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 31,1996.

[ ] 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                                  2-2476114
(State or other jurisdiction of                  (I.R.S. Employer Identification
incorporation or organization)                             Number)


           1515 Route 10, Parsippany, New Jersey 07054 (201) 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, no 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. [X]

          Aggregate  market value of voting stock held by  non-affiliates  as of
February 14, 1997 was approximately $325 million.

          Number of shares of Common Stock  outstanding as of February 14, 1997:
15,796,671.

          Documents incorporated by reference: Annual report to shareholders for
the year ended December  31, 1996 (Part II);  Definitive proxy statement for the
registrant's 1997 annual meeting of shareholders (Part III).

                              DIALOGIC CORPORATION
                                TABLE OF CONTENTS

PART I                                                                    Page

Item 1  Business of the Company...........................................  3

Item 2  Properties........................................................ 24

Item 3  Legal Proceedings................................................. 24

Item 4  Submission of Matters to a Vote of Security Holders............... 25

Item 4A Executive Officers of the Registrant.............................. 25

PART II

Item 5  Market for the Registrant's Common Equity and Related Stockholder 
        Matters.
                                                                           27

Item 6  Selected Financial Data..........................................  28

Item 7  Management's Discussion and Analysis of Results of Operations and  
        Financial  Condition.............................................. 28

Item 8  Financial Statements and Supplementary Data....................... 28

Item 9  Changes in and Disagreements with Accountants on Accounting 
        and Financial Disclosure.......................................... 28

PART III

Item 10 Directors of the Registrant......................................  28

Item 11 Executive Compensation...........................................  29

Item 12 Security Ownership of Certain Beneficial Owners and Management.... 29

Item 13 Certain Relationships and Related Transactions.................... 29

PART IV

Item 14 Exhibits, Financial Statements Schedules and Reports on Form
        8-K............................................................... 30

Signatures ............................................................... 33



Item 1.  Business of the Company

Introduction

          Dialogic Corporation ("Dialogic" or the "Company") was incorporated in
New Jersey in 1983.  Its principal  executive  offices are located at 1515 Route
10, Parsippany, New Jersey 07054, and its telephone number is (201) 993-3000. On
June  6,  1994,  Dialogic  acquired  GammaLink,  a  California  manufacturer  of
facsimile  boards for  various  computer-based  applications  ("GammaLink").  On
February  27,  1995,  the  Company  acquired  Spectron  Microsystems,   Inc.,  a
California supplier of digital signal processor ("DSP") system software products
("Spectron").  Both  of  these  mergers  were  accounted  for  as a  pooling  of
interests.  During February 1995,  Dialogic also acquired from Digital Equipment
Corporation its computer integrated telephony server technology; these resources
are now  provided  by  Dialogic  from its CT  Division.  In June 1996,  Dialogic
acquired  Dianatel  Corporation,  a California  manufacturer  of digital network
interface and other signal computing products ("Dianatel"). The Dianatel merger,
resulting in the issuance of approximately 55,500 shares of the Company's Common
Stock,  the  payment  of  approximately  $1.1  million  in cash and the grant of
options to purchase  approximately  29,800 shares of Dialogic Common Stock,  was
accounted for as a purchase. As used in this Annual Report, the terms "Dialogic"
and the "Company" refer to Dialogic Corporation and its subsidiaries.

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

          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  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,  however,  numerous  computer  telephony  vendors have adopted  open,  or
non-proprietary,  personal  computer  ("PC")  platforms  and standard  operating
systems,  such as Windows 95,  Windows NT, UNIX,  OS/2,  MS-DOS and Netware,  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:

o    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) 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 PC platforms  with
     PC/AT or Micro Channel  standards 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.

o    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  growing  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, 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".

o    Initiate and Promote Uniform Standards.  In 1993, Dialogic introduced a new
     architecture  initiative,  known as Signal  Computing  System  Architecture
     ("SCSA").  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-along  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 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.

o    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.

