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 October 31, 1999           Commission File No. 0-14880


                              MICROLOG CORPORATION
             (Exact name of Registrant as specified in its charter)

             VIRGINIA                                          52-0901291
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)

         20270 GOLDENROD LANE                                  20876-4070
         GERMANTOWN, MARYLAND                                  (Zip Code)
(Address of principal executive offices)


                                 (301) 428-9100
              (Registrant's telephone number, including area code)

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

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

                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (Title of class)

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 __

Indicate 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 herein, and
will not be  contained,  to the best of  Registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ( )

The  aggregate  market  value of shares of Common  Stock held by  non-affiliates
(based on the January 14, 2000 closing price of these shares) was  approximately
$9.6 million. The Common Stock is traded over-the-counter and quoted through the
Nasdaq Smallcap Market.

           As of January 14, 2000 6,989,113 shares of the Registrant's
                         Common Stock were outstanding.

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                       DOCUMENTS INCORPORATED BY REFERENCE

Parts I and III of this  Form  10-K  incorporate  information  by  reference  to
portions of the Company's definitive Proxy Statement to be filed within 120 days
after the end of the fiscal  year (the "Proxy  Statement").  Parts I, II, and IV
incorporate  information  by reference  from  portions of the  Company's  Annual
Report to Shareholders for the fiscal year ended October 31, 1999 attached as an
exhibit hereto (the "Annual Report to Shareholders").

                                TABLE OF CONTENTS

                                                                            PAGE

Part I.   Item 1.  Business ..................................................1
          Item 2.  Properties.................................................15
          Item 3.  Legal Proceedings..........................................15

          Item 4.  Sumission of Matters to a Vote of Security Holders.........16
Part II.  Item 5.  Market for Registrant's Common Equity and
                   Related Stockholder Matters................................16
          Item 6.  Selected Financial Data....................................16

          Item 7.  Management's Discussion and Analysis of Financial
                   Condition and Results of Operations........................16

          Item 7A. Quantitative and Qualitative Disclosures About Market Risk.16
          Item 8.  Financial Statements and Supplementary Data................16
          Item 9.  Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure........................16

Part III. Item 10. Directors and Executive Officers of the Registrant.........17
          Item 11. Executive Compensation.....................................17
          Item 12. Security Ownership of Certain Beneficial
                   Owners and Management......................................17

          Item 13. Certain Relationships and Related Transactions.............17
Part IV.  Item 14. Exhibits, Financial Statement Schedules
                   and Reports on Form 8-K....................................17



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              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This report and the  information  incorporated  by  reference in it contain
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. The Company intends the forward-looking  statements to be covered by
the safe harbor provisions for forward-looking statements in these sections. All
statements  regarding the Company's  expected  financial  position and operating
results,  business strategy,  financing plans, forecasted trends relating to our
industry,  its ability to realize  anticipated  cost savings and similar matters
are forward-looking statements.  These statements can sometimes be identified by
the  use  of  forward-looking   words  such  as  "may,"  "will,"   "anticipate,"
"estimate," "expect," "believe" or "intend." The Company cannot promise you that
our expectations in such forward-looking statements will turn out to be correct.
Some  important  factors  that could cause our actual  results to be  materially
different  from our  expectations  include  those  discussed  under the  caption
"Business--Factors That May Effect Future Results of Operations."




                                      iii

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                                     PART I

ITEM 1.  BUSINESS

Unless the context otherwise requires,  references in this report to Microlog or
the Company are to Microlog Corporation and its consolidated subsidiaries.

GENERAL

Microlog Corporation has two major subdivisions:  the Voice Processing division,
and the Old  Dominion  Systems  division.  The Voice  Processing  division  is a
software  development and systems integration  services company.  The charter of
the division is to help the Company's  customers to serve their customers better
through the use of technology in formal and informal  corporate contact centers.
Specifically,  the Company builds custom  self-service and customer  interaction
solutions that manage  telephony type contacts (a historical  focus and strength
of the Company) and Internet-based  contacts (sometimes known in the industry as
"new media types").  In providing these  solutions,  the Company uses core voice
and  data  platforms  and  toolkits  (the  Company's   products)  combined  with
professional services. This means that Microlog's products and solutions address
interactive voice response (IVR), inbound and outbound phone calls, e-mail, fax,
world-wide Web interactions,  chat, Web bulletin board, and voice-over-IP  types
of  contacts.   Services   associated  with  this  business  include  technology
assessment, project management,  application and software development, telephony
integration, installation, system administration, quality assurance testing, and
on-going maintenance and support.  While the scope of this business has expanded
far beyond simply processing  telephone calls, the area has  traditionally  been
identified as Voice  Processing,  and will be identified as such  throughout the
remainder of this document.

Through its Old Dominion  Systems  division,  the Company  provides  performance
analysis  and  technical  and  administrative  support  services  to the Applied
Physics  Laboratory  (APL), a prime  contractor to the U.S. Navy.  Although this
segment of the business has  historically  provided a stable source of sales and
profits, the Company believes that its principal opportunities for growth are in
the Voice Processing area, specifically related to customer contact centers. The
Company  has  been  concentrating  its  investments  and  efforts  on the  Voice
Processing area.

The Company had a net loss of $4.7 million (($1.02) per basic and diluted share)
for the fiscal year ended October 31, 1999. By comparison, the Company had a net
loss of $8.6 million  (($2.02) per basic and diluted  share) for the fiscal year
ended October 31, 1998,  which  included a $2.15  million  (($.50) per basic and
diluted share)  reversal of an income tax benefit  associated  with the expected
future  realization  of the  Company's  net operating  loss  carryforwards.  The
Company  had net  income of $3.7  million  ($.89  per  basic  share and $.82 per
diluted share) for the fiscal year ended October 31, 1997, which included a $1.5
million ($.36 per basic share and $.33 per diluted share) income tax benefit.

The net loss of $4.7  million  for  fiscal  year  1999 was  attributable  to the
Company's voice processing  operations.  Approximately $4.2 million of this loss
was due primarily to insufficient voice processing  revenues.  The loss was also
due in  part to an  increase  of  $0.3  million  in the  reserve  for  inventory
obsolescence, and $0.7 million of costs incurred for restructuring the Company's
voice  processing  operations.  These  losses  were  offset  in part by the $0.5
million  net  income  generated  from the  Company's  performance  analysis  and
supports services operations.

In fiscal year 1999, the Company incurred  restructuring charges of $693,000 for
severance  benefits and other costs for the  reduction of  employees.  Temporary
employees and contractors were also reduced.  The restructuring  charges include
costs of $381,000 for severance and benefits, the write-off of assets of $49,000
for the  equipment  associated  with  headcount  reductions,  costs of  $103,000
associated with the closing of the Company's  manufacturing  facility, and costs
of $160,000 to terminate the 15-year lease commitment for new office space which
the  Company had entered  into in May 1998.  As a result of these  restructuring
activities and other cost reduction  actions,  the Company expects to reduce its
annual  voice  processing  operating  expenses  by  approximately  $4.8  million
annually.


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<PAGE>

On July 2, 1999 the Company finalized an Investment Agreement with TFX Equities,
Inc., a wholly owned subsidiary of Teleflex, Inc. The investment was consummated
in two transactions.  In the first transaction,  which occurred on July 2, 1999,
TFX purchased  854,563 shares of Microlog common stock for $1.3 million.  In the
second  transaction,  which occurred on October 2, 1999, TFX purchased 1,812,104
additional  shares of common stock for $2.7 million.  The Company held a special
meeting of  stockholders  on  September  9, 1999 and  received  approval  of the
issuance of the 1,812,104 additional shares.

In September 1999, the Company sold the voice processing  operations of Microlog
Europe to Comsys International,  B.V. of The Netherlands.  The Company agreed to
grant Comsys certain rights to resell its TIVRA (formerly  Intela)  software and
related hardware.  The Company also agreed to assign certain agreements to which
Microlog is a party  relating to the TIVRA  products.  As part of the sale,  two
Microlog employees became employees of Comsys. The sale is anticipated to result
in a gain to Microlog of approximately $100,000. Since some of the proceeds from
the sale are based on future  contracts  between Comsys and the Company's former
customers,  the gain on the sale was  estimated  and therefore has been deferred
into fiscal year 2000.

In fiscal year 1999, the Company  closed and drew on a revolving  line-of-credit
facility  which  allows  the  Company  to  borrow  up to  75%  of  its  eligible
receivables  to a maximum of  $2,000,000,  subject to the right of the financial
institution  to make  loans only in its  discretion.  The  line-of-credit  bears
interest at the bank's prime rate plus 2.25% (10.75% at October 31,  1999),  and
contains a 0.025%  fee on the  average  unused  portion of the line as well as a
monthly  collateral fee and a 1% up-front  commitment fee. The loan subjects the
Company to a  restrictive  covenant of not  exceeding  115% of its  consolidated
planned  quarterly losses for its second and third quarters of fiscal year 1999,
and a requirement for consolidated profitability beginning in the fourth quarter
of  fiscal  year  1999.  The line  also  subjects  the  Company  to a number  of
restrictive covenants including restrictions on mergers or acquisitions, payment
of dividends,  and certain  restrictions on additional  borrowings.  The line is
secured by all of the Company's  assets.  The Company was not in compliance with
the restrictive covenant in the second quarter of fiscal year 1999, but obtained
a waiver from the bank. The Company was not in compliance  with the  restrictive
covenant  in the  fourth  quarter  of fiscal  year 1999 for which a  forbearance
agreement has been obtained. The forebearance agreement waives the lenders right
under an event of default to terminate the loan. This line-of-credit  expires in
March  2000,  and the  Company  and  the  bank  are in the  process  of  renewal
discussions.  There was no  outstanding  debt  against  this  line-of-credit  at
October 31, 1999.

