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                                   FORM 10-K/A

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 (FEE REQUIRED)

For the fiscal year ended December 31, 1995

                                       OR

[ ] TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE SECURITIES
    EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from ____________ to ________________

Commission File Number:  0-11551


                       EXECUTONE INFORMATION SYSTEMS, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)
<TABLE>
<S>                                                                    <C>
                 Virginia                                                  86-0449210
--------------------------------------------------------------         -----------------
           (State or other jurisdiction                                  (I.R.S. Employer
        of incorporation or organization)                               Identification No.)

478 Wheelers Farms Road, Milford, Connecticut                                 06460
--------------------------------------------------------------         -----------------
(Address of principal executive offices)                                   (Zip Code)
</TABLE>


Registrant's telephone number, including area code:  (203)876-7600


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

    Title of each class     Name of each exchange on which registered
    -------------------     ------------------------------------------
             N/A                    None

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

                     COMMON STOCK, PAR VALUE $.01 PER SHARE
         7 1/2% CONVERTIBLE SUBORDINATED DEBENTURES, DUE MARCH 15, 2011
--------------------------------------------------------------------------------
                                (Title of Class)

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




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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 registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

The  aggregate  market  value of the common stock held by  nonaffiliates  of the
registrant  (assuming for this purpose that all executive officers and directors
of the registrant are affiliates) as of March 29, 1996 was  $125,909,320,  based
on the last sale price for the common stock on that date.

The number of shares outstanding of the registrant's only class of common stock,
$.01 par value per share, as of March 29, 1996, was 51,865,163.


                       DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference into the Part of this Form
10-K indicated below:

Part II  -   1995 Annual Report to Shareholders







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                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
Item                                                                            Page


PART I


<S>      <C>                                                                    <C>
1.       Business                                                                    1
2.       Properties                                                                 15
3.       Legal Proceedings                                                          15
4.       Submission of Matters to a Vote of Security Holders                        16
         Executive Officers of the Registrant                                       17



PART II

5.       Market for Registrant's Common Equity and Related
         Stockholder Matters                                                        20
6.       Selected Financial Data                                                    20
7.       Management's Discussion and Analysis of Financial Condition                20
         and Results of Operations
8.       Financial Statements and Supplementary Data                                20
9.       Changes in and Disagreements with Accountants on                           20
         Accounting and Financial Disclosure




PART III

10.      Directors and Executive Officers of the Registrant                         20
11.      Executive Compensation                                                     22
12.      Security Ownership of Certain Beneficial Owners and Management             28
13.      Certain Relationships and Related Transactions                             31


PART IV

14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K            32


</TABLE>








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                                     PART I

ITEM 1.           BUSINESS

General

         EXECUTONE  Information  Systems,  Inc.  ("EXECUTONE"  or the "Company")
designs, manufactures, sells, installs and supports voice processing systems and
healthcare  communications  systems.   EXECUTONE  also  provides  cost-effective
long-distance  telephone service through its INFOSTAR'r'/LD+  program.  Products
are  sold  under  the  EXECUTONE'r',  INFOSTAR'r',  IDS'tm',  LIFESAVER'tm'  and
INFOSTAR/ILS'tm'  brand names  through a worldwide  network of direct  sales and
service offices and independent distributors.

         EXECUTONE's  executive  offices are located at 478 Wheelers Farms Road,
Milford,  Connecticut  06460,  telephone  (203)  876-7600.  The Common  Stock of
EXECUTONE  is traded on the  NASDAQ  National  Market  System  under the  symbol
"XTON", and its Convertible Subordinated Debentures due 2011 trade on the NASDAQ
system under the symbol "XTONG".


Recent Developments

         On April 10,  1996,  the Company  entered into an agreement to sell the
Company's direct sales and service organization,  including its network services
division,  to a new acquisition company led by Bain Capital,  Inc. and including
Triumph  Capital Group (the  "Buyer").  The purchase price will consist of $61.5
million in cash, a $5.9 million junior  subordinated note due July 1, 2004, with
interest at 7.5% per year,  and warrants to purchase 8% of the equity  issued as
of the  closing in the new  company.  The sale is  expected  to close on May 31,
1996, subject to the Buyer's financing and other conditions.

         The purchase and sale  agreement also provides that the Company and the
Buyer will enter into a five-year  exclusive  distributor  agreement pursuant to
which the Buyer will sell and service  EXECUTONE'r'  and  INFOSTAR'r'  telephone
products to business and commercial locations that require up to 400 telephones.

   
         The sale will include the Company's  National Service Center.  The sale
does not include the  Pittsburgh  direct  sales and  service  office,  which the
Company  has  separately  agreed  to  sell  to one of its  existing  independent
distributors for  approximately  $1.3 million in cash and notes. The sale of the
Direct Sales and Service Group  (including  the separate sale of the  Pittsburgh
office)  relates  primarily to the retail  distribution  channel of the Computer
Telephony division and includes the entire network services division.  After the
sale, the Computer  Telephony  division  consists  of telephony product sales to
independent  distributors,  of which Clarity is the largest  distributor,  along
with the National  Accounts and Federal Systems  marketing  groups.  The Company
retains its Healthcare Communications and Call Center Management businesses  and
the Unistar business.

         On April 10, 1996,  the Company also announced that it had given notice
of its intention to terminate its distribution  agreement with GPT Video Systems
due to  failures  by  GPT  to  deliver  properly  functioning  videoconferencing
products on a timely basis.  In June 1996, the Company completed the sale of its
videoconferencing  division,  including  customer service  contracts and certain
inventory,  to BT  Visual  Images  LLC  for  approximatley  $115,000,  plus  the
assumption of certain liabilities relating to the business, of the division.

    


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         In April  1996,  the  Company  also sold its inmate  calling  business,
including certain equipment and customer contracts,  for approximately  $550,000
plus the  assumption  of certain  obligations  relating  to the  business.  This
business was part of the Computer Telephony division.

         On December 19, 1995, the Company  acquired 100% of the common stock of
Unistar Gaming Corp., a Delaware corporation  ("Unistar").  Unistar, through its
subsidiary Unistar  Entertainment,  Inc., has an exclusive five-year contract to
design,  develop,  finance, and manage the National Indian Lottery (the "NIL" or
"Lottery").  The NIL will be a national  telephone lottery authorized by federal
law and by a compact  between  the State of Idaho and the Coeur  d'Alene  Indian
Tribe of Idaho ("Coeur d'Alene Tribe"). In return for providing these management
services, Unistar will be paid a fee equal to 30% of the profits of the NIL.
    

         The Company  acquired 100% of Unistar for 3.7 million  shares of Common
Stock,  250,000  shares of  Cumulative  Convertible  Preferred  Stock,  Series A
("Series A  Preferred  Stock")  and 100,000  shares of  Cumulative  Contingently
Convertible Preferred Stock, Series B ("Series B Preferred Stock").

         The Series A Preferred  Stock has voting  rights  equal to one share of
Common Stock and will earn dividends equal to 18.5% of the consolidated Retained
Earnings of Unistar as of the end of a fiscal period, less any dividends paid to
the  holders of the Series A Preferred  Stock  prior to such date.  The Series B
Preferred  Stock has voting  rights  equal to one share of Common Stock and will
earn dividends equal to 31.5% of the consolidated  Retained  Earnings of Unistar
as of the end of a fiscal period,  less any dividends paid to the holders of the
Series B Preferred  Stock prior to such date.  All dividends on Preferred  Stock
are  payable  (I) when and as  declared  by the  Board of  Directors,  (ii) upon
conversion or  redemption of the Series A and Series B Preferred  Stock or (iii)
upon liquidation.  The Series A and Series B Preferred Stock is redeemable for a
total of 13.3 million shares of Common Stock (Series A Preferred Stock for 4.925
million  shares and Series B Preferred  Stock for 8.375  million  shares) at the
Company's  option.  The Series A Preferred  Stock is convertible for up to 4.925
million shares of Common Stock and the Series B Preferred  Stock is contingently
convertible  for up to  8.375  million  shares  of  Common  Stock (a total of an
additional 13.3 million shares of Common Stock) if Unistar meets certain revenue
and profit parameters. Shareholder approval is required before any of the Series
B Preferred  Stock can be converted or redeemed.  The Company  intends to submit
the terms of the Series B Preferred  Stock to its  shareholders  for approval at
the 1996 Annual Meeting.
   

         The telephone  operations of the NIL cannot begin until the  resolution
of a pending legal proceeding. Certain states have attempted to block the NIL by
filing letters under 18 U.S.C.  Section 1084 preventing  long-distance  carriers
from providing telephone service to the NIL based on allegations that the NIL is
not legal.  The Coeur d'Alene Tribe has initiated legal action to argue that the
Lottery is  authorized by the Indian Gaming  Regulatory  Act ("IGRA")  passed in
1988,  that IGRA preempts state and federal  statutes,  and that the states lack
authority to issue the Section  1084  notification  letters to any  carrier.  On
February 28, 1996, the Coeur d"Alene Tribal Court ruled that all requirements of
IGRA have been  satisfied,  that the Section 1084 letters are invalid,  and that
the long distance carrier is obligated to provide telephone service for the NIL.
This  ruling and a related  order  dated May 1, 1996 are being  appealed  to the
Tribal  Appellate  Court and  probably  will be  appealed  to the United  States
federal  courts  as well.  The Company has been advised by its outside  counsel,
Hunton  &  Williams,  that  based  upon  such  firm's  review  of the applicable
statutes, regulations and case law, it believes that the National Indian Lottery
is  authorized  under  IGRA  and  that the favorable rulings issued by the Coeur
D'Alene Tribal Court on February 28, and May 1, 1996 should be upheld on appeal.
    


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         In July 1995,  the  Company  reorganized  its core  business  into five
divisions:  Computer Telephony,  Healthcare  Communication  Systems, Call Center
Management,  Videoconferencing  Products,  and Network Services. The business of
Executone,  Inc.  acquired  by the  Company  in 1988 was a  telephone  equipment
business that focused its direct  selling effort on office sites with fewer than
20 phones,  with an emphasis on selling additional hardware to generate revenues
in the form of moves, adds and changes ("MAC") and service, mainly on a time and
material basis. The average system size in the customer base at that time was in
the 8-10  phone  range.  It was  originally  expected  in 1988  that the MAC and
service revenues generated by the customer base would be increasingly profitable
as the base of customers grew.  Since 1988, the Company has expanded its product
line to the high-end user, with larger customers and more sophisticated products
to serve customers' total communications  needs. The strategy the Company is now
pursuing is to focus on software  solutions  versus the hardware  orientation of
the business purchased in the 1988 acquisition.  With the IDS product, a digital
platform for various  communications  functions,  which was developed  after the
acquisition,  the  Company's  product lines now provide  sophisticated  software
applications,  including  integrated voice mail, call center  applications (ACD,
IVR's and predictive dialers),  infrared locator systems, nurse call systems and
computer telephony interfaces that drive its telephony products.

         The  development  in the nature and complexity of our product lines has
changed the way the Company has to market its products. Unlike many companies in
its industry  that focus on one  particular  product to one market,  the Company
provides multiple products and applications to its particular market niche. This
requires the Company to have  expertise  in each  particular  market  segment in
which it competes  because the Company's  competitors are primarily  one-product
companies  or  divisions  who are  experts  in their  particular  market  niche.
Therefore, the Company consolidated the sales, marketing and product development
functions  for each market  segment  under a  divisional  management  structure,
headed by a division president.  The sales force has been restructured such that
each sales  person is assigned to a specific  division and will sell only within
that division's market segment.  The  specialization of the sales force included
the  addition of sales  representatives  with the  necessary  product and market
expertise,   as  well  as  substantial   retraining  for  the  remaining   sales
representatives.


Business Strategy

         EXECUTONE is a vertically  integrated  voice  processing and healthcare
communications company. The Company controls the major elements of its business,
ranging from  product  design,  manufacturing  and  marketing  to  distribution,
installation,  service and  support.  Revenues  are  derived  from both from new
installations and from the Company's  existing customer base through  additions,
changes,  upgrades or relocation of previously  installed  systems,  maintenance
contracts, service charges and sales of network services. The Company's products
and services are marketed and sold through a worldwide network of Company direct
sales and service offices and independent distributors. The Company is organized
into five divisions focusing on different products and market segments: computer
telephony, healthcare communication systems, call


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center  management,  videoconferencing  products,  and network (voice,  data and
video) services.

         The  objective  of  the  computer   telephony   division  is  to  offer
value-added  products and services.  The Company's  integrated digital telephone
systems  emphasize  flexible software  applications,  such as data switching and
computer  telephone  interface,  designed to enhance the  customer's  ability to
communicate,  obtain and manage  information.  The Company's  telephone  systems
provide the platform for its other voice processing software applications,  such
as automatic call distribution.


