<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                  FORM 10-KSB
(Mark One)
            [ X ]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 1997

                                       OR

            [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the transition period from to            .

                        Commission file number: 0-21037

                                SOLOPOINT, INC.
             (Exact name of registrant as specified in its charter)


                CALIFORNIA                              77-0337580
     (State or other jurisdiction of                 (I.R.S. Employer
     incorporation or organization)               Identification Number)

   130-B Knowles Drive, Los Gatos, CA                      95032
(Address of principal executive office)                  (Zip Code)


       Registrant's telephone number, including area code: (408) 364-8850

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

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

                           COMMON STOCK, NO PAR VALUE
                                (Title of Class)

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

  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]

  Net revenues of the issuer as of December 31, 1997 were $492,260.

  The aggregate market value of the voting stock of the issuer held by non-
affiliates of the issuer on March 16, 1998 was approximately $5,450,000, based
upon the closing price of such stock on March 16, 1998.

  As of March 16, 1998, 8,305,818 shares of Common Stock of the registrant were
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

  Certain information required by Items  9, 10, 11 and 12 of Form 10-KSB is
incorporated by reference from the Registrant's Definitive Proxy Statement for
the 1998 Annual Meeting of Shareholders, which will be filed with the Securities
and Exchange Commission within 120 days after the close of the Registrant's
fiscal year ended December 31, 1997.

  Transitional Small Business Disclosure Format: Yes [   ] No [ X ]
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

  The following Business section contains forward-looking statements that
involve risks and uncertainties, including those referring to the period of time
the Company's existing capital resources will meet the Company's future capital
needs, the Company's operating results, the market acceptance of the products of
the Company, its efforts to establish and maintain distribution partners, the
development of new products and the Company's planned investment in the
marketing and distribution of its current products and research and development
with regard to future products. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including: the Company's dependence on market
acceptance of multifunction personal communications management products; lack of
significant sales and distribution channels; the Company's ability to timely
develop new products; business conditions and growth in the personal
communications management industry and general economy; competitive factors,
such as rival providers of personal communications management products and
services, and price pressures; compatibility with a wide variety of switching
configurations; reliance on sole source contract manufacturers and component
suppliers; dependence on a limited number of key personnel; rapid technological
changes; as well as other factors set forth elsewhere in this Form 10-KSB.

  SoloPoint, Inc. designs, develops and markets innovative and easy-to-use
personal communications management products that connect people more
effectively. The Company's products are used by residential Regional Bell
Operating Companies ("RBOC") and Local Exchange Carriers ("LEC") Voice Mail
customers, Small Office Home Office ("SOHO") professionals and professionals in
corporate satellite offices. The Company's products are designed to allow users
to balance three important needs of communications dependent individuals:
Mobility, the ability to receive critical calls while away from their primary
office; Accessibility, the ability to be available on an as-needed basis; and
Control, the ability to monitor calls in order to decide, in real time, from
whom and when to accept a call.

  The Company currently offers three product lines: SmartScreen, which allows a
residential RBOC or LEC Voice Mail customer to locally screen an incoming call
and take the call, if desired; SmartMonitor, which allows a mobile professional
to remotely monitor and take office calls from a cellular or PCS phone; and
SmartCenter, which provides a feature rich call management environment for SOHO
professionals and professionals in corporate satellite offices.

INDUSTRY OVERVIEW

  The number of communications-dependent individuals has increased significantly
in recent years. These individuals can be categorized into three broad market
categories: residential RBOC and LEC Voice Mail customers, mobile professionals,
and SOHO professionals and professionals in corporate satellite offices.

 RBOC and LEC Voice Mail Users

  International Data Corporation estimates that as of the end of 1996 there were
over 9 million residential RBOC Voice Mail customers in the United States,
growing to over 18 million at the end of 2001. RBOC and LEC Voice Mail has
several advantages over traditional answering machines, including the ability to
take messages when the line is busy, better remote access, enhanced message
management capabilities and improved reliability. The Company believes that the
three major drawbacks to RBOC and LEC Voice Mail are the inability to screen a
call, the lack of a visual message waiting indicator and the inability to share
a fax machine on the same line as Voice Mail. If a call has gone to Voice Mail,
a subscriber must wait until the caller has left a message, then dial a number,
enter an access code, retrieve the message and call back the caller if they
choose. The lack of a visual message waiting indicator forces the user to pick
up his or her phone and listen for a stutter dial tone to determine if a message
has been left. As a result, important calls may be missed and messages are often
received later than if the
<PAGE>

blinking light of a traditional answering machine had been available. The
Company believes that the lack of screening and a visual message waiting
indicator light are significant factors causing the low penetration and frequent
cancellation of Voice Mail service. Finally, the inability to support a fax
machine on the same line requires a fax user to add a second line.

  The SoloPoint Solution-SmartScreen

  The Company's SmartScreen product line remedies these deficiencies in RBOC and
LEC Voice Mail by providing users with the ability to screen incoming calls,
visually determine if there are new messages, and utilize a fax machine on the
same line as Voice Mail. SmartScreen connects to a Voice Mail user's telephone
line and utilizes RBOC and LEC Three-Way calling service. When a user receives a
call, SmartScreen picks up the call and connects the caller to RBOC or LEC Voice
Mail. Simultaneously, SmartScreen turns on a built-in speaker so that the user
can hear the caller as they leave a message. If the user wishes to talk to the
caller, he/she can pick up any phone connected to the line and be immediately
connected to the caller. In order to provide a visual message waiting indicator,
SmartScreen is designed to work with stutter dial tone ("FSK") signaling
provided by the RBOC or LEC. By providing the ability to support a fax machine
on the same line, fax users are not forced to pay for a second line.


