<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC. 20549
                                   FORM 10-QSB


(Mark One)

     [X]  Quarterly Report under section 13 or 15(d) of the Securities Exchange
          Act of 1934 for the quarterly period ended March 31, 2000 or

     [ ]  Transition Report under section 13 or 15(d) of the Securities
          Exchange Act for the transition period from ________ to ________.


                         Commission file number: 0-24738


                        LORONIX INFORMATION SYSTEMS, INC.
        (Exact name of small business issuer as specified in its charter)



            NEVADA                                         33-0248747
(State or other jurisdiction of                           (IRS Employer
 incorporation or organization)                         Identification No.)


                    820 AIRPORT ROAD, DURANGO, COLORADO 81301
                    (Address of principal executive offices)

                    ISSUER'S TELEPHONE NUMBER: (970) 259-6161


     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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
         ---   ---

     As of April 20, 2000, there were 5,153,175 shares of the issuer's common
stock outstanding.

<PAGE>

                LORONIX INFORMATION SYSTEMS, INC. AND SUBSIDIARY

                                      INDEX

<TABLE>
<CAPTION>
PART I.   FINANCIAL INFORMATION                                         PAGE NO.
<S>                                                                     <C>
          Item 1.  Financial Statements

                   Unaudited Consolidated Balance Sheet                     1
                     as of March 31, 2000

                   Unaudited Consolidated Statements                        2
                     of Operations for the three months ended
                     March 31, 2000 and 1999

                   Unaudited Consolidated Statements of                     3
                     Cash Flows for the three months ended
                     March 31, 2000 and 1999

                   Notes to Unaudited Consolidated Financial                4
                     Statements

          Item 2.  Management's Discussion and Analysis of                  7
                   Financial Condition and Results of Operations


PART II.  OTHER INFORMATION

          Item 6.  Exhibits and Reports on Form 8-K                        13


SIGNATURES.                                                                14

</TABLE>

<PAGE>

                         PART I - FINANCIAL INFORMATION

                LORONIX INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET

                                 March 31, 2000

<TABLE>
<CAPTION>

                                     ASSETS
                                                                                    (unaudited)
                                                                                    ------------
<S>                                                                                 <C>
Current assets:
     Cash and cash equivalents                                                      $  5,179,562
     Accounts receivable:
        Trade, net of allowance for doubtful accounts of $707,946                      5,394,605
        Officers and employees                                                           101,547
     Inventory, net                                                                    4,409,567
     Prepaid expenses and other assets                                                   564,245
     Notes receivable, related parties                                                    97,840
                                                                                    ------------
            Total current assets                                                      15,747,366

     Property and equipment, net                                                       4,516,750
     Capitalized software costs, net of accumulated amortization of $1,880,454           892,981
     Accounts receivable - officers and employees                                          4,675
     Deposits and other assets                                                            21,532
                                                                                    ------------
             Total assets                                                           $ 21,183,304
                                                                                    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current installments of long-term debt                                         $     80,733
     Accounts payable                                                                  2,875,313
     Litigation settlement payable                                                       300,000
     Customer deposits                                                                 1,243,249
     Accrued liabilities                                                                 624,011
     Accrued warranty                                                                    487,562
     Accrued bonuses and commissions                                                     533,034
                                                                                    ------------
          Total current liabilities                                                    6,143,902

     Long-term debt, excluding current installments                                    1,522,420
     Long-term accrued liabilities                                                        51,243
                                                                                    ------------
           Total liabilities                                                           7,717,565
                                                                                    ------------

Stockholders' equity:
   Preferred stock, $.001 par value.  Authorized 2,000,000
     shares; no shares issued and outstanding                                               --
   Common stock, $.001 par value.  Authorized 20,000,000
     shares; issued and outstanding 5,151,400 shares                                       5,152
   Additional paid-in capital                                                         16,883,097
   Notes receivable from stockholders                                                    (97,875)
   Accumulated deficit                                                                (3,324,635)
                                                                                    ------------
          Total stockholders' equity                                                  13,465,739
                                                                                    ------------
          Total liabilities and stockholders' equity                                $ 21,183,304
                                                                                    ============


</TABLE>

           See accompanying notes to consolidated financial statements

                                       1
<PAGE>

                LORONIX INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                   Three Months Ended March 31, 2000 and 1999


<TABLE>
<CAPTION>
                                                      2000               1999
                                                   -----------       -----------
                                                   (unaudited)       (unaudited)
                                                   -----------       -----------
<S>                                                <C>               <C>
Systems and supplies revenue                       $ 7,186,697       $ 7,390,036
                                                   -----------       -----------
Costs and expenses:
  Cost of systems, supplies and maintenance          3,766,754         4,003,867
  Operations                                           329,582           227,667
  Marketing, sales and customer support              2,179,003         1,314,046
  General and administrative                           720,581           875,275
  Research and development                             417,521           382,908
                                                   -----------       -----------
       Total cost and expenses                       7,413,441         6,803,763

