<PAGE>
                     SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K/A

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

For the fiscal year ended October 31, 1995           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  statement  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 19, 1996 closing price of these shares) was  approximately
$20.8 million.  The Common Stock is traded  over-the-counter  and quoted through
the Nasdaq SmallCap Market.

As of January 19, 1996,  3,964,073 shares of the Registrant's  Common Stock were
outstanding.
------------------------------------------------------------------------------



<PAGE>


                       Documents Incorporated by Reference


Parts I and III  incorporate  information  by  reference  from  portions  of the
Company's  definitive  Proxy  Statement  dated  January  29,  1996  (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, 1995 (the "Annual Report to Shareholders").



<PAGE>
                                     PART I

ITEM 1.  BUSINESS

General

Microlog Corporation ("Microlog" or the "Company") designs, assembles,  markets,
and services a variety of  microprocessor-based  voice processing  systems which
allow users to store,  retrieve,  and transmit  digitized  voice messages and to
access  information on computer  databases.  In addition,  the Company  provides
performance  analysis and technical and  administrative  support services to the
Applied  Physics  Laboratory  ("APL"),  and  American  Telephone  and  Telegraph
("AT&T"),  prime  contractors  to the U.S.  Navy.  Although  this segment of its
business  historically  has provided a stable  source of sales and profits,  the
Company  believes that its principal  opportunities  for growth are in the voice
processing segment and has been concentrating its efforts on that segment.

The results of the Company's  performance during fiscal 1995, 1994, and 1993 are
discussed  in  greater  detail  in  "Management's  Discussion  and  Analysis  of
Financial  Condition and Results of Operations,"  incorporated by reference into
Item 7 of the report. That section 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  from Note 1 of the  Notes to  Consolidated  Financial  Statements
incorporated by reference into Item 8 of this Report.

Microlog,  a Virginia  corporation,  was organized in 1969. The Company's wholly
owned  subsidiaries are Microlog  Corporation of Maryland,  Genesis  Electronics
Corporation, and Old Dominion Systems Incorporated of Maryland.


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.  They
are  accessible  through  touch-tone  and rotary  telephones.  Voice  processing
systems range from small systems with basic voice processing  features to larger
more  complex  systems.   Many  voice  processing  systems  focus  on  only  one
application.

Microlog  offers through its Intela,  a Graphical  User Interface  ("GUI")-based
interactive voice  information  processing system designed to run multiple voice
processing applications simultaneously. Through its DOS-based VCS 3500, Microlog
offers customized  systems which can include up to eleven primary  applications,
each  supported  by separate  software  modules,  and also  offers,  through its
CallStar,  products  which  are  standard  and  can be sold  in  volume  through
distribution channels.

Products

The Company's voice processing  systems are comprised of a  specially-configured
microprocessor-based  hardware  platform and versatile  proprietary  application
software which allows users to store,  retrieve,  and transmit  digitized  voice
messages and to access  information on computer  databases.  The Company's voice
processing  products  include a new  addition  to its product  line,  the Intela
("Intela"),  which is a UNIX-based  voice  processing  system capable of running
multiple voice processing applications  simultaneously.  The Company also offers
the  DOS-based VCS 3500 voice  processing  system,  which  performs up to eleven
voice  processing  applications,  and the  CallStar  series  of  voice  mail and
automated attendant products.

Interactive Information Response ("IIR") connects the voice processing system to
an external computer which 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 

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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.
IIR is widely used for functions such as reporting account balances, checking on
inventory  in stock and  determining  the status of  applications  or permits in
process.  A  special  application  of IIR is also used by  taxpayers  who are in
arrears in paying their Federal  income taxes to call the Intela IIR system from
a touch-tone  telephone and  automatically  establish a repayment  plan with the
IRS.  Microlog  IIR  software  interfaces  to the  most  popular  types  of host
mini-computers,  mainframe computers, and local area networks ("LANs"). Microlog
emphasizes the IIR applications of its new Intela product, but also provides IIR
applications through the VCS 3500. The CallStar product provides primarily voice
mail, automated attendant and fax-on-demand features.

The following voice  processing  applications are provided by the Intela and VCS
3500 products:

         Local Database  provides very similar  functions to IIR, but allows the
         data of  interest,  up to  100,000  records,  to  reside  on the  voice
         processing system rather than a host mini- or mainframe computer.  This
         provides a  cost-effective  approach for smaller IIR  applications.  It
         also allows large IIR applications to do local batch processing of data
         by downloading to the voice processing system for data manipulation.

         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 5,000 messages may be presented.  Audiotex
         software finds wide use by organizations which 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 in the content
         of information dispensed.

         Voice Mail  provides an  organization  with "voice  mailboxes" in which
         internal or external callers may leave detailed,  confidential messages
         at any  time.  Messages  may be left for  groups  of  people as well as
         individuals.  Callers  have many options to review and may record their
         messages  until  satisfied,  and mailbox  owners  have many  options to
         review, save, forward or discard voice messages.