Over the past two years,  the  Company  has been  experiencing  reduced  demand,
increased  competition,  and reduced margins in the voice processing area, which
the Company  attributes to market forces.  The Company believes that interactive
voice response  systems in general,  and certain  vertical  sub-segments of this
market  in  particular,  are in the  maturing  phase  of  market  evolution  for
stand-alone systems.  Accordingly,  competition has increased, margins have been
reduced,  and it has become more difficult to sell these products.  In addition,
governmental  customers have been  procuring  large IVR systems as part of major
procurements from larger vendors, which has required the Company to work through
prime  contractors,  also  resulting  in increased  margin  pressure and greater
difficulty in making sales directly.  The Company's response to this has been to
increase its R&D in both the uniQue(TM) and TIVRA (formerly  Intela) products to
expand  its   interactive   response   offerings   to   include   Internet-based
interactions,  and to offer professional  turnkey services to the integration of
modern customer contact centers. This addresses not only traditional voice types
of contacts,  but also e-mail,  fax,  Web  callback,  IP  telephony,  chat,  Web
bulletin board, and hardcopy mail,  thereby expanding the Company's  addressable
market.  This  approach  yields  sales  potential  due to the trend in corporate
process re-engineering in customer relationship  management,  and in outsourcing
of related transactions and application development.

In fiscal year 2000,  the Company's  strategy for  addressing  the market trends
will be to expand its professional  services offerings to provide  comprehensive
solutions to its customers,  inclusive of the Company's products.  The objective
of these  solution  services is for the Company to help its  customers to better
serve  their  customers.  The  Company  plans to  accomplish  this  through  the
implementation of self service and customer interaction  applications utilizing:
the TIVRA voice processing platform,  enabled by speech recognition;  the uniQue
contact processing platform, for media processing,  Web interfaces,  and contact
prioritization; and services based on the analysis, development, and integration
skills developed over the years by the Microlog and ODSM staff.

The Company is subject to the risk that its new strategy will not be successful.
The new strategy is dependent on market  acceptance  of the  Company's new focus
and new products,  ongoing research and development efforts and sales activities
over the near term.  In  addition,  the new  strategy is also  dependent  on the
Company's ability to successfully retain and recruit skilled personnel.

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The results of the Company's performance during fiscal 1999, 1998, and 1997, are
discussed  in  greater  detail  in  "Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations," which forms a part of the Annual
Report to  Shareholders  and is  incorporated  by reference  into Item 7 of this
Annual Report on Form 10-K.  That  discussion and analysis should be read in its
entirety in conjunction  with the  discussion of the Company's  business in this
Item 1. Information  concerning the Company's  operations by business segment is
hereby  incorporated  by  reference  to  Note 1 of the  "Notes  to  Consolidated
Financial  Statements,"  which forms a part of the Annual Report to Shareholders
and is also incorporated by reference into Item 8 of this Report.

Microlog, a Virginia corporation, was organized in 1969. Microlog Corporation of
Maryland, and Microlog Europe, both subsidiaries,  design, assemble, market, and
service customized voice processing systems and other  communications  products.
Old Dominion Systems Incorporated of Maryland,  engaged in providing performance
analysis of certain major weapons systems and related data processing support to
the  Federal  Government  through  prime  contractors,  was merged with and into
Microlog Corporation of Maryland effective October 31, 1999.

VOICE PROCESSING

VOICE PROCESSING INDUSTRY

Voice processing systems are designed to serve the needs of organizations  which
are searching for an efficient,  cost-effective means to deliver and communicate
information and complete business transactions in a timely manner. These systems
use specialized computer hardware and software to store,  retrieve, and transmit
digitized  voice messages and to access  information on computer  databases.  In
traditional Interactive Voice Response,  callers hear voice prompts and then use
a touch-tone  telephone to enter information  into, and/or retrieve  information
from, a computer database. Voice processing systems have evolved and now provide
information not only through voice,  but also through a wide range of additional
input devices and interfaces,  including the Internet,  fax,  Telecommunications
Device for the Deaf (TDD), and pagers.

Voice processing  typically  includes a system connected to an external computer
that contains  data of interest to callers.  With  touch-tone or voice  commands
(using speech recognition  software),  which often include  passwords,  codes or
account numbers,  callers can query the computer and have data read back to them
in voice form. Depending on the customer's application,  callers may also change
data on the computer or input new data with touch-tone or voice commands.  Voice
processing  is widely used for  functions  such as reporting  account  balances,
checking on inventory,  or determining  the status of applications or permits in
process.  Voice processing  systems range from small systems with basic features
utilizing a few phone  lines,  to larger more complex  systems with  hundreds of
lines.

The following  functionality  is provided through the Company's voice processing
products:

     Audiotex is used by  organizations to construct a "library" of pre-recorded
     messages,  which  outside  callers can access  through  touch-tone or voice
     commands without live operator assistance.  Customers can record and change
     menus and messages themselves over the telephone at any time.  Libraries of
     information  may be  presented  in  different  languages,  and callers with
     rotary  telephones  may also  access  menus and  information.  Up to 50,000
     messages  may  be   presented.   Audiotex   software   finds  wide  use  by
     organizations  that receive  large volumes of  highly-repetitive  telephone
     requests  for   information.   Major   advantages  of  audiotex  over  live
     information operators include the availability of information at every hour
     of the day and the consistency of information disseminated.

     Automated  Attendant uses touch-tone or voice commands to route and connect
     inbound calls to extensions faster and more accurately than live operators.
     Microlog's  software  allows  different  phone  lines to be  answered  with
     various greetings and menus of options presented to different  callers.  In
     the event of a busy or unanswered  extension,  the software permits callers
     to hold,  transfer,  leave a  message  or  disconnect.  The  system  can be
     name-based,  in which  callers input the first three letters of the party's
     last name, or  extension-based,  in which callers dial an extension number.
     For  extension-based  systems,  the  software  incorporates  a directory of
     names,  allowing  callers  to use  touch-tone  commands  to find  extension
     numbers they do not know.


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     Service  Management System (SMS) allows network and operations  managers to
     configure  and  manage  their  voice  processing  system  through a simple,
     consistent graphical "point & click" interface. SMS allows network managers
     to monitor a system's status, retrieve usage statistics, configure hardware
     and software  resources,  and install  software on any  TIVRA-based  system
     installed on the network.

     Fax  Software  allows  system  users to  automatically  receive  stored fax
     documents on demand from the voice processing system.  Customer service and
     sales support  operations  are frequent  users of fax  software.  A service
     representative  can  take a  request  for  documents  from the  system  and
     designate faxes to be sent in response without exiting the system.

     Interactive Voice Response (IVR) provides a telephone interface to computer
     systems.  IVR  allows a user to call into a  computer  and  access  various
     information systems using a touch-tone telephone or voice commands.

     Interactive  Web  Response  (IWR) allows the voice  processing  platform to
     handle  Web-originated  input as it would  data  collected  from a standard
     phone  interaction.  IWR  performs  activities  such as  database  lookups,
     outgoing  faxes,  conferencing,  and  sending  information  to  agents  for
     customer  callbacks.  Acting  as the  interface  between a Web site and the
     voice processing  system,  IWR passes  information  collected through a Web
     contact using Common Gateway  Interface (CGI) and sockets.  The results are
     delivered though a Web page that is sent back to the user.

     Local Database provides similar  functionality to voice processing  systems
     as IVR, but allows the data of interest to reside on the system rather than
     in a host mini- or  mainframe  computer.  This  provides  a  cost-effective
     approach  for many voice  processing  applications.  It also  allows  large
     interactive communication applications to do local batch processing of data
     by downloading the data to the system for manipulation.

     Multiple  Languages  Interface Software allows system messages to be played
     in multiple languages. It also interfaces TDD terminals to IVR systems over
     telephone lines.

     Outbound Dialing permits an organization to send messages  automatically to
     large lists of external  phone  numbers  and to record  responses  to those
     messages,  if necessary.  This flexible  software can handle multiple lists
     with  thousands  of names  per list.  It can draw from a library  of 50,000
     messages  and can send  different  combinations  of messages to  individual
     phone numbers as directed.  The software also generates  management reports
     about the number of successful  connections,  the length of calls,  and the
     content of responses.

     Release Line Trunking  (RLT) provides the ability to transfer the same call
     several times. After the call to each transfer destination is complete, the
     telephone line to that  destination  is released.  A call may, for example,
     initially be transferred to a phone number,  which can provide  information
     required  for the second  transfer.  In the Microlog  applications,  RLT is
     often used for long distance transfers.

     Speech Recognition allows the caller to speak responses that are understood
     by the TIVRA systems.  Continuous and discrete  speech  recognition  can be
     combined in a single system. The standard vocabulary includes digits "0-9",
     "yes",  and "no" responses.  Microlog has incorporated  speech  recognition
     technology  from  several  U.S.-  and  international-based  companies.  All
     technologies  are  speaker  independent  and  therefore  require no special
     training or development to recognize individual voice or speech patterns.

