SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            ________________________

                                   FORM 10-K

[X] Annual  Report  Pursuant  to Section 13 or 15(d) of the  Securities Exchange
    Act of 1934 for the fiscal  year ended December 31, 1997.

[ ]  Transition  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
     Exchange  Act  of  1934  for  the transition period from ____ to ______.

                        Commission File Number 33-59598

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

         New Jersey                                      22-2476114
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

           1515 Route 10, Parsippany, New Jersey 07054 (973) 993-3000
      (Address and telephone number, including area code, of registrant's
                          principal executive office)

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

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

                              Title of each class

                          Common Stock, $.01 par value

     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, to the
best  of  the  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. [ ]

     Aggregate  market  value  of  voting  stock  held by  non-affiliates  as of
February 1, 1998 was approximately $352,203,000.

     Number of shares  of Common  Stock  outstanding  as of  February  1,  1998:
16,122,367.

     Documents incorporated by reference:  Annual report to shareholders for the
year ended  December  31, 1997  (Part II);  Definitive  proxy  statement for the
registrant's 1998 annual meeting of shareholders (Part III).

<PAGE>
                              DIALOGIC CORPORATION
                               TABLE OF CONTENTS

PART I                                                                 Page


Item 1  Business of the Company                                            3
Item 2  Properties                                                        25
Item 3  Legal Proceedings                                                 25
Item 4  Submission of Matters to a Vote of Security Holders               27
Item 4A Executive  Officers of the Registrant                             27

PART II

Item 5  Market  for  the   Registrant's   Common  Equity 
        and Related Stockholder Matters                                   30
Item 6  Selected Financial Data                                           30
Item 7  Management's  Discussion  and  Analysis  of Results of
        Operations and Financial  Condition                               30
Item 7A Quantitative   and  Qualitative Disclosure About Market
        Risk                                                              30
Item 8  Financial Statements and Supplementary Data                       30
Item 9  Changes  in and  Disagreements  with Accountants 
        on Accounting and Financial Disclosure                            30

PART III 

Item 10 Directors of the Registrant                                       31
Item 11 Executive Compensation                                            31
Item 12 Security Ownership of Certain Beneficial Owners and Management    31
Item 13 Certain Relationships and Related Transactions                    31

PART IV

Item 14 Exhibits, Financial Statements Schedules and Reports on Form 8-K  32

Signatures     .........................................................  39

<PAGE>

Item 1.  Business of the Company

Introduction

     Incorporated in New Jersey in 1983, Dialogic  Corporation has its principal
executive  offices located at 1515 Route 10,  Parsippany,  New Jersey 07054. The
terms  "Company" and "Dialogic"  used in this report refer to the Registrant and
its  consolidated   subsidiaries  unless  the  context  indicates  otherwise(1).
Acquired  companies  include  GammaLink,  a  manufacturer  of  facsimile  boards
("GammaLink"),  and Dianatel  Corporation,  a  manufacturer  of digital  network
interface and other signal computer  products  ("Dianatel"),  each of which have
been merged into the Company.

     On  February  17,  1998,  the  Company  sold  the  assets  of its  Spectron
Microsystems,  Inc. subsidiary to Texas Instruments,  Inc. for approximately $26
million  in  cash  and  the   assumption  of   substantially   all  of  Spectron
Microsystems'  liabilities.   Spectron  Microsystems  was  in  the  business  of
developing software for DSP operating systems.

     This Annual Report contains certain  forward-looking  statements within the
meaning   of  the   Private   Securities   Litigation   Reform   Act   of   1995
("Forward-Looking  Statements").  Such  statements  are  subject  to  risks  and
uncertainties  that could cause actual results to differ  materially  from those
projected  in such  Forward-Looking  Statements.  Certain  factors  which  could
materially  affect such  results and the future  performance  of the Company are
described below under "-- Risk Factors".

General

     Dialogic  designs,  manufactures  and markets  hardware and software signal
computing components for "computer  telephony" systems.  "Computer telephony" is
the term used to encompass a wide variety of technologies and applications  that
use the  information  processing  capabilities of a computer (often a server) to
add intelligence to telephone functions and to combine these functions with data
processing.  The Company's  products are offered as modular building blocks that
enable  its  customers--primarily  VARs,  OEMs,  systems  integrators,   service
providers and applications developers--to design computer telephony systems that
meet the applications demands of their end-user customers. Dialogic has promoted
the acceptance of open, non-proprietary computer telephony systems, enabling its
customers  to  respond  to  end-user  demand  for  standards-based  systems  and
expanding  the  types of  systems  into  which  the  Company's  products  may be
incorporated.  The Company's customers vary in size from small ventures to major
computer and telecommunications companies worldwide.

     The Company's  signal  computing  products receive and process signals from
telecommunications  networks  and  perform  computing  functions  to convert the
signals  to data  

_________________
(1)  Dialogic,  GammaLink,  Dianatel  and many of the  Company's  product  names
referred to herein are  trademarks  or trade names of the  Company.  This Annual
Report  also  includes  references  to  trademarks  and  trade  names  of  other
companies.

<PAGE>

appropriate for various types of computer systems. These computing functions are
based upon algorithms for a variety of features,  including  voice  compression,
voice storage,  speech recognition,  tone recognition and facsimile compression.
Conversely,  the Company's signal computing products also take computer data and
convert it to  signals  compatible  with  telecommunications  networks  by using
algorithms  for features such as speech  synthesis,  voice  decompression,  tone
signaling  and  facsimile  generation.   Dialogic's  signal  computing  products
typically  combine two  elements--a  signal  processing  resource  and a network
interface.  Signal  processing  resources  perform specific  functions.  Network
interfaces connect a system, normally a personal computer, to telephone and data
networks.  Dialogic's  hardware  products  are  offered  in the form of  circuit
boards/platforms  to be installed in a variety of computer chassis.  The Company
also licenses the use of various software products.

     Dialogic  offers a broad  product  line,  allowing its customers to develop
computer  telephony   applications  with  components  that  are  compatible  and
scaleable across different ranges of density and performance.  Such applications
include:

     Database  interaction  applications,   which  query  and  make  changes  to
databases based on touchtone or voice input, including:

             Audiotex  - giving  24-hour  telephone  access  to a  menu-selected
                         database of recorded (spoken) information

             Fax-on-demand - giving 24-hour telephone  access to a menu-selected
                         database of printed information

             Interactive voice response - giving 24-hour telephone access,  with
                         update privileges, to an indexed database of records

             Interactive  fax  response  -  faxing  hard-copy  confirmations  of
                         touchtone queries or transactions

    Fax and voice messaging applications, including:

            Voice mail

            Fax servers, which pool fax resources across a network of users, for
               the purpose of broadcasting fax messages and storing fax messages
               for later retrieval

            Paging

            Unified  messaging,  which presents  e-mail,  fax and voice messages
               through one screen interface and converts from e-mail to fax or 
               voice for remote telephone access

    Intelligent  call  control   applications,   which  automate  services  that
once  required  the intervention of an operator, including:

            Call centers, where a large number of agents process inbound 
                    requests or outbound sales calls

            Help desk automation, which directs a call to the support staffer 
                    with the appropriate expertise

            Conferencing,  which enables more than two parties to call a control
                    number,  with active or passive (i.e., listening) privileges

            Predictive/autodialing,  which  dials out to lists of phone numbers,
                    screens out  certain  calls  (e.g., no-answers) and delivers
                    live prospects to telemarketing agents

            Personal  communications  agents,  which  screen  and  forward calls
                    based  on a  user's  itinerary  and instructions

   Internet gateway applications, including:

            Voice over the Internet

            Fax over the Internet


Strategy

          The  first  computer  telephony  systems,  like  the  first  computing
systems,  were built using proprietary hardware and software.  Over the last few
years numerous computer telephony vendors have adopted open, or non-proprietary,
personal  computer  ("PC")  platforms and standard  operating  systems,  such as
Windows  NT,  Windows 95,  UNIX,  OS/2,  or DOS,  as elements of their  computer
telephony systems. This shift toward open platforms has been driven by the rapid
increase  in  performance  and power of  standard  microprocessors,  the general
availability  of  add-on  hardware  and  software  components,   growth  in  the
functionality of the PC and cost savings due to lower PC prices.

          The  Company's  strategy is to position  Dialogic to benefit  from the
growing acceptance of open call processing systems. The Company seeks to support
this strategy through the following approaches:

          Advocate Open Systems.  The Company  believes that open  architectures
          provide many advantages to systems developers,  including (i) reducing
          the time  needed  to bring  new  products  to  market,  (ii)  reducing
          customers'   maintenance  and  continuing   engineering  costs,  (iii)
          providing  access  to  a  variety  of  technologies  from  third-party
          vendors,  (iv)

<PAGE>
          enabling  customers to focus their  efforts on marketing  and end-user
          applications,  (v)  protecting  customers  so that  they  will  not be
          dependent upon a particular technology and therefore be precluded from
          accessing new technologies  and (vi) enabling  customers and end-users
          to benefit from the economies  associated with open architectures.  As
          part of its  commitment to open  architectures,  Dialogic  designs its
          modular  components to satisfy  established  industry  standards.  Its
          products  work in a  variety  of PC  platforms  and form  factors  and
          support  standard  operating  systems.  Furthermore,  to  support  its
          international sales efforts,  the Company designs its products to meet
          international telecommunications standards. At the same time, Dialogic
          advocates  the  value  to  end  users  of  requesting  their  computer
          telephony  vendors to provide open systems,  thereby  encouraging  the
          "pull through" of open components.

