Local Office   Doc No.SDILIB1\MSK\262461.02(5M$L02!.DOC)Doc PathOrig Doc
Path   Doc Name   Addressee(s)   Signer(s)   Cause No.   Parties   Client
No.023321Matter No.0001Client NameCORSAIR COMMUNICATIONSMatter
        NameGENERALCaption Bank Document Date FooterStore DocumentType

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                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-K

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

==============================================================================
                   For fiscal year ended December 31, 1998
==============================================================================
                                      OR
   |_|     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934
==============================================================================

                       Commission File Number 000-22859

                         CORSAIR COMMUNICATIONS, INC.
            (Exact name of Registrant as specified in its charter)
==============================================================================

           Delaware                                    77-0390406
   (State of incorporation)                           (IRS Employer
                                                   Identification No.)

  3408 Hillview Avenue, Palo Alto, California               94304
    (Address of principal executive offices)              (Zip Code)

      Registrant's telephone number, including area code: (650) 842-3300

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

         Securities registered pursuant to Section 12(g) of the Act:
                        Common Stock, $.001 par value

   Indicate  by check mark  whether  the  Registrant  (1) has filed all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____

   Indicate by check mark if disclosure of  delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of 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  non-affiliates of the
registrant,  based on the closing  price of the Common  Stock as reported on The
Nasdaq  Stock  Market   (National  Market  System)  on  February  28,  1999  was
approximately $39,847,146. For the purposes of this calculation, shares owned by
officers,  directors  and 10%  stockholders  known to the  registrant  have been
excluded.  Such  exclusion  is not  intended,  nor shall it be deemed,  to be an
admission that such persons are affiliates of the registrant.



   As of February  28,  1999 there were  18,037,141  shares of the  registrant's
Common Stock outstanding.

                     DOCUMENTS INCORPORATED BY REFERENCE

   Portions of the  registrant's  Proxy Statement for the 1999 Annual Meeting of
Stockholders  to  be  held  on  June  16,  1999  (the  "Proxy  Statement"),  are
incorporated by reference into Part III of this Annual Report on Form 10-K.


<PAGE>


                                      51
                                    PART I
------------------------------------------------------------------------------


ITEM 1. Business

      The discussion in this Annual Report contains  forward-looking  statements
that involve risks and  uncertainties.  The statements  contained in this Annual
Report that are not purely historical are forward-looking  statements within the
meaning of  section  27A of the  securities  Act of 1933,  as amended  including
statements  regarding  the  Company's  expectations,   beliefs,   intentions  or
strategies regarding the future. All forward-looking statements included in this
document are based on  information  available to the Company on the date hereof,
and the  Company  assumes  no  obligation  to  update  any such  forward-looking
statement.  The  Company's  actual  results could differ  materially  from those
discussed  herein.  Factors that could cause or contribute  to such  differences
include,  but are not limited to, those  discussed in this section and elsewhere
in this Annual Report,  and the risks discussed in the Company's  Securities and
Exchange Commission ("SEC") filings.

GENERAL

      Corsair Communications,  Inc. is a leading provider of software and system
solutions for the wireless industry.  Corsair's  PhonePrint(R) system has proven
highly effective in reducing cloning fraud. The PhonePrint  system has prevented
hundreds of millions of fraudulent  call attempts;  some of Corsair's  customers
have  reported up to a 95%  reduction in cloning  fraud  losses after  deploying
PhonePrint.   The  Company's   PrePay(TM)   billing  system  provides   wireless
telecommunications  carriers with a prepaid system  designed to fully  integrate
with the upcoming wireless  intelligent  network standards ("WIN").  The Company
believes  that its  products  can  provide  a number  of  benefits  to  wireless
telecommunications  carriers,  including  reduced  costs,  improved  cash  flow,
increased market penetration and improved customer service.

      The   Company    sells   and   markets   its    products   to   wireless
telecommunications  carriers  domestically and internationally.  The Company's
customers include Alltel Communications,  Inc., AT&T Wireless Services, Aurora
Wireless  Technology,  Baja  Cellular  Mexicana,  S.A. de C.V.,  Bell Atlantic
Mobile,  BellSouth  Cellular Corp.,  Celular de Telefonia,  S.A. de C.V., CCPR
Services,  Inc.,  Centennial Cellular Corp., Comcast Cellular  Communications,
Communicacion  Cellular,  S.A.,  Compania  Dominicana  de  Telefonos c. por a.
(Codetel),  Dobson Cellular Systems, Inc., GTE Wireless,  Grupo Iusacell, S.A.
de C.V., Los Angeles Cellular  Telephone  Company,  Motorola,  Inc.,  Pilipino
Telephone  Corporation  (Piltel),  PriCellular  Wireless  Corp.,  Puerto  Rico
Telephone Company,  RadioMovil DIPSA, S.A. de C.V. (Telcel),  Radiofone, Inc.,
Southwestern  Bell Mobile Systems Inc.,  Southwestern  Bell  Wireless,  Telcel
Celular,  S.A., United States Cellular Corp. and Vanguard  Cellular  Financial
Corp.

      The worldwide  demand for wireless  telecommunications  services has grown
significantly in recent years as those services have become widely available and
increasingly  affordable.  The growth in the worldwide subscriber base, together
with changes in  telecommunications  regulations  and  allocations of additional
radio  spectrum  frequencies,  has resulted in the  build-out  of a  significant
number of new  networks  and plans for  additional  networks.  The Yankee  Group
estimates that the number of wireless  telecommunications  subscribers worldwide
increased from  approximately 85 million in 1995 to approximately 270 million in
1998, and the number of subscribers is expected to exceed 530 million by the end
of 2002.

      There are two types of wireless  telecommunications  networks:  analog and
digital.  Analog networks broadcast the actual voice waveform;  digital networks
digitize the voice waveform using various coding techniques before the signal is
broadcast.  In the 1980s,  carriers around the world installed  primarily analog
networks.  In North  America,  all  analog  networks  use a single  transmission
standard,  called Advanced Mobile Phone Services ("AMPS"), that enables carriers
to provide nearly seamless  roaming  coverage by partnering with other carriers.
The Company  believes  that analog  networks will continue to play a significant
role in wireless telecommunications for the foreseeable future. However, because
digital standards are gaining substantial market share, the Company has plans to
develop products to serve markets using digital standards.





      Issues Facing Wireless Telecommunications Carriers

      As the  wireless  telecommunications  industry  evolves,  it faces  severe
competitive,  pricing and cost pressures and additional  regulatory  hurdles. In
the U.S.,  existing  carriers are seeing  increased  competition as new Personal
Communications  Services ("PCS") and Enhanced  Specialized Mobile Radio ("ESMR")
carriers enter their markets.  Also, as the industry shifts from a predominantly
high usage  business  subscriber  base to the mass  market,  carriers  are being
impacted  by a decline  in the  average  revenue  per  subscriber.  As a result,
carriers  must retain  subscribers  for a longer period of time to recover their
marketing  investment per subscriber and the high costs of spectrum  acquisition
and network build-out.  In order to retain or acquire market share, carriers are
faced  with a  growing  need  to  differentiate  service  offerings  from  their
competitors,  using enhanced  features,  alternative  billing plans and options,
security, voice quality, coverage, pricing and other factors as differentiators.

      These market  forces have  hastened the need for carriers to improve their
service  offerings  and to address a number of issues  that have been facing the
industry  for some  time.  Two of these  issues  are  objects  of the  Company's
products: fraud and prepaid wireless services.

      Fraud

      Fraud  is  one  of  the  most  pervasive   problems  facing  the  wireless
telecommunications  industry in both the U.S. and abroad.  The most common types
of fraud are cloning  fraud,  subscription  fraud and phone  theft.  The Company
believes that cloning fraud  accounts for most fraud losses in analog  networks.
Cloning  occurs  when a  thief  uses a  scanning  device  to  steal  the  mobile
identification  number ("MIN") and electronic serial number ("ESN")  transmitted
over the air during a wireless call, and then  reprograms  other phones with the
stolen  numbers.  The  reprogrammed  phones,  or "clones," are then used to make
fraudulent calls on the wireless carriers' networks.

      To address  cloning  fraud, a number of prevention  techniques,  including
fraud profilers, personal identification numbers ("PINs") and voice recognition,
have been developed.  None of these  techniques has proven to be a practical and
effective  solution to  preventing  cloning  fraud on analog  networks.  A fraud
profiler is a software tool that tracks anomalies in a subscriber's behavior and
notifies a carrier of unusual  calling  patterns.  Profilers  detect  suspicious
activity only after it has occurred and do not identify fraud conclusively,  but
instead  only  assist   carriers  in   identifying   fraud  and  require  manual
intervention.  PINs involve the use of a numeric code that must be dialed by the
subscriber  before a call is connected.  PINs are considered  inconvenient,  and
because  they  are  transmitted  over  the air  during a call,  they  have  been
compromised in the same manner as MIN/ESN numbers.  Voice  recognition  requires
the use of a spoken  password  before  a call is  connected.  The  technological
feasibility of voice recognition  systems for the prevention of cloning fraud is
still being evaluated and voice recognition  systems are not generally viewed as
a cost-effective or convenient solution.

      Another cloning fraud prevention technique, known as authentication,  uses
encryption technologies and requires a phone to prove its validity before a call
is  connected.  While  authentication  has been adopted by many  carriers and is
expected to be used in a large  number of  networks  in the future,  the Company
believes  that it will not be cost  effective  to  replace  the large  number of
existing analog phones that do not allow authentication.  Because authentication
is  generally  considered  expensive  and  difficult to  implement,  a number of
carriers,  especially in international  and smaller U.S.  markets,  have not yet
deployed it. In addition,  announcements  relating to breaches of other wireless
encryption  algorithms  have  heightened  concerns  about the  vulnerability  of
authentication processes in preventing fraud.

      Prepaid Metered Billing

      Wireless carriers have identified potential subscribers who prefer the use
of cash over  credit,  as well as potential  subscribers  who do not qualify for
credit,  as an attractive  segment for which to target their service  offerings.
Additionally,  the monthly  billing  arrangements  commonly used in the U.S. are
often  much  less  appealing  in  international   markets,   where  neither  the
information  infrastructure nor the business culture favor credit-based business
models,   particularly  when  targeting  mass  consumer  markets  in  developing
economies. Prepaid service enables carriers to gain substantial penetration into
mass markets that would otherwise be unavailable.  In developed  markets such as
the U.S.,  monthly  billing  is often not  practical  for  individuals  who want
wireless  service  only  temporarily  or for  businesses  that  want to  control
employee usage.  Prepaid service provides carriers with the opportunity to offer
an alternative  payment  approach to these potential  subscribers.  Accordingly,
wireless carriers are seeking cost-effective ways to solve the technological and
marketing  challenges in providing prepaid service,  including monitoring usage,
inbound and outbound calling and roaming.

      To address the market for prepaid services,  several  approaches have been
developed,  including "post-call" systems, handset-based systems and trunk-based
or "adjunct  switch"  systems.  Post-call  systems were  designed to review call
detail  records  released  by  wireless  switches  after  calls were  completed.
Post-call  systems need only a data link from the carriers'  network which makes
them inexpensive to deploy;  however,  these systems cannot operate in real-time
and are thus prone to fraud,  which has  resulted in limited  market  reception.
Handset-based technology has proven popular in European markets employing Global
System for Mobile Telecommunications  ("GSM") networks through applications that
run on the Subscriber  Identification Module ("SIM") card. Handset-based systems
have met with limited success  outside of markets  operating SIM card systems in
part due to concerns over potential fraud exposure,  inventory  requirements and
lack of flexibility.  Adjunct switch systems provide  real-time  prepaid service
and can avoid fraud associated with post-call  systems.  This is accomplished by
implementing  an adjunct  switching  platform in the voice network  connected by
T1/E1 trunk lines to control all prepaid  calls.  Limitations  to adjunct switch
systems  include high costs for  additional  switching  platforms and additional
trunk lines,  prohibitive costs of scaling the system and substantial  increases
in call setup times.  Voice trunks in  particular  represent a  substantial  and
often  prohibitive  recurring  cost as the  customer  base for  prepaid  service
expands to a significant  percentage of the market's  total users.  Carriers are
concerned  about  relying upon an adjunct  switch to support a large and growing
customer group.


CORSAIR'S SOLUTIONS

      Fraud

      Corsair's  PhonePrint  system  provides  highly  effective  cloning  fraud
prevention to wireless  telecommunications  carriers by using  proprietary radio
frequency  ("RF") signal analysis  technology to identify  attempted  fraudulent
calls and prevent cloners from gaining access to a carrier's analog network. The
system measures specific  characteristics  of each phone's unique RF waveform to
develop an "RF  fingerprint"  that is a reliable tool to  distinguish  between a
clone and a legitimate  phone.  Just as no two human  fingerprints are the same,
differences  in phone  designs and  components  as well as subtle  manufacturing
differences mean that no two wireless phones generate the same waveform.  The RF
fingerprint of one wireless phone cannot be emulated by another  wireless phone,
and is therefore not subject to being compromised like MIN/ESN numbers,  PINs or
potentially  authentication  codes. The scalable design of the PhonePrint system
allows  carriers  to deploy the system  initially  in areas  where fraud is most
prevalent  and to further  deploy the system  over time in other  parts of their
networks. In addition,  by purchasing  subscriptions to the Company's PhonePrint
Roaming  Network(TM),  carriers can share RF fingerprints  in real-time  between
PhonePrint  systems in different  markets to protect  against losses  associated
with roaming fraud.

      Prepaid Metered Billing

      PrePay expands the carriers'  potential customer base by allowing carriers
to market services to customers who prefer the use of cash over credit or who do
not qualify for credit and who otherwise would be required to pay high deposits.
PrePay is differentiated  from most other competitive  offerings by its wireless
intelligent  network ("WIN") based  architecture,  which enables carriers to use
existing switch infrastructure equipment rather than requiring costly additional
adjunct switches and voice trunk  resources.  PrePay software scales with growth
in the number of prepaid  subscribers by adding processors to its server.  Since
prepaid calls are controlled by the existing switch,  there is no impact on call
setup times and carriers can convert prepaid customers to traditional  post-paid
customers  without  changing  their  mobile phone  number.  All calls by prepaid
subscribers are rated in real time, and an integrated interactive voice response
("IVR") system automatically informs the customer when account funds are low. If
prepaid funds are depleted during a call, the call is  automatically  terminated
and service is suspended to avoid fraud until  additional  funds are  deposited.
The deposit of  additional  funds can be made over the air with a prepaid  phone
card or in cash at a  replenishment  center,  ensuring  continuity  of  cellular
service.

STRATEGY

      The  Company's  objective  is to be the leading  provider  of  value-added
solutions to wireless telecommunications carriers. Key elements of the Company's
strategy include:

      Maintain  Leadership in WIN-based Prepaid Metered Billing  Solutions.  The
Company  believes  that it deployed the first prepaid  system  designed to fully
integrate with the upcoming wireless  intelligent  network  standards,  and that
PrePay systems currently serve more prepaid subscribers worldwide than any other
WIN-based  prepaid  system.  The Company  intends to leverage its reputation and
experience in operating PrePay in international markets to increase its share of
the global market for wireless prepaid billing solutions.

      Further  Penetrate  Market for Cloning  Fraud  Prevention  Solutions.  The
Company intends to leverage its reputation and experience as a leading  provider
of RF  fingerprinting  solutions to increase its share of the market for cloning
fraud prevention solutions.  The Company believes that carriers in international
markets are experiencing  substantial cloning fraud on their analog networks and
present a greater future opportunity for PhonePrint sales than domestic markets.
The Company intends to expand PhonePrint sales internationally by increasing its
direct sales force and  marketing  through  distribution  partners.  The Company
believes that the reputation,  customer  relationships  and global field support
capabilities  of  distribution  partners may accelerate  the  penetration of its
products in international markets.

      Provide  Superior  Customer  Support.  The Company believes that providing
superior customer support is critical to maintaining long-term relationships and
to  capitalizing  upon future sales  opportunities.  The Company has invested in
building a customer support  organization with the range of technical skills and
depth of expertise  necessary to serve various wireless  customers.  The Company
has developed  proprietary  software tools that permit extensive  monitoring and
diagnosis  of system  performance  and  provide  for the  flexibility  of remote
operation.

      Leverage Core  Expertise to Develop and Acquire New Products.  The Company
intends  to use  its  core  expertise  in RF  signal  analysis,  digital  signal
processing and real-time networking in distributed systems environments, billing
and customer  care to develop and  introduce  other  products.  The Company also
seeks  to  strategically   acquire   complementary   businesses,   products  and
technologies  from third  parties.  The  Company has in the past  evaluated  and
expects in the future to pursue acquisitions with third parties.

      Maintain Leadership in RF Fingerprinting  Solutions.  The Company believes
that  its  proprietary  approach  to  developing  RF  fingerprints,  based  upon
technology originally developed for the military, is a key differentiator of the
Company's  solution that results in highly effective  cloning fraud  prevention.
The Company also believes that it deployed the first  real-time  network for the
exchange of  fingerprints  between  carriers,  and that it was also the first to
expand  real-time  roaming  protection  internationally.  The Company intends to
focus  on  enhancing  and   improving   PhonePrint  in  order  to  optimize  its
performance.


THE PHONEPRINT SYSTEM

      PhonePrint  is an open  architecture  hardware  and  software  system that
reduces  cloning fraud by detecting and promptly  disconnecting  fraudulent call
attempts.  A key  element  of the  architecture  is its  distributed  processing
capability,  which provides high  performance and efficiency and reduces network
bandwidth  requirements.  The system supports  real-time  network  connectivity,
allowing  PhonePrint  markets to interoperate both domestically and abroad.  The
scalable  design of the  PhonePrint  system  has  allowed  both  large and small
carriers to deploy the system  initially  in areas where  cloning  fraud is most
prevalent  and to further  deploy the system  over time in other  parts of their
networks.

      PhonePrint's cloning fraud prevention capability is based upon proprietary
RF signal analysis  technology.  Every wireless  phone's signal creates a unique
waveform due to differences in phone designs and  components,  as well as subtle
manufacturing  variances.  PhonePrint creates an RF fingerprint by using complex
proprietary  algorithms  to measure  physical  features of these  waveforms.  RF
fingerprints  of  legitimate  subscribers'  phones  are  stored  in a  database.
PhonePrint  compares  the  observed  RF  fingerprint  of the caller  with the RF
fingerprint of the subscriber in the database.  If the two  fingerprints  do not
match,  the call is  promptly  disconnected.  In  addition,  PhonePrint  reduces
roaming fraud by exchanging RF  fingerprints  between  markets  connected to the
PhonePrint Roaming Network in real-time, allowing the immediate disconnection of
fraudulent roaming call attempts.

      The  PhonePrint  system is comprised of three  components for each market:
radio  frequency  units located in multiple cell sites,  a single system control
center and a single real-time  application  server.  All of these components are
connected by a real-time open internet protocol ("IP") network.

      Radio Frequency Units ("RFUs"). Each RFU is an intelligent, self-contained
unit  that  detects   fraudulent   calls.   Key  elements  of  the  RFU  include
sophisticated  receivers,  a PC-based  processor and a database of subscriber RF
fingerprints.  An RFU constantly  monitors the RF waveforms generated by phones,
analyzes them via proprietary algorithms and initiates disconnections when fraud
is detected.  The RF collection,  signal  analysis and fraud  detection  process
requires  less than 0.5  seconds.  RFUs have been  designed  so that they can be
installed,  exchanged  or taken  off-line  without  interrupting  the  carrier's
wireless network.

      System Control Center ("SCC"). An SCC administers and maintains the master
database of RF fingerprints  and activates RF fingerprint  validation  processes
for a market.  An SCC also communicates with the market's RFUs to receive new RF
fingerprint  observations  and  update RF  fingerprint  databases.  The SCC also
supports remote system diagnostics and configuration administration.

      Real-Time  Application  Server  ("RTAS").  The RTAS hosts a graphical user
interface  that allows  different  carrier  personnel,  including  customer care
representatives  and fraud  analysts,  to generate a variety of system  activity
reports based on real-time and historical data.

      Real-Time  Network.  The RFUs,  SCC and RTAS for each market are connected
together,  and the  PhonePrint  system is  connected  to the  carrier's  network
infrastructure,  using  an  open  IP  network.  Carriers  can  subscribe  to the
PhonePrint  Roaming  Network  service to  exchange  RF  fingerprints  with other
markets in real-time to reduce roaming fraud.

      The hardware and software  components of the  PhonePrint  system have been
designed to be  compatible  with various  vendors'  infrastructure  equipment to
maximize  the  testability,  reliability  and  performance  of the system and to
reduce software release cycle times.

THE PREPAY SYSTEM

      PrePay allows carriers to support  prepaid  service  offerings using their
existing   Mobile   Switching    Center/Home   Location   Registry   ("MSC/HLR")
infrastructure  equipment.  The PrePay server  communicates with the MSC/HLR and
other network  elements via IS41 messages in a standard SS7/C7 network,  and via
TCP/IP with the PrePay IVR server and customer service  clients.  Because PrePay
is designed to operate in IS41  networks,  it supports  several air  interfaces,
including: Code Division Multiple Access ("CDMA"), Time Division Multiple Access
("TDMA"),  AMPS, Total Access  Communications System ("TACS") and Extended Total
Access Communications System ("ETACS").