     Text-to-Speech  converts  typed ASCII data,  resident on host  computers or
     databases,  to  computer-generated  synthetic  speech on demand.  It has an
     extensive  vocabulary,  since it can  pronounce any string of letters which
     are sent to it. Microlog's  text-to-speech module is ideal for applications
     requiring  information  from large text databases.  Because  text-to-speech
     works with external databases,  the module works with the interactive voice
     response  module that  provides  the link  between the TIVRA system and the
     customer's database.

     Transaction  Processing allows the inbound caller to place orders,  request
     information,  respond to surveys or  complete  other  transactions  without
     personal  handling by a live  operator,  using either  touch-tone  or voice
     commands. The caller can initiate transactions any hour of any day, and the
     Company  can  process



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     the transactions at its convenience,  including  processing  outside normal
     business hours.  Such  transactions  allow orders and requests to be filled
     faster and at lower cost than traditional methods.

     Voice  Mail  provides  an  organization  with  "voice  mailboxes"  in which
     internal or external callers may leave detailed,  confidential  messages at
     any time.  Voice mail  overcomes  many  limitations  of telephone  systems,
     allowing  people to exchange  information  and  transact  business  without
     having  to be on the  phone  together.  It  eliminates  paperwork  and adds
     meaning and content,  which  written  messages  can not  reflect.  Benefits
     include increased office productivity through fewer  interruptions,  timely
     and  accurate  message  delivery,  increased  message  detail,  and reduced
     callbacks and "telephone tag." Messages may be left for groups of people as
     well as individuals.  Callers may edit messages, reviewing and re-recording
     until satisfied.  Mailbox owners may review, save, forward or discard voice
     messages.

     UNIQUE(TM)

     Microlog's uniQue product offers  comprehensive  open  architecture,  cross
     platform solutions for customer contact centers. uniQue is designed for the
     contact center with 5 to 5,000 agents and seamlessly  integrates all of the
     contact center's telephony,  computer and business applications.  uniQue is
     designed for the contact  center  manager and offers the agent  appropriate
     tools necessary to handle customer interactions.

     Microlog's uniQue product is now in its second major release phase.  uniQue
     release 1.5 was first  demonstrated  in September,  1998, and was generally
     available  in November,  1998.  The function of this release was limited to
     telephony  call control (for  telephone  calls into a switch or ACD, or for
     calls  through an IVR),  although  the  current  functions  of  management,
     statistics,  and the agent  interface were available at that time in a more
     limited  implementation.  uniQue  2.0,  which  adds the other  major  media
     contact  types (see  below) and major  functional  enhancements,  went into
     limited  availability  trial  testing  in  September,  1999.  uniQue 2.0 is
     generally  available as of February,  2000. Work on subsequent  releases is
     continuing,  along with specific custom  extensions of the product based on
     customer requests. One customer has been fully installed and is operational
     on the 2.0  release,  and two others  are in  process  as of this  writing.
     Several others are in the pre-contract stage.

     The sales model for uniQue is direct at first,  with growing indirect sales
     over time. The direct sales  experience is important to the first phases of
     the product roll-out in order to provide  responsive  service to customers,
     to obtain direct feedback on the usability and marketability of the product
     as initially conceived, and to allow the Company to develop a certification
     program for indirect sales  representatives to ensure that the product will
     be properly  represented and supported.  The indirect  channel  development
     will be important to building sales volume beyond the  capabilities  of the
     current direct sales staff to reach certain market segments. Indirect sales
     methods  could  range from  simple  lead  sharing in  informal  partnership
     arrangements to formal value added remarketer (VAR)  representation  of the
     product,  to actual  packaging of the product under another brand (original
     equipment manufacturer - OEM relationship). Management is currently seeking
     appropriate  indirect  relationships  along this spectrum of possibilities,
     and we believe  that  management's  success in this  endeavor is key to the
     long-term  success  of the  product.  The  Company  expects  in any case to
     continue to represent the product  through  direct sales in addition to any
     successful indirect channels that may be developed.

     The uniQue product includes the following features:

     Multiple  Media - uniQue  accepts  and  intelligently  routes all  customer
     contacts,  whether from a traditional  telephone call, Web contact,  email,
     facsimile,  or even simple  postal mail.  By accepting  any type of contact
     from the  customers,  uniQue  becomes the single  source  repository of all
     customer  interaction  providing the user with a powerful  information tool
     that   summarizes   customer   behavior   and  provides   better   customer
     satisfaction.

     Contact Prioritization - In addition to handling all types of media, uniQue
     prioritizes  the contact  based upon the rules  established  by the contact
     center  manager  in order to ensure  that all of the user's  customers  are
     handled  in the  most  appropriate  manner,  such  as  servicing  the  most
     important customers first.

     Intelligent  Routing - uniQue  leverages the  effectiveness of skills-based
     routing by  matching  the  customer  contact  to the agent  having the most
     appropriate skills required to service the contact.  uniQue's simple


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     system  administration  feature allows the supervisor to quickly and easily
     add or remove skills to any agent profile on-line.  This allows the contact
     center's  management to schedule and maintain the most appropriate level of
     agents at all times.

     Easy Configuration & Remote  Administration - Being a completely  Web-based
     Java  application,   uniQue  offers  the  contact  center  management  zero
     administration  at the agent 's  workstation.  The Java applet is hosted on
     the uniQue server. It is loaded only once, and each time an agent logs into
     the application, the uniQue applet is downloaded to the agent's workstation
     eliminating any agent workstation configuration or administration.

     Web-Based  System  -  Keeping  with the  concept  of open  systems,  uniQue
     operates on any agent computer with any operating  system provided there is
     a properly configured Java-enabled Web browser on the agent's desktop. This
     concept  frees the user from being tied to a single  computer  environment,
     system  architecture  or  operating  system.  uniQue  will  operate  in  an
     environment where there may be multiple types of computers. The open system
     approach provides  tremendous  flexibility to a contact center's  computing
     requirements and simplifies the task of integration.

     Reporting - Included with uniQue is a powerful  statistical  data capturing
     and reporting component. Contact center managers can generate any number of
     statistical  reports from the system.  uniQue stores each customer  contact
     along with the detailed information about the contact. Detailed information
     which could be stored  includes  but is not limited to:  contact  duration,
     agent wrap-up time, total contact length,  contact outcome,  contact result
     and contact  reason.  With  uniQue,  contact  center  managers  are able to
     develop  their own reports  which  summarize  agent  productivity,  contact
     center accomplishments, and even business success statistics.

     TIVRA

     The TIVRA (formerly Intela) platform is a voice processing product designed
     for   simultaneous   support  of  multiple   applications  and  interactive
     information solutions. Prices for TIVRA systems are dependent on the number
     of ports in the system (from 4 to over 1000),  the amount of voice storage,
     the  need for  additional  equipment,  and the time  needed  to  develop  a
     customized application.

     Microlog has installed TIVRA for many different customers,  with one of our
     largest TIVRA customers being the Internal Revenue Service (IRS).  Projects
     for the IRS  included  Voice  Balance  Due (VBD),  which  enables  eligible
     taxpayers to check the status of their debt to the U.S.  Government and set
     up repayment plans.  The Refund Inquiry  application  enables  taxpayers to
     call the IRS and, by selecting the Refund  Inquiry on TIVRA,  automatically
     obtain their refund status, including the amount of the refund.

     TIVRA is based on an Intel Pentium(R) hardware platform utilizing a UNIX(R)
     operating  system with a Graphical  User  Interface  (GUI) for  application
     development.  The TIVRA  system has a  non-proprietary  open  architecture.
     TIVRA also supports  text-to-speech,  speech recognition,  remote and local
     databases, host connectivity, Web and fax.

     Each TIVRA system incorporates  multiple servers with hard disk storage and
     several voice cards. TIVRA uses distributed servers,  each of which handles
     a part  of the  total  processing  task,  rather  than  one  large  central
     processor.  By  increasing  the  number of voice  cards  and the  number of
     distributed servers, the Company can configure the voice processing systems
     with a greater number of ports and hours of message storage. Depending upon
     customer  specifications,  systems are  provided as floor  standing or rack
     mounted units.  These units can be networked to create a larger system with
     thousands of ports,  and they can be  configured  to run on -48 volt DC for
     use in a Central Office (CO).

     The TIVRA  architecture  supports  a variety  of  configurations  that meet
     varying  functional,  processing,  and voice port and storage  needs.  This
     platform is designed  for  simultaneous  support of multiple  applications,
     including  both voice  response and voice  messaging  services.  Within the
     architecture, particular hardware configurations may be proposed to provide
     cost-effective  solutions  to a wide  range  of  system  requirements.  All
     systems can be configured with built-in  redundancy so that at least 50% of
     total system capacity is maintained  across any single  component  failure.
     Growth  capability  is  achieved  by the  modular  upgrade  of  application
     servers, port servers, disk storage,  additional  communications links, and
     additional  voice


                                       6
<PAGE>



     response units. The TIVRA system includes a monitor, keyboard, and printer.
     These are used to program the system,  organize the storage of  information
     (which will be accessible to users),  produce  reports,  and monitor system
     activity.  Customers  that  contract for the Company's  system  maintenance
     services  also  purchase  modems so that the  Company  can  perform  remote
     diagnostic procedures.

     The basic TIVRA architecture consists of three major system components: the
     Application  Server(s),  the Port  Server(s),  and the TIVRA-ware  software
     platform.

