shares of US
Order's  common  stock.  The offering was  completed in June 1995. Of the shares
registered,  3,062,500  were issued and sold by US Order,  and 1,365,000  shares
were sold by WorldCorp.  In June 1995, US Order exchanged  230,000 shares of its
restricted  common  stock for  170,743  shares of Colonial  Data's  unregistered
common  stock.  In October  1995,  US Order  acquired a 40%  interest in HomeNet
through the  issuance of 296,746  shares of its common stock in exchange for 40%
of HomeNet. In August 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 in October 1995. Of the
shares  registered,  2,000,000 were issued and sold by World Airways and 900,000
shares were sold by WorldCorp. The Company recognized a gain of $43.7 million as
result  of these  sales of stock by US Order and  World  Airways,  and a gain of
$23.7 million from its sales of US Order and World Airways stock.

       In February 1994,  WorldCorp  recognized a gain of $26.9 million from the
sale of 24.9%  of World  Airways  common  stock,  pursuant  to an  October  1993
agreement.  Also, in August 1994, US Order sold its electronic  banking and bill
payment  operations  to  Visa.  As a result  of this  transaction,  the  Company
recognized a gain of $14.5 million.

     Other,  Net. 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.  Other expenses decreased $2.6
million in 1995 from 1994  primarily due to a $0.7 million loss on the sale of a
DC10 engine by World  Airways in 1994. In addition,  World Airways  recognized a
$0.8 million gain in 1995 resulting from a settlement  with the lessor  relating
to the return of two DC10 aircraft in 1993.

                                                       36

<PAGE>




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, 1996,  World Airways has a working capital deficit of $29.6 million
and has substantial debt and lease commitments. At December 31, 1996, InteliData
has working  capital of $63.5 million,  with no long-term  debt.  World Airways'
ability to pay dividends is currently restricted under a borrowing  arrangement.
Additionally,  the provisions of the Indenture governing WorldCorp's  Debentures
causes World  Airways not to pay  dividends  upon the occurence of any events of
default  by  WorldCorp  under  such  Indenture.  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.

     Of the $12.5  million in cash and cash  equivalents  at December  31, 1996,
approximately  $7.0  million is held by World  Airways  and,  therefore,  is not
available to satisfy WorldCorp's obligations. As of December 31, 1996, WorldCorp
had parent company repayment  obligations,  including principal and interest, of
approximately $22.4 million for 1997. In order to meet these obligations and its
general and  administrative  costs,  the Company must use its existing  cash and
either sell shares of World Airways or InteliData,  or issue  additional debt or
equity. Under the terms of certain borrowing arrangements however, WorldCorp has
pledged all of its shares of World Airways and  InteliData as collateral for the
borrowings.

     The Company is currently evaluating the feasibility of a disposition of its
interest  in World  Airways  through a  secondary  offering or a sale to a third
party. Any such transaction  would require the approval of certain other parties
(See Notes 6,12 and 13). Additionally, management believes it will be successful
in  reducing  the  amount  of  collateral  securing  its  borrowings,  either by
renegotiating  the terms of the loan or by entering into a new loan with another
financial institution. Although there can be no assurance that WorldCorp will be
successful in  consummating  these  transactions,  management  believes that its
existing cash and the anticipated  proceeds from a combination of sales of stock
of  World  Airways  or  InteliData,  renegotiations  of its  existing  borrowing
arrangements,  or new  financing  arrangements,  will be sufficient to allow the
Company to meet its operating  requirements and repayment  obligations for 1997.
At December 31, 1996,  based on quoted  market  prices,  the market value of the
Company's  6,915,915 shares of World Airways and 9,179,273 shares of InteliData,
approximated  $56.2  million and $66.5  million,  respectively,  although  these
values have declined since year-end.

       World  Airways  is  also  highly   leveraged.   World  Airways   incurred
substantial debt and lease commitments during the past three years in connection
with its  acquisition of MD-11 aircraft and related spare parts. At December 31,
1996,  World Airways had total  long-term  indebtedness of  approximately  $30.1
million and notes  payable and current  maturities of long-term  obligations  of
$20.4  million.  In addition,  World Airways has  significant  future  long-term
obligations  under aircraft lease  obligations  relating to its aircraft.  World
Airways has  historically  financed its working capital and capital  expenditure
requirements  out of cash flow from  operating  activities,  public and  private
sales of its common stock,  secured borrowings,  and other financings from banks
and other  lenders.  The degree to which World  Airways is leveraged  could have
important consequences to holders of Common Stock, including the following:  (i)
its ability to obtain  additional  financing in the future for working  capital,
capital  expenditures,  acquisitions or other purposes may be limited;  (ii) its
degree  of  leverage  and  related  debt  service  obligations,  as  well as its
obligations  under  operating  leases for aircraft,  may make it more vulnerable
than some of its  competitors in a prolonged  economic  downturn;  and (iii) its
financial position may restrict its ability to pursue new business opportunities
and limit its flexibility in responding to changing business conditions.

     World Airways' cash and cash  equivalents at December 31, 1996 and December
31, 1995 were $7.0 million and $25.3 million,  respectively. As is common in the
airline  industry,  World Airways  operates with a working capital  deficit.  At
December 31, 1996 World  Airways'  current assets were $44.4 million and current
liabilities  were $74.0 million.  World Airways believes that the combination of
the  financings  consummated  to date,  income from  continuing  operations  and
certain  additional  financings  will be sufficient to allow it to meet its cash
requirements  related to the remaining phase-out of its discontinued  operations
and the operating and capital requirements for its continuing operations for the
next twelve months.

       At  December  31,  1996,  InteliData  had  $39.0  million  in cash,  cash
equivalents  and  short-term  investments.  InteliData  has generated  operating
losses  since its  inception.  InteliData's  smart  telephone  and home  banking
products  and services are subject to the risks  inherent in the  marketing  and
development  of new  products.  The market for these  products  and  services is
relatively new and is  characterized  by rapid  technological  change,  evolving
standards,   changes  in  end-user   requirements   and   frequent  new  product
introductions  and enhancements.  However,  the acquisition of Colonial Data has
provided  InteliData with established  product lines and sales channels in large
telecommunications  markets. The industry for InteliData's products and services
is  intensely  competitive.   InteliData  experiences  direct  competition  from
manufacturers of smart telephones, caller ID units, and cordless phones and from

                                                       37

<PAGE>



companies  that  develop   transaction   processing   software  for  interactive
applications and customer support services. The acquisition of Colonial Data has
provided  InteliData  with a revenue  stream that  totaled  approximately  $74.2
million and $50.2  million,  respectively,  for the twelve months ended December
31, 1995 and the nine months ended September 30, 1996. There can be no assurance
as to what level of future sales or  royalties,  if any,  that  InteliData  will
receive from Visa,  Visa member banks and retail markets for its smart telephone
and home banking products and services.


CASH FLOWS FROM OPERATING ACTIVITIES


     Operating activities used $25.4 million in cash for the year ended December
31, 1996 compared to providing $1.1 million of cash in the comparable  period in
1995.  This  decrease  in cash in 1996  resulted  primarily  from an increase in
losses, and increase in accounts receivable, and a decrease in unearned revenue,
partially offset by an increase in accounts payable during 1996.


CASH FLOWS FROM INVESTING ACTIVITIES


     Investing activities used $26.0 million in cash for the year ended December
31, 1996 compared to using $22.7 million in the comparable  period in 1995. This
decrease in cash used  resulted  primarily  from the  purchase of rotable  spare
parts required for the integration of two MD-11 aircraft and  incremental  DC-10
aircraft  in 1995,  as compared  to the  acquisition  of engines and spare parts
which were financed in 1996. In addition,  the Company's  consolidated  cash was
reduced as a result of the Merger and the Company's  change to the equity method
of accounting for its investment in InteliData.

CASH FLOWS FROM FINANCING ACTIVITIES


     Financing activities used $10.6 million in cash for the year ended December
31, 1996 compared to providing  $87.9 million in the comparable  period in 1995.
In 1995,  the Company  received $93.4 million from the sale of World Airways and
US  Order's  common  stock  and  made  net  repayments  of $9.0  million  on its
borrowings.  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. In addition, the Company increased its net borrowings by $1.0 million.

CAPITAL COMMITMENTS

World Airways
-------------

       In  October  1992 and  January  1993,  World  Airways  signed a series of
agreements  to lease seven new MD-11  aircraft for initial lease terms of two to
five years,  renewable for up to 10 years (and in the case of one aircraft,  for
13 years) by the Company with  increasing  rent costs.  As of March 1995,  World
Airways had taken delivery of all seven  aircraft,  consisting of four passenger
MD-11 aircraft, one freighter MD-11, and two passenger/cargo convertible MD-11s.
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  of $1.2  million  toward the option  aircraft.  In March  1996,  World
Airways signed an agreement with the manufacturer to lease two MD-11ER aircraft.
Under the  agreement,  it leased  each  aircraft  for a term of 24 years with an
option to return the  aircraft  after a seven year  period  with  certain  fixed
termination fees. As part of the agreement,  the  above-mentioned  deposits were
applied towards the deposits required on these two aircraft. In addition,  World
Airways  agreed to assume an existing lease of two  additional  MD-11  freighter
aircraft for 20 years,  beginning in 1999, in the event that the existing lessee
terminates  its lease with the  manufacturer  at that time.  As of December  31,
1996,  annual minimum payments required under its aircraft and lease obligations
totaled $86.2 million for 1997.

       As a result of its decision to discontinue  scheduled service operations,
World  Airways  reached an agreement  with the lessor to terminate the leases of
two DC10-30  aircraft  effective  December 31, 1996. As of March 31, 1997, World
Airways  leases one  short-term  DC10-30  aircraft  and four  long-term  DC10-30
aircraft with terms expiring in 1999, 2003, and two in 1997.

       In August 1995,  World Airways  amended its aircraft spare parts facility
under the Credit  Agreement  to provide for a variable  rate  borrowing of $10.5
million.  Approximately  $2.5  million of this  facility was used to pay off the
previously outstanding balance of the spare parts loan facility and $0.8 million
was used to  purchase  additional  spare  parts for MD-11s  required  during the
remainder of 1995.  The balance of this loan  facility was used to increase cash
balances  which were drawn down during the first half of 1995 to purchase  MD-11
spare parts.


                                                       38

<PAGE>




       In September 1995,  World Airways agreed to purchase 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.  World  Airways made payments of
$1.2  million and $0.4  million  towards  this  purchase in  September  1995 and
January 1996, respectively.

       As discussed  above,  World Airways  signed an agreement for the lease of
two  MD-11ER  aircraft  beginning  in the  first  quarter  of  1996  to  provide
additional capacity for growth  opportunities.  As part of the agreement for the
MD-11 aircraft,  World Airways received spare parts financing from the lessor of
$9.0 million of which $3.0 million was made  available with the delivery of each
aircraft, and the remaining $3.0 million was made available in December 1996. As
of December 31, 1996,  approximately $6.4 million had been received.  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  with an  interest  rate  to be  fixed  at the  time of
delivery, which is expected to be during 1997.

       World Airways' fixed assets increased  approximately $17.7 million during
1996. The majority of this amount  relates to assets which were financed.  World
Airways anticipates that its total capital  expenditures in 1997, which includes
the spare  engine,  will  approximate  $10.2  million  of which it will  receive
approximately  $6.1  million  in  financing.  World  Airways  expects  that  the
remaining balance will be funded from its operating cash flow and available cash
balances.  In March 1996, the Credit Agreement was amended to increase the limit
on capital expenditures by World Airways to no more than $35.0 million and $25.0
million in 1996 and 1997, respectively.

       As of December 31, 1996,  World Airways held  approximately  $3.9 million
(at book value) of aircraft spare parts currently available for sale.

InteliData
----------

       InteliData's  principal  needs for cash in 1996 were for  investments  in
property  and  equipment  and to fund  working  capital,  primarily  related  to
inventories and accounts receivable.  InteliData's primary needs for cash in the
future  are  for  investments  in  product  development,  working  capital,  the
financing of operations,  strategic ventures,  potential  acquisitions,  capital
expenditures and the upgrade of its systems and operations. In order to meet its
needs for cash over the next twelve  months,  InteliData  will utilize  proceeds
from  its  1995  initial  public  offering  and  cash  received  in the  Merger.
Additionally,   InteliData  may  utilize  funds  it  expects  to  generate  from
operations in the second half of 1997.

FINANCING DEVELOPMENTS

     WorldCorp.  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 is due September 29, 1997
and earns interest of LIBOR plus 2.5%,  payable monthly.  Under the terms of the
Bridge Loan,  the borrowings  are  collateralized  by all of the shares of World
Airways and InteliData owned by WorldCorp, a first priority security interest in
WorldCorp's  assets,  and certain cash  collateral.  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
Notes are payable in three installments through September 2000, earn interest of
10%,  payable  semi-annually,  and are  included  in  long-term  obligations  at
December 31, 1996. On December 31, 1996, the Company refinanced the Bridge Loan,
which  resulted in a decrease  in the  interest  rate to LIBOR plus  1.75%,  and
reduced the cash  collateral  under the loan to $1.0 million.  The interest rate
was 7.99% at December  31,  1996.  The  Purchase  Agreement  and the Bridge Loan
generally restrict the amount of stock repurchases by WorldCorp based on certain
specified conditions.  These borrowings also contain a number of covenants that,
among other things, restrict the ability of WorldCorp to dispose of assets, make
certain   acquisitions  of  the  stock  of  other  entities,   incur  additional
indebtedness,  and make  capital  expenditures.  The Bridge  Loan also  contains
certain  covenants which,  among other things,  require WorldCorp to maintain at
least a 50.1% ownership of World Airways.

     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 Bridge Loan was amended to permit this loan.


     World Airways.  In October 1995, World Airways  completed an initial public
offering  pursuant to which World Airways and WorldCorp  received  approximately
$22.8 million and $10.2 million in net proceeds, respectively. Each company used
its proceeds to increase cash reserves.

       Effective June 30, 1996,  World Airways amended its Credit Agreement with
BNY  Financial  Corporation  ("BNY") to include the  following:  a $10.0 million
spare parts loan and an $8.0  million  revolving  line of credit.  This  amended
Credit  Agreement  is  collateralized  by certain  receivables,  inventory,  and
equipment.  As of December 31, 1996, the outstanding  balance of the spare parts
loan  and  revolving   line  of  credit  was  $7.6  million  and  $6.8  million,
respectively, with minimal capacity available on the revolving line of credit.

                                                       39

<PAGE>




       Under the terms of the amended  Credit  Agreement,  World  Airways is not
permitted  to (i)  incur  indebtedness  in excess  of $25.0  million  (excluding
capital leases),  (ii) declare, pay, or make any dividend or distribution in any
six month period which  aggregate in excess of the lesser of $4.5 million or 50%
of net income for the previous  six months,  (iii)  declare or pay  dividends if
after giving effect to such dividends  World  Airways' cash or cash  equivalents
would be less than $7.5  million or (iv) make capital  expenditures  in 1996 and
1997 of more than  $35.0  million  and $25.0  million,  respectively,  or in any
subsequent  year of more than $15.0 million.  World Airways must also maintain a
certain quarterly net worth and net income (loss) requirements.  At December 31,
1996,  World  Airways was not in compliance  with one  covenant,  but obtained a
waiver from the financial  institution.  This waiver also extended the date that
World  Airways is  required  to pay any  outstanding  amounts  under the line of
credit to December 31, 2000. The aircraft security  agreement remains payable in
1999. No assurances  can be given,  however,  that World Airways will meet these
covenants  prospectively  or, if  necessary,  obtain the  required  waivers.  In
addition,  World Airways granted  warrants to BNY in October 1996 to purchase up
to 50,000 shares of common stock.

       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.  In addition,  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. 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  and  received  a  commitment  from the  engine
manufacturer to finance 85% if its purchase price over a seven-year term with an
interest rate to be fixed at the time of delivery.