      When a subscriber  initiates a call and the MSC/HLR validates that it is a
prepaid subscriber, an IS41 message is sent to the PrePay system to pre-rate the
call and determine the allowed call duration.  The result of pre-call  rating is
determined by a number of factors, but is primarily based on the current account
balance,  the calling  location,  the called location and the subscriber's  plan
offering.  The  MSC/HLR  then  processes  the call in the same  manner as in the
post-paid environment,  but times the call against the allowed call duration. If
prepaids funds are depleted during a call, the call is  automatically  ended and
service is suspended  until  additional  funds are  deposited.  When the call is
released,  the  MSC/HLR  passes a message to the PrePay  server for a  post-call
rating, and then PrePay adjusts the subscriber's  account balance to reflect the
costs associated with the call.
All communications and processes occur in real time.

      The PrePay IVR server provides subscribers with automated telephone access
to the PrePay system.  The mobile inquiry function allows  subscribers to obtain
automated  information  regarding  their mobile  balance and balance  expiration
date. The mobile payment  function allows  subscribers to replenish their mobile
balance by using a prepaid phone card.  The PrePay system will update the mobile
balances, record payment transactions,  update the "used" phone card inventories
and  provide  the  subscribers  with  their new mobile  balances  and new mobile
balance expiration dates. The low balance/funds  expiration warning announcement
function provides an automated warning message to subscribers  warning them that
their mobile balance is getting low or mobile balance expiration date is getting
near.  If either the balance or  expiration  threshold are met, then PrePay will
instruct  the  network  to  route a new call to the IVR for a  warning  prior to
completing  the call.  In the PrePay  system,  only the IVR need  connect to the
MSC/HLR with voice trunks.

      PrePay   provides   carriers   with   feature-rich   customer   care   and
administration functions including:  activations and provisioning,  phone number
and phone card inventory  control,  and real-time  account review and adjustment
capabilities for customer service  representatives.  PrePay uses existing number
blocks and provides airtime rating,  true  point-to-point  toll rating,  special
number rating, special discounting,  multiple rate calendars, holiday rates, and
taxes.  The system also supports  one-time only fees as well as daily or monthly
recurring   access  fees.  Rate  plans  and  threshold   processing   plans  are
user-definable in accordance with carriers' unique marketing strategies.

      PrePay  operates  in UNIX to provide for better  multitasking,  more fault
tolerance and more effective call resource utilization. UNIX allows PrePay's key
software processes to operate in parallel and with multithreading for efficiency
and  optimal  scalability.  Consequently,  the  cost to  scale  with  PrePay  is
minimized,  generally  only requiring  additional  processors to be added to the
PrePay server.

      Corsair  developed  proprietary  WIN-based  interfaces in conjunction with
Ericsson Radio Systems AB ("Ericsson")  to accelerate the market  development of
PrePay in markets which have deployed Ericsson switching equipment in advance of
the final WIN standards.  Prior to PrePay's launch,  the use of existing MSC/HLR
equipment  was  impractical  or  impossible  due to the  proprietary  nature  of
Ericsson equipment.  PrePay's development reflects two important considerations.
First, the Company believes that its present system architecture and design will
support a smooth transition to WIN standards once the standards are released and
implemented  commercially.  Second,  in the  absence of  standards,  the Company
believes   that  the  system  can  support   proprietary   interfaces  to  other
infrastructure   vendors'   networks   with  modest   additional   research  and
development.


PRODUCT DEVELOPMENT

      The Company's  product  development  enhancements  to the  PhonePrint  and
PrePay  systems and  development of new products will address  perceived  market
opportunities.  Future  releases of PhonePrint and PrePay are being developed to
support  additional  signal  transmission  standards and may include  developing
interfaces for PrePay with additional switch manufacturers.

      The process of developing new products and product enhancements for use in
the wireless telecommunications industry is extremely complex and is expected to
become  more  complex  and   expensive  in  the  future  as  new  platforms  and
technologies  emerge.  In the past,  the Company has  experienced  delays in the
introduction of certain product enhancements, and there can be no assurance that
new products or product  enhancements  will be introduced on schedule or at all.
Any new products or product  enhancements  may also  contain  defects when first
introduced  or when new versions are released.  There can be no assurance  that,
despite  testing by the  Company,  defects  will not be found in new products or
product  enhancements after commencement of commercial  shipments,  resulting in
loss of or delay in market acceptance. Any loss of or delay in market acceptance
would  have a  material  adverse  effect on the  Company's  business,  operating
results and financial condition.

      Total  research and  development  expenditures  were $8.6  million,  $12.5
million,  and $18.3 million in fiscal years 1996, 1997, and 1998,  respectively.
The Company anticipates that it will continue to commit substantial resources to
product  development in the future.  Since the Company wrote-off  nonrecoverable
capitalized software costs of $3.8 million in 1996, all research and development
expenditures have been expensed as incurred.  For the past three years,  product
development  activities  have  significantly  improved the PhonePrint  system by
identifying  new  algorithms  and  refining   existing   algorithms  to  bolster
PhonePrint's  fraud  detection  capabilities  and by improving  reliability  and
manufacturability. During this same period of time, end-to-end real-time network
connectivity  capabilities  and a graphical user interface were also  developed,
and significant size and cost reductions were achieved. Also during this period,
PrePay has been  enhanced to increase  peak  throughput  capability  and improve
reliability.

      As of  December  31,  1998 102  employees  were  engaged in  research  and
development  programs,  including  hardware and software  development,  test and
engineering   support.  The  Company  believes  that  recruiting  and  retaining
engineering  personnel  is  essential  to  its  success.  Competition  for  such
personnel is intense. See "Risks and Uncertainties - Dependence on Personnel."




CUSTOMERS

      The  end  users  of  the   Company's   products  are  both   domestic  and
international   wireless   telecommunications   carriers.   BellSouth   Cellular
Corporation  and GTE Mobilnet  Service  Corporation,  each accounted for greater
than 10% of the Company's total revenues in 1998, and collectively accounted for
over 23% of the Company's  total revenues in 1998. In 1997,  BellSouth  Cellular
Corporation,  GTE Mobilnet Service  Corporation,  and  Southwestern  Bell Mobile
Systems,  Inc.  each  accounted  for  greater  than 10% of the  Company's  total
revenues,  and  collectively  accounted  for  over  33% of the  Company's  total
revenues for the year. In 1996, AT&T Wireless  Services and Los Angeles Cellular
Telephone  Company each  accounted for greater than 10% of the  Company's  total
revenues,  and  collectively  accounted  for  over  22% of the  Company's  total
revenues for the year. See "Risks and Uncertainties Customer Concentration."

      The  following is a partial list of wireless  telecommunications  carriers
that have deployed either the Company's PhonePrint or PrePay systems:

American CellularCommunications Corp.   Houston Cellular Telephone Company
AT&T Wireless Services                  Los Angeles Cellular Telephone Company
Bell Atlantic NYNEX Mobil               Pilipino Telephone Corporation (PILTEL)
BellSouth Cellular Corporation          Puerto Rico Cellular Telephone Company
Centennial Cellular Corporation         RadioMovil DIPSA, S.A. de C.V. (Telcel)
Comcast Cellular Communications, Inc.   Southwestern Bell Mobile Systems, Inc.
CCPR Services, Inc.(Cellular One        Vanguard Cellular Financial Corp.
Puerto Rico)                            United States Cellular Corporation
GTE Mobilnet Services Corp.

SALES, MARKETING, DISTRIBUTION AND CUSTOMER SUPPORT

      The Company  markets  PhonePrint to wireless  telecommunications  carriers
domestically and internationally through its direct sales force. The Company has
also entered into several  distribution  agreements  with respect to PhonePrint.
The Company sells and licenses  PhonePrint pursuant to agreements that typically
provide for hardware  purchases  and  software  licenses,  customer  service and
support  and  roaming  service  fees.  The  Company  sells and  licenses  PrePay
primarily  pursuant to a non-exclusive OEM agreement with Ericsson.  A carrier's
decision  to  deploy  PhonePrint  or PrePay  typically  involves  a  significant
commitment  of capital by the  carrier,  with the  attendant  delays  frequently
associated with  significant  capital  expenditures.  In addition,  purchases of
PhonePrint or PrePay involve testing,  integration,  implementation  and support
requirements.  For these and other reasons,  the sales cycle associated with the
purchase of PhonePrint or PrePay typically ranges from three to 18 months and is
subject  to a number  of risks  over  which  the  Company  has  little  control,
including  the  carrier's  budgetary and capital  spending  constraints  and the
internal decision making processes.  See "Risks and Uncertainties - Fluctuations
in Quarterly Financial Results; Lengthy Sales Cycle and Customer Concentration."

      For the year ended December 31, 1998, international revenues accounted for
approximately  42% of the Company's total revenues.  For the year ended December
31,  1997,  international  revenues  accounted  for  approximately  24%  of  the
Company's total revenues.  Revenue from  international  customers  accounted for
approximately  12% of the Company's  total revenues in 1996. The Company expects
that revenue from international  customers will continue to grow and account for
a larger portion of the Company's total revenues in the foreseeable  future than
it did in 1998. The Company is expanding its sales efforts outside of the United
States,  both directly and through  distributors  and switch  vendors.  Any such
expansion will require significant management attention and financial resources.
See "Risks and Uncertainties - Risks Associated with International Markets."

      The Company is actively seeking to enter into distribution  agreements and
other marketing  arrangements as it believes it will depend more on distributors
in the future, both with respect to PhonePrint, PrePay and new products, if any,
that the Company may offer. During 1998, the Company entered into a distribution
agreement  with  Telesis  Sistemas em  Telecomunicacoes  Ltda.,  with respect to
PhonePrint for the territory covering the countries of Argentina, Brazil, Chile,
Paraguay,  and Uruguay. As a result of its acquisition of Subscriber  Computing,
Inc. in 1998,  the Company is party to a  non-exclusive  agreement with Ericsson
dated June 3, 1997  which  provides  Ericsson  the right to  sub-license  PrePay
worldwide.  During 1997, the Company entered into  distribution  agreements with
Motorola,  Inc.  ("Motorola")  and Ericsson,  which provides these companies the
ability to distribute PhonePrint worldwide on a non-exclusive basis. The Company
has also entered into sales referral agreements with Lucent  Technologies,  Inc.
("Lucent") and Sumitomo Corporation of America ("Sumitomo")  allowing Lucent and
Sumitomo to work with the Company to generate sales leads in certain situations.
In 1996, the Company entered into a distribution  agreement with Aurora Wireless
Technologies,  Ltd.  ("Aurora"),  which  provides  Aurora  with the  ability  to
distribute  PhonePrint  throughout the  Asia/Pacific  region,  as defined in the
agreement.  Pursuant to these arrangements,  PhonePrint systems have been placed
with carriers in the  Philippines,  and Europe.  See "Risks and  Uncertainties -
Dependence on Distributors."

      The Company  provides  service  and  technical  support  for its  products
through  both  its  direct  field   service  and  support   personnel   and  its
distributors.  A high level of continuing service and support is critical to the
Company's  objective of developing  long-term  relationships with its customers.
The Company also provides on-site installations and technical assistance as part
of the  standard  support  and  service  package  that its  customers  typically
purchase for the length of their  respective  agreements  with the Company.  The
Company also offers various training courses for its distributors and customers.


COMPETITION

      The market for PhonePrint is intensely and increasingly  competitive.  The
Company  believes  that the primary  competitive  factors in the  cloning  fraud
prevention market in which it currently competes include carriers' timelines for
phasing out analog standards,  product effectiveness and quality, price, service
and support  capability and compatibility  with cloning fraud prevention systems
used by the carrier in other  geographic  markets and by the  carrier's  roaming
partners.  The expansion of digital  networks and the  reluctance of carriers to
make further investments in their existing analog infrastructure has limited the
demand for PhonePrint.

      The Company's  principal  competitor for RF-based cloning fraud prevention
systems is Cellular Technical Services Company, Inc. ("CTS"). CTS has agreements
pursuant to which it has  installed or will install its RF-based  cloning  fraud
prevention  system in many major U.S.  markets.  PhonePrint also competes with a
number of alternative technologies, including profilers, personal identification
numbers  and  authentication.  The  Company  is  aware  of  numerous  companies,
including  GTE  Telecommunications  Services,  Inc.,  Authentix  Network,  Inc.,
Systems/Link, and Lightbridge, Inc., that currently are or are expected to offer
products in the  cloning  fraud  prevention  area.  In  addition,  carriers  may
themselves develop technologies that limit the demand for PhonePrint.  There can
be no assurance that any such company or any other competitor will not introduce
a new product at a lower price or with greater  functionality  than  PhonePrint.
Furthermore, the demand for PhonePrint would be materially adversely affected if
wireless   telecommunications   carriers  implement  authentication   technology
applicable  to analog  phones as their  sole  cloning  fraud  solution  in major
markets,  if U.S. wireless  telecommunications  carriers adopt a uniform digital
standard  that  reduces  the need for  digital  phones to operate in analog mode
while roaming,  or if analog phone makers change product  designs and/or improve
manufacturing  standards to a point where the difference  from phone to phone in
the radio  waveform  becomes so small that it is  difficult  for  PhonePrint  to
identify  a  clone.  There  can be no  assurance  that any  currently  available
alternative  technology  or any new  technology  will not render  the  Company's
products obsolete or significantly  reduce the market share afforded to RF-based
cloning fraud prevention  systems like PhonePrint.  See "Risks and Uncertainties
Dependence on PhonePrint, Dependence on Analog Networks."

      The market for PrePay is new and intensely and  increasingly  competitive.
PrePay competes with a number of alternative prepaid billing products, including
post-call systems, handset-based systems and adjunct switch systems. The Company
is aware of numerous companies, including GTE Telecommunications Services, Inc.,
Boston  Communications   Group,  Inc.,  Brite  Voice  Systems,   Inc.,  Comverse
Technology,   Inc.,  Glenayre   Technologies,   Inc.,  National   Telemanagement
Corporation,  Telemac Cellular Corporation,  Systems/Link  Corporation,  Prairie
Systems,  Inc., ORGA  Kartensysteme  GmbH, SEMA Group,  Logica plc, Alcatel USA,
Priority Call Management, Lucent Technologies,  Inc., TeleCommunication Systems,
Inc. and Northern  Telecom  Limited that  currently are or are expected to offer
prepaid  wireless  billing  products.  There can be no  assurance  that any such
company or any other  competitor  will not  introduce  a new  product at a lower
price or with greater  functionality  than PrePay.  Furthermore,  the demand for
PrePay would be materially adversely affected if wireless carriers implement WIN
standards and prepaid  systems other than PrePay as their sole prepaid  solution
in  major  markets.  There  can be no  assurance  that any  currently  available
alternative  technology  or any new  technology  will not render  the  Company's
PrePay  system  obsolete or  significantly  reduce the market share  afforded to
prepaid wireless billing systems like PrePay.

      The  market  for  other   products  and  services   provided  to  wireless
telecommunications   carriers  is  highly   competitive  and  subject  to  rapid
technological change,  regulatory  developments and emerging industry standards.
In addition, many wireless  telecommunications  carriers and vendors of switches
and other telecommunications equipment may be capable of developing and offering
products and services  competitive  with new products,  if any, that the Company
may offer in the future.  Trends in the  wireless  telecommunications  industry,
including greater  consolidation  and  technological or other  developments that
make it simpler or more cost-effective for wireless  telecommunications carriers
to provide certain services themselves could affect demand for new products,  if
any, offered by the Company, and could make it more difficult for the Company to
offer a cost-effective  alternative to a wireless  telecommunications  carrier's
own capabilities. The Company is aware of a number of companies that have either
announced  an intention to develop or are capable of  developing  products  that
would  compete  with the  products  the  Company  may  develop,  and the Company
anticipates the entrance of new  competitors in the wireless  telecommunications
carrier  service  industry  in the  future.  The  Company's  ability to sell new
products,  if any, may be hampered by  relationships  that competitors have with
carriers based upon the prior sale of other products to carriers.

      The Company  believes that its ability to compete in the future depends in
part on a number of  competitive  factors  outside its  control,  including  the
ability to hire and retain employees,  the development by others of products and
services  that are  competitive  with the Company's  products and services,  the
price at which others offer  comparable  products and services and the extent of
its  competitors'  responsiveness  to  customer  needs.  Many  of the  Company's
competitors and potential  competitors  have  significantly  greater  financial,
marketing,  technical and other  competitive  resources  than the Company.  As a
result,  the Company's  competitors  may be able to adapt more quickly to new or
emerging  technologies  and changes in customer  requirements  or may be able to
devote  greater  resources  to the  promotion  and  sale of their  products  and
services.  To remain competitive in the market for products and services sold to
wireless  telecommunications  carriers,  the  Company  will need to  continue to
invest substantial resources in engineering,  research and development and sales
and marketing.  There can be no assurance that the Company will have  sufficient
resources to make such  investments or that the Company will be able to make the
technological advances necessary to remain competitive.  Accordingly,  there can
be no  assurance  that the  Company  will be able to compete  successfully  with
respect to new products, if any, it offers in the future.


MANUFACTURING

      The Company's  manufacturing objective is to produce products that conform
to  Corsair's   specifications  at  the  lowest  possible   manufacturing  cost.
Manufacturing,  system  integration and certain testing operations are performed
at  the  Company's  headquarters  in  Palo  Alto,   California.   The  Company's
manufacturing  operations  consist  primarily of assembling  finished goods from
components and subassemblies  purchased from third parties. The Company monitors
quality at each stage of the  production  process,  including  the  selection of
component suppliers, the assembly of finished goods and final testing, packaging
and shipping.

      The  Company  relies  to  a  substantial  extent  on  outside  vendors  to
manufacture many of the components and subassemblies  used in PhonePrint and the
hardware  and third party  software  used in PrePay,  some of which are obtained
from a single supplier or a limited group of suppliers.  The Company's  reliance
on outside  vendors  generally,  and a sole or a limited  group of  suppliers in
particular, involves several risks, including a potential inability to obtain an
adequate supply of required components and reduced control over quality, pricing
and timing of delivery of  components.  In the past the Company has  experienced
delays in receiving materials from vendors, sometimes resulting in delays in the
assembly of products by the Company.  See "Risks and  Uncertainties - Dependence
on Third-Party Products and Services; Sole or Limited Sources of Supply."



<PAGE>


PATENTS AND PROPRIETARY RIGHTS

      The Company relies on a combination of patent, trade secret, copyright and
trademark  protection and  nondisclosure  agreements to protect its  proprietary
rights. As of December 31, 1998, the Company had four issued U.S. patents,  five
pending U.S.  patent  applications;  one issued  foreign  patent and two pending
foreign patent applications.  The Company's success will depend in large part on
the ability of the Company to obtain  patent  protection,  defend  patents  once
obtained,  license third-party  proprietary  rights,  maintain trade secrets and
operate without  infringing  upon the patents and proprietary  rights of others.
The patent positions of companies in the wireless  telecommunications  industry,
including  the Company,  are generally  uncertain and involve  complex legal and
factual  questions.  There can be no assurance  that patents will issue from any
patent  applications  owned or licensed  to the  Company or that,  if patents do
issue,  the claims allowed would be sufficiently  broad to protect the Company's
technology. In addition, there can be no assurance that any issued patents owned
by  or  licensed  to  the  Company  will  not  be  challenged,   invalidated  or
circumvented,  or that the rights granted  thereunder  will provide  competitive
advantages to the Company.

      Patents issued and patent  applications filed relating to products used in
the  wireless  telecommunications  industry  are  numerous  and  there can be no
assurance  that current and potential  competitors  and other third parties have
not filed or in the future will not file  applications for, or have not received
or in the future  will not  receive,  patents or obtain  additional  proprietary
rights  relating to products  used or proposed to be used by the Company.  There
can be no  assurance  that  the  Company  is  aware  of all  patents  or  patent
applications  that may materially  affect the Company's  ability to make, use or
sell any current or future products.  U.S. patent  applications are confidential
while pending in the U.S. Patent and Trademark Office,  and patent  applications
filed in foreign  countries  are often first  published six months or more after
filing.  There can also be no  assurance  that  third  parties  will not  assert
infringement  claims  against  the  Company  in the  future  or  that  any  such
assertions will not result in costly litigation or require the Company to obtain
a license  to  intellectual  property  rights of such  parties.  There can be no
assurance that any such licenses  would be available on terms  acceptable to the
Company,  if at all.  Furthermore,  parties  making  such  claims may be able to
obtain  injunctive or other equitable  relief that could  effectively  block the
Company's  ability to make,  use,  sell or otherwise  practice its  intellectual
property (whether or not patented or described in pending patent  applications),
or to further develop or  commercialize  its products in the U.S. and abroad and
could  result in the award of  substantial  damages.  Defense of any  lawsuit or
failure to obtain any such license could have a material  adverse  effect on the
Company's business, operating results or financial condition.


      The  Company  also  relies on  unpatented  trade  secrets to  protect  its
proprietary  technology,  and no  assurance  can be given that  others  will not
independently develop or otherwise acquire the same or substantially  equivalent
technologies or otherwise gain access to the Company's proprietary technology or
disclose such  technology or that the Company can ultimately  protect its rights
to such unpatented proprietary technology.  No assurance can be given that third
parties will not obtain patent rights to such  unpatented  trade secrets,  which
patent rights could be used to assert  infringement  claims against the Company.
The  Company  also  relies on  confidentiality  agreements  with its  employees,
vendors,  consultants and customers to protect its proprietary technology. There
can be no assurance that these agreements will not be breached, that the Company
would have adequate  remedies for any breach or that the Company's trade secrets
will not otherwise become known to or be independently developed by competitors.
Failure  to obtain or  maintain  patent  and trade  secret  protection,  for any
reason,  could  have  a  material  adverse  effect  on the  Company's  business,
operating results and financial condition.