     Application  Server defines the computing  environment in which  TIVRA-ware
     software resides and provides  centralized  management and control, as well
     as optional secure voice storage.  The application server can be a personal
     computer,  a  workstation,  or  mini-computer.  It  interfaces  to a  voice
     processing peripheral, or TIVRA port server, via a command link on a LAN or
     a serial communications link.

     Port Server consists of tower and rackmount models, each providing call and
     speech processing, as well as voice storage. Interfacing to either a CO- or
     PBX-based telephone system, these units answer calls, and process and store
     speech, all under the direction of commands coming from TIVRA-ware software
     on the application server across a command link.

     TIVRA-ware  Software Platform is an application  development and deployment
     environment  for voice  processing  applications,  supporting  the  on-line
     creation and  administration  of multiple  applications.  From an X-Windows
     graphic terminal  connected to the application  server,  users access major
     functions of the software through several  interfaces:  Application Editor,
     Prompt Loading and Management, System Administration,  Reports and Database
     Access, Prompt Manager, and Centralized System Management.

     Through these  interfaces,  users control the  development and operation of
     their voice applications,  using a graphical user interface. This interface
     provides the  developer  with a set of tools to create voice  applications.
     Following is a description of each of these interfaces.

     Application  Editor is used to create and edit applications and is oriented
     towards  programmer  productivity,  with several  developers able to access
     different applications  simultaneously.  The editor is GUI-based and allows
     programmers to develop call flows using a click-and-place  approach similar
     to many standard drawing  packages.  Cells from a palette are placed onto a
     drawing  pane  and are  connected  using a set of mouse  actions.  Standard
     Windows(R)-like  pull-down menus allow file control, editing features (cut,
     copy, and paste),  object search (by cell number,  name, or type), and user
     preferences  for appearance of the palette.  Applications  can be developed
     and tested on-line without interrupting those currently running.

     Prompt Loading and Management  Facility  provides the capability for prompt
     creation,  a major  function  in voice  applications.  With the  TIVRA-ware
     prompt  loading  facility,  prompts can be reviewed,  recorded,  installed,
     deleted,  backed up to removable  media,  restored,  and distributed over a
     local or wide-area data network (LAN/WAN).  They can be loaded on-line over
     the telephone,  a microphone,  or from a tape, and the process can be semi-
     or fully- automatic,  depending on whether dual-tone  multifrequency (DTMF)
     tones are  coded on the tape to  identify  the  prompts.  Users can  record
     individual  prompts, a list of prompts, or record with DTMF prompt numbers,
     and the prompts  will be replaced  only after they have been  reviewed  and
     accepted.  New or updated  prompts  will be phased in  automatically  while
     applications remain on-line.

     Prompt  Manager  allows  users to retrieve a prompt from  storage on a port
     server and have the graphical  representation  shown in a window.  The user
     can modify the prompt simply by clicking on the window and  performing  any
     of the following actions:  cut, copy, paste,  delete, trim silence,  adjust
     again, convert sections of a prompt to silence, and change sampling rate.

     System Administration allows for the loading and unloading of applications,
     and  the  management  of the  port  servers  connected  to the  application
     processor.  If a system has network  hardware in the system  configuration,
     administration  can be performed through one central point.  Administrators
     can bring up a new revision of an  application  or move an  application  to
     another trunk while the system is on-line. If a caller happens to be on the
     line at the time,  the  changes on that trunk  will take  effect  after the
     caller hangs


                                       7
<PAGE>



     up.  TIVRA-ware can support multiple TIVRA systems to expand to larger port
     and  storage  capacity  by  networking  systems  and  clusters  of  systems
     together.

     Centralized  System  Management  provides a graphical  means to address the
     operation,  administration, and maintenance (OA&M) of a distributed system.
     It provides a graphical  representation  of the application  server and its
     attached TIVRA systems,  including the command link mode used,  Ethernet or
     serial links.  Further, by clicking on the TIVRA icon, an additional window
     is displayed.  In this window,  a graphic of the TIVRA display panel,  with
     active  trunk  status  indicators  and disk  usage  indicators,  is  shown.
     Clicking  on a trunk  status  indicator  opens an  additional  window  that
     depicts information about the running application.

     Reports  are  designed to track  significant  statistical  information  for
     activities  such as billing and to justify  services.  TIVRA-ware  offers a
     choice of reports that can be created and viewed without  interrupting  the
     operation of an  application.  These  reports can then be sent to a printer
     for a hard copy  printout.  Available  reports  include call  detail,  cell
     usage,   trunk  usage,   subscriber   information,   and  transaction  log.
     Statistical requirements beyond those addressed by the standard reports can
     be met from the raw call data records (CDRs).

     Database  Access  allows  interfaces  to be built  between  TIVRA-ware  and
     Standard Query Language (SQL) relational databases, such as Oracle, Sybase,
     Informix and Ingress.  The  Application  Editor  contains an SQL cell type,
     which  allows  information  to  be  extracted  from  databases  to  support
     interactive  communication  applications.  This cell type  allows  users to
     delete,  insert,  select,  and update data.  TIVRA-ware  also  supports two
     internal  proprietary  databases:  message and information  databases.  The
     message  database  used in voice mail  applications,  consists of mailboxes
     associated  with a number,  usually  the phone  number of the user who will
     access the box for the  messages  deposited  in it.  More than one  message
     database  can  be  supported  within  TIVRA-ware  to  accommodate  multiple
     applications.  Messages can be retrieved  either first in, first out (FIFO)
     or last in, first out (LIFO), determined on a system basis.

     Microlog  delivered the Y2K compliant  TIVRA System Release 6 (SR6) product
     in  1998.  Enhancements  included  significant  hardware  upgrades,  system
     management   capabilities,   enhanced  speech  recognition   options,   and
     extensions to allow interactive Web response. In 1999, the Company focussed
     on  extending  the  customer  applications  built and  delivered on the SR6
     platform, adding to its inventory of custom and re-usable components.

SALES AND MARKETING

The  Company's  products are sold  primarily  through  direct  sales.  The TIVRA
products are sold through a combination of direct sales,  value-added resellers,
and government contract vehicles.  It is expected that, during 2000, uniQue will
be  primarily  sold  directly.  The  Company is looking for  original  equipment
manufacturers,  technology  partners,  and value-added  resellers for its uniQue
product.

The Company has a sales and marketing team  consisting of six employees  located
in the  Washington-Baltimore  metropolitan  area. This team will focus on direct
sales,  technology partners, and value-added resellers of the Company's products
in the  Mid-Atlantic  region.  Sales and marketing  activities  will continue to
focus  on  certain  vertical  markets,  including  contact  centers,  utilities,
associations, and Federal, state and local government.

The Company  compensates its direct and distribution  sales personnel  through a
base salary plus commission,  which generally represents a percentage of the net
sales for which the sales  personnel is  responsible.  The  principal  potential
customers  for the  Company's  self service  applications  and products in these
vertical  markets  are  organizations  which  receive or make a large  volume of
telephone  calls  or  e-mail  and  Web  inquiries,   and  the  customer  desires
information stored on the organization's data system or requires assistance.

In September 1999, the Company sold the voice processing  operations of Microlog
Europe to Comsys International,  B.V. of The Netherlands.  The Company agreed to
grant Comsys certain  rights to resell its TIVRA software and related  hardware.
The Company  also agreed to assign  certain  agreements  to which  Microlog is a
party relating to the TIVRA product. As part of the sale, two Microlog employees
became employees of Comsys.

                                       8
<PAGE>



SERVICES

The Company  provides  limited  warranties  for parts and labor on its  products
ranging  from 90 days to two years from the date of  delivery.  The Company also
offers its  customers  annual  maintenance  contracts  under  which the  Company
maintains  and  services  the  systems.   Microlog  charges  an  annual  fee  of
approximately  10% to 16% of the purchase  price of its systems for  maintenance
contracts  covering normal  business  hours.  The fee is highest for maintenance
contracts providing for 24-hour or weekend assistance.

The Company generally  performs  maintenance for its interactive  communications
systems in the Washington, D.C. metropolitan area from its Germantown,  Maryland
headquarters, where an inventory of spare parts is maintained. Microlog also has
an  agreement  with  a  subcontractor  to  perform  on-site  maintenance  on its
interactive  communications  systems nationwide.  The Company operates a hotline
which customers with maintenance  contracts may use to request  assistance or to
ask questions concerning operation of the Company's  interactive  communications
systems.   Microlog  can  perform  many  diagnostic   procedures  remotely  and,
historically,  has been able to correct many of the difficulties  experienced by
its customers  through  telephone  consultation.  International  maintenance  is
performed by the third party  distributor  and is supported by Microlog  service
personnel in Germantown, Maryland.

Microlog also offers a variety of other services to its customers. Microlog will
customize interactive  communications and contact center systems to a customer's
specific  needs by  designing  application  software,  or by making  appropriate
changes in the underlying source code of any of Microlog's products. The Company
may charge for this service on a time and  materials  basis,  or may include the
service in the price of the system  being sold.  Training  on system  operations
also is offered to  customers.  In  addition,  the  Company  generally  provides
certain  improvements  to its software  modules free of charge to customers  who
contract for its system maintenance services.