       InteliData.  In June 1995, US Order  completed an initial public offering
pursuant  to which US Order  and  WorldCorp  received  $41.6  million  and $18.7
million in net  proceeds,  respectively.  US Order used part of its  proceeds to
satisfy debt obligations  (including those to WorldCorp).  The remaining balance
was added to US Order's cash  reserves.  WorldCorp used its proceeds to fund its
debt service requirements and increase its cash position.

       InteliData maintains three credit facilities aggregating $20 million. The
first  credit  agreement  covers the period  through May 1997 and is a revolving
line of credit of $1.0 million.  The second  credit  agreement is a $4.0 million
line of credit utilized for the purpose if issuing letters of credit.  The third
credit  agreement is a credit facility  totaling $15.0 million for cash advances
and letters of credit. As of December 31, 1996,  InteliData had outstanding $2.0
million  under a line of credit  and had  available  $13.5  million to fund draw
downs and letters of credit.

OTHER MATTERS

LEGAL AND ADMINISTRATIVE PROCEEDINGS

       The Company and World Airways (the "World  Defendants") are defendants in
litigation  brought  by the  Committee  of  Unsecured  Creditors  of  Washington
Bancorporation   (the   "Committee")  in  August  1992,   captioned   Washington
Bancorporation  v. Boster,  et. al., Adv.  Proc.  92-0133  (Bankr.  D.D.C.) (the
"Boster  Litigation").  The complaint asserts that the World Defendants received
preferential transfers or fraudulent conveyances from Washington  Bancorporation
when the  World  Defendants  received  payment  at  maturity  on May 4,  1990 of
Washington  Bancorporation commercial paper purchased on May 3, 1990. Washington
Bancorporation  filed for relief under the Federal  Bankruptcy Code on August 1,
1990.  The Committee  seeks  recovery of  approximately  $4.8 million from World
Airways and  approximately  $2.0  million  from  WorldCorp.  Under a  settlement
agreement  which  remains  subject to certain  contingencies,  the plaintiff has
agreed to dismiss with prejudice the Boster  Litigation  against all defendants,
including the World  Defendants,  with each party to bear its own costs. In that
event, the World  Defendants would not have any further  liability in the Boster
Litigation. On January 28, 1997, the U.S. District Court conditionally dismissed
the  Boster  Litigation  subject  to  reinstatement  if  the  settlement  is not
finalized by May 15, 1997. In any event, the Company believes it has substantial
defenses to this  action,  although no  assurance  can be given of the  eventual
outcome of this litigation.  Depending upon the timing of the resolution of this
claim,  if the Committee were  successful in recovering the full amount claimed,
the resolution could have a material  adverse effect on the financial  condition
or results of operations of the Company.


                                                       40

<PAGE>



       World Airways has periodically received  correspondence from the FAA with
respect to minor noncompliance  matters. Most recently, as the FAA has increased
its scrutiny of U.S. airlines, it was assessed a preliminary fine of $810,000 in
connection  with certain  minor  security  violations by ground  handling  crews
contracted by World Airways for services at foreign airport  locations.  In each
of  these  instances,   World  Airways  was  in  compliance  with  international
regulations,  but not the more  stringent U.S.  requirements.  World Airways has
taken steps to comply with the U.S.  requirements  and  believes  that any fines
ultimately  imposed  by the FAA will not have a material  adverse  effect on the
financial  condition or results of  operations of World  Airways.  World Airways
believes the amount of fines it will  ultimately  be assessed  will be below the
preliminary assessment.  This estimated amount is included in liabilities in the
accompanying balance sheet at December 31, 1996.

       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.  World Airways  believes it has
substantial  defenses to this action,  although no assurance can be given of the
eventual outcome of this litigation.  Depending upon the timing
of the resolution of this claim,  if the plaintiff were successful in recovering
the full amount claimed,  the resolution could have a material adverse effect on
its financial condition or results of operations.

       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.

       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 June
1998.

       World Airways'  flight  attendants are also  represented by the Teamsters
under a collective  bargaining  agreement  that became  amendable  in 1992.  The
parties exchanged their opening contract  proposals in 1992. In June 1996, World
Airways signed a new four year labor agreement with the Teamsters which provides
for  retroactive  pay  increases  for  the  flight   attendants  and  work  rule
flexibility  and lengthened  duty time rules for the Company.  The agreement was
ratified  by  the  flight  attendants  in  August  1996.  World  Airways  flight
attendants  challenged the use of foreign flight  attendant crews on its flights
for Malaysian  Airlines and Garuda  Indonesia  which has  historically  been its
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  recently  denied 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 it to
first actively seek  profitable  business  opportunities  that require using its
flight   attendants,   before  World  Airways  may  accept  wet  lease  business
opportunities that use the flight attendants of its customers. World Airways can
provide no assurances as to how the imposition of this  requirement  will affect
its 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 Company
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  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 the Company.



                                                       41

<PAGE>



DIVIDEND POLICY

     WorldCorp  has never paid any  dividends and does not plan to do so for the
foreseeable  future.  The  Purchase  Agreement  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.

ESSOP

       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 participating  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  Employee
Savings and Stock Ownership Plan (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, WorldCorp and World Airways
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.

       The Plan will continue to hold the shares of WorldCorp  common stock that
were allocated 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.

INCOME TAXES

       At December 31 1996,  WorldCorp  had  approximately  $53.1 million in net
operating  loss  carryforwards  ("NOLs")  that are  available  to offset  future
federal taxable income.

       There can be no assurance  that the Company will generate  taxable income
in future  years so as to allow the  Company to realize a tax  benefit  from its
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,
ownership  changes of the Company,  pursuant to the Internal  Revenue Code,  may
occur in the future and may result in the imposition of an annual  limitation on
the  Company's  NOLs  existing  at the time of any  such  ownership  change.  In
addition,  a portion of World Airways' NOLs are subject to an annual  limitation
as a result of a previous ownership change, for tax purposes,  which occurred in
1991.  World  Airways  does not file a  consolidated  income tax return with the
Company.

INFLATION

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

                                                       42

<PAGE>



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                         WORLDCORP, INC. AND SUBSIDIARIES
                                            CONSOLIDATED BALANCE SHEETS
                                                      ASSETS
                                                  (IN THOUSANDS)

<TABLE>
<CAPTION>



                                                                                            December 31,
                                                                                    -------------------------
                                                                                       1996           1995
                                                                                    -----------   -----------
<S>                                                                                 <C>           <C>
CURRENT ASSETS
     Cash and cash equivalents, including restricted
          cash of $447 at December 31, 1996 and $625
          at December 31, 1995 (Note 20)                                            $    12,462   $    74,443

     Restricted cash and short-term investments (Notes 8, 12 and 20)                      2,047         4,218

     Trade accounts receivable,  less allowance for doubtful accounts of $413 at
         December 31, 1996 and $322
         at December 31, 1995 (Notes 12 and 18)                                          19,427        12,476

     Other receivables                                                                    4,667         4,438

     Due from affiliate, net (Note 6)                                                     4,181         2,981

     Prepaid expenses and other current assets (Notes 9 and 19)                           8,314        11,668

     Assets held for sale (Notes 10 and 13)                                                 500           700
                                                                                       --------      --------

         Total current assets                                                            51,598       110,924
                                                                                        -------       -------

ASSETS HELD FOR SALE (Notes 10 and 13)                                                    3,425         2,383

EQUIPMENT AND PROPERTY (Notes 5, 10 and 13)
     Flight and other equipment                                                          75,191        60,794
     Equipment under capital leases                                                      11,639        11,734
                                                                                        -------       -------
                                                                                         86,830        72,528
     Less accumulated depreciation and amortization                                      21,357        17,878
                                                                                        -------       -------

         Net equipment and property                                                      65,473        54,650
                                                                                        -------       -------

LONG-TERM OPERATING DEPOSITS (Note 13)                                                   15,951        16,157

INVESTMENT IN AFFILIATE (Notes 5 and 12)                                                 36,299            --

OTHER ASSETS AND DEFERRED CHARGES, NET (Notes 5, 6 and 9)                                 5,145        15,384

INTANGIBLE ASSETS, NET (Note 11)                                                          1,072         2,591
                                                                                       --------       -------

         TOTAL ASSETS                                                               $   178,963   $   202,089
                                                                                        =======       =======
</TABLE>

                                                                     (Continued)

                                                       43

<PAGE>



                                         WORLDCORP, INC. AND SUBSIDIARIES
                                            CONSOLIDATED BALANCE SHEETS
                                                    (CONTINUED)
                                   LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
                                         (IN THOUSANDS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>

                                                                                            December 31,
                                                                                    -------------------------
                                                                                       1996           1995
                                                                                    -----------   -----------

<S>                                                                                 <C>           <C>
CURRENT LIABILITIES
     Notes payable (Note 12)                                                        $    26,386   $     6,764
     Current maturities of long-term obligations (Note 13)                                9,990        11,355
     Accounts payable                                                                    24,339        17,363
     Net liabilities of discontinued operations (Note 3)                                  1,834            --
     Unearned revenue                                                                     3,046        10,421
     Air traffic liability                                                                   --         2,332
     Accrued maintenance in excess of reserves paid                                      13,737         8,919
     Accrued salaries and wages (Note 19)                                                10,344        10,804
     Accrued interest                                                                       981         2,061
     Accrued taxes                                                                        1,249         1,283
                                                                                        -------       -------
         Total current liabilities                                                       91,906        71,302
                                                                                        -------       -------

LONG-TERM OBLIGATIONS, NET (Note 13)                                                    104,804       111,345
                                                                                        -------       -------

OTHER LIABILITIES
     Deferred gain from sale leaseback transactions, net of
         accumulated amortization of $19,099 as of December 31,
         1996 and $18,041 as of December 31, 1995                                         6,252         7,310
     Accrued postretirement benefits (Note 16)                                            2,545         2,596
     Accrued maintenance in excess of reserves paid                                       6,867         3,579
     Other                                                                                3,378         2,035
                                                                                       --------      --------
         Total other liabilities                                                         19,042        15,520
                                                                                        -------       -------

         TOTAL LIABILITIES                                                              215,752       198,167
                                                                                        -------       -------

MINORITY INTEREST (Notes 4, 5 and 6)                                                      3,548        27,219

COMMON STOCKHOLDERS'  DEFICIT (Notes 5, 12, 13, 14, 15, 16 and 19)
     Common stock,$1 par value, (60,000,000 shares authorized,
         16,420,350 shares issued and 15,020,265 shares outstanding
         at December 31, 1996 and 16,416,134 shares issued and
         16,353,549 shares outstanding at December 31, 1995)                             16,617        16,354
     Additional paid-in capital                                                          43,824        42,210
     Deferred compensation                                                                (591)         (553)
     Accumulated deficit                                                               (91,366)      (79,598)
     ESOP guaranteed bank loan (Notes 13 and 16)                                          (805)       (1,370)
     Treasury stock, at cost(1,596,766 and 62,585 shares in 1996 and 1995,
         respectively)(Notes 1, 4 and 16)                                               (8,016)         (340)
                                                                                       --------      --------
         TOTAL COMMON STOCKHOLDERS' DEFICIT                                            (40,337)      (23,297)
                                                                                       --------      --------

     COMMITMENTS AND CONTINGENCIES (Notes 2, 3, 4, 6, 12, 13, 15, 16,
         17, 18 and 20)

         TOTAL LIABILITIES AND COMMON STOCKHOLDERS'
             DEFICIT                                                                $   178,963   $   202,089
                                                                                       ========       =======
</TABLE>

                     See accompanying Notes to Consolidated Financial Statements

                                                       44

<PAGE>



                                         WORLDCORP, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                         (IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>

                                                                                Years ended December 31,
                                                                    ----------------------------------------------
                                                                        1996             1995             1994
                                                                    ------------     ------------     ------------

<S>                                                                 <C>              <C>              <C>
OPERATING REVENUES (Note 18)
     World Airways                                                  $    309,587     $    242,386     $    180,715
     US Order                                                              4,085            4,186            1,432
                                                                         -------          -------          -------
         Total operating revenues                                        313,672          246,572          182,147
                                                                         -------          -------          -------

OPERATING EXPENSES
     World Airways:
       Flight                                                             71,121           65,223           57,792
       Maintenance (Notes 6, 13 and 20)                                   60,462           41,843           26,212
       Aircraft costs (Notes 6 and 13)                                    85,227           67,331           53,860
       Fuel                                                               19,255           16,704           16,915
       Flight operations subcontracted to other carriers                  12,932            9,096            5,549
       Promotions, sales and commissions                                   6,236            1,995            1,060
       Depreciation and amortization                                       8,032            6,056            4,006
       General and administrative                                         24,677           18,240           20,522
                                                                         -------          -------          -------
         Total operating expenses - World Airways                        287,942          226,488          185,916
                                                                         -------          -------          -------
     US Order:
         Total operating expenses - US Order                              19,190            9,457           11,429
                                                                         -------          -------          -------
     WorldCorp:
       General and administrative                                          3,803            4,334            3,614
                                                                         -------         --------          -------

         Total operating expenses                                        310,935          240,279          200,959
                                                                         -------          -------          -------

OPERATING INCOME (LOSS)                                                    2,737            6,293         (18,812)
                                                                         -------          -------          -------

OTHER INCOME (EXPENSE)
     Interest expense (Notes 12 and 13)                                 (11,680)         (12,586)         (12,154)
     Interest income                                                       3,389            2,909              863
     Equity in loss of affiliate (Note 5)                               (23,273)               --               --
     Gain (loss) on issuances (purchases) of equity by
         subsidiaries, net (Notes 4 and 5)                                38,886           43,676           10,524
     Gain on sales of subsidiaries' stock (Notes 4 and 5)                     --           23,717           16,398
     Gain on sale of US Order banking operations (Note 5)                     --               --           14,547
     Other, net                                                          (1,550)            1,676            (870)
                                                                         -------          -------          -------
         Total other income                                                5,772           59,392           29,308
                                                                         -------          -------          -------

EARNINGS FROM CONTINUING OPERATIONS
     BEFORE INCOME TAXES AND MINORITY INTEREST                             8,509           65,685           10,496

INCOME TAX EXPENSE (Note 17)                                               (504)            (661)            (159)

MINORITY INTEREST                                                          (568)            (866)          (2,029)
                                                                         -------          -------          -------

EARNINGS FROM CONTINUING OPERATIONS                                        7,437           64,158            8,308

DISCONTINUED OPERATIONS (Note 3)
     Loss from discontinued operations (less applicable
         income tax benefit of $83 in 1996 and $306 in 1995)            (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)                                                 $   (11,754)      $    60,208      $     8,308
                                                                         =======          =======          =======
</TABLE>

                                                                     (Continued)
                                                       45

<PAGE>





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


<TABLE>
<CAPTION>


                                                                                Years ended December 31,
                                                                    ----------------------------------------------
                                                                        1996             1995             1994
                                                                    ------------     ------------     ------------

<S>                                                                 <C>              <C>              <C>
PRIMARY EARNINGS (LOSS) PER COMMON
     EQUIVALENT SHARE
     Continuing operations                                          $       0.45     $       3.75     $       0.54
     Discontinued operations                                               (1.15)           (0.23)              --
                                                                          ------           ------           ------
     Net earnings (loss)                                            $      (0.70)    $       3.52     $       0.54
                                                                          ======           ======           ======

PRIMARY WEIGHTED AVERAGE COMMON AND
     COMMON EQUIVALENT SHARES OUTSTANDING                             16,676,889       17,103,669       15,516,063
                                                                      ==========       ==========       ==========

FULLY DILUTED EARNINGS (LOSS) PER COMMON
     EQUIVALENT SHARE

     Continuing operations                                          $          *     $       2.99     $       0.53
     Discontinued operations                                                   *            (0.17)              --
                                                                          ------           ------           ------
     Net earnings (loss)                                            $          *     $       2.82     $       0.53
                                                                          ======           ======           ======

FULLY DILUTED WEIGHTED AVERAGE COMMON AND
     COMMON EQUIVALENT SHARES OUTSTANDING                                      *       22,994,866       15,793,046
                                                                      ==========       ==========       ==========

</TABLE>

*  Fully diluted earnings per share are anti-dilutive.