 Mobile Professionals

  The mobile professional's success is dependent upon the ability to effectively
manage business communications in a mobile environment, thereby enabling the
user to receive critical calls and be more responsive to customers. Missed
calls, delayed responses to messages, or the appearance of an unprofessional
image can cause potential customers or clients to take their business elsewhere.
A large percentage of these mobile professionals utilize a cellular or PCS phone
to stay in touch while out of the office. Because their office number and
cellular or PCS number are not connected, phone calls to the office are not
immediately received in the field resulting in "phone tag" or missed calls
which can result in customer dissatisfaction and lost business.


  The SoloPoint Solution-SmartMonitor

  The SmartMonitor product line enables users to screen incoming office calls
from a cellular or PCS phone and connect to those callers the user chooses. When
a caller dials the user's office number, SmartMonitor simultaneously rings the
user's office telephone and remote cellular or PCS phone. The SmartMonitor M-100
allows users to optionally monitor the call as the caller leaves a message on
his/her office answering machine. The Company's SmartMonitor M-200 is designed
to allow a user to monitor a message being left in RBOC or LEC Voice Mail. If
the user wants to talk with the caller, he/she can be immediately connected by
simply pressing a button on his or her remote cellular or PCS telephone. A key
benefit of SmartMonitor is that it enables a user to be more accessible to
customers without disclosing their cellular or PCS telephone number. In
addition, since the user's office and cellular or PCS telephone rings
simultaneously, the user can seamlessly move in and out of their office without
having to enable or disable the device or service.


 SOHO Professionals and Professionals in Corporate Satellite Offices

  While many corporations provide a communications infrastructure for their
employees that includes, among other things, secretarial and administrative
support and computer and telephony services, SOHO professionals and
professionals in corporate satellite offices must address their own personal
communications management needs. These needs usually include the ability to
provide a professional image through an Interactive Voice Response ("IVR")
system, the ability to filter and route calls automatically, and the ability to
tie all their communications devices and services together to work more
efficiently and effectively. These individuals have previously attempted
<PAGE>

to address these needs through the use of an array of disparate, single function
communication devices, such as cellular or PCS phones, pagers, fax machines and
e-mail applications, and separate, basic broad-based communications services,
such as Voice Mail, Call Forwarding, Caller ID and Three-Way Calling.


  The SoloPoint Solution-SmartCenter

  The Company's SmartCenter C-120 product responds to the needs of SOHO
professionals and professionals in corporate satellite offices who require an
automated method of ensuring that incoming calls are answered and properly
filtered and routed. The C-120 is attached to the professional's main line and
functions as an automated receptionist for incoming calls. Incoming calls are
answered by the C-120, which plays a greeting and provides the caller with a set
of options. These options can include transferring the caller to a particular
department, extension or person, providing the caller with pre-recorded
information (such as directions to the business), or providing the caller with
another set of menu options. The caller responds to the C-120 by pressing the
buttons on his touch-tone phone.

  The C-120 was designed to give businesses a robust set of features typically
found on more expensive PC-based systems without the complicated installation
and configuration procedures typically associated with such systems. The C-120
can answer a business' phone, play a greeting, provide a series of options to
the caller, transfer the call to a specified extension and transfer the call to
another set of menu options. Other features include multiple greetings for
business hours and off business hours, a name directory, and extension dialing.
The C-120 also tracks a variety of call statistics, such as number of calls
processed at different times of the day. A non-technical user can configure the
C-120 by simply responding to the interactive voice prompts, which are imbedded
in the system. Although an optional graphical Windows-based PC software program
is provided and can assist users in creating more complex procedures for
handling calls, it is not required for normal operation of the SmartCenter
device. Installation is accomplished by plugging standard telephone lines into
the product. The Company believes that the C-120's suggested retail price of
under $500 makes it a cost-effective solution to the call-processing needs of
small business users.


 STRATEGY

  The Company's objective is to be a leading provider in the emerging personal
communications management products market. The Company's strategy for achieving
this objective includes the following key elements:


  Leverage Proprietary Technology to Create an Innovative Line of Personal
  Communications Products

  The Company intends to continue to leverage the proprietary technology
incorporated in its initial SmartCenter product to design and bring to market a
broad line of personal communications management products designed to meet the
needs of a wide range of communications dependent individuals. In accordance
with this strategy, the Company has introduced SmartScreen and SmartMonitor,
which are substantially based upon the sophisticated technology contained in the
SmartCenter product. The Company plans to similarly develop additional personal
communications management products which the Company believes will leverage its
research and development expenditures, facilitate the establishment of brand
name recognition and expand the Company's distribution and marketing
capabilities.


  Develop Telephone Company and Related Distribution Channels

  The Company's products are designed to meet the needs of RBOC or LEC customers
while utilizing several RBOC and LEC services, such as Voice Mail, Three-Way
Calling and Caller ID. In May 1997, the Company
<PAGE>

entered into a marketing agreement with Pacific Bell and is working to establish
Original Equipment Manufacturer ("OEM") or additional marketing agreements with
other RBOCs and with LECs so that its products can be bundled with RBOC or LEC
services to provide a complete personal communications management solution. In
addition, the Company's long term objective is to leverage these relationships
to access RBOCs' and LECs' authorized resellers which the Company believes would
also be appropriate resellers of its products.


  Establish Strategic Alliances and Business Relationships

  The Company intends to establish additional strategic alliances and business
relationships with leading participants in various segments of the
communications markets. The Company believes these alliances and relationships,
if established, will enable it to take advantage of the superior financial
resources, technological capabilities, proprietary positions and market presence
of these companies. In accordance with this strategy, the Company has received
an equity investment from Ameritech. The Company's objective is to establish a
strategic relationship with Ameritech involving marketing, distribution or
manufacturing agreements.