         The  healthcare   communications   systems  division  provides  to  its
healthcare  facility  customers  integration of voice and data between nurse and
patient  communication  systems and hospital information  systems,  resulting in
increased  flexibility  and  efficiency  in hospital  operations,  and  improved
patient care. EXECUTONE has been a recognized name in this market for many years
with its LIFESAVER'tm' and  CARE/COM'r'II-E  nurse call systems.  The Company is
also creating  software  applications  specific to hospital and nursing homes to
help resolve other labor intensive tasks.

         The    healthcare    communications    division    also   markets   the
INFOSTAR/ILS'tm' locator system, released in early 1994. The INFOSTAR/ILS system
can improve productivity, save time and expense for users and eliminate overhead
paging by instantly  locating staff and equipment in a facility.  Each person or
piece of equipment  wears an  individually  coded badge that transmits  infrared
signals to sensors placed  throughout  the facility,  which forward the location
information to a central  processing  unit. The location data can be accessed on
local display stations.  The ILS'tm' system can be integrated with the Company's
telephone systems and the LIFESAVER'tm'  nurse call system to provide additional
productivity  improvements  for  hospital  environments.  The ILS system is also
marketed by the computer telephony division for office environments.

         The call center management  division  develops and sells  sophisticated
telephony  products  that  integrate a  computerized  digital  telephone  system
platform  with  high-volume  inbound,  outbound  and  internal  call  processing
systems.  Such systems include automatic call distribution  systems,  predictive
dialing  systems,  scripting  software  to assist  agents  handling  calls,  and
interactive voice response  systems.  Certain of these systems also provide data
interface  with host or  mainframe  computers.  These  systems  are sold to call
center   customers   that  have  a  need  for   systems   to   efficiently   and
cost-effectively  receive or place their customer or prospect calls,  distribute
those calls to available live operators, obtain information from callers, record
and distribute  messages from callers,  and produce  management  reports on call
activity.

         The videoconferencing division is the exclusive distributor of products
of GPT Video Systems  ("GPT") in the United  States.  The division also provides
videoconferencing  network  services  such as multipoint  conferencing,  network
bridging and network design to its videoconferencing customers.

         The network services  division offers  cost-effective  voice,  data and
video


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long-distance  service,  least-cost routing,  network design and network support
services,  enabling  customers to make more efficient and  cost-effective use of
their  telecommunications  systems.  Services  are sold  primarily  to telephony
customers in the United States.

         In 1995, the Company acquired Unistar.  Unistar, through its subsidiary
Unistar Entertainment,  Inc., has an exclusive five-year contract with the Coeur
d'Alene  Tribe of Idaho to design,  develop,  finance,  and manage the  National
Indian  Lottery  (the  "NIL"  or the  "Lottery").  The NIL  will  be a  national
telephone  lottery  authorized  by the  federal  Indian  Gaming  Regulatory  Act
("IGRA") and a compact  between the State of Idaho and the Coeur d'Alene  Tribe.
In return for providing these  management  services to the NIL,  Unistar will be
paid a fee equal to 30% of the profits of the NIL. Through Unistar,  the Company
will provide  development  and  management of the network design and call center
applications  for the  Lottery's  operations.  It is  anticipated  that calls to
purchase  lottery  tickets  will be made via 800 number  lines and  processed by
interactive voice response systems,  as well as live agents located on the Coeur
d'Alene  Reservation  using ACD  software to manage a high volume of calls.  The
Lottery will require an extensive  telephone  network to handle the  anticipated
call volume.

         The telephone operations of the NIL cannot begin until resolution of a
pending legal proceeding.  See "Legal Proceedings."

Computer Telephony Products

         The Company  offers a complete line of  applications-oriented  computer
telephony systems,  ranging from those satisfying the basic voice communications
needs of small businesses to those capable of meeting the complex voice and data
communications  demands  of much  larger  business  locations  that  need  fully
featured  telecommunications systems. The Company markets the IDS'tm' Integrated
Digital  System,  along with an  expanding  line of  software  applications  and
features operating on that platform. The Company's largest telephone platform is
the  IDS'tm'/System  648  digital  system,  which  can  accommodate  up  to  648
nonblocking voice ports and 648 nonblocking data ports. The Company believes its
installed telephone equipment base exceeds 3 million desktops.

         In 1996, the Company introduced its TAPI telephone, designed to support
any  desktop   application  using  the  TAPI  standard  for   computer-telephone
integration,  in order to speed  inbound and outbound call handling and increase
productivity.  The  TAPI  telephone  can  eliminate  time  spent  searching  for
telephone  numbers,  looking up PBX feature  codes,  misdialing or searching for
information to handle a call.

         The Company's  telephone systems are characterized by flexible software
and a hardware design that makes them readily  adaptable to evolving  technology
and customer  requirements.  The Company attributes the market acceptance of its
systems to  cost-effective  design  and to the  sophistication  of its  software
options.  The  software  in each system  provides  such  features  as  automatic
dialing, add-on conferencing,  call forwarding,  last number redialing,  message
waiting, paging capability, internal diagnostic routines and other commonly used
communications features. The Company's systems also include an integrated


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automated attendant feature to answer and transfer calls quickly and efficiently
without  operator  intervention,  and a video  display  terminal and  management
reports  that  permit the  monitoring  of calls and improve  the  efficiency  of
directing calls to the appropriate  extensions.  The Company's telephone systems
also  support  sophisticated  applications  such as voice  mail and call  center
products as well as the Company's locator system.

         The Company also offers a voice mail system that can be integrated with
the IDS'tm' telephone systems and with telephone systems manufactured by others.
The voice message or voice mail system receives,  records, stores,  distributes,
transfers and replays  messages from both external and internal  callers and can
supplement other call center systems.

         The Company  develops its  application-specific  software options using
high-level   programming   languages  to  facilitate  further  enhancements  and
portability.  EXECUTONE's  software  includes  remote  capabilities  built  into
certain  systems  that  enable the  Company  to  customize  and update  selected
features  continuously,  which increases the value of such systems and lengthens
their  useful  lives.  Certain of the  Company's  systems  are capable of having
service diagnostics,  updates and modifications performed on a remote basis. The
ability to provide such off-site servicing  increases the efficiency of customer
support and service.


Healthcare Communication Products

         The Company  develops,  manufactures,  markets  and  services a line of
specialized  internal  communications  systems  that are used  primarily  in the
healthcare    industry.    These    internal    communications    systems    are
microprocessor-based  patient-to-nurse  communication systems, intercoms, paging
and sound equipment, and room status indicators.

         The  Company's  LIFESAVER'tm'  nurse call system is an advanced  system
integrating voice and data communication between nurse and patient and providing
enhanced  self-diagnostics.  The  LIFESAVER'tm'  system is a  state-of-the-  art
communications  network that  provides  routine and emergency  signaling,  voice
communications  and data  transmission.  The nurse  console  offers  menu-driven
functions and step-by-step user prompts. The system is highly flexible, offering
many  programmable  features that allow  customization  of its operations to the
hospital's  needs.  A single  system can serve more than 300  patient  beds (150
rooms) and up to eight nurse  control  stations,  and up to eight systems can be
networked for centralized operation.

          The  CARE/COM'r'  II-E nurse call system  represents the first step in
EXECUTONE's  plan to bring the benefits of a totally  integrated  communications
system to the  healthcare  market on the  Company's  IDS digital  platform.  The
CARE/COM'r'  lI-E system  provides  patient-to-staff  and  staff-to-staff  voice
communication on an automatic  three-level call priority basis.  This new system
can  currently  support 72 patient  stations  per  system,  with the  ability to
integrate three systems together and support 216 patient stations.  A three-line
LCD display  Nurse Control  Station  allows  simple call  processing  and system
operation. The


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system is highly  flexible  to meet the  individually  defined  needs of today's
hospitals and long-term care facilities.

         The  LIFESAVER'tm'  nurse call  system  integrates  with the  Company's
locator system.

         The  Healthcare  Division  also  markets the  INFOSTAR'r'  /PRS patient
reporting  system,  an automated  voice storage system that allows the efficient
transfer of patient  information  between nurses.  Patient reports are password-
protected for confidentiality and admission,  discharge and transfer information
are also supported.  The system uses standard telephone instruments and provides
full voice messaging capability. The INFOSTAR'r'/PRS system reduces report time,
provides continuity at shift changes, and improves report quality.

         In 1995,  the  Healthcare  Division  began  marketing the  Communicator
system manufactured by Dialogic Communications Corporation, in which the Company
has an equity investment.  The Communicator  product is a P.C.-based,  automated
callout system that rapidly  locates  personnel to fulfill  routine or emergency
staffing needs,  searching  multiple locations until responses are sufficient to
satisfy the staffing need. The system also provides real-time management reports
of employee  eligibility,  availability,  and responses.  Using the Communicator
system, hospitals can improve staffing efficiency,  avoid miscommunication,  and
enhance productivity.

Locator Systems

         The Company's  INFOSTAR/ILS'tm'  locator system is an integrated system
using  infrared  transmitter  badges to  communicate  location  data to  sensors
installed   throughout   a   facility.   The  badges   transmit   regularly   at
user-programmed  intervals  and can be worn by staff  personnel  or  attached to
equipment.  The location  data is  collected  by the sensors and  forwarded to a
central  processing unit that organizes the data so it can be accessed at one or
more display stations.  The display of staff and equipment location  information
can be in the  form of a list  or in the  form  of a map of the  facility  using
icons. The display can be filtered to show only particular staff members, groups
of personnel,  particular pieces of equipment or groups of equipment. The system
can be integrated with either the IDS telephone systems, allowing the activation
of features and display of  information  on the telephone  set, or the Company's
nurse  call  systems,  allowing  the  activation  of  features  and  display  of
information   at  the  nurse   control   station  and  patient   stations.   The
INFOSTAR/VLS'tm'  version  of this  product  allows  outside  callers  to locate
personnel within a facility, find out who the person is with, complete the call,
or leave a voice  message.  The ILS and VLS  systems can also be  integrated  to
other  manufacturers'  PBXs.  Nortel  has now made ILS  available  to its dealer
network for sale by its dealers in conjunction with Nortel PBXs.


Call Center Management Products

          The Company's call center management products consist of the following
systems,  which can be integrated with the Company's  computer telephone systems
and with each other to provide large-volume inbound, outbound and


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internal call  management.  Computer-telephone  integration  ("CTI")  technology
integrates the IDS'tm' call processing function with information in a customer's
computer   database.   Primarily   used  by  large   incoming  call  centers  to
automatically  identify  incoming callers and by outbound centers to contact and
provide records of contacts,  CTI limits the amount of time that an agent spends
contacting or identifying the caller, thereby providing better customer service,
reducing  the  number  of  required  agents  and  reducing  telephone  line  and
transmission expense.


          Predictive Dialers and Scripting Products - The INFOSTAR'r'/Predictive
Dialer is an automated call system  designed to boost  productivity  in outbound
call centers. The system integrates  telephone,  data collection and transaction
processing  functions  for those  customers  who require high volume  contact by
telephone to transact  business,  such as sales,  credit and collections,  blood
banks and fund-raising. Working with the host computer and the IDS'tm' telephone
system platform,  the dialer  automatically  dials telephone numbers pulled from
the host computer database and detects "live" calls.  Available  representatives
receive  these calls and,  through  CTI, can view screen  information  about the
customer from the database immediately after the customer answers the phone. The
system predicts the  availability  of agents in order to reduce  abandoned calls
and increase agent productivity, and reduces agent contact with busy signals, no
answers,  wrong  numbers and  answering  machines.  Management  reports  provide
instant and historical  feedback on call  distribution,  list  management,  data
input integrity and file maintenance.  Scripting software allows the call center
to create a script to guide its agents through various call scenarios and prompt
the input of desired information.

         Automatic  Call  Distribution  ("ACD") - ACD  systems  are  designed to
increase responsiveness to inbound callers and increase agent productivity.  ACD
systems  provide  the  capability  to  distribute  or  route  incoming  calls to
available  agents  based  upon  management's   specifications,   and  allow  the
supervisor of the call  processing  group to monitor call traffic  on-line via a
computer  terminal.  The Company produces ACD software for call centers of up to
500 agents in  multiple  shifts  (225 in any single  shift),  in five  levels of
sophistication,  the  highest of which is "Custom  Plus  ACD."  Custom  Plus ACD
provides the  capability to store and retrieve  call data for a limited  period,
print out standard  call traffic  reports,  customize  reports to the needs of a
specific  application,  monitor  traffic with color  screens and  graphics,  and
greatly enhance the ability to store and retrieve historical call data.