          Develop Signal Computing  Technologies.  Dialogic believes that voice,
          image and data processing technologies are converging at a rapid rate.
          This  convergence  is  reflected  in the demand for unified  messaging
          systems in the  telecommunications  and computing  industries.  In the
          telecommunications  field, voice processing systems are being designed
          to integrate  voice, fax and e-mail  messages;  similarly,  within the
          computing industry, unified messaging may be addressed by servers that
          provide the client with access to voice, fax and e-mail  messages.  By
          focusing on signal computing  technologies,  such as the Company's DM3
          Mediastream   Architecture,   Dialogic  seeks  to  have  its  products
          incorporated in a wide variety of business computing applications that
          address one or more voice, image and data processing functions.  As PC
          platforms decline in price and continue to be widely deployed,  and as
          reliable,  user-friendly  multi-tasking  operating systems become more
          widely  accepted,  the Company  intends to provide its customers  with
          products  that  support  multi-application  uses and that benefit from
          this technological convergence. This statement regarding the Company's
          intent  constitutes a  Forward-Looking  Statement.  Actual results may
          differ  from  the  Company's  intentions  as a result  of a number  of
          factors,  including the extent to which the Company is able to respond
          to technological  developments and competitive responses.  See "--Risk
          Factors".

          Initiate and Promote Uniform  Standards.  Dialogic's  Signal Computing
          System Architecture  ("SCSA") reflects the Company's commitment to the
          expansion  of  existing  call  processing   technology   through  open
          architectures.  The goal of SCSA is to develop and gain broad domestic
          and  international  acceptance  for a variety  of  computer  telephony
          standards and  technologies.  The  essential  elements of SCSA are the
          development  of  (i)  software  standards  for  use  by  the  computer
          telephony industry, (ii) buses with increased bandwidth and capability
          to support  high  capacity  platforms,  (iii) a wide range of products
          available  from  multiple  vendors that enable  systems  developers to
          integrate voice, image and data technologies in order to build unified
          messaging   solutions   and  (iv)   technologies   that  will   permit
          scaleability  from  single  node  stand-alone  systems  to  multi-node
          distributed systems,  thereby allowing customers to expand from low to
          high capacity products with relative ease. SCSA  participants  include
          computer  suppliers,  component  manufacturers,   hardware  suppliers,
          algorithm and technology developers, call processing systems suppliers
          and leading telecommunications equipment manufacturers.  Substantially
          all  of  the  major  products  in  Dialogic's   current  product  line
          incorporate  one 

<PAGE>

          or more aspects of SCSA. In 1995,  Dialogic  joined Digital  Equipment
          Corporation, Ericsson Business Networks,  Hewlett-Packard and Northern
          Telecom in forming the Enterprise  Computer  Telephony Forum ("ECTF").
          The  principal  goal  of the  ECTF  is to  oversee  the  evolution  of
          industry-wide   standards   implementation  for  computer   telephony.
          Dialogic has  contributed  to ECTF its  Telephone  Application  Object
          (TAO) software  framework to assist in the  development of a series of
          open  interfaces.  In the Internet field,  Dialogic has been active in
          the  VON  Coalition,  the  International  Multimedia  Teleconferencing
          Consortium and other bodies advocating standards for Internet products
          that  will  enable  different   vendors'   gateways  and  products  to
          interoperate.

          Leverage  Technological  Expertise in Computer  Telephony.  Dialogic's
          core technical  competence is the  development  of computer  telephony
          technologies that are embedded in the Company's hardware, software and
          digital  signal  processing  algorithms.  Dialogic  believes  that its
          future  success  depends  upon its ability to  continually  expand its
          technical  capabilities and to provide technically advanced components
          that are responsive to technological  advances and changes in industry
          standards. Accordingly, the Company spends, and intends to continue to
          spend, substantial amounts on research and development.  Statements in
          this Annual Report regarding future research and development  spending
          constitute Forward Looking Statements.  See "--Risk Factors".  Factors
          that  could  affect the level of  research  and  development  spending
          include market conditions, the nature of customer demand, competitors'
          product  announcements,  patent and/or license availability and claims
          and regulatory requirements.

          Provide Customers with a Broad Range of Products. Dialogic enables its
          systems  developer  customers  to develop  and offer a broad  range of
          applications  by providing its customers with building blocks that are
          designed to conform to widely accepted standards, much in the same way
          that the  standardization  of PC  platforms  has resulted in an entire
          industry of data processing software developers. The Company's modular
          approach also enables  systems  developers  and  integrators  to build
          progressively  larger systems with more  application  features without
          making significant changes in the underlying technologies.

          Develop Collaborative Customer  Relationships.  Dialogic believes that
          it is essential to maintain close communications with its customers in
          order to understand  their needs.  Through  contacts at both the field
          and management  levels,  the Company  reviews  application  design and
          hardware  configuration  issues and  application  objectives  with its
          customers.  Dialogic  seeks to serve as a problem solver in helping to
          construct new and enhanced call processing  systems.  The Company also
          seeks  to  educate  systems   developers  about  the  broad  range  of
          applications  that  may be  provided  through  use  of  the  Company's
          computer telephony components, in part by conducting seminars to train
          customers' engineers in the use and potential applications of Dialogic
          modules.  To this end, Dialogic has helped create Dialogic User Forum,
          Inc., a body designed to facilitate customer feedback to Dialogic.

<PAGE>
          Expand  International  Presence.  Dialogic  believes  that advances in
          voice, image and data processing  technologies,  growing international
          acceptance  of the  benefits  available  from these  technologies  and
          deregulation and  privatization  of  international  telecommunications
          networks  will  drive  increased   acceptance  of  computer  telephony
          technology in  international  markets.  Thus,  during  February  1997,
          negotiators  at the  World  Trade  Organization  in  Geneva  signed  a
          telecommunications   pact  designed  to  open  telephony   markets  to
          competition.  Statements  on  future  market  acceptance  are  Forward
          Looking  Statements.  See "--Risk Factors." No assurances can be given
          with respect to the pace of deregulation and privatization,  which may
          differ  significantly  from  country to country or the degree to which
          deregulation  and  privatization  will  result in demand  for  Company
          products.  The Company's  familiarity  with  international  regulatory
          requirements  has  enabled it to gain  approvals  for its  products in
          several  international  markets, thus providing its customers with the
          opportunity  to reduce the time  necessary  to market  their  products
          internationally.

          Complement   Internal   Growth   with   Strategic   Acquisitions   and
          Investments.  Prior to the  acquisition  of  GammaLink  in June  1994,
          Dialogic's   growth  had   occurred   principally   through   internal
          development. However, as reflected in its past transactions,  Dialogic
          believes  that  opportunities  exist to extend and enhance its current
          lines of business and distribution capabilities through investments in
          or acquisitions of businesses in the computer  telephony  industry and
          related   fields.    Management   intends   to   analyze   acquisition
          opportunities  that  become  available  to the Company and to consider
          pursuing  those   opportunities  that  complement  or  supplement  its
          business strategies.

Dialogic's  presentation above of its business strategies reflects the Company's
planning for the future and thus may constitute a Forward-Looking  Statement. No
assurance  can be given as to whether or as to the extent that the Company  will
be  successful  in the pursuit of its business  strategies.  Factors which could
impact the Company's ability to pursue such strategies are set forth below under
"--Risk Factors".

Products

          Dialogic's  signal  computing  products are computer  expansion boards
which typically fit in a PC chassis and operate under the control of an industry
standard PC operating system, such as Windows NT, Windows 95, UNIX, OS/2 or DOS.
With its emphasis on developing  modular building blocks for computer  telephony
systems,  Dialogic  offers products that operate over a continuum in performance
and  density.   Its  traditional  products  enable  developers  to  create  call
processing systems with voice processing,  facsimile,  data, speech recognition,
and speech synthesis capabilities.  Its high density products, introduced during
1994 as the Company's first  implementation of SCSA,  provide advanced switching
and computer telephony features that enable Dialogic's customers to extend their
product offerings into call center and enhanced services  environments.  Its VME
platform products, consisting of high density products based on the VME computer
bus and form factor,  are designed to support existing call processing  features
with significant enhancements for telephone central office use.

<PAGE>

          Dialogic's  products  typically  include  two  elements  -  a  network
interface and signal processing  resources.  Network  interfaces  connect a call
processing system to telephone and data networks.  Signal  processing  resources
use digital signal processing  techniques to perform useful computing functions,
such as  digitalization  and  compression,  on telephony and data  signals.  The
Company's  product  line  includes  network  interfaces  and  signal  processing
resources for voice processing, fax and data processing,  speech recognition and
speech  synthesis,  as well as an open  signal  processing  platform  for a wide
variety of Dialogic and third party  algorithms.  The product line also includes
system software for developing applications.

Technologies Supported by Dialogic Products

          Dialogic's   platforms  support  a  variety  of  technologies,   whose
functionality in finished products is largely driven by application software and
middleware  supplied by the Company's customers and other  third-parties.  These
technologies include:

     Voice. Voice technology  involves processing and manipulating audio signals
     in  a  computer  telephony  system.   Voice  technology  functions  include
     filtering,  analyzing,   recording,   digitizing,   compressing,   storing,
     expanding and replaying such signals, as well as receiving, recognizing and
     generating  specific  telephone  and  network  tones.  In  addition,   this
     technology includes multiparty voice conferencing.

     Network Interfaces.  A call coming from the telephone network to a computer
     telephony  system can be carried on a variety of lines,  from  analog  loop
     start to digital,  T-1 and E-1 and primary rate integrated services digital
     network (ISDN) lines. These calls can be routed to analog and digital basic
     rate interface (BRI) station devices for call center applications. Dialogic
     manufactures  and sells  platforms that are compatible with various popular
     network interfaces utilized throughout the world.

     Facsimile.  Fax technology  transmits a copy of  paper-based  documents and
     images over telephone lines. In a PC-based system,  fax technology can also
     transmit and receive computer-generated files.

     Automatic Speech Recognition  ("ASR").  ASR is an algorithm that recognizes
     human  speech.  Speaker-independent  ASR can  recognize a limited  group of
     words and numbers  from any caller.  Speaker-dependent  ASR can  identify a
     large vocabulary of commands from a specific speaker.

     Text-to-Speech  ("TTS").  TTS is an algorithm that generates  intelligible,
     synthetic  speech from text stored in computer  files,  designed to provide
     access to information  that would be too expensive or impractical to record
     using voice technology.

     Switching.  Switching  involves routing,  transferring and connecting voice
     signals between multiple chassis.