EMPLOYEES

      As of December 31, 1998,  the Company had 258  employees,  including 81 in
sales and marketing, 47 in manufacturing,  102 in research and development,  and
28  in  finance  and  administration.   None  of  the  Company's  employees  are
represented  by  a  collective  bargaining   agreement,   nor  has  the  Company
experienced any work stoppages. The Company believes that its relations with its
employees are good.


<PAGE>


RISKS AND UNCERTAINTIES

      The Company  operates in a rapidly  changing  environment  that involves a
number of risks, many of which are beyond the Company's  control.  The following
discussion  highlights some of these risks.  The Company's  actual results could
differ  materially  from those  discussed  herein.  Factors  that could cause or
contribute to such differences  include, but are not limited to, those discussed
in this section and elsewhere in this Annual Report,  and the risks discussed in
the Company's other SEC filings.

      Lack of Sustained Profitability. The Company has incurred net losses since
its  incorporation  resulting in an  accumulated  deficit of $52.6 million as of
December 31, 1998. There can be no assurance that the Company's existing revenue
levels can be  sustained,  and past and existing  revenue  levels  should not be
considered  indicative of future  results or growth.  Moreover,  there can be no
assurance  that the Company  will reach  profitability  on a quarterly or annual
basis.   Operating   results   for  future   periods  are  subject  to  numerous
uncertainties  specified  elsewhere in this Annual Report.  The Company's future
operating  results  will  depend  upon,  among  other  factors:  the  demand for
PhonePrint; the demand for PrePay, the Company's ability to introduce successful
new products and product enhancements,  including products that are sold to both
analog  network   carriers  and  digital  network   carriers  such  as  Personal
Communications  Services ("PCS") and Enhanced  Specialized Mobile Radio ("ESMR")
carriers; the level of product and price competition; the ability of the Company
to  expand  its   international   sales;  the  Company's  success  in  expanding
distribution  channels;  the  Company's  success  in  attracting  and  retaining
motivated  and  qualified  personnel;  and the  ability of the  Company to avoid
patent and intellectual property litigation. If the Company is not successful in
addressing  such risks,  as well as the others set forth in this Annual  Report,
the  Company's  business,  operating  results and  financial  condition  will be
materially adversely affected.

      Dependence on  PhonePrint;  Dependence on Analog  Networks.  To date,  the
Company's revenues have primarily been attributable to PhonePrint, the Company's
cloning fraud  prevention  system,  and the Company  anticipates that PhonePrint
will  continue  to account  for a majority  of the  Company's  revenues at least
through the end of 1999. As a result,  the Company's  future  operating  results
will depend on the demand for and market acceptance of PhonePrint.  A relatively
small number of carriers that operate analog  networks  constitute the potential
customers for  PhonePrint.  A large majority of the carriers that operate analog
networks in the largest U.S. markets have to varying degrees already implemented
cloning fraud  solutions,  and the Company believes the demand for cloning fraud
solutions in the U.S.  has begun to decline and will  continue to decline in the
future. If not offset by growth in international markets, this trend will have a
material  adverse effect on PhonePrint  sales.  Over time, this trend could also
occur in international  markets.  As carriers that operate analog networks adopt
cloning  fraud  solutions for their  existing  networks,  the future  commercial
success of  PhonePrint  will depend in part on the further  expansion  of analog
networks by those carriers.  The rate of  implementation  of new analog networks
has  slowed  significantly  and  some  carriers  have  determined  not  to  make
additional  investments in their existing  analog  networks.  As analog networks
expand  slowly or cease to expand,  the future  demand  for  PhonePrint  will be
materially adversely affected.  There can be no assurance that the international
market for cloning fraud  solutions will grow as the U.S.  market  declines,  or
that current or future levels of revenues  attributable  to  PhonePrint  will be
maintained or will not decline. Any reduction in the demand for PhonePrint would
have a material adverse effect on the Company's business,  operating results and
financial condition.

      All of the Company's  customers for  PhonePrint to date have been carriers
that operate  analog  networks.  Wireless  services  operating in digital  mode,
including PCS and ESMR in the U.S. and Global  System for Mobile  Communications
("GSM") in many foreign countries  (including many European  countries),  use or
may use authentication  processes that automatically establish the validity of a
phone each time it attempts to access the wireless  telecommunications  network.
The Company is not aware of any information that suggests that cloners have been
able to break the authentication encryption technologies.  Unless the encryption
technologies that form the basis for authentication  are broken by cloners,  the
Company does not believe that operators of digital  networks will purchase third
party radio frequency ("RF") fingerprinting  solutions for cloning fraud such as
PhonePrint.  In addition,  authentication processes for analog networks are also
currently  available and are being employed by a significant number of carriers.
The Company is also very  dependent on the  continued  widespread  use of analog
networks.  Industry  experts project that the number of analog phones and analog
networks  will  ultimately  decline.  Any  reduction in demand by carriers  that
operate analog networks for cloning fraud  solutions  would, or any reduction in
the use of analog phones could,  have a material adverse effect on the Company's
business, operating results and financial condition.

      Dependence on PrePay;  Dependence  on Ericsson  Radio Systems AB Switching
Equipment . The Company  anticipates that PrePay,  the Company's prepaid metered
billing  solution,  will  account  for a  growing  percentage  of the  Company's
revenues in 1999.  As a result,  the  Company's  future  operating  results will
depend on the demand for and market  acceptance of PrePay. To date, only a small
number of wireless  carriers have deployed  PrePay,  and the rate of adoption of
the PrePay  system  will need to increase  dramatically  in order to achieve the
Company's revenue targets. The Company's PrePay solution currently only works in
conjunction with Ericsson  switching  equipment.  Therefore,  only carriers that
have deployed  Ericsson's  infrastructure  equipment are potential customers for
PrePay.  In order to expand  the  Company's  potential  customer  base by making
PrePay compatible with other infrastructure  equipment,  each of the Company and
the  infrastructure  provider  would have to  complete  significant  development
projects. There can be no assurance that Corsair will be able to cause PrePay to
work with any other infrastructure provider's equipment, or that Corsair will be
capable of causing PrePay to work on future versions of Ericsson equipment.  Any
reduction  in the demand for  prepaid  billing  services  or any failure to gain
market  acceptance for Corsair's  PrePay solution would have a material  adverse
effect on the Company's business, operating results and financial condition.

      Fluctuations  in Quarterly  Financial  Results;  Lengthy Sales Cycle.  The
Company has  experienced  significant  fluctuations  in revenues  and  operating
results  from  quarter to quarter  due to a  combination  of factors and expects
significant  fluctuations to continue in future periods. Factors that are likely
to cause the Company's revenues and operating results to vary significantly from
quarter to  quarter  include,  among  others:  the level and timing of  revenues
associated  with  PhonePrint  and  PrePay;  the  timing of the  introduction  or
acceptance of new products and services and product  enhancements offered by the
Company  and its  competitors;  technological  changes  or  developments  in the
wireless  telecommunications  industry;   dependence  on  a  limited  number  of
products;  the size, product mix and timing of significant orders; the timing of
system  revenue;  competition  and  pricing in the  markets in which the Company
competes;   possible  recalls;  lengthy  sales  cycles;  production  or  quality
problems; the timing of development expenditures; further expansion of sales and
marketing  operations;  changes in  material  costs;  disruptions  in sources of
supply;  capital spending;  the timing of payments by customers;  and changes in
general economic conditions.  These and other factors could cause the Company to
recognize  relatively large amounts of revenue over a very short period of time,
followed by a period  during  which  relatively  little  revenue is  recognized.
Because of the relatively fixed nature of most of the Company's costs, including
personnel and facilities costs, any  unanticipated  shortfall in revenues in any
quarter would have a material adverse impact on the Company's  operating results
in that quarter and would likely result in substantial  adverse  fluctuations in
the price of the Company's Common Stock.  Accordingly,  the Company expects that
from time to time its future operating results will be below the expectations of
market analysts and investors, which would likely have a material adverse effect
on the prevailing market price of the Common Stock.

      A carrier's  decision to deploy PhonePrint or PrePay typically  involves a
significant  commitment  of capital by the  carrier  and  approval by its senior
management.  Consequently,  the timing of purchases are subject to uncertainties
and delays frequently associated with significant expenditures,  and the Company
is not able to accurately  forecast  future sales of  PhonePrint  or PrePay.  In
addition,  purchases of  PhonePrint  and PrePay  involve  testing,  integration,
implementation and support requirements.  For these and other reasons, the sales
cycle  associated  with the purchase of PhonePrint and PrePay  typically  ranges
from  three to 18 months  and is  subject  to a number of risks  over  which the
Company has little  control,  including  the  carrier's  budgetary  and spending
constraints and internal  decision-making  processes.  In addition,  a carrier's
purchase  decision may be delayed as a result of announcements by the Company or
competitors   of  new  products  or  product   enhancements   or  by  regulatory
developments.  The Company expects that there will be a lengthy sales cycle with
respect to new  products,  if any,  that the  Company  may offer in the  future.
Because of this lengthy sales cycle and the  relatively  large size of a typical
order and because the  Company  does not  recognize  revenue  until  contractual
acceptance criteria are met, if revenues forecasted from a specific customer for
a particular quarter are not realized in that quarter,  the Company's  operating
results for that quarter could be materially and adversely affected.

      Dependence on  Distributors.  PhonePrint is currently  marketed  primarily
through the  Company's  direct  sales  efforts.  The  Company  has entered  into
distribution  agreements  with  respect  to  PhonePrint  with,  amongst  others,
Motorola,  Inc.,  Ericsson and Aurora  Wireless  Technologies,  Ltd. and a sales
referral agreement with Lucent  Technologies,  Inc. and Sumitomo  Corporation of
America.   PrePay  is  currently   marketed   primarily  through  the  Company's
distribution  agreement  with  Ericsson,  and to a limited  extent,  through the
Company's  direct  sales  efforts.  The  Company  seeks to  pursue  distribution
agreements  and  other  forms of sales and  marketing  arrangements  with  other
companies and the Company believes that its dependence on distributors and these
other sales and marketing  relationships will increase in the future,  both with
respect to  PhonePrint,  PrePay and new  products,  if any, that the Company may
offer in the future. There are no minimum purchase obligations applicable to any
existing  distributor or other sales and marketing partners and the Company does
not  expect  to have  any  guarantees  of  continuing  orders.  There  can be no
assurance that any existing or future  distributors or other sales and marketing
partners will not become  competitors of the Company with respect to PhonePrint,
PrePay  or any  future  product  either  by  developing  a  competitive  product
themselves or by  distributing  a  competitive  offering.  In fact,  the Company
believes  that with respect to PrePay,  Ericsson  from time to time may evaluate
and  seek  to  distribute  or  acquire  alternative   vendor's  prepaid  product
offerings.  Any failure by the  Company's  existing and future  distributors  or
other sales and marketing partners to generate significant revenues could have a
material  adverse  effect  on the  Company's  business,  operating  results  and
financial condition.

      Risks  Associated  with  International  Markets.  In an  effort  to offset
declining demand in the U.S. for cloning fraud solutions, the Company intends to
devote  significant  marketing  and sales efforts over the next several years to
increase its sales of PhonePrint  and PrePay to  international  customers.  This
expansion  of  sales  efforts  outside  of the  U.S.  will  require  significant
management attention and financial resources. There can be no assurance that the
Company  will  be  successful  in  achieving  significant  growth  of  sales  of
PhonePrint and PrePay in international  markets.  The Company does not expect to
sell PhonePrint in the many international markets that rely primarily on digital
wireless networks,  including many European countries.  In addition, the Company
does not anticipate  selling PrePay to any wireless  carriers that do not employ
Ericsson switching equipment.

      The Company's  international  sales may be  denominated in foreign or U.S.
currencies.  The Company does not currently  engage in foreign  currency hedging
transactions.  As a  result,  a  decrease  in the  value of  foreign  currencies
relative to the U.S. dollar could result in losses from transactions denominated
in foreign  currencies.  With respect to the Company's  international sales that
are U.S.  dollar-denominated,  such a decrease could make the Company's  systems
less price-competitive. Additional risks inherent in the Company's international
business  activities include changes in regulatory  requirements,  the costs and
risks of  localizing  systems  in foreign  countries,  tariffs  and other  trade
barriers,   political  and  economic   instability,   reduced   protection   for
intellectual property rights in certain countries,  difficulties in staffing and
managing foreign operations, difficulties in managing distributors,  potentially
adverse tax consequences,  foreign currency exchange fluctuations, the burden of
complying  with a wide  variety of complex  foreign  laws and  treaties  and the
possibility  of  difficulty  in  accounts  receivable  collections.  The Company
anticipates  that  product  service and  support  will be more  complicated  and
expensive with respect to products sold in  international  markets.  The Company
may need to adapt its products to conform to different  technical standards that
may exist in foreign  countries.  Future  customer  purchase  agreements  may be
governed  by  foreign  laws,  which may  differ  significantly  from U.S.  laws.
Therefore, the Company may be limited in its ability to enforce its rights under
such agreements and to collect  damages,  if awarded.  There can be no assurance
that  any of  these  factors  will not have a  material  adverse  effect  on the
Company's business, operating results and financial condition.

      Potential Acquisitions.  The Company has in the past evaluated and expects
in the future to pursue  acquisitions  of businesses,  products or  technologies
that complement the Company's  business.  Future  acquisitions may result in the
potentially  dilutive issuance of equity securities,  the use of cash resources,
the  incurrence of  additional  debt,  the write-off of in-process  research and
development or software  acquisition and development  costs and the amortization
of expenses related to goodwill and other intangible  assets, any of which could
have a material adverse effect on the Company's business,  operating results and
financial  condition.  Future  acquisitions  would involve  numerous  additional
risks, including  difficulties in the assimilation of the operations,  services,
products and personnel of an acquired  business,  the diversion of  management's
attention from other business  concerns,  entering  markets in which the Company
has little or no direct prior experience and the potential loss of key employees
of an acquired business. In addition, there can be no assurance that the Company
would be successful in completing any acquisition.  The Company currently has no
agreements or understandings with regard to any acquisition.

      Highly  Competitive  Industry.  The  market  for  PhonePrint  is  new  and
intensely and  increasingly  competitive.  The Company believes that the primary
competitive factors in the cloning fraud prevention market in which it currently
competes include product  effectiveness and quality,  price, service and support
capability and compatibility  with cloning fraud prevention  systems used by the
carrier in other geographic markets and by the carrier's roaming partners. There
has been a tendency for carriers that purchase cloning fraud prevention  systems
to purchase  products  from the company that supplies  cloning fraud  prevention
systems  to other  carriers  with  whom the  purchasing  carrier  has a  roaming
arrangement.  As a result,  the Company  expects it will be  significantly  more
difficult to sell PhonePrint to a carrier if the carrier's  roaming partners use
cloning fraud prevention systems supplied by a competitor.  Furthermore,  once a
competitor  has made a sale of RF-based  cloning fraud  prevention  systems to a
carrier,  the Company expects that it is unlikely that the Company would be able
to sell PhonePrint to that carrier.

      The Company's  principal  competitor for RF-based cloning fraud prevention
systems is Cellular Technical Services Company, Inc. ("CTS"). CTS has agreements
pursuant to which it has  installed or will install its RF-based  cloning  fraud
prevention  system in many major U.S.  markets.  PhonePrint also competes with a
number of alternative technologies, including profilers, personal identification
numbers  and  authentication.  The  Company  is  aware  of  numerous  companies,
including  GTE  Telecommunications  Services,  Inc.,  Authentix  Network,  Inc.,
Systems/Link and Lightbridge,  Inc., that currently are or are expected to offer
products in the cloning fraud prevention area. The expansion of digital networks
and the  reluctance of carriers to make further  investments  in their  existing
analog  infrastructure  has  limited  the demand for  PhonePrint.  In  addition,
carriers  may  themselves  develop   technologies  that  limit  the  demand  for
PhonePrint.  There  can be no  assurance  that any  such  company  or any  other
competitor  will not  introduce a new  product at a lower price or with  greater
functionality than PhonePrint.  Furthermore,  the demand for PhonePrint would be
materially adversely affected if wireless  telecommunications carriers implement
authentication  technology  applicable  to analog  phones as their sole  cloning
fraud solution in major markets,  if U.S. wireless  telecommunications  carriers
adopt a uniform  digital  standard  that reduces the need for digital  phones to
operate in analog mode while  roaming,  or if analog phone makers change product
designs and/or improve  manufacturing  standards to a point where the difference
from phone to phone in the radio waveform  becomes so small that it is difficult
for PhonePrint to identify a clone. There can be no assurance that any currently
available  alternative  technology  or any new  technology  will not  render the
Company's products obsolete or significantly reduce the market share afforded to
RF-based cloning fraud prevention systems like PhonePrint.

      The market for PrePay is new and increasingly competitive. PrePay competes
with a number of  alternative  prepaid  billing  products,  including  post-call
systems,  handset-based systems and adjunct switch systems. The Company is aware
of numerous companies,  including GTE Telecommunications  Services, Inc., Boston
Communications  Group,  Inc., Brite Voice Systems,  Inc.,  Comverse  Technology,
Inc., Glenayre Technologies,  Inc., National Telemanagement Corporation, Telemac
Cellular  Corporation,  Systems/Link  Corporation,  Prairie Systems,  Inc., ORGA
Kartensysteme   GmbH,  SEMA  Group,  Logica  plc,  Alcatel  USA,  Priority  Call
Management,  Lucent  Technologies,  Inc.,  TeleCommunication  Systems,  Inc. and
Northern  Telecom  Limited that  currently  are or are expected to offer prepaid
wireless  billing  products.  There can be no assurance that any such company or
other  competitor  will not  introduce  a new  product at a lower  price or with
greater functionality than PrePay.  Furthermore,  the demand for PrePay would be
materially   adversely   affected  if  wireless  carriers   implement   wireless
intelligent  network standards and a prepaid offering other than PrePay as their
sole  prepaid  solution in major  markets.  There can be no  assurance  that any
currently available alternative technology or any new technology will not render
the Company's  PrePay system obsolete or  significantly  reduce the market share
afforded to prepaid wireless billing systems like PrePay.

      The  market  for  other   products  and  services   provided  to  wireless
telecommunications   carriers  is  highly   competitive  and  subject  to  rapid
technological change,  regulatory  developments and emerging industry standards.
In addition, many wireless  telecommunications  carriers and vendors of switches
and other telecommunications equipment may be capable of developing and offering
products and services  competitive  with new products,  if any, that the Company
may offer in the future.  Trends in the  wireless  telecommunications  industry,
including greater  consolidation  and  technological or other  developments that
make it simpler or more cost-effective for wireless  telecommunications carriers
to provide certain services themselves could affect demand for new products,  if
any, offered by the Company, and could make it more difficult for the Company to
offer a cost-effective  alternative to a wireless  telecommunications  carrier's
own capabilities.

      The Company  believes that its ability to compete in the future depends in
part on a number of  competitive  factors  outside its  control,  including  the
ability to hire and retain employees,  the development by others of products and
services  that are  competitive  with the Company's  products and services,  the
price at which others offer  comparable  products and services and the extent of
its  competitors'  responsiveness  to  customer  needs.  Many  of the  Company's
competitors and potential  competitors  have  significantly  greater  financial,
marketing,  technical and other  competitive  resources  than the Company.  As a
result,  the Company's  competitors  may be able to adapt more quickly to new or
emerging  technologies  and changes in customer  requirements  or may be able to
devote  greater  resources  to the  promotion  and  sale of their  products  and
services.  To remain competitive in the market for products and services sold to
wireless  telecommunications  carriers,  the  Company  will need to  continue to
invest substantial resources in engineering,  research and development and sales
and marketing.  There can be no assurance that the Company will have  sufficient
resources to make such  investments or that the Company will be able to make the
technological advances necessary to remain competitive.  Accordingly,  there can
be no  assurance  that the  Company  will be able to compete  successfully  with
respect to new products, if any, it offers in the future.

      Customer  Concentration.  To date, a significant  portion of the Company's
revenues in any particular  period has been  attributable to a limited number of
customers, comprised entirely of wireless telecommunications carriers. BellSouth
Cellular  Corporation and GTE Mobilnet  Service  Corporation  each accounted for
greater  than 10% of the  Company's  total  revenues  in 1998  and  collectively
accounted  for over  23% of the  Company's  total  revenues  in  1998.  In 1997,
BellSouth   Cellular   Corporation,   GTE  Mobilnet   Service   Corporation  and
Southwestern  Bell Mobile  Systems,  Inc. each accounted for greater than 10% of
the Company's total revenues in 1997, and collectively accounted for over 33% of
the Company's total revenues for the year. In 1996, AT&T Wireless Services,  and
Los Angeles  Cellular  Telephone  Company each accounted for greater than 10% of
the Company's total  revenues,  and  collectively  accounted for over 22% of the
Company's  total  revenues for the year.  A relatively  small number of carriers
that operate  analog  networks are  potential  customers  for  PhonePrint  and a
relatively small number of carriers that use Ericsson  infrastructure  equipment
are  potential  customers  for PrePay.  The Company  believes that the number of
potential  customers for future products,  if any, will be relatively small. Any
failure by the Company to capture a significant  share of those  customers could
have a material adverse effect on the Company's business,  operating results and
financial condition.  The Company expects a relatively small number of customers
will  continue to represent a significant  percentage of its total  revenues for
each quarter for the  foreseeable  future,  although the companies that comprise
the largest  customers in any given  quarter may change from quarter to quarter.
The terms of the  Company's  agreements  with its  customers  are  generally for
periods of between  two and five  years.  Although  these  agreements  typically
contain annual software license fees and various service and support fees, there
are no minimum  payment  obligations or obligations to make future  purchases of
hardware or to license additional software. Therefore, there can be no assurance
that any of the Company's current customers will generate  significant  revenues
in future periods.