BACKLOG

As of October 31, 1999,  the Company had a backlog of existing  orders for voice
processing  systems and services  totaling  $2.8  million.  By  comparison,  the
backlog,  as of October 31, 1998, was $2.0 million.  The Company has experienced
fluctuations in its backlog at various times in the past attributable  primarily
to the seasonality of governmental  purchases.  The Company anticipates that all
of the  outstanding  orders at October  31,  1999 will be shipped  and the sales
recognized  during  fiscal year 2000.  Although  the Company  believes  that its
entire backlog of orders consists of firm orders,  because of the possibility of
customer  changes in delivery  schedules and delays  inherent in the  government
contracting  process, the Company's backlog as of any particular date may not be
indicative of actual sales for any future period.

COMPETITION

The interactive  communications  industry is highly  competitive and the Company
believes that  competition  will  intensify.  The Company  competes with a large
number of companies,  which produce interactive communications products offering
one or more of the 14  major  voice  processing  applications  performed  by the
Company's  products.  Microlog's  competitors  include  companies,  such as IBM,
InterVoice/Brite,  Lucent,  Periphonics (Nortel),  Aspect, and Syntellect,  that
have emphasized sales of systems with interactive  voice response  applications.
In addition,  the Company also competes with dealers and distributors  that sell
voice products of these and other  competitors.  New or enhanced products can be
expected  from the Company's  competitors.  It is also likely that there will be
new entrants into the interactive communications industry because of the absence
of any major technological barriers to entry.

Competition for the sale of interactive communications systems has been based in
part on the  application  required  by the  customer.  In  marketing  its  TIVRA
product, the Company places emphasis on the 14 major interactive  communications
functions (refer to "Products" section) that can be performed and the ability of
these systems to be expanded to incorporate additional applications. As a result
of this emphasis on openness and  expandability,  the Company believes that many
of its  competitors'  products  cannot be  customized  as  easily to the  user's
specific needs as TIVRA.

The  contact  center  marketplace  in which the uniQue  product is  expected  to
compete  is also  very  competitive.  This is  because  the  market is large and
growing,  and sits at the  convergence  point of a number of trends.  All of the
trends are  underpinned  by the  increasing  willingness  of people to undertake
transactions  with  businesses  at a


                                       9
<PAGE>



distance, and by the generally favorable business conditions which fuel economic
growth at this  time.  The  overall  result is that the  world's  total  network
traffic  is  increasing,  with data  traffic  overtaking  voice  traffic  as the
predominant share in the latter half of the 1990s.

While data traffic  driven by rapid adoption of new  communications  media types
predominates,  voice traffic has not stopped growing in absolute terms. There is
the trend toward  increased  use by customers  of the  traditional  telephone to
accomplish sales and support functions remotely with companies.  This means that
the demand for systems that  automate  and broker  telephony  interactions  from
customers  (telephone  calls and  faxes  are  examples)  is being  sustained  by
businesses  seeking  to  contain  costs and to  improve  customer  service  as a
differentiator.

Second,  there is the trend in the  market  toward  more  widespread  use of the
Internet and the various  communications media types that it conveys. This is by
far the more dramatic  component of the increase in world network traffic.  This
means that  businesses  are compelled to deal with a growing  number of e-mails,
Web hits with  information  requests,  Web chat  requests,  Web  bulletin  board
postings, and emerging trends in the use of IP telephony and IP fax.

Third, there is a trend by businesses to adopt customer relationship  management
programs  as  a  means  of  structuring   and  ensuring  the  quality  of  their
interactions with customers. This most often takes the form of software packages
that facilitate sales entries and/or the tracking of problem reports for support
purposes. Sometimes as well, the data from the contacts in such systems are used
to facilitate marketing research (through data mining), personalization of sales
pitches or marketing programs based on individual  preferences inferred from the
data ("selling to a market of one"), or to simply enable more effective customer
self service as a means to buffer  incoming  contacts and workload to the people
in the company.

All of these trends and the general staffing  challenges  associated with a good
economy mean that companies are often forced to consider  computer  systems that
integrate voice, data, and customer  relationship systems as a means of handling
customer load, increasing efficiency,  or providing adequate customer service to
differentiate themselves from competition in their own markets.  Microlog offers
solutions  to these  customers,  comprised  of the  uniQue  product,  the  Tivra
product,  and custom integration  services. A number of competitors are offering
solutions  to  some  or all of the  problems  these  trends  present,  but  from
different  technical or market  perspectives,  largely dependent on whether they
have an installed base of customers, or they are new entrants.

Some competitors are long established telephony vendors,  seeking to add the new
media types to their ability to process telephony. These include Lucent, Nortel,
and  Aspect  as  examples.  Traditional  CTI  vendors  are  seeking  to add this
capability to their offerings, an example of which is Genesys (Alcatel). Oracle,
traditionally a database  company,  has shown interest in this market through an
acquisition of  Versatility,  a contact  management  software  company.  Network
component  companies are also interested in the market,  most notably Cisco with
its recent acquisitions of Webline (Internet based contact management) and Summa
Four (traditional  telephony  switches).  Start-up  companies  competing in this
space include Interactive Intelligence,  ATIO, Acuity, Cosmocom, eGain, PadNetX,
eShare  (Melita),  and Apropos.  All of these  competitors  and trends  define a
dynamic, large and growing, but very competitive market space.

Competition for the sale of interactive communications systems has been based in
part on the  application  required  by the  customer.  In  marketing  its  TIVRA
product, the Company places emphasis on the 14 major interactive  communications
functions (refer to "Products" section) that can be performed and the ability of
these systems to be expanded to incorporate additional applications. As a result
of this emphasis on openness and  expandability,  the Company believes that many
of its  competitors'  products  cannot be  customized  as  easily to the  user's
specific needs as TIVRA.

Marketing and product  recognition  also play a substantial  role in competition
within the interactive  communications  industry and within particular  vertical
markets.  Most of the Company's competitors have considerably greater financial,
marketing,  and sales resources than Microlog.  Many of these  competitors  have
concentrated on one or two voice  applications or on specific  vertical  markets
and may enjoy advantages in selling to customers seeking only those applications
or to companies in those  markets.  The Company  believes that it has advantages
over some competitors in sales to government and retail customers because of its
experience  in marketing  products to these  customers and in  participating  in
competitive procurements.


                                       10
<PAGE>



The Company believes that the other principal factors  affecting  competition in
the interactive  communications  market are product  applications  and features,
quality and reliability,  customer  support and service,  and price. The Company
believes that it competes favorably with respect to these factors.

RESEARCH AND DEVELOPMENT AND PRODUCT ENGINEERING

Research  and  development  expenses  for 1999  were  focused  on  uniQue,  with
incremental   investments  in  the  TIVRA  product,   and  smaller   incremental
investments  in the APRS  (Automated  Prescription  Refill  System) and TAC (The
Automated Collector) products. uniQue 2.0 was released in December of 1999, with
additional  capabilities  in e-mail  handling,  Web  call-back,  Web  chat,  Web
bulletin board, collaboration, statistics collection, management, and reporting.
TIVRA   enhancements  were  in  the  areas  of  specific  custom  and  re-usable
application  extensions  for  individual  customers.  The Company,  in providing
special features,  application  development,  and system integration services to
our  customers,  undertakes  a  significant  amount of custom  engineering.  The
Company is subject to the risk that it may not have the  financial  resources to
maintain a competitive research and development strategy.

The following table sets forth for the periods indicated the Company's  research
and development  expenditures  and the percentage of interactive  communications
net sales represented by these expenditures.

                      RESEARCH AND DEVELOPMENT EXPENDITURES

                    (In thousands, except percentage amounts)

                             YEAR ENDED OCTOBER 31,

<TABLE>
<CAPTION>
                                                1997              1998            1999
                                                ----              ----            ----

<S>                                            <C>               <C>             <C>
     Research and development expense          $3,579            $3,256          $2,870

     Percentage of voice processing net sales      19%               22%             36%
</TABLE>

Costs incurred in basic research and development  are expensed as incurred.  The
Company  has  determined   that  the  process  of   establishing   technological
feasibility with its new products is completed approximately upon the release of
the  products to its  customers.  Accordingly,  software  development  costs are
expensed as incurred.

MANUFACTURING AND OPERATIONS

The Company  assembles  its own equipment  using  standard  parts  obtained from
outside sources.  The proprietary aspects of the Company's systems are primarily
in the software  provided with the  equipment  and in the specific  applications
development  designed for the customer.  Systems are built to order as they vary
in size and sophistication of software modules.  Equipment assembly,  along with
testing and quality control, are performed at its Germantown, Maryland facility.
Microlog  currently has four employees in its  manufacturing  group. The Company
generally uses standard parts and components obtained from a variety of computer
vendors and specially  configures  these  components to produce the hardware for
its systems.  Certain  components  used in the Company's  products are presently
available  from limited  sources.  To date,  the Company has been able to obtain
supplies of these components in a timely manner from these sources.

RESTRUCTURING OF OPERATIONS

In fiscal year 1999, the Company incurred  restructuring charges of $693,000 for
severance and benefits and other costs for the reduction of employees. Temporary
employees and contractors were also reduced. These restructuring charges include
costs of $381,000 for severance and benefits, the write-off of assets of $49,000
for the  equipment  associated  with  headcount  reductions,  costs of  $103,000
associated with the closing of the Company's  manufacturing  facility, and costs
of $160,000 to terminate the 15-year lease commitment for new office space which
the  Company had entered  into in May 1998.  As a result of these  restructuring
activities and other cost reduction  actions,  the Company expects to reduce its
annual  voice  processing  operating  expenses  by  approximately  $4.8  million
annually.