         Interactive  Voice Response - The Company's  interactive voice response
("IVR")  systems provide  businesses  with automated  handling of routine calls.
Voice response  systems allow callers to input and retrieve  information into or
from  computers  by means of the  dialpads  on their  telephones.  The caller is
guided by voice prompts to input data by dialing  numbers,  which the IVR system
converts  into  computer  keystrokes.  The IVR system can also convert  computer
screen information into voice prompts,  allowing callers to retrieve information
from computers.  The voice response  product provides  advanced  computer access
applications  and advanced  facilities,  such as ISDN,  that  interface with the
Company's   IDS'tm'  family  of  telephone  systems  and  other  advanced  voice
processing applications.


                                          8




<PAGE>
<PAGE>




Videoconferencing Systems and Services

         The Videoconferencing  Division markets videoconferencing  equipment in
the  United  States  and  provides  video  network   services   including  video
networking, network design, multipoint conferencing, and video network bridging.
The Company provides its  videoconferencing  customers with a "turnkey" solution
including  equipment  installation,  network services,  maintenance and customer
support.


Network Services

         The Company markets INFOSTAR'r'/LD+  long-distance telephone service to
its  customers.  INFOSTAR'r'/LD+  provides a complete  service to the  Company's
customers  from the initial  sale  through  billing and  customer  support.  The
Company has  contracted  with major  carriers  including  Sprint,  Worldcom  and
Teleport  Communications to carry the  long-distance  traffic for both voice and
data on their  networks.  The  Company  has also  signed  agreements  to provide
alternative  local  access in select  cities  throughout  the U.S.  This program
offers many features  including  six-second  billing  rates,  accounting  codes,
international  service,  800 service,  "T-1" access and  specialized  management
reporting.

The Company also provides the following network services:

         Network  Designer  -  The  Company  can  perform  a  computer-generated
analysis of a  customer's  calling  patterns in order to  recommend  the optimum
configuration of its network.  Recommendations  would include the  long-distance
carriers and the number of lines needed.

         Least Cost Routing  ("LCR") - LCR stores  current tariff tables for the
appropriate  long-distance  carriers  employed by the customer and automatically
selects the least  expensive  carrier for each  specific  call at the moment the
call is placed.

         Data Switching - Data switching  provides the capability to switch data
between mainframe, minicomputers,  personal computers, terminals and peripherals
through the telephone systems.

         Centrex  Capability and Applications - The Company's  telephone systems
can be  programmed to function in  conjunction  with and enhance the features of
Centrex services offered by the local telephone companies.


Sales and Marketing

         Developing  and  maintaining  a strong  relationship  with the end-user
customer  is the  focus  of the  Company's  marketing  strategy.  The  Company's
distribution  network consists of (1) 70 Company-owned  direct sales and service
locations in the major markets in the United  States;  (2) domestic  independent
distributors with approximately 110 locations operating under exclusive and


                                          9




<PAGE>
<PAGE>



nonexclusive  agreements throughout the United States and Canada; (3) a National
Accounts  Division  that  uses the  sales,  installation,  service  and  support
capabilities of EXECUTONE's  distribution  network to serve multiple offices and
departments  of  companies;  (4)  a  Federal  Systems  Division  that  uses  the
distribution  network to serve offices of the U. S. Government and its agencies;
(5) vertical  marketing  organizations  of the healthcare  communications,  call
center,  network  and  videoconferencing   divisions;  and  (6)  20  independent
distributors operating in sixteen other foreign countries.

         For those  distributors  that have  exclusive  distribution  rights for
specified  products,  retention  of such  rights is subject to  satisfaction  of
established criteria for sales and service to customers on an ongoing basis. The
divesting  of or  acquisition  of  customer  bases  to or from  distributors  in
specific geographic  territories may occur in the normal course of the Company's
business.

         EXECUTONE's  National Accounts Division provides uniformity in pricing,
coordination,  installation,  billing and service for National Accounts Division
customers such as Electronic Data Systems,  Airborne Express,  Paychex, Inc., W.
W.  Grainger,  Home Quarters  Warehouse,  Inc.,  Bridgestone/Firestone,  Carlson
Companies,  Fidelity  Investments  and TCI Cable.  The Division  coordinates the
sales,  installation,  service and support  functions of direct and  independent
sales offices to serve the multiple offices and departments of large companies.

         The  Company's   Federal   Systems   Division   addresses  the  special
procurement and administrative  requirements of the U.S.  Government.  Sales are
made through a  combination  of master  contracts  and  competitively  solicited
proposals for large or complex telecommunications requirements.  Federal Systems
coordinates  the  installation,  service  and support  activities  of direct and
independent  sales offices to provide  ongoing support to federal agency offices
nationwide.

         Backlog consists  primarily of products that have been ordered and that
will be shipped or installed  within 30 to 60 days of the order (other than call
center and  healthcare  orders,  which have a longer lead time),  or systems the
installation  of  which  is not yet  required  by the  customer.  Backlog  as of
December 31,  1995,  was $ 33,091,000  compared to  $29,390,000  at December 31,
1994, and the Company expects  virtually all of such backlog to be filled within
the current fiscal year.


Customer Support and Service

         The Company  operates a National  Service Center that diagnoses  system
problems  for many of the  end-user  customers  of its direct  sales and service
offices,  coordinates field service  personnel and programs certain  corrections
remotely from a centralized location at its corporate headquarters. The National
Service Center helps the Company in providing  consistent  customer  service and
support while  improving the  productivity  of the  Company's  technicians.  All
service calls received from customers are controlled  from initial  diagnosis to
ultimate disposition through an internally-developed  and maintained proprietary
software  package.  The National  Service  Center  maintains  detailed  customer
records and also markets and  monitors  certain  products  and services  such as
maintenance


                                          10




<PAGE>
<PAGE>



contracts.  It is the primary point of contact for customer needs,  questions or
requests.  Additionally,  the National  Service Center provides the Company with
statistical  data and reports  regarding a product's  performance,  which can be
used to make enhancements and improvements. This data is also available for each
of the Company's locations and each of its technicians.

         EXECUTONE  warrants  parts and labor on its systems,  typically for one
year, and provides maintenance and service after warranty expiration either on a
contract  or time  and  materials  basis.  Most of the  Company's  products  are
repaired at its 56,000-square foot repair facility located in Poway, California.

Product Development and Engineering

         As of March 1, 1996, EXECUTONE employed over 100 individuals engaged in
product design and development.  The Company's  product  development  program is
designed to anticipate and respond to customer needs through  development of new
products  and  enhancement  of existing  products.  During 1995,  the  Company's
engineering   efforts  focused  on   applications-oriented   software  products,
including  new  releases  of  voice   messaging,   call  center  and  healthcare
communications  software.  EXECUTONE  continually  strives to reduce  production
costs  by  incorporating  new  technology  into  its  design  and  manufacturing
operations.   For  the  years  ended   December  31,  1995,   1994,   and  1993,
Company-sponsored  product development and engineering  expenditures  (including
product management and testing) amounted to approximately  $14.7 million,  $12.2
million, and $9.9 million, respectively.


Manufacturing

         Most of  EXECUTONE's  telephone  products  are  manufactured  by Wong's
Electronics  Company,  Ltd.  ("Wong's")  in  Hong  Kong  or  China,  by  Quality
Telecommunication Products, also referred to as Compania Dominicana de Telefonos
("Codetel"),  in the Dominican  Republic,  and by the Company directly in Poway,
California.  Many of the printed  circuit boards for the Company's  products are
manufactured,   and  many  products  are  assembled   into  systems  and  system
components, in the United States.

         The Company's  Manufacturing  Services  Agreement with Wong's currently
expires  in  February  1997  but is  automatically  extended  each  year  for an
additional  one-year term unless either party gives notice of termination  three
months prior to expiration  of the current term.  The contract may be terminated
earlier by either party in the event of a material breach by the other party.

         If the agreement  between Wong's and EXECUTONE should be terminated for
any  reason,  or if Wong's is unable to ship or has to reduce  shipments,  or if
restrictions  are  imposed  materially  limiting  the  importation  of  products
produced by foreign manufacturers, the Company could be affected adversely until
satisfactory  alternative sources are in place. The profitability of EXECUTONE's
operations  could be  affected  to the extent it is unable to reflect the direct
and indirect costs of products  purchased  from Wong's in its pricing  policies.
The prices for products purchased by EXECUTONE from its suppliers are payable in
U.S.


                                          11




<PAGE>
<PAGE>



dollars.

         The  majority  of  EXECUTONE's   specialized  healthcare  and  internal
communication  systems  are  produced  in the  United  States  at the  Company's
facility in Poway,  California or at domestic  subcontractors.  The functions of
repair,  warehousing and distribution of the Company's products are performed at
the Company's facilities in Poway.


Trademarks, Patents and Copyrights

         Management   believes  that  the  continued  success  of  EXECUTONE  is
dependent upon the ability to design, develop and market new products and new or
enhanced applications. The patentability of such new products or applications is
evaluated and patent  applications  are filed where  necessary to protect unique
developments.  The Company  currently holds eight utility  patents,  expiring at
various times between 2007 and 2012, has 13 U.S.  patent  applications  pending,
and seven patent applications pending in numerous foreign countries.

         The Company has registered or applied to register its  trademarks  when
it believes registration to be important to its ongoing business operations. The
Company  also  generally  claims  copyright  protection  for  software,  circuit
designs,  schematics  and technical  documentation  used in connection  with its
products,  and relies upon trade secret,  contract and copyright laws to protect
its proprietary rights in its software, designs and documentation.

         Certain of  EXECUTONE's  products  incorporate  technology and software
licensed from  independent  third parties.  Generally,  these  licenses  require
payment  of a royalty  for each  system  sold  that  incorporates  the  licensed
technology or require that the Company purchase the product from the licensor.


Government Regulation

         Many of the  Company's  systems  are  designed to be  connected  to the
public  telecommunications  network  and as such are  required  to  comply  with
certain rules of the Federal  Communications  Commission  ("FCC")  pertaining to
telecommunications  equipment.  The  Company's  network  services are  generally
required to be  tariffed  and are subject to  regulation  by the public  utility
commissions  of  the  various  states  and by  the  FCC.  The  Company  has  not
experienced  any  material  adverse  effect on its business or  operations  as a
result of such regulation and compliance.

         Certain  uses of outbound  call  processing  systems are  regulated  by
federal and state law. Among other things, the FCC has adopted rules pursuant to
the Federal Telephone Consumer Protection Act to protect  residential  telephone
subscribers' privacy rights to avoid receiving telephone  solicitations to which
they  object.  Certain  states have  enacted  similar  laws  limiting  access to
telephone subscribers who object to receiving solicitations. Although compliance
with these laws may limit the potential use of the Company's  predictive  dialer
systems in some respects, the Company's systems can be programmed to operate


                                          12




<PAGE>
<PAGE>



automatically  in full compliance with these laws through the use of appropriate
calling lists and calling campaign time parameters.

         To the extent the Company markets its products  internationally,  it is
required to comply with applicable foreign law,  including  certification of its
products by appropriate government regulatory organizations.


Competition

         The  market  segments  in which the  Company  offers its  products  and
services are highly competitive.  The under 300-desktop voice processing segment
in the United States, the primary market for the Company's  telephony  division,
is served by many domestic and foreign  communications  equipment  manufacturers
and distributors,  including Lucent  Technologies (the former equipment business
of AT&T),  Nortel  (formerly  named  Northern  Telecom),  and the Regional  Bell
Operating  Companies (the  "RBOCs"),  as well as numerous  specialized  software
companies.  The  Company  believes  that it may be  third  in  telephone  system
shipments to the under  300-desktop voice processing  market,  after AT&T/Lucent
and Nortel,  based on industry surveys of 1994 data.  However,  such information
may not be sufficient to make an exact  assessment of the Company's  competitive
position  relative  to its  competitors.  Similarly,  the Company  faces  strong
competition in network services,  including AT&T, MCI, Sprint, and numerous long
distance resellers. Although the Company can be competitive on price compared to
several of these companies,  many of EXECUTONE's  competitors have substantially
more capital, technology and marketing resources than the Company.

         Competition  in the Company's  market  segments is expected to increase
significantly  with passage in February  1996 of the  Telecommunications  Act of
1996 (the "Act"). Under the Act,  long-distance  companies,  cable companies and
others will be  permitted  to compete  with local  telephone  companies to offer
local service.  The RBOCs and other local telephone  companies will be permitted
to offer long-distance  services if their local market meets certain criteria to
measure the existence of local competition.

         The Company  believes its call center division is in a good competitive
position  although to date it has not  penetrated a significant  portion of this
market.  The Company  believes  it is  currently  the only vendor that  supplies
inbound, outbound and administrative call processing integrated with a telephone
system platform.

