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, 1999

                                     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  29, 2000 was
approximately $478,440,643.  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 29, 2000 there were  17,655,739  shares of the  registrant's
common stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions  of  Corsair's  Proxy  Statement  for the 2000  Annual  Meeting of
Stockholders  to  be  held  on  June  6,  2000  (the  "Proxy  Statement"),   are
incorporated by reference into Part III of this Annual Report on Form 10-K.




<PAGE>



                                   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  our  expectations,   beliefs,   intentions  or
strategies regarding the future. All forward-looking statements included in this
document are based on  information  available  to us on the date hereof,  and we
assume no obligation to update any such forward-looking  statements.  Our 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 our Securities and Exchange Commission filings.


GENERAL

         Corsair Communications,  Inc. (Corsair) is a leading provider of system
solutions  for the global  wireless  industry.  Our  PrePay(TM)  billing  system
provides wireless  telecommunications carriers with a software solution designed
to integrate with the upcoming Wireless  Intelligent Network standards.  Over 12
service  providers  have installed  PrePay and we believe that PrePay  currently
serves over 7.2 million subscribers.  Our PhonePrint(R) system has proven highly
effective  in reducing  cloning  fraud.  PhonePrint  has  prevented  hundreds of
millions of fraudulent call attempts and saved our customers millions of dollars
in fraud  losses.  We believe that our products can provide a number of benefits
to wireless telecommunications  carriers, including reduced costs, improved cash
flow, increased market penetration and improved customer service.

     We sell and market our  products  to wireless  telecommunications  carriers
domestically and internationally. Customers of our software and systems include:
Alltel Communications, Inc., AT&T Wireless Services, Baja Celular 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 Celular, 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,  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., Telestar
Mexico,  S.A. de C.V.,  United  States  Cellular  Corp.  and  Vanguard  Cellular
Financial Corp. We sell our products and services through our direct sales force
and  our  distribution  partners,  which  include  Aurora  Wireless  Technology,
Ericsson Radio Systems, A.B., Grupo Ozono, and Motorola, Inc.

         Issues Facing Wireless Telecommunications Carriers

         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.   Baskerville
Communications,  an independent market research firm,  estimates that the number
of wireless  telecommunications  subscribers  worldwide will reach approximately
928 million in 2003.

         As the wireless  telecommunications  industry evolves,  it faces severe
competitive  pricing and cost  pressures.  In the U.S.,  existing  carriers  are
seeing  increased  competition  as  new  Personal  Communications  Services  and
Enhanced  Specialized  Mobile Radio 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  develop  services  that allow them to
maximize the size of their  customer  base. In order to maintain or expand their
customer  base,  carriers are being faced with a growing  need to  differentiate
service offerings using 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.  Our  products  address two of these needs:  prepaid
wireless services and fraud protection.

         Prepaid Wireless Services

         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.
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   countries.   Baskerville
Communications  estimates  that  between  now and 2003  the  number  of  prepaid
wireless  telecommunications  subscribers  worldwide  will increase at a rate in
excess  of 50% per year.  It  estimates  that in 1998 less than 10% of  wireless
telecommunications  subscribers worldwide were pre-paid and it estimates that by
2003 pre-paid subscribers will account for 40% of all subscribers.

         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 have poor
credit or 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
acceptance.

         Handset-based  technology has proven popular in those European  markets
that employ the  standards  of the global  system for mobile  telecommunications
networks,  or GSM, through applications that run on a subscriber  identification
module, or SIM card. Handset-based systems have met with limited success outside
of markets  operating  with these 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
the  fraud   associated  with  post-call   systems.   This  is  accomplished  by
implementing  an adjunct  switching  platform in the voice network  connected by
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.

         Cloning 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. We believe that
cloning fraud accounts for most fraud losses in analog  networks.  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.
Cloning  occurs  when a  thief  uses a  scanning  device  to  steal  the  mobile
identification  number and  electronic  serial number  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 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.  Personal identification numbers involve the use of a numeric code
that must be  dialed  by the  subscriber  before a call is  connected.  Personal
identification  numbers  are  considered  inconvenient,  and  because  they  are
transmitted  over the air during a call, they have been  compromised in the same
manner as electronic  serial 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, we believe that
it will not be cost  effective  to replace the large  number of existing  analog
phones  that  do not  allow  authentication.  Domestically,  the  carriers  have
deployed  incompatible  digital networks  including GSM , Code Division Multiple
Access,  or CDMA and Time  Division  Multiple  Access,  or TDMA,  . Due to these
different  digital  networks,  subscribers  must utilize the analog  network for
roaming when  traveling in a market that has deployed a digital  network that is
not  compatible  with the  subscriber's  handset.  For this reason,  the Company
believes  the analog  network  will be  maintained  for several  years to enable
roaming.


CORSAIR'S SOLUTIONS

         Prepaid Metered Billing

         Our PrePay(TM) system 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.  Corsair's PrePay system is differentiated from most other
competitive  offerings by its use of the Wireless  Intelligent Network standards
and architecture,  which enables carriers to use existing switch  infrastructure
equipment  rather than requiring  costly  additional  adjunct switches and voice
trunk  resources.  The PrePay software  architecture is designed to scale as the
number  of  PrePay  subscribers  on a system  grows.  Since  prepaid  calls  are
controlled by the existing  switch,  there is no impact on call setup times. All
calls  by  prepaid  subscribers  are  rated  in  real  time,  and an  integrated
interactive  voice  response  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.

         Corsair  has  enhanced  and  extended  the  PrePay  system  to  make it
compatible with all wireless  switch vendors through the  introduction of PrePay
Open.  We believe this  enhancement  will open many new market  segments for our
product and enables  roaming with our existing  PrePay  customers using Ericsson
infrastructure  equipment.  PrePay Open will be in preliminary  customer testing
during the second quarter of 2000.

         We recently introduced our m-commerce product,  PhoneFuel, that further
extends the PrePay product line.  PhoneFuel  will allow our PrePay  customers to
offer their subscribers the capability to add cash to their PrePay balance using
wireless application  protocol, or WAP, phones directly from their bank accounts
or  credit  cards.  PhoneFuel  will  support  Internet  connections  for  PrePay
subscribers  enabling  these  subscribers to pay for services and products using
their prepaid monetary balance.

         Cloning Fraud

         Our  PhonePrint   system   provides   highly-effective   cloning  fraud
prevention to wireless  telecommunications  carriers by using  proprietary radio
frequency 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  radio  frequency
waveform to develop a radio frequency  "fingerprint"  that is a reliable tool to
distinguish  between  a  legitimate  phone and its  clone.  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  fingerprint of one wireless phone cannot be emulated by
another wireless phone,  and is therefore not subject to being  compromised like
electronic  serial  numbers,  personal  identification  numbers  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  our  PhonePrint  Roaming  Network,
carriers can share these fingerprints in real-time between PhonePrint systems in
different markets to protect against losses associated with roaming fraud.


STRATEGY

         Our  objective  is to be the  leading  provider  of  real-time  billing
solutions to wireless telecommunications  carriers. Key elements of our strategy
include:

         Maintain  Leadership in WIN-based  Prepaid Metered  Billing  Solutions.
Corsair's  PrePay  system  is  designed  to fully  integrate  with the  upcoming
Wireless  Intelligent  Network  standards,  and we believe  that PrePay  systems
currently serve more prepaid subscribers worldwide than any other prepaid system
using these  standards.  We intend to leverage our  reputation and experience in
operating  PrePay in  international  markets to increase our share of the global
market for wireless prepaid billing solutions.

         Develop New Services and Features to Compliment our PrePay Service.  We
intend  to  capitalize  on  PrePay's  installed   user-base  to  offer  expanded
functionality.  We have  developed and plan to offer  expanded  PrePay  services
including  the  ability for end users to add money to their  PrePay  account via
PhoneFuel. We also plan to develop service offerings that will capitalize on the
growth of wireless Internet access and the need for convenient, secure, wireless
payment mechanisms to support Internet-based e-commerce.

         Provide Superior Customer Support.  We believe that providing  superior
customer  support is  critical to  maintaining  long-term  relationships  and to
capitalizing  upon future sales  opportunities.  We have  invested in building a
customer  support  organization  with the range of technical skills and depth of
expertise  necessary to serve  various  wireless  customers.  We have  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.  We intend
to use our core  expertise  in real-time  billing and  real-time  networking  in
distributed  systems  environments to develop and introduce  other products.  We
also  seek to  strategically  acquire  complementary  businesses,  products  and
technologies from third parties. We have in the past evaluated and expect in the
future to pursue business combinations with third parties.

         Serve the Market for Cloning Fraud Prevention  Solutions.  We intend to
leverage our reputation and experience as a leading provider of  radio-frequency
fingerprinting  solutions to maximize  the  available  market for cloning  fraud
prevention solutions.  We believe that carriers in certain international markets
are experiencing  cloning fraud on their analog networks and present the primary
future  opportunity  for any new  PhonePrint  sales.  Domestically,  we  believe
carriers  will keep  their  installed  PhonePrint  systems up and  operating  to
prevent the re-occurrence of cloning fraud within their analog networks as these
analog networks are used for roaming.


THE PREPAY SYSTEM

         PrePay allows carriers to support prepaid service offerings using their
existing  Mobile  Switching   Center/Home   Location   Registry   infrastructure
equipment.  The PrePay server  communicates with this  infrastructure  and other
network elements with the PrePay server and customer service clients.  Corsair's
new PrePay Open product supports several air interfaces,  including:  CDMA, GSM,
TDMA, Analog Mobile Phone System, or AMPS, Total Access  Communications System ,
or TACS, and Extended Total Access Communications System, or ETACS.

         When a subscriber  initiates a call and the network registry  validates
that it is a prepaid  subscriber,  a  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 network then  processes  the call in the same
manner as in the post-paid  environment,  but times the call against the allowed
call  duration.  If  prepaid  funds  are  depleted  during  a call,  the call is
automatically  terminated and service is suspended  until  additional  funds are
deposited.  When the call is released, the system passes a message to the PrePay
server  for  a  post-call  rating,  and  then  the  PrePay  system  adjusts  the
subscriber's  account balance to reflect the costs associated with the call. All
communications and processes occur in real time.

         The PrePay server provides  subscribers with automated telephone access
to the prepaid system.  The mobile inquiry function allows subscribers to obtain
automated  information  regarding their balance and expiration  date. The mobile
payment  function  allows  subscribers  to  replenish  their  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  balances  and  new  expiration   dates.  The  low
balance/funds  expiration  announcement provides an automated warning message to
subscribers warning them that their balance is getting low or expiration date is
getting near.  If either the balance or  expiration  threshold are met, then the
PrePay system will instruct the network to route a new call to the PrePay server
for a warning prior to completing the call.

         PrePay   provides   carriers  with   feature-rich   customer  care  and
administration  functions including:  activation and provisioning,  phone number
and phone card inventory  control,  and real-time  account review and adjustment
capabilities for customer service  representatives.  Activation and provisioning
are done in real time through  software.  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 under the UNIX operating  system 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   originally   developed   proprietary   Wireless   Intelligent
Network-based  interfaces in conjunction  with Ericsson  Radio Systems,  A.B. to
accelerate  the  market  development  of PrePay in markets  which have  deployed
Ericsson  switching  equipment  in  advance  of the final  Wireless  Intelligent
Network, or WIN standards. Prior to PrePay's launch, the use of existing network
equipment  was  impractical  or  impossible  due to the  proprietary  nature  of
Ericsson  equipment.  We are in the process of developing PrePay Open, a version
of PrePay that will work on switches  manufactured  by a wide range of companies
in addition to  Ericsson.  PrePay  Open's  development  reflects  two  important
considerations.  First,  PrePay  Open will  extend  roaming  capability  for our
existing and future  Ericsson  PrePay  customers to markets that have  installed
switching  infrastructure  from vendors other than Ericsson.  Second, we believe
that our present system architecture and design will support a smooth transition
to Wireless  Intelligent  Network  standards once the standards are released and
implemented commercially.


THE PHONEPRINT SYSTEM

         PhonePrint is an open  architecture  hardware and software  system that
reduces  cloning fraud by detecting and promptly  disconnecting  fraudulent call
attempts. Its key factor is its very robust RF (radio frequency) signal analysis
techniques.  The  system  supports  real-time  network  connectivity,   allowing
PhonePrint  markets to inter-operate  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 radio frequency 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 a
radio frequency  fingerprint by using complex proprietary  algorithms to measure
the physical  features of these  waveforms.  These  fingerprints  of  legitimate
subscribers'  phones are stored in a database.  PhonePrint compares the observed
fingerprint  of  the  caller  with  the  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
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 IP (internet protocol) network.