<PAGE>

Low and Medium Density Voice Processing Resources

          Dialogic's  platforms span a range of system densities.  By developing
products in a modular  approach that allows  customers to expand the performance
capabilities  of their systems in a scaleable  manner,  Dialogic seeks to enable
its  customers to select a  performance  range that most suits their systems and
their target markets.  Dialogic's basic low density voice processing  platforms,
the D/21H and D/41H,  provide  voice  processing  and analog  network  interface
functions  simultaneously  on two or four  independent  telephone  lines.  These
products connect directly to the telephone lines,  automatically  answer inbound
calls, detect touchtones,  play voice messages to a caller,  digitize,  compress
and record voice signals,  make outbound  calls,  and  automatically  report the
results  of  outbound  calls.  The  D/21H and D/41H  provide  standard  features
required for most voice processing applications,  including voice mail and voice
messaging,   interactive   voice  response,   audiotex,   inbound  and  outbound
telemarketing,   operator  services,  dictation,  auto  dialers,   telecomputing
services, notification systems and on-line data entry and query.

          During 1996, Dialogic  introduced the DIALOG/4,  a half size four port
voice processing  platform designed for computer  telephony  installations  that
cannot support full-size voice boards. This product provides four telephone line
interface  circuits  that  connect  directly  to analog  loop start  lines.  The
functions  and  applications  are  similar to the D/21H and D/41H and,  like the
D/41H, is scaleable up to 64 ports.  Dialogic also introduced its Proline/2V two
port voice processing board during 1996.  Designed for small computer  telephone
system  development,  multiple Proline/2V boards can be installed in a single PC
chassis for system expansion up to 32 ports.

          The  D/42-SX,  D/42D-SL,  D/42-NS and  D/42-NE2  are voice  processing
boards with network  interface  daughterboards  which  emulate  proprietary  PBX
station sets and provide  connections to four PBX lines.  These products connect
to the Mitel SX, Northern  Telecom SL-1,  Northern  Telecom Norstar and NEC NEAX
switches,  respectively.  These products are used to provide special integration
features in a call processing application.

          Dialogic's low and medium density voice processing resources typically
reflect a dual-processor architecture, consisting of a DSP and a general purpose
microprocessor.  This imbedded  architecture handles all telephony signaling and
performs touchtone and audio/voice signal processing tasks.

High Density Products

          Voice Processing

          Dialogic's  D/160SC-LS,   D/240SC-TI,   D/300SC-E1,   D/480SC-T1,  and
D/600SC-E1  are 16, 24, 30, 48 and 60 port DSP - based voice boards with onboard
analog,  digital  T-1 and  digital  E-1  telephone  interfaces.  Based upon SCSA
standards,  these platforms  enable  developers to build high density systems by
configuring   multiple  boards  in  a  single  PC.  Applications  include  voice
messaging,  interactive voice response, voice/audio response, audiotex, operator
services, 

<PAGE>
telemarketing/call  centers,  dictation, auto dialers,  notification systems and
on-line  data entry and query.  The  Company's  1996  introduction  of Dual Span
boards doubled the available density.

          In 1997, the Company  introduced its QuadSpan  series of digital voice
and network interface  boards.  These platforms provide four E-1 or T-1 lines of
service termination and call processing for up to 120 voice channels in a single
PC slot. The QuadSpan  boards are  functionally  equivalent to four  single-span
boards, such as the D/300SC-E1, combined into one single-slot board.

          Network Interfaces

          The Company offers several high capacity network interfaces to connect
computer telephony applications to public and private telephone networks.  These
network  interfaces  connect a  telephone  line and  handle  all of the  network
signaling  necessary  between the call processing system and the telephone line.
Telephone lines vary in complexity, from a normal analog tip-and-ring line found
in most homes to an integrated  services  digital  network  (ISDN) line that can
carry  more  than two  million  digital  bits  per  second.  Dialogic's  network
interface products include the following:

          The LSI/81SC and LSI/160SC are analog  interface  boards which provide
          loop  start  telephone  network   connections  for  8  and  16  lines,
          respectively.  These boards  connect to other call  processing  boards
          over a digital bus and are designed for SCSA-based  computer telephony
          systems.

          The  DT1/240SC,   DT1/241SC,  DT1/300SC,  and  DT1/301SC  are  digital
          interface  boards which provide T1/E1 network  connections  for 24 T-1
          and 30 E-1 lines. These boards, which connect to other call processing
          boards over a digital bus,  support  Dialogic's SCbus and also provide
          access to  worldwide  ISDN  networks.  Dual span  configurations  (the
          DT1/480SC,   DT1/600SC,  DT1/960SC,  and  DT1/1200SC)  permit  similar
          connections for 48 and 96 T-1 and 60 and 20 E-1 lines.

          The D/240PCI-T1 and D/300PCI-E1,  introduced in 1997, are high density
          PCI versions of the D/240SC-T1 and D/300SC-E1 CT boards.  These boards
          provide the network protocol  support,  voice processing  features and
          sophisticated  switching fabric required to bridge multiple technology
          resources like fax, IP  connectivity  and speech  technologies  on PCI
          servers.

          The MS1/240SC is a station  interface board which provide  connections
          to telephones and headsets.  These products are used to connect agents
          to  a  call  processing  system  for  call  center  applications.  The
          MS1/240SC supports Dialogic's SCbus.

<PAGE>


          Antares

          The Antares  Open  Platform  is a general  purpose  signal  processing
platform which connects to other call  processing  platforms over a digital bus.
This  platform  was  designed  to be  compatible  with  SCSA  standards  and  to
facilitate the integration of a wide variety of  technologies  from Dialogic and
third parties into a single call  processing  system.  It runs the SPOX realtime
DSP operating system,  and is sold with a set of software  development tools. An
Antares  development  kit consists of an Antares card,  SPOX, DSP tools and SCSA
software.

          Application   developers   can  use   Antares'   single   standardized
programming  interface to port their  technologies to the Antares platform.  The
Antares  platform can be used in various  stages of  technology  implementation,
from initial  algorithm  development and rapid prototyping  through  large-scale
deployment.

          Each  of  the  four  DSPs  on the  Antares  platform  provides  enough
processing  power  to  support  one or  more  types  of  technology.  Therefore,
application developers can download algorithms supporting different technologies
to each of the DSPs,  allowing the creation of a  multifunctional  platform that
can support,  for example,  both ASR and TTS. These  technologies can be used to
support  multiple  applications  on a  single  platform,  or they may be used at
different times within a single  application.  Technologies  that can be used to
develop  applications on the Antares platform include ASR, TTS, call processing,
data communications and fax image processing.

          Various third-parties have developed enhanced software for the Antares
platform.  Speech  recognition  capability,  provided by companies such as Voice
Control Systems,  Lernout & Hauspie,  PureSpeech,  Telefonica,  CSELT and France
Telecom/CNET,  enables call processing applications to interpret words spoken by
a telephone caller. Enhanced capabilities include continuous speech recognition,
alphabet recognition and speaker verification.  Text-to-speech software has been
developed for the Antares platform by Lernout & Hauspie,  Centigram,  Telefonica
and CSELT.  These products  convert ASCII text to synthesized  speech,  enabling
call processing  applications to play back information files which are too large
or dynamic to be pre-recorded.

          Open Buses

          Many  of  the  Company's   products   incorporate  buses  that  embody
technology  developed by Dialogic.  Buses connect  resource  modules and network
interfaces to enable VARs and OEMs to expand their systems in a modular  manner.
The Company's  buses are utilized not only for connecting  Dialogic  components,
but also for connecting products made by third parties.

          Dialogic's SCbus signal computing bus is a third generation system bus
that is implemented on a custom integrated circuit (the SC 2000), made available
to all SCSA  developers  and designed for systems that require  especially  fast
connections.  The SCbus has  compatibility  modes for the PEB,  the  Siemens PCM
Highway, the Mitel STbus and other  communications  buses. The SCbus provides up
to 131 megabits per second,  equivalent to 2,048 

<PAGE>

channels,  for  interconnecting  sophisticated  SCSA-based  systems.  While  the
Company  continues  to support the earlier  Analog  Expansion  Bus (AEB) and PCM
Expansion  Bus  (PEB),  its  principal  bus  focal  point  is on  the  switching
capabilities  of the SCbus.  As a result,  the  Company is seeking to expand the
number and types of its products that are SCbus-compatible.

          VME Products

          Dialogic has developed a family of high density platforms  supplied in
the VME form factor.  "VME" represents a global industrial standard for computer
chassis that allows easy front access for maintenance  purposes.  Dialogic's VME
products  support  standard  features  of the  Company's  product  line  and are
intended to furnish technology  enhancements for advanced intelligent  networks,
including  higher  port  density  for  lower  cost  per port  efficiency,  SCbus
integration,   non-PC   telephony  grade  hardware,   central  office  switching
capability and multiple operating system support.

 
Facsimile and Data Resources

          Prior to its  acquisition  of  GammaLink in June 1994,  the  Company's
facsimile  products  were  designed  primarily  for  voice-processing  intensive
applications that require facsimile  capability.  The newest generation of these
products are the VFX/40SC,  VFX/40ESC and  VFX/40ESC-plus  four-port fax boards.
These boards are four channel  daughter-boards  which  connect to the D/41ESC to
provide  integrated voice and fax processing in a single PC slot. By integrating
voice and fax  processing,  these  products  enable users to take advantage of a
variety of applications,  including  fax-on-demand,  facsimile  broadcasting and
facsimile messaging.

          With the  GammaLink  acquisition,  the Company  expanded its facsimile
product line to include products that provide  scaleable  facsimile  density for
facsimile-only  applications  or for  applications  with  significant  facsimile
volume, including LAN faxing, image servers, broadcast servers, host servers and
service bureaus.  GammaLink's  enterprise fax family of products are utilized in
small and medium-sized  facsimile systems,  fax gateways and LAN-based facsimile
servers.  GammaLink's  telco fax family of products are high performance  boards
used in high  volume  fax  broadcast,  interactive  voice/fax  response  and T-1
connections  for fax.  These telco  products  can be used in a  resource-sharing
manner  with  Dialogic's  voice   processing   products  through  the  switching
capabilities of the Company's bus products.