o    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.

o    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.

o    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.  However, no assurances can be given with
     respect to the pace of  deregulation  and  privatization,  which may differ
     significantly from country to country.  In Central Europe,  economic issues
     (recessionary  pressures) and regulatory issues  (generally,  a slowdown in
     the  deregulation  of the  telecom  industry)  appear  to be  impeding  the
     deployment of computer telephony projects. See "Management's Discussion and
     Analysis of Financial  Condition and Results of Operations."  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.

o    Complement  Internal Growth with Strategic  Acquisitions  and  Investments.
     Prior to its acquisition of GammaLink in June 1994,  Dialogic's  growth had
     occurred principally through internal development. However, as reflected by
     the  GammaLink,  Spectron  and  Dianatel  transactions  and  the  Company's
     acquisition  of  Digital  Equipment   Corporation's   computer   integrated
     telephony server technology,  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 95,  Windows NT, UNIX,  Netware,
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.

          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,  which are
largely driven by the computer technology  application  software supplied by the
Company's customers and other third-parties. These technologies include:

o    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.

o    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 and DID (direct inward dial) to digital, T-1 and E-1 and primary rate
     integrated services digital network (ISDN) lines. Dialogic manufactures and
     sells  platforms  that are  compatible  with the  various  popular  network
     interfaces utilized throughout the world.

o    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.

o    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.

o    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.

o    Switching and  Conferencing.  Switching and  conferencing  involve routing,
     transferring and connecting voice signals to more than two parties.

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.

          The Company's  VR/40 is a  daughterboard  that mounts  directly on the
D/41H  platform.  The VR/40  provides  speaker-independent  isolated word speech
recognition   capabilities   in  six   languages   for  up  to   four   channels
simultaneously.

          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  and  D/300SC-E1 are 16, 24 and 30
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,  telemarketing/call centers,
dictation, auto dialers, notification systems and on-line data entry and query.

          The Company  recently  introduced its DualSpan series of digital voice
and network  interface  boards.  These platforms provide two E-1 or T-1 lines of
service  termination and call processing for up to 60 voice channels in a single
PC slot.  The DualSpan  boards are  functionally  equivalent to two  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:

o    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.

o    The DTI/240SC,  DTI/241SC,  DTI/300SC,  and DTI/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  DTI/480SC and  DT1/600SC)
     permit similar connections for 48 (T-1) and 60 (E-1) lines.

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

         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 Spectron's  realtime
DSP  operating  system  (SPOX),  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.

          Algorithm 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.  The  Dialogic  bus
products utilized in high density systems are described below:

o    PCM Expansion  Bus.  Dialogic's PCM Expansion Bus ("PEB") was developed for
     systems with higher  capacities  than the systems which utilize  Dialogic's
     first  generation  analog  expansion bus ("AEB").  The PEB, a time division
     multiplexed bus, permits a sharing of resource modules over a larger number
     of  telephone  lines,  resulting  in cost  efficiencies  as the  number  of
     inter-connected telephone lines increases.

o    SCbus.  Dialogic's  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
     channels, for interconnecting  sophisticated  SCSA-based systems. While the
     Company continues to support the AEB and 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 its  GammaLink  acquisition  in 1994,  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.  It
is intended to be used by  application  developers,  VARs and OEMs to  construct
end-user  computer-telephone  solutions for call control purposes. Dialogic also
offers CIT 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.

          Through its  acquisition  of  Spectron,  the Company  provides  system
software and development environments for DSPs and for multi-media processing on
the Pentium  processor.  Spectron  has two  primary  products:  (i) SPOX,  a DSP
operating  system that supports  multiple  vendors'  DSPs and  industry-standard
platforms;  and (ii)  IASPOX,  an Intel  architecture  version  of SPOX  jointly
developed by Spectron and Intel.

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

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 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.