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

         System  Control  Center.  A  system  control  center   administers  and
maintains  the  master  database  of  fingerprints  and  activates   fingerprint
validation  processes for a market. It also communicates with the market's radio
frequency unit to receive new fingerprint  observations  and update  fingerprint
databases.  The control  center also  supports  remote  system  diagnostics  and
configuration administration, as well as providing the connection to the roaming
network.

         Real-Time  Application Server. The real-time application server 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 radio frequency units, a system control center
and a real-time  application server for each market are connected together,  and
the  PhonePrint  system is connected to the  carrier's  network  infrastructure,
using a real-time  network.  Carriers can  subscribe to the  PhonePrint  Roaming
Network  service to exchange  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.


PRODUCT DEVELOPMENT

         Our  product  development  enhancements  to the PrePay  and  PhonePrint
systems  and  development  of  new  products  will  address   perceived   market
opportunities.  Future  releases  of  PrePay  are  being  developed  to  support
interfaces  with  additional  switch  manufacturers.  We have developed and will
begin marketing PrePay Open, a  switch-independent  version of Prepay which will
allow more widespread  adoption of PrePay including providing roaming capability
with our Ericsson PrePay customers.

         Total research and development  expenditures were $12.5 million,  $18.3
million and $11.3 million in fiscal years 1997, 1998, and 1999, respectively. We
anticipate  that we will  continue to commit  substantial  resources  to product
development in the future.  All research and development  expenditures have been
expensed as incurred.  During this period,  PrePay has been enhanced to increase
peak throughput  capability and improve  reliability.  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.

         As of December  31,  1999,  54  employees  were engaged in research and
development  programs,  including  hardware and software  development,  test and
engineering  support.  We believe  that  recruiting  and  retaining  engineering
personnel  is  essential  to our  success.  Competition  for such  personnel  is
intense.


CUSTOMERS

         The end  users of our  products  are both  domestic  and  international
wireless telecommunications carriers. Ericsson Radio Systems, A.B. accounted for
greater  than 43% of our total  revenues in 1999.  In 1998,  BellSouth  Cellular
Corporation and GTE Mobilnet Service Corporation each accounted for greater than
10% of our total revenues,  and collectively accounted for over 23% of our total
revenues for the year. In 1997,  BellSouth  Cellular  Corporation,  GTE Mobilnet
Service Corporation,  and Southwestern Bell Mobile Systems,  Inc. each accounted
for greater than 10% of our total revenues,  and collectively accounted for over
33% of our total revenues for the year.

         The following is a partial list of wireless telecommunications carriers
that have deployed either our PhonePrint or PrePay systems:

         Algar Telecom Leste
         American Cellular Communications Corp.
         AT&T Wireless Services
         Bell Atlantic
         BellSouth Cellular Corporation
         Cable and Wireless, Ltd.
         CCPR Services, Inc.(Celular One Puerto Rico)
         Centennial Cellular Corporation
         Comcast Cellular Communications, Inc.
         Ericsson Telecom, S.A. de C.V.
         GTE Mobilnet Services Corp.
         Houston Cellular Telephone Company
         Los Angeles Cellular Telephone Company
         NYNEX Mobil
         Pilipino Telephone Corporation (PILTEL)
         Puerto Rico Celular Telephone Company
         RadioMovil DIPSA, S.A. de C.V. (Telcel)
         Servisio Di Telekomunikashon, Setel N.V.
         Southwestern Bell Mobile Systems, Inc.
         Telecomunicaciones Movilnet, C.A.
         Telefonica Comunicaciones Personales S.A.
         Tess Celular
         United States Cellular Corporation
         Vanguard Cellular Financial Corp.
         VimpleCom


SALES, MARKETING, DISTRIBUTION AND CUSTOMER SUPPORT

         We sell  and  license  PrePay  primarily  pursuant  to a  non-exclusive
original equipment  manufacturer  agreement with Ericsson and through our direct
sales  force.  We market  PhonePrint  to  wireless  telecommunications  carriers
domestically  and  internationally  through  our  direct  sales  force  and  our
distribution  partners.  We sell and license  PhonePrint  pursuant to agreements
that typically provide for hardware  purchases and software  licenses,  customer
service and support and roaming  service  fees.  A carrier's  decision to deploy
PrePay or PhonePrint  typically involves a significant  commitment of capital by
the carrier,  with the delays  frequently  associated with  significant  capital
expenditures.  In addition,  purchases of PrePay or PhonePrint  involve testing,
integration,  implementation  and  support  requirements.  For  these  and other
reasons,  the sales cycle  associated  with the purchase of PrePay or PhonePrint
typically  ranges  from  three to 18 months  and is subject to a number of risks
over which we have little control, including the carrier's budgetary and capital
spending constraints and the internal decision making processes.

         For the year ended December 31, 1999,  international revenues accounted
for  approximately  74% of our total  revenues.  For the year ended December 31,
1998,  international  revenues  accounted  for  approximately  42% of our  total
revenues.  Revenue from international  customers accounted for approximately 24%
of our  total  revenues  in 1997.  We expect  that  revenue  from  international
customers  will  continue to grow and account for a larger  portion of our total
revenues in the  foreseeable  future than it did in 1999. We have been expanding
our sales  efforts  outside of the United  States,  both  directly  and  through
distributors and switch vendors.

         We are actively seeking to enter into distribution agreements and other
marketing  arrangements as we believe we will depend more on distributors in the
future, both with respect to PrePay, PhonePrint and any new products that we may
offer.  During 2000 we also  entered into an agreement  with  LightBridge,  Inc.
under which it is going to co-market our products and services in a wide variety
of markets  including  Latin America and the United  States.  As a result of our
acquisition  of  Subscriber  Computing,   Inc.  in  1998,  we  are  party  to  a
non-exclusive agreement with Ericsson dated June 3, 1997 which provides Ericsson
the  right to  sub-license  PrePay  worldwide.  During  1997,  we  entered  into
distribution agreements with Motorola,  Inc. and Ericsson,  which provides these
companies  the ability to  distribute  PhonePrint  worldwide on a  non-exclusive
basis.

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


COMPETITION

         The market for PrePay is 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.  We are
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., Compaq (Tandem Division)
and  Northern  Telecom  Limited  that  currently  offer or are expected to offer
prepaid wireless billing products.

         The market for new sales of  PhonePrint  hardware  is  competitive.  We
believe that the market for new  installations  of PhonePrint  is  significantly
limited  by: the lack of new analog  systems  currently  being built or planned;
carriers'  timelines  for phasing out analog  standards;  and our high degree of
market  penetration.  Other competitive  factors include competition for capital
expenditures  as  customers  continue  to deploy  their  digital  networks.  The
expansion  of digital  networks and the  reluctance  of carriers to make further
investments in their existing analog infrastructure,  as well as our high degree
of market  penetration,  has greatly  limited the demand for  PhonePrint.  We do
believe that the number of domestically  installed incompatible digital networks
provides an  opportunity  to continue  the  recurring  revenues  for keeping the
installed  PhonePrint units  operating.  However,  these recurring  revenues are
competing  with  operating   budgets  that  carriers  use  for  expanding  their
authentication programs and other fraud reduction programs.


MANUFACTURING

         Our manufacturing  objective is to produce products that conform to our
specifications. Manufacturing, system integration and certain testing operations
are performed at our headquarters in Palo Alto,  California.  Our  manufacturing
operations  consist  primarily of assembling  finished goods from components and
subassemblies  purchased from third parties. We monitor 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.

         We rely, to a substantial extent, on outside vendors to manufacture the
hardware and third party software used in PrePay, and many of the components and
subassemblies  used in  PhonePrint,  are  obtained  from a single  supplier or a
limited group of suppliers.  The manufacturing  volumes for PhonePrint have gone
down as the new sales of PhonePrint  hardware have decreased.  Despite the lower
volumes, we strive to maintain the high quality of manufacturing and reliability
that our customers expect from Corsair.


PATENTS AND PROPRIETARY RIGHTS

         We rely  on a  combination  of  patent,  trade  secret,  copyright  and
trademark  protection and  nondisclosure  agreements to protect our  proprietary
rights.  As of December 31, 1999, we had six issued U.S.  patents,  four pending
U.S.  patent  applications;  one issued foreign  patent and two pending  foreign
patent  applications.  Our success  will depend  partly on our ability 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.


EMPLOYEES

         As of December 31, 1999, we had 165  employees,  including 61 in sales,
marketing,  and operations 24 in manufacturing,  54 in research and development,
and  26 in  finance,  information  systems,  and  administration.  None  of  our
employees are  represented  by a collective  bargaining  agreement,  nor have we
experienced any work stoppages. We believe that our relations with our employees
are good.



RISKS AND UNCERTAINTIES

We operate in a rapidly  changing  environment  that involves a number of risks,
many of which are beyond our control. The following  discussion  highlights some
of these risks. Our 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 our other SEC filings.

We Are Dependent on PrePay.

We anticipate that PrePay,  our prepaid metered billing  solution,  will account
for a majority  of our  revenues  in 2000.  As a result,  our  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  significantly  in order to
achieve our revenue targets.

PrePay Has Only Been Commercially  Deployed on Networks Using Ericsson Switching
Equipment.

To date our PrePay  solution  has only been  commercially  deployed  on networks
which use Ericsson  switching  equipment.  Therefore,  only  carriers  that have
deployed Ericsson's infrastructure equipment are potential customers for PrePay.
In order to expand our potential  customer base by making PrePay compatible with
other  infrastructure  equipment,  we  introduced  our  PrePay  Open  product in
February  2000.  To  date,  this  product  has  only  been  used  under  testing
arrangement and PrePay Open may never gain market acceptance.

We Rely on Ericsson as Our Only Marketing Partner for PrePay.

Our PrePay product has been sold commercially only by Ericsson.  Ericsson,  from
time to  time,  may  evaluate  and seek to  distribute  or  acquire  alternative
vendor's  prepaid  product  offerings.  Any  change in the  terms of  Ericsson's
partnership  or  Ericsson's   desire  to  discontinue  our  relationship   would
drastically  affect  sales of  PrePay.  Although  we plan to have our own  sales
agents  begin to sell  PrePay  Open,  our sales force may not be  effective  and
PrePay Open may never gain market acceptance.

We Have Been Dependent on PhonePrint.

Until recently,  our revenues have primarily been attributable to PhonePrint,  a
cloning fraud prevention  system, and we anticipate that PhonePrint will account
for a declining  but still  significant  position of our revenues in 2000.  As a
result,  our future  operating  results will depend on the  continued use of the
PhonePrint system by the deployed based of PhonePrint users.

Most  Potential  Customers of  PhonePrint  Have Already  Adopted a Cloning Fraud
Solution.

A relatively  small number of carriers that operate analog  networks  constitute
the potential  customers for PhonePrint.  Substantially all of the carriers that
operate analog networks have, to varying degrees,  already  implemented  cloning
fraud solutions.  We believe there will be limited demand for PhonePrint systems
in the future.  As a result of the limited  demand for PhonePrint  systems,  the
growth of our business will be principally dependant on the growth of our PrePay
solutions.

PhonePrint Only Works on the Decreasing Percentage of Networks Which are Analog.

All of our  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 GSM  communications  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.  We are 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,  we do not  believe  that  operators  of
digital  networks  will  purchase  third  party radio  frequency  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.  We are 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.

We Cannot Assure Our Future Profitability.

We have incurred net losses from our incorporation  through 1998 resulting in an
accumulated  deficit of $43.7  million as of December  31,  1999.  Our  existing
revenue levels may not be sustained, and past and existing revenue levels should
not be considered  indicative of future results or growth.  In addition,  we may
not be able to continue to operate  profitably  on a quarterly or annual  basis.
Operating  results for future  periods  are  subject to  numerous  uncertainties
specified  elsewhere in this Annual Report.  Our future  operating  results will
depend  upon,  among  other  factors:  the  demand  for  PrePay,  the demand for
PhonePrint,  our  ability to  introduce  successful  new  products  and  product
enhancements,  the level of product and price competition, our ability to expand
our international  sales, our success in expanding  distribution  channels,  our
success in attracting and retaining motivated and qualified  personnel,  and our
ability to avoid patent and intellectual property litigation.

Our Quarterly Operating Results Were Subject to Significant Fluctuations and Our
Stock Price May Decline if We Fail to Meet Quarterly  Expectations  of Investors
and Analysts.