CT-Connect

          CT-Connect  is a computer  telephony  call control  server  capable of
connecting  a wide range of telephone  switches to a variety of data  processing
environments.  CT-Connect is based on Digital Equipment  Corporation's  computer
integrated  telephony ("CIT") technology  acquired by Dialogic in February 1995.
The software runs under the  Microsoft  Windows NT operating  system,  either on
Intel architecture or with Digital Equipment Corporation's Alpha processors.  In
1997, Dialogic introduced a newer version of CT-Connect which enables developers
to  use  either  Windows  NT or SCO  Unixware.  It is  intended  to be  used  by
application developers,  VARs and 

<PAGE>
OEMs  to  construct  end-user  computer-telephone  solutions  for  call  control
purposes. Dialogic also offers CT consulting services through its Synapse Group.

System Software

          Dialogic's  board level  products are supported by device  drivers and
Application  Programming  Interfaces  ("APIs")  for  the  leading  PC  operating
systems,  including Windows 95, Windows NT, MS-DOS,  UNIX, OS/2 and Netware. The
device  drivers and APIs enable an application to access the features of a board
through standard programming language function calls.

          The Company's SCSA software module enables a call processing system to
function as a media server in a client-server environment. In February 1997, the
Company announced CT Media, an open  standards-based  client-server  product for
computer  telephony  server  design.  CT Media is  designed  to  streamline  the
development  process by  handling  the  details of media  resource  control  and
functions internal to the computer telephony server.  Developers and integrators
are  spared  from  managing   these   low-level   functions  from  within  their
applications, thereby enabling Dialogic's customers to focus on the requirements
of application development and integration.

          Dialogic  works with many third parties to provide  software  toolkits
which simplify  application  development.  Toolkits are available in each of the
supported operating systems.


DM3 Products

          Dialogic has begun  shipments of the first  products  based on its DM3
(trademark)  Mediastream  architecture,  including DM3 IPLink, a standards based
Internet Protocol telephony server  development  system. DM3 IPLink servers link
the Public  Switched  Telephone  Network  with TCP/IP  networks,  thus  enabling
individuals to communicate directly over the data network in a variety of ways -
from telephone to telephone;  fax to fax; PC to telephone;  telephone to PC; and
Web browser to telephone.  In December 1997,  Dialogic  announced the industry's
first  enhanced IP telephony  platform  with an  integrated  on-board high speed
Ethernet  interface,  resulting in reduced latency while increasing  scalability
and system  reliability  for  developers.  In addition,  also in December  1997,
Dialogic announced the release of the QuadSpan family of products,  high density
voice  and  digital  network  interface  products  based on the DM3  Mediastream
Resource   Architecture.   The  QuadSpan   (trademark)  products  enables  OEMs,
integrator and developers to build  large-scale,  standards-based CT systems for
various  applications,   including  switching  and  routing,  call  centers  and
intelligent peripherals with media processing  capabilities.  Volume shipment of
such new products is subject to a number of risks, including technical problems,
market acceptance,  intellectual property risks and competitive  resources.  See
"-Risk Factors" and "-Research and Product Development."

Research and Product Development

          The  Company  believes  that the timely  enhancement  of its  existing
products and development of new products is critical to maintain its competitive
position.   The  Company's   ongoing  product   development  goals  include  the
enhancement (in terms of performance and cost  efficiency) of current  products,
the  adaptation  of  third-party  technologies  to  Dialogic's  products and the
development of new product options and features.  Dialogic's product development
teams work closely with customers in an effort to define necessary  improvements
and enhancements and to analyze potential new products.

          The  Company  has   announced   several   research   and   development
initiatives, including the following:

          DM3 Mediastream Resource  Architecture.  On January 27, 1997, Dialogic
          announced  the  development  of a new set of  specifications  and core
          firmware  modules that are intended to govern how the  Company's  next
          generation  of products  will be designed.  The core  elements of this
          architecture  are  general  purpose  embedded  processors  designed to
          manage  multiple   application   technologies  from  multiple  vendors
          simultaneously.  The technologies  contemplated  include real time and
          message-based  media processing for firmware  resources such as voice,
          fax,   voice  over  the  Internet,   automatic   speech   recognition,
          text-to-speech and real time network  signaling.  The DM3 architecture
          is  intended  to further  expand the  density  of  computer  telephony
          platforms,  contemplating  "quad  span"  boards  with  up to 96  ports
          available for a variety of applications.  Such boards are functionally
          equivalent to four  single-span  boards  combined into one single-slot
          board. For the system developer,  the availability of products meeting
          the  Company's DM3 goals are intended to allow the creation of bigger,
          faster and more  cost-efficient  products and to allow the combination
          of functions  on a single board (as opposed to current  configurations
          which require such combinations to be placed on multiple boards).

          No assurance can be given that all of the  Company's DM3  architecture
          development  projects  will  result in  market  accepted  products  or
          profitable  ventures.  Like any announcement in the computer telephony
          industry,  Dialogic's DM3 initiative is subject to a variety of risks,
          including the length of time  required for Dialogic to bring  products
          to market, competitive responses, customer acceptance,  development or
          manufacturing difficulties,  the availability of regulatory approvals,
          and general market conditions. See "--Products" above.

          Internet  Access.  Dialogic is pursuing the  development of technology
          and  components to enable the  transmission  of voice and fax messages
          over  the   Internet.   The  Company  is  working   with   vendors  of
          voice-over-the-Internet  software to develop hardware and software for
          Internet and "intranet" servers. Such servers would combine Dialogic's
          board level  components with the vendor's  software to enable standard
          telephones  to send and receive  calls over the  Internet.

<PAGE>

          In  January  1997,  the  Company   announced  the  availability  of  a
          development   kit  to  enable   systems   developers   to  create  fax
          applications for the Internet.  There is substantial  competition with
          respect  to  the  development  of  Internet  telephony  products.   No
          assurance  can be given that  Dialogic will be successful in competing
          against  other  companies  (many of whom  have  substantially  greater
          resources  than  the  Company)  with  respect  to  Internet  telephony
          products.  Factors  which may  influence  the  success  of  Dialogic's
          Internet  telephony  initiative  include  the rapid and  unpredictable
          changes in Internet technology and usage, regulatory initiatives which
          may affect costs, chassis, interfaces and access services, competitive
          responses, market acceptance of standards and market conditions.


          Dialogic's  research and development  staff included 401 persons as of
December  31,  1997.  For the years  ended  December  31,  1995,  1996 and 1997,
research and development expenses amounted to $29.0 million,  $40.7 million, and
$51.5  million,  respectively,  representing  17.2% of revenues in 1995,  19% of
revenues in 1996 and 19.7% of revenues in 1997.

International Business

          Dialogic's   international   market   opportunities   are  defined  in
significant part by the nature of the telephone networks in particular countries
(which  affect  the types of  network  interfaces  that can be  utilized)  and a
variety  of  regulatory  issues.  These  regulatory  issues  center  around  the
homologation (or approval) process and service offering  regulations that affect
the ability of the  Company's  customers  to sell their  products in  particular
countries.  In certain  countries,  approvals  can be  granted at the  component
level.  Such  approvals are not dependent  upon the particular PC or application
being utilized. Accordingly, once such approvals are obtained, specific products
can  be  utilized  by  customers  in  the  applicable  country  without  further
interaction  with  regulatory  officials.  Other countries  require  platform or
system level approvals. As of December 31, 1997, Dialogic had received approvals
in more than 60 countries  throughout the world.  The Company  believes that its
success in obtaining component, platform or system level approvals constitutes a
significant  competitive advantage, in that it permits Dialogic's products to be
sold in the applicable  countries  while the products of competitors  which have
not  successfully  completed  the  approval  process  cannot  be sold  in  those
countries.

          In 1995, 1996 and 1997,  international  sales (excluding  exports from
North America)  accounted for approximately 23%, 23% and 24%,  respectively,  of
the Company's  revenues.  See Note 8 of the Notes to the Company's  Consolidated
Financial Statements incorporated by reference herein.

          The Company conducts its  international  operations  primarily through
foreign subsidiaries. These entities are managed by local managing directors who
are given  substantial  autonomy in order to assure that product  offerings  and
customer  contacts are  sensitive to the needs of local  customers.  Efforts are
made to match product  capabilities  offered in particular  countries with local
product needs, networks and infrastructures.

<PAGE>

          International  sales are subject to inherent risks,  including changes
in regulatory and standards  requirements,  exchange rates, economic conditions,
tariffs and other  barriers,  difficulties  in  staffing  and  managing  foreign
subsidiary  operations,  potentially  adverse tax  consequences  and specialized
inventory requirements applicable to particular foreign countries.  There can be
no assurance that these factors will not have an adverse impact on the Company's
future  international  sales or operating  results.  As the Company  expands its
international operations, exposure to gains and losses on international currency
transactions  may increase.  Dialogic does not currently engage in international
currency  hedging  transactions.  A substantial  percentage (but not all) of the
Company's international sales have been billed and collected in U.S. dollars.

Sales, Marketing, Customers and Customer Support

          Dialogic  markets  its  products  primarily  to  VARs,  OEMs,  systems
integrators,  service  providers  and  applications  developers.  In the  United
States,  Dialogic  sells to these  customers  through  its own  sales  force and
distributors,   as  well  as  through  telemarketing  and  advertising  efforts.
Internationally,  the Company  utilizes its own sales force and  selected  sales
representatives  and agents. As of December 31, 1997, the Company had 160 direct
sales  employees.  Increased  reliance  has been placed on  distributors,  sales
representatives  and sales agents in recent  periods.  Such reliance may subject
the Company to the uncertainties that affect the businesses of these independent
third-parties.

