INTELIDATA TECHNOLOGIES CORP, 10-K405, 1997-03-31

INTELIDATA TECHNOLOGIES CORP
10-K405, 1997-03-31
COMPUTER INTEGRATED SYSTEMS DESIGN

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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 000-21685

INTELIDATA TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 54-1820617
(State of incorporation) (I.R.S. Employer Identification Number)

13100 Worldgate Drive, Suite 600, Herndon, VA 20170
(Address of Principal Executive Offices)
(703) 834-8500
(Registrant's telephone number, including area code)

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

Title of Each Class Name of Each Exchange on Which Registered
- ------------------- -----------------------------------------

NONE

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

Common Stock par value $.001 per share

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 [ X ].

The aggregate market value of the Common Stock held by non-affiliates of the
registrant on March 1, 1997, was approximately $116,206,000. In determining
this figure, the Registrant has assumed that all of its directors and executive
officers are affiliates. Such assumptions should not be deemed to be conclusive
for any other purpose.

The number of shares of the registrant's Common Stock outstanding on March 1,
1997 was 31,816,693.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of InteliData Technologies Corporation's Proxy Statement for its 1997
Annual Stockholder Meeting, to be filed within 120 days after the end of the
registrant's fiscal year, are incorporated into Part III of this Report.

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INTELIDATA TECHNOLOGIES CORPORATION

1996 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

Page
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<S> <C> <C>
PART I
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Item 1. Business............................................................ 3

Item 2. Properties.......................................................... 21

Item 3. Legal Proceedings................................................... 21

Item 4. Submission of Matters to a Vote of Stockholders..................... 21

PART II
- -------

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters 22

Item 6. Selected Financial Data............................................. 23

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation ............................................... 24

Item 8. Financial Statements and Supplementary Data......................... 40

Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure ........................................... 66

PART III
- --------

Item 10. Directors and Executive Officers of the Registrant.................. 66

Item 11. Executive Compensation.............................................. 68

Item 12. Security Ownership of Certain Beneficial Owners and Management...... 68

Item 13. Certain Relationships and Related Transactions...................... 69

PART IV
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Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K .... 70

</TABLE>

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PART I

ITEM 1. BUSINESS
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GENERAL

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

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

The business of the Company consists of the businesses previously conducted
by US Order, Colonial Data and Colonial Data's subsidiaries. The Company
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"). The Company 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 provide consumers call management features
and the ability to access numerous network services and interactive applications
via telephone. The Company 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. The Company also
repairs and refurbishes telecommunications products for commercial customers and
provides other services that support the development and implementation of
intelligent network services.

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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. The Company currently
receives its electronic commerce revenues largely from the sale of products and
services to Visa International Service Association, Inc. ("Visa") member banks.

On August 1, 1994, the Company 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. The Company's right to future royalty payments from Visa is
subject to a cumulative offset amount aggregating $880,000 and, accordingly, the
Company 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 the Company, including 54
former Company employees. Visa InterActive also has agreed through 2000 to
inform Visa member banks that the Company 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"). The Company intends to sell interactive
applications directly to end users and through other companies, including telcos
and wireless communications companies. The Company'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.

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

INDUSTRY BACKGROUND

The Company 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

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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 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.

Circuit. In December 1996, the FCC issued a Notice of Proposed Rulemaking which
suggests rules concerning the implementation of the Telecommunications Act
provisions relating to RBOC manufacture of telecommunications and customer
premises equipment. Although the FCC has not yet implemented the regulations
relating to those provisions, the proposed regulations would permit RBOCs to
manufacture products that support Caller ID and other emerging intelligent
network services subject to certain conditions. The 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 the
Company'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. The Company'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 the Company builds some of its services, the Company is
essentially an aggregator of other data sources and purchases data from many of
the same suppliers as its competitors.

PRODUCTS AND SERVICES

The Company's business strategy is to develop products and services to meet
the needs of its customers in each of three markets: consumer
telecommunications, electronic commerce and interactive services. The Company
develops products and services for the RBOCs and other telcos, financial
institutions and their customers. The Company strives to develop products with
broad appeal that are easy-to-use, practical, inexpensive and built around
common industry standards. The Company believes its products position the
Company 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,
the Company 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 the Company's revenues are derived from

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the sale and leasing of its Caller ID products. The following represent the
Company's consumer telecommunications products and services:

Entry Level Caller ID Adjunct Devices
-------------------------------------

The Company provides low-priced, entry level Caller ID devices primarily to
support RBOC marketing and promotional campaigns in which a telco may give away
or subsidize the purchase of a Caller ID adjunct device when a consumer
subscribes for the service. The Company believes that RBOCs utilize lower-priced
products to reduce or eliminate the initial consumer expenditure required to
obtain the service and, as a result, may subsequently achieve higher penetration
rates for Caller ID in selected markets. The Company's entry level Caller ID
adjunct devices have suggested retail prices of $29.99 to $39.99.

Full-Featured Caller ID Adjunct Devices
---------------------------------------

The Company's full-featured products display all transmitted information
before the incoming telephone call is answered and store this information in
memory. Among the features available on the Company's full-featured products are
memory capacity for up to 99 calls, a "blocked call"/"new call" light, a
patented "Block the Blocker" feature, a bilingual display and a "message waiting
alert" light that indicates to a network voice mail subscriber that a new voice
mail message has been received. "Block the Blocker" is a feature that detects
when call block is used by a caller, delivers a message to that caller that the
Caller ID subscriber does not accept blocked calls and disconnects the call. The
Company's full-featured Caller ID adjunct devices have suggested retail prices
of $39.99 to $69.99.

Caller ID on Call Waiting
-------------------------

Caller ID on Call Waiting allows a subscriber to combine both Caller ID and
Call Waiting network services, to view the directory name and telephone number
of an incoming call as the Call Waiting signal is delivered. The Company's
Caller ID on Call Waiting adjunct device also allows a consumer to store
approximately 85 names and numbers in memory. InteliData has applied for a
patent on certain aspects of its Caller ID on Call Waiting device. The Caller
ID on Call Waiting adjunct device has a suggested retail price of $79.99.

Call Manager
------------

The Call Manager is a sophisticated Caller ID device that works with both
single-data and multi-data message services. The Call Manager stores up to 75
of the most recent names and numbers called. The product incorporates a wide
variety of telco provided network services, including Caller ID on Call Waiting
with Disposition, into a compact adjunct. The Call Manager has a suggested
retail price of $99.99.

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Integrated Telephones
---------------------

The Company offers a line of corded and cordless telephones with integrated
Caller ID functionality which have suggested retail prices of $59.99 to $199.99.

ADSI-Compatible Smart Telephones
--------------------------------

The Telesmart 4000/Intelifone/TM/ smart telephone was designed and developed
by the Company and is being marketed under the Telesmart brand name in the telco
channel and under the Intelifone/TM/ brand name in the retail channel. Its
design is based on a Digital Signal Processing ("DSP") architecture. The smart
telephone is an ADSI telephone device that incorporates a graphics display
screen, magnetic card reader, alpha-numeric keypad, V.22 modem and a processor.
The smart telephone supports Caller ID with Disposition, the integration of
Caller ID on Call Waiting and a visual message waiting indicator. The Telesmart
4000/Intelifone/TM/ smart telephone will also support the Company's protocol for
information, transaction and communication services. The Company began shipping
units in late 1996.

Small Business Telecommunications Systems
-----------------------------------------

The Company, through one of its subsidiaries, distributes small business
telecommunications systems. These systems include analog and digital key
systems that allow up to 24 individual telephone lines to be serviced from the
same operating system. These small business systems are sold through
independent dealers that install and service the product, and in some instances
through retail stores. The Company markets its small business
telecommunications systems to small business/home office consumers who are
looking for an easy-to-install communications system at a reasonable price.

Repair and Refurbishment
------------------------

The Company has provided telephone repair and refurbishment services to RBOCs,
other telcos and certain telephone equipment manufacturers for a wide variety of
telecommunications products, including corded and cordless telephones, key
telephone business systems, cellular telephones and leased telephone products.
The Company believes that its capabilities in this area have strengthened its
relationship with the RBOCs and other telcos. During the year ended December 31,
1996, the Company's service customer base included Nitsuko America Corp.,
TIE/communications, Inc. ("TIE"), Conair Corp., Southern New England Telephone
Company ("SNET") and Motorola, Inc.

Electronic Commerce

The Company'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, the Company supports Visa
InterActive with products and services which facilitate bill payment and bill
presentment. The Company's products and services are designed to provide
consumers the ability to access and utilize their bank account information.
They are

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also designed to provide financial institutions with connectivity to the Visa
InterActive host computer system as well as to other third party payment
processors. The following represent the Company's electronic commerce products
and services:

Consumer Access Products
------------------------

Remote Banking Systems. The remote banking system product line, which runs on
an InterVoice platform, was developed by the Company for sale to Visa
InterActive financial institutions. The Company is an authorized value-added
reseller of InterVoice's hardware products. The remote banking system product
line is an advanced touch-tone telephone-based bill payment system with built-in
connectivity to the Visa Bill-Pay System. The products are custom-branded for
each individual bank or credit union customer. The products offer three levels
of touch-tone interaction. The first application allows a customer to establish
a list of payees identified by numerical codes. The customer then uses the
remote banking system to pay bills using the telephone by pressing the
appropriate payee code and desired payment amount. The second application allows
a customer to establish a list of payees identified by numerical codes and
record the customer's own voice identifying the payee by name. The customer then
uses the remote banking system to pay bills using the telephone by pressing the
appropriate payee code. After the customer's voice recording confirms that the
proper payee has been selected, the customer keys in the desired amount of
payment. The third application allows a customer, after establishing a list of
payees identified by numerical codes and recording the customer's own voice
identifying the payee by name, to pay bills by telephone by speaking the name of
the payee and then touching in the desired amount of the payment.

Financial Power Tools 2000. The Financial Power Tools 2000 ("FPT 2000") is a
front end internet interface that offers full-service banking and bill payment
and gives a financial institution the flexibility to add services such as
electronic bill presentment, brokerage, insurance, loan applications and service
requests. Customers access their accounts in real-time, getting accurate and
timely information on account balances and pending transactions. FPT 2000's
secure, real-time connection to the host protects the bank and its customers by
utilizing the latest browser-level security systems on the internet and accesses
control at the host.

Mainframe Connectivity Products
-------------------------------

Unigate/(TM)/ ADMS Gateway Server. One of a family of server products
connecting access devices to the banks, the Company's gateway connectivity
product supports the Visa Bill-Pay System and provides a real time connection
between banks and their customers. It is a data translator which enables a real
time connection between a customer's access device and a bank's host data
processor, allowing the customer to access all of his or her account activity
from the bank's mainframe CICS or IMS system. The product runs on a Sun SPARC 5
platform (or larger) and can communicate with almost any mainframe host.

Unipay/(TM)/ Automated Billing Systems. The Company is developing automated
payment systems, including a biller workstation. The biller workstation will
allow merchants to design bill

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templates, transmit customized marketing information, and give customers direct
access to statement information in partnership with their financial
institutions. The product family incorporates the Visa InterActive and ePay
standards for electronic exchange of bill payment information with Visa banks
and supports formatting and delivery of bill information to consumers. Billers
will also be able to send and receive payment and invoice information
electronically to and from their commercial banks through the Visa Bill-Pay
System. The Company expects to introduce this product line in the second half of
1997.

Services
--------

Customer Support Services. The Company offers bank-branded, turnkey customer
service to financial institutions in support of its consumer access products.
The Company's customer service operation is open seven days a week, 18 hours a
day. If a bank chooses the Company to provide customer service, the Company
typically receives a start-up fee from that bank and a per minute fee per
customer.

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

Interactive Services

The Company'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. The Company
intends to sell interactive service applications to RBOCs, telcos and end users
through retail markets and direct sales programs. The Company'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. Alpha-numeric paging and
internet e-mail allow the users to send notes and messages to individuals
carrying a paging device and to individuals with an internet e-mail address,
respectively. The data save and restore service is an application that provides
remote backup capability and data retrieval for information that is stored in
the smart telephone memory. Additionally, the Company offers services providing
news, weather, stock quotes, sports 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,
the Company 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, the Company has not generated revenues from
its interactive services division.

MARKETING AND DISTRIBUTION

The Company sells its products and services to telephone operating companies,
retailers and

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financial institutions in the United States. Revenues from the Company'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

The Company markets its consumer telecommunications products and services
through 20 employees in its direct sales force and marketing department, and
currently uses 28 independent sales representative firms. The Company'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 as described
below.

Direct Fulfillment Arrangements
-------------------------------

The Company sells consumer telecommunications products to RBOC subscribers and
other telco subscribers through direct fulfillment arrangements with Ameritech
Corporation ("Ameritech"), Bell Atlantic Corporation ("Bell Atlantic"),
BellSouth Corporation ("BellSouth"), NYNEX Corporation ("NYNEX") and Pacific
Bell ("PacBell"). In most instances, the telco representatives market both
Caller ID service and the Company's equipment to subscribers and transmit
equipment orders to the Company electronically on a daily basis. The Company
then ships its equipment directly to the subscribers and bills the telco which,
in turn, bills its subscribers directly or through a third party. As part of
promotional campaigns, some RBOCs may elect to purchase Caller ID units from the
Company and distribute them to their subscribers free of charge. The Company
provides an 800 number service and support to help the subscriber understand how
to utilize the Caller ID service and equipment. In addition, during 1996, the
Company entered into a three-year arrangement with PacBell whereby the Company
supplies adjunct Caller ID units and cordless Caller ID telephones to PacBell's
direct fulfillment vendor.

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

Direct Marketing on Behalf of Telcos
------------------------------------

In May 1995, the Company entered into a joint venture agreement with the
direct marketing firm of Blau Marketing Technologies, Inc. The joint venture
operates through a jointly owned corporation, Worldwide Telecom Partners, Inc.
("Worldwide Telecom"), which is 50% owned by each of the joint venturers. The
joint venture agreement is terminable by either party upon

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sufficient advance notice to the other to enable Worldwide Telecom to complete
performance of any outstanding contracts with telcos.

Worldwide Telecom has provided direct marketing services to Ameritech, Bell
Atlantic and NYNEX under several separate programs and has completed numerous
programs for Caller ID, Call Answering and Call Waiting Services. InteliData
supplies Caller ID units and product management services for Worldwide Telecom.

Direct Sales
------------

Through its direct sales force and sales representatives, the Company sells
Caller ID units in quantity to a number of telcos, including Ameritech, Bell
Atlantic, BellSouth, NYNEX, and others, which units may be redistributed either
under the Company's trade name or the respective telco's trade name.

Retail and Other Customer Sales
-------------------------------

The Company sells Caller ID units and smart telephones to national, regional
and local retailers and private label customers. A substantial portion of the
Company's retail sales are made through manufacturers' representatives or
distributors with the support of the Company's sales personnel. The Company's
retail customers include Sears, Roebuck & Co., CompUSA, Inc. and Staples, Inc.
The Company has identified the wireless communications or paging companies as
additional distribution channels that it will begin to develop during 1997.

Electronic Commerce

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

Bill Payment Channel
--------------------

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 (the "Commitment Date"), an
extended roll-out period of the bank's electronic commerce services begins.

During the first ninety days following the Commitment Date, Visa InterActive
begins technical and operational implementation of the electronic commerce
service for the Visa member bank and the member bank determines which consumer
access devices it will offer to its

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customers and how it will provide customer support services. During this period,
the Company has opportunities to market its products and services directly to
the member bank. The bank may choose the Company to provide its Unigate/TM/ or
other products, customer support services or the bank may choose any number of
other suppliers. Typically, during the second ninety days following the
Commitment Date, the Visa member bank completes the technical trial phase and
begins a market trial of its electronic commerce system, including any selected
InteliData-provided products and services. Approximately six to twelve months
following the Commitment Date, the member bank completes its market trial and
can begin a market roll-out of its electronic commerce services.

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. Previously, banks working with the Money software were only able to
process bill payments through CheckFree Corporation. With the signing of this
agreement and the release of the most recent Money software upgrade, banks
working with the Money software are able to choose between Visa InterActive and
CheckFree as their electronic bill pay processor. Royalties due the Company
from Visa will be equal to $.666 per month per bill pay customer whose
transactions are processed by Visa InterActive's bill pay system. The Company'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. The Company believes
its relationship with Visa InterActive keeps the Company in close contact with
Visa, its banks and the end users of electronic commerce services. The Company
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 the Company to have access to Visa's
worldwide member banks. There can be no assurance, however, that the Company's
marketing efforts will be successful or that Visa will not reassess its
commitment to the Company at any time in the future.

Bill Presentment Channel
------------------------

The Company'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 major U.S. financial
institutions, including Banc One Corp., Barnett Banks, The Chase Manhattan Bank,
Crestar Bank, First Bank System, First Interstate Bank, First Chicago,

13
<PAGE>

First Tennessee Bank, First Union National Bank, Mellon Bank, Norwest Banks,
Star Bank and U.S. Bancorp. 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 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.

Account Access Channel
----------------------

The Company also is developing products and services for financial
institutions who want to provide their customers with 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.

Interactive Services

The Company'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.
The following represent the Company's marketing channels for interactive
services:

Telecommunications Channel
--------------------------

The Company's strategy is to gain access to telco customers through the
Company's existing relationships with the RBOCs and other telcos. The Company
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.

Other Distribution Channels
---------------------------

In 1996 the Company began selling its interactive content through retail
stores and related outlets. The Company 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. The Company 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 the Company's products and services is highly competitive and
subject to increased competition resulting from rapid technological change as
well as increased competition

14
<PAGE>

resulting from changes in the telecommunications regulatory environment,
telecommunications industry consolidation and the emergence of new market
entrants. At present, the Company's principal competitors in the market for
Caller ID products are CIDCO Incorporated ("CIDCO"), Lucent Technologies, Inc.
("Lucent") and Northern Telecom, Ltd. ("Northern Telecom"). The Company's Caller
ID products also compete with Caller ID telephones offered by Panasonic, Sony
Corp. ("Sony"), Thomson Consumer Electronics, Inc. ("Thomson"), US Electronics,
Inc. ("US Electronics") and other companies.

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

The Company's competitors, including Philips and Northern Telecom, have
already introduced smart telephones that include technological features
incorporated in the Company's 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 Philips smart telephone that is processed by Visa
InterActive will potentially generate a royalty payment due to the Company from
Visa.

The Company 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. The Company'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 the Company. Increased competition could
materially and adversely affect the Company's results of operations through,
among other things, price reductions and loss of market share.

The Company's Telesmart 4000/Intelifone/TM/ smart telephone product
incorporates newer DSP technology. Although the Company is currently unaware of
any efforts by its competitors to deploy DSP technology in their smart
telephones, the Company expects that its competitors will attempt to replicate
the Telesmart 4000/Intelifone/TM/ smart telephone DSP design if it is
commercially successful. The Company 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.

The Company 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 the Company's competitors in the market
for such services have substantially greater financial, marketing and
technological resources than the Company. There can be no assurance that the
Company will be able to continue to compete successfully against its existing
competitors or that it will be able to compete successfully against new
competitors.

15
<PAGE>

The Company 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 repair and support services, customer service and
support, and price relative to performance. The Company 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

The Company'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. The
Company'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 the Company'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 the Company'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. The Company 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.

The Company expects that competition in all of these areas will increase in
the near future. The Company 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. The Company 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.

16
<PAGE>

Interactive Services

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

PRODUCT DEVELOPMENT

The Company operates in industries that are rapidly growing and changing. In
efforts to improve the Company's position with respect to its competition, the
Company 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. In 1996, 1995 and 1994, the
Company's research and development expenditures, exclusive of nonrecurring in-
process research and development expenses were $2,649,000, $1,067,000 and
$1,769,000, respectively.