SOLOPOINT PRODUCTS

 SmartScreen Family

  SmartScreen S-100:   The SmartScreen S-100 was introduced in January 1997, is
currently sold by Pacific Bell for $69.95 and is also available through various
retail outlets for prices between $99.95 and $119.95. The S-100 enables a
residential RBOC or LEC Voice Mail user to screen and manage incoming calls
while callers are leaving messages on the user's RBOC or LEC Voice Mail. The
user can connect with a caller while he/she is leaving a Voice Mail message at
any time during the call. The following table lists the key features of
SmartScreen S-100 and the benefits the Company believes they bring to the end
customer:

<TABLE>
<CAPTION>

FEATURE                                   DESCRIPTION                 BENEFIT TO CUSTOMER
----------------------------------------------------------------------------------------------
<S>                              <C>                             <C>

Voice Mail Screening             Allows a user to screen         Control over who to talk
                                 incoming calls on a Voice       with on a call by call
                                 Mail enabled line.              basis.

                                                                 Identify the caller and the
                                                                 purpose of the call before
                                                                 picking up the phone.
----------------------------------------------------------------------------------------------

Anytime Connection with Caller   Allows a user to                Real time connection to
in Voice Mail                    instantaneously connect         important callers.
                                 at anytime with a caller
                                 while the caller is leaving
                                 a message in Voice Mail.
----------------------------------------------------------------------------------------------

Visual Message Waiting           A red light flashes to          Eliminates need to dial voice
Indicator                        indicate new messages           mail to determine if a
                                 in Voice Mail.                  message has been left.
----------------------------------------------------------------------------------------------

Voice Mail Fax Switch            Allows an external fax          More effective use of single
                                 machine to work on a Voice      telephone line.
                                 Mail enabled line.
                                                                 Avoids additional cost of a
                                                                 second phone line.
----------------------------------------------------------------------------------------------
</TABLE>

     SmartScreen S-150:   The SmartScreen S-150 was introduced in May 1997 and
currently retails for approximately $119.95. The S-150 is designed to meet the
needs of SOHO professionals who have a PC and use RBOC or LEC Voice Mail. The S-
150 provides an RS-232 interface to a PC and PC software that integrates Voice
Mail, Caller ID and the user's PC. In addition to providing all the features and
benefits of the SmartScreen S-100, the SmartScreen S-150 provides the following
additional features and the benefits:

<TABLE>
<CAPTION>

FEATURE                                             DESCRIPTION                      BENEFIT TO CUSTOMER
----------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                    <C>

PC Caller ID screen pop                Caller ID information pops up on the   Provides visual information about
                                       PC screen.                             the person calling prior to
                                                                              picking up the call.

                                                                              Personal call management.
----------------------------------------------------------------------------------------------------------------

Detailed call logging                  Key information for each call is       Accurate record of call activity
                                       saved and can be stored or exported    for billing or other purposes.
                                       to other software applications.
----------------------------------------------------------------------------------------------------------------

TAPI driver                            Sends Caller ID information to any     Automatic access of caller's
                                       TAPI compliant database or Personal    record and information on any
                                       Information Manager (PIM).             TAPI compliant software
                                                                              application.
----------------------------------------------------------------------------------------------------------------

Call indicator screen saver            Screen saver indicates number of new   Allows user to ascertain call
                                       calls.                                 status on a PC.
----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

    SmartMonitor Family

     SmartMonitor M-100:   The SmartMonitor M-100 was introduced in September
1996 and currently retails for $149.95. The M-100 is designed to meet the needs
of mobile professionals who have a direct access office number and an answering
machine. The M-100 enables users to screen incoming office calls from either
their cellular or PCS telephone. When a caller dials the user's office number,
SmartMonitor simultaneously rings the user's office number and cellular or PCS
telephone. The user can optionally monitor calls as messages are being left on
the user's office answering machine. The user can also elect to instantly
connect to callers by simply pushing a button. A key benefit of the M-100 is
that it enables users to be more accessible to their customers without
disclosing their cellular or PCS numbers or the user's current location. Since
the user's office telephone and Cellular or PCS telephone ring simultaneously,
the user can answer either telephone without having to disable or enable any of
the screening features of the M-100, an advantage over RBOC or LEC Call
Forwarding. The following table lists the key features of the SmartMonitor M-100
and the benefits the Company believes they bring to the end customer:


<TABLE>
<CAPTION>

FEATURE                                            DESCRIPTION                       BENEFIT TO CUSTOMER
----------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                   <C>

Remote Monitoring of Office Calls      Allows a user to discretely monitor   Control of inbound cellular calls.
                                       and then optionally take incoming
                                       office calls from either a remote     Reduced "phone tag" with
                                       cellular or PCS telephone.            customers.

                                                                             Single number access (office
                                                                             number).
----------------------------------------------------------------------------------------------------------------

Simultaneous Ringing of Office and     Rings the user's office phone and     Eliminates needs for the user to
Remote Telephone                       the remote cellular or                routinely enable/disable unit.
                                       direct-dialed land based telephone
                                       at the same time.                     Single number access (office
                                                                             number).
----------------------------------------------------------------------------------------------------------------

Remote Programming                     Allows the user to remotely change    User does not need to return to
                                       the monitor telephone number.         office to change monitor telephone
                                                                             number.
----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

     SmartMonitor M-200:   The Company commenced commercial shipment of the
SmartMonitor M-200, also known as the Mobile Phone Companion M-200, in September
1997 which currently retails for $249.95. The M-200 is designed to meet the
needs of high-end mobile professionals who have a direct access office number
and RBOC or LEC Voice Mail or answering machines. When used with RBOC or LEC
Voice Mail, the M-200 requires RBOC or LEC Three-Way Calling service. In
addition to providing all the features and benefits of the SmartMonitor M-100,
the SmartMonitor M-200 provides the following additional features.