          Dialogic's  United  States sales  personnel are based in various field
sales offices,  including  offices in Arizona,  California,  Georgia,  Illinois,
Massachusetts,  New Jersey, Texas and Washington. These offices are staffed with
individuals that have sales and/or customer support  backgrounds.  The Company's
international sales offices include locations in Argentina,  Australia, Belgium,
Brazil,  Canada,  China, France,  Germany,  Hong Kong, India,  Ireland,  Israel,
Italy,  Japan,  Korea,  New Zealand,  Singapore,  Taiwan and the United Kingdom.
These  international  offices also provide  technical  support to the  Company's
international  customer  base and,  in certain  instances,  perform  development
activities.

          The Company's marketing  activities include  participation in industry
trade shows and seminars,  advertising  in selected trade  publications,  public
relations activities with the trade and business press, publication of technical
articles and  distribution of sales literature and product  specifications.  The
Company's Internet website, http://www.dialogic.com,  has become an increasingly
important vehicle for Dialogic's marketing and customer support functions. As of
December 31, 1997, the Company's marketing group consisted of 95 employees.

          The Company sold products to more than 3,000 customers  during 1997. A
total of 58 of  these  customers  represented  approximately  50% of  Dialogic's
revenues, and no customer accounted for 10% or more of revenues in 1997.

          The Company  believes  that  customer  service and support have been a
significant  factor in distinguishing  the Company from other computer telephony
component  manufacturers.  Given the need to blend  signal  computing  component
technology with applications  software, it is 

<PAGE>

important for Dialogic to maintain close communication with its customers.  This
communication  enables Dialogic to educate existing and potential customers with
respect to the  functionality  of the  Company's  product  line and new  product
offerings  and  enables  Dialogic  to  assess  and  understand  the needs of its
customers.

          The Company's technical  developments are communicated to customers by
its sales  engineering  group,  its field  applications  engineering  group, its
technical  support  group,  its design group and its  website.  The Company also
furnishes its customers with documentation  that provides  performance and other
data regarding complex systems configurations and alerts customers to the market
opportunities  available through utilization of Dialogic's  products.  Moreover,
Dialogic's  processor-driven products typically are software upgradeable.  Thus,
as  developments  in the  technology  for such  products are  introduced  by the
Company, that new technology typically can be incorporated into an existing call
processing system by changing the software provided by Dialogic.

          In addition to having its sales  representatives  personally meet with
larger   customers   in  the  field  and   having   headquarters   telemarketing
representatives  contact other  developers by  telephone,  the Company  provides
engineering   assistance   to  its  customers  and  helps  obtain  any  required
certifications  from regulatory  authorities.  The Company also offers extensive
documentation  describing its products and provides  telephone support to assist
its customers in their support of end users.

Competition

          The computer telephony industry is highly competitive.  Moreover,  the
Company believes that competition is likely to intensify in the future. Dialogic
believes that its principal  competitors  are (i) companies  that  specialize in
particular  computer  telephony  functions,  (ii) companies that provide a broad
range of computer  telephony  products and (iii)  companies,  many of which have
substantially  greater  resources than Dialogic,  which have chosen to, or which
may choose to, produce computer telephony components in-house. Within the second
group,  Dialogic's principal competitors include Brooktrout Technology,  Natural
Microsystems  and Rhetorex (a  subsidiary  of Lucent  Technologies  Inc.'s Octel
business).  In the future, the Company may also face competition from new market
entrants,   including  those  with  substantially  greater  resources  and  name
recognition than Dialogic and industry  companies in the third group which elect
to supply not only their own needs but to enter the merchant market.

          New  and  enhanced   products  can  be  expected  from  the  Company's
competitors in the future.  The  competitive  factors in the computer  telephony
components industry include the time required to produce a market-ready product,
engineering  expertise,  product quality,  reliability and  performance,  price,
brand name  awareness,  customer  support and service and access to distribution
channels.  The Company  believes that it competes or may compete on the basis of
the breadth and quality of its product line,  its customer  service and support,
its technical capabilities, its name recognition and price.

<PAGE>
          In high-volume facsimile applications, Dialogic faces competition from
companies which offer multi-line products. In the LAN fax market, Dialogic faces
competition from  manufacturers of fax cards and fax modems.  Other  competitors
have  announced  multi-channel  fax  cards  combining  voice and fax on the same
processor

          While  the  Company  believes  that its  commitment  to open  computer
telephony  architectures  positions  Dialogic as a "technology  enabler" for the
computer   telephony   industry,   this  commitment  may  reduce  the  technical
constraints  that otherwise  would limit the entry of additional  competitors to
the market and may commoditize Dialogic's market.

     Proprietary Rights

          The Company holds patents  covering  certain aspects of its technology
and has applied for additional patent  protection.  While Dialogic believes that
its technology provides it with certain competitive advantages,  there can be no
assurance  that the Company's  competitors  will not be able to develop  similar
technology.  Dialogic  currently  licenses certain technology from third parties
and  plans  to  continue  to  do so in  the  future  as  warranted  by  business
conditions. This statement regarding future licensing arrangements constitutes a
Forward-Looking  Statement. See "--Risk Factors." There can be no assurance that
in the  future  the  Company  will be able to obtain  licenses  of  intellectual
property  rights owned by third parties or that such licenses can be obtained on
terms  favorable to the Company.  If the Company is unable to obtain licenses of
protected  technology,  it could be prohibited from  manufacturing and marketing
products incorporating that technology. Factors which could affect the Company's
ability to  maintain  such  licensing  arrangements  in the future  include  the
strength  of  third-parties'   patent  protections,   the  willingness  of  such
third-parties to contract with Dialogic,  the availability of competing products
and  technologies,  the cost of  manufacturing  alternative  solutions and other
competitors' responses.

          Dialogic  has  received  from  time to time,  and may  receive  in the
future, communications from third parties asserting intellectual property rights
relating to certain of the Company's products and technologies. To date, most of
these  claims have been based on  application-oriented  patents that the Company
would not directly infringe. However,  application-oriented  patents may be used
by the holder to restrict the types of markets in which  Dialogic or  Dialogic's
customers are able to compete.  Application-oriented patents may also be used to
induce  customers  and  potential   customers  to  purchase  computer  telephony
components from  competitors of the Company that are affiliated with the holders
of such patents.

          The   Company   has   received   certain   claims   from   holders  of
application-oriented  patents  asserting that Dialogic,  as opposed to customers
using the  Company's  components  to build  applications,  may violate  existing
patent  rights.  Other  claims may be asserted  in the  future.  There can be no
assurance  that in the future,  other  similar  claims will not be made  against
Dialogic.  Further,  there can be no assurance  that the Company will be able to
resolve such claims,  either by  convincing  the  claimants  that the  Company's
technology  is  non-infringing,  obtaining a license on terms  favorable  to the
Company,  redesigning  its products or defending  any legal action taken against
it. The costs that may be incurred by  Dialogic  in pursuing  any such

<PAGE>

response could have a material adverse effect upon Dialogic.  Should the Company
or its  customers be found to infringe  the  proprietary  rights of others,  the
Company could be required to pay  substantial  damages to the  infringed  party,
which in turn could have a material adverse effect upon Dialogic.

          From  time to time,  the  Company  considers  steps  to be taken  with
respect  to  outstanding  patents  prior to any claim  being  made by the patent
holder  against  Dialogic or its customers.  Such steps may include  obtaining a
license or joining or  sponsoring  litigation  to  challenge  the validity of an
outstanding patent. No assurances can be given that the commencement of any such
litigation  will not result in  counterclaims  being made directly or indirectly
against the Company.

          For information  regarding legal  proceedings  involving  Dialogic and
Brooktrout Technology, Inc., see "Legal Proceedings".

     Manufacturing

          The Company utilizes  contract  manufacturing for substantially all of
its manufacturing processes, thereby allowing Dialogic to focus resources on its
product development and customer support efforts.  During 1997, Dialogic moved a
significant  percentage of its manufacturing to a turnkey contract manufacturer,
Jabil Circuit, Inc. The Company also employs other suppliers.  The activities of
these  suppliers are  coordinated  by Dialogic's  manufacturing  personnel.  The
Company's  internal   manufacturing-related   operations  consist  primarily  of
production of prototypes, test engineering, materials purchasing and inspection,
final product configuration and testing, quality control and service repair.

          At present,  Dialogic does not have a long-term  supply  contract with
any of its  manufacturing  subcontractors,  turnkey  manufacturer  or  component
suppliers.  Certain  key  components  incorporated  in  the  Company's  products
(including the digital signal  processors  used  throughout  Dialogic's  product
lines) are supplied by only one source,  and others are  available  from limited
sources.  To date,  Dialogic  has been able to obtain  supplies of products  and
components in a timely manner, in part because Dialogic's  principal sole source
products  are  acquired  from   well-established   vendors  with   long-standing
relationships with Dialogic.  However,  in the event that any of its sole source
suppliers  or  contract  manufacturers  were  unable or  unwilling  to  perform,
Dialogic's results of operations could be materially  affected until the Company
establishes  alternative  sources.  The Company owns all of the  engineering and
sourcing  documentation  and functional test equipment used in the manufacturing
of its principal  products and believes that it could shift product  assembly to
alternate suppliers or in-house if it experienced difficulties with its contract
manufacturers. This statement regarding the availability of alternate approaches
to contract  manufacturing  may  constitute  a Forward  Looking  Statement.  The
Company could be materially adversely affected by several factors, including the
demands imposed upon, and the sophistication of, alternate  suppliers,  the lead
time available to such  suppliers,  unanticipated  difficulties  in transferring
production and market acceptance of the products made by means of such alternate
approaches.  Accordingly,  actual  results  could  differ  materially  from  the
Company's expectations. See "-- Risk Factors."