We have experienced  significant  fluctuations in revenues and operating results
from quarter to quarter due to a combination  of factors and expect  significant
fluctuations to continue in future periods. Factors that are likely to cause our
revenues and  operating  results to vary  significantly  from quarter to quarter
include,  among others: the level and timing of revenues  associated with PrePay
and PhonePrint; the timing of the introduction or acceptance of new products and
services  and  product   enhancements   offered  by  us  and  our   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 we compete;  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 us 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 our
costs, including personnel and facilities costs, any unanticipated  shortfall in
revenues in any quarter  would have a material  adverse  impact on our operating
results  in  that  quarter  and  would  likely  result  in  substantial  adverse
fluctuations in the price of the our common stock.  Accordingly,  we expect that
from time to time our 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 our common stock.

Our Products Have Lengthy  Sales Cycles and  Potential  Delays in the Cycle Make
Our Revenues Susceptible to Fluctuations.

A  carrier's  decision  to  deploy PrePay  or PhonePrint  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 we are not
able to accurately  forecast future sales of PrePay or PhonePrint.  In addition,
purchases  of  PrePay  and   PhonePrint   can  involve   testing,   integration,
implementation and support requirements.  For these and other reasons, the sales
cycle  associated  with the purchase of PrePay and PhonePrint  typically  ranges
from  three to 18 months  and is subject to a number of risks over which we have
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 us or competitors of new products
or product enhancements or by regulatory developments. We expect that there will
be a lengthy sales cycle with respect to new products, if any, that we may offer
in the future. If revenues  forecasted from a specific customer for a particular
quarter are not realized in that  quarter,  our sales for that quarter  could be
significantly reduced.

We Are Dependent on Our Distributors.

PrePay is currently marketed  primarily through our distribution  agreement with
Ericsson,  and to a limited  extent,  through  our direct  sales  efforts and we
believe that with respect to PrePay,  Ericsson,  from time to time, may evaluate
and  seek  to  distribute  or  acquire  alternative   vendor's  prepaid  product
offerings.  PhonePrint is currently  marketed primarily through our direct sales
efforts. We have entered into distribution agreements with respect to PhonePrint
with,  among  others,  Motorola,,   Ericsson  and  Aurora.  We  seek  to  pursue
distribution agreements and other forms of sales and marketing arrangements with
other  companies and we believe that our  dependence on  distributors  and these
other sales and  marketing  relationships  will  increase  in the  future,  with
respect to PrePay, PhonePrint and new products, if any, that we may offer. There
are no minimum purchase  obligations  applicable to any existing  distributor or
other sales and marketing  partners and we do not expect to have any  guarantees
of continuing orders.  Our existing and future  distributors and other sales and
marketing partners may become our competitors with respect to PrePay, PhonePrint
or any future product either by developing a competitive  product  themselves or
by  distributing  a  competitive  offering.  Failure by our  existing and future
distributors  or other sales and  marketing  partners  to  generate  significant
revenues could have a material adverse effect on our business, operating results
and financial condition.

New  Competitors  and  Alliances  Among  Existing  Competitors  Could Impair Our
Ability to Retain and Expand our Market Share.

Because  competitors  can easily  penetrate the software  market,  we anticipate
additional  competition from other  established and new companies as the markets
for billing and fraud  solutions  develop.  In addition,  current and  potential
competitors have established or may establish  cooperative  relationships  among
themselves  or with third  parties.  Large  software  companies  may  acquire or
establish  alliances with our smaller  competitors.  We expect that the software
industry will continue to  consolidate.  It is possible that new  competitors or
alliances among  competitors may emerge and rapidly acquire  significant  market
share.

The Success of Our International Operations is Dependant Upon Many Factors Which
Could  Adversely  Affect Our Ability to Sell Our  Products  Internationally  and
Could Affect Our Profitability.

We believe that both our PrePay and PhonePrint products are likely to generate a
majority of our future revenues from international  markets. We intend to devote
significant  marketing and sales efforts over the next several years to increase
our sales of PrePay to international customers.  This expansion of sales efforts
outside of the U.S. will require significant  management attention and financial
resources.  We may not be successful in achieving significant growth of sales of
PrePay in international markets.

Additional  risks  inherent in our  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.  We  anticipate  that product  service and
support will be more  complicated and expensive with respect to products sold in
international markets. We may need to adapt our 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,  we may be limited in our ability to
enforce our rights under such agreements and to collect damages, if awarded.

Our International  Operations May be Conducted in Currencies Other Than the U.S.
Dollar and  Fluctuations  in the Value of  Foreign  Currencies  Could  Result in
Currency Exchange Losses.

Our future international sales may be denominated in foreign or U.S. currencies.
We do 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  our   international   sales   that  are  U.S.
dollar-denominated,    such   a   decrease   could   make   our   systems   less
price-competitive.

Our Past  Acquisitions  of Other  Businesses and Potential  Future  Acquisitions
Present Risks that Could Adversely Affect Our Business.

We have, in the past,  evaluated and expect in the future to pursue acquisitions
of businesses,  products or technologies  that  complement our 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
our 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 we have little or no direct prior  experience and the
potential loss of key employees of an acquired business. In addition, we may not
be successful in completing any acquisition.  We currently have no agreements or
understandings with regard to any acquisition.

The  Industry  In  Which  We  Operate  Is  Highly  Competitive  and New  Product
Introductions or the Enhancement of Existing  Products by Our Competitors  Could
Adversely Affect Our Ability to Sell Our Products.

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.  We are 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.,  Compaq (Tandem Division) and Northern
Telecom Limited that currently  offer or are expected to offer prepaid  wireless
billing products.  Any other company or competitor could 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.  A new technology
could render our PrePay system obsolete or significantly reduce the market share
afforded to prepaid wireless billing systems like PrePay.

The  market  for  PhonePrint  is  competitive.   We  believe  that  the  primary
competitive factors in the cloning fraud prevention market in which we currently
compete 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, we expect 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 radio  frequency  -based  cloning fraud  prevention  systems to a
carrier,  we expect that it is unlikely that we would be able to sell PhonePrint
to that carrier.

Our principal  competitor  for radio  frequency-based  cloning fraud  prevention
systems has been Cellular Technical  Services Company,  Inc. This competitor has
agreements  pursuant  to  which  it has  installed  or will  install  its  radio
frequency-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.  We are 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.  The  demand  for  PhonePrint  would be  lessened  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. Any currently  available  alternative  technology or a new technology may
render our products  obsolete or significantly  reduce the market share afforded
to radio frequency-based cloning fraud prevention systems like PhonePrint.

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 we 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 us,  and  could  make  it  more  difficult  for us to  offer a
cost-effective  alternative  to  a  wireless  telecommunications  carrier's  own
capabilities.

We believe that our ability to compete in the future depends in part on a number
of competitive  factors  outside our control,  including the ability to hire and
retain  employees,  the  development by others of products and services that are
competitive  with our  products  and  services,  the price at which others offer
comparable   products  and   services   and  the  extent  of  our   competitors'
responsiveness  to  customer  needs.  Many  of  our  competitors  and  potential
competitors have significantly greater financial, marketing, technical and other
competitive  resources than we have. As a result, our 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, we will need
to  continue  to invest  substantial  resources  in  engineering,  research  and
development  and sales and marketing.  We may not have  sufficient  resources to
make such investments and we may not be able to make the technological  advances
necessary to remain competitive.

Certain of Our Customers Have  Accounted for a Substantial  Portion of Our Sales
and a Loss of One or More of These Customers Would Hurt Our Profitability.

To date, a significant portion of our revenues in any particular period has been
attributable  to a limited number of customers,  comprised  entirely of wireless
telecommunications  carriers.  Ericsson  Radio  Systems AB accounted for greater
than 43% of our total revenues in 1999. In 1998,  BellSouth Cellular Corporation
and GTE Mobilnet Service  Corporation each accounted for greater than 10% of our
total revenues,  and  collectively  accounted for over 23% of our total revenues
for the year. In 1997,  BellSouth  Cellular  Corporation,  GTE Mobilnet  Service
Corporation,  and  Southwestern  Bell Mobile  Systems,  Inc. each  accounted for
greater than 10% of our total revenues,  and collectively accounted for over 33%
of our total revenues for the year.

A relatively small number of carriers that use Ericsson infrastructure equipment
are  potential  customers  for PrePay and a relatively  small number of carriers
that operate analog networks are potential customers for PhonePrint.  We believe
that the number of potential  customers  for future  products,  if any,  will be
relatively  small.  Any  failure by us to capture a  significant  share of those
customers  could  have a  material  adverse  effect on our  business,  operating
results  and  financial  condition.  We  expect a  relatively  small  number  of
customers  will  continue to  represent a  significant  percentage  of our 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 our  agreements  with our  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, our current customers may
not generate significant revenues in future periods.

If We Fail to Protect Our Intellectual Property Rights,  Competitors May Be Able
to Use Our  Technology  or  Trademarks  and This Could  Weaken  Our  Competitive
Position, Reduce Our Revenue and Increase Our Costs.

We rely on a  combination  of patent,  trade  secret,  copyright  and  trademark
protection and nondisclosure agreements to protect our proprietary rights. As of
December 31, 1999, the we had six issued U.S.  patent,  four pending U.S. patent
applications,   one  issued  foreign  patent  and  two  pending  foreign  patent
applications.  Our  success  will  depend in large part on our ability 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 us, are generally uncertain and
involve complex legal and factual  questions.  Our patent  applications  may not
result in issued patents and, if patents do issue, the claims allowed may not be
sufficiently  broad to protect our technology.  In addition,  any issued patents
owned by or licensed to us may be challenged,  invalidated or circumvented,  and
the rights granted thereunder may not provide competitive advantages to us.

Patents  issued and patent  applications  filed relating to products used in the
wireless  telecommunications  industry  are numerous and it may be the case that
current and potential  competitors and other third parties have filed, or in the
future will 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 us. We may not be aware of all patents
or patent  applications  that may materially  affect our 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.  Third parties may assert  infringement  claims against us in the future
and any such assertions may result in costly  litigation or require us to obtain
a license to intellectual property rights of such parties. Such licenses may not
be available on terms acceptable to us, if at all.  Furthermore,  parties making
such  claims may be able to obtain  injunctive  or other  equitable  relief that
could effectively block our ability to make, use, sell or otherwise practice our
intellectual  property  (whether or not patented or described in pending  patent
applications),  or to further develop or commercialize  our products in the U.S.
and abroad and could result in the award of substantial damages.

We also rely on unpatented trade secrets to protect our proprietary  technology,
and  others  may  independently   develop  or  otherwise  acquire  the  same  or
substantially   equivalent   technologies   or  otherwise  gain  access  to  our
proprietary  technology or disclose such  technology and we may never be able to
protect our rights to such unpatented proprietary technology.  Third parties may
obtain patent rights to such unpatented trade secrets, which patent rights could
be  used  to  assert   infringement   claims   against   us.  We  also  rely  on
confidentiality  agreements  with  our  employees,   vendors,   consultants  and
customers  to  protect  our  proprietary  technology.  These  agreements  may be
breached,  and we may not have  adequate  remedies  for any breach and our trade
secrets may become known or developed by competitors.

We May Experience  Delays In Developing Our Products That Could Adversely Affect
Our Ability to Introduce New  Products,  Maintain Our  Competitive  Position and
Grow Our Business.

Our future  success  depends on the timely  introduction  and  acceptance of new
products  and  product  enhancements.  However,  our  new  products  or  product
enhancements that we attempt to develop may not be developed  successfully or on
schedule, or if developed,  they may not achieve market acceptance. In addition,
there can be no  assurance  that we will  successfully  execute our  strategy of
acquiring businesses, products and technologies from third parties.

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, we have experienced delays in the introduction
of certain product enhancements, and it is possible that new products or product
enhancements will not be introduced on schedule or at all.

Errors in Our Products Could Result in Significant  Costs to Us and Could Impair
Our Ability to Sell Our Products.

Any new  products  or  product  enhancements  may  contain  defects  when  first
introduced  or when new versions are  released.  Our testing may not uncover all
defects and thus  defects may 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 our  business,  operating  results  and  financial
condition.

We Are  Dependant On Certain  Suppliers  and Vendors and Changes in the Terms Of
Our  Relationship  Could  Impair  Our  Ability  to Produce  Our  Products  for a
Reasonable Price or At All.

We rely, to a substantial extent, on outside vendors to manufacture the hardware
and  third  party  software  used  in  PrePay  and to  manufacture  many  of the
components and subassemblies used in PhonePrint, some of which are obtained from
a single  supplier  or a limited  group of  suppliers.  Our  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, we have  experienced  delays in
receiving materials from vendors,  sometimes resulting in delays in the assembly
of products by us. Such delays,  or other  significant  vendor or supply quality
issues, may occur in the future, which could result in a material adverse effect
on our business,  operating results or financial  condition.  The manufacture of
certain of these  components and  subassemblies is specialized and requires long
lead times, and delays and shortages caused by vendors may reoccur.