         The Company's  principal  competitors in healthcare  communications are
Hill-Rom Company, DuKane and Rauland-Borg.  The Company believes it has a strong
competitive position in nurse call and locator products.

         The   Company   believes   that   it   has   several   competitors   in
videoconferencing  but is not yet  able to  estimate  its  competitive  position
relative to such competitors.

         The Company competes by offering a full array of integrated


                                          13




<PAGE>
<PAGE>



telecommunication  products  and  services to its  customers.  The Company  also
competes  on the basis of the quality of its  products,  its  customer  service,
nationwide distribution and installation, and price.


Employees

         As of March 1, 1996,  EXECUTONE employed  approximately  2,400 persons,
directly and through its subsidiaries.  Approximately 5% of the employees of the
Company  and its  subsidiaries  are  represented  by  unions,  all of which  are
represented by the International  Brotherhood of Electrical Workers.  Management
believes that the Company's relations with its employees are good.



                                          14




<PAGE>
<PAGE>


ITEM 2.                    PROPERTIES

         EXECUTONE's  principal  offices are located in two leased  buildings in
Milford,  Connecticut. The Company has sales offices, warehouses,  manufacturing
and  distribution  facilities  throughout the United States.  As of December 31,
1995, the Company  utilized 73 facilities in the United States with an aggregate
of approximately 792,000 square feet for its ongoing operations.

         The Company's facilities are occupied under lease agreements except for
one facility.  This Company-owned  building is approximately 15,000 square feet,
and is used for a direct sales and service  office.  The current annual rent for
the Company's  facilities  is  approximately  $9.2 million.  The Company has one
facility  totaling  approximately  14,000 square feet of space that is no longer
used in ongoing operations and is subleased.

         The Company believes its facilities are adequate and generally suitable
for its business  requirements at the present time and for the immediate future.
The following is a brief description of the primary facilities of the Company.

<TABLE>
<CAPTION>
Use                                 Location                  Approximate Size
<S>                                 <C>                       <C>                
Corporate and Direct Sales          Milford, Connecticut      150,000 square feet
Headquarters; National Customer
Service Center; and Research,
Development and Engineering
Facility

Distribution, Production &          Poway, California         115,000 square feet
 Repair Center and Warehouse

Direct Sales and Service            Major cities across U.S.  496,000 square feet
Offices, including warehouses
</TABLE>


ITEM 3.                    LEGAL PROCEEDINGS

   
         On October 16, 1995, the Coeur d 'Alene Tribe filed an action  entitled
Coeur d'Alene Tribe v. AT&T Corp. in the Tribal Court, located in Plummer, Idaho
(Case No. C195-097),  requesting a ruling that the NIL is legal under IGRA, that
IGRA preempts state laws on the subject of Indian gaming,  and the NIL cannot be
blocked by state  action,  and an  injunction  preventing  AT&T from refusing to
provide  telephone service to the NIL. This action was necessary because several
network  carriers  have  been  sent  Section  1084  letters  under  the  Federal
Communications  Act by states  opposed to the NIL.  These letters state that the
NIL is illegal  under state and federal  laws and  prohibit  the  carriers  from
carrying network traffic for the NIL. The telephone operations of the NIL cannot
begin until  resolution of this proceeding and agreement of a network carrier to
carry the network  traffic of the NIL. On February  28,  1996,  the Tribal Court
ruled that all


                                          15




<PAGE>
<PAGE>



requirements  of IGRA have been  satisfied,  that the Section  1084  letters are
invalid,  and that AT&T is obligated to provide  telephone  service for the NIL.
This ruling and a related order dated  May  1, 1996  are being appealed  to  the
Tribal  Appellate  Court and  probably  will be  appealed  to  the United States
federal  courts as  well.  The  Company has been advised by its outside counsel,
Hunton  &  Williams,  that  based  upon  such  firm's review of  the  applicable
statutes, regulations and case law, it believes that the National Indian Lottery
is authorized  under  IGRA  and  that the favorable rulings issued by the  Coeur
D'Alene Tribal Court on February 28, and May 1, 1996 should be upheld on appeal.
However,  this litigation, as well as other litigation which could be brought by
states  opposed  to the  NIL,  could delay commencement of operations, and it is
impossible at this time to predict  when the NIL will  commence  operations. The
Company  does  not believe the outcome of this  litigation  will have a material
adverse effect on the  Company's  consolidated financial  position,   results of
operations  or liquidity.
    

         The Company  currently is a named defendant in a number of lawsuits and
is a party to a number  of other  proceedings  that have  arisen  in the  normal
course of its business.  Those lawsuits and proceedings  relate primarily to the
collection of indebtedness owed to the Company, the performance of products sold
by the Company,  and various contract  disputes.  In the opinion of the Company,
these  proceedings  are not  expected to have a material  adverse  effect on the
consolidated  financial  position,  results of  operations  or  liquidity of the
Company and, to the extent they are not covered by insurance,  reserves adequate
to satisfy such liabilities have been established.



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

         No matter was  submitted  to a vote of  security  holders in the fourth
quarter of the fiscal year covered by this report.




                                          16




<PAGE>
<PAGE>



                         EXECUTIVE OFFICERS OF THE REGISTRANT


         The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
Name                       Age  Position With Company
<S>                        <C>  <C>                                       
Alan Kessman               49   Chairman of the Board, President and Chief
Executive Officer

Stanley M. Blau            58   Vice Chairman of the Board

Michael W. Yacenda         44   Executive Vice President

Barbara C. Anderson        44   Vice President, General Counsel and Secretary

James E. Cooke III         47   Vice President, National Accounts

Anthony R. Guarascio       42   Vice President, Finance  and Chief Financial Officer

Israel J. Hersh            42   Vice President, Software Engineering

Elizabeth Hinds            54   Vice President, Human Resources

Robert W. Hopwood          52   Vice President, Customer Care

Andrew Kontomerkos         50   Senior Vice President, Hardware Engineering and
                                Production

David E. Lee               49   Vice President, Business Development

John T. O'Kane             66   Vice President, MIS

Frank J. Rotatori          53   Vice President, Healthcare Sales

Shlomo Shur                46   Senior Vice President, Advanced Technology

</TABLE>

         Alan Kessman has served as Chairman and Chief Executive  Officer of the
Company  since  1988.  Prior to that,  he had  served  as  President  and  Chief
Executive Officer of ISOETEC Communications,  Inc., a predecessor of the Company
("ISOETEC"),  since 1983.  From 1978 to 1983, Mr. Kessman served as President of
three  operating  subsidiaries  of Rolm  Corporation,  and from 1981 to 1983, he
served as a Corporate Vice President of Rolm Corporation,  responsible for sales
and service in the eastern United States.

         Stanley M. Blau has served as Vice  Chairman of  EXECUTONE  since 1988.
Prior thereto, from June 1987 to July 1988, Mr. Blau was the President and Chief
Executive Officer of Vodavi Technology Corporation, a predecessor of the Company
("Vodavi").  Mr. Blau was  formerly the  President  and Chairman of the Board of
Consolidated Communications, Inc., a telecommunications products


                                          17




<PAGE>
<PAGE>



supply company he founded in 1973.

         Michael W. Yacenda has served as Executive  Vice President of EXECUTONE
since January 1990. Prior to that time, he was Vice President, Finance and Chief
Financial  Officer of the Company from July 1988 to January 1990. He served as a
Vice President of ISOETEC from 1983 to 1988.  From 1974 to 1983, Mr. Yacenda was
employed by Arthur  Andersen & Co., a public  accounting  firm. Mr. Yacenda is a
certified public accountant.

         Barbara  C.  Anderson  has been Vice  President,  General  Counsel  and
Secretary  since 1990.  From 1985 to 1989,  she was Corporate  Counsel of United
States Surgical Corporation, a manufacturer of medical devices.

         James E.  Cooke III has  served as Vice  President,  National  Accounts
since February 1995.  Prior to that time, from 1992 until 1995, Mr. Cooke served
as Division  Manager of Operations for the Company,  and from 1988 through 1991,
Mr.  Cooke was a District  Manager for the  Company.  From 1985 until 1988,  Mr.
Cooke was the President of an  interconnect  company,  and from 1981 to 1985, he
was a General  Manager  and a Regional  Manager of the Jarvis  Corporation.  For
eight years prior to that time, he worked at Xerox  Corporation in various sales
and management positions.

         Anthony  R.  Guarascio  has been  Vice  President,  Finance  and  Chief
Financial  Officer since January 1994,  and prior thereto was Vice President and
Corporate Controller since January 1990. From 1984 until 1990, Mr. Guarascio was
the Corporate Controller of the Company and ISOETEC.

         Israel J. Hersh has been Vice  President,  Software  Engineering  since
February 1995. Mr. Hersh joined the Company as Director of Software  Development
in 1984, and was promoted to Senior Director of Software  Engineering in January
1994.  Prior to his employment with the Company,  Mr. Hersh was a manager of the
software  development  department  for  T-Bar,  Inc.  Mr.  Hersh  has a B.S.  in
Electrical  Engineering  from  Tel  Aviv  University  and  a  MS  in  Electrical
Engineering from Bridgeport University.

         Elizabeth Hinds has been Vice President,  Human Resources since January
1995.  Prior to  joining  the  Company,  Ms.  Hinds  was Vice  President,  Human
Resources   of  Chilton   Company,   a   wholly-owned   subsidiary   of  Capital
Cities/American  Broadcasting Company, Inc. ("CC/ABC"), from February 1993 until
January 1995. Ms. Hinds was the Director of Human Resources for CC/ABC from June
1987 until February 1993.

         Robert W.  Hopwood has served as Vice  President,  Customer  Care since
January 1990.  From 1983 until 1990,  Mr.  Hopwood was the Director of Technical
Operations of the Company and ISOETEC.

         Andrew Kontomerkos has been Senior Vice President, Hardware Engineering
and  Production  since  January  1994,  and prior  thereto  was Vice  President,
Hardware  Engineering since 1988. He served as a Vice President of ISOETEC since
1983. From 1982 to 1983, he was a Vice President and founder


                                          18




<PAGE>
<PAGE>



of SAM  Communications,  Inc., a  telecommunications  research  and  development
company  which was one of the  predecessors  to ISOETEC;  that  corporation  was
merged into ISOETEC in 1983. From 1979 to 1982, Mr.  Kontomerkos was Director of
Telecommunications   Systems   Development   of   TIE/communications,   Inc.,  a
manufacturer of telecommunications systems.

         David  E. Lee has  been  Vice  President,  Business  Development  since
February 1995.  Prior  thereto,  from October 1990 to February 1995, Mr. Lee was
Division  Manager for the Network  Services  Division of the Company.  From 1984
until 1990, Mr. Lee held various  management  positions within the Company.  Mr.
Lee served as Director,  International  Finance of GTE Corporation  from 1983 to
1984 and prior thereto,  he held various financial  management  positions within
GTE Corporation.

         John T. O'Kane has served as Vice  President,  MIS since  January 1990.
From 1988 until 1990,  Mr. O'Kane was Director of MIS for the Company.  Prior to
that time and since 1981, he was the Vice President of MIS for Executone,  Inc.,
a predecessor of the Company.

         Frank J.  Rotatori  has been Vice  President,  Healthcare  Sales  since
February 1995.  Prior thereto he was Vice President,  European  Operations since
February 1994, and prior thereto was Director of Call Center Management Products
during 1992 and 1993,  Vice  President-Direct  Sales from 1990  through 1991 and
Vice  President-Customer  Service of the Company from 1988 to 1990. Mr. Rotatori
joined  ISOETEC in 1986 as a regional  manager.  From 1982 to 1986, he served as
General Manager and Eastern Regional Manager for Rolm Corporation.  For 13 years
prior to that time,  he worked at Xerox  Corporation  in various  manufacturing,
accounting, sales and service management positions.

         Shlomo Shur has been Senior Vice President,  Advanced  Technology since
January 1994, and prior thereto was Vice President,  Software  Engineering since
1988. He served as a Vice  President of ISOETEC from 1983 to 1988.  From 1982 to
1983,  he was Vice  President  and a  founder  of SAM  Communications,  Inc.,  a
telecommunications  research  and  development  company  which  was  one  of the
predecessors to ISOETEC;  that corporation was merged into ISOETEC in 1983. From
1978 to 1982, Mr. Shur was Manager, Software Development for TIE/communications,
Inc., a manufacturer of telecommunications systems.




                                          19




<PAGE>
<PAGE>



                                        PART II

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


         Incorporated  by  reference to "Stock  Data" in the  Registrant's  1995
Annual Report to Shareholders.


ITEM 6.      SELECTED FINANCIAL DATA

         Incorporated   by  reference  to  "Selected   Financial  Data"  in  the
Registrant's 1995 Annual Report to Shareholders.