         Voice Mail overcomes many  limitations of telephone  systems,  allowing
         people to exchange  information and transact business without having to
         be on the  phone  simultaneously.  It  eliminates  paperwork  and  adds
         meaning and content  which  written  messages  can't  reflect.  Primary
         benefits   are,   increased   office    productivity    through   fewer
         interruptions, timely, accurate message delivery, and increased message
         detail,  eliminating callbacks and "telephone tag." Although all of the
         Company's voice processing products provide voice mail, the CallStar is
         a less  expensive  product  designed  specifically  for voice  mail and
         automated attendant applications.

         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 different  greetings and different menus of options to be
         presented to different callers. In the event extensions are busy or not
         answered,  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  called  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.

         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 make the transaction any hour of any
         day, and the company can process the  transaction  at its  convenience.
         Such transactions  allow orders and requests to be filled faster and at
         lower cost than traditional methods.

         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 very flexible  software can handle
 
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         multiple  lists  with up to 10,000  names per list.  It can draw from a
         library of 1,000 messages and send different  combinations  of messages
         to individual  phone numbers as directed.  The software also  generates
         management reports about the number of successful  connections,  length
         of calls, and content of responses.

         Multiple  Languages  including  Telecommunications  Device for the Deaf
         ("TDD") Interface software allows system messages to be played in up to
         24 different  languages.  It also  interfaces TDD terminals to VCS 3500
         systems  over  telephone  lines.  The  interface  enables  TDD users to
         interact with most VCS 3500  software  modules no  differently  than if
         voice  communications  were being used. Users simply type messages onto
         their TDD terminals and send them to the voice processing system, which
         understands  the input and  responds  with menus,  prompts and messages
         which are  printed on the TDD  terminal.  It has broad  application  in
         areas  where  the  hearing-impaired  must have  access  to  information
         sources.

         Speech  Recognition  allows  the  caller  to speak  responses  that are
         understood by the VCS 3500 and Intela systems.  Continuous and discrete
         speech  recognition  are  available  on a single  product.  A  standard
         vocabulary   includes  digits  "0-9"  and  "yes"  and  "no"  responses.
         Microlog's  speech  recognition  is speaker  independent  and therefore
         requires 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 creates
         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 which provides the link between the
         VCS 3500 or Intela voice processing system and the customer's database.

         Fax software allows voice processing system users to automatically send
         stored fax documents on demand from within 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 voice  processing  system  and  designate  faxes to be sent in
         response without exiting the voice processing system.

Intela

Intela  is  an  IIR  system  designed  for  simultaneous   support  of  multiple
applications and interactive  information  solutions.  Prices for Intela 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 in the case of
direct sales, the time needed to develop a customized  application.  The Company
is  currently  working on  additional  releases  of the  product  with  expanded
features.

Microlog has employed the Intela in projects for the Internal  Revenue  Service.
Some of these  projects  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 Intela,  automatically  obtain
their refund status, including the amount of the refund.

The Company has incorporated all of the interface  features of its DOS-based VCS
3500 with Graphical User  Interface-based  tools for application  development in
Intela.  Intela  is  based  on a  Pentium  hardware  platform  utilizing  a UNIX
operating system and is capable of supporting 4 to over 1000 ports. Intela has a
non-proprietary  open  architecture.  It supports foreign language user screens,
voice prompts and  documentation.  Intela also supports  text-to-speech,  speech
recognition, remote and local databases, host connectivity, and fax.

Each Intela system contains multiple  microprocessors with hard disk storage and
several  voice cards.  Intela uses  distributed  microprocessors,  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
microprocessors,  the Company can configure the voice processing  systems with a
greater  number of ports and hours of message  storage. 

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Depending  upon  customer  specifications,  systems are  provided  as  tabletop,
floor-standing  or rack mounted units.  These units can be networked to create a
larger system with more than 1000 ports.

Product  Architecture.  The basic  Intela  architecture  consists  of four major
system  components:  the Application  Server(s),  the Port Server(s),  the Voice
Distributed and Control Network and the Intelaware Software Platform.

Application Server. The application server defines the computing  environment in
which Intelaware  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  minicomputer.  It interfaces to a voice  processing
peripheral, or Intela Port Server, via a command link on Ethernet or an RS-232-C
link.

Port  Server.  Microlog's  Intela  T100 and  Intela  R100 are  voice  processing
peripherals,  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,  process and store  speech,  all under the  direction of commands
coming from Intelaware software on the application server across a command link.

Voice Distribution and Control Network. An Ethernet-based, high-speed network is
used to control the port server and transfer voice files between the Intelas and
the application server, as well as among the Intelas themselves.

Intelaware   Software   Platform.   Microlog's   Intelaware  is  an  application
development and deployment environment for both Interactive Information Response
("IIR") and voice messaging  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,  Integration
Manager, Agency Manager and the Calendar Manager.

Through these  interfaces,  users control the development and operation of their
voice  applications,  using  OSF  Motif-based  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.  The 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  connected  using a set of mouse  actions.  Standard
         Windows-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.  A major  function in voice
         applications  is prompt  creation.  With the Intelaware  prompt loading
         facility, prompts can be reviewed, recorded, installed, deleted, backed
         up to removable media,  restored, and distributed over a wide-area data
         ("WAN")  network.  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 DTMF (dual-tone  multifrequency) 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 they will be replaced only after they've been reviewed and
         accepted.  New or updated prompts will be phased in automatically while
         applications remain on-line.