<TABLE>
<CAPTION>

FEATURE                                   DESCRIPTION                 BENEFIT TO CUSTOMER
----------------------------------------------------------------------------------------------
<S>                              <C>                             <C>

Permits local screening of       Allows a user to discretely     Ultimate control of inbound
Voice Mail and answering         monitor and then optionally     calls.
machines                         take incoming office calls
                                 from either a cordless          Gives the customer the
                                 or stationary telephone.        ability to utilize a
                                                                 cordless phone and
                                                                 still monitor phone calls.
----------------------------------------------------------------------------------------------

Return callers to Voice Mail     Allows a user to send a         Maximize call management.
after  talking with them         caller back into Voice Mail
                                 after talking with them.        Voice Mail records
                                                                 information
                                                                 when the user is busy.
----------------------------------------------------------------------------------------------

Voice prompted set up menus      Natural human voice menuing     Simplifies setup.
                                 system for setup and
                                 configuration.                  Simplifies normal
                                                                 interactions.
----------------------------------------------------------------------------------------------

Pause and special character      Allows the user to enter        Supports centralized
dialing                          pauses and special              corporate Voice Mail
                                 characters into                 configurations.
                                 the dialing string.
                                                                 Supports Credit Card and
                                                                 other forms of call payment.

                                                                 Supports consolidation of
                                                                 messages into cellular Voice
                                                                 Mail systems.
----------------------------------------------------------------------------------------------

Supports both RBOC and LEC       Allows a user to use Voice      Works with customers'
Voice Mail or answering          Mail or an answering machine    existing answering machine
machine                          as their messaging solution.    or RBOC and LEC Voice Mail.
----------------------------------------------------------------------------------------------
</TABLE>

 SmartCenter Family

     The SmartCenter C-120 is the successor to the SmartCenter C-100, which the
Company introduced in March 1996. The C-120 currently retails for $495.95 per
unit and is a complete, multifunction, communications management platform
designed to meet the needs of mobile, communications-dependent SOHO individuals.
The SmartCenter C-120 is an integrated communications management hardware device
that fits under a telephone, connects to two analog telephone lines and provides
four general purpose extensions for connecting personal office telephone
equipment. The core building block of the C-120 is its efficient, feature rich,
analog switching matrix, which provides many of the PBX-like functions of
larger, more expensive switches. The configuration and management of the C-120
can be accomplished through either the convenience of a voice-prompted, touch-
tone menuing interface or a graphical configuration software application running
on a PC that can be connected to the C-120's serial interface. The C-120 can
route, filter, prioritize and manage both incoming and outgoing calls through
the use of its proprietary technology.
<PAGE>

  The SmartCenter C-120 supports a number of features that provide a complete
personal communications management system for mobile, communications-dependent
individuals. These features are entirely dependent upon the specifications
published by Bell Communications Research ("Bellcore Specifications").

  The SmartCenter C-120 can be configured and managed through a customized,
voice-prompted touch-tone menuing interface, either remotely or locally, or
through SmartStart, the C-120's graphical configuration software application.
Most basic features of the C-120 can be configured through voice-prompted touch-
tone sequences, either from a local extension telephone or a remote telephone.
Callers dialing in are required to enter a PIN to access the configuration
menus, thus ensuring a secure communications environment. SmartStart, a
graphical user interface, can be used to configure and manage the SmartCenter C-
120. SmartStart is a full 32-bit Windows-based software application that can run
under Windows 95, Windows NT and Windows 3.11 (with 32-bit extensions). With
SmartStart, the user can configure any number of "call handlers" and store
them on a PC. A call handler is a set of instructions that directs the
SmartCenter C-120 on how to handle an incoming call. Call handlers are created
"visually" through the use of a call handler template editor. Once handlers
are configured and downloaded, the SmartStart application can be terminated and
the PC disconnected from the SmartCenter C-120. The following table lists the
key features of the SmartCenter C-120 and the benefits the Company believes they
bring to the end customer:

<TABLE>
<CAPTION>

FEATURE                                 DESCRIPTION                   BENEFIT TO CUSTOMER
------------------------------------------------------------------------------------------------
<S>                           <C>                               <C>

Remote Monitoring             Allows a user to discreetly       Control of inbound cellular
                              monitor and then optionally       calls.
                              take an incoming office call
                              from either a remote cellular     Reduced "phone tag" with
                              or direct-dial land based         customers.
                              telephone.
                                                                Single number access (office
                                                                number).
------------------------------------------------------------------------------------------------

Local Monitoring              Allows a user to locally screen   Caller identification for better
                              undetected incoming calls on a    control of calls.
                              telephone line utilizing RBOC
                              Voice Mail services.
------------------------------------------------------------------------------------------------

Auto Attendant Menuing        Allows a user to present a        More professional image.
                              customized, voice-prompted menu
                              to a caller who can then direct   More effective handling of
                              the call to an answering          calls.
                              machine,Voice Mail, pager,
                              extension, fax machine, or        Improved ability to find the
                              other remote telephone            customer.
                              number.
------------------------------------------------------------------------------------------------

Direct Routing                Allows a user to specifically     Single number access.
                              definewhere to route a specific
                              incoming call. Routing can be     More convenient for caller.
                              determined based on Caller ID,
                              distinctive ring, fax/voice       Improved ability to have phone
                              type, time of day, or day of      calls follow the customer.
                              week.
------------------------------------------------------------------------------------------------

Fax Routing                   Allows a user to receive and      Better utilization of telephone
                              transmit faxes from either        lines.
                              telephone line, re-route
                              incoming faxes to a remote fax    Single number fax access.
                              machine automatically, and
                              prevents accidental fax           More reliable fax reception.
                              interruption if an extension is
                              picked up.
------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

CORE TECHNOLOGY

     The Company has developed a number of technology building blocks which the
Company believes enables it to relatively quickly and efficiently develop new
hardware and software personal communications management products. The Company's
most important hardware building block is the low cost, highly flexible analog-
switching core. In addition to implementing the basic PBX-like switching
function, this circuit implements additional higher level PBX features such as
DTMF detection/generation, silence detect, full/half duplex separation and call
progress monitoring. Another key hardware building block is the automatic gain
recovery circuitry, used to dynamically control the voice quality and volume
between two central office lines that are connected together in either a half
duplex or full duplex manner. The Company believes that this circuit
significantly reduces any line loss, which might result in poor signal quality
upon the connection of the two central office lines. The Company believes that
the nature of its core technology will enable it to implement its strategy of
developing a broad line of personal communications management products.