        (Loss) income from operations                 (226,744)          586,273

Other income (expense):
  Interest income                                       57,439            31,396
  Interest expense                                     (32,952)          (29,847)
  Other income (expense)                                 9,797              (667)
                                                   -----------       -----------
                                                        34,284               882

         (Loss) income before income taxes            (192,460)          587,155

Income tax expense                                      (6,442)          (32,000)
                                                   -----------       -----------
          Net (loss) income                        $  (198,902)      $   555,155
                                                   ===========       ===========

Basic net (loss) income per share                  $     (0.04)      $      0.12
                                                   ===========       ===========

Weighted-average shares outstanding - basic          5,116,968         4,734,279
                                                   ===========       ===========

Diluted net (loss) income per share                $     (0.04)      $      0.11
                                                   ===========       ===========

Weighted-average shares outstanding - diluted        5,116,968         5,008,413
                                                   ===========       ===========

</TABLE>

           See accompanying notes to consolidated financial statements

                                       2
<PAGE>

                LORONIX INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   Three Months ended March 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                           2000              1999
                                                                        -----------       -----------
                                                                        (unaudited)       (unaudited)
                                                                        -----------       -----------
<S>                                                                     <C>               <C>
Cash flows from operating activities:
   Net (loss) income                                                    $  (198,902)      $   555,155
   Adjustments to reconcile net (loss) income to net
     cash provided by operating activities:
       Depreciation and amortization                                        414,445           336,635
       Loss (gain) on disposal of capital equipment and software              8,788            (4,570)
       Loss on foreign currency exchange                                      2,081               833
       Changes in operating assets and liabilities:
          Decrease (increase) in accounts receivable, net                 1,350,484        (1,862,862)
          Increase in inventory, net                                       (461,958)         (121,855)
          (Increase) decrease in prepaid expenses and other assets         (258,228)            8,948
          Decrease in deposits and other assets                                 764            12,043
          Increase in accounts payable and litigation
            settlement payable                                              253,117         1,541,092

          Increase in customer deposits                                     637,387           373,819
          (Decrease) increase in accrued liabilities, warranty,
             bonuses and commissions                                       (447,219)          320,751
                                                                        -----------       -----------
                Net cash provided by operating activities                 1,300,759         1,159,989
                                                                        -----------       -----------

Cash flows from investing activities:
   Capital expenditures                                                    (480,016)         (123,064)

   Proceeds from disposal of capital equipment                                2,758             9,454

   Decrease in notes receivable, related parties                              9,614             9,613
   Capitalized software costs                                              (109,309)         (101,640)
                                                                        -----------       -----------
                Net cash used in investing activities                      (576,953)         (205,637)
                                                                        -----------       -----------

Cash flows from financing activities:
    Proceeds on bank borrowings                                             316,143              --
    Principal payments on notes payable                                     (21,221)          (24,020)
    Payments on capital lease                                                  --              (2,695)
    Proceeds from exercise of stock options                                 263,405           519,679
                                                                        -----------       -----------
                Net cash provided by financing activities:                  558,327           492,964
                                                                        -----------       -----------

Net increase in cash                                                      1,282,133         1,447,316
Cash and cash equivalents, beginning of year                              3,897,429         1,625,259
                                                                        -----------       -----------
Cash and cash equivalents, end of March                                 $ 5,179,562       $ 3,072,575
                                                                        ===========       ===========

Supplemental cash flow information:
   Interest paid                                                        $    32,952       $    29,847
                                                                        ===========       ===========
   Income taxes paid                                                    $     6,442       $    32,000
                                                                        ===========       ===========

Noncash investing activities:
  In 2000 the Company  transferred  inventory
    valued at $127,893 to property and equipment
  In 1999 the Company transferred inventory valued
    at $41,932 to property and equipment

</TABLE>

           See accompanying notes to consolidated financial statements

                                       3
<PAGE>

                        LORONIX INFORMATION SYTEMS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (March 31, 2000 - unaudited)

NOTE 1: BASIS OF PRESENTATION

     The accompanying consolidated financial statements have been prepared in
accordance with Securities and Exchange Commission requirements for interim
financial statements. Therefore, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The financial statements should be read in conjunction
with the Form 10-KSB for the year ended December 31, 1999 of Loronix Information
Systems, Inc. (the "Company").

     The results of operations for the interim periods shown in this report are
not necessarily indicative of results to be expected for the full year. In the
opinion of management, the information contained herein reflects all adjustments
necessary to make the results of operations for the interim periods a fair
statement of such operations. All such adjustments are of a normal recurring
nature.