At December 31, 1996, 62 employees were engaged in product development
including 17 in the consumer telecommunications division, 35 in the electronic
commerce division and 10 in the interactive services division.

Consumer Telecommunications

The Company'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 Company's product development group is
experienced in engineering products for high-volume assembly, stressing low-cost
manufacturing design while maintaining quality, consistency and reliability.
The Company's products utilize proprietary electrical, mechanical and software
design.

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

Electronic Commerce

The electronic commerce division's product development efforts are focused on
software and systems for electronic banking. In particular, the Company 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, the Company 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. The
Company's

17
<PAGE>

ability to attract and retain highly skilled research and development personnel
is important to the Company's continued success.

Interactive Services

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

The Company'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, the Company 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 the Company's suppliers are supplemented, in part,
by the Company's own limited manufacturing facilities in Connecticut. The
availability or cost of the Company's products may be affected by political,
economic or labor conditions in the countries where those products are
manufactured, including the 1997 return of Hong Kong to China, by fluctuations
in currency exchange rates and by other factors. In addition, a change in the
tariff structure or other trade policies of the United States could adversely
affect the Company's foreign manufacturing strategies.

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

In the United States, the Company'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 the Company's products.

The key components used in the Company'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 the
Company 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 the Company pending the development of an alternative
source.

18
<PAGE>

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
innovation to telephone customers in the United States. The FCC issued its first
major order under the Telecommunications Act in August 1996 which constitutes
the FCC's initial measures to implement certain sections of the Telcommunicatons
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 Rulemaking which suggests rules concerning the implementation
of the Telecommunications Act provisions relating to RBOC manufacture of
telecommunications and customer premises equipment. Although the FCC has not yet
implemented the regulations relating to those provisions, the proposed
regulations would permit RBOCs to manufacture products that support Caller ID
and other intelligent network services subject to certain conditions. The
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 the Company's business generally .

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

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. The Company 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.

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

Electronic Commerce

The banking market which the Company has targeted for marketing is highly
regulated. The banking industry, although it has recently undergone significant
deregulation, remains quite

19
<PAGE>

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 the Company and its products.

PATENTS, PROPRIETARY RIGHTS AND LICENSES

The Company holds limited patent or registered intellectual property rights
with respect to its products. The Company 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 the Company for its Caller ID on Call Waiting
product or that such patent, if issued, will afford effective protection of the
Company's technology. The Company filed for patents on certain new features
developed by the Company 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.

The Company additionally relies on trade secret laws to establish and maintain
its proprietary rights to its products. Although the Company 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 the Company's proprietary technology or misuse the
technology to which the Company has granted access.

The Company has rights to practice the inventions under certain of Lucent's
Caller ID patents. These patents are also licensed to others, including the
Company's competitors. Lucent receives royalties from sales and leases of the
Company'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 the Company were unable to
negotiate a new patent license agreement with Lucent, the Company 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,
the Company 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.

The Company 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 the Company. There can be no assurance that any such assertion
will not result in costly litigation or require the Company to cease using, or
obtain a license to use, intellectual property rights of such parties.

EMPLOYEES

At December 31, 1996, the Company had approximately 348 employees, of whom 327
were

20
<PAGE>

full-time. The Company has no collective bargaining agreements with its
employees and believes that its relationship with its employees is good.

ITEM 2. PROPERTIES
- -------------------

The Company is headquartered in Herndon, Virginia, where it leases 30,000
square feet of office space from an unaffiliated party. The lease covers a
fifty-three month period from its commencement date of July 1, 1996. The
Company also leases 15,000 square feet of office space in Herndon, Virginia from
unaffiliated parties under two leases expiring in 1999 for its consumer
telecommunications and interactive services divisions and 10,000 square feet of
office space in Herndon, Virginia for its customer service department from an
unaffiliated party. The Company also leases other, less significant sales and
product development facilities.

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

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

ITEM 3. LEGAL PROCEEDINGS
- --------------------------

The Company is not currently a party to any material litigation. From time to
time, the Company is a party to routine litigation incidental to its business.
Management does not believe that the resolution of any or all of such routine
litigation will be likely to have a material adverse effect on the Company's
financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
- --------------------------------------------------------

By a unanimous written consent of stockholders of the Company dated
November 7, 1996, the stockholders of the Company approved the following
actions:

1. The following persons were elected to serve as Directors of the Company
for the following respective terms: (a) CLASS I, term expiring at 1997 Annual
Stockholders Meeting: William F. Gorog, Patrick F. Graham, Constantine S.
Macricostas; (b) CLASS II, term expiring at 1998 Annual Stockholders Meeting: T.
Coleman Andrews, III, Walter M. Fiederowicz, Timothy R. Welles; and (c) CLASS
III, term expiring at 1999 Annual Stockholders Meeting: John C. Backus, Jr.,
Wesley C. Tallman and Robert J. Schock.

2. The Agreement and Plan of Merger, dated as of August 5, 1996, and as
amended by Amendment No. 1, dated as of November 7, 1996, by and among US Order,
Colonial Data and the Company was ratified and approved.

3. The InteliData Non-Employee Directors' Stock Option Plan was approved.

4. The InteliData Incentive Plan was approved.

5. The InteliData Employee Stock Purchase Plan was approved.

6. The assumption by the Company of the obligations of US Order and
Colonial Data in connection with: (i) all outstanding options granted under the
(a) US Order 1991 Stock Option Plan, (b) US Order 1995 Incentive Plan, (c) US
Order Non-Employee Directors Stock Option Plan, (d) US Order 1995 Outside
Directors Plan and (e) USO Employee Stock Purchase Plan; (ii) all other
outstanding options granted by US Order and not yet exercised; (iii) all
outstanding options granted under the (a) Colonial Data 1983 Stock Option Plan
and (b) Colonial Data 1994 Long-Term Incentive Plan and (iv) all outstanding
warrants issued by Colonial Data and not yet exercised.
21
<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
- ---------------------------------------------------------
STOCKHOLDER MATTERS
-------------------

Since November 8, 1996, the Company's common stock has been traded on the
Nasdaq National Market under the symbol INTD. US Order common stock prices were
reported for the period beginning June 2, 1995 through November 7, 1996 and were
traded on the Nasdaq National Market under the symbol USOR. Colonial Data's
common stock prices are reported for the period prior through November 7, 1996.
Subsequent to February 9, 1996, Colonial Data common stock was traded on the
Nasdaq National Market under the symbol CDTX. Prior to February 9, 1996,
Colonial Data common stock was traded on the American Stock Exchange. The table
below sets forth the high and low quarterly sales prices for the common stock of
US Order, Colonial Data and InteliData as reported in published financial
sources for each quarter during the last two years:

Price Range of Common Stock
-------------------------------------------------------
US Order Colonial Data InteliData
-------------------- ------------------ -------------
High Low High Low High Low
-------- ---------- -------- -------- -------- ---
<S> <C> <C> <C> <C> <C> <C>
1996
Fourth Quarter $11 7/8 $ 8 1/4 $11 5/8 $ 8 3/8 $10 7/8 $6
Third Quarter 15 1/4 8 15/16 15 1/4 8 1/2 * *
Second Quarter 22 1/2 13 23 5/8 14 7/8 * *
First Quarter 24 1/4 16 3/4 25 1/4 15 7/8 * *

1995
Fourth Quarter 23 1/4 13 1/4 23 13 1/2 * *
Third Quarter 26 1/2 14 1/4 27 1/4 16 3/4 * *
Second Quarter 17 1/4 14 1/4 22 3/8 14 1/8 * *
First Quarter * * 19 1/8 12 1/4 * *
</TABLE>

* No established public trading market for InteliData common stock existed
prior to November 8, 1996. No established public trading market for US
Order common stock existed prior to the completion of US Order's initial
public offering on June 1, 1995.

The Company has never declared or paid any cash dividends on its common
stock. The Company currently intends to retain its future earnings, if any, to
fund the development and growth of its business and, therefore, does not
anticipate paying any cash dividends in the foreseeable future. Any future
decision concerning the payment of dividends on the Company's common stock will
depend upon the results of operations, financial condition and capital
expenditure plans of the Company, as well as such other factors as the Board of
Directors, in its sole discretion, may consider relevant.

The number of stockholders of record at March 1, 1997 was 498, and does not
include those stockholders who hold shares in street name accounts.

22
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------

INTELIDATA TECHNOLOGIES CORPORATION /(1)/
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>

Year Ended December 31,
-------------------------------------------------------------------
1996 1995 1994 1993 1992
--------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
- ----------------------

Revenues $ 13,899 $ 4,186 $ 1,432 $ 905 $ 63
Cost of revenues 10,448 2,470 1,013 908 126
Operating expenses 99,563 6,877 10,584 /(2)/ 10,540 /(4)/ 6,492/(4)/
-------- ------- -------- -------- --------
Operating loss (96,112) (5,161) (10,165) (10,543) (6,555)

Net income (loss) (95,727) (4,718) 3,713 /(3)/ (11,225) (6,806)
Preferred dividend requirement -- 681 1,895 1,042 392
-------- ------- -------- -------- --------
Net income (loss) available to common
shareholders $(95,727) $(5,399) $ 1,818 $(12,267) $ (7,198)

Net income (loss) per common share $ (5.21) $ (0.50) $ 0.28 $ (2.01) $ (1.18)
Weighted average shares outstanding 18,370 10,772 8,243 6,090 6,090

FINANCIAL POSITION (AS OF DECEMBER 31):
- ---------------------------------------

Cash, cash equivalents and
short-term investments $ 39,062 $25,120 $ 2,568 $ 3,444 $ 66
Total assets 143,746 40,252 4,637 7,694 4,681
Long-term obligations -- -- 4,833 4,231 1,033
Stockholders' equity (deficit) 124,289 37,733 (6,466) (5,849) (3,613)

</TABLE>
(1) Results reflect the operations of US Order for the periods presented and
operations of Braun Simmons since September 30, 1996 and Colonial Data since
November 7, 1996. Operating expenses for 1996 include $77,214,000 of
nonrecurring in-process research and development expenses related to the
Mergers and Braun Simmons Acquisition.

(2) Operating expenses in 1994 include a $3.25 million payment to certain
employees to cancel certain outstanding vested options in connection with
the sale of the Company's bill pay operations to Visa. Visa required that
all employees of the Company who became employees of Visa InterActive cancel
their outstanding vested options to eliminate any potential conflicts of
interest. As a result, the Company's shareholders and Board of Directors
agreed to pay all active and full-time employees of the Company (excluding
William F. Gorog, Chief Executive Officer and Chairman of the Board) an
aggregate of $3.25 million for the cancellation of 675,334 of their
outstanding and vested options with exercise prices ranging between $0.98
and $4.00 per share. Of the $3.25 million, approximately $2.1 million was
paid to employees of the Company who became Visa InterActive employees as of
August 1, 1994.

(3) Includes gain of approximately $14.5 million on the sale of the Company's
electronic banking and bill pay operations to Visa on August 1, 1994.

(4) Operating expenses in 1993 and 1992 include write-downs of terminals and
terminal components of approximately $1.5 million and $430,000,
respectively.

23
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------

OVERVIEW

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

On October 4, 1996, US Order acquired the business of Braun, Simmons & Co., an
Ohio corporation ("Braun Simmons"), for approximately $7 million consisting of
cash and US Order common stock and including US Order transaction costs pursuant
to a merger of Braun Simmons into US Order (the "Braun Simmons Acquisition").
Braun Simmons was an information engineering firm specializing in the
development of home banking and electronic commerce solutions for financial
institutions. The acquisition expands the Company's product line for both large
and small financial institutions.

The excess purchase price over the fair value of net assets acquired resulted
in goodwill of $49,483,000 in connection with the Mergers, and $1,898,000 in
connection with the Braun Simmons Acquisition which is being amortized on a
straight-line basis over fifteen years and seven years, respectively.

In connection with the Mergers and the Braun Simmons Acquisition, the Company
charged, as of the respective dates of such transactions, in-process research
and development expenses of $72,300,000 for the Mergers and $4,914,000 for the
Braun Simmons Acquisition, for purchased in-process technology that had not
reached technological feasibility as of the respective dates of such
transactions and which did not have alternative future uses.

The business of the Company consists of the businesses previously conducted by
US Order, Colonial Data and Colonial Data's subsidiaries. The Company 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.

24
<PAGE>

including a smart telephone, the Telesmart 4000/Intelifone(TM), which provide
consumers call management features and the ability to access numerous network
services and interactive applications via telephone. The Company 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. The Company 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. The Company currently
receives its electronic commerce revenues largely from the sale of products and
services to Visa International Service Association, Inc. ("Visa") member banks.

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"). The Company intends to sell interactive
applications directly to end users and through other companies, including telcos
and wireless communications companies. The Company'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.

RESULTS OF OPERATIONS - 1996 COMPARED WITH 1995

The consummation of the Mergers on November 7, 1996 and the required
accounting presentation of the historical financial statements had a significant
impact on the results of operations for 1996 compared to 1995. Consolidated
total revenues and all categories of expenses are significantly greater in 1996
than 1995 because 1996 results include approximately two months of Colonial
Data's operations and 1995 results do not include any of Colonial Data's
operations.

Revenues

The Company's revenues were $13,899,000 in 1996 compared to $4,186,000 in
1995. Product revenues increased $6,772,000 to $8,589,000 in 1996 from
$1,817,000 in 1995. Product revenues in 1996 consisted of $5,955,000 from
Caller ID products and $2,634,000 from small business and smart telephone
equipment. Contributing to the product revenues in 1996 were

25
<PAGE>

sales of $2,845,000 to the Company's direct marketing joint venture, Worldwide
Telecom Partners, Inc. The Company's lease revenues of $1,838,000 in 1996 are
primarily related to revenues from the Company's leasing program in the US West
Communications region. Service fees in 1996 and 1995 were generated primarily
from three sources: (1) customer support services, (2) monthly service fees and
(3) nonrecurring development fees for smart telephone applications. The
Company's customer support services were remarketed by Visa InterActive, Inc.
("Visa Interactive") to Visa member banks under the Company's reseller agreement
with Visa InterActive. Repair and refurbishment services provided by the
consumer telecommunications division contributed 19% of the total 1996 service
revenues.

Cost of Revenues

The Company's cost of revenues increased by $7,978,000 to $10,448,000 for 1996
compared to $2,470,000 in 1995. Product cost of revenues contributed 62% to the
total cost of revenues for 1996. Product cost of revenues consisted of
$4,173,000 from Caller ID products and $2,284,000 from small business and smart
telephone equipment. As a result of the Mergers, the Braun Simmons Acquisition
and change in product mix in 1996, gross margins related to product revenues
were 25% in 1996 compared to 4% in 1995, while gross margins related to services
revenues decreased to 17% from 69%, resulting in a decrease in the Company's
overall gross margin to 25% in 1996 from 41% in 1995. Gross margins from the
Company's leasing activities were approximately 40% for 1996. The Company
expects its gross margin percentages to vary in future periods based upon the
revenue mix between product sales and services revenues and based upon the
composition of services revenues earned during the period.

General and Administrative

General and administrative expenses increased $10,338,000 to $16,121,000 in
1996 from $5,783,000 during the comparable period in 1995. The increase was
primarily attributable to expenses related to the write-off in the fourth
quarter of $2,801,000 related to the Company's investment in Home Financial
Network, Inc. ("HFN"), a development stage personal computer software company,
and the associated goodwill. The Company believes its investment in HFN was
impaired based on its history of losses. Also contributing to the increase was
rent expense of $907,000, employee related expenses for the increase of
personnel, amortization of intangible assets and nonrecurring charges for
certain customer service operations.

In the future, the Company 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 the Company and its
alliances with strategic partners. During 1997, the Company expects that
general and administrative expenses will increase as the Company upgrades its
systems and operations in anticipation of the potential for increased business
in 1997.

Research and Development

Research and development costs were $2,649,000 in 1996 compared to $1,067,000
in 1995.

26
<PAGE>

The Company has been actively engaged in research and development since its
inception and expects that these activities will be essential to the operations
of the Company in the future. Research and development related expenses for 1996
were largely attributable to developing, designing and testing the Company's
next generation smart telephone, the Telesmart 4000/Intelifone/TM/ smart
telephone, and electronic bill payment software for the electronic commerce
division.

Selling and Marketing

Selling and marketing expenses increased $1,984,000 to $2,011,000 in 1996 from
$27,000 in 1995. The increase is attributed primarily to selling expenses of
$914,000 for the consumer telecommunications division and selling expenses of
$714,000 for the interactive services division relating to an increase in sales
personnel and a substantial increase in advertising and marketing for smart
telephones which were introduced in retail stores and outlets in the fourth
quarter of 1996. The Company expects its advertising and promotion expenses will
increase substantially in 1997 due to the further marketing efforts within the
consumer telecommunications and interactive services divisions.

Provision for Corporate Restructuring

The Company recorded a provision for corporate restructuring during the fourth
quarter of 1996 of $1,568,000. This amount consists of $1,323,000 in facilities
consolidations, $175,000 in relocation expenses for certain employees and
$70,000 for the write-down of processing equipment.

In-Process Research and Development

In connection with the Braun Simmons Acquisition and the Mergers in
September and November 1996, respectively, the Company charged in-process
research and development expenses for purchased in-process technology that had
not reached technological feasibility as of the date of the Mergers and the
Braun Simmons Acquisition and did not have alternative future uses. Amounts
charged to in-process research and development were based on independent
appraisals and totaled $4,914,000 and $72,300,000 for the Braun Simmons
Acquisition and the Mergers respectively.

Other Income, Net

Other income decreased $33,000 or 7% to $410,000 in 1996 from $443,000 in
1995. The decrease is largely associated with recognizing the Company's
proportionate share of losses of HFN and the amortization of the excess of the
purchase price over the Company's share of the equity in net assets of HFN.
This decrease was offset in part by an increase in interest income attributed to
the Company investing funds raised in its June 1995 initial public offering.

27
<PAGE>
Income Taxes

Income taxes increased to $25,000 in 1996 from $0 in 1995 based primarily on
state income taxes incurred in connection with the Company's operations. At
December 31, 1996, the Company had net operating loss carryforwards for federal
income tax purposes of approximately $38,415,000 which expire by 2010. However,
use of these net operating losses in future years may be limited under
applicable tax laws and regulations as a result of the Mergers and the Braun
Simmons Acquisition.

Net Loss and Weighted Average Shares

As a result of the foregoing factors, net loss applicable to common
shareholders increased to $(95,727,000) in 1996 from $(4,718,000) in 1995. The
weighted average shares increased to 18,370,000 in 1996 from 10,772,000 in 1995.
The increase resulted primarily from the shares issued in connection with the
Mergers.

FOURTH QUARTER 1996 COMPARED WITH FOURTH QUARTER 1995 (UNAUDITED)

The following table sets forth selected consolidated statement of operations
data for the three months ended December 31, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
1996 1995
--------- --------
<S> <C> <C>

Revenues $ 10,962 $ 1,286
Cost of revenues 8,474 229
-------- -------
Gross profit 2,488 1,057
Operating expenses 85,022 2,492
Other income 525 164
-------- -------
Net loss $(82,009) $(1,271)
======== =======
</TABLE>

The Company's revenues increased 752% to $10,962,000 for the quarter ended
December 31, 1996 from $1,286,000 for the same period last year. The increase
is attributed to the operations of the consumer telecommunications division
subsequent to the Mergers. Revenues from the sale or lease of Caller ID
products represented $7,793,000 or 71% of the total revenues for the fourth
quarter of 1996.