     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.   The  Company  also  recently   announced  the
     availability  of a development  kit to enable systems  developers to create
     fax applications for the Internet.  The Company anticipates that there will
     be  substantial  competition  within  its  industry  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 349 persons as of
December  31,  1996.  For the years  ended  December  31,  1994,  1995 and 1996,
research and development expenses amounted to $21.6 million,  $29.0 million, and
$40.7 million,  respectively,  representing 17% of revenues in 1994 and 1995 and
19% of revenues in 1996.

International Business

          Dialogic's international market opportunities are defined primarily 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.
As of  December  31,  1996  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 each of 1994, 1995 and 1996, international sales (excluding exports
from North America)  accounted for approximately 29% of the Company's  revenues.
See Note 10 of the  Notes to the  Company's  Consolidated  Financial  Statements
incorporated by reference herein. In certain European markets, primarily Central
Europe,   economic  issues   (recessionary   pressures)  and  regulatory  issues
(generally, a slowdown in the deregulation of the telecom industry) appear to be
impeding the deployment of computer telephony products.

          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.

          International  sales are subject to inherent risks,  including changes
in regulatory  and standards  requirements,  exchange  rates,  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, 1996, the Company had 152 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   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,  Belgium,  Brazil,
Canada, China, France, Italy, Israel, Ireland, Japan, Germany, Singapore 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, 1996, the Company's marketing group consisted of 88 employees.

          The Company sold products to more than 3,000 customers  during 1996. A
total of 50 of  these  customers  represented  approximately  47% of  Dialogic's
revenues, and no customer accounted for 10% or more of revenues in 1996.

          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 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 Octel).  In the future,  the Company
may also  face  competition  from new  market  entrants,  including  those  with
substantially greater resources and name recognition than Dialogic.

          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.

          In  high-volume   applications,   GammaLink  faces   competition  from
companies  which offer  multi-line  products.  In the LAN fax market,  GammaLink
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.  Spectron  faces  competition  from  both  major  corporate
competitors  and smaller  companies  and competes  primarily on the basis of its
technological advances and customer support and services.

          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.  This statement  regarding  future
licensing arrangements constitutes a Forward-Looking  Statement. 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.  The Company
investigates each of these claims. 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.  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 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.  Furthermore,  intellectual property claims are frequently accompanied
by claims of violations of applicable  antitrust laws.  Antitrust  litigation is
often fact-intensive and thus can be extremely time-consuming and expensive.

          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.

          In the computer telephony  industry,  intellectual  property claims by
third-parties can result in substantial  expenditures of time, effort and money.
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. The Company has employed three
principal suppliers located in New Jersey and New York - Electronic  Associates,
Inc., Ridge Associates and American Computer  Assembly,  Inc. - as well as small
contract  suppliers  in  California.  The  activities  of  these  suppliers  are
coordinated  by  Dialogic's  manufacturing  personnel.  The  Company's  internal
operations  consist  primarily of production of  prototypes,  test  engineering,
materials  purchasing and inspection,  final product  configuration and testing,
quality  control and service  repair.  The Company is  currently  negotiating  a
written  agreement  which, if consummated,  would result in Dialogic's  moving a
significant  amount of its  manufacturing to another contract  manufacturer.  No
assurances can be given as to whether or when such  negotiations  will result in
an agreement being signed by the parties.

          At present, Dialogic does not have a long-term supply contact with any
of  its  manufacturing   subcontractors  or  component  suppliers.  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.  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  were to  experience  difficulties  that
resulted in a reduction or interruption in supply to the Company or in the event
that any of Dialogic's contract manufacturers were unable to perform, Dialogic's
results of operations  could be materially  adversely  affected (after available
inventory  is used)  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,  which  could be  affected by several
factors,  including  the  demands  imposed  upon,  and  the  sophistication  of,
alternate  suppliers,  the lead time  available  to such  suppliers  and  market
acceptance  of  the  products  made  by  means  of  such  alternate  approaches.
Accordingly,   actual   results  may  differ   materially   from  the  Company's
expectations.