  The Company has a library of telephony-based software algorithms and
Application Programming Interfaces ("APIs") which provide the basis of all the
features in SmartCenter, SmartMonitor and SmartScreen. These algorithms and APIs
work in conjunction with the hardware to provide unique functionality.

SALES AND MARKETING

  Since March 1996, the Company has introduced three product lines that are
designed to address specific market segments and customers. The Company's
products are sold to residential RBOC and LEC Voice Mail customers, mobile
professionals and SOHO professionals and professionals in corporate satellite
offices. The Company has identified distribution channels for each of these
product lines and intends to market to these channels accordingly.

  The Company's SmartScreen product line is targeted at residential RBOC and LEC
Voice Mail customers. The Company believes that the primary channels of
distribution for the SmartScreen family are RBOCs and LECs. The Company's
strategy is to encourage these telephone companies to co-brand, market and sell
SmartScreen products to Voice Mail subscribers at discounted prices and/or on
favorable terms to enhance the benefits of RBOC and LEC Voice Mail in order to
retain existing subscribers or acquire new subscribers. In May 1997, the Company
entered into a marketing agreement with Pacific Bell to market a co-branded
version of the S-100 to Pacific Bell's residential Voice Mail customers. The
Company believes that its current relationship with Pacific Bell and the future
relationships with the other RBOCs and LECs which it intends to establish in
connection with marketing the SmartScreen S-100 product will aid it in
developing the telephone companies as a distribution channel for its other
products, the SmartScreen S-150, the SmartCenter C-120, the SmartMonitor M-100
and the SmartMonitor M-200.

  The Company's SmartMonitor product line is targeted at mobile professionals.
The SmartMonitor M-100 is designed for mobile professionals who use answering
machines and the SmartMonitor M-200 is designed for mobile professionals who use
RBOC or LEC Voice Mail. The Company believes that the primary channel of
distribution for the M-100 is the network of retailers, dealers and distributors
currently marketing cellular and PCS telephones and the primary channels of
distribution for the M-200 are RBOCs and LECs. Because mobile professionals use
cellular and PCS telephones and pagers, the Company also intends to pursue
relationships with the wireless operations of RBOCs and LECs.

  The Company's SmartCenter product line is targeted at SOHO professionals and
professionals in corporate satellite offices that need to be integrated into the
corporate communications infrastructure. The Company believes the primary sales
distribution channel for the C-120 targeted at SOHO professionals is office
supply retailers. The Company believes the primary sales channel for the C-120
targeted at corporate satellite offices is direct from the Company or through
Value Added Resellers ("VARs").
<PAGE>

  In addition to the foregoing targeted distributed channels, in order to make
its products more widely available to end-users the Company also markets its
products through catalogs targeted at telephony customers.

MANUFACTURING

  The Company's manufacturing operations consist of final integration and test
of its products at the Company's facilities, in order to maintain overall
product quality. The Company subcontracts the manufacture of all of the
subassemblies of SmartCenter on a sole source basis offshore to CT Continental
(for circuit board fabrication) and Wellex Corporation (for circuit board
assembly). The Company subcontracts the manufacture of the subassemblies of
SmartMonitor on a sole source basis to Wellex Corporation (for circuit board
assembly) and AC International, Inc. (for circuit board fabrication). The
Company is currently subcontracting the subassemblies of SmartScreen on a sole
source basis to CT Continental offshore. The Company believes that there are
alternative contract manufacturers which could produce such subassemblies, but
it is not currently pursuing agreements or understandings with such alternative
sources. To date, the contract manufacturers have not been required to assemble
and deliver material quantities of subassemblies of any of the Company's current
products. Sole source integrated circuit suppliers include but are not limited
to Motorola, Inc., Texas Instruments, National Semiconductor Corporation, Exar
Corporation and DSP Technology, Inc. There can be no assurance that such
contract manufacturers or sole source integrated circuit suppliers will be able
to supply the Company with sufficient quantities of subassemblies or components
in a timely manner. If a contract manufacturer or sole source supplier were
unable to assemble or deliver the Company's subassemblies or components in a
timely manner, for any reason, the Company's business, financial condition and
results of operations would be materially adversely affected. In the event of a
reduction or interruption of supply to the Company of such subassemblies or
components, it could take a significant period of time for the Company to
qualify alternative suppliers, redesign the product as necessary and commence
manufacturing. The Company's inability to obtain sufficient quantities of
subassemblies or sole or limited source components in the future or to develop
alternative sources in the future, could result in delays in product
introductions or shipments, which could have a material adverse effect on the
Company's business, financial condition and results of operations.

RESEARCH AND DEVELOPMENT

  Since its inception, the Company has made a substantial investment of
approximately $4,700,000 as of December 31, 1997 in the research and development
of its core technology. This investment has resulted in the modular hardware and
software technology which the Company has utilized in its three product lines:
SmartCenter, SmartMonitor and SmartScreen. The Company intends to continue to
leverage this core technology to develop additional products to broaden its
product line. While the Company believes that its future success, if any, will
depend in large part on its ability to develop additional products that meet the
unique needs of each RBOC or LEC, the Company expects to continue to derive
substantially all of its revenues, if any, over the next 12 months from the sale
of its existing products. As of December 31, 1997, the Company's product
development staff consisted of four engineers. The Company also utilizes
consultants on a project basis from time to time. The Company's total expenses
for research and development for the years ended December 31, 1997 and 1996 and
for the period from inception to December 31, 1997 were $1,385,544, $1,523,599
and $4,739,261, respectively.