In addition,  from time to time, we must also rely upon third parties to develop
and  introduce  components  and  products to enable us, in turn,  to develop new
products  and product  enhancements  on a timely and  cost-effective  basis.  In
particular,  we must rely on the  development  efforts of third  party  wireless
infrastructure  providers in order to allow our PrePay product to integrate with
both existing and future generations of the infrastructure equipment. We may not
be able to obtain  access,  in a timely  manner,  to  third-party  products  and
development  services  necessary to enable us to develop and  introduce  new and
enhanced  products.  We may not be  able  to  obtain  third-party  products  and
development  services  on  commercially  reasonable  terms nor may we be able to
replace  third-party  products in the event such  products  become  unavailable,
obsolete or incompatible with future versions of our products.

Our Senior  Management  and Other Key Personnel Are Critical to Our Business and
If They Choose to Leave Corsair, It Could Harm Our Business.

Our success is  dependent,  in part, on our ability to attract and retain highly
qualified  personnel.  Our future business and operating results depend upon the
continued  contributions of our senior  management and other employees,  many of
whom  would be  difficult  to replace  and  certain  of whom  perform  important
functions for us 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 our  senior  management  team or  current  employees,
particularly to competitors,  could  materially  adversely  affect our business,
operating results or financial condition.  We may not be successful in hiring or
retaining  requisite  personnel.   None  of  our  employees  have  entered  into
employment  agreements with us, and we do not have any key-person life insurance
covering the lives of any members of our senior management team.

We Need to Recruit and Retain  Additional  Qualified  Personnel to  Successfully
Grow Our Business.

We plan to rapidly and significantly  expanded our operations.  Such growth will
place significant demands on our management, information systems, operations and
resources.  The strain will be in hiring,  integrating and effectively  managing
sufficient  numbers of  qualified  personnel  to support  the  expansion  of our
business.  Our  ability  to manage  any  future  growth,  should it occur,  will
continue  to depend  upon the  successful  expansion  of our  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.  We may not be able to attract,  manage and
retain  additional  personnel to support any future  growth,  if any, and we may
experience significant problems with respect to infrastructure  expansion or the
attempted implementation of systems, procedures and controls.

We Operate in a Highly-Regulated  Industry and Unanticipated  Changes to U.S. or
Foreign Regulations Could Harm Our Business.

While most of our  operations  are not  directly  regulated,  our  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 our
products or impede our ability to offer competitive products and services to the
wireless telecommunications industry or otherwise have a material adverse effect
on our 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 us,  decrease demand for our
products,  increase  our cost of doing  business  or  otherwise  have a material
adverse effect on our business,  operating results and financial  condition.  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,  our business
would suffer.

If the  Market  for  Billing  Solutions  Does  Not  Continue  to  Develop  as We
Anticipate  Our  Ability  to Grow Our  Business  and Sell Our  Products  Will Be
Adversely Affected.

Our future financial performance will depend primarily on the number of carriers
seeking  to  implement   prepaid   billing   services.   Although  the  wireless
telecommunications  industry has experienced significant growth in recent years,
such growth may not  continue at similar  rates and if the  industry  does grow,
there may not be continued demand for prepaid metered billing or other products.

Despite the Precautions We Have Taken,  Our Computer Systems Are Subject to Risk
of Damage from a Variety of Sources.

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
our business,  operating  results and financial  condition.  We currently do not
have liability  insurance to protect  against these risks and such insurance may
not be available to us on commercially reasonable terms, or at all. In addition,
if any carrier using PhonePrint  encounters material performance  problems,  our
reputation would suffer.

When Needed, We May Not Be Able to Raise Funds on Beneficial Terms or At All.

Our future  capital  requirements  will depend upon many factors,  including the
commercial  success of PrePay  and  PhonePrint,  the  timing and  success of new
product  introductions,  if any, the  progress of our  research and  development
efforts,  our results of operations,  the status of competitive products and the
potential acquisition of businesses, technologies or assets. We believe that our
combination of existing sources of liquidity and internally  generated cash will
be sufficient to meet our projected  cash needs for at least the next 12 months.
However, it is possible that we will require additional  financing prior to such
date to fund our operations.  In addition,  we may require additional  financing
after  such  date  to  fund  our  operations.  Additional  financing  may not be
available  to us on  acceptable  terms,  or at  all,  when  required  by us.  If
additional  funds are raised by issuing equity  securities,  further dilution to
the existing  stockholders will result. If adequate funds are not available,  we
may be required to delay, scale back or eliminate one or more of our development
or  manufacturing  programs  or obtain  funds  through  arrangements  with third
parties that may require us to relinquish  rights to certain of our technologies
or potential products or other assets that we would not otherwise relinquish.

Our Stock Will Likely Be Subject to  Substantial  Price and Volume  Fluctuations
Which May Prevent Stockholders from Reselling Their Shares at or Above the Price
at Which They Purchased Their Shares.

The market price of our 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 PrePay and PhonePrint,  new products or
new contracts by us or our competitors,  actual or anticipated variations in our
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, we expect that, from time to time, our 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.

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 us, could result in
substantial costs and a diversion of our management's attention and resources.

Provisions in our Charter Documents and in Delaware Law May Discourage Potential
Acquisition Bids for Corsair and May Prevent Changes in Our Management Which Our
Stockholders Favor.

Our Restated Certificate of Incorporation authorizes our 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
our voting  stock.  Our Restated  Bylaws  divide our 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 us, 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.

         We maintain our corporate headquarters in Palo Alto,  California.  This
leased  facility,  totaling  approximately  55,000  square  feet,  contains  the
principal   administrative,   assembly,   manufacturing,   marketing  and  sales
facilities.  The lease on this  facility  expires on May 31,  2002.  We sublease
approximately 12,840 square feet which expires on May 31, 2002. In addition,  we
sublease  approximately  7,800 square feet to a second tenant which includes the
right for either party to terminate the sublease upon 90 days written notice. To
date, neither party has exercised this option.

         We also  maintain a facility in Irvine,  California.  This  lease,  for
approximately  41,000 square feet,  expires on April 30, 2001. Corsair subleases
approximately 27,400 square feet with an expiration date of April 30, 2001.


ITEM 3.  Legal Proceedings.

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


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, 1999.







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


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


(a)       Market Price of and Dividends on the Registrant's Common Equity.

         Corsair's  common  stock  trades on The Nasdaq  Stock  Market under the
symbol "CAIR." High and low stock prices for the last two fiscal years were:

                                         1998
                     ----------------------------------------------
                          High                           Low
                          ----                           ---
  Quarter Ended
  -------------
  March 31               $ 22.250                     $  14.000
  June 30                $ 21.188                     $   6.500
  September 30           $ 11.000                     $   2.625
  December 31            $  6.250                     $   2.625



                                         1999
                     ----------------------------------------------
                          High                           Low
                          ----                           ---
  Quarter Ended
  -------------
  March 31              $   6.219                       $ 3.688
  June 30               $   5.000                       $ 3.875
  September 30          $   8.063                       $ 4.188
  December 31           $  12.000                       $ 6.875



         On February 29, 2000, the last reported sale price of Corsair's  common
stock was  $28.500  per share.  As of February  29,  2000,  the number of record
holders of our common  stock was 189 and the number of  beneficial  holders  was
approximately  11,200.  Corsair  has  declared no cash  dividends  on its common
stock. We currently intend to retain all earnings for use in our business and do
not anticipate paying any cash dividends in the foreseeable future.

ITEM 6. Selected Financial Data

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

         On June 23, 1998, we acquired Subscriber  Computing,  Inc. ("SCI") in a
merger  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.  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, 1998 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, 1995,
1996, 1997, 1998 and 1999 combines  Corsair's  statements of operations for each
of the  years in the  five-year  period  ended  December  31,  1999  with  SCI's
statements of operations  for each of the years in the  three-year  period ended
September 30, 1997, and the years ended December 31, 1998 and 1999 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,  1999.  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.
<TABLE>

                                                                    Year Ended December 31,
<CAPTION>

                                               1995            1996           1997           1998           1999
                                            -----------     -----------    -----------    -----------     ----------
<S>                                         <C>             <C>            <C>            <C>             <C>

Statement of Operations Data:
Total revenues                               $  15,139       $  31,216      $  60,856      $  65,218      $  66,207
Total cost of revenues                          12,716          24,935         36,867         26,562         24,314
                                            -----------     -----------    -----------    -----------     ----------
Gross profit                                     2,423           6,281         23,989         38,656         41,893
Operating costs and expenses:
     Research and development                    3,421           8,583         12,525         18,289         11,312
     Sales and marketing                         4,274           7,764         11,411         16,775         13,421
     General and administrative                  3,547           5,282          9,432          8,501          6,606
     Reorganization costs                           --              --             --             --            856
     Write-off of capitalized software              --           3,760             --             --             --
    costs
     Merger related expenses                        --              --             --          4,191             --
                                            -----------     -----------    -----------    -----------     ----------

     Total operating costs and expenses         11,242          25,389         33,368         47,756         32,195
                                            -----------     -----------    -----------    -----------     ----------

Operating income (loss)                        (8,819)        (19,108)        (9,379)        (9,100)          9,698
Loss on sale of assets                              --              --             --             --        (2,176)
Interest income (expense), net                     181           (494)          1,191          2,460          1,817
                                            -----------     -----------    -----------    -----------     ----------

Income (loss) before income taxes              (8,638)        (19,602)        (8,188)        (6,640)          9,339
Income tax expense                                   2               3              8             --            498
                                            -----------     -----------    -----------    -----------     ----------
Income (loss) before extraordinary item        (8,640)        (19,605)        (8,196)        (6,640)          8,841
Loss on debt extinguishment,  net                   --              --          (428)          (226)             --
                                            -----------     -----------    -----------    -----------    -----------
Net income (loss)                           $  (8,640)      $ (19,605)      $ (8,624)      $ (6,866)       $  8,841
                                            ===========     ===========    ===========    ===========     ==========
Basic net income (loss) per share data:
Income (loss) per share before              $   (5.49)      $  (11.57)      $  (0.82)      $  (0.38)       $   0.50
extraordinary item
Extraordinary item                          $      --       $      --       $  (0.04)      $  (0.01)       $     --
                                             -----------   -----------       -----------   -----------    ----------
Basic net income (loss) per share           $   (5.49)      $  (11.57)      $  (0.86)      $  (0.39)       $   0.50
                                            ===========     ===========      ===========   ===========     ==========
Shares used in per share calculation             1,573          1,694          10,017         17,749         17,700
                                            ===========     ===========      ===========   ===========     ==========

Diluted net income (loss) per share data:
Income (loss) per share before              $    (5.49)      $  (11.57)      $  (0.82)      $  (0.38)       $   0.48
extraordinary item
Extraordinary item                          $       --       $      --       $  (0.04)      $  (0.01)       $     --
                                             -----------   -----------       -----------   -----------    ----------
Diluted net income (loss) per share         $    (5.49)      $  (11.57)      $  (0.86)      $  (0.39)       $   0.48
                                            ===========     ===========      ===========   ===========     ==========
Shares used in per share calculation              1,573           1,694         10,017         17,749         18,315
                                            ===========     ===========      ===========   ===========     ==========

</TABLE>
<TABLE>

Balance Sheet Data:
                                                                     December 31,
<CAPTION>

                                       1995              1996              1997            1998             1999
                                   --------------    -------------     -------------    ------------     ------------
<S>                                <C>               <C>               <C>              <C>              <C>

Cash, cash equivalents & short-
  term investments                      $ 15,569        $  22,081         $  62,953       $  38,573        $  52,949
Working capital                           15,145           17,670            51,321          45,424           51,305
Total assets                              26,707           41,726            87,539          71,560           76,683
Long-term obligations                      8,030            8,295             3,164           1,624              670
Total stockholders' equity                13,077           13,651            57,375          52,114           56,615
</TABLE>



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.  Corsair'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 this Annual  Report.  We undertake 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.

         Corsair acquired Subscriber  Computing,  Inc., or SCI, in a combination
accounted  for under the  pooling-of-interests  method of  accounting.  As such,
Corsair'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  Corsair's  consolidated  financial
statements and notes  thereto,  and discussion of the our 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.  Our  PrePay(TM)  billing  system
provides wireless  telecommunications carriers with a software solution designed
to fully integrate with the upcoming  Wireless  Intelligent  Network  standards.
Over 12 service  providers  have  installed  PrePay and we believe  that  PrePay
currently serves 7.2 million  subscribers.  Our 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 our customers  have
reported  up  to a  95%  reduction  in  cloning  fraud  losses  after  deploying
PhonePrint.  We believe  that our  products  can provide a number of benefits to
wireless  telecommunications  carriers,  including reduced costs,  improved cash
flow, increased market penetration and improved customer service.