The cost of revenues represented 77% of total revenues, yielding a gross
margin of 23% for the fourth quarter of 1996. The decrease in margins is
attributed to the product mix. In 1995, the Company earned most of its revenues
from services and software programs with low direct costs of revenues. Most
product sales in 1996 were for lower-end model Caller ID adjuncts which yield a
lower margin.

The increase in operating expenses is largely attributed to the in-process
research and development costs, aggregating $77,214,000 that were expensed in
connection with the Mergers and the Braun Simmons Acquisition. Other operating
expenses include

28
<PAGE>

nonrecurring charges for $4,369,000 for restructuring costs and revaluation of a
long-term investment in HFN. The remaining increase is attributable to
operational costs associated with additional personnel and operating facilities
in Connecticut, Ohio and Virginia as a result of the Company's growth and the
Mergers and the Braun Simmons Acquisition.

1995 COMPARED WITH 1994

Revenues

The Company's revenues increased by $2,754,000 from $1,432,000 in 1994 to
$4,186,000 in 1995. This increase was primarily related to the sale of the
Company's products, such as its smart telephones, which the Company began
selling through its "preferred provider" relationship with Visa in 1995. All of
the Company's product sales for 1995 were generated from the sale of its smart
telephones and electronic commerce products. Service fees for 1995 were
generated primarily from three sources: (1) customer support services, (2)
monthly service fees and (3) non-recurring development fees for smart telephone
applications. The Company's customer support services, amounting to $505,000 for
1995, were remarketed by Visa InterActive to Visa member banks under the
Company's reseller agreement with Visa InterActive. The monthly service fees,
which accounted for $911,000 of the Company's service revenues, were from its
customers who used its smart telephones and interactive applications during the
year, compared to $1,235,000 during the same period in 1994. The decrease of
$325,000 was primarily due to the fact that the Company was in the process of
converting these customers to Visa member banks and over time expects to be
offering these services strictly on a wholesale basis. In addition, in 1995,
the Company earned approximately $575,000 in fees for development of smart
telephone applications.

Cost of Revenues

The Company's cost of revenue increased by $1,457,000 for 1995 compared to
1994, due to the sale of its products such as its voice response systems and
smart telephones. The Company's cost of revenue prior to 1995 had consisted of
bill pay processing costs and depreciation of the Company's smart telephones
being utilized by customers for a monthly fee. Beginning in 1995, the Company
began selling its smart telephones and voice response systems pursuant to a
market penetration strategy designed to build an installed base of subscribers
who are potential sources of revenue from monthly fees. Accordingly, in 1995
gross margins related to product sales were 4%, while gross margins related to
service fees increased from 27% to 69%, resulting in an increase in the
Company's overall gross margin from 29% in 1994 to 41% in 1995.

General and Administrative

General and administrative expenses were $5,783,000 in 1995 versus $7,968,000
during the comparable period in 1994. The decrease of $2,185,000 was primarily
due to a one time payment to certain administrative employees in conjunction
with a $3.25 million payment for the August 1, 1994 sale of the Company's bill
pay operations whereby Visa required that all

29
<PAGE>

Company employees who became employees of Visa InterActive cancel their vested
options to eliminate any potential conflict of interest. Of the $3.25 million,
approximately $2.1 million was paid to the Company employees who became Visa
InterActive employees as of August 1, 1994 and $1.1 million was paid to
employees who remained with the Company. This decrease was partially offset by
reduced costs in 1994 associated with certain of the Company's personnel
becoming Visa InterActive employees.

Research and Development

Research and development costs were $1,067,000 in 1995 compared to $1,769,000
in 1994. Research and development related expenses for 1995 were largely
attributable to developing, designing and testing the Company's next generation
smart telephone, the Telesmart 4000/Intelifone/TM/ smart telephone.

The decrease of $702,000 from 1994 was partially due to a one time payment to
product development employees in August 1994 in conjunction with $3.25 million
payment for the cancellation of their vested options (see "general and
administrative" above) of which approximately $350,000 was attributed to
research and development employees. In addition, the decrease was due to
reduced costs associated with approximately 60% of the Company's personnel
becoming Visa Interactive employees effective August 1, 1994.

Selling and Marketing

Selling and marketing expenses decreased by $820,000 from $847,000 in 1994 to
$27,000 in 1995. Advertising expenses were significant prior to 1995. The
Company curtailed advertising after the sale of the Company's electronic bill
pay system to Visa in August 1994.

Other Income, Net

In August 1994, the Company sold its electronic banking and bill pay
operations to Visa and recognized a one-time non-operating gain of $14,523,000
from the sale. The transaction was structured as an asset sale with the Company
retaining ownership of certain specific assets that were not related to
electronic commerce. Visa granted the Company a perpetual, royalty-free,
worldwide license to use intellectual property, which it purchased with the
provision that the Company not compete with Visa through 2000. Similarly, the
Company granted to Visa a perpetual, royalty-free, worldwide license to use
intellectual property retained by the Company necessary for the operation of the
Visa Bill-Pay System.

Interest income was $970,000 for 1995 compared to $72,000 in 1994. The
increase of $898,000 was due to the significant increase in the Company's cash
balances and short-term investments resulting from its June 1995 initial public
offering.

The Company's interest expense consists of interest incurred in connection
with capital leases for computer equipment and outstanding borrowings with
WorldCorp, Inc. ("WorldCorp") and VeriFone, Inc. ("VeriFone"). Interest expense
was $286,000 in 1995 compared to $650,000 in 1994. The

30
<PAGE>
decrease of $364,000 was primarily due to two factors: (i) in June 1995, the
Company retired substantially all long-term debt as it related to its capital
leases and outstanding borrowings with WorldCorp and VeriFone with proceeds
derived from its initial public offering and (ii) in August 1994, in addition to
purchasing the Company's electronic banking and bill pay operations, Visa
assumed $853,000 of the Company's capital lease obligations and miscellaneous
liabilities.

Equity in loss of affiliate was $316,000 in 1995 compared to $0 in 1994. The
increase was due to the Company recording its proportionate share of losses of
HFN and the amortization of the excess of the purchase price over the Company's
share of the equity in net assets of HFN, following the Company's 40% investment
in HFN in October 1995.

Income Taxes

Income taxes decreased from $70,000 in 1994 to $0 in 1995 based primarily on
state income taxes incurred on the Company's 1994 income before income taxes of
$3,783,000.

Net Income (Loss) and Weighted Average Shares

As a result of the foregoing factors, net income (loss) applicable to common
shareholders decreased to a net loss of $(5,399,000) in 1995 from a net income
of $1,818,000 in 1994. The weighted average shares increased to 10,772,000 in
1995 from 8,243,000 in 1994. The increase resulted primarily from the issuance
of 3,062,500 shares offered by the Company in an initial public offering on June
2, 1995.

LIQUIDITY AND CAPITAL RESOURCES

During 1996, the Company's cash, equivalents and short-term investments
increased by $13,942,000 resulting from the Mergers in November 1996, offset in
part by cash used in operations and the funding of certain equipment purchases.
At December 31, 1996, the Company had $39,062,000 in cash, cash equivalents and
short-term investments. To improve the yield on its cash and equivalent
holdings, in 1996, the Company invested in financial instruments that are
diversified among high credit quality securities. The investments are reported
at cost, which approximates market value, and are classified as short-term
investments and cash equivalents. Additionally, at December 31, 1996, the
Company had working capital of $63,532,000 with no long-term debt. The Company's
total assets exceeded total liabilities by $124,289,000.

The Company's cash requirements for operating and investing activities in
1996 were financed primarily by the net proceeds from an initial public offering
in June 1995 aggregating approximately $41.6 million. In connection with the
offering, the Company issued and sold 3,062,500 shares at $14.75 per share.

The Company'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.

31
<PAGE>

Capital expenditures for the year ended December 31, 1996 aggregated $2,304,000.
The Company funded an increase in accounts receivable, prepaid expenses and
inventories of $2,318,000, $1,404,000, and $1,020,000, respectively for the year
ended December 31, 1996. The increase in accounts receivable is attributed to
the timing of receipts for products shipped relating to the consumer
telecommunications division. The increase in prepaid expenses is related to
deposits paid, prepaid insurance and prepaid advertising and other charges. The
increase in inventories was made to ensure that units were available for the
timely fulfillment of sales orders. During 1996, the Company increased its
accounts payable, accrued expenses and other liabilities by $5,123,000 from
1995.

On July 1, 1996, the Company began leasing a facility under an operating
lease for 30,000 additional square feet of office space. The lease covers a
fifty-three month period from July 1, 1996 with aggregate minimum lease payments
equal to approximately $2,700,000.

The Company maintains three credit agreements aggregating $20,000,000. The
first credit agreement covers the period through May 1997 and is a revolving
line of credit of $1,000,000. The second credit agreement is a $4,000,000 line
of credit utilized for the purpose of issuing letters of credit. The third
credit agreement is a credit facility totaling $15,000,000 for cash advances and
letters of credit. As of December 31, 1996, the Company had outstanding
$2,000,000 under a line of credit and had available $13,500,000 to fund draw
downs and letters of credit.

The Company'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 the
Company's systems and operations. In order to meet the Company's needs for cash
over the next twelve months, the Company will utilize proceeds from its 1995
initial public offering and cash received in the Mergers. Additionally, the
Company may utilize funds it expects to generate from operations in the second
half of 1997.

INFLATION

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

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

The Company desires to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995. The Company wishes to caution
readers that the following important factors, among others, in some cases have
affected the Company's actual results, and 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.

32
<PAGE>

Uncertainty as to Future Financial Results

The Company believes that the Mergers 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 the Company's management due to the increased time and
resources required in the management effort. While the management and the Board
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
Mergers.

Following the Mergers, 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 Mergers 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 the Company'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. The Company'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 the Company's products and services will be commercially
successful or benefit from such growth.

Much of the Company's success in the smart telephone market depends on the
Company'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. The Company faces competition in these markets
from other emerging interactive applications delivered through personal
computers, cable television and Integrated Service Digital Network ("ISDN").

33
<PAGE>

Fluctuations in Operating Results

Historically, US Order and Colonial Data have experienced fluctuations in
quarterly operating results, and accordingly, the Company may experience
fluctuations in quarterly operating results due to a variety of factors, some of
which are beyond the Company's control. These include the size and timing of
customer orders or the royalty payments from Visa InterActive, if any, changes
in the Company'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 the Company 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 the Company and its competitors, the timing of programs
offering Caller ID or other intelligent network services by a telco, disruptions
in sources of supply, the effects of regulation on Caller ID and other
intelligent network services, the timing and extent of promotional activities by
a telco, changes in service charges by a telco, other changes in operating
expenses, personnel changes and general economic conditions. Additionally,
certain RBOCs have entered into merger agreements. The Company is unable to
assess the 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 the Company'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 the Company's business, operating results and
financial condition.

Concentration of Distribution of Products and Services

The Company 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, the
Company 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 the
Company views the telcos with which it maintains direct fulfillment
relationships as its customers, it considers its customer base to be highly
concentrated. The Company's current telco fulfillment arrangements are not
exclusive and may

34
<PAGE>

be terminated by either party. The loss of any one or more of the Company'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 the Company'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.

InteliData Common Stock Owned by WorldCorp

As of December 31, 1996, WorldCorp beneficially owned approximately 29% of the
outstanding common stock of the Company. WorldCorp is highly leveraged, and
therefore requires substantial funds to meet debt service requirements each
year. As a result of the Company's cash requirements, it may be required to sell
shares of the Company's common stock from time to time and such sales, or the
threat of such sales, could have a material adverse effect on the market price
for the Company's common stock. In addition, the Company's Board of Directors
has nine members, four of whom also serve on the Board of Directors of
WorldCorp. As a result of membership on the Company's Board and stock ownership,
WorldCorp may have a significant influence on the decisions made by the Company.

Technological Considerations

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

Dependence on Foreign Production

The Company's Caller ID units and certain other products, including the smart
telephone, the Telesmart 4000/Intelifone/TM, 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

35
<PAGE>

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 the Company's bill payment operations
and technology (the "Visa Bill-Pay System"), the Company 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 the Company's reliance upon Visa. The Company's dependence on Visa, and
the terms of the agreement between the parties, may have a material adverse
effect on the Company.

Importance of Strategic Alliances

One of the Company'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 the Company's
products and services. There can be no assurance that any alliance partners will
view their alliance with the Company as significant for their own businesses or
that they will not reassess their commitment to the Company at any time in the
future.

Competition

Consumer Telecommunications
---------------------------

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

Marketing of the Company'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. The Company 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. The Company'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 the
Company. Competition could materially and adversely affect the Company's results
of operations through price reductions and loss of market share.

The Company competes with a large number of competitors for its repair
services and other services supporting the development and implementation of
intelligent network services. Several

36
<PAGE>

of the Company's competitors in the market for such services have substantially
greater financial, marketing and technological resources than the Company. There
can be no assurance that the Company 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. The Company'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
the Company's various banking products including other manufacturers of touch-
tone response systems, other financial software companies and financial services
software and service companies. The Company 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. The Company expects that competition in all of these
areas will increase in the near future.

Relationship with Visa

The Company sold the Visa Bill-Pay System to Visa on August 1, 1994, for
approximately $15 million in cash, the assumption of certain liabilities and
rights to a 72-month royalty period commencing January 1, 1995 and ending
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 the Company are calculated and paid by Visa InterActive quarterly
during the Royalty Period. Because the amount of the royalties to the Company is
dependent upon the number of customers that use the Visa Bill-Pay System on a
monthly basis during the Royalty Period, the Company cannot provide any
assurances of the amount of royalties, if any, that will be payable by Visa
InterActive to the Company. 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 the Company, 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

37
<PAGE>

is $880,000. The Company 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 the Company 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 the
Company's technology, this could have a material adverse effect on the amount of
royalties payable by Visa InterActive to the Company. As a condition of Visa's
acquisition of the Visa Bill-Pay System, the Company 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 the Company's reliance upon Visa.

Dependence on Key Employees

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

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 the Company is unable to predict what effect, if any,
the Telecommunications Act of 1996 or other regulatory developments may have
upon the telecommunications industry or the Company's business, any such effects
could have a material adverse impact on the future operations of the Company.

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.

38
<PAGE>

Volatility of Stock Price

The market price of the Company's stock has experienced significant
volatility. The stock market has experienced volatility that has particularly
affected the market prices of equity securities of many high technology and
developmental stage companies and that has often been unrelated to the operating
performance of such companies. Factors such as announcements of the
introduction of new products or services by the Company 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 the Company or its competitors may have a significant impact on the market
price of the Company's stock.

Limited Proprietary Protection

The Company possesses limited patent or registered intellectual property
rights with respect to its technology. The Company 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. The Company also
relies on a combination of contractual rights and trade secret laws to protect
its proprietary technology. There can be no assurance, however, that the Company
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 the Company's proprietary technology, that third parties
will not misuse the technology to which the Company has granted access, or that
the Company's contractual or legal remedies will be sufficient to protect the
Company's interests in its proprietary technology.

Certain of Lucent's Caller ID patents are licensed by Lucent to the Company
and others, including the Company's competitors. If the Lucent license were
terminated and the Company were unable to negotiate a new patent license
agreement with Lucent, the Company 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 the Company's business would be materially and adversely affected.

Limited Sources of Supply

The key components used in the Company'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 the
Company 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 the Company pending the development of an alternative
source.

39
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1996 and 1995................... 41

Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994............................................. 42

Consolidated Statements of Stockholders' Equity (Deficit) for the Years Ended
December 31, 1996, 1995 and 1994............................................. 43

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994............................................. 44

Independent Auditors' Reports ...................................................... 64

</TABLE>

40
<PAGE>

INTELIDATA TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(in thousands, except share data)
<TABLE>
<CAPTION>

1996 1995
--------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 26,644 $ 25,120
Short-term investments 12,418 --
Accounts receivable, net of reserves of $1,788
in 1996 and $63 in 1995 (Note 16) 12,925 841
Inventories (Note 5) 28,420 801
Prepaid expenses and other current assets 2,582 306
--------- --------
Total current assets 82,989 27,068
--------- --------
NONCURRENT ASSETS
Costs in excess of net assets acquired (Note 3) 50,061 --
Property, plant and equipment, net (Note 6) 9,143 1,448
Long-term investments (Note 10) -- 8,228
Restricted cash -- 3,309
Other assets 1,553 199
--------- --------
TOTAL ASSETS $143,746 $ 40,252
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,684 $ 1,651
Accrued expenses and other liabilities (Note 7) 12,773 868
Short-term borrowings (Note 8) 2,000 --
--------- --------
TOTAL LIABILITIES 19,457 2,519
--------- --------
COMMITMENTS AND CONTINGENCIES (Note 17)

STOCKHOLDERS' EQUITY (Note 11)
Preferred stock, $0.001 par value; authorized 5,000,000 shares in 1996 and
1995; no shares issued and outstanding -- --
Common stock, $0.001 par value; authorized 60,000,000 shares in 1996
and 30,000,000 shares in 1995; issued and outstanding 31,816,693 shares
in 1996 and 15,529,818 shares in 1995 32 16
Additional paid-in capital 243,757 61,650
Receivable from sale of stock (2,456) (2,488)
Deferred compensation (133) (261)
Accumulated deficit (116,911) (21,184)
--------- --------
TOTAL STOCKHOLDERS' EQUITY 124,289 37,733
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $143,746 $ 40,252
========= ========
</TABLE>
See accompanying notes to consolidated financial statements.

41
<PAGE>

INTELIDATA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(in thousands, except per share data)
<TABLE>
<CAPTION>

1996 1995 1994
-------- ------- --------
<S> <C> <C> <C>
REVENUES
Product $ 8,589 $ 1,817 $ --
Leasing 1,838 -- --
Services 3,472 2,369 1,432
-------- ------- --------
Total revenues 13,899 4,186 1,432
-------- ------- --------
COST OF REVENUES
Product 6,457 1,747 1,013
Leasing 1,105 -- --
Services 2,886 723 --
-------- ------- --------
Total cost of revenues 10,448 2,470 1,013
-------- ------- --------
Gross profit 3,451 1,716 419

OPERATING EXPENSES (Notes 3, 9, and 10)
General and administrative 16,121 5,783 7,968
Research and development 2,649 1,067 1,769
Selling and marketing 2,011 27 847
Provision for corporate restructuring (Note 12) 1,568 -- --
In-process research and development 77,214 -- --
-------- ------- --------
Total operating expenses 99,563 6,877 10,584
-------- ------- --------
Operating loss (96,112) (5,161) (10,165)
-------- ------- --------
OTHER INCOME (EXPENSE)
Gain on sale of bill pay operations (Note 13) -- -- 14,523
Interest, net 1,445 684 (578)
Other, net (Note 10) (1,035) (241) 3
-------- ------- --------
Total other income, net 410 443 13,948
-------- ------- --------
Income (loss) before income taxes (95,702) (4,718) 3,783
Income taxes (Note 15) 25 -- 70
-------- ------- --------
Net income (loss) (95,727) (4,718) 3,713
Preferred dividend requirement (Note 13) -- (681) (1,895)
-------- ------- --------
Net income (loss) applicable to common shareholders $(95,727) $(5,399) $ 1,818
======== ======= ========
Net income (loss) per common share $ (5.21) $ (0.50) $ 0.28
======== ======= ========
Weighted average shares 18,370 10,772 8,243
======== ======= ========

</TABLE>

See accompanying notes to consolidated financial statements.