         Prompt  Manager.  The  Intelaware  prompt  management  facility  has  a
         Graphical Prompt Manager. This editor allows users to retrieve a prompt
         from  storage  on a port  server  or  Intela  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.   The  load/unload  of  applications  and  the
         management of the Port Servers  connected to the application  processor
         are done through the System Administration  interface.  If a system

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         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 up.  Intelaware can support  multiple Intelas to expand to larger
         port and storage capacity by networking systems and clusters of systems
         together.  Expansions depend on the application  server the systems are
         connected to.

         Centralized  System  Management.  The system  monitor menu under system
         administration  provides  a  graphical  means to  address  the  central
         administration  of  a  distributed  system.  It  provides  a  graphical
         representation  of the  application  server and its  attached  Intelas,
         including  the  command  link mode  used,  Ethernet  or  serial  links.
         Further,  by  clicking  on the Intela  icon,  an  additional  window is
         displayed.  In this window, a graphic of the Intela 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 on the application that is running, shows what cell
         it is in, and so forth.

         Reports.  To  track  significant   statistical   information  for  such
         activities  as billing  and to justify  services,  Intelaware  offers a
         choice of reports that can be created and viewed  without  interrupting
         the  operation of an  application,  and these  reports can be sent to a
         printer for a hard copy print-out.  Reports  available are call detail,
         cell usage, trunk usage, subscriber  information,  and transaction log.
         If requirements include other than these standard reports,  they can be
         customized using the underlying statistics.

         Database  Access.  Interfaces  can be built between  Intelaware and 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
         information  applications.  This  cell  type  allows  users to  delete,
         insert,  select, and update data. Intelaware 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  Intelaware to  accommodate  multiple
         applications.  Messages can be  retrieved  either FIFO (first in, first
         out) or LIFO (last in, first out), determined on a system basis.

The Microlog Intela platform  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 Microlog
platform  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
processing units.

The Intela system includes a monitor,  keyboard,  and printer, which 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  Company  has  entered  into  non-exclusive   distribution  agreements  with
international   companies,   including   Philips   Communication   Systems  B.V.
("Philips") of The  Netherlands  and  Communication & Network System PTE Ltd. of
Singapore, along with 4 other companies in Europe, Asia, and the Middle East, to
market and support the Intela product line worldwide. Philips markets the Intela
IIR system as the VoiceManager 800 series.

VCS 3500

The Microlog VoiceConnect System 3500 ("VCS 3500") line of systems consists of a
microprocessor-based  hardware platform which can accommodate varying numbers of
ports and, due to its  proprietary  software  modules,  can support up to eleven
separate voice  response or voice  messaging  applications.  Prices for VCS 3500
systems range from $10,000 to over $250,000 and are dependent upon the number of
ports in the system (from 2 

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ports to 96 or more), the number of voice processing  applications  desired, the
amount of voice storage, the need for additional equipment (in the case of large
or unique  systems),  and the extent to which the product must be adapted to the
customer's specific needs.

The  VCS  3500  system  may be  purchased  with  up to  eleven  different  voice
processing applications:  voice mail, automated attendant, automated transaction
processing,  audiotex,  interactive  voice response,  local  database,  outbound
dialing,  multiple languages  including  Telecommunications  Device for the Deaf
("TDD), speech recognition,  text-to-speech,  and fax. The Company also provides
other applications and customization where required. The Company has developed a
separate  software  module  for each  voice  processing  application,  making it
possible  to  provide  customers  with any  combination  of these  eleven  voice
processing applications. Additional software modules may be added after a system
has  been  installed,   thereby  allowing  customers  to  expand  their  systems
gradually, as the need arises, without substantial additional cost.

Microlog's voice processing  software modules include a proprietary  application
software matrix which allows users to customize the systems without the need for
additional  software.  The VCS 3500  system's  application  software  provides a
series of menus  containing  instructions  for the entry of data into the matrix
which will result in a customized system. For example,  the automated  attendant
application  of the VCS 3500 can be  customized  to forward  calls  based on the
recipient's last name,  extension  number,  or other code of up to 20 letters or
numbers.  The features in the application software matrix may be set to specific
dates or  times,  allowing  the  system to  activate  or  de-activate  different
information  menus,  greetings,  or other  features  on  particular  dates or at
particular times. The complexity of the interactive  voice response  application
presently  requires that most  customizing  of this  application be performed by
Microlog.

The Company's VCS 3500 has a flexible system  architecture.  All of the VCS 3500
systems use similar hardware  platforms and the Company activates one or more of
the eleven  software  modules to enable a system to perform  the  desired  voice
processing  applications.  In the case of complex  systems  performing  extra or
unusual  applications  as  requested  by a  particular  user,  the  Company  can
customize the voice processing systems' architecture.  By using similar hardware
platforms  for VCS 3500  systems,  the Company has been able to achieve  greater
system reliability and more efficient assembly, testing, and maintenance.

Each VCS 3500 system contains  multiple  microprocessors  with hard disk storage
and several voice cards. The VCS 3500 uses distributed microprocessors,  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
microprocessors,  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 tabletop, floor-standing or rack-mounted
units.  These units can be networked to create a larger system with more than 48
ports.