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.  Any failure by the
Company to anticipate or respond  adequately to  technological  developments and
customer  requirements,  or any  significant  delays in product  development  or
introduction,  could  have a material  adverse  effect on  Dialogic's  business,
operating  results  and  financial  condition.  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.

          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 materially and adversely  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
economic  conditions.  The Company  typically  operates with  relatively  little
backlog and 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.  If near-term  demand for the Company's  products weakens or if orders
are not shipped in any quarter as anticipated,  Dialogic's results of operations
for that quarter could be materially  and adversely  affected.  Any shortfall in
revenues  or  earnings  from the levels  anticipated  by  analysts  could have a
substantial  adverse impact on the market price of Dialogic's  Common Stock. The
Company is likely not to learn of any such  shortfalls  until late in its fiscal
quarter.

          Uncertainties   Relating  to  Proprietary   Matters.  For  information
regarding  substantial  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   economic   conditions,   patent   positions,   regulatory
requirements  and  other  marketing  restrictions,  that  adversely  affect  the
revenues of Dialogic's OEM and VAR customers can have a substantial  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, 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.

          Dependence on Third-Party Suppliers.  The Company contracts with three
domestic  companies for the  manufacture of  substantially  all of its products.
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,
although  it is  currently  negotiating  a  written  agreement  with a  contract
manufacturer.  See "-- Manufacturing".  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.

          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,
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 or that
Dialogic's   management  will  be  able  to  effectively  manage  the  resulting
businesses.

          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,   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 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, 1996, the Company had 905 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.


Item 2.  Properties

          The Company's  corporate  headquarters are located in Parsippany,  New
Jersey,  in a leased facility.  The lease expires in 2005, with options to renew
for two subsequent  five-year terms.  The lease presently  covers  approximately
192,000 square feet of space.  Further,  the Company has an option,  exercisable
through 1999, to expand the lease space by an additional 20,000 square feet. The
Company also leases all of its other domestic and foreign offices. See Note 9 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  certain of its  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.  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. Management is unable to predict a potential range of
monetary  exposure,  if any, to the Company,  but believes that the  substantive
claims  asserted  are without  merit and that a material  adverse  effect on the
Company's consolidated  financial condition,  results of operations or liquidity
is less than probable. However, based on the extent of the decline in the market
price of the Company's  Common Stock after such press release was published,  an
unfavorable result could have a material adverse effect on the Company.

          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.

          Management  intents  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.  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.


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, 1997) and their positions with the Company are set forth below:


        Name                     Age                                  Title

  Nicholas Zwick                 44      Chairman of the Board

  Howard G. Bubb                 42      President and Chief Executive Officer;
                                         Director

  John G. Alfieri                37      Vice President, Sales and Service, the
                                         Americas

  Kenneth J. Burkhardt, Jr.      51      Executive Vice President, New Business 
                                         Development; Director

  Darrayl E. Cannon              49      Vice President, Operations

  Edward B. Jordan               36      Vice President, Chief Financial Officer
                                         and  Treasurer  

  John E. Landau                 43      Vice  President  and General Manager, 
                                         Dialogic Architecture Labs

  Samuel T. Liss                 38      Vice President, Corporate Marketing

  Theodore M. Weitz              50      Vice President, General Counsel and 
                                         Secretary

          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.  Zwick was an Area  Technical  Manager and Field  Applications  Engineer for
Advanced  Micro  Devices (a  semiconductor  manufacturing  company) from 1979 to
1985.

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

          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. Dr. Burkhardt was
a Systems  Architect for Unisys  Corporation,  a computer systems company,  from
1981 to 1986.

          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. Jordan joined the Company in 1987 as its  controller and was named
Dialogic's Chief Financial Officer in October 1992,  Treasurer in March 1993 and
Vice  President in August 1993.  Prior to joining the Company,  he served in the
Audit Department of Touche Ross & Co. (now Deloitte & Touche) from 1982 to 1986.
Mr. Jordan is a Certified Public Accountant.