42
<PAGE>

INTELIDATA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(in thousands)
<TABLE>
<CAPTION>

Series A Series C
Convertible Convertible
preferred stock preferred stock Common stock Additional
-------------------- -------------------- ----------------------- paid-in
Shares Amount Shares Amount Shares Amount capital
--------- --------- --------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,1993 5,204 $ 5 1,683 $ 2 5,000 $ 5 $ 16,817
Sale of common stock -- -- -- -- 121 -- 137
Redemption of preferred
stock -- -- (535) (1) -- -- (3,816)
Dividends paid--Series C,
$.64 per share -- -- -- -- -- -- (183)
Series B redeemable
preferred stock accumu-
lated dividends -- -- -- -- -- -- (466)
Net income -- -- -- -- -- -- --
------ ------ ------ ----- ------ ------ --------
Balance at December 31,1994 5,204 5 1,148 1 5,121 5 12,489
Sale of common stock
in public offering, net -- -- -- -- 3,062 3 41,643
Conversion of preferred
stock to common stock (5,204) (5) (1,148) (1) 6,352 6 --
Issuance of common stock
for long-term investment -- -- -- -- 230 -- 3,392
Issuance of common stock
for investment in
affiliate, net -- -- -- -- 297 1 5,046
Issuance of common stock
upon exercise of options
and warrants -- -- -- -- 468 1 1,419
Deferred compensation on
grant of stock options -- -- -- -- -- -- 486
Compensation expense -- -- -- -- -- -- --
Dividends paid - Series A -- -- -- -- -- -- (1,577)
Dividends paid - Series C -- -- -- -- -- -- (1,107)
Dividends accumulated and
paid - Series B -- -- -- -- -- -- (141)
Use of advertising credits -- -- -- -- -- -- --
Net loss -- -- -- -- -- -- --
------ ------ ------ ----- ------- ------ --------
Balance at December 31,1995 -- -- -- -- 15,530 16 61,650
Issuance of common stock
related to the
Braun Simmons Acqusition -- -- -- -- 375 -- 4,170
Issuance of common stock
related to merger with
Colonial Data -- -- -- -- 15,406 15 179,103
Retirement of common
stock for long-term
investment -- -- -- -- (230) -- (3,392)
Issuance of common stock
upon exercise of
options and warrants -- -- -- -- 730 1 2,176
Issuance of common stock
related to employee
stock purchase plan -- -- -- -- 6 -- 50
Use of advertising credits -- -- -- -- -- -- --
Compensation expense -- -- -- -- -- -- --
Net loss -- -- -- -- -- -- --
------ ------ ------ ----- ------- ------ --------
Balance at December 31,1996 -- $ -- -- $ -- 31,817 $ 32 $243,757
====== ====== ====== ===== ======= ====== ========
</TABLE>

Receivable
from sale Deferred Accumulated
of stock compensation deficit Total
--------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Balance at December 31,1993 $ (2,500) $ -- $ (20,179) $ (5,850)
Sale of common stock -- -- -- 137
Redemption of preferred
stock -- -- -- (3,817)
Dividends paid--Series C,
$.64 per share -- -- -- (183)
Series B redeemable
preferred stock accumu-
lated dividends -- -- -- (466)
Net income -- -- 3,713 3,713
--------- ------------ ----------- ------------
Balance at December 31,1994 (2,500) -- (16,466) (6,466)
Sale of common stock
in public offering, net -- -- -- 41,646
Conversion of preferred
stock to common stock -- -- -- --
Issuance of common stock
for long-term investment -- -- -- 3,392
Issuance of common stock
for investment in
affiliate, net -- -- -- 5,047
Issuance of common stock
upon exercise of options
and warrants -- -- -- 1,420
Deferred compensation on
grant of stock options -- (486) -- --
Compensation expense -- 225 -- 225
Dividends paid - Series A -- -- -- (1,577)
Dividends paid - Series C -- -- -- (1,107)
Dividends accumulated and
paid - Series B -- -- -- (141)
Use of advertising credits 12 -- -- 12
Net loss -- -- (4,718) (4,718)
--------- ------------ ----------- ------------
Balance at December 31,1995 (2,488) (261) (21,184) 37,733
Issuance of common stock
related to the Braun
Simmons Acquisition -- -- -- 4,170
Issuance of common stock
related to merger with
Colonial Data -- -- -- 179,118
Retirement of common
stock for long-term
investment -- -- -- (3,392)
Issuance of common stock
upon exercise of
options and warrants -- -- -- 2,177
Issuance of common stock
related to employee
stock purchase plan -- -- -- 50
Use of advertising credits 32 -- -- 32
Compensation expense -- 128 -- 128
Net loss -- -- (95,727) (95,727)
--------- ------------ ----------- ------------
Balance at December 31,1996 $ (2,456) $ (133) $(116,911) $124,289
======== ============ =========== ============
</TABLE>

See accompanying notes to consolidated financial statements.

43
<PAGE>

INTELIDATA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>

1996 1995 1994
---------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(95,727) $(4,718) $ 3,713
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
In-process research and development 77,214 -- --
Depreciation and amortization 2,725 619 749
Equity in loss of long-term investments 2,801 316 --
Receipt of affiliate stock for services provided -- (87) --
Deferred compensation expense 128 225 --
Gain on sale of bill pay operations and other assets (231) (75) (14,526)
Other noncash activities 130 -- 35
Changes in certain assets and liabilities, net of effects of non-cash
transactions including acquisitions:
Accounts receivable (2,318) (681) (96)
Prepaid expenses and other current assets (1,404) 155 (219)
Inventories (1,020) (802) --
Other assets 3,742 (87) (38)
Accounts payable, accrued expenses and other liabilities 5,123 1,079 191
Due from (to) affiliates -- (113) (293)
-------- ------- --------
Net cash used in operating activities (8,837) (4,169) (10,484)
-------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of short-term investments (12,418) -- --
Purchases of property, plant and equipment (2,304) (1,064) (314)
Change in restricted cash 3,309 (3,309) --
Proceeds from sale of bill pay operations and other assets, net 231 683 16,100
Acquisitions, net of cash acquired 17,578 -- --
-------- ------- --------
Net cash provided by (used in) investing activities 6,396 (3,690) 15,786
-------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (payments) related to borrowings 2,000 (4,633) --
Proceeds from issuances of common stock, net of discount 2,177 43,420 137
Payments for redemption of preferred stock -- (4,925) (5,968)
Payment of preferred stock dividends -- (2,684) (183)
Other financing activities (212) (767) (164)
-------- ------- --------
Net cash provided by (used in) financing activities 3,965 30,411 (6,178)
-------- ------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,524 22,552 (876)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 25,120 2,568 3,444
-------- ------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 26,644 $25,120 $ 2,568
======== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.

44
<PAGE>

INTELIDATA TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

(1) ORGANIZATION

InteliData Technologies Corporation ("InteliData" or the "Company"), is
engaged in providing products and services for three primary markets: consumer
telecommunications, electronic commerce and interactive services. The Company
designs, develops and markets consumer telecommunications products including
Caller ID adjuncts, integrated telephones and smart telephones. The Company
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.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Consolidation - The consolidated financial statements include the accounts
of the Company after elimination of all intercompany balances and transactions.
Certain items from the 1995 and 1994 financial statements have been reclassified
to conform to the 1996 financial statement presentation.

(b) Accounting 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 period. Actual results could differ from those estimates. The Company
considers the impairment of long-lived assets based on an assessment of the
asset's ability to contribute to the profitability of the Company using
estimates of expected future cash flows.

(c) Revenue Recognition - Revenue is recorded when products and repair
merchandise are shipped to the customer. Lease revenue is recorded based on the
units in service at the end of the prior month since these leases are cancelable
at any time. The Company recognizes service revenue from consulting and
maintenance contracts as the services are provided.

(d) Cash and Cash Equivalents - The Company considers all non-restricted highly
liquid investments with original maturities of three months or less to be cash
equivalents. Cash and cash equivalents are stated at cost, which approximates
market.

(e) Inventories - Inventories are stated at the lower of cost or market, with
cost determined on a weighted average basis.

45
<PAGE>

(f) Property, plant and equipment - Property, plant and equipment is stated at
cost. Equipment under capital lease is stated at the lower of the present value
of minimum lease payments at the beginning of the lease term or the estimated
fair value of the equipment at the inception of the lease.

Depreciation of property and equipment is calculated using the straight-
line method over the estimated useful lives of the assets as follows:
<TABLE>
<CAPTION>

Category Years
-------- -----
<S> <C>
Building and improvements 5-20
Leasehold improvements 5-15
Leased equipment 2-5
Equipment 3-7
Molds and tools 3-5

</TABLE>

Equipment held under capital lease and leasehold improvements are amortized
using the straight-line method over the lease term or estimated useful life,
whichever is shorter. The cost and accumulated depreciation of assets sold or
retired are removed from the respective accounts and any gain or loss is
reflected in income. Maintenance and repairs are charged to expense as
incurred.

(g) Long-term Investments - Long-term investments at December 31, 1995 consisted
of stock in Colonial Data Technologies Corp. ("Colonial Data") and an investment
in Home Financial Network, Inc. ("HFN"). The investment in Colonial Data was
recorded at its original cost at December 31, 1995. The Company used the equity
method of accounting for its investment in and earnings of HFN in which the
Company had the ability to exert significant influence, but not control, over
the operating and financial policies of HFN. The excess of purchase cost of
investments in affiliate over the Company's proportional amount of the fair
value of net assets acquired was considered to be goodwill and was being
amortized over a five year period on a straight-line basis.

(h) Intangible Assets - The Company carries its intangible assets, including
costs in excess of net assets acquired and other intangible assets, at cost
which are amortized using the straight-line method over 2 to 15 years. Other
intangible assets are reported in other assets on the balance sheet.

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

46
<PAGE>

(j) Accounting for Stock-Based Compensation - The Company applies APB Opinion
No. 25 and related interpretations in accounting for its plans. Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation"
("SFAS 123") was issued by the Financial Accounting Standards Board in 1995 and,
if fully adopted, changes the methods for recognition of cost on plans similar
to those of the Company. The Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma disclosure
provisions of SFAS 123.

(k) Net Income (Loss) per Common Share - Primary income (loss) per common share
is computed by dividing net income (loss), after deducting preferred stock
dividend requirements, by the weighted average number of shares of common stock
and common stock equivalents outstanding during the year. Common stock
equivalents are comprised entirely of stock options and warrants. Stock issued
and stock options granted during the 12-month period preceding the date of the
Company's initial public offering on June 2, 1995 have been included in the
calculation of weighted average shares of common stock and common stock
equivalents outstanding for all periods using the treasury stock method based on
the initial public offering price of $14.75 per share.

Dividend requirements on all series of the Company's preferred stock prior
to the redemption or conversion of such preferred stock are deducted from net
income or loss applicable to common shareholders in computing income (loss) per
common share. The preferred dividend requirements were $0, $681,000 and
$1,895,000 for the years ended December 31, 1996, 1995 and 1994, respectively,
and included undeclared dividends for 1994 of $1,712,000, or $.21 per common
share.

(3) ACQUISITIONS

On November 7, 1996 US Order, Inc. ("US Order") and Colonial Data were merged
with and into InteliData Technologies Corporation, a newly formed corporation,
through an exchange of stock ("Mergers"). Upon consummation of the Mergers, 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. Accordingly, the
historical financial results of US Order are the historical financial results of
InteliData.

Effective September 30, 1996 Braun Simmons & Co., Inc. ("Braun Simmons"), a
firm specializing in the development of home banking and electronic commerce
solutions for financial institutions, was merged into US Order (the "Braun
Simmons Acquisition"). This merger was accounted for as a purchase of Braun
Simmons by US Order. US Order acquired all of the outstanding stock of Braun
Simmons for $2 million and 375,000 shares of the Company's common stock.

47
<PAGE>

(a) Unaudited Pro Forma Condensed Consolidated Financial Information

The unaudited pro forma condensed consolidated statements of operations for
the years ended December 31, 1996 and 1995 give effect to the Mergers and the
Braun Simmons Acquisition as if each was completed as of January 1, 1995 and
combines US Order's, Braun Simmons' and Colonial Data's statements of operations
for each of those periods. Such statements of operations do not include the
combined effect of the $77 million nonrecurring charges for in-process research
and development. However, such statements do reflect adjustments for the
elimination of historical transactions between US Order, Braun Simmons and
Colonial Data, amortization of goodwill and related income tax effects.

The unaudited pro forma condensed consolidated financial information is
provided for illustrative purposes only and is not necessarily indicative of the
consolidated financial information that would have been reported had the mergers
occurred on the dates indicated, nor do they represent a forecast of the
consolidated financial information for any future period. The unaudited pro
forma condensed consolidated financial information should be read in conjunction
with the historical financial statements and accompanying notes of the Company.

Shown below is the unaudited pro forma condensed consolidated statements of
operations for the combined businesses of US Order, Braun Simmons and Colonial
Data (in thousands, except per share amounts).
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31, 1995:

Historical Pro Forma
---------------------------------------- ----------
US Order Braun Simmons Colonial Data Adjustments Reference InteliData
-------- ------------- ------------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues....................... $ 4,186 $1,841 $74,194 $ -- $ 80,221
Cost of revenues............... 2,470 1,024 44,240 1,089 (2) 48,823
Gross profit................... 1,716 817 29,954 (1,089) (2) 31,398
Operating expenses............. 6,877 826 11,056 5,494 (3) 24,253
Operating income (loss)........ (5,161) (9) 18,898 (6,583) (2)(3) 7,145
Net income (loss).............. (4,718) (29) 12,523 (4,313) (2)(3)(4)(5) 3,463
Net income (loss) per share.... $ (0.50) $ 0.85 $ 0.11

</TABLE>

YEAR ENDED DECEMBER 31, 1996:

<TABLE>
<CAPTION>
Pro Forma Pro Forma
---------------------------------------- ----------
US Order Braun Simmons Colonial Data Adjustments Reference InteliData
-------- ------------- ------------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues....................... $ 4,227 $3,653 $63,987 $(1,894) (1) $ 69,973
Cost of revenues............... 3,832 2,272 43,490 101 (1)(2) 49,695
Gross profit................... 395 1,381 20,497 (1,995) (2) 20,278
Operating expenses............. 19,911 1,284 18,312 2,285 (3) 41,792
Operating income (loss)........ (19,516) 97 2,185 (4,280) (2)(3) (21,514)
Net income (loss).............. (19,349) 67 688 4,011 (2)(3)(4)(5) (14,583)
Net income (loss) per share.... $ (1.20) $ 0.04 $ (0.46)
</TABLE>

Pro Forma Adjustments

The following pro forma adjustments have been made to the unaudited pro forma
condensed consolidated financial information:

48
<PAGE>

(1) Reflects the elimination of intercorporate transactions.

(2) Reflects the amortization associated with an allocation of the purchase
price of Colonial Data for its lease base of $1.9 million to recognize the
excess of the estimated fair market value over the carrying amount and its
amortization on a straight-line basis over five years.

(3) Reflects the allocation of purchase price to developed technology and
goodwill. Such developed technology is amortized on a straight-line basis over
two years; goodwill is amortized on a straight-line basis over 7 years for
Braun Simmons and 15 years for Colonial Data.

(4) Reflects accrual of the transactions and other related costs. Estimated
costs incurred by Colonial Data relating to the Mergers of $2 million have
been reflected as expenses in the pro forma statement of operations for the
year ended December 31, 1995. Estimated costs incurred by Braun Simmons
relating to the Braun Simmons Acquisition of $50,000 have been reflected as
expenses in the pro forma consolidated condensed statement of operations for
the year ended December 31, 1995.

(5) Reflects the effect of the combination of Braun Simmons', US Order's
and Colonial Data's operations and the above adjustments on income taxes. A
valuation allowance has been recognized for the pro forma net deferred tax
assets of InteliData, relating primarily to operating loss carryforwards
generated by US Order prior to the Mergers and the Braun Simmons Acquisition,
based on an assessment of the likelihood of recoverability of such amounts. As
a result of the Mergers and the Braun Simmons Acquisition, the use of US
Order's operating loss carryforwards may be limited in future years.

(b) Purchase Accounting

The purchase amount of Braun Simmons was:

<TABLE>

<S> <C>
Fair value of common stock issued.. $4,170
Cash consideration................. 2,000
US Order transaction costs......... 913
------
Total........................... $7,083
======
</TABLE>

The purchase amount was allocated for Braun Simmons as follows:

<TABLE>
<S> <C>
Current assets..................... $ 700
Equipment and other................ 286
In-process research and development 4,914
Goodwill........................... 1,898
Liabilities assumed................ (715)
------
Total........................... $7,083

======
</TABLE>

49
<PAGE>

The purchase amount of Colonial Data was:

<TABLE>

<S> <C>
Fair value of common stock issued..................... $179,118
Fair value of employee stock options and warrants..... 2,805
Cost of previous investment in Colonial Data.......... 3,393
US Order transaction costs............................ 1,309
--------
Total......................................... $186,625
========

</TABLE>

The purchase amount was allocated for Colonial Data as follows:

<TABLE>

<S> <C>
Current assets....................... $ 60,488
Lease base........................... 3,747
Equipment and other.................. 5,754
In-process research and development.. 72,300
Developed technology................. 1,418
Goodwill............................. 49,483
Liabilities assumed.................. (6,565)
--------
Total....................... $186,625
========
</TABLE>

The allocation of the purchase amounts to both Braun Simmons and Colonial Data
tangible and identifiable intangible assets was based on independent appraisals
of the estimated fair value of certain of those assets. Such appraisals
indicated approximately $5 million and $72 million, respectively, for purchased
in-process research and development for Braun Simmons and Colonial Data,
respectively, which was expensed by the Company upon each closing, as the
technologies had not reached technological feasibility and did not have
alternative future uses. The unaudited pro forma condensed consolidated
statements of operations do not include this one-time charge for purchased in-
process technology as it represents a material nonrecurring charge. The Company
is waiting for certain information pertaining to the collection of certain
outstanding receivables and legal matters related to these transactions.

US Order's historical loss per share for the year ended December 31, 1995
includes $681,000 of preferred dividend requirement which has been deducted from
historical net loss in determining net loss attributable to common stockholders.
All of US Order's series of preferred stock, including accumulated dividends,
were redeemed or converted to common stock in June 1995. The historical
preferred dividend requirement has been excluded from the computations of pro
forma income per share.

The weighted average shares used in the computations of pro forma income
(loss) per share assumes that the shares issued in the acquisition of Braun
Simmons and the total number of shares exchanged in the Mergers and the Braun
Simmons Acquisition, net of canceled intercorporate investment shares, were
outstanding for all periods presented. The impact of outstanding stock options
and warrants of the Company has been considered using the treasury stock method.

50
<PAGE>

(4) SEGMENT REPORTING

The Company maintains operations in three primary markets: consumer
telecommunications, electronic commerce and interactive services. Intersegment
sales are not material. Operating loss represents total revenues less operating
expenses, and excludes general corporate expenses, other income and expense and
income taxes. Identifiable assets are those assets employed in each segment's
operation, including an allocated value to each segment of cost in excess of net
assets acquired. Corporate assets consist primarily of cash and cash
equivalents, investments, and assets not employed in the production of goods or
services. Segment financial information is as follows (in thousands):

<TABLE>
<CAPTION>
Consumer Electronic Interactive
Telecommunications Commerce Services Corporate Consolidated
------------------- ----------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
1996
Revenues $ 10,942 $ 2,957 $ -- $ -- $ 13,899
Operating loss (79,014) (9,072) (2,479) (5,547) (96,112)
Identifiable assets 97,801 7,932 234 37,779 143,746
Depreciation and amortization 1,484 198 41 1,002 2,725
Capital expenditures 110 771 267 1,156 2,304
</TABLE>

Operating loss for consumer telecommunications and electronic commerce include
in-process research and development expenses of $72,300,000 and $4,914,000,
respectively. Segment information for 1995 and 1994 is not presented as the
Company did not operate under separate business markets during these periods.