The VCS 3500  includes  a  monitor,  keyboard,  and  printer,  which 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 VCS  3500  voice  response  applications  can be  used  with  most  customer
telephone  systems.  When  used  in  connection  with a PBX,  Centrex  or  other
telephone  system having a switch capable of transferring  calls  automatically,
the system can provide a direct connection between the caller and the customer's
telephone  system.  The system can also be designed to allow callers to transfer
their calls to a live operator on the customer's telephone system.


CallStar

CallStar 2000,  developed during fiscal 1991 and available for delivery early in
fiscal 1992, and CallStar 1200,  introduced at the end of fiscal 1993, are based
on  Microlog's  flexible,  industry-standard  hardware  platform  and  operating
system,  and incorporate new user  interfaces and software  standardization  and
improved integration features.

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The CallStar  2000 has capacity of up to 24 ports,  and is available  with voice
mail and  automated  attendant  software.  CallStar  1200 was  designed  for the
small-to-medium  organization with capacities of 2 to 12 ports and a standard 18
hours of storage with up to 50 hours of storage  optional.  These models combine
features of the VCS 3500 with the popular user interface,  model standardization
and  integration  technology  from the  former  CINDI  product  line of  Genesis
Electronics Corporation, a company based in Rancho Cordova,  California that was
acquired by the Company in November 1990.

Prior Systems.  With the introduction of CallStar,  the Company discontinued the
manufacturing and sales of the Genesis CINDI systems.  The Company is continuing
to provide parts and service to the over 4,500 CINDI's sold.

Application Solutions

During 1995, the Company dedicated  development  efforts to repackage and market
existing  applications  previously  developed  for  the  government  sector  for
commercial  customers.   The  first  suite  of  applications  targeted  for  the
commercial  market is called the Retail  Solution.  Retail Solution  consists of
several  applications  designed  and  manufactured  specifically  for the retail
pharmacy industry.  These applications include the Automated Prescription Refill
System ("APRS"),  Photo Ready,  Prescription Ready, the ProNouncer(R),  and Call
Routing.  APRS allows users to place their prescription refill orders 24 hours a
day by entering their  prescription  information via telephone.  Photo Ready and
Prescription Ready  automatically dials individuals who have not picked up their
complete  prescription orders or processed film, and the ProNouncer is a digital
in-store automated  announcement system. Call Routing answers incoming lines and
automatically  directs callers to the desired store department  without the need
for a human operator.

Sales and Marketing

The  Company's  Applications  and VCS 3500  systems are sold  primarily  through
direct sales,  while the CallStar products have been sold principally  through a
distribution network.  Intela is also being sold through both direct sales and a
distribution network.

Direct  Sales  Force The Direct  Sales force has a Director in charge of Federal
systems  sales,  a sales manager for commercial  sales,  and five salesmen.  The
Company's  direct  sales force is  presently  based in the  Washington-Baltimore
metropolitan   area  with  satellite  offices  in  Illinois,   California,   and
Pennsylvania.  The Company  provides  training to its direct  sales  persons and
furnishes  ongoing  technical  support  to these  persons  through  its  systems
engineers  and  other  personnel.   The  Company   compensates  its  direct  and
distribution  sales  personnel  through a base  salary plus  commissions,  which
generally   represent  a  percentage  of  the  net  sales  for  which  they  are
responsible.

The Company's Direct Sales personnel will continue to focus on national accounts
assigned to them and on certain vertical markets, including Retail, Health Care,
Federal,  state and local government.  The principal potential customers for the
Company's voice  processing  applications and products in these vertical markets
are  organizations  which receive or make a large volume of telephone calls that
primarily are repetitive in nature.

Distribution  Sales The  Distribution  Sales force  currently  has a director in
charge of international sales, one salesmen, and one sales engineer. The Company
has established distribution  relationships with GTE, Sprint North Supply, and a
variety  of  smaller  independent  companies  in  the  domestic  market.  In the
international  market,  Microlog has  established a distribution  agreement with
Philips  Communication Systems B.V. ("Philips") of The Netherlands to market and
support the Intela product line initially in Europe,  then worldwide,  under the
name   VoiceManager   800.  The  Company  has   established  or  is  negotiating
distribution  agreements in other countries in Europe,  the Middle East, and the
Far East.

Marketing.  The marketing  organization currently has a director who manages the
Company's product and marketing  related  activities,  one product manager,  one
application  business development manager, and two assistant marketing managers.
This organization interfaces with Direct and Distribution Sales in marketing and

                                       7
<PAGE>
selling the  company's  products,  applications,  and  services.  The  Company's
Training and Documentation groups are also under the marketing organization.

Promotional  Activities  The Company's  promotional  efforts  during fiscal 1995
included  advertising  in industry  trade  publications,  direct  mail,  product
presentations  at trade  shows and similar  events,  and public  relations.  The
Company also conducted seminars for potential  customers in certain  industries,
such as Federal,  state and local  governments.  The Company expects to continue
these promotional activities during fiscal 1996.

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 the VCS  3500  and  Intela
systems for maintenance  contracts  covering  normal business hours.  The fee is
highest for maintenance  contracts  providing for 24-hour or weekend assistance.
Distributors generally perform the maintenance required on systems sold by them,
and most of the Company's distributors offer annual maintenance contracts, which
the Company believes are similar to those offered by the Company and provided at
comparable prices.