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

         Incorporated by reference to  "Management's  Discussion and Analysis of
Financial  Condition and Results of Operations" in the Registrant's  1995 Annual
Report to Shareholders.


ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Financial Statements are incorporated by reference to the Financial
Statements in the Registrant's 1995 Annual Report to Shareholders.  The Schedule
appears at pages S-1 through S-2 of this report.

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

         Not applicable.


                                       PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


Directors

         The following  persons are currently serving as directors and have been
nominated by the Board of Directors as candidates  for  re-election as directors
at the  Annual  Meeting of  Shareholders  to be held on July 30,  1996.  Certain
information  regarding  each  director  is  set  forth  below,   including  each
individual's principal occupation and business experience during


                                 20




<PAGE>
<PAGE>



at least the last five years, other directorships in other public companies, and
the year in which the individual was elected a director of the Company or one of
its predecessor companies.

<TABLE>
<CAPTION>
                                                                    Director
Name                  Age        Principal Occupation                Since
<S>                   <C>   <C>                                         <C> 
Alan Kessman           49   President, Chief Executive  Officer and   1983
                            Chairman of  the Board  of the  Company
                            since 1988;  formerly President,  Chief
                            Executive  Officer and  Chairman of the
                            Board of  ISOETEC Communications,  Inc.
                            ("ISOETEC"),  one   of  the   Company's
                            predecessor  corporations, since  1983.
                            From 1981 to 1983,  Mr. Kessman  served
                            as a  Corporate Vice President of  Rolm
                            Corporation.

Stanley M. Blau        58   Vice  Chairman  of  the  Company  since   1983
                            1988;  formerly  President   and  Chief
                            Executive Officer of  Vodavi Technology
                            Corporation  ("Vodavi"),  one   of  the
                            Company's   predecessor   corporations,
                            from 1987 until July 1988.

Thurston R. Moore      49   Partner, Hunton & Williams (Attorneys),   1990
                            Richmond, Virginia,  since 1981.

Richard S. Rosenbloom  63   David  Sarnoff  Professor  of  Business   1992
                            Administration,    Harvard     Business
                            School,  since 1980.  Mr. Rosenbloom is
                            a  director  of Arrow Electronics, Inc.

Jerry M. Seslowe       50   Managing  Director of Resource  Holdings  1996
                            Ltd.,   an   investment   and  financial 
                            consulting firm, since prior to 1991.

William R. Smart       75   Senior  Vice  President   of  Cambridge   1992
                            Strategic     Management    Group    in
                            Cambridge,  Massachusetts  since  1984.
                            From  1984  to  1992,  Chairman of  the
                            Board,  Electronic   Associates,   Inc.
                            Mr.  Smart is  a director  of  National
                            Data Computer  Company   and   American
                            International Petroleum Company.
</TABLE>

Executive Officers

         See Part 1 for information and  identification of executive officers of
the


                                          21




<PAGE>
<PAGE>



Company.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

     Section  16(a) of the  Securities  Exchange Act of 1934  requires  that the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities,  file with the Securities
and Exchange  Commission  initial  reports of ownership and reports of change in
ownership of Common Stock and other equity securities of the Company.  Officers,
directors and greater than 10%  shareholders  are required by SEC  regulation to
furnish the Company with copies of all Section 16(a) forms that they file.

     To the  Company's  knowledge,  based solely on review of the copies of such
reports  furnished to the  Company,  and written  representations  that no other
reports were  required,  during the fiscal year ended  December  31,  1995,  all
Section 16(a) filing  requirements  applicable  to its  officers,  directors and
greater than 10% beneficial owners were complied with.



ITEM 11.     EXECUTIVE COMPENSATION

Director Compensation

     Each non-employee director receives an annual retainer of $10,000,  payable
in equal  quarterly  installments,  plus a fee of $1,250 for each Board  meeting
attended.   The  Company  also   reimburses   directors  for  their  travel  and
accommodation expenses incurred in attending Board meetings.

         In addition,  each non-employee  director is granted annually an option
to purchase shares of the Company's  Common Stock under the terms and conditions
of the Company's 1990 Directors'  Stock Option Plan approved by the shareholders
on June 20,  1990.  During  June  1995,  each  outside  director  was  granted a
five-year  option for 3,000 shares at a per share exercise  price of $2.50,  the
closing market price on the date of grant. Each  non-employee  director was also
granted an additional five-year option ( for 12,300 shares at $3.15 per share in
the case of Mr. Seslowe, and 13,300 shares at $3.00 per share in the case of the
other non-employee  directors)  pursuant to an amendment to the Plan approved by
the Board of Directors in November 1995, subject to approval by the shareholders
of the Company at the 1996 Annual Meeting. These options were granted at a price
equal to 120% of the  closing  market  price of the Common  Stock on the date of
grant.  The number of shares  granted to each director under the amended Plan is
determined by reference to an annual formula designed to award each


                                 22




<PAGE>
<PAGE>



director  five-year options having a value of $10,000 based on the Black-Scholes
option valuation model and the current price of the Company's Common Stock.

          As of March 31,  1996,  options to  purchase  39,000  shares of Common
Stock were outstanding under the 1990 terms of the Plan, and options to purchase
an  additional  52,200  shares  were  outstanding  under  the  amendment  to the
Directors' Stock Option Plan subject to shareholder approval of the amendment at
the 1996 Annual Meeting of Shareholders.  Under the Plan as amended,  subject to
shareholder  approval,  options to purchase  140,800  shares were  available for
future grant under the Directors' Stock Option Plan.

     On  February  1, 1996,  June 23,  1992 and  September  24,  1992,  Jerry M.
Seslowe,  Richard S. Rosenbloom and William R. Smart were each granted  warrants
to purchase  25,000  shares of the  Company's  Common Stock at $2.63,  $1.25 and
$1.16, respectively, the closing market prices on those dates. The warrants vest
ratably over a three-year  period and expire on February 1, 2001,  June 23, 1997
and September 24, 1997,  respectively.  Messrs.  Seslowe,  Rosenbloom  and Smart
received  these  warrants upon being elected to serve on the Company's  Board of
Directors.


Executive Compensation


Summary Compensation Table

      The  following  table sets forth the  compensation  by the  Company of the
Chief  Executive  Officer and the four most highly  compensated  other executive
officers of the Company for  services in all  capacities  to the Company and its
subsidiaries during the past three fiscal years.

<TABLE>
<CAPTION>
                                       Annual Compensation          Long-Term Compensation
                                                      Other            Awards
                                                     Annual            of              All
Name and                                Bonus ($)    Compensa-         Options/        Other(3)
Principal Position  Year   Salary ($)   (1)          tion($) (2)       SARs(#)         Compensation
                                                                                        ($)
<S>                 <C>    <C>          <C>          <C>               <C>              <C>

Alan Kessman        1995   400,000      -0-          1,100             -0-              10,328

</TABLE>

                                       23




<PAGE>
<PAGE>

<TABLE>
<S>                 <C>    <C>          <C>          <C>               <C>              <C>
Chairman of the
Board,              1994   391,100      100,000      8,506             -0-              6,978
President and
Chief               1993   374,850      150,764      -0-               50,000           263,491
Executive Officer


Michael W.          1995   256,00       -0-          1,100             -0-              6,353
Yacenda
Executive Vice      1994   243,154      39,600       10,000            -0-              55,597
President
                    1993   225,879      58,684       -0-               32,000           160,388



Stanley M. Blau     1995   197,789      -0-          -0-               15,000           3,367
Vice Chairman
                    1994   201,738      7,713        -0-               15,000           3,276

                    1993   193,973      37,083       -0-               20,000           22,645


Shlomo Shur         1995   215,700      -0-          -0-               -0-              5,514
Senior Vice
President           1994   211,539      23,088       10,000            -0-              4,199
Advanced
Technology          1993   203,390      38,885       -0-               25,000           4,750


Andrew              1995   214,000      -0-          -0-               -0-              5,535
Kontomerkos
Senior Vice         1994   205,888      28,025       10,000            -0-              4,899
President
Hardware            1993   193,973      37,083       -0-               20,000           6,060
Engineering and
Production


(1)  Includes  special  bonus  awarded to certain  Company  employees  following
     successful  implementation  of measures to overcome the effect of a fire at
     the facilities of one of the Company's major suppliers in China in December
     1993. Special bonuses totalling $50,000,  $30,000, $15,000 and $20,000 were
     awarded to Messrs. Kessman, Yacenda, Shur and Kontomerkos, respectively.


                                       24




<PAGE>
<PAGE>



(2)  This category represents employee stock option credits that could have been
     used after July 1, 1993 and prior to December  31, 1994 to pay the exercise
     price of employee stock options held by the employee.  Stock purchased with
     the 1992 option  credits  must be held for one year.  All credits  shown in
     this column were used to exercise  stock options in 1993 or 1994.  See Note
     3.

(3)  This  category  includes  for 1994  stock  option  credits  used to pay the
     exercise  price of  employee  stock  options  exercised  during 1994 by Mr.
     Yacenda in the amount of $50,549.  This  category  includes  for 1993 stock
     option  credits used to pay the exercise  price of employee  stock  options
     exercised during 1993 in the following amounts:  Mr. Kessman $256,240;  Mr.
     Yacenda, $155,250, and Mr. Blau, $19,200. The credits were granted in 1988,
     1992 and 1994 (see note 2 above).  The column does not include 1992 or 1994
     credits  used  in  1993  or  1994  that  were  reported  as  "Other  Annual
     Compensation"  for 1992 or  1994.  This  category  also  includes  for each
     individual  a matching  contribution  by the  Company  under the  Company's
     401(k)  plan in the amount of $660 each for each  year.  This  column  also
     includes  premiums  paid by the Company for long-term  disability  and life
     insurance  for the  individuals  in the  following  amounts  in  1995:  Mr.
     Kessman,  $9,668; Mr. Yacenda,  $5,693; Mr. Shur, $4,854; Mr. Blau, $2,707;
     and Mr. Kontomerkos, $4,875; in the following amounts in 1994: Mr. Kessman,
     $7,424;  Mr. Yacenda,  $4,774;  Mr. Shur, $4,196; Mr. Blau, $2,820; and Mr.
     Kontomerkos,  $4,849;  and in the following  amounts in 1993: Mr.  Kessman,
     $6,591; Mr. Yacenda, $4,478; Mr. Blau, $2,785; Mr. Shur, $4,090;


                                 25




<PAGE>
<PAGE>



     Mr. Kontomerkos, $5,400.


Employment Agreement

         The Company  and Mr.  Kessman  entered  into an  employment  continuity
agreement in January,  1995 that provides certain benefits to Mr. Kessman in the
event of the  termination  of Mr.  Kessman's  employment  following  a change in
control in the  Company,  including a lump sum  payment  equal to 2.99 times his
then current base salary plus the average of any bonuses  awarded to Mr. Kessman
during the two fiscal years preceding the  termination of his employment.  Under
the terms of the  agreement,  a change in control  includes the  acquisition  of
beneficial  ownership of 20% of the Company's voting securities by any person or
group. The agreement  continues  through the length of Mr. Kessman's  employment
with the Company.

Option Grants in Last Fiscal Year


The  following  table sets forth the  individual  grants of stock  options  made
during the year ended December 31, 1995 to the Chief  Executive  Officer and the
four most highly compensated


                                 26




<PAGE>
<PAGE>



other  executive  officers  of the  Company.  There  were  no  grants  of  stock
appreciation  rights  made  to  any  officers  during  1995,  and  there  are no
outstanding stock appreciation rights.


</TABLE>
<TABLE>
<CAPTION>

                                                                                                        Potential Realized Value
                                                                                                       at Assumed Annual Rates of
                                                                                                        Stock Price Appreciation
                                           Individual  Grants                                                for Option Term
------------------------------------------------------------------------------------------------     -------------------------------
                                             % of Total
                                               Options         Exercise
                                             Granted to         or Base
                              Options       Employees in         Price         Expiration
          Name              Granted (#)     Fiscal Year         ($/Sh)            Date                   5% ($)          10% ($)
------------------------------------------------------------------------------------------------     -------------------------------
<S>                              <C>              <C>              <C>              <C>                     <C>             <C>
      Alan Kessman               0                0                0                0                       0               0
   Michael W. Yacenda            0                0                0                0                       0               0
     Stanley M. Blau            15,000           2.5             $3.13           3/23/00                 12,950          28,617
       Shlomo Shur               0                0                0                0                       0               0
   Andrew Kontomerkos            0                0                0                0                       0               0
</TABLE>

The option reported in the above table expires in five years,  and vests 25% per
year over four years.