                                       11
<PAGE>

In September 1999, the Company sold the voice processing  operations of Microlog
Europe to Comsys International,  B.V. of The Netherlands.  The Company agreed to
grant Comsys certain  rights to resell its TIVRA software and related  hardware.
The Company  also agreed to assign  certain  agreements  to which  Microlog is a
party relating to the TIVRA product. As part of the sale, two Microlog employees
became  employees  of  Comsys.  The sale is  anticipated  to result in a gain to
Microlog of approximately $100,000. Since some of the proceeds from the sale are
based on future contracts between Comsys and the Company's former customers, the
gain on the sale was  estimated and therefore has been deferred into fiscal year
2000.

SOFTWARE PROTECTION, TECHNOLOGY LICENSES, AND TRADEMARKS

The Company regards its software as proprietary  and has implemented  protective
measures  both of a legal and a  practical  nature to ensure  that the  software
retains  that  status.  The  Company  derives  protection  for its  software  by
licensing  only the  object  code to  customers  and  keeping  the  source  code
confidential.  Like  many  other  companies  in the  interactive  communications
industry,  Microlog does not have patent  protection for its software,  although
some of the  inventions  for which Microlog has received and applied for patents
can be  implemented  in  software.  The  Company,  therefore,  relies  upon  the
copyright laws to protect against unauthorized copying of the object code of its
software,  and upon  copyright  and trade secret laws for the  protection of the
source code of its software.  Despite this  protection,  competitors  could copy
certain  aspects of the  Company's  software or  hardware or obtain  information
which the Company regards as a trade secret.

The Company  has  patents on an  Interactive  Audio  Telecommunications  Message
Storage,  Forwarding and Retrieval System, a Software Switch for Digitized Audio
Signals,   an  Automated   Telephone   System  Using   Multiple   Languages,   a
Telecommunications  System  for  Transferring  Calls  without a  Private  Branch
Exchange,  Detection  of  TDD  Signals  in an  Automated  Telephone  System,  an
Automated  Telephone  System with TDD  Capabilities,  an Automated  Announcement
System, and Methods for Communicating with a  Telecommunications  Device for the
Deaf (TDD). The Company also has pending patent applications on an Apparatus and
Method for Coupling an Automated  Attendant to a  Telecommunications  System,  a
Method and System for Enabling Computer  Terminals in a Call Center  Environment
to Display and Perform Telephony Related Functions,  and a Contact Center System
Capable of Handling  Multiple  Media Types of Contacts  and Method for Using the
Same. EVR, Microlog,  Truant, CINDI, ProNouncer,  CallStar,  CallStar FXD, APRS,
Connecting People to a World of Information, The Automated Collector, and uniQue
are all registered trademarks owned by the Company.  uniQue Agent, The Best Seat
In The House,  Strategic  Team of Elite  Partners,  and The Global  Call  Center
Company  are  all   trademarks  or  service  marks  which  are  the  subject  of
applications  for  registration  owned by the  Company  which are pending in the
United  States  Patent and  Trademark  Office  (PTO).  INTEL  Corporation  filed
oppositions  with the PTO Trademark Trial and Appeal Board against the Company's
federal  trademark  applications for the marks Intela,  VCS Intela,  Intelaware,
Intelaview,   and  Intelapowerdial  (the  "Intela  marks").   This  consolidated
opposition  proceeding  has been settled and,  under the terms of the settlement
agreement,  the Company has abandoned its applications for and ceased use of the
Intela marks.  Products  formerly  branded with the Intela marks are now branded
with the Company's  "TIVRA" family of marks. The Company is currently using, and
claims  common  law rights in, the  following  additional,  unregistered  marks:
TIVRA,  TIVRA-ware,  TIVRA Powerdial,  Voice Connect,  Genesis,  Voice Path, VCS
3500, Retail Solutions, RLT, and Release Line Trunking. In addition, the Company
enters into  confidentiality  agreements with its employees,  distributors,  and
customers and limits access to and distribution of its software,  documentation,
and other  proprietary  information.  There can be no  assurance  that the steps
taken by the Company to protect its proprietary rights will be adequate to deter
misappropriation of its technology.  Further, there can be no assurance that any
patent issued to the Company or any registered  copyrights of the Company can be
successfully defended.

PERFORMANCE ANALYSIS AND SUPPORT SERVICES

GENERAL

Since the early  1970s,  the Company and its  subsidiaries  have been  providing
performance   analysis  and  technical  and  administrative   support  services,
principally  in the  form of  data  processing  and  analysis,  engineering  and
scientific  analysis,  and  computer  services,  to  government  and  commercial
customers.  These services, which comprise the Company's original business, were
provided  through Old Dominion  Systems  Incorporated of Maryland,  a subsidiary
which was  merged  with and into  Microlog  Corporation  of  Maryland  effective
October 31, 1999. The Company believes that its performance  analysis  contracts
are likely to continue to provide a stable but declining source of sales for the
Company.  The Company is  experiencing  (indirectly,  through its contracts with
APL) the effects of some  reductions in defense  spending due to changes in U.S.
defense  priorities.  The  Company

                                       12
<PAGE>



is not aware of any  proposed  reductions  in  spending  that will result in any
material adverse affect over the next fiscal year on its expected net sales from
performance  analysis  and  support  services  nor alter the  manner in which it
procures  contracts for such  services.  However,  the Company cannot assure you
that changes in defense  priorities or  continuing  budget  reductions  will not
cause such an effect  during the fiscal year or  thereafter.  Additionally,  the
Company has  experienced  increased  competition  for retention of its employees
from APL. As a result of the tight labor  market and changes in hiring  policies
at APL, the Company is  experiencing  increased  employee  attrition to APL. The
Company  expects this trend to continue  through fiscal year 2000. Each employee
hired  directly by APL, and removed from our  contract(s)  decreases our revenue
and profit potential from that source.

The principal customer for the Company's  performance analysis and technical and
administrative  support  services  is The  Johns  Hopkins  University's  Applied
Physics Laboratory (APL), a United States Navy contractor, for which the Company
or its  subsidiaries  have been  performing  services  since  1972.  Sales  from
contracts  with APL  accounted  for 39%, 44%, and 56% of the Company's net sales
for fiscal 1997, 1998, and 1999 respectively.

The Company's  performance  analysis and support  services  personnel  perform a
variety  of  analytical  and  science-related  support  services  under  several
contracts. These services usually are performed on the customer's premises or at
test-site  locations.  The  Company's  technical  staff works  jointly  with the
customer's  scientists and engineers in the acquisition,  processing,  analysis,
and  management of certain major weapon  systems data.  This work is directed to
quantifying  and reducing the impact of current and future threats to the United
States'  submarine fleet through the use of ocean sensor systems.  The technical
support rendered by the Company  includes  real-time data  acquisition,  digital
signal  processing,   software  development  and  systems   applications,   data
management, and data analysis.

In addition,  the Company supports naval strategic  programs through its role as
an independent evaluator of the performance of submarine-based strategic missile
systems.  This is  accomplished  through  extensive data  processing,  technical
evaluation and data analysis relating to sonar, fire control, missile, launcher,
and navigation subsystems.

The Company's performance analysis and support services employees also engage in
communications   testing  and  evaluation  for  mobile  communications   network
exercises.   The   Company's   communications   analysts   assist  in  preparing
presentations  to the  Navy and in  designing  and  implementing  communications
analysis software.

The Company's employees perform various technical support services in connection
with several  Ballistic  Missile Defense  Organization  (BMDO)  projects.  These
include   advanced   technical   support  in  the   design,   development,   and
implementation of space-qualified equipment, systems analysis, and the operation
of a VAX computer-based mission control center for the MSX mission.

CONTRACTS

The Company's  contracts are  generally  one-year in duration,  and many of such
contracts  contain two one-year  extension  options,  with a fixed level of work
authorized  under the contract.  Several of the Company's  larger contracts with
APL have been renewed or  re-awarded to the Company  annually,  and the level of
work  authorized  under the contract at the time of renewal has provided for, in
the aggregate, the same or a greater level of services.

The Company  typically  provides  services  under three types of contracts.  The
majority of contracts are on a time-and-materials  basis,  pursuant to which the
Company  receives a pre-set fee for all services  provided  under the  contract,
without  regard  to the  Company's  cost of  supplying  these  services,  and is
reimbursed  only for the cost of  materials.  Other  contracts are on a purchase
order basis, which operates similar to a time and materials  contract,  and on a
cost plus fixed fee  basis.  Occasionally,  the  Company  experiences  delays in
contract awards,  contract funding,  and payment,  which the Company believes is
customary  under  contracts  which involve  performance  of services for Federal
Government agencies.

The Company  monitors  performance  under  existing  contracts  and requests for
proposal (RFPs) for performance  analysis and support services by contractors or
government  agencies.  The Company has received a number of blanket contracts by
responding  to RFPs.  In order to increase the new  contracts,  the Company must
locate skilled programmers and other technical personnel with the qualifications
specified  by the open  requisitions.  The Company  uses  agencies  and internal
resources to locate these personnel. The Company believes that its reputation in
the industry  enables it to attract  qualified  individuals for inclusion in the
Company's proposals.