The Company  performs  maintenance for its VCS 3500 and Intela voice  processing
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 Microlog's
voice  processing  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  voice  processing  systems.
Microlog  can  perform  many  diagnostic   procedures  over  the  telephone  and
historically  has been able to correct most of the  difficulties  experienced by
its customers through telephone consultation.

Microlog also offers a variety of other services to its customers. Microlog will
customize voice processing  systems to a customer's  specific needs by using the
application  software  matrix in the VCS 3500 or the Graphical User Interface in
its Intela, or by making appropriate  changes in the underlying source code. 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 voice processing  software modules free of
charge to customers who contract for its system maintenance services.

Customer  service and support for voice  processing  products  sold  through the
distribution  network  generally  is  provided by the  distributor.  Most of the
distributors offer annual maintenance contracts to customers with varying levels
of support.  CallStar  products  sold  through  distributors  would also receive
service and support from distributors,  and CallStar models sold to customers on
a direct basis are covered by the VCS 3500 customer service and support program.
The  Company  provides a limited  warranty  for parts and labor on its  CallStar
products for one-year,  with the exception of CallStar 1200 which has a two-year
warranty on voice boards and up to a four-year extended service warranty.

Backlog

As of October 31, 1995,  the Company had a backlog of existing  orders for voice
processing systems totaling $3.7 million.  The backlog,  as of October 31, 1994,
was also $3.7 million.  The Company has experienced  fluctuations in its backlog
at various times during the past two fiscal years attributable  primarily to the
seasonality of governmental  purchases.  In addition, the Company has observed a
lengthening  of the period  between the date of booking an order and the date of
shipment, with the shipment depending on any customer delivery schedules and any
customization  needed  for  VCS  3500  or  Intela   applications.   The  Company
anticipates  that all of the  outstanding  orders at  October  31,  1995 will be
shipped  and the sales  recognized  during  fiscal  1996.  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.

                                       8
<PAGE>
Competition

The voice  processing  industry is highly  competitive and the Company  believes
that  competition  will intensify.  The Company  competes with a large number of
companies which produce voice  processing  products  offering one or more of the
eleven  voice  processing  applications  performed  by the  Company's  products.
Microlog's  competitors include companies such as AT&T,  Computer  Communication
Specialists ("CCS"),  InterVoice,  Inc., Perception Technology Corporation,  and
Syntellect,  that have emphasized  sales of systems with audiotex or interactive
voice  response  applications.  Direct  competition  with  the  Company's  voice
processing systems also arises from a substantial  number of companies,  such as
AVT,  Centigram,  and  Active  Voice,  that  focus on the  market  for  small or
medium-size  voice messaging  (voice mail or automated  attendant)  systems.  In
addition,  the Company also  competes  with dealers and  distributors  that sell
voice processing 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 voice  processing  industry
because of the absence of any major technological barriers to entry.

Competition for the sale of voice  processing  systems has been based in part on
the application  required by the customer.  In marketing its VCS 3500 and Intela
products,   the  Company  places   emphasis  on  the  eleven  voice   processing
applications  that can be  performed  and the  ability  of these  systems  to be
expanded to incorporate  additional  applications.  Although many of its primary
competitors continue to develop new voice processing  applications,  the Company
believes  that no competing  microprocessor-based  system  presently  offers all
eleven voice processing  applications on a single hardware platform. The Company
also believes  that many of its  competitors'  products  cannot be customized as
easily to the user's specific needs as the VCS 3500 and Intela.

In marketing its Retail  Solution,  the Company places  emphasis on the suite of
applications and solutions that these applications  offer.  Potential  customers
have the ability to add additional  solutions as the need arises. The Company is
also able to customize these  applications to meet the user's needs. The Company
is  actively  developing  additional  features  to the Retail  Solution  and new
solutions for release in fiscal 1996.

In marketing its CallStar products, the Company places emphasis on the extensive
features,  and the ease of use and installation of its products in comparison to
competition.  The Company believes that the user interface for these products is
presently one of the best accepted  interfaces in the market.  In addition,  the
dealer support  programs,  including sales support,  service support and others,
help differentiate Microlog from the competition.

Marketing and product  recognition  also play a substantial  role in competition
within the voice processing  industry and within  particular  vertical  markets.
Most  of  the  Company's   competitors  have  considerably   greater  financial,
marketing,  and sales resources than the Company. Many of these competitors have
concentrated on one or two voice processing 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 customers because of its
experience  in marketing  products to these  customers and in  participating  in
competitive procurements.

The Company believes that the other principal factors  affecting  competition in
the voice processing 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

The  Company  believes  that  both  the  development  of  new  voice  processing
applications  and features for its existing  products and the development of new
products  are  necessary to remain  competitive  in the  rapidly-changing  voice
processing  market.  The Company has  continued to improve its voice  processing
product line and is currently  developing new products and  enhancements  to its
existing  products.  In March 1994, the Company  introduced the first release of
its Intela  product and in October,  a new  software  release for  CallStar  was
introduced.  The  Company's  product  engineering  staff  also is engaged in the
development  of special  product 

                                       9
<PAGE>
features for current or potential  customers.  Unless  prohibited  by government
regulation or customer  contract,  the Company retains ownership of all software
applications and features that it develops.