      Uncertainty  Regarding  Patents and Protection of Proprietary  Technology;
Risks of Future Litigation. The Company relies on a combination of patent, trade
secret,  copyright  and trademark  protection  and  nondisclosure  agreements to
protect its  proprietary  rights.  As of December 31, 1998, the Company had four
issued U.S. patent,  five pending U.S. patent  applications,  one issued foreign
patent and two pending foreign patent  applications.  The Company's success will
depend in large part on the ability of the Company to obtain patent  protection,
defend patents once obtained,  license third party proprietary rights,  maintain
trade secrets and operate  without  infringing  upon the patents and proprietary
rights  of  others.   The  patent   positions   of  companies  in  the  wireless
telecommunications  industry, including the Company, are generally uncertain and
involve  complex  legal and factual  questions.  There can be no assurance  that
patents will issue from any patent applications owned or licensed to the Company
or that, if patents do issue, the claims allowed would be sufficiently  broad to
protect the Company's  technology.  In addition,  there can be no assurance that
any issued  patents owned by or licensed to the Company will not be  challenged,
invalidated or circumvented,  or that the rights granted thereunder will provide
competitive advantages to the Company.

      Patents issued and patent  applications filed relating to products used in
the  wireless  telecommunications  industry  are  numerous  and  there can be no
assurance  that current and potential  competitors  and other third parties have
not filed or in the future will not file  applications for, or have not received
or in the future  will not  receive,  patents or obtain  additional  proprietary
rights  relating to products  used or proposed to be used by the Company.  There
can be no  assurance  that  the  Company  is  aware  of all  patents  or  patent
applications  that may materially  affect the Company's  ability to make, use or
sell any current or future products.  U.S. patent  applications are confidential
while pending in the U.S. Patent and Trademark Office,  and patent  applications
filed in foreign  countries  are often first  published six months or more after
filing.  There can also be no  assurance  that  third  parties  will not  assert
infringement  claims  against  the  Company  in the  future  or  that  any  such
assertions will not result in costly litigation or require the Company to obtain
a license  to  intellectual  property  rights of such  parties.  There can be no
assurance that any such licenses  would be available on terms  acceptable to the
Company,  if at all.  Furthermore,  parties  making  such  claims may be able to
obtain  injunctive or other equitable  relief that could  effectively  block the
Company's  ability to make,  use,  sell or otherwise  practice its  intellectual
property (whether or not patented or described in pending patent  applications),
or to further develop or  commercialize  its products in the U.S. and abroad and
could  result in the award of  substantial  damages.  Defense of any  lawsuit or
failure to obtain any such license could have a material  adverse  effect on the
Company's business, operating results or financial condition.

      The  Company  also  relies on  unpatented  trade  secrets to  protect  its
proprietary  technology,  and no  assurance  can be given that  others  will not
independently develop or otherwise acquire the same or substantially  equivalent
technologies or otherwise gain access to the Company's proprietary technology or
disclose such  technology or that the Company can ultimately  protect its rights
to such unpatented proprietary technology.  No assurance can be given that third
parties will not obtain patent rights to such  unpatented  trade secrets,  which
patent rights could be used to assert  infringement  claims against the Company.
The  Company  also  relies on  confidentiality  agreements  with its  employees,
vendors,  consultants and customers to protect its proprietary technology. There
can be no assurance that these agreements will not be breached, that the Company
would have adequate  remedies for any breach or that the Company's trade secrets
will not otherwise become known to or be independently developed by competitors.
Failure  to obtain or  maintain  patent  and trade  secret  protection,  for any
reason,  could  have  a  material  adverse  effect  on the  Company's  business,
operating results and financial condition.

      Dependence  on New Product  Introductions  and Product  Enhancements.  The
Company's  future success depends on the timely  introduction  and acceptance of
new products and product enhancements.  However,  there can be no assurance that
any new products or product enhancements the Company attempts to develop will be
developed  successfully or on schedule, or if developed,  that they will achieve
market acceptance.  In addition, there can be no assurance that the Company will
successfully  execute  its  strategy  of  acquiring  businesses,   products  and
technologies  from  third  parties.  Any  failure by the  Company  to  introduce
commercially  successful new products or product enhancements or any significant
delay in the  introduction  of such new products or product  enhancements  would
have a material adverse effect on the Company's business,  operating results and
financial condition.

      The process of developing new products and product enhancements for use in
the wireless telecommunications industry is extremely complex and is expected to
become  more  complex  and   expensive  in  the  future  as  new  platforms  and
technologies  emerge.  In the past,  the Company has  experienced  delays in the
introduction of certain product enhancements, and there can be no assurance that
new products or product  enhancements  will be introduced on schedule or at all.
Any new products or product  enhancements  may also  contain  defects when first
introduced  or when new versions are released.  There can be no assurance  that,
despite  testing by the  Company,  defects  will not be found in new products or
product  enhancements after commencement of commercial  shipments,  resulting in
loss of or delay in market acceptance. Any loss of or delay in market acceptance
would  have a  material  adverse  effect on the  Company's  business,  operating
results and financial condition.

      Dependence on Third-Party  Products and Services;  Sole or Limited Sources
of Supply.  The Company  relies to a  substantial  extent on outside  vendors to
manufacture many of the components and subassemblies  used in PhonePrint and the
hardware  and third party  software  used in PrePay,  some of which are obtained
from a single supplier or a limited group of suppliers.  The Company's  reliance
on outside  vendors  generally,  and a sole or a limited  group of  suppliers in
particular, involves several risks, including a potential inability to obtain an
adequate supply of required components and reduced control over quality, pricing
and timing of delivery of components.  In the past, the Company has  experienced
delays in receiving materials from vendors, sometimes resulting in delays in the
assembly of products by the Company. Such delays, or other significant vendor or
supply quality issues, may occur in the future, which could result in a material
adverse  effect  on the  Company's  business,  operating  results  or  financial
condition.  The manufacture of certain of these components and  subassemblies is
specialized  and requires  long lead times,  and there can be no assurance  that
delays or shortages caused by vendors will not reoccur.  Any inability to obtain
adequate deliveries, or any other circumstance that would require the Company to
seek  alternative  sources of supply or to  manufacture  internally  could delay
shipment of the Company's  products,  increase its cost of goods sold and have a
material  adverse  effect  on the  Company's  business,  operating  results  and
financial condition.  In addition, from time to time, the Company must also rely
upon third  parties to develop and introduce  components  and products to enable
the Company,  in turn,  to develop new products  and product  enhancements  on a
timely and  cost-effective  basis.  In particular,  the Company must rely on the
development efforts of third party wireless infrastructure providers in order to
allow its PrePay product to integrate with both existing and future  generations
of the infrastructure equipment. There can be no assurance that the Company will
be able to  obtain  access  in a  timely  manner  to  third-party  products  and
development  services  necessary to enable the Company to develop and  introduce
new and enhanced products, that the Company will obtain third-party products and
development  services on commercially  reasonable terms or that the Company will
be able to  replace  third-party  products  in the event  such  products  become
unavailable,  obsolete or  incompatible  with future  versions of the  Company's
products.  The  absence  of, or any  significant  delay in, the  replacement  of
third-party  products  could have a  material  adverse  effect on the  Company's
business, operating results and financial condition.

      Dependence on Personnel. The success of the Company is dependent, in part,
on its ability to attract and retain highly qualified  personnel.  The Company's
future business and operating results depend upon the continued contributions of
its senior  management and other  employees,  many of whom would be difficult to
replace and certain of whom perform  important  functions for the Company beyond
those  functions  suggested  by their  respective  job  titles or  descriptions.
Competition  for such  personnel  is intense  and the  inability  to attract and
retain  additional  senior  management and other employees or the loss of one or
more  members of the  Company's  senior  management  team or current  employees,
particularly to competitors,  could  materially  adversely  affect the Company's
business,  operating results or financial  condition.  There can be no assurance
that the Company will be successful in hiring or retaining requisite  personnel.
None of the Company's employees has entered into employment  agreements with the
Company,  and the Company does not have any key-person  life insurance  covering
the lives of any members of its senior management team.

      Management of Growth.  The Company has rapidly and significantly  expanded
its  operations.  Such growth has placed,  and, if  sustained,  will continue to
place,  significant demands on the Company's  management,  information  systems,
operations  and  resources.  The strain  experienced to date has chiefly been in
hiring,  integrating and effectively  managing  sufficient  numbers of qualified
personnel to support the  expansion of the  Company's  business.  The  Company's
ability to manage any future  growth,  should it occur,  will continue to depend
upon the successful expansion of its sales, marketing, research and development,
customer   support   and   administrative   infrastructure   and   the   ongoing
implementation  and  improvement  of a variety of internal  management  systems,
procedures and controls. There can be no assurance that the Company will be able
to attract, manage and retain additional personnel to support any future growth,
if any,  or  will  not  experience  significant  problems  with  respect  to any
infrastructure expansion or the attempted implementation of systems,  procedures
and  controls.  Any  failure in one or more of these areas could have a material
adverse  effect on the Company's  business,  results of operations and financial
condition.

       Government  Regulation  and  Legal  Uncertainties.   While  most  of  the
Company's  operations  are not directly  regulated,  the Company's  existing and
potential  customers  are subject to a variety of U.S. and foreign  governmental
regulations.    Such    regulations   may   adversely    affect   the   wireless
telecommunications  industry,  limit the number of potential  customers  for the
Company's products or impede the Company's ability to offer competitive products
and services to the  wireless  telecommunications  industry or otherwise  have a
material  adverse  effect on the  Company's  business,  financial  condition and
results   of   operations.   Recently   enacted   legislation,   including   the
Telecommunications Act of 1996, deregulating the telecommunications industry may
cause  changes  in  the  wireless  telecommunications  industry,  including  the
entrance of new  competitors  and  industry  consolidation,  which could in turn
increase  pricing  pressures on the Company,  decrease  demand for the Company's
products,  increase the  Company's  cost of doing  business or otherwise  have a
material  adverse  effect  on the  Company's  business,  operating  results  and
financial  condition.  The  Telecommunications  Act  of  1996  contains  several
provisions  that may bear  directly  on the  Company's  existing  and  potential
customers in the U.S.,  including  provisions that require wireless  carriers to
interconnect  with local exchange carriers and contribute to a universal service
fund,  that limit the  ability of state and local  governments  to  discriminate
against  or  prohibit  certain  wireless  services  and that may  allow  certain
companies to bundle local and long distance  services  with wireless  offerings.
These   provisions   may  cause  an   increase   in  the   number  of   wireless
telecommunications carriers which could in turn increase the number of potential
customers of the Company. This could require the Company to expand its marketing
efforts with no assurance  that revenues would  increase  proportionately  or at
all.  Alternatively,  these provisions could encourage  industry  consolidation,
which would reduce the Company's potential customer base.  Currently the FCC and
state authorities are implementing the provisions of the  Telecommunications Act
of 1996 and  several  of the  decisions  by the FCC and  state  authorities  are
already being  challenged in court.  Therefore,  the Company cannot at this time
predict the extent to which the  Telecommunications  Act of 1996 will affect the
Company's  current and potential  customers or  ultimately  affect the Company's
business,  financial  condition  or results of  operations.  If the recent trend
toward  privatization  and  deregulation  of  the  wireless   telecommunications
industry  outside of the U.S. were to discontinue,  or if currently  deregulated
international markets were to reinstate  comprehensive  government regulation of
wireless telecommunications  services, the Company's business, operating results
and financial condition could be materially and adversely affected. In addition,
the problem of cloning fraud has received heightened attention from Congress and
the FCC, which are exploring  legislative and regulatory  initiatives that would
impose stricter penalties for, and increase enforcement against,  cloning fraud.
The Company  cannot  predict  the effect of such  initiatives  on the  Company's
business,  operating  results or financial  condition,  including demand for the
Company's products.

      Dependence  on  Growth  of  Wireless   Telecommunications   Industry.  The
Company's  future  financial  performance  will  depend in part on the number of
carriers seeking  third-party  solutions to the problem of cloning fraud and the
number of carriers seeking to implement prepaid billing  services.  Although the
wireless  telecommunications  industry  has  experienced  significant  growth in
recent  years,  there can be no  assurance  that such  growth  will  continue at
similar  rates,  or that,  if the  industry  does grow,  there will be continued
demand for the Company's  cloning fraud  prevention,  prepaid metered billing or
other products. Any decline in demand for wireless  telecommunications  products
and services in general  would have a material  adverse  effect on the Company's
business, operating results and financial condition.

       Risk of System  Failure.  The continued,  uninterrupted  operation of the
PhonePrint  system  depends on protecting it from damage from fire,  earthquake,
power loss,  communications  failure,  unauthorized  entry or other events.  Any
damage to or failure of a component or combination  of components  that causes a
significant  reduction in the  performance  of a PhonePrint  system could have a
material  adverse  effect  on the  Company's  business,  operating  results  and
financial condition.  The Company currently does not have liability insurance to
protect  against these risks and there can be no assurance  that such  insurance
will be available to the Company on commercially reasonable terms, or at all. In
addition,  if any  carrier  using  PhonePrint  encounters  material  performance
problems,  the  Company's  reputation  and its business,  operating  results and
financial condition could be materially adversely affected.

      Year 2000  Compliance.  The Company's  products use and are dependent upon
certain  internally  developed and third party software programs The Company has
initiated a review and  assessment  of all  hardware  and  software  used in its
products to confirm  that they will  function  properly  in the year 2000.  With
respect to software  developed  internally  by the Company,  the results of that
evaluation to date initially  revealed  certain source codes that were unable to
appropriately  interpret  the  upcoming  calendar  year 2000.  The  Company  has
completed its work to upgrade these  programs to make them capable of processing
data  incorporating  year 2000 dates without  material errors or  interruptions.
With respect to third party software incorporated in the Company's products, all
vendors whose software is used by the Company have indicated that their software
is or will be year 2000 compliant. Evaluation of year 2000 issues is continuing,
and there can be no assurance that additional issues, not presently known by the
Company,  will not be  discovered  which  could  present a material  risk to the
function of the  Company's  products and have a material  adverse  effect on the
Company's business, operation results and financial condition.

      Future Capital  Requirements.  The Company's  future capital  requirements
will depend upon many factors,  including the  commercial  success of PhonePrint
and PrePay,  the timing and success of new product  introductions,  if any,  the
progress of the  Company's  research  and  development  efforts,  the  Company's
results of  operations,  the status of  competitive  products and the  potential
acquisition of businesses,  technologies  or assets.  The Company  believes that
combination of existing sources of liquidity and internally  generated cash will
be sufficient to meet the Company's  projected  cash needs for at least the next
12 months. There can be no assurance, however, that the Company will not require
additional financing prior to such date to fund its operations. In addition, the
Company may require additional financing after such date to fund its operations.
There can be no assurance that any additional financing will be available to the
Company on  acceptable  terms,  or at all,  when  required  by the  Company.  If
additional  funds are raised by issuing equity  securities,  further dilution to
the existing stockholders will result. If adequate funds are not available,  the
Company  may be required to delay,  scale back or  eliminate  one or more of its
development or manufacturing  programs or obtain funds through arrangements with
third  parties that may require the Company to  relinquish  rights to certain of
its  technologies  or potential  products or other assets that the Company would
not otherwise  relinquish.  Accordingly,  the inability to obtain such financing
could  have a  material  adverse  effect on the  Company's  business,  operating
results and financial condition.

       Volatility of Stock Price. The market price of the Common Stock is likely
to be highly  volatile and could be subject to wide  fluctuations in response to
numerous  factors,  including,  but not limited  to,  revenues  attributable  to
PhonePrint  and  PrePay,  new  products or new  contracts  by the Company or its
competitors,  actual  or  anticipated  variations  in  the  Company's  operating
results,  the level of operating  expenses,  changes in  financial  estimates by
securities   analysts,   potential   acquisitions,   regulatory   announcements,
developments  with  respect to patents or  proprietary  rights,  conditions  and
trends in the wireless telecommunications and other industries,  adoption of new
accounting standards affecting the industry and general market conditions.  As a
result,  the Company expects that from time to time its future operating results
will be below the  expectations  of market  analysts and investors,  which would
likely have a material  adverse  effect on the  prevailing  market  price of the
Common Stock.  The  realization of any of the risks described in these "Risk and
Uncertainties"  could have a dramatic and adverse  impact on the market price of
the Common Stock.

      Further,  the stock  market  has  experienced  extreme  price  and  volume
fluctuations  that  have  particularly  affected  the  market  prices  of equity
securities of many companies in the  telecommunications  industry and that often
have been  unrelated or  disproportionate  to the operating  performance of such
companies. These market fluctuations, as well as general economic, political and
market conditions such as recessions or international  currency fluctuations may
adversely  affect the market price of the Common Stock.  In the past,  following
periods of volatility in the market price of the  securities of companies in the
telecommunications  industry,  securities class action litigation has often been
instituted against those companies.  Such litigation,  if instituted against the
Company,  could  result in  substantial  costs  and a  diversion  of  management
attention  and  resources,  which  would have a material  adverse  effect on the
Company.

      Antitakeover  Effects of Charter,  Bylaws and Delaware  Law. The Company's
Restated  Certificate  of  Incorporation   authorizes  the  Company's  Board  of
Directors (the "Board") to issue shares of undesignated  Preferred Stock without
stockholder approval on such terms as the Board may determine. The rights of the
holders of Common  Stock will be subject to, and may be  adversely  affected by,
the rights of the holders of any such Preferred  Stock that may be issued in the
future. Moreover, the issuance of Preferred Stock may make it more difficult for
a third party to acquire,  or may  discourage  a third party from  acquiring,  a
majority of the voting  stock of the  Company.  The  Company's  Restated  Bylaws
divide  the  Company's  Board  into three  classes  of  directors.  One class of
directors is elected each year with each class serving a three-year  term. These
and other  provisions  of the  Restated  Certificate  of  Incorporation  and the
Restated Bylaws,  as well as certain  provisions of Delaware law, could delay or
impede the  removal of  incumbent  directors  and could  make more  difficult  a
merger, tender offer or proxy contest involving the Company, even if such events
could be beneficial to the interest of the  stockholders.  Such provisions could
limit the price that certain investors might be willing to pay in the future for
the Common Stock.


ITEM 2.  Properties.

      The Company maintains its corporate headquarters in Palo Alto, California.
This leased  facility,  totaling  34,555  square feet,  contains  the  principal
administrative,  assembly,  manufacturing,  marketing and sales facilities.  The
lease on this facility expires on June 1, 2002, and includes the right to expand
into the remaining 20,455 feet of space in the building beginning in April 1998.
To date, the Company has not exercised this option. The Company also maintains a
facility in Irvine,  California.  This lease, for 32,000 square feet, expires on
April 30, 2001.

ITEM 3.  Legal Proceedings.

      From time to time,  the Company may be involved in litigation  relating to
claims arising out of its operations in the normal course of business. As of the
date of this Report,  the Company is not engaged in any legal  proceedings  that
are  expected,  individually  or in the  aggregate,  to have a material  adverse
effect on the Company.

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

      No matters were submitted to a vote of security holders during the quarter
ended December 31, 1998.



<PAGE>


                                   PART II
------------------------------------------------------------------------------


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


(a)    Market Price of and Dividends on the Registrants Common Equity.

      The  Company's  Common  Stock  trades on The Nasdaq Stock Market under the
symbol  "CAIR." The table below sets forth the high and low closing sales prices
per share as reported on The Nasdaq  Stock Market  since the  Company's  initial
public offering on July 29, 1997.

                                               High                   Low
          Year Ended December 31, 1997  
Third quarter ended September 30, 1997 (1)    $21.625               $15.000
Fourth  quarter ended  December 31, 1997      $26.000               $15.000

          Year Ended December 31, 1998
First quarter ended March 31, 1998            $22.250               $14.000
Second quarter ended June 30, 1998            $21.188               $ 6.500
Third quarter  ended  September 30, 1998      $11.000               $ 2.625
Fourth  quarter ended  December 31, 1998      $ 6.250               $ 2.625
     

      (1)    From July 29, 1997 through end of the third quarter.

      On February 28, 1999,  the last  reported  sale price of the  Registrant's
Common Stock was $4.375 per share. As of February 28, 1999, the number of record
holders  of the  Company's  Common  Stock was 251 and the  number of  beneficial
holders was  approximately  1,900. The Company has declared no cash dividends on
its Common Stock. The Company  currently  intends to retain any earnings for use
in its  business  and does not  anticipate  paying  any  cash  dividends  in the
foreseeable future.



<PAGE>


ITEM 6. Selected Financial Data

      The following  selected  financial data should be read in conjunction with
the Company's  consolidated  financial  statements and related notes thereto and
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" included elsewhere herein.