NOTE 2: EARNINGS PER SHARE

     The Company presents net income and net loss per share in accordance with
SFAS No. 128, "Earnings per Share." As required by SFAS No. 128, the Company
must present basic and diluted net income and net loss per share as defined.
Basic net income and net loss per common share is computed using the weighted
average number of common shares outstanding during the period. Diluted net
income per common share is computed to incorporate the incremental dilutive
shares issuable upon the assumed exercise of stock options. All prior period net
income and net loss per common share information are presented in accordance
with SFAS No. 128.

     Stock options to purchase a total of 930,763 common shares outstanding at
March 31, 2000 were not included in computing the diluted net loss per share
because the effect would have been antidilutive. Stock options and warrants to
purchase a total of 1,417,974 common shares were outstanding at March 31, 1999.
For the three months ended March 31, 1999, 274,134 shares, representing the
dilutive effect of stock options, were included in computing the diluted net
income per share. Warrants totaling 240,000 shares were not included in
computing the diluted net income per share at March 31, 1999 because the effect
would have been antidilutive.


                                       4
<PAGE>

NOTE 3: SEGMENT INFORMATION

     The Company has identified two primary segments: digital video recording
products ("CCTVware-Registered Trademark- Products") and digital
identification products ("ID Products") in accordance with SFAS No. 131.
Segments were determined based upon internal management reporting and
organization structure and the availability of financial results.

<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                                   March 31
            Products                              CCTVware            ID             Total
            --------                             ----------       ----------       ----------
<S>                                               <C>              <C>              <C>
2000:
   Systems and supplies revenue                   $6,541,384       $  645,313       $7,186,697
   Cost of systems, supplies and maintenance       3,527,189          239,565        3,766,754
                                                  ----------       ----------       ----------

          Segment gross margin                    $3,014,195       $  405,748       $3,419,943
                                                  ==========       ==========       ==========

   Segment gross margin %                              46.08%           62.88%           47.59%
                                                  ==========       ==========       ==========

   Additions to capitalized software              $   95,935       $   13,374       $  109,309
                                                  ==========       ==========       ==========

   Software amortization                          $  109,547       $   23,195       $  132,742
                                                  ==========       ==========       ==========

   Capitalized software                           $1,754,073       $1,019,362       $2,773,435
   Accumulated amortization                          953,842          926,612        1,880,454
                                                  ----------       ----------       ----------

          Net book value of capitalized
          software costs                          $  800,231       $   92,750       $  892,981
                                                  ==========       ==========       ==========

1999:
   Systems and supplies revenue                   $6,800,515       $  589,521       $7,390,036
   Cost of systems, supplies and maintenance       3,701,174          302,693        4,003,867
                                                  ----------       ----------       ----------

          Segment gross margin                    $3,099,341       $  286,828       $3,386,169
                                                  ==========       ==========       ==========

   Segment gross margin %                              45.58%           48.65%           45.82%
                                                  ==========       ==========       ==========

   Additions to capitalized software              $   92,862       $    8,778       $  101,640
                                                  ==========       ==========       ==========

   Software amortization                          $   98,693       $   23,186       $  121,879
                                                  ==========       ==========       ==========

   Capitalized software                           $1,364,995       $  969,807       $2,334,802
   Accumulated amortization                          567,185          832,907        1,400,092
                                                  ----------       ----------       ----------

          Net book value of capitalized
          software costs                          $  797,810       $  136,900       $  934,710
                                                  ==========       ==========       ==========

</TABLE>

     For the three months ended March 31, 2000, revenue from one customer of the
Company's CCTVware segment represented 33% of the Company's consolidated
revenue. For the three months ended March 31, 1999, revenue from three customers
of the Company's CCTVware segment represented 71% of the Company's consolidated
revenue.

                                   (continued)

                                       5
<PAGE>

     The Company's areas of operations are principally in the United States and
the United Kingdom as follows:

<TABLE>
<CAPTION>
                                                                  Three Months Ended
                                                                       March 31
                                                                        United
                                                 United States         Kingdom            Total
                                                 -------------       -----------       -----------
<S>                                              <C>                <C>               <C>
2000:
   Systems and supplies revenue                   $ 5,957,980       $ 1,228,717       $ 7,186,697
   Cost of systems, supplies and maintenance        3,190,152           576,602         3,766,754
                                                  -----------       -----------       -----------

          Gross margin                            $ 2,767,828       $   652,115       $ 3,419,943
                                                  ===========       ===========       ===========

   Gross margin %                                       46.46%            53.07%            47.59%
                                                  ===========       ===========       ===========

   Depreciation and amortization                  $   401,807       $    12,638       $   414,445
                                                  ===========       ===========       ===========

   Capital expenditures                           $   441,917       $    38,099       $   480,016
                                                  ===========       ===========       ===========

   Total assets                                   $20,238,447       $   944,857       $21,183,304
                                                  ===========       ===========       ===========


1999:
   Systems and supplies revenue                   $ 7,077,143       $   312,893       $ 7,390,036
   Cost of systems, supplies and maintenance        3,781,605           222,262         4,003,867
                                                  -----------       -----------       -----------

          Gross margin                            $ 3,295,538       $    90,631       $ 3,386,169
                                                  ===========       ===========       ===========

   Gross margin %                                       46.57%            28.97%            45.82%
                                                  ===========       ===========       ===========

   Depreciation and amortization
                                                  $   323,665       $    12,970       $   336,635
                                                  ===========       ===========       ===========

   Capital expenditures                           $     2,697       $   120,367       $   123,064
                                                  ===========       ===========       ===========

   Total assets                                   $14,099,507       $   602,496       $14,702,003
                                                  ===========       ===========       ===========

</TABLE>

NOTE 4: MERGER WITH COMVERSE TECHNOLGY INC.