          We sell and market our  products  to wireless  telecommunications
carriers domestically and internationally. End users of our software and systems
include:  Algar  Telecom  Leste,  Alltel  Communications,  Inc.,  AT&T  Wireless
Services, Aurora Wireless Technology, Baja Cellular Mexicana, S.A. de C.V., Bell
Atlantic Mobile,  BellSouth Cellular Corp., Cable and Wireless, Ltd., 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., Ericsson Telecom,
S.A. DE C.V., 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.,  Servisio Di  Telekomunikashon,  Setel
N.V., Southwestern Bell Mobile Systems Inc., Southwestern Bell Wireless,  Telcel
Celular,  S.A.,  Telecomunicaciones  Movilnet,  C.A., Telefonica  Comunicaciones
Personales  S.A.,  Telestar Mexico,  S.A. de C.V., Tess Cellular,  United States
Cellular Corp., Vanguard Cellular Financial Corp., and VimpleCom.

         Our 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  we  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 our
test and assembly  operation,  materials  purchased from our  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.

         Our  gross  margin  has  grown  significantly  in the past and may vary
significantly  in the future,  depending  on the mix of  hardware,  software and
services.  Our software licenses have a higher gross margin than our service and
hardware revenue. In addition,  our 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, our operating results
will be affected by the mix of hardware units,  software  licenses,  and service
fees recognized during each period.

         We sell PhonePrint  primarily  through our direct sales force, but have
also entered into distribution  agreements with Motorola,  Ericsson,  Aurora and
Telesis,  and  seek  to  enter  into  additional   distribution  agreements  for
international   markets.   We  sell  PrePay  primarily  through  a  distribution
arrangement  with  Ericsson  and to a limited  extent  through our direct  sales
force.  Our gross margin will also vary depending on the mix of direct sales and
sales through distribution channels and sales referral arrangements.

         We  continue to make  efforts to sustain  profits by  increasing  sales
volume,  decreasing  costs of goods sold,  and through  certain other  measures.
While we have certain  programs in place intended to reduce operating costs, our
expenses could increase in the foreseeable future. As a result,  there can be no
assurance that we will sustain profitability.  See "Risks and Uncertainties - We
Cannot Assure Our Future Profitability".

Recent Events

         On February 3, 1999, we sold  substantially  all of the assets relating
to our  Communication  Resource  Manager,  or CRM",  billing  system and certain
related products to Wireless Billing Systems, or WBS", a California corporation,
pursuant to the terms of an Asset Purchase Agreement.  We recorded a loss on the
sale of assets  approximately  $2.2  million,  for the  difference  between  the
consideration  received and the net book value of the net assets  transferred to
WBS,  consisting  of cash,  accounts  receivable,  property  and  equipment  and
deferred revenue.

         Also on  February  3,  1999,  we signed a letter  of  intent  with True
Position  to develop a strategic  relationship  for the  development,  sales and
marketing  of a wireless  location  product.  As a result of our intent to enter
into this  strategic  relationship,  we  discontinued  development of a wireless
location project,  resulting in a charge of $856,000,  consisting of $649,000 in
accrued termination benefits for 13 employees and equipment write-downs of $207,
000. As of December 31, 1999,  we had not entered into a strategic  relationship
with True  Position,  and it is  unclear  whether  the  Company  will be able to
successfully develop a strategic relationship in the future.

Results of Operations-Years Ended December 31, 1997, 1998 and 1999

         Revenues.  For the years ended December 31, 1997, 1998 and 1999,  total
revenues were $60.9,  $65.2 and $66.2 million,  respectively.  Hardware  revenue
decreased  10% from $37.9  million in 1997 to $34.1  million in 1998,  and 6% to
$32.0  million in 1999.  The growth in the installed  base of  PhonePrint  units
slowed in 1999 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 11% from $12.3 million in 1997 to $13.7
million in 1998,  and  increased  46% to $20.1  million  in 1999.  The growth in
software  revenues was primarily due to the strong growth of the PrePay product,
following  its  launch in mid 1998.  Service  revenue  increased  63% from $10.7
million in 1997 to $17.4 million in 1998,  and decreased 18% to $14.2 million in
1999.  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.  The decrease in 1999 was primarily
due to the sale of CRM  assets in the first  quarter  of 1999 and the  resulting
loss of consulting revenues caused by the discontinued product line.

         Gross  Profit.  Gross profit  increased  from $24.0 million for 1997 to
$38.7  million for 1998 and $41.9 million for 1999, or 39%, 59% and 63% of total
revenues,  respectively.  The  increase  in gross  profit was due  primarily  to
improved  margins from software  revenues,  which  contributed  $10.4 million in
1997,  $12.4  million  in 1998,  and $18.7  million in 1999.  Hardware  revenues
contributed $9.9, $16.9, and $14.8 million in 1997, 1998, and 1999, respectively
to the Company's  gross profit.  Service revenue gross profit for the year ended
December 31, 1997  improved  from $3.6  million,  to $9.3  million in 1998,  and
decreased to $8.3 million in the 1999. The increasing  software margins resulted
from improved  pricing models as well as a higher  installed.  Hardware  margins
decreased due to slower unit sales and a burdened  hardware-pricing  model while
service margins  decreased due to the loss of consulting  revenues caused by the
discontinued product line .

         Research and Development. Research and development expenses were $12.5,
$18.3 and $11.3 million for the years ended  December 31, 1997,  1998, and 1999,
or 21%, 28% and 17% of total  revenues,  respectively.  The increase in absolute
dollars in 1998 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  relating to the SCI acquisition.  The
decrease  in dollars and  percentage  of revenues in 1999 was due to the sale of
assets related to the Communication  Resource Manager billing system and related
products to  Wireless  Billing  Systems.  The sale  resulted  in a reduction  in
engineering  and  support  staff  costs as well as  costs  for  related  product
development.

         Sales and Marketing. Sales and marketing expenses were $11.4, $16.8 and
$13.4 million for the years ended December 31, 1997, 1998, and 1999, or 19%, 26%
and 20% of  total  revenues,  respectively.  The  increase  in  dollars  in 1998
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 dollars and  percentage of total  revenues in 1999 was
due primarily to the CRM sale in which certain sales positions and related staff
costs were eliminated.

          General and Administrative.  General and Administrative  expenses were
$9.4,  $8.5 and $6.6 million for the years ended  December 31, 1997,  1998,  and
1999, or 15%, 13% and 10% of total revenues,  respectively. The decrease in 1998
was  due to  the  consolidation  of  operations  upon  acquisition  of SCI  when
duplicate  processes were  eliminated.  The decrease  continued in 1999 with the
sale of CRM and further elimination of duplicate positions and related expenses.

         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.

         Reorganization  Costs. On February 3, 1999,  Corsair 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 our intent to enter
into this  strategic  relationship,  we  discontinued  development of a wireless
location project, which resulted in a charge of $856,000, consisting of $649,000
in accrued  termination  benefits for 13 employees and equipment  write-downs of
$207,000.  As of December 31, 1999, all of the accrued termination  benefits had
been paid.

         Loss on Sale of Assets. Also on February 3, 1999, we sold substantially
all of the  assets  relating  to our CRM  billing  system  and  certain  related
products  to WBS, a  California  corporation,  pursuant to the terms of an Asset
Purchase Agreement.

         In conjunction with the sale, we received from WBS a secured promissory
note  receivable of $2.2 million,  which was $2.2 million less than the net book
value  of the net  assets  transferred  to WBS,  consisting  of  cash,  accounts
receivable,  property  and  equipment,  and  deferred  revenue.  The note  bears
interest  at the rate of 10% per annum,  payable in equal  monthly  installments
based  upon a sixty  month  amortization  schedule  with a final  payment of the
remaining  unpaid  principal  with all accrued  interest due and payable in May,
2003. The Company recorded a loss on the sale of the net assets of approximately
$2.2 million,  for the  difference  between the fair value of the  consideration
received and the net book value of the assets transferred.

         Interest Income, Net. Net interest income was $1.2 million for the year
ended  December 31, 1997 as compared to $2.5 million in 1998 and $1.8 million in
1999. Net interest income consists of interest income from our cash,  short-term
investments  and notes  receivable,  net of  interest  expense on our  equipment
loans,  equipment lease lines and other loans outstanding  primarily in 1997 and
1998. The increase in net interest income in 1998 was a result of larger average
cash investments  attributable to the proceeds  received from our initial public
offering which was completed in July 1998.

         Extraordinary  Item. During the years ended December 31, 1997 and 1998,
we 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 year ended  December 31,
1997 represents  minimum state tax liabilities.  For 1999, we recorded an income
tax expense of $498,000 on pretax income of $9.3 million.

Liquidity and Capital Resources

         Our  operating  activities  provided cash of $21.0 million for the year
ended  December 31, 1999.  The  generation  of cash from  operations in 1999 was
largely due to the  company's  net income of $8.8  million  and a  reduction  of
inventory of $3.9  million and an increase of $2.9  million in accounts  payable
and accrued expenses.

         Our investing  activities resulted in a net use of cash of $5.6 million
for the year ended  December 31, 1999. Net cash of $4.9 million was used for the
purchase of additional  short-term  investments.  During the year ended December
31, 1999, our financing  activities used cash of $5.9 million  primarily for the
purchase of treasury stock.

         From  inception,  we have financed our operations  primarily  through a
series of preferred stock and debt financing, and an initial public offering. In
July 1997, our initial public offering  generated $39.1 million of net proceeds.
At December 31, 1999, we had cash and cash  equivalents of  approximately  $13.7
million and short-term  investments of approximately  $39.3 million.  We believe
that existing  sources of liquidity and internally  generated cash, if any, will
be sufficient to meet our projected  cash needs for at least the next 12 months.
We intend to continue  significant product development efforts in the future and
expect  these  to  fund  activities  out of  working  capital.  There  can be no
assurance,  however, that we will not require additional financing prior to such
date to fund operations or possible  acquisitions.  In addition,  we may require
additional  financing  after  such  date to  fund  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.

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 with an average maturity 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, 1999,  we had  outstanding  a note payable for $1.4 million  which
matures in 2001. The note has a fixed interest rate of 14.4%. 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.



ITEM 8. Financial Statements and Supplementary Data

                          Annual Report on Form 10-K
                     For the Year Ended December 31, 1999

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                 PAGE
                                                                 ------
Independent Auditors' Report, KPMG LLP                            24

Independent Auditors' Report, Deloitte & Touche LLP               25

Consolidated Balance Sheets as of December 31, 1998 and 1999      26

Consolidated Statements of Operations for the years ended
December 31, 1997, 1998 and 1999                                  27

Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1997, 1998 and 1999                            28

Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1998 and 1999                                  29

Notes to Consolidated Financial Statements                        30




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, 1998 and 1999, 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, 1999.
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
21.4% in fiscal  1997,  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,  1998 and 1999,  and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended  December 31, 1999,  in  conformity  with  generally  accepted  accounting
principles.
                                                        /s/ KPMG LLP
Mountain View, California
February 4, 2000


<PAGE>



Independent Auditors' Report

The Board of Directors
Subscriber Computing, Inc.:


         We have  audited  the  balance  sheet of  Subscriber  Computing,  Inc.
("SCI") as of  September  30, 1997 and the  related  statements  of  operations,
stockholders'  equity  (deficit)  and cash  flows for the year  then ended (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 audit.

         We conducted our audit 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 audit provides 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 the results of its operations and
its cash flows for the year then ended in  conformity  with  generally  accepted
accounting principles.