                     See accompanying Notes to Consolidated Financial Statements

                                                       46

<PAGE>



                                         WORLDCORP, INC. AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF CHANGES
                                          IN COMMON STOCKHOLDERS' DEFICIT
                                   YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
                                         (IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>


                                                                                            Employee
                                                                                          Stock Owner-                 Total
                                                   Additional                               ship Plan    Treasury     Common
                                        Common      Paid-in      Deferred    Accumulated   Guaranteed     Stock,   Stockholders'
                                         Stock      Capital    Compensation    Deficit      Bank Loan    at cost      Deficit
                                       ----------   ----------   ----------   ----------   ----------   ----------   ----------


<S>                                    <C>          <C>          <C>          <C>          <C>          <C>          <C>
BALANCE AT
     DECEMBER 31, 1993                 $   15,224   $   34,071   $       --   $ (148,114)   $  (1,914)   $    (340)   $(101,073)

Exercise of 266,723 options
     and warrants                             268        1,160           --           --           --           --        1,428
Employee Stock Ownership Plan
     guaranteed bank loan                      --           --           --           --        1,914           --        1,914
Grant of stock options                         --        2,217       (2,217)          --           --           --           --
Amortization of deferred
     compensation                              --           --        1,115           --           --           --        1,115
Other                                          --          115           --           --           --           --          115
Net earnings                                   --           --           --        8,308           --           --        8,308
                                           ------       ------       ------    ---------      -------       ------     --------

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)
                                           ======       ======      =======     ========      =======       =======    ========
</TABLE>


                     See accompanying Notes to Consolidated Financial Statements

                                                       47

<PAGE>




                                         WORLDCORP, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                Years ended December 31,
                                                                    ----------------------------------------------
                                                                        1996             1995             1994
                                                                    ------------     ------------     ------------




<S>                                                                  <C>             <C>              <C>
CASH AND CASH EQUIVALENTS AT BEGINNING
     OF YEAR (Note 7)                                                $    74,443     $      8,160     $     16,916
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)                                                     (11,754)           60,208            8,308
Adjustments to reconcile net earnings (loss) to cash
     provided (used) by operating activities:
     Depreciation and amortization                                        10,361            8,043            5,212
     Deferred gain recognition                                           (1,058)          (1,063)          (1,949)
     Deferred aircraft rent payments, net                                     --              153              576
     Gain on sales of equity by subsidiaries, net                       (38,886)         (43,676)         (10,524)
     Gain on sales of subsidiaries' stock                                     --         (23,717)         (16,398)
     Gain on sale of US Order banking operations                              --               --         (14,547)
     Minority interest in earnings (loss) of subsidiaries               (12,616)            (434)            2,029
     Equity loss in affiliate                                             23,273               --               --
     Equity loss in investee of subsidiary                                 1,641               --               --
     (Gain) loss on sale of equipment and property                          (32)            (462)              669
     Writedown of assets held for sale                                       400               --               --
     Deferred compensation expense                                           162              904            1,115
     Reversal of excess maintenance reserves                                  --               --          (4,200)
     Loss on disposal of discontinued operations                           1,734               --               --
     Other                                                                   870              570              889
     Changes in certain  assets  and  liabilities  net of
         effects  of  non-cash transactions:
         (Increase) decrease in accounts receivable                     (10,607)         (11,013)            5,230
         Increase in restricted short-term investments                   (2,171)          (3,550)               --
         Decrease(increase) in deposits, prepaid expenses
              and other assets                                               399          (3,528)         (10,461)
         Increase in accounts payable, accrued expenses
              and other liabilities                                       22,195           11,500            3,842
         (Decrease)increase in unearned revenue                          (7,206)            4,806            1,159
         (Decrease)increase in air traffic liability                     (2,073)            2,332               --
                                                                        --------         --------         --------
     Net cash provided (used) by operating activities                   (25,368)            1,073         (29,050)
                                                                        --------         --------         --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to equipment and property                                     (12,620)         (24,286)          (4,854)
Proceeds from disposal of equipment and property                            735             1,768            3,893
Proceeds from sale of US Order banking operations                             --               --           14,750
Purchase of investments                                                  (1,345)            (219)          (6,533)
Cash of InteliData at date of Merger                                    (12,800)               --               --
Proceeds from sales of short-term investments, net                            --               --            6,029
                                                                        --------         --------         --------
     Net cash provided (used) by investing activities                   (26,030)         (22,737)           13,285
                                                                        --------         --------         --------
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in line of credit borrowing arrangement, net           5,031          (1,051)          (4,275)
Issuance of debt                                                          47,144           25,278            6,034
Repayment of debt                                                       (51,172)         (33,187)         (18,065)
Proceeds from stock transactions                                           1,499            4,353            1,428
Proceeds from sales of equity by subsidiaries                              2,177           64,453           12,488
Proceeds from sales of subsidiaries' stock                                    --           28,986           12,300
Purchase of common stock                                                 (7,676)               --               --
Purchase of common stock by subsidiary                                   (7,361)               --               --
Debt issuance costs                                                        (225)               --               --
Purchase of preferred stock by subsidiary                                     --               --          (2,718)
Payment of dividends by subsidiary                                            --            (885)               --
Other                                                                         --               --            (183)
                                                                        --------         --------         --------
     Net cash provided(used) by financing activities                    (10,583)           87,947            7,009
                                                                        --------         --------         --------
NET INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS                                               (61,981)           66,283          (8,756)
                                                                        --------         --------         --------
CASH AND CASH EQUIVALENTS AT END
     OF YEAR (Note 7)                                               $     12,462     $     74,443       $    8,160
                                                                        ========         ========         ========
</TABLE>

                     See accompanying Notes to Consolidated Financial Statements

                                                       48

<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  three  markets:   (1)  consumer
telecommunications; (2) electronic commerce; and (3) interactive services.

     WorldCorp's  aviation  services  subsidiary,  World  Airways,  is 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"),  Philippine Airlines, Inc. ("Philippine Airlines"), P.T.
Garuda Indonesia ("Garuda") and the U.S. Air Force (see Note 18).

     WorldCorp also has an ownership interest in InteliData,  a company which is
engaged in providing  products and services for three primary markets:  consumer
telecommunications,  electronic  commerce and interactive  services.  InteliData
designs,  develops and markets consumer  telecommunications  products  including
Caller ID adjuncts, integrated telephones and smart telephones.  InteliData also
develops  products  and services for  financial  institutions  to assist in home
banking  and  electronic  bill  payment  initiatives  and  designs  and  markets
interactive  service  applications  for smart  telephones and other small screen
devices.

     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.  In February 1997, the Company purchased an additional 25,000 shares of
its common  stock for an  aggregate  cost of $0.1  million.  WorldCorp  does not
intend to purchase any additional shares at this time.

      WorldCorp is highly leveraged, and therefore requires substantial funds to
cover its debt  service  (see Note 2).  Of the  $12.5  million  in cash and cash
equivalents  at December 31, 1996,  approximately  $7.0 million is held by World
Airways and,  therefore,  is not available to satisfy  WorldCorp's  obligations.
WorldCorp's  investment  in the  net  assets  of  World  Airways  and  US  Order
aggregates $41.9 million as of December 31, 1996.

PRINCIPLES OF CONSOLIDATION

     The accompanying  consolidated financial statements include the accounts of
WorldCorp;  its approximately 61.3% ownership interest in the outstanding common
stock of World Airways;  its wholly owned subsidiaries:  WorldCorp  Investments,
Inc.,  World Flight Crew Services,  Inc.,  World Airways Cargo,  Inc., and World
Games,  Inc., and through November 7, 1996, its interest in US Order,  Inc. ("US
Order").   On  November  7,  1996,  US  Order  and  Colonial  Data  Technologies
Corporation  ("Colonial  Data") merged with and into  InteliData  ("Merger")(see
Note 5). 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.  All  significant  intercompany  balances
have been eliminated.

FINANCIAL STATEMENT RECLASSIFICATION

      Certain items in the prior year consolidated financial statements included
herein  have  been  reclassified  to  conform  to the 1996  financial  statement
presentation.



                                                       49

<PAGE>



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

      Revenues are recognized as the services are provided.

EARNINGS (LOSS) PER COMMON SHARE

      Primary  earnings  (loss) per common  share is computed  by  dividing  net
earnings (loss) by the weighted  average number of common and common  equivalent
shares outstanding during the period.  Common equivalent shares include warrants
and options.  Fully  diluted  earnings  (loss) per common and common  equivalent
shares,  including  convertible  debt, have not been presented where the results
are anti-dilutive.

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 residual 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

      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

                                                       50

<PAGE>



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).

AIR TRAFFIC LIABILITY

      The air traffic  liability  in 1995  relates to World  Airways'  scheduled
service flying to Tel Aviv,  Israel,  which World Airways began in July 1995 and
ceased in October 1996 (see Note 3).  Scheduled  service  passenger ticket sales
were   initially   recorded  in  the  air  traffic   liability   account.   When
transportation  was provided by World  Airways,  revenue was  recognized and the
liability  was  reduced.  The  liability  was also  reduced  by any  refunds  to
passengers  or  billings   from  other   airlines  that  provide  the  passenger
transportation.

OTHER ASSETS AND DEFERRED CHARGES

      Contract  enhancements and pre-operating 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 Financial  Accounting
Standards Board Statement of Financial  Accounting Standards No. 109, Accounting
for Income  Taxes,  ("FAS #109").  Under the asset and  liability  method of FAS
#109,  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.  Under FAS #109, 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'  operations  prior to February 28, 1994 are
included  in the  Company's  consolidated  income  tax  returns.  As a result of
certain  transactions  with MHS Berhad  during 1994 (see Note 4), the results of
World Airways' operations for the period from February 28, 1994 to December 1994
and subsequent periods are not included in WorldCorp's  consolidated  income tax
returns. In addition, InteliData's results of 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. The Company  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").  The Company funds the benefit  costs on a  pay-as-you-go  (cash)
basis.

TRANSACTIONS IN SUBSIDIARIES' STOCK

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

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,

                                                       51

<PAGE>



Accounting for Stock-Based Compensation,  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, 1996,  World Airways has a working capital deficit of $29.6 million
and has substantial debt and lease commitments. At December 31, 1996, InteliData
has working  capital of $63.5 million,  with no long-term  debt.  World Airways'
ability to pay dividends is currently restricted under a borrowing  arrangement.
Additionally,  the provisions of the Indenture governing WorldCorp's  Debentures
causes World Airways not to pay dividends  upon the  occurrence of any events of
default  by  WorldCorp  under  such  Indenture.  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.

     Of the $12.5  million in cash and cash  equivalents  at December  31, 1996,
approximately  $7.0  million is held by World  Airways  and,  therefore,  is not
available to satisfy WorldCorp's obligations. As of December 31, 1996, WorldCorp
had parent company repayment  obligations,  including principal and interest, of
approximately $22.4 million for 1997. In order to meet these obligations and its
general and  administrative  costs,  the Company must use its existing  cash and
either sell shares of World Airways or InteliData,  or issue  additional debt or
equity. Under the terms of certain borrowing arrangements however, WorldCorp has
pledged all of its shares of World Airways and  InteliData as collateral for the
borrowings(see Notes 12 and 13).

     The Company is currently evaluating the feasibility of a disposition of its
interest  in World  Airways  through a  secondary  offering or a sale to a third
party.  Any such  transaction  would  require  the  approval  of  certain  other
parties(see Notes 6, 12 and 13).  Additionally,  management  believes it will be
successful in reducing the amount of collateral securing its borrowings,  either
by  renegotiating  the  terms of the loan or by  entering  into a new loan  with
another financial institution. Although there can be no assurance that WorldCorp
will be successful in consummating these transactions,  management believes that
its existing cash and the  anticipated  proceeds from a combination  of sales of
stock of World Airways or InteliData,  renegotiations of its existing  borrowing
arrangements,  or new  financing  arrangements,  will be sufficient to allow the
Company to meet its operating  requirements and repayment  obligations for 1997.
At December 31, 1996,  based on quoted  market  prices,  the market value of the
Company's  6,915,915 shares of World Airways and 9,179,273 shares of InteliData,
approximated  $56.2  million and $66.5  million,  respectively,  although  these
values have declined since year-end.

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.

      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 have been
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

                                                       52

<PAGE>



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  incurred  approximately  $18.9 million of these costs
during the six months ended  December 31, 1996 and believes  that its  remaining
accrual for estimated  losses on disposal will be adequate to meet the remaining
costs to be incurred during the phase-out period.  Effective  December 31, 1996,
World Airways and a lessor  mutually  agreed to terminate  the lease  agreements
relating to two DC10-30  aircraft  which were acquired in March 1996 as a result
of World Airways'  expansion of its scheduled  service  operations (see Note 6).
These   additional   aircraft  were  not  expected  to  be  utilized  after  the
discontinuation  of World Airways' scheduled service  operations.  World Airways
does  not  have  any  other  significant  assets  related  to  its  discontinued
operations.  World  Airways  is  involved  in several  claims and legal  actions
arising as a result of the  discontinuance of its scheduled  service  operations
(see Note 20).

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.

      As  discussed in Note 2,  WorldCorp is  evaluating  the  feasibility  of a
disposition of its interest in World Airways  through a secondary  offering or a
sale to a third  party.  There  can be no  assurances,  however,  that  any such
transactions will ultimately be consummated.

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 is Chairman of the Board of Directors
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

                                                       53

<PAGE>



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 the wholly  owned  subsidiary,  Visa
InterActive)  for $14.6 million in cash (net of closing costs of $0.2  million),
the  assumption  of certain of US Order's  capital lease  obligations  and other
miscellaneous   liabilities   totaling   $0.9   million,   100  shares  of  Visa
InterActive's  redeemable  preferred  stock,  and  a  72  month  royalty  stream
commencing  January 1, 1995 and ending December 31, 2000 (the "Royalty Period").
The Company recognized a gain of $14.5 million (before minority interest of $3.9
million) from this sale. Of the proceeds  received by US Order, $9.4 million was
used to retire a portion of its  preferred  stock (of which  WorldCorp  received
$3.3 million) and to cancel vested employee options. The royalty amount is based
on the number of Visa  InterActive  customers  using the electronic  banking and
bill  payment  technology  sold by US  Order  to Visa.  Under  the  terms of the
agreement,  Visa  InterActive  is not  required  to pay US Order  for the  first
$73,000 of royalties  earned  during each  quarter on a  cumulative  basis for a
total of twelve quarters. US Order has not received any Visa royalty payments to
date and does not expect to receive any royalty  payments through the first half
of 1997.

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 all of the  outstanding
capital  stock  of  Braun,  Simmons  & Co.  ("Braun  Simmons"),  an  information
engineering  firm  specializing  in the development of home banking and 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.

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.



                                                       54

<PAGE>



      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 such,
WorldCorp's  investment  in InteliData is included in investment in affiliate in
the  accompanying  balance  sheet  at  December  31,  1996,  and  its  share  of
InteliData's  losses for the period from  November 7, 1996 through  December 31,
1996 are shown as equity in loss of affiliate in the  accompanying  statement of
operations  for the year ended  December  31,  1996.  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  represents  the
Company's share of InteliData's  operating  results for the period following the
Merger.