                                       13
<PAGE>



COMPETITION

The Company's  Government  contracts can be opened to  competitive  bidding upon
their  expiration  at the  discretion  of the  contractor  or  agency.  Although
contracts presently  comprising a substantial  percentage of the Company's sales
have  been  renewed  annually,  these  contracts  may  and  have  been  open  to
competitive  bidding.  There can be no assurance  that these  contracts  will be
awarded to the Company if competitive bidding occurs.

The  Company  encounters  substantial  competition  in  its  procurements.   The
Company's competitors include,  Allied Signal,  Comsys, EISI, Orbital, SAIC, and
Sachs/Freeman  Associates.  The Company has  instituted  policies and procedures
designed  to maintain a low  overhead  to enhance  its  ability to compete  with
respect to new  contracts  and to existing  contracts  that are to be renewed or
extended. During the last three years, the contracts that have been lost through
competitive  bidding or otherwise have not been material to the Company,  either
individually or in the aggregate. During this three-year period, the Company has
received several new contracts as a result of competitive  procurements and also
increases in the level of work authorized under contracts that have been renewed
or re-awarded to the Company.

The Company has had  limited  success in  obtaining  contracts  with  government
agencies  or  contractors  other  than APL.  Many of these  contracts  have been
renewed  with  the  incumbent  on  a  sole  source  basis,   rather  than  being
competitively bid. In the case of contracts that have been opened to competitive
bidding,  the contract incumbents generally have had advantages because of their
prior  relationships  with the agencies and the experience of their personnel in
performing the requested services. In addition,  incumbents or other competitors
often have substantially greater financial and other resources than the Company.

BACKLOG

As of October  31,  1999,  the  Company  had a backlog  of  funding on  existing
contracts for performance  analysis and support services  totaling $0.4 million.
By  comparison,  the  backlog  as of  October  31,  1998 was $0.2  million.  The
Company's  contracts  consist  primarily  of  indefinite  delivery,   indefinite
quantity (IDIQ)  contracts  which  generally do not have a funding  amount,  and
therefore  are not included in backlog.  The Company  estimates  that the entire
$0.4  million  of backlog at October  31,  1999 will be  recognized  as sales in
fiscal year 2000.  Because of the delays inherent in the government  contracting
process or possible  changes in defense  priorities  or spending,  the Company's
backlog as of any particular  date may not be indicative of actual sales for any
future  period.  Although  the Company  believes  that its backlog of funding on
existing  contracts  is firm,  the  possibility  exists  that  funding  for some
contracts on which the Company is  continuing  to work,  in the  expectation  of
renewal,  may not be  authorized.  In addition,  the Government has the right to
cancel contracts,  whether funded or not funded,  at any time,  although to date
this has not occurred.

GOVERNMENT REGULATION

In order to maintain  contracts  with  contractors or Government  agencies,  the
Company  must comply with a variety of  regulations  and  Department  of Defense
guidelines,  including  regulations  or  guidelines  covering  security,  record
keeping, and employment practices. The majority of the employees assigned to the
Company's  contracts with  contractors or agencies are required to have security
clearances.  The  Company  historically  has  not  experienced  any  significant
difficulty in obtaining the necessary security  clearances.  The Company's sales
under these contracts are subject to audit by the Defense  Contract Audit Agency
(the  DCAA).  The  DCAA  has  completed  audits  through  fiscal  1992,  and any
adjustments  required  as  a  result  of  these  audits  have  been  minor.  The
implementation by the Federal  Government of spending  cutbacks,  or a change in
national defense priorities, could reduce the Company's sales.

EMPLOYEES

At January 15, 2000,  the Company and its  subsidiaries  employed a total of 188
persons, including three part-time employees. Of these personnel, 54 are engaged
principally in the Company's interactive  communications systems operations, 134
are  engaged in  performance  analysis  and support  services,  and six serve as
officers or managers or perform administrative  services for the Company and all
of  its  subsidiaries.  In  fiscal  year  1999,  the  Company  restructured  its
interactive   communications  systems  operations  which  included  a  workforce
reduction of approximately 35%.


                                       14
<PAGE>



The Company  believes that its success will continue to depend,  in part, on its
ability to attract  and  retain  skilled  sales and  marketing,  technical,  and
management  personnel.  Because of the high turnover rate  typically  associated
with sales and marketing personnel, the Company anticipates that it will need to
replace some of the sales and marketing  personnel who do not meet the Company's
performance  expectations.  The  Company  has not  experienced  any  significant
difficulty in hiring qualified technical personnel.  Neither the Company nor any
of its  subsidiaries is a party to a collective  bargaining  agreement,  and the
Company considers its employee relations to be satisfactory.

FACTORS THAT MAY EFFECT FUTURE RESULTS OF OPERATIONS

The Company  believes that its results of operations will be affected by factors
such as the timing of introduction  by the Company of new and enhanced  products
and  services,   market   acceptance  of  new  voice  processing   products  and
enhancements  of existing  products,  continuation of market trends in the voice
processing   market,   growth  in  the  voice  processing   market  in  general,
competition,  ability to secure and retain  adequate  financing,  commitments to
automation  by  potential  customers,  fluctuations  in  the  buying  cycles  of
governmental customers,  changes in general economic conditions,  and changes in
the U.S. defense industry and their impact on the prime contractor for which the
Company provides performance analysis and support services.

The  Company  is  subject  to the risk that its  business  strategy  will not be
successful.  The new strategy is dependent on market acceptance of the Company's
new focus, services and products,  ongoing research and development efforts, and
sales activities over the near term. In addition, the strategy is dependent upon
the Company's ability to match costs proportionately with revenue. The Company's
fiscal 2000 operating budget includes  significant  expenditures  related to its
development and marketing of its new professional services, uniQue product line,
and TIVRA  product  line.  If the  Company  is unable  to  sustain  and grow the
associated revenue,  the Company is subject to the risk that it may not make the
necessary  decisions  to  reduce  expenditures  in enough  time to avoid  severe
adverse consequences.

ITEM 2.  PROPERTIES

The Company  presently  leases and occupies the 24,000  square foot  building in
Germantown,  Maryland, which it uses for its principal executive offices and its
interactive  communications  operations  center.  In September 1998, the Company
allowed the lease of the facility in Gaithersburg, Maryland to expire, and moved
the production and warehousing  functions to the Germantown,  Maryland facility.
The  Company's  lease of 22,700  square feet of office space in Rancho  Cordova,
California expired in 1999.

In May 1998, the Company entered into a 15-year lease  commitment,  which was to
commence on or about June 1999,  for office space  intended to  consolidate  the
Company's headquarters,  warehouse, and training facilities. In August 1998, the
Company sold its office  building and committed to lease back the building prior
to its  occupation of the new leased space.  In April 1999,  the Company and its
new landlord agreed to terminate the 15-year lease commitment for the new leased
space. The Company incurred $160,000 in termination costs, but was released from
future obligations by the landlord.  At that time, the Company also committed to
lease back its building through 2009.

ITEM 3.  LEGAL PROCEEDINGS

The  Company  is  subject  to  litigation  from  time to time  arising  from its
operations and receives  occasional  letters  alleging  infringement  of patents
owned by third parties.  Management believes that such litigation and claims are
without  merit and will not have a  material  adverse  effect  on the  Company's
financial position or results of operations.

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

The Company held a special  meeting of stockholders on September 9, 1999. At the
meeting, the proposed approval of the issuance of 1,812,104 additional shares of
Common Stock to TFX  Equities,  Inc. was obtained by a vote of: For:  2,304,564,
Against: 72,837, and 24,863 shares abstaining.


                                       15
<PAGE>



PART II

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

Information  responsive to this Item is incorporated  herein by reference to the
Annual Report to Shareholders.

ITEM 6.  SELECTED FINANCIAL DATA

Information  responsive to this Item is incorporated  herein by reference to the
Annual Report to Shareholders.

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

Information  responsive to this Item is incorporated  herein by reference to the
Annual Report to Shareholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated  Financial  Statements of the Company,  including  Consolidated
Statements of Operations for the fiscal years ended October 31, 1999,  1998, and
1997,  Consolidated Balance Sheets as of October 31, 1999 and 1998, Consolidated
Statements of Changes in Stockholders' Equity for the fiscal years ended October
31, 1999, 1998, and 1997,  Consolidated  Statements of Cash Flows for the fiscal
years ended October 31, 1999, 1998, and 1997 and Notes to Consolidated Financial
Statements,  together with the report  thereon of Grant  Thornton dated December
13, 1999, and the report thereon of PricewaterhouseCoopers  LLP, dated March 17,
1999,  are  incorporated  herein  by  reference  to  pages 2  through  20 of the
Company's Annual Report to Shareholders.

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

On July 12, 1999, the Company  dismissed  PricewaterhouseCoopers  LLP ("PWC") as
its independent accountant.  PWC's reports on the Company's financial statements
for the fiscal years ended  October 31, 1998 and 1997 did not contain an adverse
opinion or a  disclaimer  of opinion,  and were not  qualified or modified as to
uncertainty,   audit  scope  or  accounting  principle.  However,  such  reports
contained an explanatory paragraph relating to the Company's ability to continue
as a going  concern.  The  decision  to dismiss  PWC was  approved  by the Audit
Committee  and the Board of  Directors of the Company.  In  connection  with the
audits of the  financial  statements  of the Company for the fiscal  years ended
October 31, 1998 and 1997, and for the period from November 1, 1998 through July
12, 1999,  the Company had no  disagreements  with PWC on matters of  accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedure,  which  disagreements,  if not resolved to the  satisfaction  of PWC,
would have caused PWC to make reference to such disagreements in their report on
the Company's financial statements for such years.