      On June 23, 1998, Corsair acquired Subscriber Computing, Inc. ("SCI") in a
merger accounted for under the  pooling-of-interests  method of accounting.  The
Company's  consolidated  financial  statements have been restated to include the
financial  position  and  results of SCI for all periods  presented.  Due to the
fiscal year end conversion of SCI to that of Corsair, SCI's net revenues of $2.9
million and net loss of $4.9 million for the three month  period ended  December
31, 1997 are not included in the Statement of Operations data.

      The selected financial data presented below under the captions  "Statement
of Operations  Data" for each of the years ended December 31, 1994,  1995, 1996,
1997 and 1998 combines Corsair's  statements of operations for each of the years
in the  five-year  period  ended  December  31,  1998 with SCI's  statements  of
operations  for each of the years in the  four-year  period ended  September 30,
1997, and the year ended December 31, 1998,  respectively,  giving effect to the
fiscal year end conversion and the merger as if it had occurred at the beginning
of the earliest period presented on a  pooling-of-interest  basis. The financial
information  of  Corsair  has been  derived  from  Corsair's  audited  financial
statements  for each of the years in the  five-year  period  ended  December 31,
1998.  Historical  information  is not  necessarily  indicative of the operating
results or  financial  position  that would have  occurred  had the merger  been
consummated at the beginning of the periods  presented,  nor is it indicative of
future operation results or financial position.

                                          Year Ended December 31,
                               1994       1995      1996       1997       1998
                              --------  ---------  --------  ---------  --------
Statement of Operations Data:
Total revenues                $ 4,918   $ 15,139    31,216   $ 60,856   $65,218
Total cost of revenues          3,063     12,716    24,935     36,867    26,562
                              --------  ---------  --------  ---------  --------
Gross profit                    1,855      2,423     6,281     23,989    38,656
Operating costs and expenses:
  Research and development        595      3,421     8,583     12,525    18,289
  Sales and marketing             837      4,274     7,764     11,411    16,775
  General and adminstrative     1,271      3,547     5,282      9,432     8,501
  Write-off of in process
    research and development    4,894         --        --         --        --
  Write-off of capitalized         --         --     3,760         --        --
    software costs
  Merger related expenses          --         --        --         --     4,191
                              --------  ---------  --------  ---------  --------

  Total operating costs         7,597     11,242    25,389     33,368    47,756
    and expenses              --------  ---------  --------  ---------  --------

Operating loss                (5,742)    (8,819)   (19,108)   (9,379)    (9,100)
Interest income (expense),       (31)        181     (494)      1,191     2,460
  net
                              --------  ---------  --------  ---------  --------

Loss before income taxes      (5,773)    (8,638)   (19,602)   (8,188)    (6,640)
Income taxes expense                2          2         3          8        --
                              --------  ---------  --------  ---------  --------
Loss before extraordinary     (5,775)    (8,640)   (19,605)   (8,196)    (6,640)
item
Loss on debt                       --         --        --      (428)      (226)
  extinguishment, net         --------  ---------  --------  ---------  --------
                                                                              
Net loss                      $(5,775)  $(8,640)   $(19,605) $ 8,624)   $(6,866)
                              ========  =========  ========  =========  ========
Basic and diluted net loss
  per share
Loss per share before              --   $ (5.49)  $(11.57)   $ (0.82)  $ (0.38)
  extraordinary item                        
Extraordinary item                 --   $     --   $    --   $ (0.04)  $ (0.01)
                              --------  ---------  --------  --------  ---------
Basic and diluted net loss         --   $ (5.49)  $(11.57)   $ (0.86)  $ (0.39)
  per share                   ========  =========  ========  ========  =========
Shares used in per share           --      1,573     1,694     10,017    17,749
calculation                   ========  =========  ========  ========  =========



<PAGE>


                                             December 31,
                          1994        1995        1996        1997       1998
                        ----------  ----------  ----------  ---------  ---------
Balance Sheet Data:
Cash, cash equivalents
& short term investments  $ 7,145    $ 15,569   $  22,081   $ 62,953   $ 38,573
Working capital             9,336      15,145      17,670     51,321     45,424
Total assets               15,985      26,707      41,726     87,539     71,560
Long-term obligations       3,018       8,030       8,295      3,164      1,624
Total stockholders'         9,881      13,077      13,651     57,375     52,114
equity


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

      The  following   discussion  and  analysis  may  contain   forward-looking
statements that involve risks and  uncertainties.  The Company's  actual results
may  differ  materially  from  the  results  discussed  in such  forward-looking
statements.  Factors  that might cause such a  difference  include,  but are not
limited to, those discussed in "Item 1. Business - Risks and Uncertainties." The
Company  undertakes  no  obligation  to  release  publicly  the  results  of any
revisions to these forward-looking statements to reflect events or circumstances
arising after the date hereof.

      As noted above, Corsair acquired Subscriber  Computing,  Inc. ("SCI") in a
combination accounted for under the  pooling-of-interests  method of accounting.
As such, the Company's  consolidated  financial statements have been restated to
include the financial position and results of SCI for all periods presented. The
following  should  be  read  in  conjunction  with  the  Company's  consolidated
financial statements and notes thereto, and discussion of the Company's business
and risks  and  uncertainties  affecting  it  results  of  operations,  included
elsewhere in this Annual Report on Form 10-K.

Overview

      Corsair Communications,  Inc. is a leading provider of software and system
solutions for the wireless industry.  Corsair's  PhonePrint(R) system has proven
highly effective in reducing cloning fraud. The PhonePrint  system has prevented
hundreds of millions of fraudulent  call attempts;  some of Corsair's  customers
have  reported up to a 95%  reduction in cloning  fraud  losses after  deploying
PhonePrint.   The  Company's   PrePay(TM)   billing  system  provides   wireless
telecommunications  carriers with a prepaid system  designed to fully  integrate
with the upcoming wireless  intelligent network standards.  The Company believes
that  its   products   can   provide   a  number   of   benefits   to   wireless
telecommunications  carriers,  including  reduced  costs,  improved  cash  flow,
increased market penetration and improved customer service.

      The worldwide  demand for wireless  telecommunications  services has grown
significantly in recent years as those services have become widely available and
increasingly affordable.  The Yankee Group estimates that the number of wireless
telecommunications subscribers worldwide increased from approximately 85 million
in 1995 to  approximately  270 million in 1998, and the number of subscribers is
expected to approximate 530 million by the end of 2002.

      The Company's revenue is comprised of three categories: hardware, software
and service  revenue.  Revenue from hardware sales is recognized  upon shipment,
unless a sales agreement contemplates that Corsair provide testing,  integration
or  implementation  services,  in which case hardware revenue is recognized upon
commissioning  and  acceptance  of the product (the  activation of the cell site
equipment  following testing integration and  implementation).  Revenue from the
licensing of software  products  generally is  recognized  upon  delivery of the
products,  unless the sales includes  post-contract  customer  support for which
vendor specific  objective evidence does not exist, in which case the revenue is
recognized ratably over the term of the license period. Revenue from services is
recognized ratably over the term of the maintenance  support, on a percentage of
completion basis over the term of the consulting effort, or during the month the
training or operations support is provided.

      Cost of  hardware  revenue  consists  of  manufacturing  overhead  for the
Company's test and assembly  operation,  materials  purchased from the Company's
subcontractors  and  vendors,  hardware  purchased  from  third  party  vendors,
depreciation  of rental  units,  and shipping  costs.  Cost of software  license
revenue primarily includes fees paid to third party software vendors, as well as
costs associated with the installation and  configuration of the software.  Cost
of service  revenue  consists  primarily  of expenses for  personnel  engaged in
network support, customer support, installation, training and consulting as well
as communications charges and network equipment depreciation.

      The  Company's  gross margin has grown  significantly  in the past and may
vary significantly in the future, depending on the mix of hardware, software and
services.  The Company's  software  licenses have a higher gross margin than its
service and hardware  revenue.  In addition,  the hardware gross margin can vary
from  customer to customer  depending  on the  contract  and from model to model
depending upon the customer's cell site and switch configuration. Therefore, the
Company's  operating  results  will be affected  by the mix of  hardware  units,
software licenses, and service fees recognized during each period.

      The Company sells PhonePrint primarily through its direct sales force, but
has also entered into distribution  agreements with Motorola,  Ericsson,  Aurora
and Telesis,  and seeks to enter into  additional  distribution  agreements  for
international  markets.  The Company has entered into a sales referral agreement
with  Lucent  and  Sumitomo.  The  Company  sells  PrePay  primarily  through  a
distribution  arrangement  with  Ericsson  and to a limited  extent  through its
direct sales force.  The Company's  gross margin will also vary depending on the
mix of direct sales and sales through  distribution  channels and sales referral
arrangements.

      The Company  continues to make efforts to generate  profits by  increasing
sales  volume,  decreasing  costs of  goods  sold,  and  through  certain  other
measures.  While the Company has  certain  programs in place  intended to reduce
operating  costs,  the  Company's  expenses  could  increase in the  foreseeable
future.  As a result,  there can be no assurance  that the Company will reach or
sustain  profitability.  See  "Risks  and  Uncertainties  -  Lack  of  Sustained
Profitability".

Results of Operations-Years Ended December 31, 1996, 1997 and 1998

      Revenues.  For the years ended  December  31, 1996,  1997 and 1998,  total
revenues were $31.2,  $60.9 and $65.2 million,  respectively.  Hardware  revenue
increased  108.5%  from  $18.2  million in 1996 to $37.9  million  in 1997,  and
decreased 10% to $34.1 million in 1998. The hardware  revenue increase from 1996
to 1997 was due  primarily  to the growth in the  installed  base of  PhonePrint
units.  The growth in the installed base slowed in 1998 following the saturation
of the domestic markets in addition to delayed sales in international markets as
a result of economic  difficulties in such markets.  Software revenue  increased
66.5% from $7.4 million in 1996 to $12.3 million in 1997, and increased 11.5% to
$13.7 million in 1998. The growth in software revenues was due to an increase in
the number of licenses and  upgrades  sold  following  the  introduction  of new
products  and  software  versions.  Service  revenue  increased  88.6% from $5.7
million in 1996 to $10.7 million in 1997,  and increased  63.2% to $17.4 million
in 1998.  The  increase  in service  revenue was  attributable  to growth in the
installed base for both hardware and software  sales which included  maintenance
and other service contracts over the years.

      Gross Profit.  Gross profit  increased from $6.3 million for 1996 to $24.0
million for 1997 and $38.7  million for 1998,  or 20.1%,  39.4%,  59.3% of total
revenues,  respectively.  The  increase  in gross  profit was due  primarily  to
improved margins from hardware  revenues,  which  contributed  $455,000 in 1996,
$9.9 million in 1997, and $16.9 million in 1998.  Increased  contributions  from
software  revenues of $5.4,  $10.4,  and $12.4 million for 1996, 1997, and 1998,
respectively  also increased the Company's  gross profit.  Service revenue gross
profit for the year ended December 31, 1996 improved from  $402,000,  to a gross
profit  of $3.6  million  and $9.3  million  in the  following  two  years.  The
increasing  margins  resulted from  improved  pricing  models and  manufacturing
yields.

      Research and  Development.  Research and  development  expenses were $8.6,
$12.5 and $18.3 million for the years ended  December 31, 1996,  1997, and 1998,
or 27.5%,  20.6% and 28.0% of total  revenues,  respectively.  The  increase  in
absolute  dollars was due primarily to the hiring of additional  engineering and
consulting  personnel  related to the continued  development  of PhonePrint  and
development work on new software products. The decrease as a percentage of total
revenues from 1996 to 1997, was due to a higher growth in sales than engineering
headcount during the period.  In 1998,  increased hiring of technical  personnel
and  consultants  increased  research and  development  costs as a percentage of
revenues to assist in the development of new products.

      Sales and  Marketing.  Sales and marketing  expenses were $7.8,  $11.4 and
$16.8,  million for the years ended December 31, 1996, 1997, and 1998, or 24.9%,
18.8%  and 25.7% of total  revenues,  respectively.  The  increase  in  absolute
dollars resulted from the hiring of additional sales and marketing  personnel to
support the increased sales of PhonePrint and to support the increase in service
revenue.  The  decrease  in  percentage  of total  revenues in 1997 was due to a
larger increase in the Company's revenues,  in comparison to the growth in sales
and marketing headcount.

       General and  Administrative.  General and  Administrative  expenses  were
$5.3,  $9.4 and $8.5,  million for the years ended December 31, 1996,  1997, and
1998, or 16.9%, 15.5% and 13.0% of total revenues, respectively. The increase in
absolute  dollars in 1997 was due  primarily  to  increased  staffing  needed to
support  growing  operations,  while  the  decrease  in  1998  was  due  to  the
consolidation  of  operations.  The decrease in percentage of total revenues was
due to the overall  increase in the  Company's  revenues  from year to year,  in
addition to the reduced headcount in 1998.

      Write-off of Capitalized  Software  Costs.  During 1996, the Company wrote
off $3.8 million of previously  capitalized  software costs after evaluating the
recoverability  of capitalized  costs and  determining  that such costs were not
recoverable based on changes in product mix.

      Merger  Related  Expenses.  As discussed in the Notes to the  Consolidated
Financial  Statements,  Corsair  incurred  $4.2 million in merger  related costs
resulting from the  acquisition of SCI in 1998.  The one-time  charges  included
transaction  costs,  termination  benefits for  approximately 20 employees,  and
redundant facility and other equipment costs associated with the merger.

      Interest Income (Expense),  Net. Net interest expense was $494,000 for the
year ended December 31, 1996 as compared to net interest  income of $1.2 million
in 1997 and $2.5 million in 1998.  Net interest  income and expense  consists of
interest  income from the  Company's  cash and  short-term  investments,  net of
interest  expense on the Company's  equipment  loans,  equipment lease lines and
other loans  obtained  primarily in 1996 and 1997.  The increase in net interest
income  in 1997 and  1998  was a  result  of  larger  average  cash  investments
attributable to the proceeds received from the Company's initial public offering
of Common Stock completed in July 1997.

      Extraordinary Item. During the years ended December 31, 1997 and 1998, the
Company  incurred  losses  on  debt  extinguishment  of  $428,000  and  $226,000
associated  with paying the  principal  and  interest  of $5.1  million and $4.8
million, respectively, on short-term and long-term notes payable.

      Income  Taxes.  The income tax expense for the years ended  December 31,
1996, 1997 and 1998 represent minimum state tax liabilities.

Liquidity and Capital Resources

      The Company's operating activities used cash of $16.5 million for the year
ended December 31, 1998. The increased use of cash was due to decreased accounts
payable (net of the merger related expenses) and deferred revenue, and increased
accounts receivable related to higher sales volume late in the year.

      The Company's  investing  activities provided cash of $6.9 million for the
year ended  December  31, 1998.  Net cash of $10.3  million was received for the
sale and maturities of short-term investments, and cash of $3.4 million was used
for the  purchase of property and  equipment,  primarily  computer  hardware and
software, and for leasehold improvements to the Company's facility.

      The Company's financing  activities used cash of $4.4 million for the year
ended  December  31,  1998,   that  was  primarily   attributable  to  the  debt
extinguishment discussed above.

      The Company has funded its operations from inception  primarily  through a
series of Preferred Stock,  debt financing,  and an initial public offering.  In
July 1997, the Company  completed its initial public offering  generating  $39.1
million of net  proceeds.  At December 31,  1998,  the Company had cash and cash
equivalents  of  approximately  $4.2  million  and  short-term   investments  of
approximately  $34.4  million.  The Company  believes that  existing  sources of
liquidity and internally  generated cash, if any, will be sufficient to meet the
Company's  projected  cash  needs for at least the next 12 months.  The  Company
intends to continue its significant  product  development  efforts in the future
and expects to fund those  activities  out of working  capital.  There can be no
assurance, however, that the Company will not require additional financing prior
to such date to fund its operations or possible  acquisitions.  In addition, the
Company may require additional financing after such date to fund its operations.
There can be no assurance that any additional financing will be available to the
Company on acceptable terms, or at all, if and when required by the Company.

Year 2000 Issue

      The year 2000 issue  refers to the  inability  of  certain  date-sensitive
computer  chips,  software  and systems to  recognize a two-digit  date field as
belonging to the 21st Century.  Mistaking  "00" for 1900 or any other  incorrect
year could result in a system failure or miscalculations, causing disruptions to
Corsair's  products  or  operations  (including  manufacturing,  or a  temporary
inability to process  transactions  or send invoices,  or engage in other normal
business activities). The year 2000 issue may create unforeseen risks to Corsair
from product or internal  computer system failures,  as well as from the failure
of third party  computer  systems  with which it deals.  Failures  of  Corsair's
products or computer  systems and or third party  computer  systems could have a
material adverse impact on Corsair's ability to conduct its business.


       Management has initiated an enterprise-wide  program to prepare Corsair's
computer  systems and  applications  for the year 2000 with  respect to: (1) the
portion  of  products   developed   internally  by  Corsair,   (2)  systems  and
applications  developed by third parties and incorporated in Corsair's products,
and (3) systems relied upon to conduct operations (including payroll, accounting
and cash  management).  With  respect to software  developed  internally  by the
Company,  the results of that  evaluation  to date  initially  revealed  certain
source codes that were unable to appropriately  interpret the upcoming  calendar
year 2000.  The Company has completed its work to upgrade these programs to make
them capable of processing data  incorporating  year 2000 dates without material
errors or  interruptions.  With respect to third party software  incorporated in
the Company's  products,  all vendors whose software is used by the Company have
indicated that their software is or will be year 2000  compliant.  This includes
all  systems  relied  upon to  conduct  operations.  Currently,  the  Company is
establishing contingency plans to address the impact to the Company in the event
its  suppliers,  products  and  internal  systems  are not year 2000  compliant.
Evaluation of year 2000 issues is continuing, and there can be no assurance that
additional  issues,  not presently known by the Company,  will not be discovered
which could present a material  risk to the function of the  Company's  products
and have a material adverse effect on the Company's business,  operating results
and  financial  condition.  The total  cost of the  testing  and  conversion  of
internally  developed  hardware  and  software is  expected to be  approximately
$600,000 and should be  substantially  incurred by June 30, 1999. A  significant
portion  of these  costs  has not been  incremental  costs  to  Corsair,  rather
redeployment of existing information  technology  resources.  Corsair expects to
continue to incur  internal staff costs as well as consulting and other expenses
related to infrastructure and facilities  enhancements  necessary to prepare the
systems for the year 2000.

ITEM 7.  Quantitative and Qualitative Disclosures about Market Risk

      We invest our excess cash and  short-term  investment  in  corporate  debt
securities  with high quality  credit  ratings and  maturities  of less than one
year. These investments are not held for trading or other speculative  purposes.
Changes  in  interest  rates  affect  the  investment  income  we  earn  on  our
investments and, therefore,  impact our cash flows and results in operations. At
December  31, 1998,  we had  outstanding  a note payable for $2.0 million  which
matures in 2001. The note has a fixed interest rate of 15.8%. Accordingly, while
changes in interest rates may affect the fair market value of the notes, they do
not impact our cash flows or results of operations.  We are not exposed to risks
for changes in foreign currency  exchange rates,  commodity prices, or any other
market rates.



<PAGE>


ITEM 8. Financial Statements and Supplementary Data





                          Annual Report on Form 10-K
                     For the Year Ended December 31, 1998

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                         PAGE
                                                                        ------
Independent Auditors' Report, KPMG LLP                                     28

Independent Auditors' Report, Deloitte & Touche LLP                        29

Consolidated Balance Sheets as of December 31, 1997 and 1998               30
               
Consolidated Statements of Operations for the years ended December 31,     31
  1996, 1997 and 1998                                                          
Consolidated Statements of Stockholders' Equity for the years ended        32
  December 31, 1996, 1997 and 1998                                     

Consolidated Statements of Cash Flows for the years ended December 31,     33
  1996, 1997 and 1998                                                           

Notes to Consolidated Financial Statements                                 34



<PAGE>


                         Independent Auditors' Report

The Board of Directors
Corsair Communications, Inc.:


We  have  audited  the  accompanying  consolidated  balance  sheets  of  Corsair
Communications,  Inc. and subsidiaries as of December 31, 1997 and 1998, and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for each of the years in the  three-year  period ended  December 31, 1998.
These  consolidated  financial  statements are the  responsibility  of Corsair's
management.  Our  responsibility is to express an opinion on these  consolidated
financial  statements  based on our audits.  We did not audit the  statements of
operations,  stockholders' equity and cash flows of Subscriber Computing Inc., a
company  acquired  by Corsair  Communications,  Inc.  in a business  combination
accounted  for  as a  pooling  of  interests  as  described  in  Note  4 to  the
consolidated  financial  statements,  which reflect total revenues  constituting
37.2%  and  21.4%  in  fiscal  1996  and  1997  respectively,   of  the  related
consolidated  totals.  Those financial statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates to
the amounts  included  for  Subscriber  Computing  Inc.,  is based solely on the
report of the other auditors.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We  believe  that our  audits  and the  report of the other  auditors  provide a
reasonable basis for our opinion.