      Summarized   financial   information  of  InteliData  is  as  follows  (in
thousands):
<TABLE>
<CAPTION>

                                                                                Year ended December 31,
                                                                    ----------------------------------------------
                                                                        1996             1995             1994
                                                                    ------------     ------------     ------------
     Results of operations:
     ---------------------

<S>                                                                 <C>              <C>              <C>
         Revenues                                                   $     13,899     $      4,186     $      1,432
         Cost of revenues                                                 10,448            2,470            1,013
         Gross profit                                                      3,451            1,716              419
         Operating loss                                                   96,112            5,161           10,165
         Net income (loss) applicable to common shareholders             (95,727)          (5,399)           1,818

</TABLE>
<TABLE>
<CAPTION>
                                                                            At December 31,
                                                                    -----------------------------
                                                                        1996             1995
                                                                    ------------     ------------
     Financial position:
     ------------------

<S>                                                                 <C>               <C>
         Current assets                                             $     82,989      $    27,068
         Noncurrent assets                                                60,757           13,184
         Current liabilities                                              19,457            2,519
         Noncurrent liabilities                                               --               --
</TABLE>

     Shown below is the Company's  unaudited pro forma  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):
<TABLE>
<CAPTION>
                                                                            At December 31,
                                                                    -----------------------------
                                                                        1996             1995
                                                                    ------------     ------------

<S>                                                                 <C>              <C>
     Revenues                                                       $    309,587     $    242,386
     Net income (loss)                                                  (27,252)           64,925
     Net income (loss) per share:
         Primary                                                          (1.63)             3.80
         Fully diluted                                                         *             3.02
</TABLE>
*    Fully dilutive earnings per share are anti-dilutive.


                                                       55

<PAGE>



     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.

6.   TRANSACTIONS WITH MHS AND MALAYSIAN AIRLINES

     On October 30, 1993,  the Company,  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 the Company 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 the Company. On February 28, 1994, the Company, 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 World Airways'  common stock.  Under a
shareholders agreement,  MHS agreed not to transfer,  sell, or pledge any of its
shares of common  stock prior to February  28,  1997  without the prior  written
consent  of the  Company.  MHS has the right to  nominate  two  members to World
Airways'  board of  directors  and the  Company 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 (a) to sell or  transfer  all or a portion of its shares to a third party
prior to February 28, 1997, and/or (b) to require the Company 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  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 the
Company'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 the Company to sell a pro rata number of shares held by MHS to the party
purchasing  the  Company's  shares.  MHS also has a right  of first  refusal  to
purchase  shares of common stock issued by World  Airways or sold by the Company
and to purchase  additional  shares of common  stock to maintain  its  ownership
percentage in World Airways.

     During 1994, MHS acquired 32% of Malaysian Airline System Berhad,  the flag
carrier of Malaysia. Due to the issuance of additional shares of common stock by
Malaysian Airlines during 1996, MHS owns 29.1% of Malaysian Airlines at December
31, 1996. World Airways has provided  service to Malaysian  Airlines since 1981,
providing aircraft for integration into Malaysian  Airlines' scheduled passenger
and cargo  operations  as well as  transporting  passengers  for the annual Hadj
pilgrimage.  World Airways  provided three aircraft for Hadj  operations in 1996
and 1995,  and,  pursuant to the contract  described  below,  will provide three
aircraft  for the 1997 Hadj  operations.Malaysian  Airlines  is World  Airways's
largest customer (see Note 18).

     Effective  December 31, 1994, the Company 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.  As a result of this  transaction,  effective  December 31, 1994, MHS
owned  19.9% of World  Airways'  common  stock.  As a result of World  Airways's
initial  public  offering (see Note 4), MHS owned  approximately  16.6% of World
Airways's  common stock as of December 31, 1995. Due to World  Airways's  common
stock  repurchases  in the  fourth  quarter  of 1996  (see  Note 4),  MHS  owned
approximately 17.6% of World Airways's common stock as of December 31, 1996.

     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 in the  accompanying  balance
sheets,  and is being amortized over the terms of the related Malaysian Airlines
contracts,  approximately  two to five  years.  As of  December  31,  1996,  the
unamortized  balance of the deferred contract cost is $1.5 million,  net of $1.5
million of accumulated amortization (see Note 9).


                                                       56

<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.  In 1996,  World Airways  provided  three aircraft for Hadj
operations.  World Airways  recently  entered into a new 32-month  agreement for
year-round operations (including the Hadj) with Malaysian Airlines whereby World
Airways will provide two aircraft with cockpit crews,  maintenance and insurance
to Malaysian  Airlines'  newly-formed  charter  division through May 1999. World
Airways  is  currently  in  preliminary   discussions  with  Malaysian  Airlines
regarding a potential  eleven-month reduction in the utilization of one of these
aircraft during the 32-month term of the contract.

     Until  recently,   World  Airways  operated  four  passenger  aircraft  for
Malaysian Airlines under the multi-year agreements described above. The contract
for two of the four passenger  aircraft for Malaysian  Airlines expired in March
1997.  While World Airways is deploying these two aircraft in the 1997 Hadj, and
will actively  re-market the aircraft  thereafter,  World Airways can provide no
assurance  that it will be able to redeploy  the two  aircraft,  beginning  June
1997, at price and  utilization  levels at least as favorable as under the terms
of the Malaysian Airlines contracts.

     World Airways originally  operated 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 the Philippine Airlines contract. World Airways and
Malaysian  Airlines are currently  discussing the future  redeployment  of these
aircraft  back  into  Malaysian  Airlines'  operations  in  order  to  meet  the
contract's  original  obligations.  World  Airways  can  provide no  assurances,
however, that it will, in fact, be able to redeploy these two aircraft back into
Malaysian Airlines' operation to meet the contract's original obligations.

     Certain operating costs incurred by World Airways pursuant to the currently
operated contracts are reimbursed by Malaysian Airlines. As of December 31, 1996
and 1995, World Airways had $4.2 million, which consists of trade receivables of
$9.2 million offset by $5.0 million of aircraft rent due to Malaysian  Airlines,
and  $3.0  million,  respectively,   included  in  due  from  affiliate  in  the
accompanying balance sheets relating to these contracts.

     World  Airways and  Malaysian  Airlines  entered into an agreement in March
1995 pursuant to which Malaysian Airlines provides routine  maintenance  checks,
structural  inspections and other necessary work for World Airways'  aircraft in
Kuala Lumpur. World Airways expensed approximately $1.7 million and $1.5 million
during 1996 and 1995, respectively, related to these services.

     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 have lease  terms of 26 and 36  months,  respectively.  In March  1996,
World Airways leased two additional  DC10-30  aircraft from Malaysian  Airlines.
These  aircraft  had initial  lease terms of 36 months with monthly rent expense
and other  lease  terms  similar  to the  aircraft  leased  during  1995.  These
additional  aircraft were not expected to be utilized after the  discontinuation
of World  Airways'  scheduled  service  operations in October 1996 (see Note 3).
Therefore, effective December 31, 1996, the parties mutually agreed to terminate
the  lease  agreements  for  the  additional  two  aircraft.  Rent  expense  and
maintenance  reserve  payments  related  to  all  of the  aircraft  leased  from
Malaysian  Airlines  totalled  $12.6  million and $1.6 million in 1996 and 1995,
respectively.

     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 will be returned at the end of the
Hadj program.

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):

<TABLE>
<CAPTION>

                                                                                Year ended December 31,
                                                                    ----------------------------------------------
                                                                        1996             1995             1994
                                                                    ------------     ------------     ------------

<S>                                                                 <C>              <C>              <C>
Cash paid for:
              Interest                                              $     12,377     $     12,130     $     11,550
              Income taxes                                                   412              711              140
</TABLE>


                                                       57

<PAGE>



      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 $1.2
million and $0.4  million  towards this  purchase in September  1995 and January
1996, 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 $6.4
million during 1996, of which $0.5 million was repaid at December 31, 1996.


      World Airways paid  approximately $1.8 million and exchanged a DC10 engine
valued at  approximately  $1.0  million in  connection  with the  settlement  of
maintenance reserves due on the return of three DC10 aircraft in 1994.


      During 1994, US Order redeemed  preferred  stock through the issuance of a
note payable of $0.9 million.

8.    SHORT-TERM INVESTMENTS

      At December  31,  1996 and 1995,  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 (Note 12).

9.    OTHER ASSETS AND DEFERRED CHARGES

      Other assets and deferred charges consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                              December 31,
                                                                                     -----------------------------
                                                                                         1996             1995
                                                                                     ------------     ------------

<S>                                                                                  <C>              <C>
         Debt issuance costs, net                                                    $      1,763     $      2,036
         Long-term notes receivable (Note 19)                                                 529              868
         Deferred contract cost (Note 6)                                                    1,509            2,285
         Aircraft integration costs, net                                                    1,094            1,968
         Long-term investments of US Order (Note 5)                                            --            8,227
                                                                                          -------          -------
                                                                                     $      4,895      $    15,384
                                                                                          =======          =======
</TABLE>

     Debt  issuance  costs  consist  of the  costs of  issuing  the  Convertible
Subordinated  Debentures  due 2004,  the Bridge  Loan due in 1997 and  revolving
lines of credit agreements. These costs are being amortized over the term of the
respective debt  instruments  using the effective  interest method (see Notes 12
and 13). The debt issuance costs relating to the 13 7/8% Subordinated Notes were
included in the  accompanying  balance  sheet at  December  31,  1995,  but were
written off when the Notes were retired in 1996.

      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.

      Prepaid  expenses and other  current  assets at December 31, 1996 and 1995
includes  prepaid  insurance of  approximately  $4.9  million and $5.9  million,
respectively,  and prepaid rent of approximately  $2.5 million and $1.5 million,
respectively.  Included in the December 31, 1995 balance is a deposit on a spare
engine of approximately $1.2 million.

10.   ASSETS HELD FOR SALE

     Assets held for sale consist primarily of DC10 and B727 rotables with a net
book value of $3.9  million and $3.0  million as of December  31, 1996 and 1995,
respectively.  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 Notes 6 and 13),  World  Airways
consigned
                                                       58

<PAGE>



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 quarter of 1996,  World Airways  wrote-down  assets
held for sale by $0.4 million to reflect the  estimated  fair value of the parts
less estimated selling costs.

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 subsidiaries (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). World Airways had minimal unused
borrowing  capacity at December 31, 1996 and 1995.  Borrowings under the line of
credit  were $6.8  million  and $1.7  million  at  December  31,  1996 and 1995,
respectively,  and bear  interest at the greater of the federal  funds rate plus
2.5% or the prime  rate  plus 2%.  The  interest  rate was  10.25%  and 10.5% at
December  31,  1996 and 1995,  respectively.  This  agreement  contains  certain
covenants related to World Airways'  financial  condition and operating results,
including  minimum  quarterly net worth and net income (loss) tests. At December
31, 1996, World Airways was not in compliance with one covenant,  but obtained a
waiver of the covenant from the lender.  This waiver also extended the date that
World  Airways is  required  to pay any  outstanding  amounts  under the line of
credit to December 31, 2000. No assurances  can be given that World Airways will
meet  these  covenants  in the  future or, if  necessary,  obtain  the  required
waivers. The agreement also requires an unused facility fee of 0.5% per year.

      A $4.6  million  note and a $5.0 million  note,  both bearing  interest at
3.8%, are included in notes payable at December 31, 1996 and 1995, respectively.
The $5.0 million note was fully paid during 1996. The $4.6 million note requires
monthly principal and interest payments, and will be paid in full in 1997.

      In the first quarter of 1995,  World Airways received  approximately  $6.0
million  in  working  capital  and  short-term  financing  from  certain  of its
equipment lessors, bearing interest at approximately 11%. The balance was repaid
during 1995.

     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 is due  September  29, 1997 and earns  interest of
LIBOR plus  2.5%,  payable  monthly.  Under the terms of the  Bridge  Loan,  the
borrowings  are  collateralized  by all of  the  shares  of  World  Airways  and
InteliData  beneficially owned by WorldCorp,  a first priority security interest
in WorldCorp's  assets, and certain cash collateral.  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
Notes are payable in three installments through September 2000, earn interest of
10%,  payable  semi-annually,  and are  included  in  long-term  obligations  at
December 31, 1996 (see Note 13). On December 31,  1996,  the Company  refinanced
the Bridge Loan, which resulted in a decrease in the interest rate to LIBOR plus
1.75%,  and  reduced the cash  collateral  under the loan to $1.0  million.  The
interest  rate was 7.99% at December 31, 1996.  The Purchase  Agreement  and the
Bridge Loan  generally  restrict  the amount of stock  repurchases  by WorldCorp
based on certain specified conditions. These borrowings also contain a number of
covenants  that,  among other  things,  restrict  cash  dividends,  restrict the
ability of WorldCorp  to dispose of assets,  make  certain  acquisitions  of the
stock  of other  entities,  incur  additional  indebtedness,  and  make  capital
expenditures. The Bridge Loan also contains certain covenants which, among other
things,  require  WorldCorp  to  maintain  at least a 50.1%  ownership  of World
Airways.

     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
                                                       59

<PAGE>



common  stock which  WorldCorp  owns as  collateral  for such loan (the  "Margin
Loan"). The Bridge Loan was amended to permit this loan.

13.   LONG-TERM OBLIGATIONS

LONG-TERM DEBT

      Long-term  obligations  of the  Company at  December 31 are as follows (in
thousands):
<TABLE>
<CAPTION>
                                                                                            1996           1995
                                                                                         ----------     ----------
<S>                                                                                      <C>            <C>
     WorldCorp:
     Senior Subordinated Notes -- with interest at 10% payable semi-annually beginning
         March 31, 1997 (net of unamortized discount of $0.3 million) (Note 12).              9,675             --

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

     13 7/8 Subordinated Notes, retired in August 1996 (net of
         unamortized discount of $0.1 million in 1995).                                          --         24,961

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

     World Airways:
     Note payable due 1999 -- with principal and interest at 7.25% payable
         monthly, collateralized by one Pratt & Whitney PW4462 engine.                   $    4,393     $    4,883

     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          3,617

     Spare parts loan due 2003 -- with  principal  and  interest at 8.5% payable
         monthly collateralized by certain
         MD-11 spare parts.                                                                   2,581          2,857

     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 a bank due 1999, net of
         discount 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 and 10.5% at December 31, 1995),
         collateralized by certain rotables.                                                  7,372          8,568

     Employee Saving and Stock Ownership Plan guaranteed bank loan (Note 16)                    805          1,370


     Capitalized lease obligations                                                            7,750          8,869

     Deferred aircraft rent                                                                   1,142          1,675
                                                                                           --------       --------

         Total                                                                              114,794        122,700

     Less current maturities                                                                  9,990         11,355
                                                                                           --------       --------

         Total long-term obligations, net                                                $  104,804     $  111,345
                                                                                            =======        =======
</TABLE>

     The  estimated  fair value of the  Convertible  Subordinated  Debentures at
December 31, 1996 approximated $44.5

                                                       60

<PAGE>



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  "Debentures").  The 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.  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. If the Asset Value, as defined,  at the end
of any fiscal year is less than $70.0 million, then WorldCorp must prepay 50% of
each of the then outstanding Notes within 60 days. If the Asset Value at the end
of any fiscal quarter is less than $50.0 million, then WorldCorp must prepay all
of the then  outstanding  Notes within 60 days. 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 (A) 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 (B)
the value of all other tangible assets of the Company.  As of December 31, 1996,
the Asset  Value was $130.4  million,  although  this value has  declined  since
year-end. Also under the Purchase Agreement,  senior indebtedness of the Company
shall not exceed $50.0 million.

     As described in Note 2, in order to meet its debt service  obligations  for
1997,  WorldCorp  must use its cash and either sell  shares of World  Airways or
InteliData,  or issue additional debt or equity. Under the terms of certain loan
agreements,  WorldCorp  has  pledged  all of its  shares  of World  Airways  and
InteliData as collateral for the loans (see Note 12).

     Effective June 30, 1996,  World Airways  amended its Credit  Agreement with
BNY  Financial  Corporation  ("BNY"),   which  includes  the  aircraft  security
agreement and the $8.0 million revolving line of credit borrowing (see Note 12).
This  amended  Credit  Agreement  is  collateralized  by  certain   receivables,
inventory, and equipment. Under the terms of the amended Credit Agreement, World
Airways is not  permitted to (i) incur  indebtedness  in excess of $25.0 million
(excluding  capital  leases),  (ii)  declare,  pay,  or  make  any  dividend  or
distribution  in any six month period which aggregate in excess of the lesser of
$4.5 million or 50% of net income for the previous six months,  (iii) declare or
pay dividends if after giving effect to such  dividends  World  Airways' cash or
cash  equivalents  would  be  less  than  $7.5  million  or  (iv)  make  capital
expenditures  in 1996 and 1997 of more than  $35.0  million  and $25.0  million,
respectively,  or in any  subsequent  year of more  than  $15.0  million.  World
Airways must also  maintain a certain  quarterly net worth and net income (loss)
requirements. At December 31, 1996, World Airways was not in compliance with one
covenant,  but obtained a waiver of the covenant from the financial institution.
This waiver  also  extended  the date that World  Airways is required to pay any
outstanding  amounts under the line of credit to December 31, 2000. The aircraft
security  agreement  remains  payable in 1999. No  assurances  can be given that
World Airways will meet these  covenants in the future or, if necessary,  obtain
the required waivers.