(5) INVENTORIES

Inventories consist of the following at December 31 (in thousands):

<TABLE>

1996 1995
------- -----
<S> <C> <C>
Raw materials $ 4,843 $ --
Finished goods 23,577 801
------- -----
$28,420 $ 801
======= =====

</TABLE>

51
<PAGE>

(6) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following at December 31 (in
thousands):

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Land and building $ 1,482 $ --
Equipment 4,491 2,206
Leased equipment 4,366 656
Leasehold improvements 852 95
Furniture and fixtures 678 398
------- -------
11,869 3,355
Accumulated depreciation (2,726) (1,907)
------- -------
$ 9,143 $ 1,448
======= =======
</TABLE>

(7) ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consists of the following at
December 31 (in thousands):

<TABLE>
<S> <C> <C>
1996 1995
------- --------
Accrued compensation expense $ 2,805 $ --
Accrued corporate restructuring and acquisition 2,476 --
Accrued wages and related expenses 2,387 782
Accrued tax liabilities 1,100 --
Accrued royalties and commissions 740 --
Accrued inventory and equipment 713 --
Accrued professional and insurance 669 --
Other liabilities 1,883 86
------- --------
$12,773 $ 868
======= ========

</TABLE>

(8) BORROWINGS

In May 1996, the Company entered into three credit agreements with two
banks that provide for borrowings of up to $20,000,000. The first credit
agreement covers the period through May 1997 and is a revolving line of credit
of $1,000,000 that is fully collateralized by a bank certificate of deposit.
The second credit agreement is $4,000,000 available to be utilized for the
purpose of issuing letters of credit. The advances and/or face amounts of
letters of credit issued under this agreement are collateralized by either 100%
of pledged certificates of deposit or 90% of pledged U.S. Treasury investments
acceptable to the bank. These agreements provide for various interest rates at
the Company's election and do not have a commitment fee on the unused portion of
the credit lines. These agreements also contain certain covenants including,
but not limited to, restrictions related to certain financial ratios as well as
restrictions with respect to acquisitions and the sale of assets. As of
December 31, 1996, the Company had no borrowings related to these credit
facilities.

52
<PAGE>

Additionally, the Company maintains a credit facility totaling $15,000,000
for cash advances and letters of credit. The loan is secured by substantially
all of the Company's assets and bears interest at an annual rate equal to the
bank's prime rate. The bank's prime rate was 8.25% as of December 31, 1996. As
of December 31, 1996, the Company had $2,000,000 outstanding under the line of
credit and had available $13,500,000 for cash advances and letters of credit.
The loan agreement contains restrictive covenants, the most significant of which
are certain financial ratios and prohibition of dividends. Interest expense
was $2,000, $286,000 and $650,000 for the years ended December 31, 1996, 1995
and 1994, respectively. Cash paid for interest was $16,000, $324,000 and
$594,000 in 1996, 1995 and 1994, respectively.

(9) RELATED-PARTY TRANSACTIONS

(a) Strategic Business Partner

In August 1994, the Company sold its electronic banking and bill pay
operations (the "Visa Bill-Pay System") to Visa (see note 13). As part of the
Visa transaction, the Company's president was appointed to, and the Company's
chairman was named an advisor to, the board of directors of Visa InterActive.
Included in service fee revenues are $1,219,000, $737,000 and $156,000 in 1996,
1995 and 1994, respectively, related to services provided by the Company to Visa
InterActive and Visa banks/members. Included in the accompanying consolidated
balance sheets are receivables due from Visa InterActive totaling $581,000 and
$315,000 as of December 31, 1996 and 1995, respectively.

(b) Primary Investor

The chairman of the board of directors of the Company is a director of
WorldCorp, Inc. ("WorlCorp") the Company's primary investor. Another officer
and certain directors of the Company are also members of the board of directors
of WorldCorp.

WorldCorp owned approximately 29% and 58% of the Company's outstanding
voting stock as of December 31, 1996 and 1995, respectively. The decrease in
ownership percentage is a direct result of the issuance of additional shares
from the Mergers and the Braun Simmons Acquisition.

The Company had a $3,500,000 long-term note that was redeemed in June 1995
with a portion of the proceeds from the sale of common stock in its initial
public offering. Interest expense on this long-term note was $216,000 and
$510,000 for the years ended December 31, 1995 and 1994, respectively.

WorldCorp also paid certain of the Company's personnel costs including
salary, benefits, business and other related costs for which the Company was
billed on a cost-reimbursed basis. In November 1996, the Company terminated
this relationship with WorldCorp. During the years ended December 31, 1996,
1995 and 1994, the Company paid WorldCorp approximately $439,000, $207,000 and
$103,000, respectively, related to these arrangements. At December 31, 1996 and
1995, the Company was not indebted to WorldCorp for significant amounts.

53
<PAGE>

(10) LONG-TERM INVESTMENTS

On October 18, 1995, the Company acquired a 40% equity interest in HFN,
a newly formed, development stage personal computer software company that plans
to develop and deliver electronic financial products and services to consumers.
In this transaction, the Company paid an aggregate purchase price of $5,015,000,
through the issuance of 296,746 shares of its common stock, in exchange for 40%
of HFN. The number of the Company's common shares issued in this transaction was
based on the $5,015,000 purchase price divided by the average closing price of
the Company's common stock on the Nasdaq National Market for each of the five
business days immediately preceding the third day prior to the closing date of
October 18, 1995. The purchase price exceeded the Company's proportionate share
of the equity in net assets of HFN at October 18, 1995 by approximately $3.1
million. This component of the investment was considered to be goodwill and was
being amortized over a period of five years on a straight-line basis.

During the fourth quarter of 1996, the Company wrote-off its remaining
investment in affiliate and the related goodwill. The Company believes its
investment in HFN was impaired based on its history of losses. The carrying
value of the investment at December 31, 1996 and 1995 was $0 and $4,835,000,
respectively. For the period ended December 31, 1996, HFN had no revenues and
incurred a net loss of $3,619,000. For the period ended December 31, 1995, HFN
had no revenues and incurred a net loss of $408,000. As of December 31, 1996,
HFN had total assets, total liabilities and total stockholders' equity of
$4,941,000, $172,000 and $4,769,000, respectively.

Additionally, as of December 31, 1995 the Company held shares of stock in
Colonial Data which were canceled upon consummation of the Mergers (see note 3).

(11) STOCKHOLDERS' EQUITY

(a) Initial Public Offering

In June 1995, the Company completed an initial public offering of 4,427,500
shares of the Company's common stock, par value $.001, at an offering price of
$14.75. Of the 4,427,500 shares sold, 3,062,500 were issued and sold by the
Company, and 1,365,000 shares were sold by WorldCorp, the Company's largest
shareholder. The Company did not receive any of the proceeds from the sale of
shares by WorldCorp. The Company received approximately $41.6 million in net
proceeds (after deducting issuance costs) from the stock sale. A portion of the
net proceeds from the offering were used by the Company to redeem its Series B
redeemable preferred stock for $4,925,000, including accumulated dividends of
$625,000, pay $2,684,000 of cumulative undeclared dividends on its Series A and
C convertible preferred stock, and redeem $4,887,000 in notes payable and
related accrued interest.

(b) Redeemable Preferred Stock

In conjunction with the Company's initial public offering in June 1995, the
Company redeemed all of its 4,300 outstanding shares of Series B redeemable
preferred stock for

54
<PAGE>

$4,300,000 and rescinded the authorization to issue any additional shares. The
Series B preferred stockholders were entitled to and had preference to
cumulative dividends at the annual rate of $75 per share. The dividends accrued
from the date of issuance. At redemption, in June 1995, the Company paid all of
the remaining accrued and unpaid dividends, totaling $625,000, with a portion of
the proceeds from its initial public offering.

The Company sponsors the following stock option plans which cover
substantially all employees and certain directors: the US Order 1991 Stock
Option Plan ("1991 Plan"), the Colonial Data 1994 Long-Term Incentive Plan
("Colonial Data Plan"), the US Order 1995 Incentive Plan ("1995 Plan"), the US
Order 1995 Non-Employee Directors' Stock Option Plan ("1995 Directors' Plan"),
the InteliData 1996 Incentive Plan ("1996 Plan"), and the InteliData 1996 Non-
Employee Directors' Stock Option Plan ("1996 Non-Employee Directors' Plan").

1991 Plan
---------

The Company had reserved 3,000,000 shares of common stock for the exercise of
options under this plan. Options are granted for purchases of the same number
of shares of the Company's common stock. For the 1991 Plan, options typically
vest monthly over a period of three to five years and expire after eight years.
However, no vesting occurs until after the employee has completed one year of
service with the Company. The 1991 Plan was terminated in May 1995. As of
December 31, 1996, there were 1,383,180 shares vested and exercisable under the
1991 Plan.

Colonial Data Plan
------------------

Colonial Data's board of directors authorized the issuance of options for
purchase of common stock for key employees. The options entitle the holder to
purchase the Company's common stock at the fair market value at the date of
grant. Colonial Data's board of directors as part of its 1994 Long-Term
Incentive Plan authorized 500,000 shares of stock to be available for grants.
The options vest periodically through 2000 and expire in 2006 and expire after
10 years from the date of grant. The Colonial Data Plan was terminated in
November 1996. As of December 31, 1996, there were 101,647 shares vested and
exercisable under the Colonial Data Plan.

1995 Plan
---------

The Company had reserved 1,000,000 shares of common stock for the exercise of
options under this plan. Options are granted for purchases of the same number
of shares of the Company's common stock. For the 1995 Plan, options typically
vest monthly over a period of three to five years and expire after eight years
from the date of grant. However, no vesting occurs until after the employee has
completed one year of service with the Company. The 1995 Plan was terminated in
November 1996. As of December 31, 1996, there were 70,056 shares vested and
exercisable under the 1995 Plan.

55
<PAGE>

1995 Directors' Plan
--------------------

The Company had reserved 250,000 shares of common stock for the exercise of
options under this plan. Options are granted for purchases of the same number
of shares of the Company's common stock. For the 1995 Directors' Plan, options
will vest monthly over a three year period beginning on the date of grant and
expire ten years subsequent to the date of grant. The grant price for the plan
was based on the average of the closing Nasdaq market price of the Company's
stock on the thirty trading days preceding the date of the grant. The 1995
Directors' Plan was terminated in November 1996. As of December 31, 1996, there
were 1,458 shares vested and exercisable under the 1995 Directors' Plan.

1996 Plan
---------

The Company had reserved 1,500,000 shares of common stock for the exercise of
options under this plan. Options are granted for purchases of the same number
of shares of the Company's common stock. The exercise price of each option shall
not be less than eight-five percent (85%) of the fair market value of the
Company's common stock on the date the option is granted and an option's maximum
term is 10 years. Options for existing employees are granted by the board of
directors and typically vest ratably at the end of the fourth year. Options
granted to new hires are awarded at the discretion of the Company's management
in accordance with guidelines approved by the board of directors. However, no
vesting occurs until after the employee has completed one year of service with
the Company. As of December 31, 1996, there were no shares vested and
exercisable under the 1996 Plan.

1996 Non-Employee Directors' Plan
---------------------------------

The Company reserved 200,000 shares of common stock for the exercise of
options under this plan. Options are granted for each non-employee director who
qualifies for participation under the plan. The exercise price of each option
shall be the fair market value as defined in the plan of the Company's common
stock and an option's maximum term is 10 years. For the 1996 Non-Employee
Directors' Plan, options vest monthly over a period of one year. As of December
31, 1996, there were no options granted under the 1996 Non-Employee Directors'
Plan.

56
<PAGE>

A summary of the changes in stock options for each of the Company's stock option
plans is as follows:

<TABLE>
<CAPTION>
1991 Plan 1995 Plan
------------------------ --------------------------
Exercise Number Exercise Number
Prices of Options Prices of Options
----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
December 31, 1993 $0.98-$4.00 1,482,168 -- --
Granted $4.00-$7.13 1,320,410 -- --
Exercised $0.98 (120,788) -- --
Canceled $0.98-$4.00 (250,869) -- --
--------- -------
December 31, 1994 $0.98-$7.13 2,430,921 -- --
Granted $7.13-$9.50 226,350 $14.50-$23.75 110,050
Exercised $0.98-$7.13 (373,106) -- --
Canceled $0.98-$7.13 (21,010) $21.00 (1,500)
--------- -------
December 31, 1995 $0.98-$9.50 2,263,155 $14.50-$23.75 108,550
Granted -- -- $ 9.00-$23.50 747,630
Exercised $0.98-$9.50 (353,013) $14.75-$18.75 (169)
Canceled $2.50-$9.50 (109,613) $ 9.88-$23.13 (71,930)
--------- -------
December 31, 1996 $0.98-$9.50 1,800,529 $ 9.00-$23.75 784,081
========= =======

</TABLE>

1995 Directors' Plan 1996 Plan
----------------------- -------------------------
Exercise Number Exercise Number
Prices of Options Prices of Options
----------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
December 31, 1995 -- -- -- --
Granted $18.86 7,500 $7.00 1,400
Exercised -- -- -- --
Canceled -- -- -- --
--------- -------
December 31, 1996 $18.86 7,500 $7.00 1,400
========= =======

</TABLE>

In addition to options issued in 1995 under both the 1991 and 1995 Plans, the
Company issued 15,000 options to three of its five non-affiliate directors and
25,000 options to a non-affiliate who helped in arranging a placement of Series
C preferred stock. Each of these grants has a $7.13 exercise price. The 45,000
options issued to non-affiliate directors vest monthly over a three-year period,
and the 25,000 options granted to the non-affiliate vested immediately. As of
December 31, 1996, of these 45,000 options, 13,751 options were canceled during
1996, options for 25,415 shares of common stock are exercisable with a weighted
average exercise price of $7.13.

During 1996 and 1995, the Company recognized $128,000 and $225,000 of
compensation expense, respectively, in connection with options granted at
exercise prices below the estimated fair market value of the Company's common
stock at the date of grant. As of December 31, 1996, deferred compensation
relating to these grants was $133,000, which will be recognized over the
remaining vesting period.

In August 1994, as a requirement of the sale of the Visa bill payment system
to Visa InterActive, the Company paid $3,250,000 to certain employees to cancel
675,334 outstanding vested options. This amount is allocated between general
and administrative and research and development expenses in the accompanying
1994 statement of operations.

57
<PAGE>

(d) Stock Compensation Plans

At December 31, 1996, the Company has six stock-based compensation plans. The
Company applies Accounting Principles Board Opinion No. 25 and related
Interpretations in accounting for stock options granted under the stock
compensation plans. Had compensation cost for the Company's stock compensation
plans been determined based on the fair value at the grant dates for the 1996
and 1995 awards under those plans, the Company's net loss and net loss per share
for the years ended December 31 1996 and 1995 would have been $(99,341,000) and
$(5.41) per share and $(5,674,000) and $(0.53) per share, respectively. Stock
compensation expense for 1995 was calculated for the period from the initial
public offering to the end of the year.

The weighted average fair value of options granted during 1996 and 1995 was
$14.75 per share. The fair value of options granted was estimated on the date
of grant using the Black-Scholes option pricing model with the following
weighted average assumptions: no dividend yield, expected volatility of 65%,
and a risk free interest rate of 6.14%.

Options Outstanding Options Exercisable
---------------------------------------------------------------- ---------------------------
Weighted Weighted
Range of Number Weighted Average Number Average
Plan Description Exercise Prices of Options Average Life Exercise Price Exercisable Exercise Price
--------------- ---------- ------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
1991 Plan $ 0.98-$9.50 1,800,529 5.8 years $ 5.62 1,383,180 $ 5.19
Colonial Data Plan $0.21-$20.38 474,800 9.5 years $10.92 101,647 $ 8.54
1995 Plan $9.00-$23.75 784,081 8.0 years $16.68 70,056 $17.95
1995 Directors' Plan $ 18.86 7,500 10.0 years $18.86 1,458 $18.86
1996 Plan $ 7.00 1,400 10.0 years $ 7.00 -- --
1996 Non-Employee -- -- -- -- -- --
Directors' Plan
</TABLE>

(e) Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, approved in 1996, the Company is
authorized to issue up to 500,000 shares of common stock to its full-time
employees, nearly all of whom are eligible to participate. Under the terms of
the Plan, employees can choose each period to have up to twenty percent of their
annual base earnings withheld to purchase the Company's common stock. The
purchase price of the stock is 85 percent of the lower of its beginning-of-
period or end-of-period market price. The Employee Stock Purchase Plan's first
period will begin January 2, 1997. The Company had an employee stock purchase
plan in existence during 1996, however, there was not a significant number of
shares of stock sold under the Plan in 1996.

(f) Receivable from Sale of Stock

In connection with a private placement offering in 1993, the Company received
$2,500,000 in advertising credits. The Company has recognized advertising
credits aggregating $32,000 and $12,000 in 1996 and 1995, respectively. The
advertising credits are included in the accompanying balance sheet as a
reduction of stockholders' equity.

58
<PAGE>

(12) CORPORATE RESTRUCTURING

The Company recorded a provision for corporate restructuring during the
fourth quarter of 1996 of $1,568,000. This amount consists of $1,323,000 in
facilities consolidations, $175,000 in relocation expenses for certain
employees, and $70,000 for the write-down of duplicative processing equipment.
Such provisions remained in corporate restructurings at December 31, 1996.

(13) SALE OF ELECTRONIC BANKING AND BILL PAY OPERATIONS

On August 1, 1994, the Company sold its electronic banking and bill pay
operations (the "Visa Bill-Pay System") to Visa for $14,645,000 in cash (net of
closing costs of $228,000), the assumption of certain of the Company's capital
lease obligations and other miscellaneous liabilities totaling $853,000; 100
shares of Visa InterActive's redeemable preferred stock; and a 72 month royalty
obligation commencing January 1, 1995 and ending December 31, 2000 (the "Royalty
Period"). Visa subsequently transferred these assets to Visa InterActive, its
wholly owned subsidiary. The System consisted of certain tangible assets with a
net book value of $975,000 and certain intangible assets, including patents,
computer software, firmware, and databases. The Company and Visa granted each
other perpetual, royalty-free, worldwide licenses to certain intellectual
property rights of the Company, including those in software, source code and
know-how. The Company recognized a gain of $14,523,000 from the sale, which is
included in other non-operating income.

Royalties due to the Company will equal $.666 per month per Visa InterActive
bill pay customer whose transactions are processed by the System, and will be
paid by Visa InterActive quarterly during the Royalty Period. Under the terms
of the agreement, Visa InterActive is not required to pay the Company for the
first $73,000 of royalties earned during each quarter on a cumulative basis for
a total of twelve quarters. The Company did not receive any Visa royalty
payments in 1996 and 1995.

Through July 1995, the Company paid Visa InterActive a monthly fee of $6.40
for each of the Company's bill pay customers which were not yet customers of a
Visa member bank. This fee was reduced to $4.00 per bill pay customer on August
1, 1995. During 1996, 1995 and 1994, respectively, the Company paid Visa
InterActive $54,000, $205,000 and $208,000 in such fees, which is included in
service fees cost of revenues.

As part of the Visa transaction, the Company's president was appointed to,
and the Company's chairman was named an advisor to, the board of directors of
Visa InterActive.