COMPETITION

  The market for communications products is highly competitive and characterized
by rapid technological change, frequent new product introductions, short product
life cycles, evolving industry standards and significant price erosion over the
life of a product. The Company believes that the principal competitive factors
affecting this market include product features, compatibility with a wide
variety of switching configurations, price, ease of use, quality, customer
service and support, as well as company and product reputation. Within specific
ranges of functionality, the Company experiences and expects to continue to
experience competition from many sources, including but not limited to: (i)
companies that provide communications management services, such as Priority Call
Management, Inc., Wildfire Communications, MCI, AccessLine Technologies, Inc.
and RBOCs such as Ameritech
<PAGE>

Corporation and U.S. West; (ii) companies that directly provide personal
communications management products, such as Bogen Communications, Inc., Beond
Communications, Centrepoint s/w Technologies, Incorporated, Datacom, Jetstream
Communications, Inc. and Notify Corporation; and (iii) large consumer
electronics companies that offer telephony products, such as enhanced answering
machines, including AT&T Corporation, Sony Corporation, Panasonic Company and
others. The Company believes that there will be intense competition between
companies that provide communications management services, such as RBOCs, and
companies that directly provide communications management products.

  Most of the Company's present and potential competitors have substantially
greater financial, marketing, technical and other resources than the Company.
Furthermore, the Company also expects to compete with companies that have
substantial manufacturing, marketing and distribution capabilities, areas in
which the Company has limited or no experience. Increased competition, direct
and indirect, could materially adversely affect the Company's revenues and
profitability through pricing pressure and loss of market share. There can be no
assurance that the Company will be able to compete successfully against existing
and new competitors as the market evolves and the level of competition
increases. The failure to compete successfully against existing and new
competitors would have a material adverse effect upon the Company's business,
financial condition and results of operations.

  Current and potential competitors have established and may establish
cooperative relationships with third parties to increase the ability of their
products to address the needs of the Company's prospective customers. To the
extent such third parties enter into such relationships with competitors of the
Company, such third parties are likely to be unable or unwilling to enter into
similar relationships with the Company. It is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share. As a result, such competitors may be able to respond more quickly to new
or emerging technologies and to changes in customer requirements or to devote
greater resources to the development, promotion and sales of their products than
can the Company. There can be no assurance that these competitive pressures will
not materially adversely affect the Company's business, financial condition and
results of operations.


INTELLECTUAL PROPERTY RIGHTS

  The Company relies upon a combination of patents, trademarks and non-
disclosure agreements in order to establish and protect its proprietary rights.
The Company has filed applications for certain patents covering its current
products and intends to continue to file applications, as appropriate, for any
of the Company's future products. There can be no assurance that patents will
issue from any of its pending applications or, if patents do issue, that the
claims allowed will be sufficiently broad to protect the Company's technology.
In addition, there can be no assurance that any patents issued to the Company
will not be challenged, invalidated or circumvented, or that the right granted
thereunder will provide proprietary protection to the Company. Since United
States patent applications are maintained in secrecy until patents issue and
since the publication of inventions in technical or patent literature tend to
lag behind such inventions by several months, the Company cannot be certain that
it was the first creator of inventions covered by its pending patent
applications, that it was the first to file patent applications for such
inventions or that the Company is not infringing on the patents of others.

  The Company has in the past and intends in the future to trademark some of its
proprietary product names and logos and claims copyright protection for its
proprietary software. There can be no assurance that the Company can obtain
additional trademarks or that any copyright protection will be adequate.
Litigation may be necessary to enforce the Company's patents, if issued,
trademarks, copyrights or other intellectual property rights, to protect the
Company's trade secrets, to determine the validity and scope of the proprietary
rights of others or to defend against claims of infringement. Such litigation
could result in substantial costs and diversion of resources and could have a
material adverse effect on the Company's business, financial condition and
results of operations regardless of the final outcome of such litigation.
Despite the Company's efforts to safeguard and maintain its proprietary rights,
there can be no assurance that the Company will be successful in doing so or
that the Company's competitors will not independently develop or patent
technologies that are substantially equivalent or superior to the Company's
technologies. In addition, the laws of certain foreign countries do not protect
the Company's intellectual property
<PAGE>

rights to the same extent, as do the laws of the United States. Although the
Company continues to implement protective measures and intends to defend its
proprietary rights vigorously, there can be no assurance that these efforts will
be successful. In the absence of effective protection of its intellectual
property, there can be no assurance that third parties will not develop and
market copies of the Company's products.

  The Company has received a letter from two third parties asserting certain
patents for various telephone call processing products and seeking to enter into
licensing agreements with the Company with respect to such patents. The Company
has had discussions with one of the parties and has reached an understanding as
to a licensing agreement. The Company is currently reviewing the second matter
to determine the need for any such licensing agreements. There can be no
assurance that the Company will not be obligated to defend itself in court
against allegations of infringement of third-party patents or that the Company
would prevail in any such litigation seeking either damages or an injunction
against the sale of the Company's products. An adverse outcome in such a suit
could subject the Company to significant liabilities to third parties, require
disputed rights to be licensed from third parties or require the Company to
cease using such technology.

PERSONNEL

  As of December 31, 1997, the Company employed 15 people on a full-time basis.
Of these, five were responsible for research and development, three were in
customer support and quality assurance, two were responsible for sales and
marketing, three were responsible for finance and administration and two were
responsible for operations. The Company also utilizes consultants to fulfill
certain projects in the area of engineering as well as corporate marketing. The
Company's employees are not represented by a union and the Company considers its
relationship with its employees to be good.