     In conjunction with the 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


                                                       61

<PAGE>



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  $3.62 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 5.99%,  expected life of 3
years and  expected  volatility  of 61%.  World  Airways  recorded  $0.2 million
related to the warrants which will be amortized  into interest  expense over the
terms of the related debt.

     During 1996,  World Airways  amended its spare parts loan originally due in
1997 which required semi-annual payments of principal and interest.  The amended
agreement  expires  in 2003 and  requires  monthly  payments  of  principal  and
interest.

     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. World Airways expects to take
delivery of the engine during 1997.

     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 $14.3 million through 1996.

     The  following  table  shows  the  aggregate  annual  amount  of  scheduled
principal  maturities (in  thousands) of debt  outstanding at December 31, 1996,
excluding capital lease obligations:

<TABLE>

         <S>                                                                             <C>
         1997                                                                            $    8,826
         1998                                                                                 8,676
         1999                                                                                 9,211
         2000                                                                                 8,662
         2001                                                                                 2,215
         Thereafter                                                                          69,454
                                                                                            -------
              Total                                                                      $  107,044
                                                                                            =======
</TABLE>

CAPITAL LEASES

     The present value of the  obligations  under capital leases at December 31,
1996 is  calculated  using rates  ranging from 6.1% to 10.7%.  The following are
scheduled  minimum  capital lease  payments (in thousands) due in the succeeding
five years and thereafter, together with the present value of such obligations:

<TABLE>


         <S>                                                                             <C>
         1997                                                                            $    1,720
         1998                                                                                 3,376
         1999                                                                                 1,317
         2000                                                                                 2,940
         2001                                                                                    --
         Thereafter                                                                              --
                                                                                            -------
         Total minimum lease payments                                                         9,353
         Less: imputed interest                                                               1,603
                                                                                            -------
              Present value of obligations under capital lease                           $    7,750
                                                                                            =======
</TABLE>

     Property  under  capital  leases  consists  of  equipment  leases  and  are
amortized  over  the  lease  terms  or  expected  useful  life  of  the  assets.
Accumulated  amortization under capital leases was $4.3 million and $3.7 million
at December 31,

                                                       62

<PAGE>



1996 and 1995,  respectively.  Amortization  expense of property  under  capital
leases totaled  approximately $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 under initial lease terms of two to five years.
Six of the seven 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 (see Note 20).


     In 1994,  World Airways  recorded a $4.2 million reversal of excess accrued
maintenance  reserves associated with the expiration of three additional DC10-30
aircraft  leases in 1994. The reversal is recorded as a reduction to maintenance
expense.

     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 $5.9
million at December 31, 1996. 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.

     World Airways  ultimately  plans to exit DC10 aircraft and  standardize its
fleet around the MD-11 aircraft. However, to the extent World Airways can obtain
DC10  aircraft at  favorable  lease  terms,  it will  continue to utilize  these
aircraft to supplement  the MD-11 fleet during peak flying times until the MD-11
fleet is  sufficient  to fulfill  its  obligations.  Therefore,  in 1995,  World
Airways entered into three DC10-30  aircraft leases with lease terms expiring in
August 1997,  September  1997 and December  1998.  In March 1996,  World Airways
leased  two  additional  DC10-30  aircraft  (see  Note 6).  However,  due to the
discontinuation  of World Airways'  scheduled  service  operations (see Note 3),
World Airways entered into an agreement in December 1996 to terminate the leases
of the two aircraft delivered in March 1996.

     As of December 31, 1996,  World Airways' fleet  consisted of four 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.

     In 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 will be returned at the end of the Hadj

                                                       63

<PAGE>



program.

     Rental expense from continuing  operations,  primarily relating to aircraft
leases,  totaled  approximately $84.6 million,  $66.7 million, and $54.4 million
for the years ended December 31, 1996, 1995 and 1994, respectively.

     The  following  is a schedule of 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, 1996 (in thousands):

<TABLE>

         <S>                                                                             <C>
         1997                                                                            $   86,209
         1998                                                                                83,606
         1999                                                                                74,003
         2000                                                                                71,462
         2001                                                                                71,579
         Thereafter                                                                         679,354
                                                                                          ---------
         Total                                                                           $1,066,213
                                                                                          =========
</TABLE>


     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.  World  Airways'  lease relating to office space for its corporate
headquarters  expires in 1997 and is therefore not included above. World Airways
intends to either  extend the  current  agreement  or enter into an  alternative
lease with similar terms.

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, 1996,
there were no BNYFC warrants outstanding.

1986 EXECUTIVE WARRANTS

     During 1986, the Company entered into  agreements with certain  officers of
the Company to issue 3,600,000 warrants, expiring May 24, 1994, each to purchase
one share of the Company's  common stock at a price of $5.00 per share,  subject
to certain anti-dilution  adjustments (the "Executive  Warrants").  During 1994,
90,000 of these warrants were  exercised.  During 1994, the remaining  2,272,336
unexercised 1986 Executive Warrants expired.

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  vest at differing
rates over 60 months.  The 1989  Executive  Warrants  expire on August 31, 1997.
During 1995,  141,083 warrants were exercised.  As of December 31, 1996, 453,417
of these  warrants had been  cancelled  and there were  150,500  1989  Executive
Warrants fully vested and outstanding.

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 are 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 warrants have an exercise

                                                       64

<PAGE>



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 6.11%,  expected  life of 4 years and expected  volatility  of
61.51%.

     The Company  recorded  $0.6 million  related to the warrants  which will be
amortized into interest expense over the term of the related debt.  During 1996,
the Company recognized $21,000 of interest expense relating to the warrants.

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 1996, 1995 and 1994,  approximately $0.2 million,  $0.7
million and $1.1 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
1996 and 1995 was $4.59 and $7.21, respectively,  on the date of grant using the
Black  Scholes   option-pricing   model  with  the  following   weighted-average
assumptions:
<TABLE>
<CAPTION>

                                                                                        1996               1995
                                                                                   --------------     --------------
<S>                                                                                 <C>                <C>
      Expected dividend yield                                                          0.00%              0.00%
      Risk-free interest rate                                                       6.2% to 6.5%       5.3% to 5.6%
      Expected life (in years)                                                         5 to 10            5 to 8
      Expected volatility                                                            56% to 59%         58% to 59%
</TABLE>


     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 income (loss)
would have been changed to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                                        1996               1995
                                                                                   --------------     --------------
<S>                                                                                <C>                <C>
      Net income (loss)                                       As reported          $     (11,754)     $       60,208
                                                              Pro forma                  (12,760)             59,433

      Primary earnings (loss) per
         common equivalent share                              As reported          $       (0.70)     $         3.52
                                                              Pro forma                    (0.77)               3.47

      Fully diluted earnings (loss) per
         common equivalent share                              As reported          $            *     $         2.82
                                                              Pro forma                         *               2.78
</TABLE>

      * Fully diluted earnings per share are anti-dilutive

                                                       65

<PAGE>




      Pro forma net  income  reflects  only  options  granted  in 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  income  amounts
presented above because compensation cost is reflected over the options' vesting
period of 17 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:

<TABLE>
<CAPTION>

                                                                              Number of
                                                                               Options           Weighted-Average
                                                                             Outstanding          Exercise Prices
                                                                             -----------          ---------------
<S>                                                                           <C>                  <C>
      Balance at December 31, 1993                                            1,648,362            $       6.69
         Granted                                                              1,100,000                    4.50
         Exercised                                                             (176,723)                   5.53
         Forfeited                                                             (216,235)                   6.96
         Expired                                                                (33,000)                   9.21
                                                                              ---------

      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)                   10.59
                                                                              ---------

      Balance at December 31, 1995                                            1,828,919            $       5.48
         Granted                                                                225,000                    6.14
         Exercised                                                            (104,456)                    8.87
         Forfeited                                                                   --                      --
         Expired                                                              (125,845)                    6.28
                                                                              ---------

      Balance at December 31, 1996                                            1,823,618            $       5.50
                                                                              =========
</TABLE>

     At December 31,  1996,  the range of exercise  prices and  weighted-average
remaining  contractual  life of outstanding  options was $4.50 to $12.23 and 8.8
years, respectively.

     At  December  31,  1996 and 1995,  the  number of options  exercisable  was
1,324,244 and 1,434,601,  respectively,  and the weighted-average exercise price
of those options was $5.50 and $5.48, 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  ESSOP").  Participation  in the ESSOP 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 ESSOP 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 1996, 1995, and 1994 was 100%.
The employer

                                                       66

<PAGE>



matching  contribution in other  investment  funds was at the rate of 33 1/3% of
the  Salary  Deferral  Contribution.  The  Company  charged  approximately  $0.2
million,  $0.3 million and $0.4 million to expense for its  contributions to the
ESSOP in 1996, 1995 and 1994, respectively.

     Effective  October 1, 1996, the Board of Directors of World Airways adopted
an Employee Savings and Stock Ownership Plan (the "Plan").  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 the Company,  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 ESSOP.  As a result of various  business  developments,  the
vast majority of the  participants  in the ESSOP were World Airways'  employees.
For that reason,  the Company and World Airways agreed that World Airways should
assume the Company's obligation under the ESSOP. In connection with that action,
the Trustees exchanged 196,681 unallocated shares of WorldCorp common stock held
by the ESSOP for a like-value  of shares in World Airways  common  stock.  World
Airways also made a special contribution of $50,000 to the Plan.

      The ESSOP 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 ESSOP agreed to repay WorldCorp the amount of the bank
loan. The ESSOP 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. Principal
payments  of $90,000 are due  quarterly  and a final  principal  payment of $1.0
million is due May 1997.  Interest  is payable  quarterly  at the call loan rate
plus  1.5%.  The margin  loan is  collateralized  by 158,256 of the  unallocated
shares of common stock owned by the Plan at December 31, 1996. Through September
30,  1996,   WorldCorp  was  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.  Beginning  October 1, 1996,  World Airways
assumed this responsibility.  Contributions were sufficient to make the required
principal and interest payments during 1996. World Airways guarantees payment on
the margin loan.

      The Plan will  continue to hold the shares of WorldCorp  common stock that
were allocated 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. The Plan has 447,417 allocated shares
at December 31, 1996.

      The World Airways'  Crewmembers Target Benefit Plan and the World Airways'
Flight  Attendants Target Benefit Plan are defined  contribution  plans covering
flight  engineers  and  pilots,  and  flight  attendants,   respectively,   with
contributions based upon defined wages. These are both tax-qualified  retirement
plans under Section 401(a) of the Internal Revenue Code of 1986, as amended (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
expense for both of the Target Benefit plans totaled $2.5 million, $1.9 million,
and $1.4  million  for the  years  ended  December  31,  1996,  1995,  and 1994,
respectively.  Pension  contributions  made to the  Teamsters  on  behalf of the
flight attendants in the fourth quarter of 1996 totaled $0.1 million.

      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  made no  distributions  in  1995  pertaining  to 1994  financial
results. World Airways distributed approximately $1.7 million in 1996 pertaining
to 1995 results, which included the retroactive payment required under the plan.
World  Airways does not plan to make any 1997  distributions  pertaining to 1996
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

                                                       67

<PAGE>



on a pay-as-you-go (cash) basis.

      A summary of the net periodic  postretirement  benefit costs for the years
ended December 31, 1996, 1995, and 1994 is as follows:

<TABLE>
<CAPTION>

                                                                      1996             1995              1994
                                                                  -------------    ------------      --------

<S>                                                               <C>              <C>               <C>
         Service cost                                             $   176,000      $    118,000      $   145,000
         Interest cost on accumulated
           postretirement benefit obligation                          100,000           134,000          143,000
         Net amortized gain                                           (38,000)          (40,000)              --
                                                                      --------          --------     -----------
              Net periodic postretirement benefit cost            $   238,000      $    212,000      $   288,000
                                                                     ========          ========         ========
</TABLE>

     The components of the Accumulated Postretirement Benefit Obligation for the
years ended December 31, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>

                                                                       1996              1995
                                                                   -----------       -----------

<S>                                                               <C>              <C>
         Retirees and dependents                                  $   789,000      $    951,000
         Fully eligible, active participants                          229,000           165,000
         Not fully eligible participants                            1,527,000         1,480,000
                                                                    ---------         ---------
                                                                  $ 2,545,000      $  2,596,000
         Less: plan assets                                                  0                 0
                                                                    ---------         ---------
              Accrued postretirement benefit obligation           $ 2,545,000      $  2,596,000
                                                                    =========         =========
</TABLE>

     The assumed  discount rates used to measure the accumulated  postretirement
benefit  obligation  for 1996 and 1995 were  6.75% and 6.0%,  respectively.  The
medical cost trend rate in 1997 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 1996 net periodic postretirement benefit
cost by $31,000 and would have increased the accumulated  postretirement benefit
obligation as of December 31, 1996 by $124,000.

17.  FEDERAL AND STATE INCOME TAXES

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

<TABLE>
<CAPTION>

                                                                             For the years ended December 31,
                                                                     ---------------------------------------------
                                                                         1996             1995               1994
                                                                     ------------     ------------        --------

<S>                                                                  <C>              <C>              <C>
         U.S. Federal                                                $       504      $       573      $       131
         State                                                                --               88               28
                                                                        --------         --------          -------
            Income tax expense                                       $       504      $       661      $       159
                                                                         =======         ========          =======
</TABLE>

      There is no deferred  tax expense or benefit for the years ended  December
31, 1996, 1995, and 1994.

      Income  tax  expense   attributable   to  income  (loss)  from  continuing
operations for the years ended  December 31, 1996,  1995, and 1994 differed from
the amounts  computed by applying the U.S. Federal income tax rate of 34 percent
as a result of the following (in thousands):
                                                       68

<PAGE>

<TABLE>
<CAPTION>
                                                                             For the years ended December 31,
                                                                     ------------------------------------------
                                                                         1996             1995           1994
                                                                     ------------     ------------    ----------
<S>                                                                  <C>              <C>             <C>
         Expected Federal income tax expense
            at the statutory rate                                    $     2,700      $    22,038     $    2,879
         Amounts attributable to (earnings)/loss of subsidiaries
            not consolidated for tax purposes                              6,833          (3,115)          1,520
         Income tax expense of subsidiaries not
            consolidated for tax purposes                                     --              296             44
         Gain on sales of equity by subsidiaries not
            consolidated for tax purposes                               (13,221)         (14,850)             --
         Amortization of goodwill                                            184              283             35
         Book/tax difference in gain on sales of subsidiaries stock           --            (252)        (2,170)
         Generation (utilization) of net operating
            loss and capital loss carryforwards                            3,911          (3,640)        (3,056)
         Federal alternative minimum tax and environmental tax                --              231            115
         State income tax expense, net of Federal benefit                     --               58             18
         Other                                                                97            (388)            774
                                                                        --------         --------        -------
            Income tax expense                                               504      $       661     $      159
                                                                       =========         ========        =======
</TABLE>

      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):

<TABLE>
<CAPTION>
                                                                                       1996              1995
                                                                                   ------------       ------------
      Deferred tax assets:
<S>                                                                                <C>                 <C>
         Net operating loss carryforwards                                          $     18,111        $    14,763
         Investment in subsidiary                                                        14,480             10,209
         Deferred compensation                                                              199                 --
         Accruals not deductible for tax                                                     24                 --
         Compensated absences, primarily due to accrual for
           financial statement purposes                                                      10                  5
                                                                                         ------             ------
           Gross deferred tax assets                                                     32,824             24,977
           Less:  valuation allowance                                                    23,277             20,113
                                                                                         ------             ------
           Net deferred tax assets                                                        9,547              4,864
                                                                                         ------             ------
      Deferred tax liabilities:
         Investment in affiliate                                                          9,499              4,571
         Property and equipment                                                              48                105
         Bonus amortization                                                                  --                188
                                                                                         ------             ------
         Gross deferred tax liabilities                                                   9,547              4,864
                                                                                         ------             ------
      Net deferred income taxes                                                    $         --        $        --
                                                                                         ======             ======
</TABLE>

      The valuation  allowance for deferred tax assets as of January 1, 1995 was
$13.9  million.  The net change in the total  valuation  allowance  for the year
ended  December 31, 1995 was an increase of $6.2 million and an increase of $3.2
million for the year ended December 31, 1996.