(14) EMPLOYEE 401(K) SAVINGS PLAN

The Company adopted a defined contribution plan ("Plan") that qualifies for
preferential tax treatment under Section 401(a) of the Internal Revenue Code.
Participation in the Plan is

59
<PAGE>

available to employees who are at least twenty-one years of age and have six
months of service. Company contributions to the Plan are based on a percentage
of employee contributions and were not significant. Administrative expenses for
the Plan were paid for by the Company.

(15) INCOME TAXES

Income taxes consists of (in thousands):

YEARS ENDED DECEMBER 31,
------------------------
1996 1995 1994
----- ------ ------
<S> <C> <C> <C>
Current:
Federal.......................................... $ -- $ -- $1,028
State 25 -- 10
Utilization of net operating loss carryforwards.. -- -- (968)
----- ----- ------
Total current tax expense....................... $ 25 $ -- $ 70
===== ===== ======
</TABLE>

A reconciliation of taxes computed at the statutory Federal tax rate on
income before income taxes to the actual income tax expense is as follows (in
thousands):

YEARS ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
---------- --------- --------
<S> <C> <C> <C>
Income taxes (benefit) computed at the
statutory rate................................ $(33,496) $(1,604) $ 1,293
Book expenses not deductible for tax purposes... 28,378 129 54
Federal alternative minimum and
environmental taxes........................... -- -- 60
Generation of net operating loss carryforwards.. 5,118 1,475 --
State income tax net of federal benefit......... 25 -- --
Change in the valuation allowance for
deferred tax assets allocated to income tax
expense....................................... -- -- (1,337)
-------- ------- -------

Income taxes............................ $ 25 $ -- $ 70
======== ======= =======

</TABLE>

60
<PAGE>

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1996 and
1995, are as follows (in thousands):

1996 1995
--------- --------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards............... $ 15,942 $ 7,955
Capitalized start-up expenditures.............. 341 641
Accounts receivable and inventory revaluation.. 6,394 --
Equipment and property......................... 137 --
General business credit carryforward........... 489 489
Alternative minimum tax carryforward........... 60 60
Other.......................................... 128 56
-------- -------
Total gross deferred tax asset............ 23,491 9,201
Valuation allowance............................ (22,210) (8,974)
-------- -------
Net deferred tax assets..................... 1,281 227

Deferred tax liability:
Equipment and property......................... -- (227)
Accounts payable and accrued liabilities....... (1,281) --
-------- -------

Net deferred taxes........................... $ -- $ --
======== =======
</TABLE>

The net changes in the total valuation allowance for the years ended
December 31, 1996 and 1995 were an increase of $13,239,000 and $2,309,000,
respectively.

At December 31, 1996, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $38,415,000, which expire in 2007
through 2011, general business tax credits of approximately $489,000, which
expire in 2005 through 2010, and an alternative minimum tax credit carryforward
of approximately $60,000, which may be carried forward indefinitely and used to
offset future regular taxable income. Included in the Company's net operating
loss carryforward is approximately $3,520,000, related to exercises of employee
stock options, which, if utilized in the future to reduce taxable income, will
be credited directly to additional paid-in capital. In the event a greater than
50% change in control of the Company occurs for tax purposes, use of these net
operating losses may be limited in future years.

Cash paid for taxes was $0, $65,000 and $0 in 1996, 1995 and 1994,
respectively.

(16) MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to credit risk
consist principally of trade receivables. The Company sells its products
primarily to telephone operating companies, retailers and financial institutions
in the United States. The Company believes that the concentration of credit
risk in its trade receivables is substantially mitigated by the Company's
ongoing credit evaluation process. The Company does not generally require

61
<PAGE>

collateral from customers. The Company establishes an allowance for doubtful
accounts based upon factors surrounding the credit risk of specific customers,
historical trends and other information. Historically, the Company has not
incurred any significant credit related losses.

Revenues from three customers were approximately 20%, 13% and 11% of total
revenues for the year ended December 31, 1996. The Company had two customers
that represented approximately 24% and 12% of total accounts receivable at
December 31, 1996. Revenues from two customers were approximately 27% and 11%
of total revenues for the year ended December 31, 1995. The Company had two
customers which represented approximately 38% and 14% of total accounts
receivable at December 31, 1995.

(17) COMMITMENTS AND CONTINGENCIES

(a) Leases

The Company leases facilities and equipment under cancelable and
noncancellable operating lease agreements. The facility leases are for terms
from one to nine years. Rent expense was $907,000, $234,000 and $214,000 for the
years ended December 31, 1996, 1995 and 1994, respectively.

Future minimum lease payments under noncancellable operating leases with
initial or remaining terms in excess of one year at December 31, 1996, were as
follows (in thousands):

Year ending December 31,
- ------------------------
<S> <C>
1997.......................... $1,091
1998.......................... 1,114
1999.......................... 947
2000.......................... 796
2001.......................... 12
------
Total minimum lease payments.. $3,960
======
</TABLE>
Capital lease obligations incurred for new equipment was $28,000 and $235,000
in 1995 and 1994, respectively.

(b) Royalties

The Company has a license relating to certain Caller ID patents and
technology with Lucent Technologies, Inc. ("Lucent"). For licensed products
leased, sold or put in use, the Company pays a royalty to Lucent. Royalty
expense was $106,000 for the period from November 7, 1996 through December 31,
1996.

The Company was contingently liable for outstanding letters of credit for
overseas

62
<PAGE>

purchases totaling $4,500,000 and $3,309,000 on December 31, 1996 and
1995, respectively.

(d) Patent Matters

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

(e) Environmental Matters

The Company was informed that certain environmental contamination existed in
the part of the Company's premises formerly occupied by another tenant and that
the Connecticut Department of Environmental Protection has performed a clean-up
and removed such contamination. The Company does not believe that the foregoing
will have a material adverse effect on the Company's consolidated financial
position or results of operations.

(18) UNAUDITED QUARTERLY FINANCIAL DATA

The results of the Company's quarterly operations for the years ended
December 31, 1996 and 1995 were (in thousands except per share amounts):

First Second Third Fourth /(1)/ Total
-------- -------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C>
1996
Revenues $ 1,326 $ 548 $ 1,063 $ 10,962 $ 13,899
Operating loss (2,033) (3,145) (8,451) (82,483) (96,112)
Loss before income taxes (1,988) (3,206) (8,524) (81,984) (95,702)
Net loss (1,988) (3,206) (8,524) (82,009) (95,727)
Net loss per common share/(2)/ $ (0.13) $ (0.20) $ (0.53) $ (3.21) $ (5.21)

1995
Revenues $ 745 $ 947 $ 1,208 $ 1,286 $ 4,186
Operating loss (1,231) (1,219) (1,276) (1,435) (5,161)
Loss before income taxes (1,369) (1,231) (847) (1,271) (4,718)
Net loss (1,369) (1,231) (847) (1,271) (4,718)
Net loss applicable to common
stockholders (1,757) (1,524) (847) (1,271) (5,399)
Net loss per common share/(2)/ $ (0.29) $ (0.20) $ (0.06) $ (0.08) $ (0.50)

</TABLE>

/(1)/ On November 7, 1996, US Order, Inc. and Colonial Data Technologies
Corp. consummated a Plan and Agreement of Merger. Operations of the
Company subsequent to November 7, 1996 reflect the operations of the
business of US Order and Colonial Data combined. Financial data also
includes in-process research and development charges of $77,214,000 and
restructuring charges of $1,568,000.

/(2)/ Net loss per share numbers are not necessarily additive due to current
year activities and rounding differences.

63
<PAGE>

INDEPENDENT AUDITORS' REPORT

BOARD OF DIRECTORS AND STOCKHOLDERS
INTELIDATA TECHNOLOGIES CORPORATION
HERNDON, VIRGINIA

We have audited the accompanying consolidated balance sheet of InteliData
Technologies Corporation and subsidiaries (the "Company") as of
December 31, 1996, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements referred to above
present fairly, in all material respects, the financial position of InteliData
Technologies Corporation and subsidiaries as of December 31, 1996, and the
results of their operations and their cash flows for the year then ended, in
conformity with generally accepted accounting principles.

/s/ DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

Hartford, Connecticut
February 5, 1997

64
<PAGE>

INDEPENDENT AUDITORS' REPORT

BOARD OF DIRECTORS AND STOCKHOLDERS
INTELIDATA TECHNOLOGIES CORPORATION:

We have audited the accompanying consolidated balance sheet of InteliData
Technologies Corporation and subsidiaries as of December 31, 1995, and the
related consolidated statements of operations, stockholders' equity (deficit),
and cash flows for each of the years in the two-year period ended December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of InteliData
Technologies Corporation and subsidiaries as of December 31, 1995, and the
results of their operations and their cash flows for each of the years in the
two-year period ended December 31, 1995, in conformity with generally accepted
accounting principles.

/s/ KPMG PEAT MARWICK LLP

KPMG PEAT MARWICK LLP

Washington, D.C.
February 5, 1996

65
<PAGE>

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

KPMG Peat Marwick LLP was previously the principal accountants for US Order,
which merged with and into InteliData , successor to US Order on November 7,
1996. On November 22, 1996, that firm's appointment as principal accountants
was terminated and Deloitte & Touche LLP was engaged by the Company as
principal accountants. On November 7, 1996, US Order and Colonial Data merged
with and into the Company with the Company being the survivor. Prior to the
mergers, Deloitte & Touche LLP had been engaged as the principal accountants
for Colonial Data. The decision to engage Deloitte & Touche and dismiss Peat
Marwick was approved by the management of the Company and was not submitted to
the Board of Directors of the Company and was based in part on the prior
engagement of Deloitte & Touche LLP by Colonial Data.

In connection with the audits of the three fiscal years ended December 31,
1995, and the subsequent interim period through November 22, 1996, there were no
disagreements with KPMG Peat Marwick LLP on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedures,
which disagreements if not resolved to their satisfaction would have caused them
to make reference in connection with their opinion to the subject matter of
disagreement.

The audit reports of KPMG Peat Marwick LLP on the consolidated financial
statements of US Order, Inc. as of December 31, 1995 and 1994, and for each of
the years in the three-year period ended December 31, 1995, did not contain any
adverse opinion or disclaimer of opinion, nor were they qualified or modified as
to uncertainty, audit scope, or accounting principles.

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 Proxy Statement for its 1997 Stockholder's Meeting 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:

Name Age Position Held
- ---- --- -------------
<S> <C> <C>

William F. Gorog 71 Chairman of the Board

Robert J. Schock 55 Chief Executive Officer

John C. Backus, Jr. 38 President

Timothy R. Welles 38 Executive Vice President,
Consumer Telecommunications Division

Joseph E. Smith 46 Executive Vice President,
Electronic Commerce Division

John W. Hillyard 40 Vice President and Chief Financial Officer

Albert N. Wergley 49 Vice President, General Counsel and Secretary

Mark L. Baird 42 Vice President, Operations

</TABLE>

WILLIAM F. GOROG has served as Chairman and director of the Company since
November 1996. Mr. Gorog had served as Chairman of US Order from May 1990 to
November 1996. From October 1987 until founding US Order in May 1990, he served
as chairman of the board of Arbor

66
<PAGE>

International, an investment management firm. From 1982 to 1987, he served as
president and chief executive officer of the Magazine Publishers of America, an
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 Council on
International Economic Policy. Prior to that time, he founded and served as
chief executive officer of DataCorp., which developed the Lexis and Nexis
information systems for legal and media research and which was subsequently sold
to the Mead Corporation. He currently serves as chairman of the board of
WorldCorp.

ROBERT J. SCHOCK has served as Chief Executive Officer and director of
the Company since November 1996. Prior to November 1996, Mr. Schock had served
as President and Chief Executive Officer of Colonial Data since September 1989
and as President of Colonial Technologies Corp., a wholly-owned subsidiary of
Colonial Data, since 1981. From 1977 to 1980, Mr. Schock was director of
national operations for ICOT Corporation, a telecommunications equipment
manufacturer. From 1966 to 1977, Mr. Schock held a variety of positions with
Xerox Corporation, including product manager, regional sales operations manager
and regional manager for microsystems.

JOHN C. BACKUS, JR. has been President and director of the Company since
November 1996. Prior to November 1996, he had worked at US Order since its
inception in 1990 and had served as President, Chief Operating Officer and a
director of US Order since 1994. Prior to working with US Order, Mr. Backus
worked for six years at WorldCorp and its subsidiaries holding a variety of
executive positions including vice president of corporate development, vice
president of finance, and vice president of sales and marketing at a WorldCorp
subsidiary. Prior to joining WorldCorp, Mr. Backus worked for Bain & Company,
Inc., a worldwide strategy consulting firm with approximately 1,200 employees,
in its consulting and venture capital groups where he focused on consumer
products and services. Mr. Backus serves on the board of directors of
WorldCorp, Home Financial Network and Visa InterActive.

TIMOTHY R. WELLES has been an Executive Vice President, Consumer
Telecommunications Division and director of the Company since November 1996.
Mr. Welles had served as Executive Vice President and Chief Operating Officer of
Colonial Data since March 1996. Prior to joining Colonial Data, Mr. Welles was
Senior Vice President of First Albany Corporation, an investment banking firm,
from January 1994 to March 1996, with responsibilities related primarily to
corporate finance activities. Prior to joining First Albany, Mr. Welles held
various positions, most recently as Managing Director, at Advest, Inc., an
investment banking firm, from August 1989 to January 1994. Prior to joining
Advest, Inc., Mr. Welles practiced securities and corporate law at Cahill Gordon
& Reindel in its New York office.

JOSEPH E. SMITH has served as Executive Vice President, Electronic Commerce
Division for the Company since November 1996. Mr. Smith had served as Executive
Vice President, Financial Services of US Order since March 1996. Prior to
joining US Order, Mr. Smith was senior vice president of client services, sales
and marketing at Deluxe Data Systems, Inc. an electronic funds transfer services
company. He was responsible for strategic market expansion and operations. Prior
to that Mr. Smith was senior vice president, worldwide sales and marketing at
Calcomp, Inc. in Anaheim, CA and also served at IBM for ten years.

67
<PAGE>

JOHN W. HILLYARD has served as Vice President and Chief Financial Officer of
the Company since January 1997. Prior thereto, Mr. Hillyard was executive vice
president and chief financial officer of Vision Technologies LLC, an assembler
and seller of computers and peripherals from August 1996 to January 1997.
From May 1985 to August 1996, he was the chief financial officer of Deluxe
Data Systems, Inc., an electronic funds transfer services company. From May
1982 to May 1985, he was vice president of finance for Hogan Systems, Inc., a
developer of an integrated line of application software for large financial
institutions. Mr. Hillyard is a Certified Public Accountant.

ALBERT N. WERGLEY has served as Vice President and General Counsel of the
Company since November 1996. From May 1995 to November 1996, he served as
Vice president and General Counsel of US Order. From 1986 to 1994, Mr. Wergley
was vice president and general counsel of Verdix Corporation (now Rational
Software Corporation), a manufacturer of software development tools. Previous
to that he was associated with the McLean, Virginia office of the law firm of
Reed Smith Shaw & McClay and with the law firm of Howrey & Simon in Washington,
D.C.

MARK L. BAIRD has served as Vice President of Operations of the Company
since November 1996. Mr. Baird had served as Director of Staff Operations and
then as Vice President of Operations for Colonial Data since July 1994. Prior
to joining Colonial Data, Mr. Baird was vice president of Consolidated Asset
Recovery Corporation, a subsidiary of the Chase Manhattan Bank of Connecticut,
N.A., with responsibilities related primarily to special asset management. Prior
to joining Chase Manhattan, Mr. Baird held various positions, most recently as
Assistant Vice President of The Bank Mart, a mutual savings bank. Prior to that,
Mr. Baird was Assistant to the Chairman of the Bodine Corporation, a privately
held machine tool manufacturer.

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.

68
<PAGE>

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.

69
<PAGE>

PART IV

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

(a) 1. FINANCIAL STATEMENTS

See Item 8 of this Report

2. FINANCIAL STATEMENT SCHEDULES

See Item 8 of this Report

3. EXHIBITS (* denotes filed herewith)

Status of Prior Documents

InteliData'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.

2.1 Agreement and Plan of Merger dated as of August 5, 1996, between
Colonial Data Technologies Corp. and US Order, Inc. (Incorporated
herein by reference to the Company's Registration Statement on Form
S-4, File Number 333-11081).

2.2 Amendment No. 1 dated as of November 7, 1996, by and among US Order,
Inc., Colonial Data Technologies Corp. and InteliData Technologies
Corporation to the Agreement and Plan of Merger. (Incorporated herein
by reference to the Company's Current Report on Form 8-K filed with
the Commission on November 12, 1996).

3.1 Certificate of Incorporation of InteliData Technologies Corporation.
(Incorporated herein by reference to the Company's Registration
Statement on Form S-4, File Number 333-11081).

3.2 Bylaws of InteliData Technologies Corporation. (Incorporated herein
by reference to the Company's Registration Statement on Form S-4,
File Number 333-11081).

4.1 Form of Warrant, as amended. (Incorporated by reference to the
Colonial Data Registration Statement on Form S-4, File Number 33-
30242).

70
<PAGE>

10.1 Memorandum of Understanding regarding Personnel Services between
WorldCorp, Inc. and InteliData Technologies Corporation, dated
February 11, 1994. (Incorporated herein by reference to the US Order
Registration Statement on Form S-1, dated June 1, 1995, File Number
33-90978).

10.2 Sales and Service Subcontract Agreement, dated December 20, 1994,
between US Order, Inc. and Visa Interactive, Inc. (Incorporated
herein by reference to the US Order Registration Statement on Form S-
1, File Number 33-90978).

10.3 Acquisition Agreement, as amended, dated July 15, 1994, among Visa
International Service Association, US Order, Inc. and WorldCorp, Inc.
(Incorporated herein by reference to the US Order Registration
Statement on Form S-1, File Number 33-90978).

10.4 US Order, Inc. 1991 Stock Option Plan. (Incorporated herein by
reference to the US Order Registration Statement on Form S-1, File
Number 33-90978).

10.5 US Order, Inc. 1995 Incentive Plan. (Incorporated herein by reference
to the US Order Registration Statement on Form S-1, File Number 33-
90978).

10.6 US Order, Inc. Non-Employee Directors' and Directors' Stock Option
Plans. (Incorporated herein by reference to the US Order Registration
Statements on Form S-8, File Numbers 333-2348 and 333-2346).

10.7 Employment Agreement, dated as of August 1, 1994, between US Order,
Inc. and John C. Backus, Jr. (Incorporated herein by reference to the
US Order Registration Statement on Form S-1, File Number 33-90978).

10.8 Stock Option Agreement, dated as of August 1, 1995, between US Order,
Inc. and John C. Backus, Jr. (Incorporated herein by reference to the
US Order Registration Statement on Form S-1, dated June 1, 1995, File
Number 33-90978).

10.9 Stock Restriction Agreement, as amended, dated September 14, 1990,
among US Order, Inc. and certain founders of US Order, Inc..
(Incorporated herein by reference to the US Order Registration
Statement on Form S-1, File Number 33-90978).

10.10 Investment Agreement, dated December 20, 1993, between US Order, Inc.
and Knight-Ridder, Inc. (Incorporated herein by reference to the US
Order Registration Statement on Form S-1, File Number 33-90978).

10.11 Letter Agreement dated April 5, 1995 between Visa International
Service Association and US Order, Inc.. (Incorporated herein by
reference to the US Order Registration Statement on Form S-1, File
Number 33-90978).

71
<PAGE>

10.12 Amendment No. 1, dated as of May 1, 1995, to Stock Option Agreement
between US Order, Inc. and John C. Backus, Jr. (Incorporated herein
by reference to the US Order Registration Statement on Form S-1, File
Number 33-90978).