Aggregated  Option Exercises  in  Last Fiscal  Year  and Fiscal
Year-End Option Values

     The  following  table sets forth each exercise of stock options made during
the year ended  December  31, 1995 by the Chief  Executive  Officer and the four
most highly  compensated other executive  officers and the fiscal year-end value
of unexercised  options held by those individuals as of December 31, 1995. There
were no  exercises  or holdings  of stock  appreciation  rights by any  officers
during 1995, and there are no outstanding stock appreciation rights.




                                 27




<PAGE>
<PAGE>





<TABLE>
<CAPTION>
                                                                  
                                                                                       Value of
                                                                   Number of          Unexercised
                                                                  Unexercised         In-the-Money
                                                                    Options             Options  
                                                                   at Fiscal           at Fiscal
                                                                  Year-End (#)      Year-End ($) (1)
                                                                  ---------------   -------------------
               Shares Acquired                                     Exercisable/        Exercisable/
Name           on Exercise (#)    Value Realized ($)               Unexercisable       Unexercisabl
               --------------     ------------------               --------------
<S>                  <C>               <C>                             <C>               <C>
Alan Kessman         137,500          262,500                      65,688/35,000      74,097/18,438

Michael W.           158,273          302,697                      66,000/27,000      60,313/16,688
Yacenda

Stanley M. Blau       0                 -0-                       381,500/15,000      446,719/8,438

Shlomo Shur          286,930          495,854                      62,500/17,500       59,219/9,219

Andrew Kontomerkos   296,425          578,660                      45,250/13,750       42,078/7,109

</TABLE>


(1)  Based upon the last sale price on  December  29, 1995 of $2.31 per share of
     Common Stock.






Compensation Committee Interlocks and Insider Participation

         The members of the Compensation  Committee in 1995 were Thurston Moore,
Richard Rosenbloom, and William Smart.

         No member of the  Committee is a former or current  officer or employee
of the  Company  or any  subsidiary,  except  that  Mr.  Moore  has  acted as an
Assistant  Secretary of the  Company.  Mr. Moore is a partner in the law firm of
Hunton & Williams, which regularly acts as counsel to the Company.


                                 28



<PAGE>
<PAGE>




     No executive officer of the Company served as a director or a member of the
Compensation Committee or of the equivalent body of any entity, any one of whose
executive officers serve on the Compensation Committee or the Board of Directors
of the Company.




ITEM 12.            SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

Ownership of Common Stock by Directors, Officers and
Principal Shareholders

     The  following  table  sets  forth the  number  of  shares of Common  Stock
beneficially  owned  as of March  31,  1996,  by each  current  director  of the
Company,  by all current directors and officers of the Company as a group and by
each  person  known to the  Company to be a  beneficial  owner of more than five
percent of the Company's  outstanding Common Stock.  Unless otherwise noted, the
owner has sole voting and dispositive power with respect to the securities.


<TABLE>
<CAPTION>
                                                               Percentage
                                    Shares of Common Stock          of
    Name of Beneficial Owner           Beneficially Owned     Common Stock (1)
    ------------------------        -----------------------   ----------------
<S>                                         <C>                    <C>
Stanley M. Blau (2)  . . . . . . . . .      753,846                1.4
Entities Associated with Hambrecht &
   Quist Group (3)   . . . . . . . . .    4,822,989                9.3
      One Bush Street
      San Francisco, CA 94104
Alan Kessman (4)   . . . . . . . . . .    1,760,682                3.4
Thurston R. Moore (5)  . . . . . . . .      108,635                *
Entities Associated with
      Edmund H. Shea, Jr. (6). . . . .    3,249,895                6.3
      655 Brea Canyon Road
</TABLE>


                                 29




<PAGE>
<PAGE>

<TABLE>
<CAPTION>
                                                               Percentage
                                    Shares of Common Stock          of
    Name of Beneficial Owner           Beneficially Owned     Common Stock (1)
    ------------------------        -----------------------   ----------------
<S>                                         <C>                    <C>

      Walnut Creek, CA 91789
Richard S. Rosenbloom (7)  . . . . . .       50,300                *
Jerry M. Seslowe (8)   . . . . . . . .       69,444                *
William R. Smart (9)   . . . . . . . .       60,300                *

All Directors and Officers as a Group
   (20 persons) (10)  . . . . . . . . .    6,079,953               14.3

</TABLE>


*    Less than 1%

(1) Based upon  51,865,163  shares of Common Stock  outstanding  as of March 31,
1996.  In cases  where  the  beneficial  ownership  of the  individual  or group
includes options,  warrants, or convertible securities,  the percentage is based
on the 51,865,163  shares actually  outstanding  plus the shares of Common Stock
issuable  upon  exercise  or  conversion  of  any  such  options,  warrants,  or
convertible  securities held by the individual or group. The percentage does not
reflect or assume  the  exercise  or  conversion  of any  options,  warrants  or
convertible securities not owned by the individual or group in question.

(2) Includes  362,750  shares subject to options  exercisable  within 60 days of
June 3, 1996.  Includes 16,250 shares subject to options not exercisable  within
60 days of June 3, 1996.

(3) The  Hambrecht  & Quist  entities  share power to vote and dispose of all of
such shares.

(4) Includes 62,500 shares subject to options exercisable within 60 days of June
3, 1996.  Includes  12,500 shares subject to options not  exercisable  within 60
days of June 3, 1996. Includes 765,503 shares as to which voting and dispositive
power is shared.  Includes  187,500  shares  held in a  revocable  trust for Mr.
Kessman's children, over which Mr. Kessman has no control and as to which shares
he disclaims any  beneficial  ownership.  Includes  9,412 shares of Common Stock
issuable upon conversion of the Company's  Debentures (of which Mr. Kessman owns
$100,000 principal amount or .5% of the principal amount outstanding).

(5) Includes  28,300  shares  subject to options,  all of which are  exercisable
within 60 days of June 3, 1996.

(6)   Includes 11,935 shares of Common Stock issuable upon


                                 30




<PAGE>
<PAGE>



conversion of the Company's  Debentures,  of which entities  affiliated with Mr.
Shea  beneficially  own less  than 1% of the  outstanding  principal  amount  or
$126,812 principal amount. The Shea entities share the power to vote and dispose
of all of such shares.

(7) Mr.  Rosenbloom  beneficially  owns  50,300  shares  subject to options  and
warrants, all of which are exercisable within 60 days of June 3, 1996.

(8) Mr.  Seslowe  beneficially  owns 37,300  shares of Common  Stock  subject to
options and warrants,  none of which are  exercisable  within 60 days of June 3,
1996. Includes 12,755 shares owned by Resource Holdings Associates, in which Mr.
Seslowe has a greater than 10% ownership and of which he is a managing director.
Does not include  203,756  shares of Common  Stock  contingently  issuable  upon
conversion  of the Series A  Preferred  Stock and the Series B  Preferred  Stock
owned by Mr.  Seslowe,  or 45,874 shares of Common Stock  contingently  issuable
upon  conversion of Preferred  Stock owned by Resource  Holdings,  none of which
shares of Preferred Stock are or will become  convertible within 60 days of June
3, 1996.

(9) Mr. Smart  beneficially  owns 50,300 shares subject to options and warrants,
of which 49,550 are exercisable within 60 days of June 3, 1996.

(10) Includes 976,262 shares subject to options or warrants  exercisable  within
60 days of June 3, 1996.  Includes 196,650 shares subject to options or warrants
not  exercisable  within 60 days of June 3, 1996. Also includes 64,000 shares of
Common Stock issuable upon conversion of the Company's  Debentures (of which the
group  beneficially  owns $680,000  principal  amount,  or 3.5% of the principal
amount outstanding).  Includes 924,978 shares as to which voting and dispositive
power  is  shared  and  289,445  shares  as to  which  beneficial  ownership  is
disclaimed.

Ownership of Preferred Stock by Directors, Officers and
Principal Shareholders

      The  following  table  sets  forth the  number  of  shares of  Convertible
Cumulative  Preferred Stock, Series A, and Contingently  Convertible  Cumulative
Preferred  Stock,  Series B,  beneficially  owned as of March 31,  1996,  by all
current  directors and officers of the Company who  beneficially own any of such
shares, and by each person known to the Company to be a beneficial owner of more
than five percent of the Company's  outstanding  Preferred Stock. The table also
shows


                                 31




<PAGE>
<PAGE>



the percentage of each series  beneficially  owned, based upon 250,000 shares of
Series A Stock and 100,000 shares of Series B Stock  outstanding as of March 31,
1996. No other director,  nominee for director or officer owns any shares of the
Company's Preferred Stock. Unless otherwise noted, the owner has sole voting and
dispositive power with respect to the securities.





<TABLE>
<CAPTION>

                                        Shares of Preferred Stock
Beneficially Owned and Percent of Class
                            Series A Stock
                           Series B Stock


 Name of Beneficial Owner

<S>                                   <C>            <C> 
Cooper Life Sciences                78,819         (31.53%)
                                    31,528         (31.53%)
 160 Broadway
 New York, NY 10038


Jerry M. Seslowe                     3,830          (1.53%)
                                     1,532          (1.53%)

James W. Spencer                    26,625         (10.65%)
                                    10,650         (10.65%)
  8446 Bronze Lane 
  Highlands Ranch, CO 80126

Watermark Investments              127,895         (51.16%)
  Limited                           51,157         (51.16%)
  730 Fifth Avenue
  New York, NY 10019


All Directors and Officers           3,830          (1.53%)
  as a Group (20 persons)            1,532          (1.53%)
   
</TABLE>



ITEM 13.            CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS

         Hunton & Williams regularly acts as counsel to the Company.  Mr. Moore,
a director of the Company, is a


                                 32




<PAGE>
<PAGE>



partner at Hunton & Williams.

                    In connection with the Company's acquisition of Unistar, the
Company paid or agreed to pay Resource  Holdings  Ltd, a former  shareholder  of
Unistar,  accrued  investment  banking  fees  incurred  by Unistar  prior to the
acquisition of $105,000,  and total finder's fees of $320,000 based on the value
of the transaction.  Mr. Seslowe was elected a director of the Company after the
acquisition.  Both Resource  Holdings and Mr. Seslowe  acquired Common Stock and
Preferred  Stock of the Company in  exchange  for their  shares of Unistar.  Mr.
Seslowe is a managing  director of and owns more than 10% of Resource  Holdings.
The Company's  management  believes that the transactions with Resource Holdings
were on terms as favorable to the Company as could be expected from unaffiliated
third parties.

                    The Executive Stock  Incentive Plan (the  "Incentive  Plan")
approved by  shareholders  at the 1994 Annual Meeting was implemented in October
1994 with 30  employees  participating.  Under the terms of the  Incentive  Plan
eligible  employees  were granted the right to purchase  shares of the Company's
Common Stock at a price of $3.1875 per share.  Participating  employees financed
the purchases of these shares through loans by the Company's bank lenders at the
prime  rate  less  1/4%.  The  loans  are  fully-recourse  to the  participating
employees  but are  guaranteed  by  letters  of credit  from the  Company to the
lending banks.  The Company holds the purchased Common Stock as security for the
repayment  of  the  loans.  The  following  table  contains   information  about
borrowings  in excess of $60,000 by  executive  officers  that were  outstanding
during 1995 pursuant to the Incentive Plan that are guaranteed by the Company.

<TABLE>
<CAPTION>
                                                               Unpaid
                                                           Indebtedness
                              Highest Amount of                  at
                           Indebtedness Between                3/31/96
 Name                     1/1/95 and 3/31/96 (1)       Including Accrued Interest
-----                     ----------------------       --------------------------
<S>                           <C>                             <C>       
 Alan Kessman                 $1,912,500                      $2,097,195

 Michael W. Yacenda           $1,115,625                      $1,223,364

 Shlomo Shur                   $ 557,813                       $ 611,682

 Andrew Kontomerkos            $ 557,813                       $ 611,682
  
 Barbara C. Anderson           $ 318,750                       $ 349,533
</TABLE>


                                 33




<PAGE>
<PAGE>


<TABLE>

<S>                           <C>                             <C>       
 James E. Cooke III           $  318,750                      $ 349,533

 Anthony R.                   $  446,250                      $ 489,345
 Guarascio

 Israel J. Hersh              $   95,625                      $ 104,860

 Robert W. Hopwood            $  318,750                      $ 348,912

 David E. Lee                 $  318,750                      $ 349,533

 Frank J. Rotatori            $  191,250                      $ 209,720

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


(1) Amounts shown are exclusive of accrued interest.