In our opinion,  based on our audits and the report of the other  auditors,  the
consolidated  financial  statements  referred to above  present  fairly,  in all
material respects,  the financial position of Corsair  Communications,  Inc. and
its  subsidiaries  as of December  31,  1997 and 1998,  and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended  December 31, 1998,  in  conformity  with  generally  accepted  accounting
principles.
                                                          /s/ KPMG LLP
San Francisco, California
February 2, 1999


<PAGE>



                         Independent Auditors' Report

The Board of Directors
Subscriber Computing, Inc.:


      We have audited the balance sheets of Subscriber  Computing,  Inc. ("SCI")
as of September 30, 1997 and 1996,  and the related  statements  of  operations,
stockholders' equity (deficit) and cash flows for each of the three years in the
period  ended  September  30,  1997 (not  presented  separately  herein).  These
financial   statements  are  the   responsibility  of  SCI's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

      We conducted our audits in accordance  with  generally  accepted  auditing
standards. Those standards required that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly,
in all material respects,  the financial position of Subscriber Computing,  Inc.
as of September  30, 1997 and 1996,  and the results of its  operations  and its
cash flow for each of the three years in the period ended  September 30, 1997 in
conformity with generally accepted accounting principles.

                                    /s/  DELOITTE & TOUCHE LLP

Costa Mesa, California
January 7, 1998


<PAGE>


                         CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT PER SHARE DATA)


                                                      DECEMBER 31,
                                                   1997        1998
                  ASSETS
    Current assets:
      Cash and cash equivalents                  $  18,228   $  4,196
      Short-term investments                        44,725     34,377
      Trade accounts receivable, less allowance
        for doubtful accounts of $1,428                   
        for 1997 and $2,896 for 1998                 5,610     14,134
      Evaluation inventory                           4,745      2,597
      Inventories, net                               3,618      5,676
      Prepaid expenses                               1,395      2,266
                                                 ----------  ---------
      Total current assets                          78,321     63,246
    Property and equipment, net                      7,110      7,422
    Other assets                                     2,108        892
                                                 ----------  ---------
                                                 $  87,539   $ 71,560
                                                 ==========  =========


                LIABILITIES AND STOCKHOLDERS'EQUITY
    Current liabilities:
      Accounts payable                           $   1,419    $ 1,706
      Accrued expenses                               7,881      7,731
      Current portion of notes payable               4,559        639
      Current portion of capital lease                 789        609
        obligations
      Deferred revenue                              12,352      7,137
                                                 ----------  ---------

      Total current liabilities                     27,000     17,822
    Notes payable, net of current portion            2,380      1,407
    Capital lease obligations, net of current          784        217
      portion                                      ----------  ---------

    Total liabilities                               30,164     19,446
                                                 ----------  ---------

    Commitments and contingencies

    Stockholders' equity:
      Common stock, $.001 par value; 20,000,000
       shares authorized; 17,548,562, and
       17,976,492 shares issued and outstanding          
       at December 31, 1997 and 1998,
       respectively                                     17         18
      Notes receivable from stockholders             (511)      (468)
      Additional paid-in capital                   104,142    105,433
      Deferred compensation                          (648)      (288)
      Accumulated deficit                         (45,625)   (52,581)
                                                 ----------  ---------
      Total stockholders' equity                    57,375     52,114
                                                 ----------  ---------
                                                 $  87,539   $ 71,560           
                                                 ==========  =========


         See accompanying notes to consolidated financial statements



<PAGE>



                    CONSOLIDATED STATEMENTS OF OPERATIONS 
                    (IN THOUSANDS, EXCEPT PER SHARE DATA)




                                         YEAR ENDED DECEMBER 31,
                                       1996        1997        1998
                                    ----------- ----------- -----------
    Revenues:
      Hardware                          18,168      37,882      34,089 
      Software                           7,390      12,303      13,717
      Service                            5,658      10,671      17,412
                                    ----------- ----------- -----------
         Total revenues                 31,216      60,856      65,218
                                    ----------- ----------- -----------

    Cost of revenues:
      Hardware                          17,713      27,938      17,151
      Software                           1,966       1,903       1,317
      Service                            5,256       7,026       8,094
                                    ----------- ----------- -----------
        Total cost of revenues          24,935      36,867      26,562
                                    ----------- ----------- -----------
    Gross profit                         6,281      23,989      38,656
                                    ----------- ----------- -----------

    Operating costs and expenses:
      Research and development           8,583      12,525      18,289
      Sales and marketing                7,764      11,411      16,775
      General and                        5,282       9,432       8,501
        administrative
      Write-off  of                      3,760           -           -
        capitalized software costs
      Merger related expenses                -           -       4,191
                                   ----------- ----------- -----------
    Total operating costs and          25,389      33,368      47,756
      expenses                     ----------- ----------- -----------

      Operating loss                  (19,108)     (9,379)     (9,100)
    Interest income (expense), net       (494)       1,191       2,460
                                   ----------- ----------- -----------
      Loss before income taxes        (19,602)     (8,188)     (6,640)
    Income tax expense                      3           8           -
                                   ----------- ----------- -----------
    Loss before extraordinary        (19,605)     (8,196)     (6,640)
      item
    Loss on debt extinguishment,            -       (428)       (226)
      net                          =========== =========== ===========
    Net loss                       $ (19,605)  $  (8,624)   $  (6,866)
                                   =========== =========== ===========

    Basic and diluted net loss per share data:
    Loss before extraordinary     
      item                         $  (11.57)  $  (0.82)    $   (0.38)
    Extraordinary item                     -      (0.04)        (0.01)
                                   =========== =========== ===========
    Basic and diluted net loss     $ (11.57)   $  (0.86)    $   (0.39)
      per share                    =========== =========== ===========

    Shares used in per share           1,694      10,017      17,749
      calculation                  =========== =========== ===========



         See accompanying notes to consolidated financial statements.


<PAGE>

<TABLE>

                                       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                              (IN THOUSANDS, EXCEPT SHARE DATA)


<CAPTION>

                    CONVERTIBLE                        NOTE                                
                     PREFERRED          COMMON      RECEIVABLE  ADDITIONAL                             TOTAL
                       STOCK            STOCK          FROM      PAID-IN     DEFERRED    ACCUM.    STOCKHOLDERS'
                  SHARES    AMOUNT  SHARES  AMOUNT  STOCKHOLDER  CAPITAL   COMPENSATION  DEFICIT      EQUITY
                                        
Balance as
of December     6,741,424     7   1,814,863     2       --        25,392         --     (12,324)     13,077
31, 1995

Exercise of                                                                           
common                --     --     553,344    --    (136)           230         --           --         94
stock
options

Issuance of
convertible            --    --          --    --       --           131         --           --        131
preferred
stock                 
warrants
in
conjunction
with debt
financing

Issuance of
Series C        2,424,864     2          --    --       --        19,948         --           --     19,950
convertible 
preferred
stock,
net of
issuance
costs

Deferred
compensation           --    --          --    --       --            73       (73)           --         --
related                   
to grant of
stock
options

Amortization
of deferred            --    --          --    --       --            --          4           --          4
compensation

Net loss               --    --          --    --       --            --         --      (19,605)  (19,605)
             ----------------------------------------------------------------------------------------------

Balance as                              
of December     9,166,288     9   2,368,207     2    (136)         5,774       (69)      (31,929)    13,651
31, 1996

Exercise of
common                 --    --     730,417     1       --           402         --           --        403
stock
options

Issuance of
common                 --    --      58,828    --       --           142         --           --        142
stock
for an
acquisition

Issuance of
common                 --    --     178,229    --    (375)           375         --           --         --
stock for                                 
notes
receivable

Issuance of
Series B        1,911,951     2          --    --       --        14,092         --           --     14,094
convertible 
preferred
stock,
net of
issuance 
costs

Issuance of
Series D          266,668    --          --    --       --         2,996         --           --      2,996
convertible  
preferred
stock,
net of
issuance
costs

Deferred
compensation           --    --          --    --       --         1,129    (1,129)           --         --
related       
to grant of
stock
options

Amortization
of deferred            --    --          --    --       --            --        550           --        550
compensation

Conversion
<S>          <C>           <C>   <C>           <C>      <C>       <C>       <C>            <C>        <C>                 
of preferred (11,344,907)  (11)  11,344,907    11       --            --         --           --         --
stock to
common stock

Issuance of
common                 --    --   2,875,000     3       --        39,055         --           --     39,058
stock        
net of
issuance
costs

Repurchase
of common              --    --     (7,026)    --       --            (3)        --           --        (3)
stock

Accretion
attributable           --    --          --    --       --            180        --        (180)         --
to                
subsidiary's
preferred
stock

Net loss               --    --          --    --       --             --        --      (8,624)    (8,624)

Change in
subsidiary's           --    --          --    --       --             --        --      (4,892)    (4,892)
year end
             ---------------------------------------------------------------------------------------------

Balances as
of December            --    --  17,548,562    17    (511)        104,142     (648)     (45,625)     57,375
31, 1997 
                            
Stock
issued under           --    --     384,932     1       --          1,209        --           --      1,210
stock
option
and stock
purchase
plans

Stock
issued                 --    --      40,409    --       --             --        --           --         --
pursuant to
exercise
of warrants

Notes
receivable             --    --          --    --       43             --        --           --         43
repayments

Issuance of
common                 --    --      13,575    --       --             --        --           --         --
stock
for an
acquisition

Accretion
attributable           --    --          --    --       --             90        --         (90)         --
to               
subsidiary's
preferred
stock

Repurchase
of common              --    --    (10,986)    --       --            (8)        --           --        (8)
stock

Amortization
of deferred            --    --          --    --       --             --       360           --        360
compensation

Net loss               --    --          --    --       --             --        --      (6,866)    (6,866)
             ----------------------------------------------------------------------------------------------
Balances as
of December 
31, 1998               --    --  17,976,492  $ 18   $(468)      $ 105,433   $ (288)    $(52,581)    $52,114
             ==============================================================================================
</TABLE>


                     See accompanying notes to financial statements.


<PAGE>


                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)

                                                  YEAR ENDED DECEMBER 31,
                                               ---------------------------------
                                                  1996        1997       1998
                                               ----------  ---------  ----------
Cash flows from operating activities:
  Net loss                                      $(19,605)  $ (8,624)  $  (6,866)
  Adjustments to reconcile net loss to net 
   cash used in operating activities:
     Depreciation and amortization                  1,389      2,934       4,243
     Amortization of deferred compsensation             4        550         360
     Extraordinary loss on extinguishment               -        428         226
       of debt
     Loss on disposition of fixed assets                3        100           -
     Write-off of capitalized software              3,761          -           -
       development costs
     Merger-related costs                               -          -       4,191
     Changes in operating assets and
       liabilities:
        Trade accounts receivables                (3,373)      (886)     (8,524)
        Inventories                               (6,965)        969          90
        Prepaid expenses and other assets           (277)    (2,341)       (990)
        Accounts payable and accrued expenses       5,904        153     (4,054)
        Deferred revenue                            1,692      4,487     (5,215)
                                                ----------  ---------  ---------
          Net cash used in operating activities   (17,467)    (2,230)   (16,539)
                                                ----------  ---------  ---------
Cash flow from investing activities:
  Purchase of short-term investments              (2,472)   (66,601)    (29,514)
  Proceeds from sales and maturities of             1,957     23,969      39,862
    short-term investments
  Purchases of property and equipment             (1,504)    (4,822)     (3,446)
  Proceeds from sale of property and                   19          -           -
    equipment                                   ----------  ---------  ---------
          Net cash (used in) provided by          (2,000)   (47,454)       6,902
            investment activities               ----------  ---------  ---------

Cash flow from financing activities:
  Proceeds from sale of preferred stock, net       19,950     17,090           -
    of offering costs
  Proceeds from issuance of common stock,              95     39,458       1,202
    net of offering costs
  Proceeds from notes payable                       6,022        660       4,128
  Proceeds from issuance of warrants                  131          -           -
  Payments on note payable                          (322)    (8,269)     (9,021)
  Payments on capital lease                         (348)      (733)       (747)
  Loan to stockholder                                (64)          -           -
  Proceeds from note receivable from                   -          -          43
    stockholder                                 ----------  ---------  ---------
           Net cash (used in) provided             25,464     48,206     (4,395)
             by financing activities            ----------  ---------  ---------

Net increase (decrease) in cash and cash            5,997    (1,478)    (14,032)
  equivalents
Change in subsidiary's year end                         -         77           -
Cash and cash equivalents, beginning of year       13,632     19,629      18,228
                                                ----------  ---------  ---------
Cash and cash equivalents, end of year          $  19,629   $ 18,228   $   4,196
                                                ==========  =========  =========
Cash paid during the year:
    Interest                                    $     834   $  1,128   $   1,188
                                                ==========  =========  =========
    Income taxes                                $       2   $    807   $     364
                                                ==========  =========  =========
Noncash financing and investing activities:
    Assets recorded under capital leases        $   1,496   $    864   $       -
                                                ==========  =========  =========
    Common stock issued upon exercise of stock
      option in exchange for stockholders'
      note                                      $     136    $   375    $      -
                                                ==========  =========  =========
    Deferred compensation relating to stock  
      option grants                             $      73   $  1,129   $       -
                                                ==========  =========  =========
    Conversion of preferred stock to common    
      stock                                     $       -   $ 31,737   $       -
                                                ==========  =========  =========
    Accretion of subsidiary's preferred stock                    
      liquidation preference                    $       -   $    180   $      90
                                                ==========  =========  =========


         See accompanying notes to consolidated financial statements.



<PAGE>



                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998


1. BUSINESS

 Corsair Communications, Inc. ("Corsair" or the "Company") is a leading provider
of software and system  solutions for the wireless  industry,  focusing on fraud
prevention and prepaid  wireless  billing.  On June 23, 1998,  Corsair  acquired
Subscriber  Computing,  Inc.  ("SCI") in a  combination  accounted for under the
pooling-of-interests  method of  accounting.  Corsair's  consolidated  financial
statements  have been restated to include the financial  position and results of
SCI for  all  periods  presented.  Corsair's  statement  of  operations  for the
three-year  period  ended  December  31,  1998 have  been  combined  with  SCI's
statement  of  operations  for each of the years in the  two-year  period  ended
September 30, 1997, and the year ended December 31, 1998,  respectively.  Due to
the fiscal year end conversion of SCI to that of Corsair,  SCI's net revenues of
$2.9 million and net loss of $4.9  million for the three  months ended  December
31, 1997 are not included in the consolidated statements of operations.

The consolidated  financial  statements  include the accounts of the Company and
its subsidiary. All significant intercompany accounts and transactions have been
eliminated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

Revenue  from  hardware  sales  is  recognized  upon  shipment,  unless  a sales
agreement   contemplates   that  Corsair   provide   testing,   integration   or
implementation  services,  in which case  hardware  revenue is  recognized  upon
commissioning  and  acceptance  of the product (the  activation of the cell site
equipment  following testing integration and  implementation).  Revenue from the
licensing of software  products  generally is  recognized  upon  delivery of the
products,  unless the sales includes  post-contract  customer  support for which
vendor specific  objective evidence does not exist, in which case the revenue is
recognized ratably over the term of the license period. Revenue from services is
recognized ratably over the term of the maintenance  support, on a percentage of
completion basis over the term of the consulting effort, or during the month the
training or operations support is provided.

 In October  1997,  the  American  Institute  of  Certified  Public  Accountants
("AICPA") issued Statement of Position 97-2,  Software Revenue  Recognition (SOP
97-2).  Effective  January 1,  1998,  the  Company  adopted  SOP 97-2.  SOP 97-2
generally  requires revenue earned on software  arrangements  involving multiple
elements  such  as  software  products,  upgrades,  enhancement,   post-contract
customer  support,  installation  and  training to be  allocated to each element
based on the relative fair values of the elements.  The fair value of an element
must be based on evidence which is specific to the vendor. The revenue allocated
to software products, including specified upgrades or enhancements, generally is
recognized as the services are performed.  If evidence of the fair value for all
elements of the arrangement  does not exist,  all revenue for the arrangement is
deferred until such evidence  exists or until all elements are delivered.  There
was no material  change to the Company's  accounting for revenues as a result of
the adoption of SOP 97-2.

In December 1998,  AcSEC issued SOP 98-9  "Software  Revenue  Recognition,  with
Respect to Certain  Arrangements",  which requires  recognition of revenue using
the "residual method" in a multiple element arrangement when fair value does not
exist for one or more of the delivered  elements in the  arrangement.  Under the
"residual method",  the total fair value of the undelivered elements is deferred
and  subsequently  recognized in accordance  with SOP 97-2. The Company does not
expect a  material  change to its  accounting  for  revenues  as a result of the
provisions  of SOP 98-9.  SOP 97-2 is effective  for  transactions  entered into
beginning January 1, 2000.


<PAGE>


Concentration of Credit Risk

Financial  instruments that potentially  expose the Company to concentrations of
credit  risk  principally   consist  of  cash,  cash   equivalents,   short-term
investments, and accounts receivable.

The Company  limits the  amounts  invested  in any one type of  investment.  The
Company  maintains its cash  investments  with several  financial  institutions.
Management  believes  the  financial  risks  associated  with such  deposits are
minimal.

The  Company  has   historically   sold  its   products   directly  to  wireless
telecommunications  carriers.  Sales  generally are not  collateralized,  credit
evaluations  are  performed  as  appropriate,  and  allowances  are provided for
estimated credit losses.  The Company has not experienced  significant losses on
trade receivables from any particular customer or geographic region.

Fair Value of Financial Instruments

The fair values of the Company's cash, cash  equivalents,  accounts  receivable,
accounts payable,  and accrued expenses approximate their carrying values due to
the short maturity of those instruments.

Cash Equivalents and Short-Term Investments

Cash equivalents consist of instruments with remaining  maturities of 90 days or
less  at the  date  of  acquisition.  Certain  cash  equivalents  and all of the
Company's investments are classified as  available-for-sale.  The securities are
carried at fair value,  which  approximates cost. To date, the fair value of the
securities has not differed significantly from the cost basis of the securities.

The  amortized  cost of  available-for-sale  debt  securities  is  adjusted  for
amortization of premiums and accretion of discounts to maturity.  Realized gains
and  losses,  and  declines  in value  judged  to be  other  than  temporary  on
available-for-sale securities, if any, are included in interest income, net. The
cost of securities sold is based on the specific identification method. Interest
and dividends on securities  classified  as  available-for-sale  are included in
interest income, net.

 Investments,  all of which are debt securities maturing in one year or less and
are classified as available-for-sale, consisted of the following (in thousands):


                                                      DECEMBER 31,
                                                    1997       1998

      Corporate debt securities                  $ 25,505   $ 34,376
      Certificates of deposit                      15,405      2,291
      Commercial paper                             11,372         --
                                                 --------   --------
                                                 $ 52,282   $ 36,667
                                                 ========   ========

As of December 31, 1997 and 1998,  $7,557,000 and $2,290,000,  respectively,  of
the Company's  investments  were classified as cash and cash  equivalents in the
accompanying  balance  sheets.  Short-term  investments  as of December 31, 1997
included  $992,000 of restricted  cash under the terms of the Company's  line of
credit and long-term debt agreements.


Inventories

Inventories,  including  evaluation  inventory,  are  stated  at  the  lower  of
first-in,  first-out  cost,  or market.  Evaluation  inventory  is  comprised of
finished hardware units delivered to a customer which are pending  commissioning
of the product.

Property and Equipment

Property and equipment are recorded at cost.  Equipment  recorded  under capital
leases  is stated at the lower of fair  value or the  present  value of  minimum
lease payments at the inception of the lease.  Depreciation is calculated  under
the  straight-line  method  over  the  estimated  useful  lives  of the  assets,
generally  three to five  years.  Equipment  recorded  under  capital  leases is
amortized over the shorter of the lease term or the estimated useful life of the
asset.  Leasehold improvements are amortized using the straight-line method over
the shorter of the lease term or the estimated useful life of the asset.

Software Research and Development Costs

All costs  incurred to establish the  technological  feasibility of software are
expensed as incurred.  Costs incurred  subsequent to establishing  technological
feasibility are  capitalized  and amortized on a straight-line  basis over their
estimated useful lives. The Company  determines that  technological  feasibility
has been established once a working model has been completed and tested.  During
1996,  the Company  wrote off $3.8 million of  previously  capitalized  software
costs after evaluating the  recoverability  of capitalized costs and determining
that such  costs were not  recoverable  based on  changes  in  product  mix.  No
software  research and development  costs have  subsequently been capitalized as
qualified amounts have not been material.

Other Assets

Included  in other  assets are spare  parts that are  generally  amortized  on a
straight-line basis over the course of their respective useful lives,  generally
two years.

Income Taxes

Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to  apply  to  taxable  income  in  the  years  that  those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in income in the
period that includes the enactment  date. A valuation  allowance is  established
when necessary to reduce  deferred tax assets to amounts more likely than not to
be recovered.

Use of Estimates

The  preparation of the  consolidated  financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosures  of contingent  assets and  liabilities at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

The Company evaluates long-lived assets and certain identifiable intangibles for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.  Recoverability of assets to
be held and used is measured by a comparison of the carrying  amount of an asset
to future net cash flows  expected to be generated by the asset.  If such assets
are  considered to be impaired,  the  impairment to be recognized is measured by
the amount by which the carrying  amount of the assets  exceed the fair value of
the assets.  Assets to be disposed of are  reported at the lower of the carrying
amount or fair value less costs to sell.

Net Loss Per Share

Basic earnings per share is computed using the weighted average number of shares
of common stock  outstanding.  Diluted  earnings per share is computed using the
weighted   average  number  of  shares  of  common  stock  and,  when  dilutive,
convertible  preferred stock  outstanding on an as if converted basis and common
equivalent shares from options to purchase common stock and warrants outstanding
using the treasury stock method.