10.13 Employment Agreement, dated as of July 1, 1996, between Colonial
Data Technologies Corp. and Robert J. Schock. (Incorporated herein by
reference to the Company's Registration Statement on Form S-4, File
Number 333-11081).

10.14 Technical Information and Patent License Agreement effective as of
August 1, 1987 by and between American Telephone and Telegraph and
Colonial Data Technologies Corp. (Incorporated herein by reference to
the Colonial Data Report on Form 10-Q for the quarter
ended September 30, 1989, File Number 0-15562).

10.15 Colonial Data Technologies Corp. 401(k) Plan. (Incorporated herein
by reference to the Colonial Data Report on Form 10-K for the year
ended December 31, 1994, File Number 0-15562).

10.16 Agreement, dated as of March 1, 1996 between Colonial Data
Technologies Corp. and Robert J. Schock. (Incorporated herein by
reference to the Colonial Data Report on Form 10-Q
for the quarter ended March 31, 1996, File Number 0-15562).

10.17 Amended and Restated Loan and Security Agreement between Colonial
Technologies Corp. and People's Bank, dated May 3, 1996.
(Incorporated herein by reference to the Colonial Data Report on
Form 10-Q for the quarter ended June 30, 1996, File Number 0-15562).

10.18 Revolving Credit Note between Colonial Technologies Corp. and
People's Bank, dated May 3, 1996. (Incorporated herein by reference
to the Colonial Data Report on Form 10-Q for the quarter ended June
30, 1996, File Number 0-15562).

10.19 Guaranty Agreement between Colonial Data Technologies Corp. and
People's Bank, dated May 3, 1996. (Incorporated herein by reference
to the Colonial Data Report on Form 10-Q for the quarter ended June
30, 1996, File Number 0-15562).

10.20 Master Trademark License Agreement between Colonial Data
Technologies Corp. and Pacific Bell. (Incorporated herein by
reference to the Colonial Data Report on Form 10-Q for the quarter
ended June 30, 1996, File Number 0-15562).

72
<PAGE>

10.21 Bond Purchase Agreement by and among CDT Realty Corp. and 80
Pickett District Associates, L.L.C., dated as of September 13, 1996.
(Incorporated herein by reference to the Company's Report on Form 10-
Q for the quarter ended September 30, 1996, File Number 000-21685).

10.22 InteliData Technologies Corporation 1996 Incentive Plan.
(Incorporated herein by reference to the Company's Registration
Statement on Form S-8, File Number 333-16115).

10.23 InteliData Technologies Corporation Non-Employee Directors' Stock
Option Plan. (Incorporated herein by reference to the Company's
Registration Statement on Form S-8, File Number 333-16117).

10.24 InteliData Technologies Corporation Employee Stock Purchase Plan.
(Incorporated herein by reference to the Company's Registration
Statement on Form S-8, File Number 333-16121).

*10.25 Restricted Shares Award Agreement between Colonial Data
Technologies Corp. and Timothy R. Welles.

*10.26 Award Agreement between Colonial Data Technologies Corp. and
Timothy R. Welles.

*10.27 Aircraft Lease Agreement between CDT Corp. and Colonial Data
Technologies Corp.

16.1 Letter from KPMG Peat Marwick LLP. (Incorporated herein by reference
to the Company's Current Report on Form 8-K filed with the Commission
on November 27, 1996).

*21.1 InteliData Technologies Corporation List of Significant
Subsidiaries.

23.1 Consent of Deloitte & Touche LLP.

23.2 Consent of KPMG Peat Marwick LLP.

27 Financial Data Schedule.

(b) REPORTS ON FORM 8-K

The Company filed Current Reports on Form 8-K with the Securities and
Exchange Commission on November 12, 1996 and November 27, 1996.

* * * * * * * *

73
<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.

INTELIDATA TECHNOLOGIES CORPORATION

By /s/Robert J. Schock
-------------------
ROBERT J. SCHOCK
Chief Executive Officer and Director
(Principal Executive Officer)

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

Signature Title Date
- --------- ----- -----
<S> <C> <C>
/s/ Robert J. Schock Chief Executive Officer and Director March 28, 1997
- ----------------------------- (Principal Executive Officer)
ROBERT J. SCHOCK

/s/ William F. Gorog Chairman of the Board and Director March 28, 1997
- -----------------------------
(WILLIAM F. GOROG)

/s/ John C. Backus, Jr. President, Chief Operating March 28, 1997
- ----------------------------- Officer and Director
JOHN C. BACKUS, JR.

/s/ John W. Hillyard Vice President - Finance and Chief March 28, 1997
- ----------------------------- Financial Officer (Principal Financial
JOHN W. HILLYARD and Accounting Officer)

/s/ Timothy R. Welles Executive Vice President and Director March 28, 1997
- -----------------------------
TIMOTHY R. WELLES

/s/ T. Coleman Andrews, III Director March 28, 1997
- -----------------------------
T. COLEMAN ANDREWS, III

/s/ Walter M. Fiederowicz Director March 28, 1997
- -----------------------------
WALTER M. FIEDEROWICZ

/s/ Patrick F. Graham Director March 28, 1997
- -----------------------------
PATRICK F. GRAHAM

- ----------------------------- Director
CONSTANTINE S. MACRICOSTAS

- ----------------------------- Director
WESLEY C. TALLMAN

</TABLE>

<PAGE>
EXHIBIT 10.25
RESTRICTED SHARES AWARD AGREEMENT

This Restricted Shares Award Agreement (the "Agreement") is made and
entered into as of November 1, 1996, between Colonial Data Technologies Corp, a
Delaware corporation (the "Corporation"), and Timothy R. Welles ("Award
Recipient").

W I T N E S S E T H:

WHEREAS, the Award Recipient is the Executive Vice President, Chief
Operating Officer and a Director of the Corporation.

WHEREAS, the Corporation wishes to recognize the valuable services rendered
by the Award Recipient to the Corporation, to retain the Award Recipient as an
employee of the Corporation, to provide inducement to him to continue his
employment and to provide an additional incentive to him to promote the best
interests of the Corporation all through the use of a restricted shares award.

WHEREAS, the Corporation maintains the Colonial Data Technologies Corp.
1994 Long-Term Incentive Plan (the "Plan") under which the Compensation
Committee of the Board of Directors of the Corporation (the "Compensation
Committee") may, among other things, award shares of the Corporation's Common
Stock, $.01 par value per share (the "Common Stock"), to such members of the
Company's management team as the Committee may determine, subject to terms,
conditions or restrictions as it may deem appropriate.

WHEREAS, pursuant to the Plan, the Compensation Committee has awarded to
the Award Recipient a restricted shares award (the "Restricted Shares Award") of
certain shares of the Common Stock conditioned upon the execution by the
Corporation and the Award Recipient of this Restricted Shares Award Agreement
setting forth all the terms and conditions applicable to such award.

NOW, THEREFORE, in consideration of the agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound thereby, the parties
hereby agree as follows:

1. AWARD OF SHARES

Under the terms of the Plan, and subject to the terms and conditions set
forth herein, the Corporation awards to the Award Recipient, on the day and year
first written above (hereinafter referred to as the "Effective Date"), ten
thousand (10,000) fully paid and non-assessable shares of Common Stock of the
Corporation (the "Restricted Shares").

2. SHARE RESTRICTIONS

All Restricted Shares awarded to the Award Recipient pursuant to this
Agreement are subject to the following restrictions:
<PAGE>

(a) Without limiting the provisions of paragraphs 2(b) and 2(c) below, the
Restricted Shares shall be restricted until the closing of the transactions
contemplated by the Agreement and Plan of Merger dated as of August 5, 1996
between US Order, Inc. and the Corporation (the "Merger Agreement"). If the
Merger Agreement is terminated prior to the consummation of the transactions
contemplated thereby, the Restricted Shares shall immediately be cancelled and
the Award Recipient's rights with respect to the Restricted Shares shall be
forfeited.

(b) If the Award Recipient's employment with the Corporation terminates for
any reason other than death or total disability, prior to December 31, 1998,
such Restricted Shares that are then subject to the restrictions imposed under
this paragraph 2(b) shall immediately be cancelled and the Award Recipient's
rights with respect to such Restricted Shares shall be forfeited. The
restrictions imposed under this paragraph 2(b) shall lapse and be of no further
effect ("Lapse") as to 5,000 Restricted Shares on December 31, 1997 and as to
5,000 Restricted Shares on December 31, 1998. In the event that the Award
Recipient shall die while in the regular full time employment of the Corporation
or terminate his employment by virtue of his having become totally disabled, the
restrictions imposed under this paragraph 2(b) shall Lapse.

(c) Until the restrictions imposed under this paragraph 2 Lapse, the Award
Recipient agrees that the Award Recipient will not sell, offer to sell, or
otherwise transfer or dispose of the Restricted Shares subject to such
restrictions, whether by gift, sale, assignment, pledge, other encumbrance, or
by operation of law.

3. SECRETARY TO HOLD CERTIFICATES

In order to enforce the restrictions imposed upon the Restricted Shares
under paragraph 2 of this Agreement, the Restricted Shares, together with a
stock power duly executed by the Award Recipient, shall be held by the Secretary
of the Corporation until the restrictions imposed pursuant to said paragraph 2
have Lapsed; and as such restrictions Lapse, the Secretary shall distribute to
the Award Recipient those Restricted Shares which are no longer subject to such
restrictions. The Award Recipient hereby appoints the person holding the office
of Secretary of the Corporation, from time to time, as his attorney-in-fact to
take all actions necessary to carry out the intent of this Agreement including
but not limited to endorsing the certificate evidencing the Restricted Shares
back to the Corporation, and to the extent that the Corporation is entitled to a
distribution of some, but not all, of the Restricted Shares under the terms
hereof, re-issuing such new certificates with regard to the Restricted Shares as
may be appropriate upon Lapse of the restrictions or termination of the Award
Recipient's employment.

4. WITHHOLDING TAXES

The Corporation shall have the right to retain and withhold from any
payment of Restricted Shares awarded the amount of taxes required by any
government to be withheld or otherwise deducted and paid with respect to such
payment. At its discretion, the Corporation may require the Award Recipient
receiving shares of Common Stock under this Restricted Shares Agreement Award to
<PAGE>

reimburse the Corporation for any such taxes required to be withheld by the
Corporation and withhold any distribution in whole or in part until the
Corporation is so reimbursed. In lieu thereof, the Corporation shall have the
right to withhold from any other cash amounts due or to become due from the
Corporation to the Award Recipient an amount equal to such taxes required to be
withheld by the Corporation to reimburse the Corporation for any such taxes or
retain and withhold a number of shares having a market value of not less than
the amount of such taxes and cancel (in whole or in part) any such shares so
withheld in order to reimburse the Corporation for any such taxes.

5. LEGAL RESTRICTIONS

This Restricted Shares Award and the Corporation's obligation to issue
shares of its Common Stock hereunder shall be subject to all applicable laws,
rules and regulations, including without limitation, federal and state
securities laws. It shall be a condition precedent to the Corporation's
obligation to issue any shares hereunder that the Award Recipient make any
representation, warranty or agreement to the Corporation as may be required by
applicable law or regulation. The certificate or certificates for shares of
Common Stock issued pursuant to this Agreement shall be registered in the name
of the Award Recipient and shall contain, among other required legends, the
following legend:

"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including, without
limitation, forfeiture events) contained in the Colonial Data Technologies Corp.
1994 Long-Term Incentive Plan and Restricted Shares Award Agreement entered into
between the registered owner hereof and Colonial Data Technologies Corp. Copies
of such Plan and Restricted Shares Award Agreement are on file in the office of
the Secretary of Colonial Data Technologies Corp., New Milford, Connecticut.
Colonial Data Technologies Corp. will furnish to the record holder of the
certificate, without charge and upon written request at its principal place of
business, a copy of such Plan and Restricted Shares Award Agreement. Colonial
Data Technologies Corp. reserves the right to refuse to record the transfer of
this certificate until all such restrictions are satisfied, all such terms are
complied with and all such conditions are satisfied."

6. ADMINISTRATION

The Compensation Committee Board of Directors of the Corporation shall have
full authority and discretion to decide all matters relating to the
administration and interpretation of this Agreement. All such Committee
determinations shall be final, conclusive and binding upon the Corporation, the
Award Recipient, and any and all interest parties.

7. RIGHT TO CONTINUE EMPLOYMENT

Nothing in this Agreement shall confer on an Award Recipient any right to
continue in the employ of the Corporation or in any way affect the Corporation's
right to terminate the Award Recipient's employment without prior notice at any
time for any or no reason.
<PAGE>

8. FORCE AND EFFECT

The various provisions of this Agreement are severable in their entirety.
Any determination of invalidity or unenforceability of any one provision shall
have no effect on the continuing force and effect of the remaining provisions.

9. PREVAILING LAWS

This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware.

10. SUCCESSORS

This Agreement shall be binding upon and inure to the benefit of the
successors, assigns and heirs of the respective parties.

11. NOTICES

Unless waived by the Corporation, any notice to the Corporation required
under or relating to this Agreement shall be in writing and addressed to:

Colonial Data Technologies Corp.
80 Pickett District Road
New Milford, CT 06776
Attention: Secretary

12. NON-TRANSFERABILITY

The rights of the Award Recipient under this Agreement are nontransferable
and any attempted transfer thereof shall be void.

13. ENTIRE AGREEMENT

This Agreement contains the entire understanding of the parties and shall
not be modified or amended except by an instrument in writing and duly signed by
the parties. No waiver by either party of any default under this Agreement shall
be deemed to waiver of any subsequent default.

IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
hereof.

COLONIAL DATA
TECHNOLOGIES CORP.

By /s/ Robert J. Schock
-----------------------
Robert J. Schock
Title: President

/s/ Timothy R. Welles
-----------------------
Timothy R. Welles
Award Recipient

<PAGE>

EXHIBIT 10.26

AWARD AGREEMENT

This Award Agreement (this "Agreement") is made and entered into as of
November 1, 1996 between Colonial Data Technologies Corp., a Delaware
corporation (the "Corporation") and Timothy R. Welles ("Award Recipient").

W I T N E S S E T H:

WHEREAS, the Award Recipient is the Executive Vice President, Chief
Operating Officer and a Director of the Corporation.

WHEREAS, the Board of Directors has authorized a bonus (the "Award") to the
Award Recipient, for services rendered to the Corporation consisting of 40,000
fully paid and non-assessable shares (the "Shares") of common stock, par value
$.01, of the Corporation (the "Common Stock") conditioned upon the execution by
the Corporation and the Award Recipient of this Award Agreement setting forth
all the terms and conditions applicable to the Award.

WHEREAS, such Shares are subject to a restriction on sale or transfer until
December 31, 1997.

1. AWARD OF SHARES

Subject to the terms and conditions set forth herein, the Corporation
awards to the Award Recipient, on the day and year first written above (the
"Effective Date"), 40,000 fully paid and non-assessable shares of common stock
of the Corporation.

2. RESTRICTIONS

(a) Without limiting the provisions of paragraphs 2(b) and 2(c) below, the
Shares shall be restricted and subject to forfeiture until the closing of the
transactions contemplated by the Agreement and Plan of Merger dated as of August
5, 1996 between US Order, Inc. and the Corporation (the "Merger Agreement"). If
<PAGE>

the Merger Agreement is terminated prior to the consummation of the transactions
contemplated thereby, the Shares shall immediately be cancelled and the Award
Recipient's rights with respect to such Shares shall be forfeited.

(b) From and after the Effective Date and until December 31, 1997, the
Award Recipient hereby agrees that the Award Recipient will not sell, offer to
sell or otherwise transfer or dispose of, all or any portion of the Shares,
whether by gift, sale, assignment, pledge, other encumbrance or by operation of
law.

(c) In furtherance of the foregoing, the Corporation and its transfer agent
are hereby authorized to decline to make any transfer of such Shares if such
transfer would constitute a violation or breach of this Agreement.

3. SECRETARY TO HOLD CERTIFICATES

In order to enforce the restrictions imposed upon the Shares under
paragraph 2 of this Agreement, the Shares, together with a stock power duly
executed by the Award Recipient, shall be held by the Secretary of the
Corporation until the restrictions imposed pursuant to said paragraph 2 have
lapsed; and as such restrictions lapse, the Secretary shall distribute such
Shares to the Award Recipient. The Award Recipient hereby appoints the person
holding the office of Secretary of the Corporation, from time to time, as his
attorney-in-fact to take all actions necessary to carry out the intent of this
Agreement including but not limited to endorsing the certificate evidencing the
Shares back to the Corporation.

4. WITHHOLDING TAXES

The Corporation shall have the right to retain and withhold from any
payment under the Shares awarded the amount of taxes required by any government
to be withheld or otherwise deducted and paid with respect to such payment. At
its discretion, the Corporation may require the Award Recipient receiving Shares
under this Award to reimburse the Corporation for any such taxes required to be
withheld by the Corporation and withhold any distribution in whole or in part
until the Corporation is so reimbursed. In lieu thereof, the Corporation shall
have the right to withhold from any other cash amounts due or to become due from
the Corporation to the Award Recipient an amount equal to such taxes required to
be withheld by the Corporation to reimburse the Corporation for any such taxes
or retain and withhold a number of Shares having a market value of not less than
the amount of such taxes and cancel (in whole or in part) any such Shares so
withheld in order to reimburse the Corporation for any such taxes.

5. LEGAL RESTRICTIONS

This Agreement and the Corporation's obligation to issue Shares hereunder
<PAGE>

shall be subject to all applicable laws, rules and regulations, including
without limitation, federal and state securities laws. It shall be a condition
precedent to the Corporation's obligation to issue any Shares hereunder that the
Award Recipient make any representation, warranty or agreement to the
Corporation as may be required by applicable law or regulation.

6. RIGHT TO CONTINUE EMPLOYMENT

7. FORCE AND EFFECT

8. PREVAILING LAWS

This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware.

9. SUCCESSORS

This Agreement shall be binding upon and inure to the benefit of the
successors, assigns and heirs of the respective parties.

10. NOTICES

Unless waived by the Corporation, any notice to the Corporation required
under or relating to this Agreement shall be in writing and addressed to:

Colonial Data Technologies Corp.
80 Pickett District Road
New Milford, CT 06776
Attention: Secretary

11. NON-TRANSFERABILITY
<PAGE>

The rights of the Award Recipient under this Agreement are nontransferable
and any attempted transfer thereof shall be void.

12. ENTIRE AGREEMENT

IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
hereof.

COLONIAL DATA TECHNOLOGIES CORP.