      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 a
result,  approximately $100.4 million of the Company's previous consolidated net
operating loss carryforward ("NOLs") was allocated to World Airways in 1994, and
therefore,  is only available to offset future  federal  taxable income of World
Airways.  Of this  amount,  $38.1  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 Company's or World Airways' stock could cause an additional
ownership  change at World Airways.  The valuation  allowance for World Airways'
deferred tax assets as of December 31, 1996 was $43.3  million.  World  Airways'
estimate of the  required  valuation  allowance is based on a number of factors,
including  historical  operating results.  World Airways generated earnings from
continuing  operations  in 1996  and net  earnings  for the year  ended  1995 as
compared to net losses in both 1996 and 1994.  If World  Airways  generates  net
earnings in 1997,  it is possible  that a change in the estimate of the required
valuation  allowance  will occur in the near term,  and could differ  materially
from the amount recorded at December 31, 1996.

      As of December 31, 1996,  the Company has  approximately  $53.1 million of
net operating loss carryforwards, which expire as follows (in millions):

<TABLE>

                                         <S>                   <C>
                                         2005                      5.8
                                         2007                     15.2
                                         2008                     11.2
                                         2009                     10.0
                                         2010                      1.1
                                         2011                      9.8
                                                                ------
                                                               $  53.1
</TABLE>


                                                       69

<PAGE>




      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 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.

18.   SEGMENTS AND MAJOR CUSTOMERS

      The Company  owns  positions  in  companies  that  operate in two distinct
business areas. The Company owns  approximately  61.3% 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
28.9% of InteliData, a company which concentrates on three markets: (1) consumer
telecommunications,  (2)  electronic  commerce,  and (3)  interactive  services.
Results of  operations  for World  Airways and  InteliData  are reflected in the
accompanying statements 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):

<TABLE>

<CAPTION>
                                                                                 Year ended December 31,
                                                                     ------------------------------------------
                                                                         1996             1995           1994
                                                                     ------------     ------------    ----------
<S>                                                                  <C>              <C>             <C>
         Malaysian Airlines                                          $    105,410     $    100,934    $   32,773
         U.S. Department of Defense (including U.S. Air Force)             79,029           52,889        44,572
         Philippine Airlines                                               46,516               --            --
         P. T. Garuda Indonesia                                            39,849           26,263        32,356
         Look Charters                                                      3,749            3,677        21,222
</TABLE>


     World  Airways  has  provided  service to  Malaysian  Airlines  since 1981,
providing aircraft for integration into Malaysian  Airlines' scheduled passenger
and cargo  operations  as well as  transporting  passengers  for the annual Hadj
pilgrimage. The Malaysian Airlines' Hadj contract which was entered into in 1992
expired in 1996. World Airways  recently  entered into a new 32-month  agreement
for year-round  operations  (including the Hadj) with Malaysian Airlines whereby
World  Airways will provide two aircraft  with cockpit  crews,  maintenance  and
insurance to Malaysian Airlines' newly-formed charter division through May 1999.
World Airways is currently in preliminary  discussions  with Malaysian  Airlines
regarding a potential  eleven-month reduction in the utilization of one of these
aircraft during the 32-month term of the contract.  World Airways provided three
aircraft for the 1996 and 1995 Hadj operations,  and will provide three aircraft
for the 1997 Hadj operations.

     Until  recently,   World  Airways  operated  four  passenger  aircraft  for
Malaysian Airlines under multi-year agreements. The contract for two of the four
passenger  aircraft for Malaysian  Airlines  expired in March 1997.  While World
Airways is  deploying  these two  aircraft in the 1997 Hadj,  and will  actively
re-market the aircraft  thereafter,  World Airways can provide no assurance that
it will be able to redeploy the two aircraft,  beginning June 1997, at price and
utilization  levels at least as  favorable  as under the terms of the  Malaysian
Airlines contracts.

     World Airways originally  operated 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 the Philippine Airlines contract. World Airways and
Malaysian  Airlines are currently  discussing the future  redeployment  of these
aircraft  back  into  Malaysian  Airlines'  operations  in  order  to  meet  the
contract's  original  obligations.  World  Airways  can  provide no  assurances,
however,  that  World  Airways  will,  in fact,  be able to  redeploy  these two
aircraft back into Malaysian Airlines' operation to meet the contract's original
obligations.

     World Airways'  contract with the U.S. Air Force expires in September 1997.
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

                                                       70

<PAGE>



annual Hadj contract  since 1988.  World Airways  operated seven aircraft in the
1996 Garuda Hadj and five  aircraft in the 1995 Garuda Hadj.  World Airways will
operate six aircraft for the 1997 Garuda Hadj.

     In May 1996, World Airways entered into a new ACMI contract with Philippine
Airlines,  thereby  further  expanding  its presence in the Pacific  Rim.  World
Airways presently operates four MD-11 passenger aircraft for Philippine Airlines
under an agreement, with high minimum monthly utilization levels. World Airways,
however, has recently received a written  communication from Philippine Airlines
in which the airline  contends that its leases for all four  aircraft  expire on
November 15, 1997.  World Airways believes that this position is contrary to the
understanding  of the  parties  that  each of the  MD-11s  are to be  leased  by
Philippine  Airlines for a period of 18 months from  delivery of each  aircraft.
The  parties  are  currently  discussing  the length of the lease term for these
aircraft.  World Airways can provide no  assurances,  however,  that  Philippine
Airlines  will agree to lease any of the four MD-11  passenger  aircraft  beyond
November 15, 1997, or that World  Airways will be able to secure other  business
at as favorable price and utilization levels.

     Also,  subsequent  to year-end,  at  Philippine  Airlines'  request,  World
Airways agreed to a payment plan with respect to Philippine  Airlines' wet lease
obligations  for several  months  beginning in March 1997.  Although  Philippine
Airlines  is  current  on this  payment  plan to date,  if  Philippine  Airlines
defaults  on this  payment  plan,  or fails to meet its monthly  aircraft  lease
obligations,  this  development,  if not offset by other business,  would have a
material  adverse effect on the cash flows,  financial  condition and results of
operation of World Airways.

     World  Airways  has  provided  service  to Look  Charters  under an  annual
contract since 1992. In 1996, 1995 and 1994, 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'  customers bear the financial risk of filling the
World Airways' 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 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.

     World Airways  derives a  significant  percentage of its revenues and block
hours from its  operations  in the  Pacific  Rim  region.  While  World  Airways
believes the Pacific Rim region is a growth market for air  transportation,  any
economic  decline or any  military  or  political  disturbance  in this area may
interfere with World Airways'  ability to provide service in this area and could
have a  material  adverse  effect  on the  financial  condition  or  results  of
operations of World Airways.

     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):

<TABLE>

<CAPTION>
                                                                             For the years ended December 31,
                                                                     ------------------------------------------
                                                                         1996             1995           1994
                                                                     ------------     ------------    ----------
     Operating Revenues:
<S>                                                                  <C>              <C>             <C>
         Domestic                                                    $    91,516      $     59,278    $   63,156
         Export   -  Malaysia                                            105,410           100,934        32,773
                  -  Philippines                                          46,516                --            --
                  -  Indonesia                                            39,849            26,263        32,356
                  -  France                                                3,749             6,897        22,217
                  -  Other                                                22,547            49,014        30,213
                                                                         -------           -------       -------
         Total                                                       $   309,587      $    242,386    $  180,715
                                                                         =======           =======       =======
</TABLE>

19.  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

                                                       71

<PAGE>



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. 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  through  March 15, 1997.  On August 19, 1994,  the Company and Mr.
Andrews extended Mr. Andrews'  employment  agreement to serve as Chief Executive
Officer and  President of WorldCorp  through  December 31, 1997.  The  Incentive
Agreement amounts are included in accrued wages in the accompanying consolidated
balance sheets. As of December 31, 1996 and 1995, $0.4 million and $0.5 million,
respectively,  of the promissory note are included in prepaid expenses and other
current assets and $0.5 million and $0.9 million,  respectively, are included in
other  assets and  deferred  charges in the  accompanying  consolidated  balance
sheets.

     As of  December  31,  1996,  WorldCorp  owns  approximately  28.9%  of  the
outstanding  common stock of InteliData  (see Note 5). The 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 December 31, 1996, MHS owns approximately  17.6% and 29.1% of the
outstanding common stock of World Airways and Malaysian Airlines,  respectively.
Malaysian  Airlines is World Airways' largest  commercial  customer (see Notes 6
and 18).

     Bain & Company,  Inc. provided  consulting  services of approximately  $0.2
million and $0.4 million to the Company  during 1995 and 1994,  respectively.  A
principle  of Bain &  Company  is also a member  of the  Board of  Directors  of
WorldCorp.

     W.  Jerrold  Scoutt,  Jr., a member of the Board of  Directors of WorldCorp
until May 1994,  is a member of the law firm of Zuckert,  Scoutt &  Rasenberger,
Washington,  D.C. Zuckert,  Scoutt & Rasenberger  rendered legal services to the
Company during 1996, 1995, and 1994.

20.  COMMITMENTS AND CONTINGENCIES

LITIGATION AND CLAIMS

     The Company and World Airways (the "World  Defendants")  are  defendants in
litigation  brought  by the  Committee  of  Unsecured  Creditors  of  Washington
Bancorporation   (the   "Committee")  in  August  1992,   captioned   Washington
Bancorporation  v. Boster,  et. al., Adv.  Proc.  92-0133  (Bankr.  D.D.C.) (the
"Boster  Litigation").  The complaint asserts that the World Defendants received
preferential transfers or fraudulent conveyances from Washington  Bancorporation
when the  World  Defendants  received  payment  at  maturity  on May 4,  1990 of
Washington  Bancorporation  commercial  paper  purchased  on  May 3,  1990.  The
Committee  seeks recovery of  approximately  $4.8 million from World Airways and
approximately  $2.0 million from WorldCorp.  Under a settlement  agreement which
remains  subject to certain  contingencies,  the plaintiff has agreed to dismiss
with prejudice the Boster Litigation against all defendants, including the World
Defendants,  with each party to bear its own  costs.  In that  event,  the World
Defendants  would not have any further  liability in the Boster  Litigation.  On
January 28, 1997,  the U.S.  District Court  conditionally  dismissed the Boster
Litigation  subject to  reinstatement  if the settlement is not finalized by May
15, 1997. In any event, the Company believes it has substantial defenses to this
action,  although  no  assurance  can be given of the  eventual  outcome of this
litigation. Depending upon the timing of the

                                                       72

<PAGE>



resolution of this claim, if the Committee was successful in recovering the full
amount  claimed,  the  resolution  could have a material  adverse  effect on the
financial condition or results of operations of the Company.

     World Airways'  flight  attendants are represented by the Teamsters under a
collective  bargaining  agreement  that became  amendable  in 1992.  The parties
exchanged their opening contract  proposals in 1992. In June 1996, World Airways
signed a new four year labor  agreement  with the Teamsters  which  provides for
retroactive  pay increases for the flight  attendants and work rule  flexibility
and lengthened duty time rules for World Airways.  The agreement was ratified by
the  flight   attendants  in  August  1996.  World  Airways'  flight  attendants
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  recently  denied 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.  World Airways can provide no assurances as to how the  imposition of
this requirement 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. Most recently, 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 minor security violations by ground handling
crews contracted by World Airways for services at foreign airport locations.  In
each of these  instances,  World  Airways was in compliance  with  international
regulations,  but not the more  stringent U.S.  requirements.  World Airways has
taken steps to comply with the U.S.  requirements  and  believes  that any fines
ultimately  imposed  by the FAA will not have a material  adverse  effect on the
financial condition or results of operations of World Airways. World Airways has
accrued a liability for its estimate of the ultimate fine that will be assessed,
which is less than the amount of the preliminary assessment, in the accompanying
balance sheet at December 31, 1996.

     In connection with the discontinuance of World Airways's  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  has been  filed in
connection with World  Airways's  discontinuance  of scheduled  service to South
Africa,  seeking  approximately  $37.8  million  in  compensatory  and  punitive
damages.  World  Airways  believes it has  substantial  defenses to this action,
although no assurance can be given of the eventual  outcome of this  litigation.
Depending upon the timing of the resolution of this claim, if the plaintiff were
successful in recovering the full amount claimed with respect to this claim, the
resolution  could have a material  adverse effect on the financial  condition or
results of operations of World Airways.

     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 has recorded  $984,000 for rent  shortfalls  through  December 1996. The
estimated  shortfall  liabilities  relating to these aircraft are accrued in the
accompanying  balance  sheets at  December  31,  1996 and 1995.  World  Airways'
remaining contingent liability related to this matter approximates $866,000.

COMMITMENTS TO PURCHASE SPARE ENGINES

     World  Airways has a commitment  to purchase a spare engine for which World
Airways expects to take delivery in 1997 (See Note 13).


                                                       73

<PAGE>



LETTERS OF CREDIT

     At December 31, 1996 and 1995,  restricted cash and short-term  investments
include  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 principally occurring in 1997.

MD-11 ENGINE MAINTENANCE AGREEMENT

     Engine maintenance  accounts for most of World Airways's 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.  World Airways's  maintenance costs associated with the MD-11 aircraft
and PW 4462 engines have been significantly  reduced due in part to manufacturer
guarantees  and  warranties  which  began to expire in 1995 and which will fully
expire by 1998. In addition,  the specified rates per hour are subject to annual
escalation,  increasing  substantially in April 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 will begin to accrue these increased expenses in 1997. Therefore,  World
Airways expects that  maintenance  expenses will continue to increase during the
remainder of the term of the contract as World Airways's aircraft fleet ages.

                                                       74

<PAGE>



21.  UNAUDITED QUARTERLY RESULTS

     The results of the Company's quarterly operations  (unaudited) for 1996 and
1995 are as follows (in thousands except per share amounts):

<TABLE>
<CAPTION>
                                                                         Quarter Ended
                                             ----------------------------------------------------------------------
                                              March 31       June 30      September 30   December 31     Total Year
                                             ----------     ----------     ----------     ----------     ----------
    1996
<S>                                          <C>            <C>            <C>            <C>            <C>
    Operating revenues                       $   66,691     $   87,056     $   76,461     $   83,464     $  313,672

    Operating income (loss)                     (6,673)         11,449        (5,738)          3,699 (1)      2,737

    Earnings (loss) from
        continuing operations                   (6,592)          4,379        (4,147)         13,797 (2)      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)

    Primary earnings (loss) per
    common equivalent share:
        Continuing operations                $   (0.41)     $     0.25     $   (0.24)     $     0.89     $     0.45
        Discontinued operations                  (0.15)         (0.98)           0.01           0.01         (1.15)
                                                 ------         ------         ------         ------         ------
        Net earnings (loss)                  $   (0.56)     $   (0.73)     $   (0.23)     $     0.90     $   (0.70)
                                                 ======         ======         ======         ======         ======

    Fully diluted earnings (loss) per
        common equivalent share:
        Continuing operations                $        *     $     0.24     $        *     $     0.70     $        *
        Discontinued operations                       *              *              *           0.01              *
                                                 ------         ------         ------         ------          -----
        Net earnings (loss)                  $        *     $        *     $        *     $     0.71     $        *
                                                 ======         ======         ======         ======          =====


    1995

    Operating revenues                       $   41,282     $   76,725     $   70,602     $   57,963     $  246,572

    Operating income (loss)                     (5,532)          9,940          2,989        (1,104)          6,293

    Earnings (loss) from
        continuing operations                   (8,338)         55,680 (3)         93         16,723 (4)     64,158

    Discontinued operations (less
        applicable tax benefit)                   (116)          (931)          (912)        (1,991)        (3,950)

    Net earnings (loss)                      $  (8,454)     $   54,749     $    (819)     $   14,732     $   60,208

    Primary earnings (loss) per
        common equivalent share:
        Continuing operations                $   (0.54)     $     3.27     $     0.01     $     0.97     $     3.75
        Discontinued operations                  (0.02)         (0.05)         (0.06)         (0.12)         (0.23)
                                                 ------         ------         ------         ------         ------
        Net earnings (loss)                  $   (0.56)     $     3.22     $   (0.05)     $     0.85     $     3.52
                                                 ======         ======         ======         ======         ======

    Fully diluted earnings (loss) per
        common equivalent share:
        Continuing operations                $        *     $     2.48     $        *     $     0.77     $     2.99
        Discontinued operations                       *         (0.04)              *         (0.08)         (0.17)
                                                 ------         ------         ------         ------         ------
        Net earnings                         $        *     $     2.44     $        *     $     0.69     $     2.82
                                                 ======         ======         ======         ======         ======
</TABLE>


                                                       75

<PAGE>




    *   Fully diluted earnings are anti-dilutive.