     On March 5, 2000, the Company entered into an Agreement and Plan of Merger
with Comverse Technology Inc. (Comverse), a maker of special purpose computer
and communications systems and software for multimedia communications and
information processing applications. Under the principal terms of the agreement,
Comverse will issue 0.385 new common shares for each outstanding share of the
Company's common stock and will convert all of the Company's outstanding stock
options into Comverse options based upon the same ratio. The Company has the
right to terminate the agreement if the value of Comverse shares to be received
by Company stockholders is less than $36 per share of Company common stock,
provided that Comverse retains the right to increase the exchange ratio to
adjust the consideration to $36 per share. In addition, as part of the
agreement, the Company has granted Comverse an option to purchase up to 19.9% of
the Company's outstanding shares of common stock (calculated after giving effect
to the exercise of such option). If certain events occur and the merger is not
completed, the option may become exercisable and the Company may be required to
pay Comverse an $11 million termination fee.




                                       6
<PAGE>

FORWARD-LOOKING STATEMENTS

     THIS REPORT ON FORM 10-QSB CONTAINS STATEMENTS THAT ARE NOT HISTORICAL
FACTS BUT ARE FORWARD-LOOKING STATEMENTS RELATING TO SUCH MATTERS AS ANTICIPATED
FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, NEW PRODUCTS AND SIMILAR MATTERS.
SUCH STATEMENTS ARE GENERALLY IDENTIFIED BY THE USE OF FORWARD-LOOKING WORDS AND
PHRASES, SUCH AS "INTENDED," "EXPECTS," "ANTICIPATES" AND "IS (OR ARE) EXPECTED
(OR ANTICIPATED)." THESE FORWARD-LOOKING STATEMENTS INCLUDE BUT ARE NOT LIMITED
TO THOSE IDENTIFIED IN THIS REPORT WITH AN ASTERISK (*) SYMBOL. ACTUAL RESULTS
MAY DIFFER MATERIALLY FROM THOSE DISCUSSED IN SUCH FORWARD-LOOKING STATEMENTS,
AND THE COMPANY'S STOCKHOLDERS SHOULD CAREFULLY REVIEW THE CAUTIONARY STATEMENTS
SET FORTH IN THIS REPORT ON FORM 10-QSB, INCLUDING THOSE SET FORTH UNDER THE
CAPTION "CERTAIN FACTORS BEARING ON FUTURE RESULTS."

     THE COMPANY MAY FROM TIME TO TIME MAKE ADDITIONAL WRITTEN AND ORAL
FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS CONTAINED IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION AND IN ITS REPORTS TO
STOCKHOLDERS. THE COMPANY DOES NOT UNDERTAKE TO UPDATE ANY FORWARD-LOOKING
STATEMENTS THAT MAY BE MADE FROM TIME TO TIME BY OR ON BEHALF OF THE COMPANY.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

     On March 5, 2000, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Comverse Technology, Inc. ("Comverse"), a maker of
special purpose computer and communications systems and software for multimedia
communications and information processing applications.

     Under the Merger Agreement, Comverse will issue 0.385 new common shares for
each outstanding share of the Company's Common Stock and will assume all of the
Company's outstanding stock options. The Company has the right to terminate the
agreement if, based on the average of the daily closing prices of Comverse
Common Stock on the Nasdaq National Market for the five consecutive trading days
ending on the third trading day prior to the merger, the value of Comverse
shares to be received by Company stockholders is less than $36 per share of
Company Common Stock. If the Company exercises this right of termination,
Comverse has the right to increase the exchange ratio to adjust the
consideration to $36 per share. The Company has also granted Comverse an option
to purchase up to 19.9 percent of the Company's outstanding shares of Common
Stock which shall be calculated after giving effect to the exercise of such
option (the "Stock Option"). Comverse has also entered into voting agreements
with holders of approximately 22 percent of the outstanding shares of the
Company's Common Stock requiring them to vote in favor of the transaction
(together with the Stock Option and Merger Agreement, the "Merger Documents").

     In connection with the Merger Agreement, the Company also amended its
Preferred Shares Rights Agreement (the "Rights Agreement") on March 5, 2000 to
specifically exclude the Merger Documents from triggering any provision of the
Rights Agreement.