By /s/ Robert J. Schock
Title: President

/s/ Timothy R. Welles
Timothy R. Welles
Award Recipient

<PAGE>

EXHIBIT 10.27

------------------------------------------------

AIRCRAFT LEASE AGREEMENT

------------------------------------------------

between

CDT CORP.
("Lessor")

and

COLONIAL DATA TECHNOLOGIES CORP.
("Lessee")

Effective as of this 1st day of October, 1996

INDEX

ARTICLE PAGE
<S> <C> <C>
ARTICLE 1. LEASE OF AIRCRAFT AND AIRCRAFT USE................... 4
1.01. Lease of Aircraft........................... 4
1.02. Use of Aircraft............................. 4
1.03. Liens....................................... 5
1.04. Alteration to Aircraft...................... 5

ARTICLE 2. MAINTENANCE AND REPAIR............................... 5

ARTICLE 3. COMPENSATION......................................... 5
3.01. Payment for Lease of Aircraft............... 5
3.02. Time of Payment............................. 5

ARTICLE 4. EXPENSES, TAXES AND OTHER INCIDENTAL
COSTS.............................................. 6

ARTICLE 5. INSURANCE............................................ 6
5.01. Liability Insurance......................... 6
5.02. Hull Insurance.............................. 6
5.03. General Policy Provisions................... 6
(a) Primary Insurance................... 6
(b) Coverage of Each Insured............ 6
(c) Waiver of Certain Rights............ 7
(d) Breach of Warranty.................. 7
(e) Notice of Termination or Changes.... 7
(f) Nonliability for Premiums........... 7
(g) Identity of Insurers................ 7
5.04. Operation Under Insurance................... 7

</TABLE>
<PAGE>

<TABLE>

<S> <C> <C>
ARTICLE 6. INDEMNIFICATION AND LIMITATION OF
LIABILITY.......................................... 7
6.01. Property Damage and Personal Injury......... 7
6.02. Governmental Penalties...................... 8
6.03. Limitation of Liability..................... 8

ARTICLE 7. TERM AND TERMINATION RIGHTS.......................... 8
7.01. Term........................................ 8
7.02. Termination Rights.......................... 8
7.03. Return of Aircraft.......................... 8

ARTICLE 8. LOSS OR DAMAGE TO AIRCRAFT........................... 9

ARTICLE 9. GENERAL.............................................. 9
9.01. Assignment.................................. 9
9.02. Notice...................................... 9
9.03. Force Majeure............................... 10
9.04. Governing Law............................... 10
9.05. Headings.................................... 10
9.06. Execution................................... 10
9.07. Invalidity, Illegality or Unenforceability.. 11
9.08. Entire Agreement............................ 11

</TABLE>

AIRCRAFT LEASE AGREEMENT

THIS AGREEMENT, effective this 1st day of October, 1996, between CDT Corp.,
a corporation organized and existing under the laws of the State of Delaware,
U.S.A., with offices at c/o Colonial Data Technologies Corp., 80 Pickett
District Road, New Milford, Connecticut 06776, U.S.A. (hereafter "Lessor"), and
Colonial Data Technologies Corp., a corporation organized and existing under the
laws of the State of Delaware, U.S.A., with offices at 80 Pickett District Road,
New Milford, Connecticut 06776 (hereafter "Lessee").

W I T N E S S E T H:

WHEREAS, Lessor owns a Cessna 441 Aircraft, manufacturer's serial number
441-0221, FAA registration number N881CD, and all instruments, equipment, parts,
and accessories attached thereto (hereafter "Aircraft") which Lessor desires to
lease to Lessee; and

WHEREAS, Lessee desires to lease said Aircraft from Lessor to conduct
operations pursuant to Title 14 of the U.S. Code of Federal Regulations Part 91
(FAR Part 91) and other applicable laws and regulations;

NOW, THEREFORE, in consideration of the foregoing premises, which are
hereby incorporated and made part of the terms and conditions of this Agreement,
and the mutual covenants herein contained, the parties hereto agree as follows:
<PAGE>

ARTICLE 1.

LEASE OF AIRCRAFT AND AIRCRAFT USE

1.01. Lease of Aircraft. Lessor shall lease to Lessee and Lessee shall
lease from Lessor the Aircraft during the term of this Agreement, subject to the
terms and conditions set forth herein. Lessor shall at all times retain title to
and ownership of the Aircraft, together with all replacement parts, additional
equipment, repairs and accessories affixed thereto at the beginning of and
during the lease period. At no time shall Lessee attempt to register the
Aircraft in any country. During the term of the lease hereunder, Lessee shall
have operational control of the Aircraft.

1.02. Use of Aircraft. Lessee agrees to use the Aircraft in a safe, careful
and prudent manner in full compliance with FAR Part 91 of the regulations of the
U.S. Federal Aviation Administration (FAA) and any other regulations, rules,
laws, decrees, or treaties applicable to the operation of the Aircraft
hereunder. Lessee shall allow the Aircraft to be operated only by duly licensed
and qualified pilot(s) who shall be employed directly by Lessee.

1.03. Liens. Lessee shall not pledge, loan, or mortgage the Aircraft, or
permit any liens or other encumbrance of any nature or description to be
incurred upon the Aircraft during the term of this Agreement. If, because of any
act or omission by Lessee, any lien is placed on the Aircraft, Lessee shall,
within five (5) days after receipt of notice of the filing of any lien, take all
action necessary to remove the lien.

1.04. Alteration to Aircraft. Lessee shall not alter, modify, remove,
improve, or install any equipment in or on the Aircraft without Lessor's prior
written consent except to the extent such alterations, modifications, or
improvements are required by the FAA, by the manufacturer of the Aircraft or by
the manufacturer of any of its component parts by way of airworthiness
directives, manufacturer's mandatory service bulletins, or similar publications.
Lessee shall advise Lessor and Lessor shall advise Lessee upon receipt of
manufacturer's optional service bulletins and Lessee and Lessor shall consult in
good faith with each other with respect to compliance with and payment for said
optional service bulletins.

ARTICLE 2.

MAINTENANCE AND REPAIR

All inspections, maintenance and repairs on the Aircraft, including but not
limited to maintenance, repairs and modifications required by the manufacturer
or by any governmental authority, shall be performed by Lessee at its sole cost
unless otherwise agreed to by the parties.

ARTICLE 3.

COMPENSATION

3.01. Payment for Lease of Aircraft. Lessee agrees to pay Lessor rental
payments of One Hundred Dollars (U.S. $100) per flight hour or fraction thereof.
For purposes hereof, a flight hour shall be measured from the time the Aircraft
takes off to the time the Aircraft lands. Lessee agrees to pay Lessor for a
minimum of three hundred (300) flight hours per year and One Hundred Dollars
($100.00) per flight hour in excess of 300 flight hours.
<PAGE>

3.02. Time of Payment. Payments shall be made monthly in arrears by
Lessee. Payments shall be due within fifteen (15) days after the end of each
month, the first payment to be due November 15, 1996, and shall be sent to the
address set forth at Paragraph 9.02, unless otherwise directed by Lessor. Lessee
shall submit a copy of the flight logs for the previous month and shall pay any
additional rental payments due under Paragraph 3.01 along with each monthly
payment.

ARTICLE 4.

EXPENSES, TAXES AND OTHER INCIDENTAL COSTS

Lessee shall be responsible for all expenses incurred for use and operation
of the Aircraft during the term of this Agreement, including but not limited to
fuel, hangaring, storage, insurance, ground services, landing fees, property and
use taxes, and other governmental assessments or charges relating to the use and
operation of the Aircraft by Lessee. If any of such costs, expenses, fees, or
charges are billed to Lessor, Lessor shall immediately notify and provide such
bills, statements or invoices to Lessee which relate to such costs, expenses,
fees, or charges and Lessee shall take all reasonable steps to pay such bills in
a timely manner. In the event Lessor pays any such costs, expenses, fees, or
charges on behalf of Lessee, a written invoice showing such amounts shall be
submitted to Lessee for reimbursement in a timely manner.

ARTICLE 5.

INSURANCE

5.01. Liability Insurance. Lessor shall maintain in effect, during the term
of this Agreement, liability insurance, including war risk coverage, insuring
Lessor, including its employees, officers and directors, and naming Lessee and
its assignees, its employees, officers and directors as additional insureds,
against all liability for loss, injury, damages, or claims caused by or arising
out of or in connection with this Agreement, or with the possession, operation,
or control by Lessee of the Aircraft, including injuries to or death of
passengers, injuries to or deaths of third persons and damage to property up to
an aggregate limit of Seventy Million U.S. Dollars ($70,000,000.00) as a result
of any one occurrence.

5.02. Hull Insurance. Lessee shall maintain, during the term of this
Agreement, policies of all-risk aircraft flight and ground hull insurance on the
Aircraft against any and all loss of or damage to the Aircraft, including war
risk coverage.

5.03. General Policy Provisions. The insurance policies set forth in
Paragraphs 5.01 and 5.02 shall:

(a) Primary Insurance. Be primary and without right of contribution from
other insurance obtained by either Lessor or Lessee which may provide coverage
to Lessor or Lessee, or any other party indemnified under Article 6 hereof, with
respect to such person's interest in the Aircraft or with respect to or arising
out of the transactions contemplated by this Agreement.
<PAGE>

(b) Coverage of Each Insured. Expressly provide that all the provisions
thereof, except the agreed values and the limits of the liability of the insurer
under such policy, shall operate in the same manner as if there were a separate
policy covering each insured.

(c) Waiver of Certain Rights. Waive any right of the insurers to any
subrogation, setoff, recoupment, counterclaim, or any other deduction, whether
by attachment or otherwise, in respect of any liability of Lessee or any
additional insured.

(d) Breach of Warranty. Provide that, in respect of Lessor and each
additional insured, such insurance shall not be invalidated by any action or
inaction by Lessor and shall inure the interests of Lessor and each additional
insured, regardless of any breach or violation by Lessor of any representation,
warranty, declaration or condition contained in such policy.

(e) Notice of Termination or Changes. Provide for not less than 30 days'
prior written notice to be received by Lessor or Lessee before any lapse,
alteration, termination, or cancellation of the insurance evidenced thereby
shall be effective as to Lessor or Lessee, except that war-risk and allied
perils policies may provide for not less than seven days' prior written notice
or such lesser or greater notice as shall at the time be customary in the
aviation insurance industry generally, and which are then customarily in effect.

(f) Nonliability for Premiums. Provide that neither Lessee nor any other
additional insured shall be liable for any insurance premium.

(g) Identity of Insurers. Be with insurance companies' underwriters or
funds of recognized responsibility.

5.04. Operation Under Insurance. Lessee will not take any action that would
cause the insurance set forth in this Article to be suspended, impaired or
cancelled.

ARTICLE 6.

INDEMNIFICATION AND LIMITATION OF LIABILITY

6.01. Property Damage and Personal Injury. Each party hereto shall defend,
indemnify, and hold harmless the other party, its officers, directors,
employees, assignees, and agents from and against any and all loss or damage,
including but not limited to attorneys' fees, arising from damage to or
destruction of property (except Lessee shall not indemnify Lessor with respect
to damage to or destruction of the Aircraft, Lessor bearing the risk of loss of
Aircraft) or injury or death of persons which are in any manner whatsoever
related to the obligations of that party under this Agreement, except where due
to the other party's breach of representation or covenant in this Agreement or
gross negligence of the other party, its directors, officers, employees, or
agents.

6.02. Governmental Penalties. Lessee agrees to indemnify, defend, and hold
harmless Lessor, its officers, directors, employees, and agents from and
against:
<PAGE>

(a) any and all fines, forfeitures, lawful seizures, or confiscations by a
governmental authority, and (b) any and all penalties and related costs,
including but not limited to attorneys' fees, arising out of any violation of
FAR Part 91, or any other regulations, rules, laws, decrees or treaties
("Governmental Penalties"), provided such Governmental Penalties arise from
directions pertaining to operation of the Aircraft issued by Lessee or its
agents or from an act or omission of Lessee not pertaining to operation of the
Aircraft.

6.03. Limitation of Liability. UNDER NO CIRCUMSTANCES SHALL LESSOR BE
LIABLE FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES WHETHER OR NOT CAUSED BY LESSOR'S
NEGLIGENCE.

ARTICLE 7.

TERM AND TERMINATION RIGHTS

7.01. Term. The term of this Agreement shall be for two (2) years,
commencing on the date first written above.

7.02. Termination Rights. Notwithstanding Paragraph 7.01 hereof, this
Agreement may be terminated.

(a) immediately, if the Aircraft should be lost or substantially damaged
and, as a result thereof, be declared a total or constructive loss, or if Lessor
shall determine repair of the Aircraft is not advisable; or

(b) immediately, if the other party becomes insolvent, commits an act of
bankruptcy or bankruptcy proceedings are begun by or against the other party; or

(c) by either party upon thirty (30) days' written notice to the other
party in the event the other party is in breach of a material term or condition
of this Agreement. In such event, termination shall be effective on the date
specified in said notice, unless the default, which must be specified in the
notice, has been corrected by the party to whom notice is given and such
correction has been communicated to the party giving notice of termination
before the expiration of the thirty (30) day period; or

(d) by Lessor in its sole discretion upon the giving of thirty (30) days'
written notice to Lessee.

7.03. Return of Aircraft. Upon termination of this Agreement, Lessee shall
return the Aircraft to Lessor at a mutually agreeable location and in the same
condition as originally existed at the beginning of the lease period, normal
wear and tear excepted. The Aircraft shall be clean by industry standards and
shall be in an airworthy condition. Lessee shall also deliver to Lessor all
documents required by the FAA to be maintained with respect to the Aircraft and
all such documents shall be in full compliance with FAA rules, regulations,
requirements, and guidance for FAR 91 operations. Lessee shall be responsible
for and shall cause to be performed prior to the return of the Aircraft all
Airworthiness Directives issued during the term of this Lease, whether or not
the terms of such Airworthiness Directives require compliance prior to the
expiration of the Lease. Lessee shall return the Aircraft with no fewer than
<PAGE>

2500 hours and 2000 cycles remaining on the Aircraft until its next scheduled
shop visit. Upon termination of this Agreement, Lessor, at its option and in
addition to any other remedies, may take possession of and remove the Aircraft
with notice to Lessee and with or without legal proceedings.

ARTICLE 8.

LOSS OR DAMAGE TO AIRCRAFT

In the event of loss or damage to the Aircraft, Lessee shall immediately
report said loss or damage to Lessor and to any and all applicable governmental
agencies, and shall furnish such information and expeditiously execute or assist
Lessor in preparing and executing such documents as may be required and
necessary for Lessor to collect the proceeds from any insurance policies. Lessor
shall bear the risk of damage to, or destruction of, the Aircraft.

ARTICLE 9.

GENERAL

9.01. Assignment. Lessee may not sublease the Aircraft, except to a
wholly-owned subsidiary or affiliate of Lessee or assign this Agreement, in
whole or in part, without the prior written consent of Lessor. Lessor may not
assign this Agreement, in whole or in part, except to a wholly owned subsidiary
of Lessor in Lessor's sole discretion upon providing written notice to Lessee.
Upon providing such notice to Lessee of an assignment by Lessor to a
wholly-owned subsidiary, Lessor shall, if the subsidiary shall have a net worth
equal to or greater than that of Lessor,l be relieved of any obligations arising
thereafter under the terms of this Agreement to the extent of such assignment.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors or assigns.

9.02. Notice. Any notice required by this Agreement shall be considered as
having been duly given if such notice clearly identifies this Agreement and is
sent by telecopy, telefax, express or overnight courier service, or by certified
mail, postage prepaid, to the respective parties at the following addresses:

If to Lessor:

CDT Corp.
c/o Colonial Data Technologies Corp.
80 Pickett District Road
New Milford, Connecticut 06776
Attention: Robert B. Schock
Telephone: (860) 210-3000
Facsimile: (860) 355-3186

If to Lessee:

Colonial Data Technologies Corp.
80 Pickett District Road
New Milford, Connecticut 06776
Attention: John N. Giamalis
Telephone: (860) 210-3045
Facsimile: (860) 355-3186
<PAGE>

or to such other address as the respective parties hereto shall from time
to time designate in writing to the other party.

9.03. Force Majeure. If, by reason of Force Majeure (as defined below), any
party is rendered unable, wholly or in part, to perform any of its obligations
hereunder, such obligation shall be suspended so far as it is affected by Force
Majeure during, but not longer, than the continuance thereof. As used herein,
Force Majeure shall mean acts of God; acts of public enemy; acts of any
sovereign national or any political subdivision of any department or regulatory
agency thereof or entity created thereby whether or not such acts prove valid;
severe weather conditions; acts of any person engaged in subversive activity or
sabotage; fires, explosions or other catastrophes; strikes, slowdowns, lockouts,
or other labor disputes; or any similar cause beyond the party's control.

9.04. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAS OF THE STATE OF CONNECTICUT.

9.05. Headings. Headings are included in this Agreement for convenience
only and are to be disregarded in any interpretation or construction of this
Agreement.

9.06. Execution. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one counterpart.

9.07. Invalidity, Illegality or Unenforceability. In case any provision
contained herein shall for any reason be invalid, illegal or unenforceable under
applicable law in any respect, such provision shall be ineffective to the extent
of such invalidity, illegality or unenforceability, without invalidating the
remainder of such provision or the remainder of this Agreement, which shall be
construed as if such provision had never been contained herein.

9.08. Entire Agreement. This Agreement constitutes the entire agreement
between the parties relating to the subject matter hereof and supersedes all
prior agreements and understandings, whether written or oral, between the
parties concerning the subject matter contained herein. This Agreement shall not
be varied except in writing signed by both of the parties.

THE AIRCRAFT, N881CD, HAS BEEN MAINTAINED AND INSPECTED UNDER FAR 91 FROM
AT LEAST ONE YEAR BEFORE EXECUTION OF THIS AGREEMENT THROUGH THE DATE OF THE
EXECUTION OF THIS AGREEMENT. IT WILL BE MAINTAINED AND INSPECTED UNDER FAR 91
FOR OPERATIONS TO BE CONDUCTED UNDER THIS AGREEMENT FOR THE DURATION OF THIS
LEASE. LESSEE IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT IDENTIFIED
AND TO BE OPERATED UNDER THIS LEASE.

AN EXPLANATION OF THE FACTORS BEARING ON OPERATIONAL CONTROL AND THE
PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA
FLIGHT STANDARDS DISTRICT OFFICE OR GENERAL AVIATION DISTRICT OFFICE.
<PAGE>

I, THE UNDERSIGNED, JOHN N. GIAMALIS, VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER OF COLONIAL DATA TECHNOLOGIES CORP., CERTIFY THAT COLONIAL DATA
TECHNOLOGIES CORP. IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT AND
THAT COLONIAL DATA TECHNOLOGIES CORP. UNDERSTANDS ITS RESPONSIBILITY FOR
COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed and delivered by a duly authorized officer on the date first set forth
above.

COLONIAL DATA TECHNOLOGIES CORP.

By: /s/ John N. Giamalis
-------------------------------
John N. Giamalis
Title: Vice President and CFO

CDT Corp.

By: /s/ Robert J. Schock
-------------------------------
Robert J. Schock
Title: President

<PAGE>

EXHIBIT 21.1

INTELIDATA TECHNOLOGIES CORPORATION
LIST OF SIGNIFICANT SUBSIDIARIES

Colonial Technologies Corp.

<PAGE>

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

BOARD OF DIRECTORS AND STOCKHOLDERS
INTELIDATA TECHNOLOGIES CORPORATION
HERNDON, VIRGINIA

We consent to the incorporation by reference in Registration Statements No. 333-
16115, No. 333-16117 and No. 333-16121 of InteliData Technologies Corporation on
Form S-8 of our report dated February 5, 1997 appearing in this Annual Report on
Form 10-K of InteliData Technologies Corporation for the year ended December 31,
1996.

/s/ DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

Hartford, Connecticut
March 28, 1997

<PAGE>

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

BOARD OF DIRECTORS AND STOCKHOLDERS
INTELIDATA TECHNOLOGIES CORPORATION:

We consent to the incorporation by reference in the registration statements (No.
333-16115, No. 333-16117 and No. 333-16121) on Form S-8 of InteliData
Technologies Corporation of our report dated February 5, 1996, relating to the
consolidated balance sheet of InteliData Technologies Corporation as of December
31, 1995, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for each of the years in the two-year period
ended December 31, 1995, which report appears in the December 31, 1996 annual
report on Form 10-K of InteliData Technologies Corporation.

/s/ KPMG PEAT MARWICK LLP

KPMG PEAT MARWICK LLP

Washington, D.C.
March 28, 1997

<PAGE>
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