The Company has excluded the impact of  approximately  1,221,827,  1,268,289 and
1,951,331  outstanding options to purchase common stock and outstanding warrants
to purchase  243,822,  271,545 and 194,249 shares of common stock as of December
31,  1996,  1997 and 1998,  respectively,  since their  inclusion in diluted per
share results would have been antidilutive.


Stock-Based Compensation

The company  accounts for its stock-based  compensation  arrangements  using the
intrinsic-value  method. As such, deferred  compensation is recorded on the date
of grant when the fair value of the underlying common stoc  exceeds the exercise
price or the purchase  price for  issuances or sales of common  stock.  Deferred
compensation is amortized on an accelerated basis over the vesting period of the
individual award consistent with the method described in FASB Interpretation No.
28.

Comprehensive Loss

The Company has no  significant  components  of other  comprehensive  loss,  and
accordingly, the comprehensive loss is the same as net loss for all periods.

<PAGE>

Effect of New Accounting Standards.

In June 1998,  the FASB  issued  Statement  of  Financial  Accounting  Standards
("SFAS") No. 133, Accounting for Derivative  Instruments and Hedging Activities.
SFAS 133 establishes accounting and reporting standards for derivative financial
instruments  and hedging  activities  and requires the Company to recognize  all
derivatives  as either  assets or  liabilities  on the balance sheet and measure
them at fair value.  Gains and losses resulting from changes in fair value would
be accounted for based on the use of the derivative and whether it is designated
and  qualifies for hedge  accounting.  The Company will be required to implement
SFAS 133 for its fiscal year 2000.  The Company  has not  determined  the impact
that SFAS 133 will  have on its  financial  statements  and  believes  that such
determination  will  not be  meaningful  until  closer  to the  date of  initial
adoption.


3. BALANCE SHEET COMPONENTS

Inventories

Inventories consisted of the following (in thousands):
                                                           DECEMBER 31,
                                                         1997       1998

  Raw materials                                        $ 1,479     $ 2,600
  Work in process                                          189         311
  Finished goods                                         1,950       2,765
                                                       -------     -------
                                                       $ 3,618     $ 5,676
                                                       =======     =======
Property and Equipment

Property and equipment consisted of the following (in thousands):

                                                           DECEMBER 31,
                                                         1997       1998

  Computer equipment                                   $ 8,132     $10,059
  Furniture and fixtures                                   991       1,093
  Purchased software                                       665       1,233
  Leasehold improvements                                   931       1,311
  Machinery & equipment                                  1,326       1,795
                                                       -------     -------
                                                        12,045      15,491
    Less accumulated depreciation and amortization     (4,935)     (8,069)
                                                       -------     -------
                                                       $ 7,110      $7,422
                                                       =======     =======

The total amount of assets  recorded under capital  leases  included in property
and equipment is approximately $2,513,000 and $2,505,000 as of December 31, 1997
and 1998,  respectively.  Accumulated  amortization  thereon was  $1,048,000 and
$1,789,000 as of December 31, 1997 and 1998, respectively.


Accrued Expenses

Accrued expenses consisted of the following (in thousands):

                                                            DECEMBER 31,
                                                          1997       1998

  Accrued benefits                                     $ 2,479     $ 2,261
  Accrued warranty costs                                 1,571       2,093
  Accrued professional fees                                782       1,416
  Other                                                  3,049       1,961
                                                       -------     -------  
                                                       $ 7,881     $ 7,731
                                                       =======     =======
<PAGE>
4.  MERGERS & ACQUISITIONS

Acquisition of Intelligent Object Solutions, Inc.

On December 27, 1996, the Company acquired the net assets of Intelligent  Object
Solutions,  Inc. ("IOS"), a developer of cellular fraud prevention software. The
Company  issued 49,916 shares of common stock,  valued at $105,000,  in exchange
for the net assets of IOS.  The  acquisition  was recorded as a purchase and the
results of operations  for the period from December 27, 1996 are included in the
accompanying consolidated financial statements. The purchase price was allocated
$750,000 to software license costs, $563,000 to other assets acquired,  $211,000
to goodwill and  $1,419,000 to  liabilities  assumed based on fair values at the
date of acquisition. Pursuant to the purchase agreement, the Company issued from
escrow an additional 8,912 and 13,575 shares of common stock,  valued at a total
of $37,500, during 1997 and 1998, respectively.  In 1997, the Company, evaluated
the  recoverability  of the remaining amounts recorded for goodwill and software
license costs related to the acquisition of IOS. Based on this  evaluation,  the
Company  determined  that $190,000 of goodwill and $600,000 of software  license
costs were not  recoverable  and wrote-off  those amounts during the three-month
period ended December 31, 1997.

Merger with Subscriber Computing Inc.

On June 23, 1998, Corsair issued  approximately 3.9 million shares of its Common
Stock in exchange  for all of the  outstanding  shares of common stock of SCI, a
provider of software  systems to the paging,  cellular and PCS industries.  As a
result  of the  merger,  each  outstanding  share  of SCI  Preferred  Stock  was
converted into shares of SCI Common Stock based on their respective  liquidation
preference.  Concurrently,  each share of SCI Common  Stock was  converted  into
0.238 shares of Corsair Common Stock,  and SCI became a wholly owned  subsidiary
of Corsair. In addition,  Corsair has reserved  approximately  464,500 shares of
its Common Stock for issuance upon the exercise of assumed SCI stock options and
warrants.  The  merger  was  accounted  for  as  a  pooling  of  interests,  and
accordingly,  the Company's consolidated financial statements have been restated
to include the financial position and results of SCI for all periods presented.

The results of operations  previously  reported by the separate  enterprises and
the combined  amounts  presented at the time of the merger are summarized  below
(in thousands):

                                      Corsair           SCI         Combined
                                    -------------   ------------   ------------
 Six  Months  Ended  June 30, 1998      
    Total revenue                    $  29,682       $   7,879     $   37,561
       Extraordinary loss                   --             226            226
       Net income (loss)                 3,861         (7,174)        (3,313)

 Year Ended December 31, 1997
    Total revenue                    $  47,838       $  13,018     $   60,856
       Extraordinary loss                  428             --             428
       Net loss                        (1,068)         (7,556)        (8,624)

 Year Ended December 31, 1996
    Total revenue                    $  19,606       $  11,610     $   31,216
       Net loss                       (12,761)         (6,844)       (19,605)

 In the second quarter,  Corsair recorded  merger-related  costs and expenses of
 $4.2 million. The following table presents the components of the total expenses
 along with the  charges  against the  reserves  through  December  31, 1998 (in
 thousands):
                                                         Non-cash     December
                                       Total  Amounts   Writedown     31, 1998
                                       Charge   Paid    of Assets      Balance
  
  Transaction costs                    2,535    2,221         --         314
  Termination benefits (20 employees)  1,511    1,511         --          --
  Redundant facility and other           145       11        134          --
    equipment costs                    ========================================
            Total                      $4,191  $3,743      $ 134      $  314  
                                       ========================================

Corsair expects that all significant  amounts  included in the December 31, 1998
reserve will be paid within the next three months.

5. DEBT

Notes payable consist of the following at December 31 (in thousands,  except per
share amounts):

                                                           1997        1998
                                                         ---------   ---------
Note payable to a financial institution, monthly
payments of $74 at interest of 15.8% with lump sum
payment of $260 due on June 1, 2001, collateralized 
by substantially all assets of the Company.....           $2,600      $2,046
       
Note payable to a bank, monthly payments of $14
plus interest at the bank's prime rate (8.5% at
December 31, 1997) plus 1% per annum through
June 1, 1999, balance of principal and interset
due July 1, 1999, collateralized by substantially           
all assets of the Company, including a minimum
deposit required with the bank, which was $319 
at December 31, 1997.  Early extinguishment
paid in June 1998                                            264          --

Note payable to a bank, monthly payments of $14
plus interest at the bank's prime rate (8.5% at 
December 31, 1997) plus 1% per annum through 
April 3, 2000, balance of principal and interst
due May 3, 2000, collateralized by substantially 
all assets of the Company, including a minimum
deposit required with the bank, which was $458 
at December 31, 1997.  Early extinguishment paid 
in June 1998                                                 403          --

Note payable to a bank, monthly payments of $4
plus interest at the bank's prime rate (8.5% at 
December 31, 1997) plus 1.5% per annum,
collateralized by substantially all assets of               
the Company, due March 1998, including a minimum
deposit required with the bank, which was $29
at December 31, 1997                                          12          --

Unsecured subordinated note payable to a
customer, due on July 1, 1998, interest payable 
quarterly at 9% per annum, through July 1, 1998            2,500          --
      

Line of credit, monthly payment of interest at
the bank's prime rate (8.5% at December 31, 1997) 
with all borrowing payable on demand or upon
expiration of the line in April 1998.
Collaterialized by substantially all assets of
the Company, including a minimum deposit required,
which was $185 as of  December 31, 1998.  Warrants 
were issued to purchase 6 shares of stock at $16.84 
per share for a period of five years from date
of issuance                                                1,160          --
                                                        ---------   ---------
                                                           6,939       2,046
Less current portion                                     (4,559)       (639)
                                                        =========   =========
Notes payable, net of current portion                      2,380       1,407 
                                                        =========   =========

During  1998,  the  Company  incurred  a loss  on  debt  extinguishment  of $226
associated  with paying the principal and interest of $4.8 million of short-term
and  long-term  notes  payable  noted  above.  The  loss  was  comprised  of the
amortization of the remaining loan fees associated with the debt issuance.

In August 1995,  the Company  entered into a loan and security  agreement with a
lending institution pursuant to which the Company borrowed $1.0 million, secured
by the Company's  inventory and fixed assets,  at a 14.95% stated interest rate.
In July 1996, the Company  entered into  additional  agreements with two lending
institutions  pursuant to which the Company  borrowed  $5.0  million at a 14.55%
stated  interest  rate.  These  creditors  were  granted a security  interest in
certain of the Company's  tangible and  intangible  assets.  The Company  issued
warrants in  conjunction  with both debt  financings  to  purchase an  aggregate
157,907 shares of Series B convertible  preferred  stock at an exercise price of
$5.91 to $6.65 per share.  The  warrants,  exercisable  until  July  2002,  were
assigned an aggregate value of $161,000, with the value being amortized over the
term of the loan and recorded as interest expense.

During  1997,  the  Company  recorded  an  extraordinary  loss  of  $428,000  in
connection  with the payment of $5.1 million in  principal  and interest for the
early  extinguishment  of all three loan and security  agreements.  The loss was
comprised of pre-payment penalties and amortization of the remaining discount on
the debt associated with the warrants issued along with the notes payable.

In June  1997,  the  Company  signed a Loan and  Security  Agreement  which made
available a $3.0 million equipment term loan facility at prime plus 0.75% (9.25%
at December 31, 1998).  The loan  facility was  available  through July 1998 and
secured by any  underlying  equipment  purchased.  As of December 31, 1998,  the
Company did not have any borrowings under the equipment term loan.

<PAGE>
6. INCOME TAXES

A  reconciliation  of the Federal  statutory  rate of 34% as applied to net loss
from continuing operations to the Company's effective tax rate is as follows (in
thousands):

                                            Year Ended December 31,
                                     --------------------------------------
                                        1996         1997          1998
                                     ------------  ----------   -----------
Benefit at U.S. Federal statutory        (6,665)     (2,423)       (2,258)
  rate
S corporation loss not subject to          2,327       2,062            --
  tax
Unutilized net operating losses            4,244         153         1,832
State income taxes                             3           8            --
Nondeductible merger expenses                 --          --           369
Other nondeductible expenses                  94         208            57
                                     ===========   ==========   ===========
     Total tax expense                         3           8            --
                                     ============  ==========   ===========

The tax effects of temporary  differences that give rise to significant portions
of the deferred tax assets and deferred tax  liabilities are presented below (in
thousands):
                                                        December 31,
                                                   ------------------------
                                                     1997          1998
                                                   ----------   -----------
Deferred tax assets:
  Inventory, due to reserves and additional          $   401       $   745
    amounts capitalized for tax
  Other accruals and reserves not currently            1,476         1,936
    deductible for tax purposes                                   
  Technology asset                                     1,677         1,476
  Net operating loss carryforwards and                10,155        10,717
    deferred  startup costs
  Credit carryforwards                                 1,468         2,164
  Fixed assets                                           182           627
  Other                                                   --            98
                                                   ----------   -----------
      Total gross deferred tax assets                 15,359        17,763
  Less valuation allowance                          (15,331)      (17,763)
                                                   ----------   -----------
      Net deferred tax assets                             28            --
                                                   ----------   -----------
Deferred tax liabilities:
    Other deferred liabilities                          (28)            --
                                                   ----------   -----------
              Total deferred tax liabilities            (28)            --
                                                   ----------   -----------
              Net deferred tax assets                     --            --
                                                   ==========   ===========

The net change in the valuation  allowance for the years ended December 31, 1997
and  1998,   were  increases  of   approximately   $4,005,000  and   $2,432,000,
respectively.  Management  believes  that  sufficient  uncertainty  exists as to
whether the deferred tax assets will be realized and,  accordingly,  a valuation
allowance is required.

As of December 31, 1998,  the Company had net federal and  California  operating
loss carryforwards of approximately  $26,960,000 and $16,988,000,  respectively,
for income tax reporting purposes.  The Federal net operating loss carryforwards
expire  beginning in 2009 through the year 2011.  The  California  net operating
loss carryforwards expire in 2002.

The  Company  also  has  research  and  experimental  tax  credit  carryforwards
aggregating  approximately  $1,102,000  and $796,000 for Federal and  California
purposes,  respectively.  The Federal credit  carryforwards  expire beginning in
2009  through  2018.  The  California  credits  carry  over  indefinitely  until
utilized.

There are also California credit  carryforwards for qualified  manufacturing and
research and  development  equipment of  approximately  $133,000;  these credits
expire in 2006.

The Tax Reform Act of 1986 imposed  substantial  restrictions on the utilization
of net operating losses and tax credits in the event of an "ownership change" of
a corporation.  An "ownership  change" occurred in October 1996. The approximate
amounts of  carryforward  items affected by this  restriction are as follows (in
thousands):

                                          Federal          California

            Net operating losses           $13,400,000     9,800,000
            Research credits                   230,000        80,000


This  restriction  also  applies  to  carryforward   items  resulting  from  the
"ownership  change" upon the  acquisition of SCI in June 1998.  The  approximate
amounts of  carryforward  items of this  subsidiary  which are  affected by this
restriction are as follows:

                                          Federal          California

            Net operating losses           $13,600,000     6,800,000
            Research credits                   222,000       123,000


The  "ownership  change"  restrictions  are not expected to impair the Company's
ability  to  utilize  the  affected  carryforward  items.  If there  should be a
subsequent  "ownership  change,"  of the  Company,  as  defined,  its ability to
utilize all stated carryforwards could be reduced.


7. STOCKHOLDERS' EQUITY

 Preferred Stock

Upon the Company's initial public offering of its common stock on July 29, 1997,
all  shares  of  issued  and  outstanding  Preferred  Stock  were  converted  to
11,344,907 shares of common stock. Following the conversion,  the Company had no
preferred stock outstanding.

1997 Incentive Stock Option,  Nonqualified  Stock Option and Restricted  Stock
Purchase Plan

In February  1997,  the Company's  subsidiary,  SCI,  adopted the 1997 Incentive
Stock Option,  Nonqualified Stock Option and Restricted Stock Purchase Plan (the
"SCI" Plan) and authorized  653,290  shares of the Company's  common stock to be
issued under the SCI Plan.  Incentive  options may be issued to officers and key
employees.   Nonqualified  options  and  restricted  shares  may  be  issued  as
determined by the Board of Directors.  The exercise  prices are to be determined
pursuant to formulas specified in the SCI Plan but not less than the fair market
value at the grant date. Options expire within ten years from the date of grant.

In  connection  with the  adoption of the SCI Plan,  certain  stockholders  were
issued  restricted stock in return for cancellation of options granted under the
previous plan. As consideration for the stock received,  the stockholders issued
notes  payable to the Company  totaling  $375,125.  The notes bear interest at a
rate of 7% per annum,  with principal and interest due on February 28, 2002, and
are secured by the stock  received.  The notes have been  included as a separate
component of stockholders' equity in the accompanying financial statements.

The Company has assumed  certain  option plans in connection  with the merger of
SCI as discussed in Note 4. These  options were granted  under terms  similar to
the terms of the Plan at prices adjusted to reflect the relative exchange ratios
of the  mergers.  All former  plans were  terminated  as to future  grants  upon
completion of the merger.

1997 Stock Incentive Plan

In May 1997, the Company  adopted the 1997 Stock Incentive Plan (the "Plan") and
authorized 1,337,633 shares of the Company's common stock to be issued under the
Plan. Under provisions of the Plan,  options are granted at fair market value at
date of grant for  incentive  stock  options or no less than 85% of fair  market
value for  nonqualified  options.  Options  generally vest over 4 years with 25%
vesting on the first  anniversary of the vesting  commencement  date and monthly
thereafter. Options generally expire 10 years from the date of grant.

Included  in the Plan is a provision  for the  automatic  grant of  nonstatutory
options to nonemployee  Board of Director members of 1,500 shares per annum. The
options are exercisable at the then current fair market value and generally vest
over a 12-month  period  beginning  one month after the grant  date.  The option
grants to nonemployees expire 10 years from grant date.

The 1997 Plan succeeds the 1996 Stock Option/Stock  Issuance Plan and the 1997
Officer Stock Option Plan.

1997 Employee Stock Purchase Plan

In May 1997,  the Board  adopted  the 1997  Employee  Stock  Purchase  Plan (the
"Purchase  Plan") and reserved 166,667 shares of Common Stock for issuance under
the Purchase  Plan. No stock was issued under the Purchase  Plan in 1997,  while
106,900 shares were issued in 1998.

Accounting for Stock-based Compensation

The  Company  uses  the  intrinsic-value  method  to  account  for  all  of  its
stock-based  employee  compensation  plans.  During  1996 and  1997 the  Company
recorded deferred  compensation  costs totaling  $1,202,000 related to its stock
option plans for the  difference  between the exercise  price of each option and
the fair market  value of the  underlying  common stock as of the grant date for
each stock option. This amount is being amortized over the vesting period of the
individual options,  generally four years. Amortization of deferred compensation
totaled  $550,000  and  $360,000  in 1997  and 1998  respectively,  and has been
charged to operating expenses.

Had compensation cost for the Company's stock option and employee purchase plans
been determined  consistent with the fair value approach  enumerated in SFAS No.
123, Accounting for Stock-Based Compensation,  the Company's 1996 net loss would
not have been materially  impacted.  For pro forma purposes,  the Company's 1997
and 1998 net loss  would have been as follows  (in  thousands,  except per share
data):

                                        Year Ended December 31
                                            1997          1998
                                        -----------   ------------
Net loss - as reported                       8,624          6,866
Net loss - pro forma                         9,315          8,790
Basic and diluted net loss per                0.86           0.39
share - as reported
Basic and diluted net loss per                0.93           0.50
share - pro forma

<PAGE>
The fair value of each option under the Plan is  estimated  based on the date of
grant  using the  Black-Scholes  method in 1997 and  1998,  using the  following
weighted-average assumptions:

                                                  1997        1998
      Expected life (years)                      2.86         2.64
      Expected stock price volatility              27%          60%
      Risk-free interest rate                    6.12%        4.83%

No dividend  impact was considered as the Company has never  declared,  and does
not have plans to declare any future dividends.

The pro  forma  net loss and loss per  share  include  expenses  related  to the
Purchase Plan. The weighted average fair value of purchase rights granted during
1998 under the Purchase  Plan is $5.40.  The fair value is  estimated  using the
Black-Scholes  model  assuming no  expected  dividends  on the date of grant,  a
risk-free rate of 5.107%, volatility of 60%, and an expected life of 1.14 years.
No employee stock purchase plan was in place in 1996.

Stock Option Activity and Status

The following table summarizes activity under the Company's Option Plans:

                                                               Weighted-Average
                                     Weighted-Average Options       Fair Value
                          Shares       Exercise      Vested at      of Options
                                        Price       Period-End       Granted
Outstanding as of        1,285,681          $0.48
December 31, 1995
   Options granted         673,379           0.76
                                                                           $0.20
                                                                   =============
   Options exercised     (553,344)           0.42
   Options cancelled     (183,889)           0.56

                         ----------  -------------
Outstanding as of        1,221,827           0.65
December 31, 1996
                                                        258,079
                                                    ============
   Options granted       1,090,534           6.50
                                                                           $3.60
                                                                   =============
   Options exercised     (730,416)           0.55
   Options cancelled     (313,656)           1.30
                         ----------  -------------
Outstanding as of        1,268,289           5.58
December 31, 1997
                                                        254,065
                                                    ============
    Options granted      2,029,748           6.44
                                                                           $2.79
                                                                   =============
    Option exercised     (271,961)           1.91
    Options cancelled   1,074,745)          11.74
                         ----------  -------------

Outstanding as of        1,951,331           3.59       291,477
December 31, 1998
                         ==========  =============  ============


The following table summarizes information about stock options outstanding as of
December 31, 1998:

                 Outstanding                             Exercisable
  
                     Weighted-average
             Number of   Remaining   Weighted-average Number of Weighted-average
 Exercise     shares    Contractual   exercise price    shares     Exercised
   prices                   life                                   prices
$0.30-$2.11    414,768      6.63           $0.82       256,631       $  0.80
$2.88-$3.00    686,575      9.73           $2.93           497       $  2.88
$3.06-$5.00    360,218      9.91           $4.85         2,903       $  4.21
$5.13          396,563      9.95           $5.13           --        $  5.13
$5.19-$19.50    93,207      6.74           $9.35        31,446       $ 10.14
==============================================================================
$0.30-$19.50 1,951,331      9.00           $3.59       291,477       $  1.84
==============================================================================
<PAGE>

As of  December  31,  1998,  employees  held  197,020  shares  of  common  stock
outstanding  by virtue of option  exercises  which were subject to repurchase by
the Company at prices ranging from $0.30 to $1.13 per share. The Company's right
of repurchase expires 25% on the first anniversary of the original issuance date
and monthly thereafter, over a four-year period.