          Mr.  Landau was named Vice  President  and General  Manager,  Dialogic
Architecture  Labs,  in 1995.  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  semi-conductor
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 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 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.

          The Company's  executive  officers serve at the pleasure of the Board,
subject to contractual provisions when and if applicable.


                                     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, 1996 that
is responsive to the information required with respect to this Item.

          During 1996,  the  registrant  issued a total of 55,424  shares of its
Common  Stock  pursuant  to  transactions  that  were not  registered  under the
Securities  Act of 1933, as amended (the "Act").  All of such shares were issued
by the registrant in connection  with its  acquisition  of Dianatel  Corporation
("Dianatel") in June 1996. This acquisition was effected as a merger pursuant to
which Dianatel became a wholly-owned subsidiary of the registrant.  The issuance
of such shares was exempt from  registration  under the Act  pursuant to Section
4(2) of the Act as a transaction  not involving a public offering of securities.
At  the  time  of  the  acquisition,   Dianatel  had  six   shareholders.   Such
shareholders'  certificates  have been  legended,  subject  to the right of such
shareholders to resell those shares  pursuant to a registration  statement filed
by the registrant subsequent to the acquisition.


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, 1996 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, 1996 that
is responsive to the information required with respect to this Item.

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, 1996 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.



                                    PART III

Item 10.  Directors of the Registrant

          The registrant  incorporates by reference herein information set forth
in its definitive  proxy  statement for its 1997 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 1997 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 1997 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 1997 annual meeting of  shareholders
that is responsive to the information required with respect to this Item.


                                     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, 1996):

                                                                         Page

 Independent Auditors' Report............................................ 8
 Consolidated Balance Sheets as of December 31, 1995 and
      1996............................................................... 9
 Consolidated Statements of Income for the Years Ended
      December 31, 1994, 1995 and 1996...................................10
 Consolidated Statements of Shareholders' Equity
      for the Years Ended December 31, 1994, 1995 and 1996...............11
 Consolidated Statements of Cash Flows for the Years Ended
      December 31, 1994, 1995 and 1996...................................12
  Notes to Consolidated Financial Statements.............................13

          (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      1986 Stock  Option  Program,  and form of option  agreement executed
            by  certain  optionees  under  such  Program,  are  incorporated by 
            reference  to  Exhibit   10.1  of  the  Registrant's  Registration  
            Statement  on Form S-1 (No. 33-59598).

  10.2      1988 Incentive  Compensation Plan, as amended and restated through 
            March 28, 1997 (the "1988 Plan").

  10.3      Proposed  amendments to the 1988 Plan approved by the Registrant's 
            Board of Directors and submitted for  shareholder  approval at the 
            1997 Annual Meeting of Shareholders.

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

   10.5     Amended  and  Restated  1993 Plan  approved  by the  Registrant's  
            Board of Directors and submitted for shareholder approval at the
            1997 Annual Meeting of Shareholders

   10.6     1997  Director  Stock  Election/Deferral  Plan  approved  by  the 
            Registrant's Board  of  Directors and submitted  for  shareholder  
            approval at the 1997 Annual Meeting of Shareholders

   10.7     Employment  Agreement  between  the  Registrant  and Howard G. Bubb,
            as amended,   is   incorporated   by  reference  to  Exhibit  10.4  
            to  the Registrant's  Annual Report on Form 10-K for the year ended 
            December 31, 1995.

   10.8     Registrant's loan  agreements,  as  amended,  are  incorporated  by 
            reference to Exhibit 10.6 of the Registrant's Registration Statement
            on Form S-1 (No. 33-59598).

   10.9     Registrant's headquarters lease, dated August 31, 1993, as amended.

   10.10    Registrant's   Agreement   and  Plan  of  Merger  with   Spectron  
            Microsystems, Inc. is incorporated  by reference to Exhibit 2 to 
            Registrant's  Current Report on Form 8-K dated March 10, 1995.