     The following discussion and analysis should be read in conjunction with
the Company's consolidated financial statements and the notes related thereto
included herein.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

     REVENUE

     The Company's revenue is derived from sales of systems and supplies and
from maintenance services. Historically, systems and supplies have accounted for
greater than 90% of total revenue, with systems accounting for a substantial
majority of total revenue. Revenue decreased from $7,390,000 in the first
quarter of 1999 to $7,186,700 in the first quarter of 2000, representing a 3%
decrease. Revenue of $7,186,700 for the first quarter of


                                       7
<PAGE>

2000 does not include the shipment of approximately $4.1 million in sales value
of product in conformance with the Company's revenue recognition policies.
Revenue in the first quarter of 1999 and 2000 included approximately $6,801,000,
or 92% of total revenue, and approximately $ 6,541,400, or 91% of total revenue,
respectively, of CCTVware Products. For the three months ended March 31, 2000,
sales to one customer accounted for 33% of the Company's revenue.

     COSTS AND EXPENSES

     COST OF REVENUE. The cost of revenue, consisting principally of the costs
of hardware components and supplies as well as warranty costs and software
amortization, decreased from $4,003,900 in the first quarter of 1999 to
$3,766,800 in the first quarter of 2000, and represented 54% and 52% of revenue,
respectively.

     OPERATIONS. Operations expenses increased from approximately $227,700 in
the first quarter of 1999 to approximately $329,600 in the first quarter of
2000, and represented 3% and 5% of revenue, respectively. The increase, in
absolute terms, in such expenses resulted primarily from headcount and
compensation-related increases and increases in supplies, postage and
telecommunications expenses. The percentage increase from the first quarter of
1999 to the first quarter of 2000 resulted from the combination of increased
expenses and a 3% decrease in revenue.

     MARKETING, SALES AND CUSTOMER SUPPORT. Marketing, sales and customer
support expenses increased from approximately $1,314,000 in the first quarter of
1999 to $2,179,000 in the first quarter of 2000, and represented 18% and 30% of
revenue, respectively. The increase, in absolute terms, in such expenses
resulted primarily from headcount and compensation-related increases and
increases in travel, recruiting, supplies, telecommunications, product
promotions and depreciation expenses. The percentage increase from the first
quarter of 1999 to the first quarter of 2000 resulted from the combination of
increased expenses and a 3% decrease in revenue.

     GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased
from approximately $875,300 in the first quarter of 1999 to $720,600 in the
first quarter of 2000, and represented 12% and 10% of revenue, respectively. The
decrease, in absolute terms, in such expenses resulted primarily from decreases
in legal fees and depreciation expense offset somewhat by, primarily, headcount
and compensation-related increases. The reduction in legal fees is the result of
settling the Company's legal dispute with Prima Facie, Inc. in the third quarter
of 1999. The percentage decrease from the first quarter of 1999 to the first
quarter of 2000 resulted from the decrease in expenses without a commensurate
decrease in revenue.

     RESEARCH AND DEVELOPMENT. Research and development expenses, net of
capitalized software costs, increased from approximately $382,900 in the first
quarter of 1999 to approximately $417,500 in the first quarter of 2000, and
represented 5% and 6% of revenue, respectively. The increase, in absolute terms,
in such expenses resulted primarily from increases in travel, supplies and
depreciation expenses offset to some extent by, primarily, headcount and
compensation-related decreases. The percentage increase from the first quarter
of 1999 to the first quarter of 2000 resulted from the combination of increased
expenses and a 3% decrease in revenue.

     INTEREST INCOME. Interest income increased from approximately $31,400 in
the first quarter of 1999 to approximately $57,400 in the first quarter of 2000.
This increase was primarily due to an increase in the average cash available for
investment.

     INTEREST EXPENSE. Interest expense increased from approximately $29,800 in
the first quarter of 1999 to approximately $33,000 in the first quarter of 2000
as a result of increased bank borrowings.

     INCOME TAX EXPENSE. In the first quarter of 1999, the Company recorded
$32,000 of income tax expense after giving effect to the carry-forward of net
operating losses. In the first quarter of 2000, income tax expense of
approximately $6,400 was recorded for various state tax obligations.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

     During the three month period ended March 31, 1999, the Company financed
its activities primarily through cash from operations and proceeds from the
exercise of stock options. During the three month period ended March 31, 2000,
the Company financed its activities primarily through cash from operations, bank
borrowings and proceeds from the exercise of stock options. The Company's
principal uses of cash during each of

                                       8
<PAGE>

the three month periods ended March 31, 1999 and 2000 were (i) to fund operating
activities; (ii) to acquire property and equipment; and (iii) to invest in the
development of software.