                                       /s/ DELOITTE & TOUCHE LLP

Costa Mesa, California
January 7, 1998


<PAGE>

<TABLE>

                                            CONSOLIDATED BALANCE SHEETS
                                         (IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>

                                                                                 DECEMBER 31,
                                                                            1998            1999
                                                                            ----            ----
     <S>                                                                <C>             <C>

                   ASSETS
     Current assets:
       Cash and cash equivalents                                           $    4,196    $    13,686
       Short-term investments                                                  34,377         39,263
       Trade accounts receivable, less allowance for
         doubtful accounts of $2,896 for 1998 and $2,115 for 1999              14,134         11,548
       Evaluation inventory                                                     2,597          1,163
       Inventories, net                                                         5,676          3,183
       Prepaid expenses                                                         2,266          1,475
     Current portion of notes receivable                                           --            385
                                                                        --------------  -------------
     Total current assets                                                      63,246         70,703
     Notes receivable                                                              --          1,325
     Property and equipment, net                                                7,422          3,458
     Other assets                                                                 892          1,197
                                                                        --------------  -------------
                                                                            $  71,560    $    76,683
                                                                        ==============  =============

                   LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
       Accounts payable                                                    $    1,706    $     2,273
       Accrued expenses                                                         7,731         10,245
       Current portion of notes payable                                           639            737
       Current portion of capital lease obligations                               609             80
       Deferred revenue                                                         7,137          6,063
                                                                        --------------  -------------
       Total current liabilities                                               17,822         19,398
     Notes payable, net of current portion                                      1,407            670
     Capital lease obligations, net of current portion                            217             --
                                                                        --------------  -------------

     Total liabilities                                                         19,446         20,068
                                                                        --------------  -------------

     Commitments and contingencies

     Stockholders' equity:
       Common stock, $.001 par value; 20,000,000 shares authorized;
         17,976,492 and 18,281,324 shares issued and outstanding at                18             18
         December 31, 1998 and 1999, respectively
       Treasury stock at cost, 1,075,000 shares                                    --        (5,741)
       Notes receivable from stockholders                                       (468)          (272)
       Additional paid-in capital                                             105,433        106,445
       Deferred compensation                                                    (288)           (95)
       Accumulated deficit                                                   (52,581)       (43,740)
                                                                        --------------  -------------
Total stockholders' equity                                                     52,114         56,615
                                                                        --------------  -------------
                                                                            $  71,560      $  76,683
                                                                        ==============  =============


</TABLE>


            See accompanying notes to consolidated financial statements



<PAGE>

<TABLE>


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


<CAPTION>


                                                                   YEAR ENDED DECEMBER 31,
                                                           1997             1998              1999
                                                      ---------------- ---------------- -----------------
      <S>                                             <C>              <C>              <C>

      Revenues:
          Hardware                                        $    37,882      $    34,089       $    31,961
          Software                                             12,303           13,717            20,083
          Service                                              10,671           17,412            14,163
                                                      ---------------- ---------------- -----------------
              Total revenues                                   60,856           65,218            66,207
                                                      ---------------- ---------------- -----------------

      Cost of revenues:
          Hardware                                             27,938           17,151            17,124
          Software                                              1,903            1,317             1,336
          Service                                               7,026            8,094             5,854
                                                      ---------------- ---------------- -----------------
              Total cost of revenues                           36,867           26,562            24,314
                                                      ---------------- ---------------- -----------------
      Gross profit                                             23,989           38,656            41,893
                                                      ---------------- ---------------- -----------------

      Operating costs and expenses:
          Research and development                             12,525           18,289            11,312
          Sales and marketing                                  11,411           16,775            13,421
          General and administrative                            9,432            8,501             6,606
          Merger related expenses                                  --            4,191                --
          Reorganization costs                                     --               --               856
                                                      ---------------- ---------------- -----------------

      Total operating costs and expenses                       33,368           47,756            32,195
                                                      ---------------- ---------------- -----------------

          Operating income (loss)                             (9,379)          (9,100)             9,698
      Loss on sale of assets                                       --               --           (2,176)
      Interest income, net                                      1,191            2,460             1,817
                                                      ---------------- ---------------- -----------------
          Income (loss) before income taxes and               (8,188)          (6,640)             9,339
      extraordinary item
      Income tax expense                                            8               --               498
                                                      ---------------- ---------------- -----------------
      Income (loss) before extraordinary item                 (8,196)          (6,640)             8,841
      Loss on debt extinguishment, net                          (428)            (226)                --
                                                      ================ ================ =================
      Net income (loss)                                   $   (8,624)      $   (6,866)         $   8,841
                                                      ================ ================ =================

      Basic net income (loss) per share data:
      Income (loss) before extraordinary item             $    (0.82)      $    (0.38)         $    0.50
      Extraordinary item                                       (0.04)           (0.01)                --
                                                      ---------------- ---------------- ----------------
      Basic net income (loss) per share                   $    (0.86)      $    (0.39)         $    0.50
                                                      ================ ================ =================

      Shares used in per share calculation                     10,017           17,749            17,700
                                                      ================ ================ =================

      Diluted net income (loss) per share data:
      Income (loss) before extraordinary item             $    (0.82)      $    (0.38)         $    0.48
      Extraordinary item                                       (0.04)           (0.01)                --
                                                      ---------------- ---------------- ----------------
      Diluted net income (loss) per share                 $    (0.86)      $    (0.39)         $    0.48
                                                      ================ ================ =================

      Shares used in per share calculation                     10,017           17,749            18,315
                                                      ================ ================ =================

</TABLE>





               See  accompanying  notes  to  consolidated  financial statements.


<PAGE>
<TABLE>


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

<CAPTION>


                                                                   NOTE     ADDITIONAL                                   TOTAL
        CONVERTIBLE                                             RECEIVABLE   PAID-IN      DEFERRED     ACCUMULATED   STOCKHOLDERS'
      PREFERRED STOCK      COMMON STOCK       TREASURY STOCK       FROM      CAPITAL    COMPENSATION     DEFICIT        EQUITY
                                                                STOCKHOLDER
      SHARES    AMOUNT   SHARES    AMOUNT      SHARES   AMOUNT
<S> <C>         <C>    <C>         <C>         <C>      <C>        <C>        <C>           <C>          <C>             <C>

Balance
 as  9,166,288       9  2,368,207         2        --       --       (136)      45,774          (69)       (31,929)         13,651
 of
 December
 31,
 1996

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

Issuance
 of         --      --    58,828         --        --       --          --         142            --             --            142
 common
 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
 related     --      --        --         --        --       --          --       1,129       (1,129)             --             --
 to
 grant
 of
 stock
 options

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

Conversion
 of (11,344,907)   (11)  11,344,907       11        --       --          --          --            --             --             --
 preferred
 stock
 to
 common
 stock

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

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

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

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

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

Balances
 as of      --      --  17,548,562       $ 17       --       --       (511)     104,142         (648)       (45,625)         57,375
 December
 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          --      --    13,575         --        --       --          --          --            --             --             --
 common
 stock
 for
 an
 acquisition

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

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

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

Net loss    --      --        --         --        --       --          --          --            --         (6,866)         (6,866)

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

Balances
 as of      --      --  17,976,492     $ 18     $ --     $ --         $(468)    $ 105,433       $(288)      $(52,581)     $ 52,114
 December
 31, 1998
     ===============================================================================================================================

Stock
 issued
 under       --      --   299,802         --        --       --          --         675            --             --            675
 stock
 option
 and
 stock
 purchase
 plans

Stock
 issued      --      --     5,030         --        --       --          --         (5)            --             --            (5)
 pursuant
 to
 exercise
 of
 warrants

Notes
 receivable  --      --        --         --        --       --         196        (16)            --             --            180
 repayments

Deferred
 compensation--      --        --         --        --       --          --         358            --             --            358
 related
 to CRM sale

Amortization
 of          --      --        --         --        --       --          --          --           193             --            193
 deferred
 compensation

Purchase
 of          --      --        --         -- (1,075,000) (5,741)          --         --            --             --        (5,741)
 Treasury
 Stock

Net          --      --        --         --        --       --           --         --            --          8,841          8,841
 income
     -------------------------------------------------------------------------------------------------------------------------------
Balances
 as of       --      -- 18,281,324    $ 18  $(1,075,000)  $(5,741)    $(272)     $106,445       $(95)        $(43,740)     $ 56,615
 December
 31, 1999
     ===============================================================================================================================
</TABLE>

           See   accompanying   notes  to  consolidated financial statements.


<PAGE>

<TABLE>

                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (IN THOUSANDS)
<CAPTION>

                                                                                YEAR ENDED DECEMBER 31,
                                                                     -----------------------------------------------
                                                                         1997            1998              1999
                                                                     -------------    ------------     -------------
<S>                                                                  <C>             <C>              <C>

Cash flows from operating activities:
    Net income (loss)                                                 $   (8,624)      $  (6,866)        $    8,841

    Adjustments to reconcile net income (loss) to net cash (used
      in) provided by operating activities:
              Depreciation and amortization                                 2,934           4,243             3,722
              Amortization of deferred compensation                           550             360               193
              Extraordinary loss on extinquishment of debt                    428             226                 -
              Noncash loss on disposition of assets                           100               -               914
              Noncash reorganization costs                                      -               -               412
              Merger-related costs                                              -           4,191                 -
              Changes in operating assets and liabilities:
                        Trade accounts receivable                           (886)         (8,524)               665
                        Inventories                                           969              90             3,917
                        Prepaid expenses and other assets                 (2,341)           (990)             (697)
                        Accounts payable and accrued expenses                 153         (4,054)             2,943
                        Deferred revenue                                    4,487         (5,215)                95
                                                                     -------------    ------------     -------------
                             Net cash (used in) provided by               (2,230)        (16,539)            21,005
                               operating activities
                                                                     -------------    ------------     -------------
Cash flow from investing activities:
    Purchase of short-term investments                                   (66,601)        (29,514)          (37,035)
    Proceeds from sales and maturities of short-term investments           23,969          39,862            32,149
    Purchases of property and equipment                                   (4,822)         (3,446)             (717)
                                                                     -------------    ------------     -------------
                             Net cash (used in) provided by              (47,454)           6,902           (5,603)
                             investment activities
                                                                     -------------    ------------     -------------
Cash flow from financing activities:
    Proceeds from sale of preferred stock, net of offering costs           17,090               -                 -
    Proceeds from issuance of common stock, net of offering costs          39,458           1,202               655
    Proceeds from notes payable                                               660           4,128               207
    Repurchase of common stock                                                  -               -           (5,741)
    Payments on note payable                                              (8,269)         (9,021)             (639)
    Payments on capital lease                                               (733)           (747)             (590)
    Proceeds from notes receivable from stockholders                            -              43               196
                                                                     -------------    ------------     -------------
                             Net cash provided by (used in)                48,206         (4,395)           (5,912)
                               financing activities
                                                                     -------------    ------------     -------------
Net increase (decrease) in cash and cash equivalents                      (1,478)        (14,032)             9,490
Change in subsidiary's year end                                                77               -                 -
Cash and cash equivalents, beginning of year                               19,629          18,228             4,196
                                                                     -------------    ------------     -------------
Cash and cash equivalents, end of year                                 $   18,228       $   4,196         $  13,686
                                                                     =============    ============     =============
Cash paid during the year:
    Interest                                                           $    1,128       $   1,188         $     296
                                                                     =============    ============     =============
    Income taxes                                                       $      807       $     364         $     508
                                                                     =============    ============     =============
Noncash financing and investing activities:
    Assets recorded under capital leases                               $      864       $      --         $      --
                                                                     =============    ============     =============
    Common stock issued upon exercise of stock option in exchange
         for stockholders' note                                        $      375       $      --         $      --
                                                                     =============    ============     =============
    Deferred compensation relating to stock option grants              $    1,129       $      --         $      --
                                                                     =============    ============     =============
    Conversion of preferred stock to common stock                      $   31,737       $      --         $      --
                                                                     =============    ============     =============
    Accretion of subsidiary's preferred stock liquidation              $      180       $      90         $      --
    preference
                                                                     =============    ============     =============
    Notes receivable in exchange for net assets sold                   $       --       $      --         $   2,238
                                                                     =============    ============     =============
    Options vesting in reorganization costs                            $       --       $      --         $     358
                                                                     =============    ============     =============

</TABLE>

          See  accompanying  notes  to  consolidated  financial statements.



<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999


1. BUSINESS

Corsair  Communications,  Inc. ("Corsair") is a leading provider of software and
system solutions for the wireless industry, focusing on prepaid wireless billing
and fraud prevention.  On June 23, 1998, we acquired Subscriber Computing,  Inc.
("SCI") in a combination accounted for under the pooling-of-interests  method of
accounting.  Our consolidated financial statements have been restated to include
the financial position and results of SCI for all periods presented.

The consolidated  financial  statements  include the accounts of Corsair 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 we 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 objective  evidence  which is specific to Corsair.  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.  The fair  value of our  products  is
indicated by the standard sale price  specific to each  hardware  element or the
annual software or service renewal rates agreed to and paid by our customers.

In December 1998,  Accounting  Standards  Executive Committee (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.  We do not  expect  a  material  change  to our
accounting  for revenues as a result of the  provisions of SOP 98-9. SOP 98-9 is
effective for transactions entered into beginning January 1, 2000.

Concentration of Credit Risk

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

We limit the amounts  invested in any one type of  investment  and maintain cash
investments  with  several  financial  institutions.  As such,  we  believe  the
financial risks associated with such deposits are minimal.

Corsair   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.  We have not experienced  significant  losses on trade
receivables from any particular customer or geographic region.