During the fourth quarter of 1998, the Company's Board of Directors approved the
repricing of approximately  821,000  outstanding  stock options held by existing
employees to the current fair market value of the Company's stock at the date of
the repricing.

Notes Receivable from Stockholder

In November  1996,  the Company  issued an aggregate of 370,101 shares of common
stock in connection with option exercises by the Company's President.

In connection with such issuance,  the Company's President paid for the stock by
issuing a note  payable  (secured  pursuant  to a pledge  agreement  for 370,101
shares of common stock held by the  Company's  President)  to the  Company.  The
Company has the right to repurchase  such stock at the original  purchase  price
per share upon the  purchaser's  cessation  of service  prior to vesting in such
shares.  The  repurchase  right  lapses over the  following  four  years.  As of
December  31,  1998,  29,167 of such shares of common  stock are included in the
197,020 total shares of common stock  subject to repurchase by the Company.  The
secured note payable bears  interest at the rate of 7% per annum.  In 1998,  the
terms of the note were extended to October 1999.

8. COMMITMENTS AND CONTINGENCIES

 Leases

In August  1995,  the Company  entered  into a leasing  agreement to finance the
purchase of up to $1.0 million in equipment. In 1996, the Company entered into a
second  leasing  agreement to finance the purchase of an additional  $500,000 in
equipment. Lease terms under both agreements are for 42 months and are accounted
for as capital  leases.  As of December 31,  1998,  the Company had no remaining
amounts available under these leasing agreements

The Company is obligated under certain noncancelable operating leases for office
space and equipment expiring at various dates through 1999. Total rental expense
was  approximately  $1,107,000,  $1,539,000  and  $1,938,000 for the years ended
December 31, 1996, 1997, and 1998 respectively.

Future minimum  payments under capital and operating leases that have initial or
remaining  noncancelable  lease  terms in excess of one year are as follows  (in
thousands):

Year ending                                          Capital    Operating
December 31,                                         leases      leases
   1999                                               $  699     $ 2,390
   2000                                                  164       2,440
   2001                                                   17       2,149
   2002                                                    7         817
                                                      ------     -------
Total minimum lease payments                          $  887     $ 7,796
Less amount representing interest                         61     =======
                                                      ------   
                                                         826
Less current portion of obligations                      609
  under capital lease                                 ------
Long-term portion of capital lease obligations        $  217
                                                      ======

Litigation

The Company is involved in various  legal matters that have arisen in the normal
course of business.  Management  believes,  after consultation with counsel, any
liability  that may result from the  disposition  of such legal matters will not
have a material adverse effect on the Company's  financial  condition or results
of operations.


<PAGE>


9.  SEGMENT INFORMATION

 The  Company  has  adopted the  provision  of SFAS No.  131,  Disclosure  About
Segments of an  Enterprise  and Related  Information.  SFAS No. 131  establishes
standards for the reporting by public business  enterprises of information about
operating  segments,   products  and  services,   geographic  areas,  and  major
customers. The method for determining what information to report is based on the
way that  management  organizes  the operating  segments  within the Company for
making operating decisions and assessing financial performance.

The Company's chief  operating  decision maker is considered to be the Company's
Chief Executive Officer ("CEO"). The CEO reviews financial information presented
on a consolidated basis accompanied by disaggregated  information about revenues
by geographic  region for purposes of making  operating  decisions and assessing
financial  performance.  The consolidated  financial information reviewed by the
CEO is identical to the information  presented in the accompanying  consolidated
statement of operations.  Therefore,  the Company  operates in, and measures its
results in a single operating  segment,  wireless system solutions,  rather than
distinctive product segments.

The  Company's  operations  are  located in the  United  States.  Revenues  from
international  sources  relate to export  sales  primarily  to  distributors  in
Europe,  Latin America and Asia. The Company's  revenue by geographic area is as
follows (in thousands):

                                      Years Ended
                                      December 31,
                           -----------------------------------
                              1996         1997        1998
                           -----------  -----------  ---------
Revenues:
    North America          $   27,321   $   46,371   $ 38,022
    Latin America                 707        5,933     14,827
    Pacific Rim                 1,496        5,568      6,921
    Europe                      1,692        2,984      5,448
                           -----------  -----------  ---------
         Total             $   31,216   $   60,856   $ 65,218
                                                        

The Company has no material operating assets outside of the United States.

Significant Customers

The following tables summarize information relating to the Company's significant
customers as of December 31, 1997 and 1998 and for the years ended  December 31,
1996, 1997 and 1998:
                                                   Percentage of Total         
                                                        Revenues
                                                   1996    1997    1998
      
      Customer A                                      3%    11%     13%
      Customer B                                      6%    12%     10%
      Customer C                                      8%    10%      9%
      Customer D                                     12%     4%      1%
      Customer E                                     10%     5%      3%

                                                        Percentage of Trade
                                                        Accounts Receivable
                                                           1997    1998
      
      Customer B                                            12%     --%
      Customer C                                            14%     --%
      Customer F                                            --%     12%
      Customer G                                            --%     11%
      Customer H                                            13%     --%
      Customer I                                            13%     --%


<PAGE>


10.    SUBSEQUENT EVENTS

On February 3, 1999, the Company sold  substantially  all of the assets relating
to its  Communication  Resource  Manager  billing  system  and  certain  related
products to Wireless Billing Systems ("WBS"), a California corporation, pursuant
to the terms of an Asset Purchase Agreement.

Pursuant  to the terms of the Asset  Purchase  Agreement,  the  Company  made an
initial  payment of  $1,000,000  to WBS at the closing and agreed to loan WBS an
additional  $200,000 pursuant to the terms of a secured  promissory note bearing
interest  at the rate of 10% per annum,  due and  payable in 24 months  from the
date of issuance.

On or before April 15, 1999, the Company will prepare a closing balance sheet as
of January 31, 1999,  reflecting the assets and liabilities  transferred to WBS,
as adjusted to reflect (i) the actual book value of selected  fixed assets to be
acquired by WBS, (ii) accounts  receivable  assumed by WBS and (iii) prepayments
received by the Company  prior to the  February 3, 1999 that are returned by WBS
to customers  (the  "Closing  Balance  Sheet").  In the event that the net asset
value, as reflected on the Closing Balance Sheet is negative,  the Company shall
deliver to WBS the amount by which such net asset value is negative in cash.  In
the event that the net asset value, as reflected on the Closing Balance Sheet is
positive,  WBS shall  deliver to the  Company a secured  promissory  note in the
aggregate  principal  amount by which such net asset value is positive,  bearing
interest at the rate of 10% per annum due and payable in 24 months from the date
of  issuance.  In addition,  pending the consent of a customer  impacted by this
transaction,  the Company may be  required  to make an  additional,  significant
payment to WBS.

The Company is currently  evaluating the impact of the sale and determination of
the accounting  treatment,  subject to the  preparation  of the Closing  Balance
Sheet.

Also in February,  the Company  signed a letter of intent to develop a strategic
relationship  for the  development,  sales and marketing of a wireless  location
product.  As a result of entering into the strategic  relationship,  the Company
has determined that it will discontinue a development project, which likely will
result in the  recording of certain one time charges.  The  financial  impact of
both events will be disclosed in the Company's first quarter filing of 1999.



<PAGE>


UNAUDITED QUARTERLY RESULTS

                                             Quarters Ended
                             Mar  31      June 30 *      Sept 30       Dec 31
                          ------------  -------------  ------------  -----------
Total revenues              $  18,834      $  19,049     $  12,023     $ 15,312
Gross Profits                   9,688         11,701         7,568        9,699
Operating expenses             10,071         15,097        11,280       11,308
Operating loss                  (383)        (3,396)       (3,712)      (1,609)
Net income (loss)                 307        (3,330)       (3,089)        (754)

Net income (loss) per       $    0.02      $  (0.19)     $  (0.17)     $ (0.04)
  share:                          
Shares used in per             18,115         17,660        17,802       17,926
  share  computation         


* Net  income  (loss)  for the second  quarter  of 1998 is  presented  net of an
adjustment  to  the  quarter's   previously  reported  operating  figures.   The
adjustment  was to decrease  operating  expenses by  approximately  $290 for the
second quarter. The adjustment caused related changes to operating loss, and net
income (loss).



<PAGE>




                                    PART III
------------------------------------------------------------------------------


ITEM 10. Directors and Executive Officers of the Registrant

      (a)   Identification  of  Directors.  The  information  under the  heading
            "Election  of  Directors,"  appearing  in the  Proxy  Statement,  is
            incorporated herein by reference.

      (b)   Identification  of Executive  Officers.  The  information  under the
            heading "Executive  Officers," appearing in the Proxy Statement,  is
            incorporated herein by reference.

      (c)   Business  Expenses.  The  information  under the  heading  "Business
            Expenses," appearing in the Proxy Statement,  is incorporated herein
            by reference.

      (d)   Section  16(a)  Beneficial  Ownership  Reporting  Compliance.  Based
            solely  upon a review of  copies  of Forms 3,4 and 5 and  amendments
            thereto furnished to the Registrant, or written representations that
            no Form 5s were required,  the Company believes that, during January
            1,  1998  through  December  31,  1998,  all  Section  16(a)  filing
            requirements applicable to its officers,  directors and greater that
            10% stockholders were satisfied.


ITEM 11. Executive Compensation

      Pursuant  to  General  Instruction  G (3) to Form  10-K,  the  information
required by this item is incorporated by reference to the information  contained
in the section captioned "Executive Compensation and Other Matters" in the Proxy
Statement.


ITEM 12. Security Ownership of Certain Beneficial Owners and Management

      The information  required by this item is incorporated by reference to the
information  contained in the section captioned "Ownership of Securities" in the
Proxy Statement.


ITEM 13. Certain Relationships and Related Transactions

      The information  required by this item is incorporated by reference to the
information  contained  in the  section  captioned  "Certain  Relationships  and
Related Transactions" in the Proxy Statement.



<PAGE>


                                     PART IV
------------------------------------------------------------------------------


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


(a)   (1)   Financial Statements

      The financial  statements of the Company are included herein as required
      under  Item  8 of  this  Annual  Report  on  Form  10-K.  See  Index  to
      Consolidated Financial Statements on page 27.

      (2)   Financial Statement Schedules

      Schedule II: Valuation of Qualifying Accounts                   page 53 

      All  other  schedules  for  which  provision  is  made  in the  applicable
      accounting  regulations of the Securities and Exchange  Commission are not
      required under the related instructions or are inapplicable, and therefore
      have been omitted.

(b)   No reports on Form 8-K have been filed during the last quarter of the  
      period covered by this report.

(b)   Exhibits

Exhibit
Number                  Description
 3.1  + Amended and Restated Certificate of Incorporation of the Company
        (Exhibit 3.2)
 3.2  + Restated Bylaws of the(Exhibit 3.3) 4.1 + Form of Certificate for   
        Common Stock.
10.1  + Series A Preferred Stock Purchase  Agreement  between the Company and
        the purchasers listed on Schedule A thereto, dated December 10, 1994
10.2  + Asset Purchase  Agreement  between the Company and ESL  Incorporated,
        dated December 14, 1994.
10.3  + Series A Preferred Stock Purchase  Agreement  between the Company and
        ESL Incorporated, dated December 14, 1994.
10.4  + License and Technical  Assistance  Agreement between the Company, TRW
        Inc. and ESL Incorporated, dated December 14, 1994.
10.5  + AirTouch   Assignment   Agreement   between   the  Company  and  ESL
        Incorporated, dated December 14,1994
10.6  + Development and License Agreement between ESL Incorporated and PacTel
        Corporation, dated October 4, 1993.
10.7  + First Amendment to the Development and License  Agreement between ESL
        Incorporated and PacTel Corporation, dated October 23, 1994.
10.8  + Second  Amendment to and Consent of Assignment of the Development and
        License Agreement between the Company and AirTouch,  dated December 14,
        1994.
10.9  + Third Amendment to the Development and License  Agreement between the
        Company and AirTouch, dated August 18, 1995.
10.10 + 1995 Stock Option/Stock Issuance Plan.
10.11 + 1995 Stock Option/Stock Issuance Plan Form of Notice of Grant.
10.12 + 1995 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.
10.13 + 1995 Stock Option/Stock Issuance  Plan  Form of Stock Purchase
        Agreement.
10.14 + Patent License Agreement.
10.15 + Master  Lease  Agreement,  as amended,  and  Schedules  VL-1 and VL-2
        between the Company and Comdisco, Inc., dated August 31, 1995.
10.16 + Loan and Security  Agreement between the Company and Comdisco,  Inc.,
        dated August 31, 1995.
10.17 + Secured  Promissory  Note from the Company to Comdisco,  Inc.,  dated
        August 31, 1995.
10.18 + Warrant  granted to  Comdisco,  Inc. to  purchase  Series B Preferred
        Stock, dated August 31, 1995.


<PAGE>


10.19 + Series B Preferred Stock Purchase  Agreement  between the Company and
        the investors listed on Schedule A thereto, dated October 31, 1995.
10.20 + 1996 Stock Option/Stock Issuance Plan, as amended.
10.21 + 1996 Stock Option/Stock Issuance Plan Form of Notice of Grant, as
        amended.
10.22 + 1996 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.
10.23 + 1996 Stock Option/Stock Issuance Plan Form of Stock Purchase
        Agreement, as amended.
10.24 + Promissory  Note from Martin  Silver to the Company,  dated April 10,
        1996.
10.25 + Promissory  Note from Martin  Silver to the Company,  dated April 10,
        1996.
10.26 + Loan and Security  Agreement between the Company and Comdisco,  Inc.,
        dated July 31, 1996.
10.27 + Warrant  granted to  Comdisco,  Inc. to  purchase  Series B Preferred
        Stock, dated July 31, 1996.
10.28 + Secured  Promissory  Note from the Company to Comdisco,  Inc.,  dated
        July 31, 1996.
10.29 +  Loan  and  Security  Agreement  between  the  Company  and  MMC/GATX
        Partnership No. 1, dated July 31, 1996.
10.30 + Warrant  granted to MMC/GATX  Partnership  No. 1 to purchase Series B
        Preferred Stock, dated July 31, 1996.
10.31 + Secured Promissory Note from the Company to MMC/GATX  Partnership No.
        1, dated July 31, 1996.
10.32 + Warrant  granted to  Comdisco,  Inc. to  purchase  Series B Preferred
        Stock, dated August 5, 1996.
10.33 + Loan and Security  Agreement  between the Company and Silicon  Valley
        Bank, dated August 30, 1996.
10.34 + Series C Preferred Stock Purchase  Agreement  between the Company and
        the investors listed on Schedule A thereto, dated October 30, 1996.
10.35 + Amended and Restated  Investors' Rights Agreement between the Company
        and various stockholders, dated October 30, 1996.
10.36 + Amendment  No.  1 to the  Amended  and  Restated  Investors'  Rights
        Agreement between the Company and various stockholders,  dated March 7,
        1997.
10.37 + Directed Share Agreement between the Company and the investors listed
        on Exhibit A thereto, dated October 30, 1996.
10.38 + Promissory  Note from Mary Ann Byrnes to the Company,  dated November
        14, 1996, as amended.
10.39 + 1997 Officer Stock Option Plan.
10.40 + 1997 Officer Stock Option Plan Form of Stock Option Agreement, as
        amended.
10.41 + 1997 Employee Stock Purchase Plan.
10.42 + 1997 Stock Incentive Plan.
10.43 + 1997 Stock Incentive Plan Form of Notice of Grant.
10.44 + 1997 Stock Incentive Plan Form of Stock Option Agreement.
10.45 + Lease dated January  10, 1997 between the Company and San Thomas
        Investment Company.
10.46 + Series D Preferred Stock Purchase  Agreement  between the Company and
        the investors listed on Schedule A thereto, dated March 7, 1997.
10.47 + Form of Master Purchase and Licensing Agreement.
10.48 + Form of Confidential Disclosure Agreement.
10.49 + Form of Indemnification Agreement between the Company and each of its
        directors.
10.50 + Form of Indemnification Agreement between the Company and each of its
        officers.
10.51 + Form of Written  Consent of Holders of Series A,  Series B,  Series C
        and Series D Preferred Stock to cnversion.
10.52 + Form of Waiver of Registration Rights
23.1  * Report on Schedule and Consent of Independent Auditors,  KPMG LLP. 
23.2  * Consent of Deloitte & Touche LLP, Independent Accountants.
24.1  * Power of Attorney (See page 47 ).
27.1  * Financial Data Schedule
------------------------------------------------------------------------------
*  Filed herewith.
+  Incorporated  by reference to the same numbered  exhibit (except as otherwise
   indicated)  to  the  Company's   Registration  Statement  on  Form  S-1  (no.
   333-28519), filed on June 4, 1997 as amended.

Supplemental Information

      Copies of the  Registrant's  Proxy  Statement  for the  annual  Meeting of
Stockholders to be held June 16, 1999 and copies of the form of proxy to be used
for such  Annual  Meeting  will be  furnished  to the  Securities  and  Exchange
Commission   prior  to  the  time  they  are  distributed  to  the  Registrant's
stockholders.





<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 Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

      Date: April 7, 1999                       Corsair Communications, Inc.

                                                By:/s/Mary Ann Byrnes
                                                   Mary Ann Byrnes
                                                   Chief Executive Officer

                                 Power of Attorney

      Know all men by these presents,  that each person whose signature  appears
below  constitutes  and appoints Mary Ann Byrnes,  his or her  attorney-in-fact,
with power of substitution in any and all capacities,  to sign any amendments to
this Annual Report on Form 10-K, and to file the same with exhibits thereto, and
other  documents  in  connection  therewith,  with the  Securities  and Exchange
Commission, hereby ratifying and confirming all that the attorney-in-fact or his
or her substitute or substitutes may do or cause to be done by virtue hereof.

      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:

      April 7, 1999     /s/Kevin R. Compton
                        Kevin R. Compton, Chairman of the Board of Directors


      April 7, 1999     /s/Mary Ann Byrnes
                        Mary Ann Byrnes, Director


      April 7, 1999     /s/Peter L.S. Currie
                        Peter L.S. Currie, Director


      April 7, 1999     /s/Stephen M. Dow
                        Stephen M. Dow, Director


      April 7, 1999     /s/David H. Ring
                        David H. Ring, Director


      April 7, 1999     /s/Rachelle B. Chong
                        Rachelle B. Chong, Director




<PAGE>




                                                                   Schedule II

                         Corsair Communications, Inc.
                      Valuation and Qualifying Accounts
                                (in thousands)


RESERVE FOR BAD DEBT AND ALLOWANCES


                     Balance at  Charged
                      beginning  to costs               Balance at
     YEAR ENDED        of the    and        Deductions  end of the
                       period     expenses                period
December 31, 1996      $    550   $     445  $     128    $     867
December 31, 1997      $    867   $   2,018  $   1,457    $   1,428
December 31, 1998      $  1,428   $   2,692  $   1,224    $   2,896



<PAGE>


                                                                  Exhibit 23.1

            REPORT ON SCHEDULE AND CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Corsair Communications, Inc.

The audits  referred  to in our report  dated  February  2, 1999,  included  the
related  financial  statement  schedule for each of the years in the  three-year
period ended  December 31, 1998,  included in the annual  report on Form 10-K of
Corsair   Communications,   Inc.  This  financial   statement  schedule  is  the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on this  financial  statement  schedule  based  on our  audits.  In our
opinion,  such financial statement schedule,  when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly in all
material aspects the information set forth therein.

We consent to  incorporation  by reference in the  registration  statement  (No.
333-3231)  on form S-8 of  Corsair  Communications,  Inc.  of our  report  dated
February 2, 1999, relating to the balance sheets of Corsair Communications, Inc.
as of December  31, 1997 and 1998,  and the related  statements  of  operations,
stockholders'  equity  and cash  flows for each of the  years in the  three-year
period ended December 31 1998, and the related schedule, which reports appear in
the December 31, 1998 annual report on Form 10-K of Corsair Communications, Inc.

KPMG LLP


San Francisco, California
April 8, 1999



<PAGE>


                                                                  Exhibit 23.2

                        INDEPENDENT AUDITOR'S CONSENT


We consent to the  incorporation  by reference in  Registration  Statement No.
333-3231  of  Corsair  Communications,  Inc.  on Form S-8 of our report on the
financial  statements of Subscriber  Computing,  Inc. as of September 30, 1996
and 1997 dated  January 7, 1998,  appearing in the Annual  Report on Form 10-K
of Corsair Communications, Inc. for the fiscal year ended December 31, 1998.


DELOITTE & TOUCHE LLP

Costa Mesa, California
April 7, 1999


<PAGE>












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