     During the first three months of 1999, the Company's cash and cash
equivalents increased from $1,625,300 at December 31, 1998 to $3,072,600 at
March 31, 1999. Net cash provided by operating activities of $1,160,000
consisted primarily of net income of $555,200, plus non-cash charges for
depreciation and amortization of $336,600, increases in accounts payable,
customer deposits and accrued liabilities and commissions of $2,235,700 offset
by increases in accounts receivable and inventory of $1,984,700. Net cash used
in investing activities of $205,600 consisted primarily of $123,100 of capital
expenditures and $101,600 of software development costs. Net cash generated from
financing activities of $493,000 consisted primarily of proceeds from the
exercise of stock options.

     During the first three months of 2000, the Company's cash and cash
equivalents increased from $3,897,400 at December 31, 1999 to $5,179,600 at
March 31, 2000. Net cash provided by operating activities of $1,300,800
consisted primarily of net losses of $198,900, plus non-cash charges for
depreciation and amortization of $414,400, a decrease in accounts receivable and
increases in accounts payable and customer deposits of $2,241,000 offset by
increases in inventory, prepaid expenses and other assets and accrued
liabilities, warranty and bonuses and commissions of $1,167,400. Net cash used
in investing activities of $577,000 consisted primarily of $480,000 of capital
expenditures and $109,300 of software development costs. Net cash generated from
financing activities of $558,300 consisted primarily of bank borrowings of
$316,100 of construction loans associated with the Company's new facility and
proceeds from the exercise of stock options.

     As of March 31, 2000, the Company had $9,603,500 in net working capital,
including $5,394,600 of trade accounts receivable and $4,409,600 of inventory.
Days sales outstanding were approximately 77 days as of March 31, 2000 compared
to 57 days for the same period a year ago. The increase in days sales
outstanding is primarily the result of advanced prepayments on shipments
received in the first quarter of 1999 and payment term extension amounts
outstanding at March 31, 2000. The Company has provided and may continue to
provide payment term extensions to certain of its customers from time to time.*
As of March 31, 2000, the Company had payment term extensions outstanding of
approximately $885,000.

     The Company's inventory balance at March 31, 1999 and 2000 was $2,005,000
and $4,409,600, respectively. Annualized inventory turns were 7.6 and 3.3 as of
March 31, 1999 and 2000, respectively. The reduction in inventory turns is
primarily the result of (i) not including the cost of goods sold associated with
$4.1 million sales value of product shipments that was not recognized as revenue
in a conformance with the Company's revenue recognition policies, and (ii)
increased inventory levels associated with certain key components that the
Company purchased to stock. The cost of the $4.1 million of product shipments
has been offset against customer deposits in the accompanying consolidated
financial statements.

     The Company's principal sources of liquidity are its cash and cash
equivalents and cash generated from operating activities, if any. The Company
also has available up to a $1,000,000 line of credit based on a percentage of
the Company's eligible accounts receivable. The line of credit expires in May
2000. The Company expects that it will successfully extend the line of credit
through May 2001.* The line of credit has not been used to date. The Company
anticipates capital expenditures for the remainder of 2000 of approximately $1.5
million.* Such capital expenditures include approximately $251,900 to complete
the 20,000 square foot expansion of its existing facility in Durango, Colorado.
The Company began occupying the expanded facility in April, 2000. On October 14,
1999, the Company entered into a six month construction loan for its new 20,000
square foot facility, the terms of which provide a credit commitment of $800,000
and 9% interest-only payments due monthly beginning November 1999. The Company
has arranged to refinance the construction loan with a commercial real estate
loan.* The principal amount of such real estate loan will be amortized over
fifteen years with a balloon payment, at the end of 5 years. Interest on amounts
outstanding under the commercial real estate loan will accrue at the banks prime
rate at the time of closing plus .75%. The Company believes that, based on its
current financial projections, it has sufficient working capital, inclusive of
its line of credit facility, to meet its capital requirements and fund
operations for at least the next twelve months.*

NEW ACCOUNTING BULLETIN

     In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB No. 101"). SAB No. 101 summarizes certain of



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<PAGE>

the SEC staff's views in applying generally accepted accounting principles to
revenue recognition in financial statements. We are presently evaluating the
impact, if any, that SAB No. 101 will have on our reported results.

YEAR 2000 COMPLIANCE

     The Company's computer systems and products successfully transitioned to
the Year 2000 with no significant problems. The Company will continue to monitor
latent problems that could surface at key dates or events in the future. It is
not anticipated that there will be any significant problems related to these
dates or events.* To date, the Company has not incurred material costs
associated with Year 2000 compliance or any disruption with vendors or
operations. Furthermore, the Company believes that any future costs associated
with Year 2000 compliance efforts will not be material.*

CERTAIN FACTORS BEARING ON FUTURE RESULTS

     The risk factors set forth below are important factors that may affect
future results and that could cause actual results to differ materially from
those projected in forward-looking statements that may be made by the Company
from time to time.