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

                      Research and Development Expenditures

                    (In thousands, except percentage amounts)

                                                    Year Ended October 31,
                                                    ----------------------

                                                 1993       1994          1995
                                                 ----       ----          ----
Research and development expense               $1,512       $1,644       $1,592

         Percentage of voice
           processing net sales                    11%          16%          11%
                                               ======       ======       ======


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. The CallStar is the only product
that comes in a standard equipment format, although the Company is standardizing
some vertical market  applications.  Equipment assembly,  along with testing and
quality control, are performed at its Gaithersburg, Maryland facility. In fiscal
1994, the Company signed a five-year lease for a new  manufacturing and training
facility  located in  Gaithersburg,  Maryland which became  operational in March
1995.  Microlog  currently  has 11 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.

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 voice  processing  industry,
Microlog does not have patent protection for its software  (although some of the
inventions  for which  Microlog  has  received  patents  can be  implemented  in
software).  It  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 Digital Switching, Voice Messaging, Multiple-Language
Automated  Telephone  Systems,  Telecommunications  Device for the Deaf  ("TDD")
compatibility,   and  Release  Line  Trunking   ("RLT"),   and  pending   patent
applications on Automated  Announcement  Systems, TDD Message Storage, and other
TDD-related   innovations.   EVR,  Microlog,  Call  Installer,   Truant,  CINDI,
ProNouncer,  CallStar,  and APRS,  are all  registered  trademarks  owned by the
Company. Intela, Intelaware,  Intelaview, AACS, AARS, ACIS, and

                                       10

<PAGE>
CALLSTAR  FXD 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.  INTEL Corporation has filed with the
U.S. Trademark Trial and Appeal Board requests for extnesion of time in which to
file opposition to registration by the Company of the marks INTELA,  VCS INTELA,
INTELAWARE,  INTELAVIEW.  Settlement  discussions  between the Company and INTEL
Corporation  on these matters are  currently on going.  The Company is currently
using,  and claims  common law rights in the following  additional  unregistered
marks:  Voice  Connect,  Genesis,  Voice Path,  and VCS 3500.  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  or that its  registered  copyrights  can be
successfully  defended.  In any event, the Company believes that factors such as
technological  innovation  and  expertise  and  market  responsiveness  are more
important than the legal protections described above.

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 technical data processing and analysis,  engineering
and  scientific  analysis,  and computer  services) to government and commercial
customers.  These  services,  which comprised the Company's  original  business,
presently are provided  through the Company's  subsidiary,  Old Dominion Systems
Incorporated of Maryland. The Company believes that its performance analysis and
support  services  business  will  continue to provide a stable stream of sales,
although its voice processing business offers greater potential for growth.

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.  Another
important customer is American Telephone and Telegraph  ("AT&T"),  for which the
Company has been performing  services since 1988.  Sales from contracts with APL
(primarily)  and AT&T  accounted for 36%, 43% and 37% of the Company's net sales
for fiscal 1993, 1994, and 1995, respectively. The Company's contracts with AT&T
were significantly reduced during fiscal 1993 as a result of decreases in levels
of work associated with these contracts. Net sales from performance analysis and
support  services through AT&T for fiscal 1995 was  significantly  less than the
fiscal 1994 net sales. Net sales through AT&T for fiscal 1996 are expected to be
less than  those in fiscal  1995.  The  Company  is  seeking  to  diversify  its
operations for performance analysis and support services by seeking contracts in
non-defense related areas.

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.

                                       11
<PAGE>
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  at the time of  contract  renewal  has  provided  for,  in the
aggregate, the same or a greater level of services.

The Company  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
bases. 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.

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 Hadron,  Inc., SAIC,  Fairchild,  Sonalysts,  and
Comsys. 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 which have been renewed or re-awarded
to the Company.

The Company has had no success in obtaining  contracts with government  agencies
or contractors other than APL or AT&T. 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,  1995,  the  Company  had a backlog  of  funding on  existing
contracts for performance  analysis and support services  totaling $7.8 million.
By comparison, the backlog as of October 31, 1994 was $4.6 million. The increase
in backlog is attributable  primarily to a significant multi-year contract award
and  increased  funding  levels  on  existing  or  new  contracts.  The  Company
anticipates  that these  services will be provided  during the next three 

                                       12
<PAGE>
fiscal  years.  The  Company  estimates  that of the $7.8  million of backlog at
October 31, 1995,  $3.9 million will be  recognized as sales beyond fiscal 1996.
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  (and the Government has the right to cancel  contracts 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  and are
included in the Company's fiscal 1995  consolidated  financial  statements.  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 19, 1996,  the Company and its  subsidiaries  employed a total of 236
persons,  including 6 part-time  employees.  Of these personnel,  86 are engaged
principally  in the  Company's  voice  processing  systems  operations,  142 are
engaged in performance analysis and support services, and 8 serve as officers or
managers  or perform  administrative  services  for the  Company  and all of its
subsidiaries.

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.