  The Company's future success depends substantially upon the efforts of certain
of its executive officers and key technical and other employees, none of whom
are covered by key man life insurance. Edward M. Esber, Jr. joined the Company
in October 1995 as President, Chief Executive Officer, Chief Financial Officer
and Director. In January 1998 Mr. Esber was elected as Chairman of the Board and
relinquished his responsibilities as President & CEO. Arthur G. Chang joined the
Company in February 1996 as Chief Operating Officer and Vice President of
Research and Development. In January 1998 Mr. Chang was elected President and
CEO. Donald Nanneman joined the Company in January 1997 as Vice President of
Marketing.  Ronald J. Tchorzewski joined the Company in October 1996 as Vice
President of Finance and in July 1997 was elected to the position of Chief
Financial Officer.

  The Company's ability to successfully market and distribute its existing and
any future personal communications management products will require it to
attract, retain and motivate additional key employees, including product
support, research and development and sales and marketing personnel. There can
be no assurance that the Company will be successful in achieving any of these
goals, and the failure to do so would have a material adverse effect on the
Company's business, financial conditions and results of operations.

ITEM 2. DESCRIPTION OF PROPERTY

  The Company leases approximately 8,200 square feet in a facility in Los Gatos,
California. The facility is subject to a lease which expires in September 1998
renewable at the Company's option for one additional year. The current monthly
rent is approximately $7,400. The Company believes that its current facilities
are sufficient to meet its needs for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

  Not applicable
<PAGE>

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

Not applicable


                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

  Since the Company's initial public offering on August 6, 1996, the Company's
Common Stock has been traded on the Nasdaq "SmallCap" Market System under the
symbol "SLPT". As of December 31, 1997 there were approximately 3,505,000 shares
of Common Stock outstanding and 35,000,000 shares of Common Stock were
authorized.

  The following table sets forth the range of the high and the low closing sales
price for each of the periods indicated for shares of the Company's Common
Stock.

   1997
<TABLE>
<CAPTION>
Quarter Ended                                                   HIGH      LOW
-------------                                                  -------  -------
<S>                                                            <C>      <C>
March 31, 1997..............................................    $3.38    $1.75
June 30, 1997...............................................    $3.50    $1.63
September 30, 1997..........................................    $3.81    $1.88
December 31, 1997...........................................    $2.56    $ .75

    1996
<CAPTION>
Quarter Ended                                                   HIGH      LOW
-------------                                                  -------  -------
<S>                                                            <C>      <C>
September 30, 1996 (from August 6, 1996)                        $5.34    $2.61
December 31, 1996...........................................    $3.50    $1.75
</TABLE>

  As of March 16, 1998 there were 108 holders of record of Common Stock.

DIVIDEND POLICY

  The Company has never paid cash dividends and does not anticipate paying any
cash dividends in the foreseeable future. The Company intends to retain
earnings, if any, for future growth and expansion of its business.

<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

  The following section contains forward-looking statements that involve risks
and uncertainties, including those referring to the period of time the Company's
existing capital resources will meet the Company's future capital needs, the
Company's operating results, the market acceptance of the products of the
Company, its efforts to establish and maintain distribution partners, the
development of new products and the Company's planned investment in the
marketing and distribution of its current products and research and development
with regard to future products. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including: dependence on market acceptance of
multifunction personal communications management products; lack of significant
sales and distribution channels; the Company's ability to timely develop new
products; business conditions and growth in the personal communications
management industry and general economy; competitive factors, such as rival
providers of personal communications management products and services, and price
pressures; compatibility with a wide variety of switching configurations;
reliance on sole source contract manufacturers and component suppliers;
dependence on a limited number of key personnel; rapid technological changes; as
well as other factors set forth elsewhere in this Form 10-KSB.

 Results of Operations

NET REVENUES

  Since inception, the Company's focus has been on the design and development of
personal communications management solutions for communications-dependent
individuals. The Company introduced its first product, SmartCenter, at the end
of March 1996 with the initial shipment of its second product, SmartMonitor, at
the end of September 1996. The Company recorded its initial revenues in the
quarter ended June 30, 1996. The Company's products currently have a 30-day,
unconditional, money-back guarantee. Revenue is recognized when products are
shipped and the 30-day money-back guarantee period has lapsed. Allowances are
provided for product returns based on estimated future product returns, the
timing of expected new product introductions and other factors. These allowances
are recorded as direct reductions of revenue and accounts receivable.

  Net revenues for the year ended December 31, 1997, were $492,260 compared to
$380,113 for the year ended December 31, 1996, a 30% increase. The increase in
net revenues is mainly attributable to revenues from the shipment of the
SmartCenter C-120 and the  SmartMonitor M-100 for a full year as well as the
introduction of new products such as SmartScreen S-100 in the first quarter of
1997 and the Mobile Phone Companion  M-200 during the third quarter of 1997 as
compared to only revenue from SmartCenter C-120 for three quarters and
SmartMonitor  M-100 for one quarter in 1996.

DEPENDENCE ON KEY CUSTOMERS

  During the year ended December 31, 1997, two customers accounted for
approximately 31% and 24% of net revenues. There can be no assurance that such
customers will continue to order similar volume of product from the Company. A
significant reduction in sales volume attributable to the loss of any of the
Company's customers, or the Company's inability to collect accounts receivable
from any major customer could have a materially adverse effect on the Company's
business, financial condition and results of operations.