     MERGER WITH COMVERSE. If the merger with Comverse (see "Merger Agreement
with Comverse Technology, Inc.") is not completed for any reason, the Company
may be subject to a number of material risks, including the following: (i) being
required to pay Comverse a termination fee of $11 million; (ii) the grant of an
option to Comverse to buy up to 19.9% of the Company's Common Stock may become
exercisable; (iii) the price of the Company's Common Stock may decline to the
extent that the current market price of the Company's Common Stock reflects a
market assumption that the merger will be completed; (iv) costs related to the
merger, such as legal, accounting and financial advisor fees, must be paid even
if the merger is not completed. In addition, the Company's customers may, in
response to the announcement of the merger, delay or defer purchasing decisions.
Any delay or deferral in purchasing decisions by customers could have a material
adverse effect on the Company's business, regardless of whether or not the
merger is ultimately completed. Similarly, the Company's current and prospective
employees may experience uncertainty about their future role with Comverse until
Comverse's strategies with regard to the Company are announced or executed. This
may adversely affect the Company's ability to attract and retain key management,
marketing and technical personnel.

     Further, if the merger is terminated and the Company's Board of Directors
determines to seek another merger or business combination, there can be no
assurance that it will be able to find a partner willing to pay an equivalent or
more attractive price than that which would be paid in the merger. Additionally,
while the Merger Agreement is in effect, subject to certain limited exceptions,
the Company is prohibited from soliciting, initiating or knowingly encouraging
or entering into certain extraordinary transactions, such as a merger, sale of
assets or other business combination, with any party other than Comverse.
Furthermore, if the Merger Agreement is terminated and Comverse exercises its
option to purchase the Company's Common Stock, the Company would not be able to
account for future transactions as a pooling-of-interests.

     CAPITAL REQUIREMENTS. To the extent that the Company experiences growth
generally, or the Company's CCTVware Products generate high demand, or the
Company receives extraordinarily large orders for certain CCTVware Products from
large business, institutional or government buyers, the Company's capital
requirements may exceed the Company's available capital resources. Additionally,
the Company has suffered losses in eight of the past thirteen quarters, and such
losses, which may occur in the foreseeable future, would diminish the Company's
cash and cash equivalents. There can be no assurance that the Company will be
able to raise equity or debt financing on favorable terms, or at all. If the
Company fails in such circumstances to raise additional capital as needed, the
Company would likely be required to reduce the scope of its product development,
selling and marketing activities and other operations, which would have a
material adverse effect on the Company's business, operating results and
financial condition.

     DISTRIBUTION RELATIONSHIPS. The Company believes its success in penetrating
markets for its CCTVware Products depends in part on its ability to maintain
distribution relationships with manufacturing representatives, systems
integrators and Philips Communication, Security & Imaging, Inc. ("Philips CSI")
and to cultivate additional systems integrator relationships. There can be no
assurance that the Company will be successful in maintaining or expanding its
distribution relationships. The loss of certain distribution relationships could
have a negative impact on the Company's revenue stream. Further, there can be no
assurance that the businesses with whom the Company

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<PAGE>

has developed such relationships, some of whom have significantly greater
financial and marketing resources than the Company, will not develop and market
products in competition with the Company or will not otherwise discontinue their
relationships with the Company.

     COMPETITION. Certain of the Company's current and prospective competitors
have substantially greater technical, financial and marketing resources than the
Company. In addition, there can be no assurance that any of the Company's
products will be competitive in the face of advances in product technology
developed by the Company's current or future competitors.

     INTERNATIONAL SALES. The Company is seeking to expand its international
presence by entering into a definitive international sale and distribution
agreement with Philips CSI. There can be no assurance that the Company and
Philips CSI will reach such an agreement. Further, the Company has in the past
generated, and may continue to generate, sales in certain foreign countries.
International sales are subject to a number of risks, including political and
economic instability, unexpected changes in regulatory requirements, tariffs and
other trade barriers, fluctuating exchange rates and the possibility of greater
difficulty in accounts receivable collection. There can be no assurance that
these and other factors will not have a material adverse effect on the Company's
future international sales, if any, and, consequently, the Company's business,
operating results and financial condition.

     DEPENDENCE ON MAJOR CUSTOMERS. In the first quarter of 2000, sales to one
customer accounted for 33% of the Company's revenue. This customer is not
obligated to purchase any minimum levels of the Company's products, and although
this customer has placed additional orders with the Company, there can be no
assurance that any further business will arise from this customer. Any
significant reduction in product sales to this customer that cannot be replaced
with new business may materially and adversely affect the Company's business,
operating results and financial condition.

     DEPENDENCE ON NEW PRODUCTS. The market for the Company's products is
characterized by ongoing technological development and evolving industry
standards. The Company's success will depend upon its ability to enhance its
current products and to introduce new products, which address technological and
market developments and satisfy the increasingly sophisticated needs of
customers. There can be no assurance that the Company will be successful in
developing, marketing or selling on a timely basis any fully functional product
enhancements or new products that respond to the technological advances by
others. There also can be no assurance that the Company's new products will be
accepted by customers.