ITEM 2.  PROPERTIES

The Company  occupies a 24,000  square foot  building in  Germantown,  Maryland,
which it uses for its  principal  executive  offices  and its  voice  processing
operations center. The Company also leases 22,700 square feet of office space in
Rancho Cordova,  California  which was Genesis'  headquarters  and 12,000 square
feet in Gaithersburg, Maryland which it uses for production and warehouse of its
voice processing products. In February 1993, the Company entered into a sublease
for its Rancho Cordova facility.  The sublease is for a five-year term and began
in June 1993.

The Company also owns one 850 square foot office  condominium  unit located at 4
Professional  Drive,  Gaithersburg,  Maryland  (formerly  used for the Company's
principal executive offices), which it leases.


ITEM 3.  LEGAL PROCEEDINGS

Microlog and its  subsidiaries,  Microlog  Corporation of Maryland,  and Genesis
Electronics  Corporation,  were  sued  in  February  1991 in the  United  States
District  Court for the  Northern  District of Texas by VMX,  Inc.,  ("VMX") and
Dytel Corporation  ("Dytel").  The lawsuit alleged  nonpayment of royalties owed
under a license  granted by VMX to Genesis  with  respect to certain  voice mail
technology  and  infringement  by all three  defendant  corporations  of certain
patents  involving call processing  technology held by VMX and/or Dytel. VMX and
Dytel 

                                       13
<PAGE>
were  seeking an  accounting  of  royalties  allegedly  owed  under the  Genesis
agreement and were seeking an injunction  and an accounting  with respect to the
alleged infringement of the call processing technology patents.

On May 24, 1993, Microlog and its subsidiaries reached a settlement with VMX and
Dytel.  Under the terms of the  settlement,  the  litigation  was dismissed with
prejudice and the products of Microlog's  subsidiaries,  Microlog Corporation of
Maryland,  and Genesis Electronics  Corporation,  are fully licensed under VMX's
and Dytel's voice mail and automatic call processing  patents.  Microlog and its
subsidiaries  paid VMX $275,000 upon execution of the  settlement  documents and
issued to VMX $225,000 of Microlog  common  stock  (102,857  shares),  which was
subject to  redemption as discussed in Note 11.  Additionally,  Microlog and its
subsidiaries   will  pay  to  VMX  a  total  of  $500,000  in  eleven  quarterly
installments  starting on July 31, 1993. Of the settlement amount,  $444,704 was
attributed  to the receipt by  Microlog of Maryland  and Genesis of a fully paid
voice mail license, and $555,296 was attributed to a license under VMX and Dytel
automatic call processing  patents.  The Company  recorded the new licenses at a
cost of $800,000, and is amortizing the licenses over seven years.

The Company is subject to other  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  effect on the  Company's  financial
position or results of operations.


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

None.

                                     PART II

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

The information  required by this item is incorporated  herein by reference from
"Price Range of Common Stock" and "Dividend  Policy" on page 29 of the Company's
Annual Report to Shareholders.


ITEM 6.  SELECTED FINANCIAL DATA

The  information  required by this item is  incorporated  herein by reference on
pages 29 and 30 of the Company's Annual Report to Shareholders.


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

The information  required by this item is incorporated  herein by reference from
pages 23 through 30 of the Company's Annual Report to Shareholders.


ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated  Financial  Statements of the Company,  including  Consolidated
Statements of Operations  for the years ended October 31, 1993,  1994, and 1995,
Consolidated  Balance  Sheets as of October  31,  1994,  and 1995,  Consolidated
Statements  of Changes in  Stockholders'  Equity for the years ended October 31,
1993, 1994, and 1995,  Consolidated Statements of Cash Flows for the years ended
October  31,  1993,  1994,  and  1995,  and  Notes  to  Consolidated   Financial
Statements,  together  with the  report  thereon of Price  Waterhouse  LLP dated
December 22, 1995, are  incorporated by reference from pages 6 through 22 of the
Company's Annual Report to Shareholders.

                                       14
<PAGE>
ITEM 9.    DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information  concerning  directors and certain executive officers of the Company
found under the caption  "Election of Directors" and the caption  "Section 16(a)
Disclosure" on pages 6 through 15 is  incorporated  herein by reference from the
Company's Proxy Statement.


ITEM 11.   EXECUTIVE COMPENSATION

The  information  found  under the  caption  "Executive  Compensation  and Other
Information",  found on pages 8 through 15, of the Company's  Proxy Statement is
incorporated herein by reference (excluding  specifically the sections captioned
"Comparative Company Performance" and "Management  Compensation Committee Report
on Executive Compensation").


ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information found under the caption "Stock Owned by Management and Principal
Stockholders"  on pages 4 and 5 of the Company's Proxy Statement is incorporated
herein by reference.


ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information found under the caption  "Compensation  Committee Interlocks and
Insider   Participation"  on  page  14  of  the  Company's  Proxy  Statement  is
incorporated herein by reference.

                                     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 6 through 22 of the
Company's  Annual  Report  to  Shareholders  and  are  incorporated   herein  by
reference.