                               PART IV

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

                    (a)(1), (a)(2) and (d).  The financial
statements required by this item and incorporated herein by
reference are as follows:

                    Report of Independent Public Accountants

                    Consolidated Balance Sheets - December
31, 1995 and 1994

                    Consolidated Statements of Operations -
Years ended December 31, 1995, 1994 and 1993

                    Consolidated Statements of Changes in Stockholders' Equity -
Three years ended December 31, 1995

                    Consolidated  Statements of Cash Flows Years ended  December
31, 1995, 1994 and 1993

                    Notes to Consolidated Financial Statements

                    The schedules to consolidated  financial statements required
                    by this item and included in this report are as follows:



                                 34




<PAGE>
<PAGE>



                    Report of Independent Public Accountants
                    on Schedule

                    Schedule II - Valuation and Qualifying
                    Accounts

                    (a)(3)  and (c).  The  exhibits  required  by this  item and
included in this report or incorporated herein by reference are as follows:



</TABLE>
<TABLE>
<CAPTION>
Exhibit No.
<S>                        <C>                                
2-1                        Agreement and Plan of Merger by and
                           among EXECUTONE Information
                           Systems, Inc., Executone Newco, Inc.,
                           and Unistar Gaming Corp., dated as of
                           December 19, 1995. Incorporated by
                           reference to the Registrant's Current
                           Report on Form 8-K dated January 3,
                           1996.

2-2                        Asset Purchase Agreement among V
                           Technology Acquisition Corporation,
                           EXECUTONE Information Systems,
                           Inc. and Vodavi, Inc. dated November
                           5, 1993, and Amendment dated
                           February 18, 1994.  Incorporated by
                           reference to the Registrant's Annual
                           Report on Form 10-K for the year
                           ended December 31, 1993.

2-3                        Asset Purchase Agreement by and
                           among Tone Holdings, Inc. and Tone
                           Acquisition Corporation, EXECUTONE
                           Network Services, Inc. and
                           EXECUTONE Information Systems,
                           Inc. dated as of April 9, 1996, and
                           Amendment No. 1 to Asset Purchase
                           Agreement dated as of May 31, 1996,
                           by and among Clarity Telecom
                           Holdings, Inc. (formerly known as
                           Tone Holdings, Inc.), Clarity Telecom,
                           Inc. (formerly known as Tone
                           Acquisition Corporation),
                           EXECUTONE Network Services, Inc.
                           and EXECUTONE Information
                           Systems, Inc. (Confidential portions 
                           have been omitted and filed separately 
                           with the Commission pursuant to a request 
                           for confidential treatment.) Previously filed.

</TABLE>


                                 35




<PAGE>
<PAGE>


<TABLE>
<S>                        <C>                                
3-1                        Articles of Incorporation, as amended
                           through December 18, 1995 (restated
                           for electronic filing). Previously filed.

3-2                        Articles of  Amendment  dated and filed 
                           December 19, 1995, amending the Company's
                           Articles of Incorporation. Incorporated 
                           by  reference  to  the  Registrant's 
                           Current Report on Form 8-K dated January
                           3, 1996.

3-3                        Bylaws, as amended.  Incorporated by
                           reference to the Registrant's
                           Registration Statement on Form S-3
                           (File No. 33-62257) filed August 30,
                           1995.

4-1                        Second Amended and Restated Loan
                           and Security Agreement dated as of
                           August 30, 1994 and First Amendment
                           thereto dated January 1, 1995,
                           between EXECUTONE Information
                           Systems, Inc., Continental Bank N.A.
                           and the other Lenders named therein.
                           Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1994.

4-2                        Loan Agreement dated as of August
                           30, 1994, between EXECUTONE
                           Information Systems, Inc., certain
                           employees thereof, and the Lenders
                           named therein.  Incorporated by
                           reference to the Registrant's Annual
                           Report on Form 10-K for the year
                           ended December 31, 1994.

4-3                        First Amendment dated January 1,
                           1995, Second Amendment dated
                           September 29, 1995, and Third
                           Amendment dated December 29,
                           1995, to the Second Amended and
                           Restated Loan and Security
                           Agreement by and among
                           EXECUTONE Information Systems,
                           Inc., the Financial Institutions Listed
                           on the Signature Page Thereof, and
                           Bank of America Illinois. Previously
                           filed.
</TABLE>


                                 36




<PAGE>
<PAGE>



<TABLE>
<S>                        <C>                                
4-10                       Indenture dated March 1, 1986 with
                           United States Trust Company of New
                           York relating to 7 1/2% Convertible
                           Subordinated Debentures of Vodavi
                           Technology Corporation due March
                           15, 2011.   Incorporated by reference
                           to Vodavi Technology Corporation's
                           Registration Statement on Form S-1
                           (as amended) (Registration No. 33-
                           3827) filed on March 9, 1986 and
                           amended April 1, 1986.

4-11                       First Supplemental Indenture dated
                           August 4, 1989 with United States
                           Trust Company of New York relating
                           to 7 1/2% Convertible Subordinated
                           Debentures due March 15, 2011.
                           Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1989.

4-12                       Specimen Certificate representing 7
                           1/2% Convertible Subordinated
                           Debentures.  Incorporated by
                           reference to the Registrant's Annual
                           Report on Form 10-K for the year
                           ended December 31, 1989.

10-1                       1984 Employee Stock Purchase Plan
                           of EXECUTONE Information Systems,
                           Inc.  Incorporated by reference to the
                           Registrant's Registration Statement on
                           Form S-8 (File No. 33-23294) declared
                           effective by the Commission on
                           August 23, 1988.

10-2                       1986 Stock Option Plan of
                           EXECUTONE Information Systems,
                           Inc.   Incorporated by reference to the
                           Registrant's Registration Statement on
                           Form S-8 (File No. 33-23294) declared
                           effective by the Commission on
                           August 23, 1988.

10-3                       1984 Stock Option Plan of
                           EXECUTONE Information Systems,
                           Inc.  Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
</TABLE>


                                 37




<PAGE>
<PAGE>

<TABLE>
<S>                        <C>                                
                           1990, as amended by Form 8 filed on
                           August 20, 1991.

10-4                       401(k) Savings Plan of Vodavi Technology 
                           Corporation dated December 27, 1985. 
                           Incorporated by reference to the  
                           Registrant's  Annual Report on Form 
                           10-K for the year ended December 31, 1989.

10-5                       Stock Option Bonus Credit Plan of
                           EXECUTONE Information Systems,
                           Inc. dated December 31, 1988.
                           Incorporated by reference to the
                           Registrant's Annual Report  on Form
                           10-K for the year ended December 31,
                           1989.

10-6                       1990 Directors' Stock Option Plan.
                           Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1990, as amended by Form 8 filed on
                           August 20, 1991.

10-7                       1994 Executive Stock Incentive Plan.
                           Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1994.

10-9                       Volume Purchase Agreement dated
                           January 31, 1992,  between U. S.
                           Sprint Communications Company
                           Limited Partnership and EXECUTONE
                           Information Systems, Inc.
                           Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1991, as amended by Form 8 filed on
                           June 12, 1992.
   
10-10                      Amendments dated as of April 1,
                           1995, and 1993 to Volume Purchase
                           Agreement dated January 31, 1992,
                           between U. S. Sprint Communications
                           Company Limited Partnership and
                           EXECUTONE Information Systems,
                           Inc. (Confidential portions have 
                           been omitted and filed separately with 
                           the Commission pursuant to a request 
                           for confidential treatment.)
                           Previously filed.

</TABLE>
    


                                 38




<PAGE>
<PAGE>



<TABLE>
<S>                        <C>                                
10-12                      Warrant to Purchase 143,181 shares
                           of Common Stock of the Registrant in
                           favor of Continental Bank N. A. (now
                           Bank of America Illinois) dated
                           December 28, 1990.  Incorporated by
                           reference to the Registrant's Annual
                           Report on Form 10-K for the year
                           ended December 31, 1990, as
                           amended by Form 8 filed on August
                           20, 1991.

10-13                      Warrant to Purchase 50,000 shares of
                           Common Stock of the Registrant in
                           favor of Continental Bank N. A. (now
                           Bank of America Illinois) dated
                           December 28, 1990.  Incorporated by
                           reference to the Registrant's Annual
                           Report on Form 10-K for the year
                           ended December 31, 1990, as
                           amended by Form 8 filed on August
                           20, 1991.

10-16                      Manufacturing Services Agreement
                           dated as of January 10, 1995,
                           between EXECUTONE Information
                           Systems, Inc. and Compania
                           Dominicana de Telefonos, C por A
                           (Codetel). Previously filed.

10-17                      Manufacturing Services Agreement
                           dated February 9, 1990 between
                           Wong's Electronics Co., Ltd. and
                           EXECUTONE Information Systems,
                           Inc.  Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1990, as amended by Form 8 filed on
                           August 20, 1991.

10-19                      Warrant to Purchase 25,000 Shares of
                           Common Stock of EXECUTONE
                           Information Systems, Inc. in favor of
                           Richard S. Rosenbloom dated June
                           23, 1992.  Incorporated by reference
                           to the Registrant's Annual Report on
                           Form 10-K for the year ended
                           December 31, 1992.

10-20                      Warrant to Purchase 25,000 Shares of
                           Common Stock of EXECUTONE
</TABLE>


                                 39




<PAGE>
<PAGE>

<TABLE>
<S>                        <C>                                

                           Information Systems, Inc. in favor of
                           William R. Smart dated September 24,
                           1992.  Incorporated by reference to
                           the Registrant's Annual Report on
                           Form 10-K for the year ended
                           December 31, 1992.

10-21                      Management Agreement for the
                           National Indian Lottery dated January
                           16,1995.  Previously filed.

10-22                      Distributor Agreement dated as of May
                           31, 1996, between EXECUTONE
                           Information Systems, Inc. and Clarity
                           Telecom, Inc. Previously filed.

11                         Statement regarding computation of
                           per share earnings.  Previously filed.
   
13                         1995 Annual Report to Shareholders
                           of EXECUTONE Information Systems,
                           Inc.  Filed herewith.

21                         Subsidiaries of EXECUTONE
                           Information Systems, Inc.  Previously
                           filed.

23.1                       Consent of Arthur Andersen LLP.
                           Filed herewith.

23.2                       Consent of Hunton & Williams. Filed 
                           herewith.
    

27                         Financial Data Schedule.  Previously
                           filed.

</TABLE>


Undertakings


                    For the purposes of complying with the rules  governing Form
S-8  under  the  Securities  Act of  1933,  the  undersigned  registrant  hereby
undertakes as follows, which undertaking shall be incorporated by reference into
registrant's Registration Statements on the following Form S-8 filings:

                    S-8 Reg. No. 2-91008 filed May 9, 1984 on
                    1983 Employee Stock Purchase Plan
                    (650,000 shares)

                    S-8 Reg. No. 33-959 filed October 17, 1985
                    on 1984 Stock Option Plan (390,000 shares)



                                 40




<PAGE>
<PAGE>



                    S-8 Reg. No. 33-6604 filed June 19, 1986 on
                    1983 Stock Option Plan (350,000 shares)

                    S-8 Reg. No. 33-16585 filed August 24,
                    1987 on 1986 and 1983 Stock Option Plans
                    (800,000 shares)

                    S-8 Reg. No. 33-23294 filed August 3, 1988
                    on 1986 Stock Option Plan (7,000,000
                    shares) and Employee Stock Purchase Plan
                    (500,000 shares)

                    S-8 Reg. No. 33-42561 filed September 4,
                    1991 on 1984 Employee Stock Purchase
                    Plan (350,000 shares) and Directors' Stock
                    Option Plan (100,000 shares)

                    S-8 Reg. No. 33-45015 filed January 2, 1992
                    on 1984 Employee Stock Purchase Plan
                    (400,000 shares)

                    S-8 Reg. No. 33-57519 filed January 31,
                    1995 on 1984 Employee Stock Purchase
                    Plan (1,000,000 shares).

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

Reports on Form 8-K

                    The  Registrant  filed no  reports  on Form 8-K  during  the
quarter ended December 31, 1995.


                                 41




<PAGE>
<PAGE>



                             SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned thereunto duly authorized.

                                       EXECUTONE Information
                                         Systems, Inc.

                                        By:  /s/ Alan Kessman
                                          --------------------------
                                           Alan Kessman, Chairman, President
                                              and Chief Executive Officer
   
February 18, 1997
Milford, Connecticut
    


Pursuant to the  requirements  of the Securities and 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.