     MANAGEMENT AND EMPLOYEES. The Company's future success depends in
significant part upon the continued service of its key technical and senior
management personnel and its continuing ability to attract and retain highly
qualified technical and managerial personnel in the future. The Company has in
the past encountered some difficulties in fulfilling its hiring needs in the
Durango, Colorado, employment market, and there can be no assurance that the
Company will be successful in hiring and retaining qualified employees in the
future.

     PROPRIETARY RIGHTS. The Company is not aware that its products, trademarks
or other proprietary rights infringe on the proprietary rights of any third
parties. However, there can be no assurance that third parties will not assert
infringement claims against the Company in the future with respect to current or
future products. As the number of software products in the industry increases
and the functionality of these products further overlaps, the Company believes
that software developers may become increasingly subject to infringement claims.
Any such claims against the Company, with or without merit, could result in
costly litigation or might require the Company to enter into royalty or
licensing agreements. Such royalty and licensing agreements, if required, may
not be available on terms acceptable to the Company.

     VARIABILITY OF OPERATING RESULTS. The Company's revenue and operating
results have fluctuated significantly from quarter to quarter, and may continue
to fluctuate, due to a combination of factors. These factors include relatively
long sales cycles for certain products, the timing or cancellation of orders
from major customers, the timing of new product introductions by the Company or
its competitors, the Company's use of third-party distribution channels, the
fulfillment of large one-time orders to particular customers and general
economic conditions and other factors affecting capital spending. For example, a
longer than expected sales cycle for the CCTVware Products initially delayed
anticipated revenue. Additionally, the Company has, from time to time, shipped a
large number of orders in the quarter in which such orders are received, and
accordingly, revenue in any quarter may be substantially dependent on the orders
booked and shipped in that quarter. Further, it is not unusual for the Company
to recognize a substantial portion of its revenue in the last month of the
quarter. Because the

                                       11
<PAGE>

Company's operating expense levels are relatively fixed and based, to some
extent, on anticipated revenue levels, a small variation in revenue can cause
significant variations in operating results from quarter to quarter and may
result in losses. Due to all of the foregoing, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.

     PRODUCT OBSOLESCENCE. The Company's current products and products under
development are limited in number and concentrated primarily in the markets for
identification and surveillance products. The life cycles of the Company's
products are difficult to estimate due in large measure to changing and
developing technology as well as the unknown future effect of products
introduced by the Company's competition. Price reductions or declines in demand
for the Company's products, whether as a result of competition, technological
change or otherwise, would have a materially adverse effect on the Company's
business, operating results and financial condition.

     VOLATILITY OF STOCK PRICE. The market price of the Company's Common Stock
has experienced significant volatility, and is likely to continue to be
significantly affected by factors such as actual or anticipated fluctuations in
the Company's operating results, the Company's failure to meet or exceed
published earnings estimates, changes in earnings estimates or recommendations
by securities analysts, announcements of technological innovations, new products
or new contracts by the Company or its existing or potential competitors,
developments with respect to patents, copyrights or proprietary rights, adoption
of new accounting standards affecting the software industry, general market
conditions and other factors. In addition, the stock market has from time to
time experienced significant price and volume fluctuations that have
particularly affected the market prices for the common stock of technology
companies which have often been unrelated to the operating performance of such
companies. These broad market fluctuations may materially adversely affect the
market price of the Company's Common Stock. There can be no assurance that the
trading price of the Company's Common Stock will not experience substantial
volatility in the future.


                                       12
<PAGE>

PART II. OTHER INFORMATION

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  EXHIBITS

<TABLE>
<S>                 <C>
           2.1 (1)  Agreement and Plan of Merger between Comverse Technology,
                    Inc. and the Company dated March 5, 2000.

          10.2 (2)  Stock Option Agreement between Comverse Technology, Inc. and
                    the Company dated March 5, 2000.

          10.3 (3)  Amendment to Preferred Shares Rights Agreement, dated
                    March 5, 2000.

          27        Financial Data Schedule for the quarter ended March 31, 2000

</TABLE>

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

          (1)  Incorporated by reference to Exhibit 1 filed to Comverse
               Technology, Inc.'s Schedule 13D filed on March 14, 2000.

          (2)  Incorporated by reference to Exhibit 2 filed to Comverse
               Technology, Inc.'s Schedule 13D filed on March 14, 2000.

          (3)  Incorporated by reference to Exhibit 10.8 filed to Registrant's
               Annual Report on Form 10-KSB filed on March 29, 2000.

     (b)  REPORTS ON FORM 8-K

          None


                                       13
<PAGE>

                                   SIGNATURES


     In accordance with the requirements 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.


                                        Loronix Information Systems, Inc.

May 3, 2000                             /s/ Jonathan C. Lupia
-----------                             ---------------------
   Date                                 Jonathan C. Lupia,
                                        Chief Operating Officer and
                                        Chief Financial Officer



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