<PAGE>

Risk Factors

          This Annual  Report  contains,  and  Dialogic  may make in the future,
certain  Forward-Looking  Statements.  Such  statements are subject to risks and
uncertainties  that could cause actual results to differ  materially  from those
projected in such Forward-Looking Statements. Risks and uncertainties applicable
to Dialogic include the following:

          Risks  Relating  to  Technological  Developments.  The  market for the
Company's products is characterized by rapid technological advances,  changes in
customer  requirements and frequent new product  introductions and enhancements.
Dialogic's  future  success  will  depend  upon its  ability to (i)  enhance its
current  products,  (ii) achieve the objectives of its DM3 Mediastream  Resource
Architecture, (iii) develop and introduce new products that keep pace with rapid
technological  developments and evolving industry and regulatory standards, (iv)
respond to changes in customer  requirements and (v) achieve market  acceptance.
In  particular,  the Company  believes it must continue to respond to customers'
needs for broad  functionality and multiple  platform  support.  There can be no
assurance  that Dialogic  will be  successful  in  developing  and marketing new
products or product  enhancements on a timely basis or that the Company will not
experience  significant delays in the introduction of new products. In addition,
there can be no assurance that new products or product enhancements developed by
the Company will achieve market  acceptance.  An additional  technology risk may
result from companies in adjacent fields integrating CT functionality into their
products,  making it more difficult for the Company to compete or  commoditizing
its products.

          Year 2000. The Company has undertaken a major  company-wide  study and
testing  program  to locate  and cure any Year 2000  issues in the  products  or
systems on which it relies. The Company believes its financial operating systems
are  currently  Year 2000  compliant.  The Company  continues to work with other
third-party  suppliers to identify exposure and obtain  compliance.  The Company
anticipates no material adverse effect  resulting from Year 2000 problems.  This
statement  represents a forward-looking  statement under the Private  Securities
Litigation  Reform  Act of 1997.  Undiscovered  issues  related to the Year 2000
issues could have an adverse impact.

          Competition.  The computer telephony  industry is highly  competitive.
Moreover,  the Company  believes that  competition is likely to intensify in the
future.  For information  regarding such competition,  see "-- Competition".  No
assurance can be given that the Company will be able to compete  successfully in
the future or that price competition will not affect the Company's  consolidated
results of operations and financial condition.

          Fluctuations  in Quarterly  Operating  Results.  The  Company's  total
revenues  may vary  significantly  from  quarter to quarter  due to a variety of
factors,  including  the  timing  of  customer  orders,  changes  in  Dialogic's
products,  geographic and customer mix, the  introduction of new products by the
Company  or  its  competitors,   pricing  pressures,   regulatory  developments,
unanticipated  development and/or  manufacturing  difficulties or expenses,  and
worldwide or regional economic  conditions.  The Company typically operates with
relatively  little backlog and 

<PAGE>

substantially all of its revenues in each quarter  ordinarily result from orders
received in that  quarter.  In addition,  the Company  often incurs  significant
development,  sales and marketing expenses in anticipation of future revenues. A
shortfall in revenues or earnings from the levels  anticipated by analysts could
have an impact on the market price of Dialogic's Common Stock.

          Uncertainties   Relating  to  Proprietary   Matters.  For  information
regarding  risks  relating  to the  availability  of licenses to the Company and
relating to potential intellectual property and related claims by third parties,
see "-- Proprietary Rights."

          Dependence  on Sales by Third  Parties.  The  Company's  revenues  are
dependent  upon the  ability of its OEM and VAR  customers  to develop  and sell
computer  telephony  systems that  incorporate  Dialogic's  modular  components.
Factors, including worldwide economic conditions,  patent positions,  regulatory
requirements  and  other  marketing  restrictions,  that  adversely  affect  the
revenues  of  Dialogic's  OEM and VAR  customers  can  have an  impact  upon the
Company's  financial results. No assurances can be given that Dialogic's OEM and
VAR customers  will not  experience  financial or other  difficulties  that will
materially and adversely  affect their purchases from Dialogic and, in turn, the
results of operations and financial condition of the Company.

          Risks   Associated  with   International   Operations.   International
operations  are subject to certain  risks,  including  changes in regulatory and
standards   requirements,   exchange  rates,  worldwide  and  regional  economic
conditions,  tariffs and other  barriers,  difficulties in staffing and managing
foreign  subsidiary   operations,   potentially  adverse  tax  consequences  and
specialized inventory  requirements  applicable to particular foreign countries.
There can be no assurance  that these factors will not have an adverse impact on
the Company's future  international  sales or operating  results.  A substantial
percentage (but not all) of the Company's  international  sales have been billed
and  collected  in  U.S.  dollars.  As  the  Company  continues  to  expand  its
international  operations,  exposures  to  gains  and  losses  on  international
currency  transactions  may  increase.  Dialogic  does not  currently  engage in
international  currency hedging  transactions.  The Company is unable to predict
with accuracy the impact of recent Asian economic problems.

          Dependence  on  Third-Party   Suppliers.   During  1997,  the  Company
contracted a large percentage of its  manufacturing  to a turnkey  manufacturer,
Jabil  Circuit,   Inc.  Dialogic  also  employs  other  domestic   manufacturing
subcontractors  in the  manufacture  of its  remaining  production.  Certain key
components  incorporated  in the  Company's  products  (including  the DSPs used
throughout Dialogic's product lines) are supplied by only one source, and others
are  available  from  limited  sources.  The  Company  does not have a long-term
agreement with any of these suppliers of services or components.  The Company is
currently  negotiating a written agreement with Jabil Circuit, Inc. Although the
Company has not experienced any material  difficulties in obtaining  supplies in
the past,  any  reduction  or  interruption  in supply  from  these  third-party
contractors  could  materially  and  adversely  affect  Dialogic's   results  of
operations  until  alternative  sources  are  established.  Moreover,  operating
results could be materially  and adversely  affected by the receipt of defective
components or products, an increase in prices from suppliers or the inability of
Dialogic to obtain lower  prices in response to  competitive  price  reductions.

<PAGE>

          Uncertainties  Regarding  Regulatory  Matters.  The  Company  seeks to
obtain  regulatory  approvals  for its  products  as a  means  of  enabling  its
customers to bring their  systems to market as rapidly as  possible.  Changes in
regulations or in  interpretations  of regulations or delays in deregulation may
substantially  hamper  end-users  and  Dialogic's  customers  and may cause such
customers to delay or cancel orders.

          Dependence on Key Personnel.  The Company depends substantially on key
personnel involved in engineering,  research and development,  marketing, sales,
finance  and  administration.  The loss of the  services  of key  persons in any
functional  area could  have a material  adverse  effect on  Dialogic's  current
operations and on new product  development  efforts.  Dialogic's success depends
upon its  ability to attract and retain  skilled  employees.  Its  success  also
depends  upon the ability of  Dialogic's  officers  and key  employees to manage
growth   successfully  and  to  continue   successful   development  of  product
enhancements  and new products.  There can be no assurance that the Company will
be able to hire or retain  sufficient  qualified  staff to meet its  goals.  The
Company does not maintain key-person life insurance for any of its personnel.

     Risks Associated with Potential Acquisitions. Since the date of its initial
public offering in 1994, Dialogic has acquired GammaLink, Spectron Microsystems,
Inc.  (the net assets of which were  subsequently  sold in February  1998),  and
Dianatel  and certain  computer  integrated  telephony  technology  from Digital
Equipment  Corporation.   The  Company's  business  strategy  contemplates  that
Dialogic will continue to seek to complement its internal growth with additional
acquisitions of and investments in businesses in the computer telephony industry
and related fields.  Although  management  expects to carefully analyze any such
opportunity before committing the Company's resources, there can be no assurance
that such transactions will result in long-term benefits to Dialogic.

     Excess  or  Obsolete  Inventory.   Dialogic's  customers  typically  expect
delivery of the Company's hardware and software products from stock. Because the
manufacturing  lead-time for several of Dialogic's  products can be significant,
the Company builds its products to meet forecasted demand. Although a portion of
customer  demand  is  ascertainable  from  volume  purchase  arrangements,   the
Company's forecasts also depend upon management's estimates of sales to existing
and  potential  customers.  Several  factors  could  affect the accuracy of such
estimates,  including unanticipated changes in customer demand, new developments
in  the  computer  telephony  industry,  unanticipated  development  delays  and
competitive inroads into the Company's business. Should management's predictions
prove to be inaccurate, the Company could have excess or obsolete inventory.

          Volatility of Stock Price. The market price of Dialogic's Common Stock
has fluctuated  significantly  since its initial public  offering in April 1994.
Factors such as announcements  of  technological  innovations or new products by
Dialogic,  its  competitors  or other third parties,  consolidations  within the
computer telephone industry,  quarterly variations in the Company's consolidated
results of operations,  shortfalls in the Company's  revenues,  gross margins or
earnings from analysts' expectations,  regulatory conditions, worldwide economic
conditions,  capital market conditions and general industry conditions,  may all
affect  the  market  price  of  the  Common  Stock  and  cause  it to  fluctuate
significantly.  In addition,  in recent years,  the stock 

<PAGE>

market in  general,  as well as the  market  prices  of the  stocks of many high
technology companies in particular, experienced wide fluctuations which have not
necessarily been related to the operating  performance of individual  companies.
There can be no assurance  that the market price of the  Company's  Common Stock
will not continue to experience significant volatility.

Backlog

          Because the Company's  products are typically shipped within one month
of receipt of the order, the Company does not believe that its backlog as of any
particular date is indicative of future sales levels.

Employees

          As of December 31, 1997, the Company had 994 full-time employees.  The
Company's  continued success will depend in part upon its ability to attract and
retain  skilled  employees.  Dialogic  has  never  had a  work  stoppage  and no
employees are  represented by a labor  organization.  The Company  considers its
employee relations to be good.

Environmental factors

          Federal,  state and local laws or regulations  which have been enacted
or adopted  regulating the discharge of materials into the environment  have not
had, and under  present  conditions  the Company does not foresee that they will
have,  a material  adverse  effect on  capital  expenditures,  earnings,  or the
competitive position of the Company.

Subsequent event

          On February 17, 1998, Dialogic  Corporation  completed the sale of the
principal  assets  and  operations  of  Spectron  Microsystems,  a wholly  owned
subsidiary, to Texas Instruments Incorporated for approximately $26 million. The
transaction will result in pre-tax gain to be recognized in the first quarter of
1998 in the range of $18 to $25  million.  The sale will not have a  significant
effect on reported sales or earnings of the Company in future periods.