Fair Value of Financial Instruments

Corsair's cash, cash equivalents,  accounts  receivable,  accounts payable,  and
accrued  expenses  are stated at fair value which  approximates  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 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,
                                            1998              1999
                                            ----              ----
         Corporate debt securities        $ 34,377         $ 39,263
         Certificates of deposit             2,290              290
                                          ----------       ---------
                                          $ 36,667         $ 39,553
                                          =========        =========

As of December 31, 1998 and 1999,  $2,290,000  and  $290,000,  respectively,  of
Corsair's  investments  were  classified  as cash  and cash  equivalents  in the
accompanying balance sheets.

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.  We determine that  technological  feasibility has been
established  once a working  model has been  completed  and tested.  No software
research and development  costs have 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

Corsair  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 Income (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  1,268,289  and  1,951,331
outstanding  options  to  purchase  common  stock and  outstanding  warrants  to
purchase  271,545 and 194,249 shares of common stock as of December 31, 1997 and
1998,  respectively,  since their  inclusion in diluted per share  results would
have been antidilutive.

The following  tables set forth the computations of shares and net income (loss)
used in the  calculation  of basic and diluted  net income  (loss) per share (in
thousands, except per share data):
<TABLE>
<CAPTION>

                                                                YEAR ENDED DECEMBER 31,
                                                           1997             1998            1999
                                                        ------------    ------------   -------------
       <S>                                              <C>              <C>            <C>

       Basic net income (loss) per share data:
               Net income (loss)                        $   (8,624)      $  (6,866)        $   8,841
                                                         ============    ============   ============
            Actual weighted average common                  10,017           17,749           17,700
            shares outstanding for the period            ============    ============   ============
       Basic net income (loss) per share                $    (0.86)      $   (0.39)        $    0.50
                                                         ------------    ------------   ------------

       Diluted net income (loss) per share data:
             Net income (loss)                          $   (8,624)      $  (6,866)        $   8,841
                                                        ============     ============    ============
             Actual weighted average common
             shares outstanding for the period               10,017          17,749           17,700
             Stock options and warrants outstanding              --              --              615
                                                         ------------    -------------    -----------
       Shares used in diluted per share                      10,017          17,749           18,315
                                                         ============    ============    ============
       Diluted net income (loss) per share               $   (0.86)      $   (0.39)        $    0.48
                                                         ============    ============    ============

</TABLE>

Stock-Based Compensation

Corsair  accounts  for  its  stock-based  compensation  arrangements  using  the
intrinsic-value  method prescribed in Accounting  Principle Board Opinion No. 25
"Accounting for Stock Issued to Employees".  As such,  deferred  compensation is
recorded on the date of grant when the fair value of the underlying common stock
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.  Statement  of Financial  Accounting  Standards
(SFAS) No. 123, "Accounting For Stock-Based Compensation" establishes accounting
and disclosure  requirements using a  fair-value-based  method of accounting for
stock-based  employee  compensation plans.  Corsair has elected to remain on its
current method of accounting as described  above, and has adopted the disclosure
requirements of SFAS No. 123.

Comprehensive Income (Loss)

Corsair has no significant  components of other comprehensive income (loss), and
accordingly,  the  comprehensive  income (loss) is the same as net income (loss)
for all periods.

3. BALANCE SHEET COMPONENTS AND RELATED VALUATION ACCOUNTS

Inventories

Inventories consisted of the following (in thousands):

                                     DECEMBER 31,
                               1998               1999
                               ----               ----

     Raw materials             $ 2,600         $   948
     Work in process               311              --
     Finished goods              2,765           2,235
                              --------       ---------
                               $ 5,676         $ 3,183
                              ========       =========


Property and Equipment

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

                                                         DECEMBER 31,
                                                   1998              1999
                                                   ----              ----

  Computer equipment                               $10,059          $6,590
  Furniture and fixtures                             1,093             985
  Purchased software                                 1,233           1,788
  Leasehold improvements                             1,311           1,261
  Machinery & equipment                              1,795           1,729
                                                  --------       --------
                                                    15,491          12,353
   Less accumulated depreciation and amortization  (8,069)         (8,895)
                                                   --------       ---------
                                                   $ 7,422          $3,458


The total amount of assets  recorded under capital  leases  included in property
and equipment is approximately  $2,505,000 and 2,180,000 as of December 31, 1998
and 1999,  respectively.  Accumulated  amortization  thereon was  $1,789,000 and
2,093,000 as of December 31, 1998 and 1999, respectively.

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

                                               DECEMBER 31,
                                        1998               1999
                                        ----               ----
     Accrued benefits                  $  2,261        $  1,987
     Accrued warranty costs               2,093           2,836
     Accrued professional fees            1,416           1,279
     Accrued taxes                          291           1,327
     Customer discounts                       -           1,207
     Other                                1,670           1,609
                                       --------       ---------
                                       $  7,731        $ 10,245
                                       ========       =========

Allowance for Doubtful Accounts

Changes to the  allowance for doubtful  accounts  consisted of the following (in
thousands):

                       Balance at     Charged to
                       beginning of   costs and                 Balance at end
  YEAR ENDED           the period     expenses     Deductions   of the period
  ----------           ----------     --------     ----------   -------------

  December 31, 1997    $     867      $   2,018    $   1,457    $   1,428
  December 31, 1998    $  1,428       $   2,692    $   1,224    $   2,896
  December 31, 1999    $  2,896       $   1,123    $   1,904    $   2,115



4.  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,  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,
1999 have been  combined with SCI's  statement of operations  for the year ended
September  30,  1997,  and  the  two  year  periods  ended  December  31,  1999,
respectively.  Due to the fiscal year end  conversion of SCI to that of Corsair,
the  following  summarized  financial  information  for SCI for the three months
ended  December  31, 1997 was not  included in the  consolidated  statements  of
operations:

                      Three Months Ended December 31, 1997
                      ------------------------------------
           Net revenue                                    $     2,854
           Total cost of sales                                  1,758
                                                          ------------
           Gross profit                                         1,096
                                                          ------------
           Operating costs and expenses                         5,946
                                                          ------------
           Operating loss                                     (4,850)
           Other expense, net                                    (42)
                                                          ============
           Net loss                                        $  (4,892)
                                                          ============


SCI did not incur any significant operating,  investing,  or financing cash flow
events during the three months ended December 31, 1997.

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

 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)



In the  second  quarter  of 1998,  Corsair  recorded  merger-related  costs  and
expenses  of $4.2  million.  The  one-time  charges  included  $2.5  million  in
transaction  costs,  $1.5 million of termination  benefits for  approximately 20
employees,  and redundant facility and other equipment costs associated with the
merger of $145,000.  As of December 31, 1999, all of the accrued  merger-related
costs had been paid.




5. REORGANIZATION COSTS

On February  3, 1999,  Corsair  signed a letter of intent with True  Position to
develop a strategic  relationship for the development,  sales and marketing of a
wireless  location  product.  As a  result  of our  intent  to enter  into  this
strategic relationship,  Corsair discontinued development of a wireless location
project,  resulting in a charge of $856,000,  consisting  of $649,000 in accrued
termination benefits for 13 employees and equipment write-downs of $207, 000. As
of December 31,  1999,  the Company had not  developed a strategic  relationship
with True  Position,  and it is  unclear  whether  the  Company  will be able to
successfully develop a strategic relationship in the future.



6. LOSS ON SALE OF ASSETS

Also on February 3, 1999, we sold  substantially  all of the assets  relating to
our  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.

In  conjunction  with the sale, we received from WBS a secured  promissory  note
receivable of $2.2 million,  which was $2.2 million less than the net book value
of the net assets transferred to WBS, consisting of cash,  accounts  receivable,
property and  equipment,  and deferred  revenue.  The note bears interest at the
rate of 10% per annum,  payable in equal monthly installments based upon a sixty
month  amortization  schedule  with a  final  payment  of the  remaining  unpaid
principal with all accrued  interest due and payable in May, 2003. We recorded a
loss on the  sale of the net  assets  of  approximately  $2.2  million,  for the
difference  between  the  consideration  received  and the net book value of the
assets transferred.



7. DEBT

Notes  payable  consists  of a note to a  financial  institution,  with  monthly
payments of approximately  $74,000 at an interest rate of 14.38% with a lump sum
payment  of  approximately  $260,000  due on June  1,  2001,  collateralized  by
selected assets of the Corsair.  The outstanding balance as of December 31, 1999
was approximately $1,407,000.

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  warrants  issued  along with the notes  payable.  In
addition,  in  1998,  the  Company  incurred  a loss on debt  extinguishment  of
$226,000  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.



8. INCOME TAXES

Income tax expense consists of the following for the years ended December 31 (in
thousands):

                                 1997            1998               1999
                            -------------    -------------     ---------------
Current
  Federal                       $       -      $        -        $      1,431
  State                                 8               -                 248
                            --------------    ------------     ---------------
Total current tax expense               8               -               1,679
Deferred
  Federal                               -               -             (1,181)
  State                                 -               -                   -
                            --------------    ------------     ---------------
Total deferred tax expense              -               -             (1,181)
                            --------------    ------------     ---------------
Total tax expense                $      8      $        -        $        498
                            ==============    ============     ===============


A  reconciliation  of the  Federal  statutory  rate of 34% as  applied to income
(loss) before income taxes and extraordinary item from continuing  operations to
Corsair's effective tax rate is as follows (in thousands):
<TABLE>
<CAPTION>

                                                            Year Ended December 31,
                                             ------------------------------------------------------
                                                  1997               1998                1999
                                             ----------------    --------------     ---------------
<S>                                          <C>                 <C>                <C>

Tax at U.S. Federal statutory rate (benefit)     $   (2,423)        $  (2,258)         $     3,176
S corporation loss not subject to tax                  2,062                 -                   -

Utilization of prior net operating losses and
temporary differences                                      -                 -             (1,240)
Utilization of prior year tax credits                      -                 -               (645)
Change in beginning valuation allowance                    -                 -             (1,181)
Unutilized net operating losses                          153             1,832                   -
State income taxes                                         8                 -                 248
Nondeductible merger expenses                              -               369                   -
Other nondeductible expenses                             208                57                 140
                                             ----------------   ==============      ===============
     Total tax expense                           $         8        $        -          $      498
                                             ================   ==============      ===============

</TABLE>

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):
<TABLE>
<CAPTION>

                                                                           Year Ended December 31,
                                                             ----------------------------------------------------
                                                                 1997               1998               1999
                                                             --------------    ----------------    --------------
<S>                                                          <C>               <C>                 <C>

Deferred tax assets:
     Net operating loss carryforward                         $      10,155      $       10,717       $     9,910
     Credit carryforwards                                            1,468               2,164             1,984
     Inventory, due to reserves and additional amounts                 401                 745               928
      capitalized for tax
     Bad debt reserve                                                    -                   -               850
     Accrued vacation                                                    -                   -               198
     Accrued warranty and retrofit                                       -                   -             1,140
     Other accruals and reserves not currently  deductible           1,476               1,936               139
      for tax purposes
     Technology asset                                                1,677               1,476             1,311
     Fixed assets                                                      182                 627               906
     Other                                                               -                  98                 -
                                                             --------------    ----------------    --------------
              Total gross deferred tax assets                       15,359              17,763            17,366

     Less valuation allowance                                     (15,331)            (17,763)          (16,185)
                                                             --------------    ----------------    --------------
              Net deferred tax assets                                   28                   -             1,181
                                                             --------------    ----------------    --------------
Deferred tax liabilities:
    Other deferred liabilities                                        (28)                   -                 -
                                                             --------------    ----------------    --------------
              Total deferred tax liabilities                          (28)                   -                 -
                                                             --------------    ----------------     -------------
              Net deferred tax assets                        $           -      $            -        $    1,181
                                                             ==============    ================     =============
</TABLE>

The net change in the valuation  allowance for the year ended  December 31, 1999
was a decrease of approximately $964,000. We believe 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, 1999,  Corsair had net Federal and California  operating loss
carryforwards of approximately $26.1 and $16.2 million respectively,  for income
tax reporting.  The Federal net operating loss carryforwards expire beginning in
2009 through the year 2011.  The  California  net operating  loss  carryforwards
expire in 2002.

Corsair also has research and experimental tax credits aggregating approximately
$932,000 and $857,000 for Federal and  California  purposes,  respectively.  The
Federal credits  forwards 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  $79,000;  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:

                                      Federal         California
                                      -------         ----------

    Net operating losses           $ 13,900,000       $  9,500,000
    Research credits                    230,000             80,000

This  restriction  also  applies  to  carryforward   items  resulting  from  the
"ownership  change" upon the  acquisition  of SCI  Computing  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           $ 12,300,000      $ 6,700,000
     Research credits                    238,000          308,000

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


9. STOCKHOLDERS' EQUITY

 Preferred Stock

Upon Corsair'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, Corsair had no preferred stock
outstanding.