    (1) - 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).
    (2) - Includes  a net gain of $37.1  million on  issuances  (purchases)  of
          equity by subsidiaries (see Notes 4 and 5).
    (3) - Includes the $46.6 million gain  realized on US Order's  offering in
          June 1995 (see Note 5).
    (4)   Includes the following:
        - Includes a gain of approximately $0.8 million on a settlement relating
          to the return of two DC10-30 aircraft in 1993 (see Note 13).
        - Includes the $16.0 million gain realized on World Airways' offering in
          October 1995 (see Note 4).


                                                       76

<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, 1996 and 1995,  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, 1996. In connection with our audits of the  consolidated  financial
statements,  we also have audited the related financial  statement  schedules as
listed in Item 14(a)(2)  herein.  These  consolidated  financial  statements and
financial statement schedules are the responsibility of WorldCorp's  management.
Our  responsibility  is to express an  opinion on these  consolidated  financial
statements and financial  statement  schedules  based on our audits.  We did not
audit  the  consolidated   financial   statements  of  InteliData   Technologies
Corporation and subsidiaries ("InteliData"), a 28.9% investee company, as of and
for the year ended December 31, 1996.  WorldCorp's  investment in InteliData was
$37.4  million,  and its equity in the loss of InteliData  was $31.8 million for
the year ended  December 31, 1996.  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, 1996 and 1995,  and the results of their  operations  and their
cash flows for each of the years in the  three-year  period  ended  December 31,
1996, in conformity with generally accepted accounting  principles.  Also in our
opinion, the related financial statement schedules,  when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.



                                                           KPMG PEAT MARWICK LLP



WASHINGTON, D.C.
FEBRUARY 14, 1997


                                                       77

<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 "1997 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:

<TABLE>

<CAPTION>
             Name Age                                        Position Held
             --------                                        -------------

<S>                                         <C>              <C>
      T. Coleman Andrews, III               42               Chief Executive Officer and President (WorldCorp,
                                                             World Airways (Acting)), and Principal Accounting
                                                             Officer, WorldCorp

      William F. Gorog                      71               Chief Executive Officer, InteliData, and
                                                             Chairman of the Board, WorldCorp

      Andrew M. Paalborg                    41               Vice President and General Counsel
</TABLE>

     T. Coleman Andrews, III was elected Chief Executive Officer,  President and
a Director of the  Company in 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 World Airways' bylaws,  Mr. Andrews will act as President and Chief Executive
Officer on an  interim  basis  pending  the  hiring of a new CEO.  In 1986,  Mr.
Andrews was recruited by the Board to lead a strategic  turnaround and financial
restructuring of World Airways,  which in the previous seven years had lost $201
million.  Since that time, the team led by Mr. Andrews has generated  profitable
results in seven of the ten years and has  rebuilt  World  Airways  successfully
around  its  current  strategy.  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.  William F. Gorog has served as Chief  Executive  Officer of InteliData
(and its predecessor,  US Order) since May 1, 1990. He was elected a director of
WorldCorp  in April 1989 and was  elected  Chairman  of the  WorldCorp  Board of
Directors in May 1993. From October 1987 until founding US Order in May 1990, he
served as Chairman of the Board of Arbor International, an investment management
firm. From 1982, he served as President and Chief Executive  Officer of Magazine
Publishers of America,  a trade association  representing the principal consumer
publications  in the United States.  During the Ford  Administration,  Mr. Gorog
served as Deputy  Assistant to the President for Economic  Affairs and Executive
Director of the White House Council on International  Economic Policy.  Prior to
that time, he founded and served as Chief Executive Officer of Data Corporation,
which  developed  the LEXIS and NEXIS  information  systems  for legal and media
research and which was subsequently sold to the Mead Corporation.

                                                       78

<PAGE>



      Mr. Andrew M. Paalborg  joined World Airways as General Counsel in October
1989 and was elected  Vice  President  and General  Counsel of  WorldCorp in May
1992. From 1984 to 1989 Mr. Paalborg practiced law with Hogan & Hartson, McLean,
Virginia.  From 1982 to 1984 he was an associate  with Morgan,  Lewis & Bockius,
New York,  New  York.  Mr.  Paalborg  received  his law  degree  cum laude  from
Georgetown  University  in 1982 and is a member  of the New York,  Virginia  and
District of Columbia Bars.

Beneficial Ownership Reporting

      The Company  incorporates herein by reference the information  required by
Item 405 of Regulation S-K contained in its 1997 Proxy Statement.

ITEM 11.  EXECUTIVE COMPENSATION
--------------------------------

      The Company  incorporates  herein by reference the information  concerning
executive compensation contained in the 1997 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
1997 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 1997 Proxy
Statement.


                                                       79

<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, 1996 and 1995

              Consolidated Statements of Operations, Years Ended
                December 31, 1996, 1995, and 1994

              Consolidated Statements of Changes in Common Stockholders'
                Deficit, Years Ended December 31, 1996, 1995 and 1994

              Consolidated Statements of Cash Flows, Years Ended
                December 31, 1996, 1995 and 1994

              Notes to Consolidated Financial Statements

              Independent Auditors' Report

      (2)     Financial Statement Schedules

         Schedule
          Number
          ------

               I.     Condensed Financial Information of Registrant
              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,
1996, 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.

         (3)  Index to Exhibits

<TABLE>

<CAPTION>
         Exhibit
           No.                                          Exhibit
         -------                                        -------

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

</TABLE>

                                                       80

<PAGE>

<TABLE>


<S>               <C>                                                                            <C>
           3.2    Amended and Restated Bylaws of WorldCorp, Inc. dated November 13,              Incorporated
                  1987.  (Filed as Exhibit 3.1 to WorldCorp, Inc.'s Annual Report on             by reference
                  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             Incorporated
                  WorldCorp, Inc. and The First National Bank of Boston, as Trustee.             by reference
                  (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,            Incorporated
                  Inc. and Patrick F. Graham. (Filed as Exhibit 4.8 to WorldCorp Inc's           by reference
                  Form S-3 Registration Statement (Commission file No. 33-60247)
                  filed on June 15, 1995 and incorporated herein by reference.)

          10.4    Aircraft  Lease  Agreement  dated as of March 30, 1987 between                 Incorporated
                  World Incorporated  Airways, Inc. and The Connecticut National                 by reference
                  Bank, not in its individual by reference capacity,  but solely
                  as Owner  Trustee.  (Filed as Exhibit 10.34 to World  Airways,
                  Inc.'s  Annual  Report on Form 10-K for the fiscal  year ended
                  December 31, 1986 and incorporated herein by reference.)

          10.5    Merger Agreement and Plan of Reorganization dated as of April 28,              Incorporated
                  1987 by and among World Airways, Inc., World Merger Corporation                by reference
                  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.]

          10.9    Form of Assumption Agreement dated as of June 23, 1987 among                   Incorporated
                  WorldCorp, Inc., World Airways, Inc. and each Indemnified Party.               by reference
                  [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.]

          10.11   Agreement between World Airways, Inc. and Flight Attendants                    Incorporated
                  represented by International Brotherhood of Teamsters.  [Filed                 by reference
                  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.]

          10.12   Agreement between World Airways, Inc. and Mechanics represented by             Incorporated
                  the International Brotherhood of Teamsters.  (Filed as Exhibit 10.41           by reference
                  to WorldCorp, Inc.'s Annual Report on Form 10-K for the fiscal year
                  ended December 31, 1988 and incorporated herein by reference.)

          10.13   Agreement between World Airways, Inc. and Stock Clerks and Store               Incorporated
                  Room Employees represented by the International Brotherhood of                 by reference
                  by reference Teamsters.  (Filed as Exhibit 10.42 to WorldCorp,
                  Inc.'s  Annual  Report on Form 10-K for the fiscal  year ended
                  December 31, 1988 and incorporated herein by reference.)

          10.14   Office Lease - The Hallmark  Building dated as of May 16, 1987                 Incorporated
                  Incorporated between WorldCorp, Inc. and GT Renaissance Centre                 by reference
                  Limited by reference  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.)
</TABLE>

                                                       81

<PAGE>

<TABLE>

<S>               <C>                                                                            <C>
          10.15   Lease Amendment dated as of June 27, 1989 between WorldCorp, Inc.              Incorporated
                  and GT Renaissance Centre Limited Partnership.  (Filed as Exhibit              by reference
                  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.)

          10.16   Office Lease - The Hallmark Building dated as of September 20, 1989            Incorporated
                  between World Airways, Inc. and GT Renaissance Centre Limited                  by reference
                  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.)

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

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

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

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

          10.28   Aircraft Lease Agreement dated as of January 15, 1991 between World            Incorporated
                  Airways, Inc. and First Security Bank of Utah, N.A.,  not in its               by reference
                  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.)

          10.30   Aircraft Lease Agreement I dated as of February 12, 1992 between               Incorporated
                  McDonnell Douglas Finance Corporation and World Airways, Inc.                  by reference
                  (Filed as Exhibit 10.39 to WorldCorp, Inc.'s Annual Report on Form
                  10-K for the fiscal year ended December 31, 1991 and incorporated
                  herein by reference.)

          10.31   Aircraft Lease Agreement II dated as of February 12, 1992 between              Incorporated
                  McDonnell Douglas Finance Corporation and World Airways, Inc.                  by reference
                  (Filed as Exhibit 10.40 to WorldCorp, Inc.'s Annual Report on Form
                  10-K for the fiscal year ended December 31, 1991 and incorporated
                  herein by reference.)

          10.32   Aircraft Engine Purchase Agreement dated as of April 26, 1991 between          Incorporated
                  Terandon Leasing Corporation and World Airways, Inc.  (Filed as                by reference
                  Exhibit 10.41 to WorldCorp, Inc.'s Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1991 and incorporated herein by
                  reference.)

</TABLE>

                                                       82

<PAGE>

<TABLE>

<S>               <C>                                                                            <C>
          10.33   Aircraft Engine Lease Agreement dated as of April 26, 1991 between             Incorporated
                  Terandon Leasing Corporation and World Airways, Inc.  (Filed as                by reference
                  Exhibit 10.42 to WorldCorp, Inc.'s Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1991 and incorporated herein by
                  reference.)

          10.34   Guaranty  Agreement  I dated as of February  12, 1992  between                 Incorporated
                  McDonnell  Incorporated  Douglas Finance Corporation and World                 by reference
                  Airways,   Inc.  (Filed  as  Exhibit  by  reference  10.43  to
                  WorldCorp,  Inc.'s  Annual  Report on Form 10-K for the fiscal
                  year  ended  December  31,  1991 and  incorporated  herein  by
                  reference.)

          10.35   Guaranty  Agreement  II dated as of February  12, 1992 between                 Incorporated
                  McDonnell  Incorporated  Douglas Finance Corporation and World                 by reference
                  Airways,   Inc.  (Filed  as  Exhibit  by  reference  10.44  to
                  WorldCorp,  Inc.'s  Annual  Report on Form 10-K for the fiscal
                  year  ended  December  31,  1991 and  incorporated  herein  by
                  reference.)

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

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

          10.40   Aircraft Lease Agreement for Aircraft Serial Number 48520 dated as             Incorporated
                  of September 30, 1992 between World Airways, Inc. and International            by reference
                  Lease Finance Corporation.

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

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

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

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

          10.47   Aircraft Parts Security Agreement dated as of December 7, 1993                 Incorporated
                  between World Airways, Inc. and BNY Financial Corporation.                     by reference

          10.48   Warrant Certificate dated as of December 7, 1993 between WorldCorp,            Incorporated
                  Inc. and BNY Financial Corporation.                                            by reference

          10.62   Consignment Agreement dated as of September 30, 1993 between World             Incorporated
                  Airways Inc. and The Memphis Group.                                            by reference

          10.63   Assignment and Assumption and Consent and Release for Aircraft                 Incorporated
                  Serial Number 47818 dated as of July 20, 1993 among World                      by reference
                  Airways, Inc., WorldCorp, Inc., McDonnell Douglas Corporation, and
</TABLE>

                                                       83

<PAGE>


<TABLE>


<S>               <C>                                                                            <C>
                  McDonnell Douglas Finance Corporation.

          10.64   Assignment and Assumption and Consent and Release for Aircraft                 Incorporated
                  Serial Number 46999 dated as of July 9, 1993 among World                       by reference
                  Airways, Inc., WorldCorp, Inc., McDonnell Douglas Corporation, and
                  McDonnell Douglas Finance Corporation.

          10.65   Aircraft Lease Agreement for Aircraft Serial Number 48458 dated as             Incorporated
                  of January 15, 1993 between World Airways, Inc. and Wilmington                 by reference
                  Trust Company/GATX Capital Corporation.

          10.66   Aircraft Lease Supplement for Aircraft Serial Number 48458 dated as            Incorporated
                  of April 23, 1993 between World Airways, Inc. and Wilmington Trust             by reference
                  Company/GATX Capital Corporation.


          10.67   Aircraft Spare Parts Lease Agreement dated as of April 15, 1993                Incorporated
                  between World Airways, Inc. and GATX Capital Corporation.                      by reference

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

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

          10.70   Assignment of Rights for Aircraft Serial Number 48518 dated as of              Incorporated
                  March 8, 1993 between World Airways, Inc. and International Lease              by reference
                  Finance Corporation.

          10.71   Assignment of Rights for Aircraft Engines Serial Numbers P723942,              Incorporated
                  P723945, and P723943 dated as of March 1, 1993 between World                   by reference
                  Airways, Inc. and International Lease Finance Corporation.

          10.72   Agency Agreement for Aircraft Serial Number 48518 dated as of                  Incorporated
                  January  15, 1993 between World Airways, Inc. and International                by reference
                  Lease Finance Corporation.

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

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

          10.75   Agency Agreement for Aircraft Serial Number 48437 dated as of                  Incorporated
                  January 15, 1993 between World Airways, Inc. and International                 by reference
                  Lease Finance Corporation.

          10.76   Assignment of Rights for Aircraft Serial Number 48437 dated as of              Incorporated
                  April 15, 1993 between World Airways, Inc. and International Lease             by reference
                  Finance Corporation.

          10.77   Assignment of Rights for Aircraft Engines Serial Numbers P723913,              Incorporated
</TABLE>

                                                       84

<PAGE>

<TABLE>

<S>               <C>                                                                            <C>
                  P723912, and P723914 dated as of April 15, 1993 between World                  by reference
                  Airways, Inc. and International Lease Finance Corporation.

          10.78   Amendment No. 2 to Aircraft Lease Agreement for Aircraft Serial                Incorporated
                  Number 48520 dated as of April 22, 1993 between World Airways,                 by reference
                  Inc. and International Lease Finance Corporation.