<PAGE>

Item 2.  Properties

          The Company's  corporate  headquarters are located in Parsippany,  New
Jersey, in two leased facilities which cover  approximately  262,000 square feet
of space.  There are two separate leases for the  facilities.  The primary lease
covers  220,000  square feet and expires in 2005,  with options to renew for two
subsequent  five-year  terms.  The second  lease covers  19,000  square feet and
expires in 2002, with options to renew for two subsequent  three-year terms. The
second  lease  was  amended  to cover an  additional  23,000  square  feet.  The
amendment covering this additional space expires in 2005 with an option to renew
for one subsequent  three-year term. The Company also leases all of its domestic
and  foreign  offices.  See Note 7 of the  Notes to the  Company's  Consolidated
Financial Statements incorporated by reference herein.


Item 3.  Legal Proceedings

          In June 1995,  the Company  entered into a settlement  agreement  that
resulted in the dismissal of various legal proceedings involving,  among others,
the Company and Brooktrout Technology,  Inc.  ("Brooktrout").  In November 1995,
Brooktrout  filed a  complaint  in the  United  States  District  Court  for the
District of Massachusetts  naming the Company,  its GammaLink subsidiary and its
Chairman  of the  Board as  defendants.  The  complaint  sought to  rescind  the
settlement agreement and obtain unspecified compensatory and punitive damages on
the basis of allegations that the defendants  fraudulently induced Brooktrout to
enter  into the  settlement  agreement.  The  defendants  deny  the  substantive
allegations of this complaint and have filed a counterclaim seeking damages from
Brooktrout.  In December  1996,  the District  Court entered an order of summary
judgment against Brooktrout  dismissing its fraud claims, but leaving unresolved
a statutory  unfair  practice claim by Brooktrout and leaving  unresolved all of
the  defendants'  counterclaims.  Such order  remains  appealable  at this time.
Separately,  the  Company's  Spectron  subsidiary  sued  Brooktrout  for  patent
infringement.  The Company has  retained  the rights to  maintain  this  lawsuit
despite the February  1998 sale of the  Spectron  assets.  Although  outcomes of
legal  proceedings  are difficult to predict and cannot be assured,  the Company
does not believe that such  proceedings  will  materially  adversely  affect its
consolidated financial condition, results of operations or liquidity.

          During the third  quarter of 1996, a complaint was filed in New Jersey
Superior  Court against the Company and certain of its  directors  alleging that
the  defendants  breached  principles  of common  law fraud in  connection  with
certain  public  statements  made prior to the  Company's  July 8,  1996,  press
release announcing  preliminary results for the quarter ended June 30, 1996. The
complaint seeks monetary damages on behalf of a purported class of purchasers of
the Company's  Common Stock.  On February 18, 1998, on motion by the defendants,
the complaint was dismissed by the court with prejudice.

          The Company is also engaged in other legal proceedings  arising in the
ordinary course of business,  the results of which  proceedings are not expected
to have a  material  adverse  effect  on the  Company's  consolidated  financial
condition, results of operations or liquidity.

<PAGE>

          Management  intends  to  defend  each  of  the  above-mentioned  legal
proceedings  vigorously.  The Company's  statements in this Item 3 regarding the
potential effect of each of these legal proceedings  constitute  Forward-Looking
Statements.  See "-Risk  Factors."  Actual results could differ  materially from
these  statements,  depending  upon  uncertainties  that exist in any litigation
relating to interpretations of legal issues and the development and presentation
of factual issues.

<PAGE>

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

          Not applicable.


Item 4A.  Executive Officers of the Registrant

          The Company's executive officers, their respective ages (as of January
31, 1998) and their positions with the Company are set forth below:


Name                               Age                 Title


Nicholas  Zwick                    45        Chairman of the Board
Howard G. Bubb                     43        President and Chief Executive 
                                             Officer; Director

John G. Alfieri                    38        Vice President, Sales and Service,
                                             the Americas

Thomas G. Amato                    52        Vice  President, Chief  Financial
                                             Officer and  Treasurer

Kenneth  J.  Burkhardt,  Jr.       52        Executive  Vice  President,  New 
                                             Business Development; Director

Darrayl E. Cannon                  50        Vice President, Operations

Charles House                      57        Vice  President, Core-Systems   
                                             Development

John  E.  Landau                   44        Vice President, Strategic Marketing

Samuel  T.  Liss                   39        Vice President, Corporate Marketing

Theodore  M.  Weitz                51        Vice President, General Counsel and
                                             Secretary

Jean  M. Beadle                    47        Chief Accounting Officer, and 
                                             Controller

          Mr.  Zwick,  a co-founder  of the Company,  has been a Director of the
Company since  Dialogic's  inception in 1983, its President and Chief  Executive
Officer from 1985 to May 1993 and its Chairman of the Board since March 1993.

          Mr. Bubb joined the Company as an  Executive  Vice  President  in July
1991. In August 1992, Mr. Bubb was promoted to Chief Operating Officer.  In June
1993, he was promoted again to President and Chief Executive  Officer.  Prior to
joining the Company,  Mr. Bubb was a consultant  from February 1991 to July 1991
and Senior Vice  President  and General  Manager of Lexar  Business  Systems,  a
marketer of PBX products and an affiliate of Telenova,  Inc., from December 1989
to January 1991. He served as Vice President of the telecommunications  business
of Memorex Telex, N.V. from January 1986 to December 1989. Mr. Bubb is currently
on the board of Pairgain Technologies, Inc.

          Mr. Alfieri was named Vice President, Sales and Services, the Americas
in January 1993.  He has been  employed by the Company since 1988,  first as the
Eastern  Regional Manager and 

<PAGE>
then (in 1990) as Manager of North American  Sales.  Prior to joining  Dialogic,
Mr. Alfieri held various sales and marketing  positions  within IBM from 1983 to
1988.

          Mr. Amato was hired by Dialogic as its Vice President, Chief Financial
Officer and Treasurer in April of 1997. Prior to joining Dialogic,  he served as
Senior Vice President and Chief Financial Officer of Symbol Technologies,  Inc.,
from 1990 to 1997. From 1979 to 1990 he served as Senior Vice President, Finance
and Administration of Amcast Industrial Corporation.  From 1971-1979,  Mr. Amato
held various financial positions with Rockwell International Corporation.

          Dr.  Burkhardt,  a co-founder of the Company,  served as the Executive
Vice  President of  Operations  of the Company  through  October  1992,  when he
assumed his  current  position  as  Executive  Vice  President  of New  Business
Development. He has been a Director of the Company since 1983.

          Mr. Cannon was hired by Dialogic as its Vice President,  Operations in
September 1995.  Prior to joining the Company,  he served as the Vice President,
Manufacturing and Quality  Assurance,  at McDATA Corporation (a supplier of data
communications  products) from 1992 to 1995 and as Vice  President,  Engineering
and Manufacturing,  at McDATA from 1990 to 1992. From 1983 to 1989, he served as
a director  of a power  systems  division of the NCR  Corporation.  From 1969 to
1983, Mr. Cannon held various manufacturing positions with NCR and Magnavox.

          Mr.  House  was  named   Executive  Vice  President  of  Core  Systems
Development in February 1998. He has been employed by the Company since December
of 1995 as Vice President and General  Manager for Spectron  Microsystems,  Inc.
Prior to  joining  Dialogic,  he served as Senior  Vice  President  and  General
Manager of Veritas  Software  from 1994 to 1995 and Senior  Vice  President  for
Product  Management and Development at Informix Software from 1991 to 1994. From
1962 to 1991,  Mr. House held various  management  positions at  Hewlett-Packard
including General Manager at both the Software  Engineering Systems Division and
Logic Systems Operation.

          Mr. Landau was named Vice  President,  Strategic  Marketing in October
1997.  He  was  previously   Vice  President  and  General   Manager,   Dialogic
Architecture Labs, since 1995 and, he served as Vice President, Marketing of the
Company from February  1993 until 1995.  Mr. Landau was as an area sales manager
for Dialogic from May 1988 until February  1989.  From February 1989 to 1990, he
was the Director of Marketing at  Benchmarq  Microelectronics  (a  semiconductor
manufacturer)  and from 1990 until he rejoined  Dialogic in February  1993,  Mr.
Landau  was  Vice  President,  Marketing  at  Benchmarq  Microelectronics.  From
November  1983 until May 1988, he held various  marketing  positions at Advanced
Micro Devices (a semiconductor  manufacturer)  and from June 1978 until November
1983,  he held various  operations  and product  marketing  responsibilities  at
Mostek Corporation (a semiconductor manufacturer).

          Mr. Liss joined Dialogic in February 1995 and was named to his present
position in September 1995. Prior to joining Dialogic,  he served as the Manager
of Channel  Marketing 

<PAGE>

within the Advanced  Services  Division of Novell from 1994 to 1995, the Eastern
Region Sales Manager and then Director of Business  Development of Fluent,  Inc.
(a multi-media  software and hardware  company which  ultimately was acquired by
Novell) from 1990 to 1994, an associate with the consulting firm of Booz,  Allen
&  Hamilton  from 1987 to 1990,  a Product  Line  Marketing  Manager  for Analog
Devices,  Inc., (a semiconductor  manufacturer) from 1984 to 1987 and as a sales
engineer for Intel Corporation (a semiconductor manufacturer) from 1980 to 1982.

          Mr. Weitz  joined the Company in January  1997 as its General  Counsel
and was named a Vice President and Secretary in February 1997.  Prior to joining
the Company,  he served in senior counsel positions for Lucent Technologies Inc.
in 1996, for AT&T from 1993 to 1996, for UNIX System  Laboratories  from 1991 to
1993 and for various AT&T affiliates from 1978 to 1991.

          Ms.  Beadle  joined  Dialogic in March of 1997 as  Controller  and was
named  Chief  Accounting  Officer in  February  of 1998.  Prior to  joining  the
Company,  she was employed at Dynatech  Corporation  as Director of Finance from
1995 to 1997,  as  Director of  Taxation  from 1990 to 1995 and as an  Assistant
Corporate  Controller  from 1985 to 1990.  From 1972 to 1985,  Ms.  Beadle  held
various financial  positions at General Electric  Corporation and Metcalf & Eddy
Engineering, Inc.