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

In February 1997,  Corsair'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 Corsair'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 Corsair 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.

Corsair 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,  Corsair  adopted the 1997 Stock  Incentive  Plan (the  "Plan") and
authorized  1,337,633  shares of the 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

Corsair uses the  intrinsic-value  method to account for all of its  stock-based
employee   compensation   plans.  During  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 $360,000 and
$193,000  in 1998  and 1999  respectively,  and has been  charged  to  operating
expenses.

Had compensation cost for the Corsair'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,  Corsair's pro forma net income
(loss) would have been as follows (in thousands, except per share data):
<TABLE>
<CAPTION>

                                                                 Year Ended December 31
                                                       1997            1998             1999
                                                  --------------- ---------------- ----------------
<S>                                               <C>             <C>              <C>

Net income (loss) - as reported                      $   (8,624)       $  (6,866)           $8,841
Net income (loss) - pro forma                            (9,315)          (8,790)            7,655
Diluted net income (loss) per share - as reported         (0.86)           (0.39)             0.48
Diluted net income (loss)  per share - pro forma          (0.93)           (0.50)             0.42
</TABLE>

The fair value of each option under the Plan is  estimated  based on the date of
grant using the Black-Scholes method in 1997, 1998 and 1999, using the following
weighted-average assumptions:

                                    1997              1998             1999
                                    ----              ----             ----
Expected life (years)               2.86              2.64             3.50
Expected stock price volatility       27%               60%              70%
Risk-free interest rate             6.12%             4.83%            5.90%


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

The pro forma net income (loss) and per share data include  expenses  related to
the Purchase  Plan. The weighted  average fair value of purchase  rights granted
during 1999 under the Purchase Plan is $2.58.  The fair value is estimated using
the Black-Scholes  model assuming no expected  dividends on the date of grant, a
risk-free  rate of 5.47%,  volatility  of 70%, and an expected life which varies
over the exercise periods.

Stock Option Activity and Status

The following table summarizes activity under Corsair's Option Plans:
<TABLE>
<CAPTION>

                                                                                                   Weighted-Average
                                                       Weighted-Average       Options Vested        Fair Value of
                                         Shares         Exercise Price              at                 Options
                                                                                Period-End             Granted
                                      -------------    ------------------    -----------------    -------------------
<S>                                   <C>              <C>                   <C>                  <C>

Outstanding as of December 31, 1996      1,221,827               $  0.65

                                                                                      258,079
                                                                             =================
         Options granted                 1,090,534                  6.50
                                                                                                              $ 3.60
                                                                                                  ===================
         Options exercised               (730,416)                  0.55
         Options canceled                (313,656)                  1.30
                                      -------------    ------------------

Outstanding as of December 31, 1997      1,268,289                  5.58
                                                                                      291,477
                                                                             =================
         Options granted                 2,029,748                  6.44

                                                                                                              $ 2.79
                                                                                                  ===================
         Options exercised               (271,961)                  1.91
         Options canceled              (1,074,745)                 11.74
                                      -------------    ------------------


Outstanding as of December 31, 1998      1,951,331                  3.59
                                                                                      432,614
                                                                             =================
         Options granted                 1,433,350                  6.89
                                                                                                              $ 3.72
                                                                                                  ===================
         Options exercised               (200,764)                  1.49
         Options canceled                (988,110)                  4.10
                                      -------------    ------------------

Outstanding as of December 31, 1999      2,195,807               $  5.70
                                      =============    ==================
</TABLE>

The following table summarizes information about stock options outstanding as of
December 31, 1999:
<TABLE>
<CAPTION>

                           Outstanding                                               Exercisable
                                    Weighted-average
                     Number of         Remaining          Weighted-average     Number of      Weighted-average
 Exercise prices       shares       Contractual life       exercise price        shares       Exercised prices
 ---------------       ------       ----------------       --------------        ------       ----------------
<S>                  <C>          <C>                  <C>                    <C>            <C>

$0.30 - $2.11            200,672                  5.88               $  0.84       170,322               $  0.83
$2.88 - $3.00            343,117                  8.73                  2.93       118,552                  2.93
$3.06 - $5.00            696,420                  9.28                  4.38        65,800                  4.70
$5.13 - $5.50            236,788                  8.95                  5.14        50,433                  5.13
$7.00 - $10.00           497,110                  9.79                  8.87         7,558                  7.87
$11.06 - $19.50          221,700                  9.63                 11.45        19,949                 14.63
=================== ============= ===================== ===================== ============= =====================
$0.30 - $19.50         2,195,807                  9.00                  5.64       432,614                  3.25
=================== ============= ===================== ===================== ============= =====================
</TABLE>

As  of  December  31,  1999,  employees  held  23,179  shares  of  common  stock
outstanding  by virtue of option  exercises  which were subject to repurchase by
Corsair at prices  ranging  from $0.68 to $1.13 per  share.  Corsair'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,  Corsair'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 Corsair's stock at the date of the
repricing.

Warrants

Corsair issued warrants to purchase an aggregate  243,822 shares of common stock
at an exercise  price of $5.91 to $6.65 per share in  conjunction  with  various
loan and security  agreements.  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.  As of December 31, 1999, one
warrant for the purchase of 52,500 shares of common stock remained outstanding.


10. COMMITMENTS AND CONTINGENCIES

 Leases


The Company is obligated under certain noncancelable operating leases for office
space and equipment expiring at various dates through 2002. Total rental expense
was  approximately  $1,539,000,  $1,938,000  and  $1,481,000 for the years ended
December 31, 1997, 1998, and 1999 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
------------                                              ------     ------

    2000                                                     89       1,296
    2001                                                     --       1,124
    2002                                                     --         449

Total minimum lease payments                               $ 89    $  2,869
                                                                    ========
Less amount representing interest and taxes                   9
                                                           -----
Current portion of obligations under capital lease         $ 80
                                                           =====

Litigation

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

Employee Benefit Plans

Corsair has two  defined  contribution  401(k)  retirement  plans for  qualified
employees.  Employer  contributions  made under the plans totaled  approximately
$425,000 and $308,000 in 1998 and 1999, respectively.  No employer contributions
were made in 1997.

11.  SEGMENT INFORMATION

Corsair 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 Corsair for making operating
decisions and assessing financial performance.

Corsair's  chief  operating  decision  maker is  considered  to be the our 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,  Corsair  operates  in, and  measures its
results in a single operating  segment,  system solutions of the global wireless
industry, rather than distinctive product segments.

Corsair'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.  Our revenues  from two distinct  products are
generated from one industry by the following geographic areas (in thousands):

                                                 Years Ended
                                                 December 31,
                            --------------------------------------------------
                                 1997               1998             1999
                            ---------------     --------------    ------------
Revenues:
    North America               $   46,371         $   38,022      $   17,248
    Latin America                    5,933             14,827          36,655
    Pacific Rim                      5,568              6,921          11,538
    Europe                           2,984              5,448             766
                            ---------------     --------------    ------------
         Total                  $   60,856         $   65,218      $   66,207

We have no material operating assets outside of the United States.

Significant Customers

The following tables  summarize  information  relating to Corsair's  significant
customers as of December 31, 1998 and 1999 and for the years ended  December 31,
1997, 1998 and 1999:
                                             Percentage of
                                            Total Revenues
                                            --------------
                                      1997        1998       1999
                                      ----        ----       ----
         Customer A                     11%        13%         3%
         Customer B                     12%        10%         4%
         Customer C                     10%         9%         5%
         Customer G                      -          6%        43%

                                               Percentage of Trade
                                               Accounts Receivable
                                               -------------------
                                                  1998        1999
                                                  ----        ----
         Customer F                                12%          5%
         Customer G                                11%         48%
         Customer J                                 -          11%



<TABLE>

UNAUDITED QUARTERLY RESULTS
(in thousands, except per share data)
<CAPTION>

                                                                    Quarters Ended 1998
                                          March 31             June 30 *           September 30        December 31
                                       ----------------     -----------------     ---------------    ----------------
<S>                                    <C>                  <C>                   <C>                <C>

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

</TABLE>

* 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).
<TABLE>
<CAPTION>

                                                                    Quarters Ended 1999
                                           March 31             June 30            September 30      December 31
                                        ---------------     -----------------     ---------------    ----------------
<S>                                     <C>                 <C>                   <C>               <C>

Total revenues                             $    15,278        $       16,046      $       17,087     $        17,796
Gross Profits                                    9,524                 9,657              10,663              12,049
Operating expenses                               9,881                 7,601               7,319               7,394
Operating income (loss)                          (357)                 2,056               3,344               4,655
Net income (loss)                              (2,134)                 2,421               2,867               5,687

Diluted net income (loss) per share:       $    (0.12)        $         0.13      $         0.16     $          0.31
Shares used in diluted per share                18,032                18,236              18,073              18,484
   computation

</TABLE>

<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   Corsair,   or  written
                  representations  that no Form 5s  were  required,  we  believe
                  that,  during  January 1, 1999 through  December 31, 1999, all
                  Section 16(a) filing requirements  applicable to our 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)  Financial Statements

         Corsair's  financial  statements are included  herein as required under
         Item 8 of this Annual  Report on Form 10-K.  See Index to  Consolidated
         Financial Statements on page 23.

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

(c)   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.
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 conversion.
10.52+    Form of Waiver of Registration Rights
23.1 *    Consent of Independent Auditors, KPMG LLP .
23.2 *    Consent of Deloitte & Touche LLP, Independent Auditors.
24.1 *    Power of Attorney (See page 45 ).
27.1 *    Financial Data Schedule
--------------------------------------------------------------------------------
*  Filed herewith.
+  Incorporated  by reference to the same numbered  exhibit (except as otherwise
   indicated) to Corsair's  Registration  Statement on Form S-1 (no. 333-28519),
   filed on June 4, 1997 as amended.

Supplemental Information

         Copies of our Proxy Statement for the annual Meeting of Stockholders to
be held June 6, 2000 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 our stockholders.




<PAGE>



Signatures

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange  Act of 1934,  Corsair we have duly caused  this Annual  Report on Form
10-K to be signed on our behalf by the undersigned, thereunto duly authorized.

         Date: March 30, 2000                   Corsair Communications, Inc.

                                                By:/s/Thomas C. Meyer
                                                   Thomas C. Meyer
                                                   Chief Executive Officer
                                                   Chairman of the Board

                                                     Power of Attorney

         Know  all men by these  presents,  that  each  person  whose  signature
appears  below   constitutes   and  appoints   Thomas  C.  Meyer,   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:

         March 30, 2000             /s/Mary Ann Byrnes
                                    Mary Ann Byrnes, Director


         March 30, 2000             /s/Kevin R. Compton
                                    Kevin R. Compton, Director


         March 30, 2000             /s/Peter L.S. Currie
                                    Peter L.S. Currie, Director


         March 30, 2000             /s/Stephen M. Dow
                                    Stephen M. Dow, Director


         March 30, 2000             /s/David H. Ring
                                    David H. Ring, Director


         March 30, 2000             /s/Rachelle B. Chong
                                    Rachelle B. Chong, Director




<PAGE>








                                                                   Exhibit 23.1

                       CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Corsair Communications, Inc.

We consent to  incorporation  by reference in the  registration statements (Nos.
333-32321,   333-59821,   333-51989  and  333-89483)  on  Form  S-8  of  Corsair
Communications,  Inc.  of our report  dated  February  4, 2000,  relating to the
consolidated balance sheets of Corsair Communications,  Inc. and subsidiaries as
of  December  31,  1998 and 1999,  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, 1999, which report appears in the December
31, 1999, annual report on Form 10-K of Corsair Communications, Inc.


KPMG LLP


Mountain View, California
March 30, 2000



<PAGE>


                                                                   Exhibit 23.2

                       INDEPENDENT AUDITOR'S CONSENT

We consent to the  incorporation  by reference  in  Registration  Statement Nos.
333-32321, 333-59821, 333-51989, and 333-89483 of Corsair Communications, Inc.on
Form  S-8 of our  report  dated  January  7,  1998,  relating  to the  financial
statements  of Subscriber  Computing,  Inc. as of September 30, 1997 and for the
year then ended (not presented separately  herein)appearing in the Annual Report
on Form 10-K of Corsair Communications,  Inc. for the fiscal year ended December
31, 1999.


DELOITTE & TOUCHE LLP

Costa Mesa, California
March 28, 2000


<PAGE>