   10.11    1997 Incentive Benefit Plan approved by the Registrant's Board of 
            Directors and submitted for shareholder approval at the 1997 Annual 
            Meeting of Shareholders

   11.1     Calculation of Income Per Share.

   13.1     Incorporated  portions of the Annual Report to Shareholders for the 
            year ended December 31, 1996.

   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,  1996,  the Company 
did not file any Current Reports on Form 8-K.

                                   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 31st day of
March, 1997.

                                   DIALOGIC CORPORATION

                                   By:/s/ Edward B. Jordan 
                                      ________________________________
                                      Edward B. Jordan, 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 31, 1997
_________________________          Officer and Director
   Howard G. Bubb

/s/Nicholas Zwick*
__________________________         Director                       March 31, 1997
   Nicholas Zwick

/s/Kenneth J. Burkhardt, Jr.*      Director                       March 31, 1997
_____________________________
   Kenneth J. Burkhardt, Jr.


/s/Edward B. Jordan                Chief Financial Officer 
______________________________     and Treasurer (Chief           March 31, 1997
    Edward D. Jordan               Financial and Accounting 
                                   Officer)
              


/s/Masao Konomi*                   Director                       March 31, 1997
____________________________
   Masao Konomi


/s/John N. Lemasters*              Director                       March 31, 1997
____________________________
   John N. Lemasters


/s/Francis G. Rodgers*             Director                       March 31, 1997
____________________________
   Francis G. Rodgers


/s/James J. Shinn*                 Director                       March 31, 1997
____________________________
   James J. Shinn


*/s/Edward B. Jordan
____________________________
    Edward B.Jordan,
    Attorney-in-Fact

<PAGE>

INDEPENDENT AUDITORS' REPORT


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

We have audited the financial statements of Dialogic Corporation as of December 
31, 1995 and 1996,  and for each of the three years in the period ended December
31, 1996,  and  have  issued our report  thereon dated  February 10, 1997; such 
financial  statements  and  report  are  included  in your 1996 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
New York, New York
February 10, 1997


<TABLE>
<CAPTION>

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


             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

<S>                                              <C>                  <C>               <C>               <C>                <C>
December 31, 1994......................          $  608               358                1                418                549
December 31, 1995......................             549               724               37                416                894
December 31, 1996......................             894               724               57                846                829

</TABLE>


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

<PAGE>

                                  EXHIBIT INDEX


    EXHIBIT                                          DESCRIPTION

      10.2                     1988  Incentive  Compensation  Plan,  as  amended
                               and restated through March 28, 1997 (the "1988 
                               Plan").

      10.3                     Proposed  amendments  to the 1988 Plan approved 
                               by the Registrant's  Board of  Directors  and  
                               submitted  for shareholder  approval  at the 1997
                               Annual  Meeting of Shareholders.

      10.5                     Amended  and  Restated   1993  Plan  approved  by
                               the Registrant's Board of Directors and submitted
                               for shareholder  approval  at  the  1997  Annual 
                               Meeting of Shareholders

      10.6                     1997  Director  Stock  Election/Deferral  Plan   
                               approved by the  Registrant's  Board of Directors
                               and submitted for shareholder  approval  at the 
                               1997  Annual  Meeting  of  Shareholders

      10.9                    Registrant's  headquarters  lease,  dated August 
                               31, 1993, as amended

      10.11                    1997 Incentive  Benefit  Plan  approved  by  the
                               Registrant's Board of Directors and submitted for
                               shareholder approval at the at the 1997 Annual 
                               Meeting of Shareholders

      11.1                     Calculation of Income Per Share

      13.1                     Incorporated   portions   of  the Annual Report  
                               to Shareholders for the Year ended December 31, 
                               1996

      21.1                     Principal subsidiaries of the Registrant

      23.1                     Independent Auditors' Consent

      24.1                     Power of Attorney

      27.1                     Financial Data Schedule