          Executive  officers  of the  Company  are  appointed  by the  Board of
Directors  on an annual  basis and serve until their  successors  have been duly
elected  and  qualified.  There  are no  family  relationships  among any of the
executive officers or directors of the Company.

<PAGE>

                                    PART II

Item  5.  Market  for  the Registrant's Common Equity and Related Stockholder 
          Matters

          The registrant  incorporates by reference herein information set forth
in its Annual Report to Shareholders  for the year ended December 31, 1997, that
is responsive to the information required with respect to this Item.

Item 6.   Selected Financial Data

          The registrant  incorporates by reference herein information set forth
in its Annual Report to Shareholders  for the year ended December 31, 1997, that
is responsive to the information required with respect to this Item.

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

          The registrant  incorporates by reference herein information set forth
in its Annual Report to Shareholders  for the year ended December 31, 1997, that
is responsive to the information required with respect to this Item.

Item 7A.  Quantitative and Qualitative Disclosure About Market Risk.

          Not applicable.

Item 8.  Financial Statements and Supplementary Data

          The registrant  incorporates by reference herein information set forth
in its Annual Report to Shareholders  for the year ended December 31, 1997, that
is responsive to the information required with respect to this Item.

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

          Not applicable.


<PAGE>

                                    PART III

Item 10.  Directors of the Registrant

          The registrant  incorporates by reference herein information set forth
in its definitive  proxy  statement for its 1998 annual meeting of  shareholders
that is responsive to the information required with respect to this Item.

Item 11.  Executive Compensation

          The registrant  incorporates by reference herein information set forth
in its definitive  proxy  statement for its 1998 annual meeting of  shareholders
that is responsive to the information required with respect to this Item.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

          The registrant  incorporates by reference herein information set forth
in its definitive  proxy  statement for its 1998 annual meeting of  shareholders
that is responsive to the information required with respect to this Item.

Item 13.  Certain Relationships and Related Transactions

          The registrant  incorporates by reference herein information set forth
in its definitive  proxy  statement for its 1998 annual meeting of  shareholders
that is responsive to the information required with respect to this Item.

<PAGE>

                                    PART IV

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

          (a)  The  following  financial   statements  and  related  report  are
incorporated  by reference  into Item 8 of this Annual Report on Form 10-K (page
references are to the Company's Annual Report to Shareholders for the year ended
December 31, 1997):

                                                                        Page

     Independent Auditors' Report       8
     Consolidated Balance Sheets as of December 31, 1996 and
            1997                                                         10
     Consolidated Statements of Income for the Years Ended
            December 31, 1995, 1996 and 1997                             12
     Consolidated Statements of Shareholders' Equity
            for the Years Ended December 31, 1995, 1996 and 1997         13
     Consolidated Statements of Cash Flows for the Years Ended
            December 31, 1995, 1996 and 1997                             14
     Notes to Consolidated Financial Statements.                         15

          (b) The  following  financial  statement  schedule is filed as part of
this Annual Report:

          Schedule                 Description                 Page
     
                         Independent Auditors' Report          S-1
          II             Valuation and Qualifying Accounts     S-2

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

          (c) The following  exhibits are  incorporated  by reference  herein or
annexed to this Annual Report:


Exhibit                       Description


3.1       Restated  Certificate of Incorporation is incorporated by reference to
          Exhibit 3.1 to the  Registrant's  Registration  Statement  on Form S-1
          (No. 33-59598).

3.2       By-laws,  as amended,  are incorporated by reference to Exhibit 3.2 to
          the Registrant's Registration Statement on Form S-1 (No. 33-59598).

10.1      1988 Incentive Compensation  Plan,  as  amended  and restated through 
          March 28, 1997 (the "1988 Plan")  is  incorporated  by  reference  to 
          Exhibit 10.2 of the Registrant's  Annual  Report on Form 10-K for the 
          year ended  December  31, 1996.

10.2      Proposed  amendments  to the  1988  Plan as  amended are incorporated 
          by reference to Exhibit 10.3 of the  Registrant's  Annual  Report on 
          Form 10-K for the year ended December 31, 1996.

10.3      1993  Non-Employee Director  Stock  Option Plan  (the "1993  Plan") is
          incorporated by reference to Exhibit 10.4 of the Registrant's 
          Registration  Statement on Form S-1 (No.  33-59598).

10.4      Amended  and Restated  1993   Plan  is  incorporated  by reference  to
          Exhibit  10.5 of the  Registrant's  Annual  Report  on Form  10-K for 
          the year  ended  December  31, 1996.

10.5      1997  Director  Stock  Election/Deferral  Plan  is  incorporated  by  
          reference to Exhibit 10.6 of the Registrant's  Annual  Report on Form 
          10-K for the year  ended  December  31,  1996.

10.6      Employment  Agreement between   the  Registrant  and Howard  G.  Bubb,
          as  amended.

10.7      Registrant's   loan   agreement,   as amended

10.8      Registrant's  headquarters  lease, dated August 31, 1993, as amended, 
          is incorporated by reference to  Exhibit   10.9  to  the  Registrant's
          Annual Report  on  Form  10-K  for  the  year  ended   December  31,
          1996.

10.9      Amendment to headquarters  lease.

<PAGE>

10.10     1997 Incentive Benefit Plan is incorporated  by  reference to Exhibit 
          10.11  of  the   Registrant's,   Annual  Report  on  Form  10-K  for  
          the  year  ended   December  31, 1996.

10.11     Asset  Purchase  Agreement,  by  and  among  the  Registrant,   Texas 
          Instruments  Incorporated  and  Spectron  Microsystems, Incorporated, 
          dated   as   of   January   22,    1998.

11.1      Calculation   of   Income   Per Share.

13.1      Incorporated  portions  of the  Annual  Report to  Shareholders  for 
          the year  ended  December  31, 1997.

21.1      Principal subsidiaries of the Registrant.

23.1      Independent  Auditors' Consent.

24.1      Power of Attorney.

27.1      Financial Data Schedule.

          (d) During the quarter  ended  December 31, 1997,  the Company did not
file any Current Reports on Form 8-K.

<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its  behalf by the  undersigned,  thereunto  duly  authorized,  this 27th day of
March, 1998.

                                                 DIALOGIC CORPORATION


                                                 By: /s/ Thomas G. Amato
                                                 ___________________________
                                                 Thomas G. Amato, Vice President
                                                 and Chief Financial Officer

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

Signatures                         Title                    Date

s/Howard G. Bubb*             President, Chief Executive    March 27, 1998
  Howard G. Bubb              Officer and Director          


/s/Nicholas Zwick*            Director                      March 27, 1998
   Nicholas Zwick       


/s/Kenneth J. Burkhardt, Jr.* Director                      March 27, 1998
   Kenneth J. Burkhardt, Jr.  


/s/Thomas G. Amato            Vice President, Chief         March 27,  1998
   Thomas G.  Amato           Financial  Officer and  
                              Treasurer 

/s/Jean M. Beadle             Chief Accounting Officer      March 27, 1998
   Jean M. Beadle             and Controller         


/s/Masao Konomi*              Director                      March 27, 1998
   Masao Konomi


/s/John N. Lemasters*         Director                      March 27, 1998
   John N. Lemasters             


/s/Francis G. Rodgers*        Director                      March 27, 1998
   Francis G. Rodgers            


/s/James J. Shinn*            Director                      March 27, 1998
   James J. Shinn                

* By  /s/Theodore M. Weitz*
      Theodore M. Weitz, Attorney in Fact
<PAGE>



INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders
of Dialogic Corporation
Parsippany, New Jersey

We have audited the consolidated  financial  statements of Dialogic  Corporation
and  Subsidiaries  as of December  31, 1997 and 1996,  and for each of the three
years in the period ended  December 31, 1997, and have issued our report thereon
dated  February 10, 1998 (except  Notes 7 and 9 as to which the date is February
18, 1998); such financial statements and report are included in your 1997 Annual
Report to Shareholders and are incorporated herein by reference. Our audits also
included the financial  statement  schedule of Dialogic  Corporation,  listed in
Item  14.  This  financial  statement  schedule  is  the  responsibility  of the
Company's  management.  Our responsibility is to express an opinion based on our
audits. In our opinion,  such financial statement  schedule,  when considered in
relation to the basic financial statements taken as a whole,  presents fairly in
all material respects the information set forth therein.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 18, 1998


                                      S-1


<PAGE>
<TABLE>
<CAPTION>

                SCHEDULE II - Valuation and Qualifying Accounts
                             (Dollars in thousands)


<S>                      <C>            <C>           <C>           <C>            <C>
   Column  A             Column  B      Column  C                   Column  D      Column  E
                         Balance at     Charged  to   Charged to
                         beginning of   costs and       other         (1)           Balance at
  Description             year          expenses      accounts      Deductions     end of year

Allowance for Doubtful Accounts

December 31, 1995        $  549         $  724         $  37         $  416          $894
December 31, 1996           894            724            57            846           829
December 31, 1997           829          1,272           (27)           794          1,280
</TABLE>

(1)  Amounts represent write-offs of accounts receivable deemed uncollectible.

                                      S-2

<PAGE>
                                 EXHIBIT INDEX


EXHIBIT                                 DESCRIPTION

 10.6                         Employment  Agreement  between  the  Registrant
                              and Howard G. Bubb as  amended

 10.7                         Registrant's Loan Agreement, as amended

 10.9                         Amendment to Registrant's Headquarters Lease

 10.11                        Asset  Purchase  Agreement,   by  and  among  the 
                              Registrant, Texas  Instruments  Incorporated   and
                              Spectron Microsystems, Incorporated, dated  as  of
                              January 22, 1998.

 11.1                         Calculation  of Income Per  Share

 13.1                         Incorporated  portions of the Annual Report to 
                              Shareholders for the Year ended December 31, 1997

 21.1                         Subsidiaries of the  Registrant
 23.1                         Independent    Auditors' Consent
 24.1                         Power of Attorney 
 27.1                         Financial Data Schedule