         Consolidated  Statements of Operations  for the years ended October 31,
         1993, 1994, and 1995

         Consolidated Balance Sheets as of October 31, 1994, and 1995

         Consolidated  Statements  of  Changes in  Stockholders'  Equity for the
         years ended October 31, 1993, 1994, and 1995

         Consolidated  Statements  of Cash Flows for the years ended October 31,
         1993, 1994, and 1995

         Notes to Consolidated Financial Statements

         Report of Independent Accountants

                                       15
<PAGE>
(a)(2)  Financial Statement Schedules

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 17).

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

F-1          Schedule VIII       Valuation and Qualifying Accounts and Reserves

F-2          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.

(a)(3)  Exhibits

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        Employment  Agreements between the Company and Joe J. Lynn and
                  Steven R. Delmar, respectively 5/

      10.2        Deferred  Compensation  Agreements  between the Company and J.
                  Graham Hartwell and Joe J. Lynn, respectively 3/

      10.3        Consulting  and  Non-Competition   Agreement  with  J.  Graham
                  Hartwell 5/

      10.4        Employment  Agreement  between  the  Company  and  Richard  A.
                  Thompson 5/

      10.5        Microlog Corporation Executive Deferred Bonus Plan 2/

      10.6        Microlog Corporation Medical Reimbursement Plan 5/

      10.7        Microlog Corporation 1986 Stock Option Plan, as amended 6/
                                                                          -

      10.8        Microlog Corporation 1989 Non-Employee Director  Non-Qualified
                  Stock Option Plan 6/ -

      10.9        Agreements with Farmers & Mechanics National Bank

      10.10       Sub-contracting   Agreement  with  Aspect   Telecommunications
                  Corporation 6/

      10.11       Sub-contracting Agreement with Applied Physics Laboratory 6/

      10.12       Agreement with Philips Communication Systems B.V.*/ 7/

      13          Annual  Report  to  Shareholders  for the  fiscal  year  ended
                  October 31, 1995

      22          Subsidiaries of the Registrant 5/

                                       16
<PAGE>
      24          Consent of Price Waterhouse LLP

---------

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

1/         Filed as an Exhibit to  Registration  Statement on Form S-1, File No.
           33-31710, and incorporated herein by reference.

2/         Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
           ended October 31, 1987.

3/         Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
           ended October 31, 1988.

4/         Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
           ended October 31, 1990.

5/         Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
           ended October 31, 1992.

6/         Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
           ended October 31, 1993.

7/         Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
           ended October 31, 1994.

(b)        Reports on Form 8-K

No reports on Form 8-K were filed by the  Company  during the fiscal  year ended
October 31, 1995.



<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.


<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934, as amended, the registrant 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 26, 1996.
                                                   MICROLOG CORPORATION


                                                   By /s/ Joe J. Lynn
                                                      ---------------
                                                          Joe J. Lynn
                                                   Chief Executive Officer

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



/s/ Joe J. Lynn                                                 January 26, 1996
--------------------------------------------
Joe J. Lynn
Chief Executive Officer




/s/ Richard A. Thompson                                         January 26, 1996
--------------------------------------------
Richard A. Thompson
President and Chief Operating Officer




/s/ Steven R. Delmar                                            January 26, 1996
--------------------------------------------
Steven R. Delmar
Executive Vice President and Chief Financial Officer
(Principal Accounting Officer)



/s/ J. Graham Hartwell                                          January 26, 1996
--------------------------------------------
J. Graham Hartwell
Chairman of the Board and Director




/s/ David M. Gische                                             January 26, 1996
--------------------------------------------
David M. Gische
Director



/s/ Robert E. Gray, Jr.                                         January 26, 1996
--------------------------------------------
Robert E. Gray, Jr.
Director


<PAGE>





<TABLE>
<CAPTION>

                                      ADDITIONAL SCHEDULE REQUIRED
                              SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                                                           BALANCE                                             BALANCE
FISCAL YEAR ENDED 10/31/95                                  11/1           ADDITIONS         DELETIONS          10/31
--------------------------------------------------     --------------------------------------------------------------------
<S>                                                            <C>                <C>               <C>            <C>    
RECEIVABLES
   ALLOWANCE FOR DOUBTFUL ACCTS                                233,081            15,422            81,292         167,211

INVENTORY
   RESERVE FOR OBSOLESCENCE                                  1,144,694           321,117           411,196       1,054,615

FISCAL YEAR ENDED 10/31/94
--------------------------------------------------

RECEIVABLES
   ALLOWANCE FOR DOUBTFUL ACCTS                                174,454            72,000            13,373         233,081

INVENTORY
   RESERVE FOR OBSOLESCENCE                                    777,575         1,137,039           769,920       1,144,694


FISCAL YEAR ENDED 10/31/93
--------------------------------------------------

RECEIVABLES
   ALLOWANCE FOR DOUBTFUL ACCTS                                187,715            22,000            35,261         174,454

INVENTORY
   RESERVE FOR OBSOLESCENCE                                    824,173                              46,598         777,575
</TABLE>













                                       F-1



<PAGE>


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

--------------------------------------------------------------------------------
        REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE


To The Board of Directors and Stockholders
Microlog Corporation



Our audits of the consolidated  financial  statements  referred to in our report
dated  December  22,  1995  appearing  on page 22 of the 1995  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.




Price Waterhouse LLP
Washington, DC
December 22, 1995




























                                       F-2

<PAGE>