          10.79   Agency Agreement for Aircraft Serial Number 48520 dated as of                  Incorporated
                  January 15, 1993 between World Airways, Inc. and International                 by reference
                  Lease Finance Corporation.

          10.80   Assignment of Rights for Aircraft Serial Number 48520 dated as of              Incorporated
                  April 22, 1993 between World Airways, Inc. and International Lease             by reference
                  Finance Corporation.

          10.81   Assignment of Rights for Aircraft Engines Serial Numbers P723957,              Incorporated
                  P723958, and P723956 dated as of March 1, 1993 between World                   by reference
                  Airways, Inc. and International Lease Finance Corporation.

          10.82   Aircraft Charter Agreement dated as of July 24, 1993 between World             Incorporated
                  Airways, Inc. and Malaysian Airline System Berhad.                             by reference

          10.83   Amendment No. 1 to Aircraft Lease Agreement for Aircraft Serial                Incorporated
                  Numbers 46835, 46837, and 46820 dated as of May 14, 1993 between               by reference
                  World Airways, Inc. and The Connecticut National Bank (assigned to
                  Federal Express Corporation).

          10.84   Amendment No. 2 to Aircraft Lease Agreement for Aircraft Serial                Incorporated
                  Numbers 46835, 46837, and 47820 dated as of May 14, 1993 between               by reference
                  World Airways, Inc. and The Connecticut National Bank (assigned to
                  Federal Express Corporation).

          10.85   Return Agreement for Aircraft Serial Numbers 47818 and 46999 dated             Incorporated
                  as of July 9, 1993 among World Airways, Inc., WorldCorp, Inc.,                 by reference
                  International Lease Finance Corporation, McDonnell Douglas
                  Corporation, and McDonnell Douglas Finance Corporation.

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

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

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

          10.89   Shareholders Agreement between Malaysian Helicopter Services                   Incorporated
                  Berhad and WorldCorp, Inc., and World Airways, Inc. dated as of                by reference
                  February 3, 1994.

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

</TABLE>


                                                       85

<PAGE>


<TABLE>
<S>               <C>                                                                            <C>
          10.94   Stock Option Agreement dated as of August 1, 1994 ("Grant Date")               Incorporated
                  between WorldCorp, Inc. and William F. Gorog.                                  by reference

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                                       86

<PAGE>

<TABLE>
<S>               <C>                                                                            <C>
          10.116  Form 10-K for the fiscal year ended December 31, 1996 for
                  InteliData Technologies Corporation, Inc.                                      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, 1996.                  Filed Herewith
</TABLE>

         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  November  22,  1996 was filed with the  Securities  and
         Exchange Commission on November 22, 1996.

         Form 8-K/A dated  November 22, 1996,  was filed with the Securities and
         Exchange Commission on December 17, 1996


               *     *     *     *     *     *     *     *     *     *     *


                                                       87

<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/ T. Coleman Andrews, III
                                         --------------------------
                                         T. Coleman Andrews, III
                                         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.
<TABLE>
<CAPTION>

Signature                                                  Title                                 Date
---------                                                  -----                                 ----
<S>                                                        <C>                                   <C>

/s/ T. Coleman Andrews, III                                Chief Executive Officer,              March 31, 1997
--------------------------                                 President, and Principal
(T. Coleman Andrews, III)                                  Accounting Officer


/s/ William F. Gorog                                       Director and                          March 31, 1997
--------------------                                       Chairman of the Board
(William F. Gorog)


/s/ Gideon Argov                                           Director
--------------------                                                                             March 31, 1997
(Gideon Argov)


/s/ John C. Backus, Jr.                                    Director                              March 31, 1997
-----------------------
(John C. Backus, Jr.)


/s/ James E. Colburn                                       Director                              March 31, 1997
--------------------
(James E. Colburn)


/s/ Patrick F. Graham                                      Director                              March 31, 1997
---------------------
(Patrick F. Graham)


/s/ Geoffrey S. Rehnert                                    Director                              March 31, 1997
-----------------------
(Geoffrey S. Rehnert)

</TABLE>




<PAGE>



                                                                      SCHEDULE I

                                                  WORLDCORP, INC.
                                             CONDENSED BALANCE SHEETS
                                                      ASSETS
                                                  (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                           December 31,
                                                                                    -------------------------
                                                                                       1996           1995
                                                                                    ----------     ----------
CURRENT ASSETS
<S>                                                                                 <C>            <C>
     Cash and cash equivalents, including restricted short-
          term investments of $109 and $6 at December 31, 1996
          and 1995, respectively                                                    $    5,434     $   24,050

     Restricted cash                                                                     1,000             --

     Other receivables                                                                     284            552

     Prepaid expenses and other current assets                                             536            715
                                                                                       -------        -------

         Total current assets                                                            7,254         25,317
                                                                                       -------         ------

EQUIPMENT AND PROPERTY
     Equipment                                                                           3,102          3,075

     Equipment under capital leases                                                        173            173
                                                                                       -------        -------
                                                                                         3,275          3,248
     Less accumulated depreciation and amortization                                      2,804          2,474
                                                                                       -------        -------

         Net equipment and property                                                        471            774
                                                                                      --------        -------

INVESTMENT IN SUBSIDIARIES AND AFFILIATE                                                41,919         40,854

OTHER ASSETS AND DEFERRED CHARGES, NET                                                   2,458          2,904

INTANGIBLE ASSETS, NET                                                                   1,072          2,591
                                                                                       -------         ------

         TOTAL ASSETS                                                               $   53,174     $   72,440
                                                                                       =======         ======
</TABLE>

                                                                     (Continued)


<PAGE>



                                                                      SCHEDULE I
                                                                     (Continued)


                                                  WORLDCORP, INC.
                                             CONDENSED BALANCE SHEETS
                                   LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
                                                  (IN THOUSANDS)
                                                    (CONTINUED)


<TABLE>
<CAPTION>
                                                                                           December 31,
                                                                                    -------------------------
                                                                                       1996           1995
                                                                                    ----------     ----------
CURRENT LIABILITIES
<S>                                                                                 <C>            <C>
     Note payable                                                                   $   15,000     $       --
     Current maturities of long-term obligations                                           944          1,410
     Accounts payable                                                                      223            421
     Accrued salaries and wages                                                            993          1,349
     Accrued interest                                                                      824          1,877
     Accrued taxes                                                                          24          (250)
                                                                                      --------      ---------
         Total current liabilities                                                      18,008          4,807
                                                                                      --------      ---------

LONG-TERM OBLIGATIONS, NET
     Senior Subordinated Notes, net                                                      9,675             --
     Subordinated convertible debt                                                      65,000         65,000
     Subordinated notes, net                                                                --         24,961
     Other long-term obligations                                                            23            969
                                                                                      --------      ---------
         Total long-term obligations, net                                               74,698         90,930
                                                                                      --------       --------

         TOTAL LIABILITIES                                                              92,706         95,737
                                                                                      --------       --------

COMMON STOCKHOLDERS' DEFICIT
     Common stock,  $1 par  value,  (60,000,000  shares  authorized,  16,420,350
         shares issued and  15,020,265  shares  outstanding at December 31, 1996
         and 16,416,134 shares issued and 16,353,549 shares outstanding at
         December 31, 1995)                                                             16,617         16,354
     Additional paid-in capital                                                         43,824         42,210
     Deferred compensation                                                               (591)          (553)
     Accumulated deficit                                                              (91,366)       (79,598)
     ESOP guaranteed bank loan                                                              --        (1,370)
     Treasury stock, at cost (1,576,766 and 62,585 shares in 1996 and 1995,
         respectively)                                                                 (8,016)          (340)
                                                                                      --------      ---------

         TOTAL COMMON STOCKHOLDERS' DEFICIT                                           (39,532)       (23,297)
                                                                                      --------       --------

     COMMITMENTS AND CONTINGENCIES

         TOTAL LIABILITIES AND COMMON STOCKHOLDERS'
             DEFICIT                                                                $   53,174      $  72,440
                                                                                      ========       ========

</TABLE>

                        See accompanying Notes to Condensed Financial Statements



<PAGE>


                                                                      SCHEDULE I
                                                                     (Continued)

                                                  WORLDCORP, INC.
                                        CONDENSED STATEMENTS OF OPERATIONS
                                                  (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                                 Year ended December 31,
                                                                     ------------------------------------------
                                                                         1996             1995           1994
                                                                     ------------     ------------    ----------
OPERATING EXPENSES:
<S>                                                                  <C>              <C>             <C>
       General and administrative                                    $      3,803     $      4,334    $    3,614
                                                                         --------         --------      --------

OPERATING LOSS                                                            (3,803)          (4,334)       (3,614)
                                                                         --------         --------      --------

OTHER INCOME (EXPENSE)
     Interest expense                                                     (8,150)          (9,071)       (8,354)
     Interest income                                                        1,072            1,263           900
     Equity in earnings (loss) of subsidiaries and affiliate             (39,964)            4,612       (7,152)
     Gain (loss) on issuances (purchases) of equity
         by subsidiaries, net                                              38,886           43,676        10,524
     Gain on sales of subsidiaries' stock, net                                 --           23,717        16,398
     Other, net                                                                30              404         (279)
                                                                         --------         --------      --------
         Total other income (expense)                                     (8,126)           64,601        12,037
                                                                         --------         --------      --------

EARNINGS (LOSS) BEFORE INCOME TAXES                                      (11,929)           60,267         8,423

INCOME TAX (EXPENSE) BENEFIT                                                  175             (59)         (115)
                                                                         --------         --------      --------

NET EARNINGS (LOSS)                                                  $   (11,754)      $    60,208    $    8,308
                                                                         ========         ========      ========
</TABLE>



                        See accompanying Notes to Condensed Financial Statements


<PAGE>



                                                                      SCHEDULE I
                                                                     (Continued)
                                                  WORLDCORP, INC.
                                        CONDENSED STATEMENTS OF CASH FLOWS
                                                  (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                 Year ended December 31,
                                                                     ------------------------------------------
                                                                         1996             1995           1994
                                                                     ------------     ------------    ----------

<S>                                                               <C>               <C>               <C>
CASH AND CASH EQUIVALENTS AT BEGINNING
     OF YEAR                                                      $    24,050       $     1,536       $    2,388

CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)                                                  (11,754)            60,208            8,308
Adjustments to reconcile net earnings (loss) to cash
     used by operating activities:
     Depreciation and amortization                                      1,378             1,368              457
     Gain (loss) on issuances (purchases) of equity
     by subsidiaries, net                                            (38,886)          (43,676)         (10,524)
     Gain on sales of subsidiaries' stock, net                             --          (23,717)         (16,398)
     Equity in (earnings) loss of subsidiaries                         39,964           (4,612)            7,152
     Deferred compensation expense                                        162               678            1,115
     Other                                                              (354)             (827)               52
     Changes in certain  assets  and  liabilities  net of
         effects  of  non-cash transactions:
         Decrease in accounts receivable                                  610               419              852
         Increase in restricted cash                                  (1,000)                --               --
         (Increase) decrease in prepaid expenses
              and other assets                                            181             1,862          (1,537)
         Increase (decrease) in accounts payable, accrued
              expenses and other liabilities                          (1,339)           (1,521)          (5,569)
                                                                     --------          --------        ---------
     Net cash provided (used) by operating activities                (11,038)           (9,818)         (16,092)
                                                                    ---------          --------         --------

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to equipment and property                                      (29)              (12)            (199)
Proceeds from disposal of equipment and property                          185                --              609
Purchase of investments                                               (1,126)             (282)            (400)
Proceeds from collection of note receivable from subsidiary                --             3,500               --
                                                                   ----------          --------         --------
     Net cash provided (used) by investing activities                   (970)             3,206               10
                                                                     --------          --------          -------

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of debt                                                       35,000                --               20
Repayment of debt                                                    (35,040)           (9,648)          (1,768)
Proceeds from stock transactions                                        1,499             3,064            1,428
Proceeds from sales of subsidiaries' stock                                 --            28,986           12,300
Proceeds from redemption of preferred stock in subsidiary                  --             4,300            3,250
Repurchases of common stock                                           (7,676)                --               --
Discounts on debt issued                                                (391)                --               --
Dividends from subsidiary                                                  --             2,424               --
                                                                    ---------        ----------        ---------
     Net cash provided by financing activities                        (6,608)            29,126           15,230
                                                                     --------          --------          -------

NET INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS                                            (18,616)            22,514            (852)
                                                                     --------          --------          -------

CASH AND CASH EQUIVALENTS AT END
     OF YEAR                                                      $     5,434       $    24,050       $    1,536
                                                                     ========          ========          =======

</TABLE>


            See accompanying Notes to Condensed Financial Statements


<PAGE>



                                                                      SCHEDULE I
                                                                     (Continued)

                                                  WORLDCORP, INC.
                                      NOTES TO CONDENSED FINANCIAL STATEMENTS
                                                 DECEMBER 31, 1995


A.   The condensed financial statements of WorldCorp, Inc. ("parent company")
     should be read in conjunction with the consolidated financial statements
     and accompanying notes thereto of WorldCorp, Inc, and subsidiaries as of
     and for the year ended December 31, 1996.

B.   The parent company's long-term obligations at December 31 are as follows
     (in thousands):
<TABLE>
<CAPTION>


                                                                                          1996             1995
                                                                                       ----------       ----------
<S>                                                                                    <C>              <C>
      Senior Subordinate Notes -- with interest at 10% payable semi-annually
         beginning March 31, 1997 (net of unamortized discount of $0.3 million)             9,675               --

      Convertible  Subordinated  Debentures  due  2004  -- with  interest  at 7%
         payable  semi-annually  beginning  May 15,  1992.  The  Debentures  are
         convertible into WorldCorp common stock at $11.06 per share
         subject to adjustment in certain events.                                          65,000           65,000

      13 7/8% Subordinated Notes, retired in 1996 (net of
         unamortized discount of $0.1 million in 1995).                                        --           24,961

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

      Guaranteed bank loan due 1996 -- with  interest at the call loan rate plus
         1.5% (8.45% at December 31, 1995),  collateralized by 286,681 shares of
         WorldCorp common stock held by the WorldCorp Employee
         Savings and Stock Ownership Plan.                                             $       --       $    1,370

      Capitalized lease obligations                                                            67              109
                                                                                         --------          -------

         Total                                                                             75,642           92,340

      Less:  current maturities                                                               944            1,410
                                                                                         --------          -------

         Total long-term obligations, net                                                  74,698       $   90,930
                                                                                          =======          =======
</TABLE>

      See Note 13 of the Company's "Notes to Consolidated  Financial Statements"
      for further description of the above obligations.

      The  following  table shows the  aggregate  amount of scheduled  principal
      maturities  (in  thousands)  of debt  and  capitalized  lease  obligations
      outstanding at December 31, 1996:
<TABLE>

                                         <S>                       <C>
                                         1997                      $   860
                                         1998                        1,933
                                         1999                        1,513
                                         2000                        6,336
                                         2001                           --
                                         Thereafter                 65,000
                                                                    ------
                                            Total                  $75,642
                                                                    ======
</TABLE>


     In  addition,   the  parent  company  has  a  $15.0  million  note  payable
     outstanding,  which is due in September 1997. Also, in the first quarter of
     1997, the parent company 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.

<PAGE>



                                                                     SCHEDULE II

                                WORLDCORP, INC. AND CONSOLIDATED SUBSIDIARIES
                                      VALUATION AND QUALIFYING ACCOUNTS
                            FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                                               (IN THOUSANDS)

<TABLE>
<CAPTION>



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

<S>                                                    <C>            <C>             <C>              <C>
Allowance for Doubtful Accounts
-------------------------------

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

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

Year ended December 31, 1994                          $       311     $       436     $       666      $        81
                                                         ========        ========         =======          =======





    Valuation Allowance for
      Deferred Tax Assets
      -------------------

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

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

Year ended December 31, 1994                          $    73,003     $        --     $    59,030      $    13,973
                                                           ======        ========          ======           ======


</TABLE>