   
February 18, 1997                          /s/ Alan Kessman
                                        -----------------------------
                                        Alan Kessman
                                        Chairman, President and
                                        Chief Executive Officer
                                        (Principal Executive Officer)

February 18, 1997                          /s/ Stanley M. Blau
                                        ----------------------------
                                        Stanley M. Blau
                                        Vice Chairman of the Board of
                                        Directors


February 18, 1997                          /s/ Anthony R. Guarascio
                                        -----------------------------
                                        Anthony R. Guarascio
                                        Vice President-Finance
                                        and Chief Financial Officer
                                        (Principal Financial and
                                        Accounting Officer)

February 18, 1997                          /s/ Thurston R. Moore
                                        -------------------------------
    

                                 42




<PAGE>
<PAGE>



                                        Thurston R. Moore
                                        Director
   
February 18, 1997                         /s/ Richard S. Rosenbloom
                                        --------------------------
                                        Richard S. Rosenbloom
                                        Director

February 18, 1997                          /s/ Jerry M. Seslowe
                                        ---------------------------
                                        Jerry M. Seslowe
                                        Director

February 18, 1997                          /s/ William R. Smart
                                        ----------------------------
                                        William R. Smart
                                        Director
    


                                 43




<PAGE>
<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Stockholders of
EXECUTONE Information Systems, Inc.:



We have audited in accordance with generally  accepted auditing  standards,  the
financial  statements  included  in  EXECUTONE  Information  Systems,  Inc.  and
subsidiaries'  annual report to  stockholders  incorporated by reference in this
Form 10-K,  and have issued our report thereon dated January 26, 1996. Our audit
was made for the  purpose of forming an opinion on those  statements  taken as a
whole.  The schedule  listed in Item 14 is the  responsibility  of the Company's
management  and is presented for purposes of complying  with the  Securities and
Exchange  Commission's rules and are not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the audit
of the basic  financial  statements  and, in our opinion,  fairly  states in all
material  respects  the  financial  data  required  to be set forth  therein  in
relation to the basic financial statements taken as a whole.



ARTHUR ANDERSEN LLP



Stamford, Connecticut
January 26, 1996


                                 44





<PAGE>
<PAGE>

                                                                     SCHEDULE II

                                     VALUATION AND QUALIFYING ACCOUNTS
                                           (Amounts in Thousands)


<TABLE>
<CAPTION>
                                                           Additions                             Deductions
                                          ---------------------------------------------        --------------
                                                            Charged                                 Net
                                          Balance at       (Credited)       (Credited)          Writeoffs of           Balance at
                                           Beginning      to Costs and       to  Other          Uncollectible            End of
           Description                     of Period        Expenses         Accounts             Accounts               Period 
           -----------                     ---------     --------------     ----------         -------------          -----------
<S>                                        <C>             <C>               <C>               <C>                    <C>
Year ended December 31, 1995
    Deducted from asset accounts:
        Allowance for doubtful accounts     $ 1,335           $ 1,872            --               ($1,492)               $ 1,715
        Allowance for uncollectible
            notes receivable                    691              (432)           --                  --                      259

Year ended December 31, 1994
    Deducted from asset accounts:
        Allowance for doubtful accounts       1,017             1,381            --                (1,063)                 1,335
        Allowance for uncollectible
            notes receivable                  1,084              (393)           --                   --                     691

Year ended December 31, 1993 *
    Deducted from asset accounts:
        Allowance for doubtful accounts       1,046             1,285            --                (1,314)                 1,017
        Allowance for uncollectible
            notes receivable                  1,604              (440)           (80)                 --                   1,084

</TABLE>




 *  Restated to reflect the disposition of the VCS Division, which was  sold  as
of March 1994.



                                      S-2




<PAGE>
<PAGE>



                 EXECUTONE INFORMATION SYSTEMS, INC.
             EXHIBITS TO 1995 ANNUAL REPORT ON FORM 10-K


<TABLE>
<CAPTION>
Exhibit No.
<S>                        <C>                                
2-1                        Agreement and Plan of Merger by and
                           among EXECUTONE Information
                           Systems, Inc., Executone Newco, Inc.,
                           and Unistar Gaming Corp., dated as of
                           December 19, 1995. Incorporated by
                           reference to the Registrant's Current
                           Report on Form 8-K dated January 3,
                           1996.

2-2                        Asset Purchase Agreement among V
                           Technology Acquisition Corporation,
                           EXECUTONE Information Systems,
                           Inc. and Vodavi, Inc. dated November
                           5, 1993, and Amendment dated
                           February 18, 1994.  Incorporated by
                           reference to the Registrant's Annual
                           Report on Form 10-K for the year
                           ended December 31, 1993.

2-3                        Asset Purchase Agreement by and
                           among Tone Holdings, Inc. and Tone
                           Acquisition Corporation, EXECUTONE
                           Network Services, Inc. and
                           EXECUTONE Information Systems,
                           Inc. dated as of April 9, 1996, and
                           Amendment No. 1 to Asset Purchase
                           Agreement dated as of May 31, 1996,
                           by and among Clarity Telecom
                           Holdings, Inc. (formerly known as
                           Tone Holdings, Inc.), Clarity Telecom,
                           Inc. (formerly known as Tone
                           Acquisition Corporation),
                           EXECUTONE Network Services, Inc.
                           and EXECUTONE Information
                           Systems, Inc. (Confidential portions 
                           have been omitted and filed separately 
                           with the Commission pursuant to a request 
                           for confidential treatment.) Previously filed.

3-1                        Articles of Incorporation, as amended
                           through December 18, 1995 (restated
                           for electronic filing). Preiously filed.

3-2                        Articles of  Amendment  dated and filed
                           December 19, 1995, amending the Company's
                           Articles of Incorporation. Incorporated 
                           by  reference  to  the  Registrant's 
                           Current Report on Form 8-K dated January
                           3, 1996.

</TABLE>


                                 45




<PAGE>
<PAGE>


<TABLE>
<S>                        <C>                                

3-3                        Bylaws, as amended.  Incorporated by
                           reference to the Registrant's
                           Registration Statement on Form S-3
                           (File No. 33-62257) filed August 30,
                           1995.

4-1                        Second Amended and Restated Loan
                           and Security Agreement dated as of
                           August 30, 1994 and First Amendment
                           thereto dated January 1, 1995,
                           between EXECUTONE Information
                           Systems, Inc., Continental Bank N.A.
                           and the other Lenders named therein.
                           Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1994.

4-2                        Loan Agreement dated as of August
                           30, 1994, between EXECUTONE
                           Information Systems, Inc., certain
                           employees thereof, and the Lenders
                           named therein.  Incorporated by
                           reference to the Registrant's Annual
                           Report on Form 10-K for the year
                           ended December 31, 1994.

4-3                        First Amendment dated January 1,
                           1995, Second Amendment dated
                           September 29, 1995, and Third
                           Amendment dated December 29,
                           1995, to the Second Amended and
                           Restated Loan and Security
                           Agreement by and among
                           EXECUTONE Information Systems,
                           Inc., the Financial Institutions Listed
                           on the Signature Page Thereof, and
                           Bank of America Illinois. Previously
                           filed.

4-10                       Indenture dated March 1, 1986 with
                           United States Trust Company of New
                           York relating to 7 1/2% Convertible
                           Subordinated Debentures of Vodavi
                           Technology Corporation due March
                           15, 2011.   Incorporated by reference
                           to Vodavi Technology Corporation's
                           Registration Statement on Form S-1
                           (as amended) (Registration No. 33-
                           3827) filed on March 9, 1986 and
                           amended April 1, 1986.
</TABLE>


                                 46




<PAGE>
<PAGE>


<TABLE>
<S>                        <C>                                

4-11                       First Supplemental Indenture dated
                           August 4, 1989 with United States
                           Trust Company of New York relating
                           to 7 1/2% Convertible Subordinated
                           Debentures due March 15, 2011.
                           Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1989.

4-12                       Specimen Certificate representing 
                           7 1/2% Convertible Subordinated
                           Debentures.  Incorporated by
                           reference to the Registrant's Annual
                           Report on Form 10-K for the year
                           ended December 31, 1989.

10-1                       1984 Employee Stock Purchase Plan
                           of EXECUTONE Information Systems,
                           Inc.  Incorporated by reference to the
                           Registrant's Registration Statement on
                           Form S-8 (File No. 33-23294) declared
                           effective by the Commission on
                           August 23, 1988.

10-2                       1986 Stock Option Plan of
                           EXECUTONE Information Systems,
                           Inc.   Incorporated by reference to the
                           Registrant's Registration Statement on
                           Form S-8 (File No. 33-23294) declared
                           effective by the Commission on
                           August 23, 1988.

10-3                       1984 Stock Option Plan of
                           EXECUTONE Information Systems,
                           Inc.  Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1990, as amended by Form 8 filed on
                           August 20, 1991.

10-4                       401(k) Savings Plan of Vodavi Technology
                           Corporation  dated December 27, 1985.
                           Incorporated by reference to the  
                           Registrant's  Annual Report on Form 10-K 
                           for the  year ended December 31, 1989.

10-5                       Stock Option Bonus Credit Plan of
                           EXECUTONE Information Systems,
                           Inc. dated December 31, 1988.
</TABLE>


                                 47




<PAGE>
<PAGE>


<TABLE>
<S>                        <C>                                
                           Incorporated by reference to the
                           Registrant's Annual Report  on Form
                           10-K for the year ended December 31,
                           1989.

10-6                       1990 Directors' Stock Option Plan.
                           Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1990, as amended by Form 8 filed on
                           August 20, 1991.

10-7                       1994 Executive Stock Incentive Plan.
                           Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1994.

10-9                       Volume Purchase Agreement dated
                           January 31, 1992,  between U. S.
                           Sprint Communications Company
                           Limited Partnership and EXECUTONE
                           Information Systems, Inc.
                           Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1991, as amended by Form 8 filed on
                           June 12, 1992.
   
10-10                      Amendments dated as of April 1,
                           1995, and 1993 to Volume Purchase
                           Agreement dated January 31, 1992,
                           between U. S. Sprint Communications
                           Company Limited Partnership and
                           EXECUTONE Information Systems,
                           Inc. (Confidential portions have been 
                           omitted and filed separately with the
                           Commission pursuant to a request for
                           confidential treatment.) Previously filed.
    

10-12                      Warrant to Purchase 143,181 shares
                           of Common Stock of the Registrant in
                           favor of Continental Bank N. A. (now
                           Bank of America Illinois) dated
                           December 28, 1990.  Incorporated by
                           reference to the Registrant's Annual
                           Report on Form 10-K for the year
                           ended December 31, 1990, as
                           amended by Form 8 filed on August
                           20, 1991.

10-13                      Warrant to Purchase 50,000 shares of
                           Common Stock of the Registrant in
                           favor of Continental Bank N. A. (now
</TABLE>


                                 48




<PAGE>
<PAGE>


<TABLE>
<S>                        <C>                                

                           Bank of America  Illinois)  dated
                           December 28, 1990.  Incorporated by
                           reference to the Registrant's  Annual
                           Report on Form 10-K for the year ended
                           December 31, 1990, as amended by Form 8
                           filed on August 20, 1991.

10-16                      Manufacturing Services Agreement
                           dated as of January 10, 1995,
                           between EXECUTONE Information
                           Systems, Inc. and Compania
                           Dominicana de Telefonos, C por A
                           (Codetel). Previously filed.

10-17                      Manufacturing Services Agreement
                           dated February 9, 1990 between
                           Wong's Electronics Co., Ltd. and
                           EXECUTONE Information Systems,
                           Inc.  Incorporated by reference to the
                           Registrant's Annual Report on Form
                           10-K for the year ended December 31,
                           1990, as amended by Form 8 filed on
                           August 20, 1991.

10-19                      Warrant to Purchase 25,000 Shares of
                           Common Stock of EXECUTONE
                           Information Systems, Inc. in favor of
                           Richard S. Rosenbloom dated June
                           23, 1992.  Incorporated by reference
                           to the Registrant's Annual Report on
                           Form 10-K for the year ended
                           December 31, 1992.

10-20                      Warrant to Purchase 25,000 Shares of
                           Common Stock of EXECUTONE
                           Information Systems, Inc. in favor of
                           William R. Smart dated September 24,
                           1992.  Incorporated by reference to
                           the Registrant's Annual Report on
                           Form 10-K for the year ended
                           December 31, 1992.

10-21                      Management Agreement for the
                           National Indian Lottery dated January
                           16, 1995.  Previously filed.

10-22                      Distributor Agreement dated as of May
                           31, 1996, between EXECUTONE
                           Information Systems, Inc. and Clarity
                           Telecom, Inc. Previously filed.
</TABLE>


                                 49




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<TABLE>
<S>                        <C>                                

11                         Statement regarding computation of
                           per share earnings.  Previously filed.
   

13                         1995 Annual Report to Shareholders
                           of EXECUTONE Information Systems,
                           Inc.  Filed herewith.

21                         Subsidiaries of EXECUTONE
                           Information Systems, Inc.  Previously
                           filed.

23.1                       Consent of Arthur Andersen LLP.
                           Filed herewith.

23.2                       Consent of Hunton & Williams. Filed
                           herewith.
    
27                         Financial Data Schedule.  Previously
                           filed.

</TABLE>



                                 50



                  STATEMENT OF DIFFERENCES

The registered trademark symbol shall be expressed as .....'r'
The trademark symbol shall be expressed as ............... 'tm'

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