The Company engaged Grant Thornton LLP as its new  independent  accountant as of
July 12, 1999.  The  decision to engage  Grant  Thornton LLP was approved by the
Audit Committee and Board of Directors of the Company.

These events were  previously  reported by the Company on its Current  Report on
Form 8-K, filed with the SEC on July 16, 1999.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

Information  responsive to this Item is incorporated  herein by reference to the
Proxy Statement.


                                       16
<PAGE>



ITEM 11. EXECUTIVE COMPENSATION

Information  responsive to this Item is incorporated  herein by reference to the
Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information  responsive to this Item is incorporated  herein by reference to the
Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

PART IV

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

(a)(1)  Financial Statements

The  following  financial  statements  are included on pages 2 through 20 of the
Annual Report to Shareholders and are incorporated herein by reference.

          Consolidated  Statements  of  Operations  for the fiscal  years  ended
          October 31, 1999, 1998, and 1997

          Consolidated Balance Sheets as of October 31, 1999 and 1998

          Consolidated  Statements  of Changes in  Stockholders'  Equity for the
          fiscal years ended October 31, 1999, 1998, and 1997

          Consolidated  Statements  of Cash  Flows for the  fiscal  years  ended
          October 31, 1999, 1998, and 1997

          Notes to Consolidated Financial Statements

          Report of Independent Certified Public Accountants

          Report of Independent Accountants

(a)(2) Financial Statement Schedule

Unaudited   supplementary  data  entitled  "Selected  Quarterly  Financial  Data
(unaudited)" is  incorporated  herein by reference in Item 8 (included in "Notes
to Consolidated Financial Statements" as Note 16).

The following  financial  statement  schedule and auditor's report in connection
therewith are attached hereto as pages F-1, F-2, and F-3:

F-1       Schedule II Valuation and Qualifying Accounts and Reserves

F-2       Report of Independent  Certified  Public  Accountants on  Supplemental
          Information

F-3       Report of Independent Accountants on Financial Statement Schedule

All other  schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.

(b)  Reports on Form 8-K.

The  Company  did not file any  Current  Reports  on Form 8-K  during the fourth
quarter of its 1999 fiscal year.

(c)  Exhibits.


                                       17
<PAGE>



       EXHIBIT
       NUMBER                                        DESCRIPTION

          3.1  Amended and Restated Articles of Incorporation of Registrant,  as
               amended 1/

          3.2  By-laws of Registrant, as amended 1/

          4.1  Specimen Stock Certificate 1/

          10.1 Microlog Corporation Medical Reimbursement Plan 2/

          10.2 Microlog  Corporation 1989  Non-Employee  Director  Non-Qualified
               Stock Option Plan 3/ -

          10.3 Microlog Corporation 1995 Employee Stock Option Plan 4/

          10.4 Sub-contracting    Agreement   with   Aspect   Telecommunications
               Corporation 5/

          10.5 Sub-contracting Agreement with Applied Physics Laboratory 5/

          10.6 Agreement with Philips Communication Systems B.V. */ 6/

          10.7 Loan and Security Agreement with Silicon Valley Bank 7/

          13   Annual Report to  Shareholders  for the fiscal year ended October
               31, 1999 7/ -

          22   Subsidiaries of the Company 7/

          23.1 Consent of Grant Thornton LLP 7/

          23.2 Consent of PricewaterhouseCoopers LLP 7/

*/       Confidential treatment has been granted for portions of this document.

1/   Filed as Exhibits 3.1, 3.2 and 4.1 to  Registration  Statement on Form S-1,
     File No. 33-31710, and incorporated herein by reference.

2/   Filed as Exhibit  10.6 to Annual  Report on Form 10-K for the  fiscal  year
     ended October 31, 1991 and incorporated herein by reference.

3/   Filed as Exhibit  10.8 to Annual  Report on Form 10-K for the  fiscal  year
     ended October 31, 1993 and incorporated herein by - reference.

4/   Filed as  Exhibit  10.6 to  Registration  Statement  on Form S-8,  File No.
     333-07981 and incorporated herein by reference.

5/   Filed as  Exhibits  10.12 and  10.13 to Annual  Report on Form 10-K for the
     fiscal year ended October 31, 1992 and incorporated herein by reference.

6/   Filed as Exhibit  10.14 to Annual  Report on Form 10-K for the fiscal  year
     ended  October 31, 1994 and  incorporated  herein by - reference.

7/   Filed herewith.



                                       18
<PAGE>



OTHER MATTERS

For the purposes of complying  with the  amendments to the rules  governing Form
S-8 (effective  July 13, 1990) under the Securities Act of 1933, the undersigned
registrant hereby undertakes as follows, which undertaking shall be incorporated
by  reference  into  registrant's  Registration  Statements  on Form  S-8,  Nos.
33-30965 (filed September 11, 1989) and 33-34094 (filed March 30, 1990):

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such indemnification is against public policy as expressed in the Securities Act
of  1933  and is,  therefore,  unenforceable.  In the  event  that a  claim  for
indemnification  against  such  liabilities  (other  than  the  payment  by  the
registrant of expenses  incurred or paid by a director,  officer or  controlling
person of the  registrant  in the  successful  defense  of any  action,  suit or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered,  the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.




                                       19
<PAGE>



                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange  Act of 1934,  the  Company has duly caused this report to be signed on
its  behalf  by the  undersigned,  thereunto  duly  authorized,  in the  City of
Germantown, State of Maryland, on January 28, 2000.

                                       MICROLOG CORPORATION

                                       By  /s/ Stephen D. Smith
                                           -------------------------------------
                                           Stephen D. Smith
                                           President and Chief Executive Officer

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

         /s/ Stephen D. Smith                                   January 28, 2000
----------------------------------------------------
Stephen D. Smith
President and Chief Executive Officer
(Principal Executive Officer)

         /s/ Steven R. Delmar                                   January 28, 2000
----------------------------------------------------
Steven R. Delmar
Executive Vice President and Chief Financial Officer
(Principal Accounting and Financial Officer)

         /s/ David M. Gische                                    January 28, 2000
----------------------------------------------------
David M. Gische
Chairman of the Board and Director

         /s/ Robert E. Gray, Jr..                               January 28, 2000
----------------------------------------------------
Robert E. Gray, Jr.
Director

         /s/ David B. Levi                                      January 28, 2000
----------------------------------------------------
David B. Levi
Director

         /s/ Joe J. Lynn                                        January 28, 2000
----------------------------------------------------
Joe J. Lynn
Director

         /s/ John J. Sickler                                    January 28, 2000
----------------------------------------------------
John J. Sickler
Director

         /s/ Randall P. Gaboriault                              January 28, 2000
----------------------------------------------------
Randall P. Gaboriault
Director


<PAGE>



================================================================================
        F-1, SCHEDULE II - VALUATION AND QUALIFYNG ACCOUNTS AND RESERVES
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                            Balance                                   Balance
Fiscal Year Ended 10/31/99                                  11/01/98     Additions      Deletions     10/31/99
--------------------------                                  --------     ---------      ---------     --------
<S>                                                            <C>           <C>                <C>      <C>
Receivables
    Allowance for Doubtful Accounts                              144           100             94          150

Inventory
    Reserve for Obsolescence                                   1,644           309          1,465          488

Income Taxes
    Valuation Allowance                                        6,400         1,915              0        8,315


                                                            Balance                                   Balance
Fiscal Year Ended 10/31/98                                  11/01/97     Additions      Deletions     10/31/98
--------------------------                                  --------     ---------      ---------     --------

Receivables
    Allowance for Doubtful Accounts                              152            29             37          144

Inventory
    Reserve for Obsolescence                                     345         1,299              0        1,644

Income Taxes
    Valuation Allowance                                        1,966         4,434              0        6,400


                                                            Balance                                   Balance
Fiscal Year Ended 10/31/97                                  11/01/96     Additions      Deletions     10/31/97
--------------------------                                  --------     ---------      ---------     --------

Receivables
    Allowance for Doubtful Accounts                              207            49            104          152

Inventory
    Reserve for Obsolescence                                     253            92              0          345

Income Taxes
    Valuation Allowance                                        3,462             0          1,496        1,966
</TABLE>


                                      F-1

<PAGE>





 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SUPPLEMENTAL INFORMATION

To the Board of Directors and Stockholders
Microlog Corporation

In  connection  with  our  audit of the  consolidated  financial  statements  of
Microlog Corporation referred to in our report dated December 13, 1999, which is
included in the Annual Report on Form 10-K, we have also audited Schedule II for
the year ended October 31, 1999. In our opinion,  this schedule presents fairly,
in all material respects, the information required to be set forth therein.

GRANT THORNTON LLP

Vienna, Virginia
December 13, 1999


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        REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE

To The Board of Directors
Microlog Corporation

Our audits of the consolidated  financial  statements  referred to in our report
dated  March  17,  1999  appearing  on  page 20 of the  1999  Annual  Report  to
Shareholders of Microlog  Corporation  (which report and consolidated  financial
statements  are  incorporated  by reference in this Annual  Report on Form 10-K)
also included an audit of the Financial  Statement Schedule listed in Item 14(a)
of this Form 10-K. In our opinion,  the Financial  Statement  Schedule  presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.

PRICEWATERHOUSECOOPERS LLP

McLean, Virginia
March 17, 1999


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