GROSS MARGIN

  Cost of sales, which consists mainly of product cost and an increase in
inventory reserves for the year ended December 31, 1997 was $940,822, which was
191% of revenue as compared to $289,050 which was 76% of revenue for the year
ended December 31, 1996. The high percentage of cost of sales for the year ended
December
<PAGE>

31, 1997 was primarily due to an increase in inventory reserves of approximately
$600,000 during the fourth quarter of 1997. The increase in inventory reserves
primarily related to the Company's SmartCenter C-120 product inventory and was
done principally as a result of the Company's change in distribution strategy
and the Company's lower than anticipated sales for 1997. Cost of sales without
the reserve adjustment would have been 69% of revenue for the year ended
December 31, 1997. Cost of sales for the year ended December 31, 1996 was
impacted by low priced units offered to customers who had participated in beta
testing; free samples provided to prospective customers to open new distribution
channels; early, low production volume and the re-working of certain items. Cost
of goods sold for the year ended December 31, 1996 was also impacted by write-
downs of obsolete inventory of $15,000 during the second quarter of 1996.

OPERATING EXPENSES

  Research and Development Research and development expenses, which consist
primarily of personnel related and consulting expenses, were $1,385,544 for the
year ended December 31, 1997 as compared to $1,523,599 for the year ended
December 31, 1996. This decrease of 9% resulted from a combination of lower
prototype and tooling expenses partially offset by higher personnel related
expenses. The Company currently expects that research and development expenses
will be consistent with the level experienced in the prior year.

  Sales and Marketing Sales and marketing expenses which consist primarily of
advertising, public relations, marketing communications, conferences and trade
shows, travel and personnel expenses were $1,696,021 for the year ended December
31, 1997 as compared to $1,120,400 for the year ended December 31, 1996. This
increase of 51% is primarily due to increased expenses related to an increase in
personnel and related costs as well as advertising and marketing efforts to
support the Company's expanded product line and RBOC relationship activity. The
Company anticipates that sales and marketing expenses may decrease in future
periods based upon its recent shift in distribution startegy.

  General and Administrative General and administrative expenses which include
personnel, professional services, bad debt allowances, depreciation, and
consultant expenses were $1,175,223 for the year ended December 31, 1997, as
compared to $1,117,974 for the year ended December 31, 1996. This increase of 5%
is primarily due to increased headcount and the higher professional services
costs associated with being a public company. The Company anticipates that
general and administrative expenses may grow in absolute dollars, but may
decrease as a percentage of revenue, as it adds the infrastructure necessary to
accommodate expanded operations and to support a growing customer base.

OTHER INCOME (EXPENSE)

  Other income is comprised primarily of interest income on cash balances, which
had been nominal until the completion of the Company's initial public offering
in August 1996. The net proceeds from the initial public offering earned
interest through investment in money market funds. For the year ended December
31, 1997 the Company earned recognized interest income of $73,028 compared with
interest income of $108,774 for the year ended December 31, 1996. The decrease
in interest income from 1996 to 1997 of $35,746 or 33% was the result of lower
average cash balances. This was offset by interest expense of $43,057 for the
year ended December 31, 1997 and interest expense of $32,476 for the year ended
December 31, 1996.

PROVISION FOR INCOME TAXES

  There was no provision for federal or state income taxes for the years ended
December 31, 1997 and December 31, 1996 as the Company incurred net operating
losses. At December 31, 1997, the Company had federal and state net operating
loss carryforwards of approximately $6,000,000. The Company also had federal and
state research and development tax credit carryforwards of approximately
$100,000 and $150,000, respectively. The net operating loss carryforwards will
expire at various dates beginning in 1998 through 2012, if not utilized. The
utilization of the net operating losses and credits may be subject to a
substantial annual limitation due to the ownership change
<PAGE>

limitations provided by the Internal Revenue Code of 1986 (the "Code") and
similar state provisions. The Company's recent public offering may result in
such an ownership change for purposes of Section 382 of the Code. If an
ownership change were to occur, net operating losses and credits could expire
before utilization. For financial reporting purposes, a valuation allowance of
$5,000,000 has been recorded to offset deferred tax assets recognized under the
Financial Accounting Standards No. 109, "Accounting for Income Taxes," primarily
related to the net operating loss carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

  As of December 31, 1997, the Company had cash of $65,858 and working capital
of $(115,670). The Company used cash of $3,935,016 in its operating activities
for the year ended December 31, 1997. Principal uses of cash were to fund the
Company's net loss, an increase in other assets of $277,956 related to expenses
incurred in connection with the Company's secondary offering which will be
transferred to equity upon the closing of the offering in January 1998 and an
increase in inventories of $168,275. The Company filed an amended Form SB-2 on
December 30, 1997 to sell an additional 4,800,000 shares of Common Stock. This
offering was completed on January 14, 1998 which provided the Company with
net proceeds of approximately $3,520,000.

  The Company expects to incur additional substantial losses at least through
the end of calendar year 1999, but anticipates that its capital resources at
December 31, 1997 plus the $3,520,000 in proceeds from the offering completed on
January 14, 1998 will provide adequate cash to fund its operations for the next
twelve months at its anticipated level of operations. However, the Company may
seek additional funding during calendar 1998 and will likely require additional
funding after such time. There can be no assurance that any additional financing
will be available on acceptable terms, or at all, when required by the Company.
Failure to obtain funding would have a material adverse effect on the Company's
business, financial condition and results of operations and could require the
Company to reduce or suspend its operations, seek an acquisition partner or
sell securities on terms that may be highly dilutive. In February 1997, the
Company entered into a $1,500,000 line of credit with Silicon Valley Bank, which
is based upon accounts receivable. Subject to meeting certain covenants the
Company is entitled to borrow up to 80% of the value of eligible accounts
receivable at an interest rate equal to the prime rate plus 1%. No amounts have
been drawn on the line as of December 31, 1997. This line of credit expired as
of February 28, 1998. The Company expects to renew its line of credit with
Silicon Valley Bank under similar terms. As of December 31, 1997 the Company did
not have any significant commitments for capital or other expenditures.

FUTURE OPERATING RESULTS

  Since its inception in 1993, the Company has incurred significant losses, has
had substantial negative cash flow, and has realized limited revenues. At
December 31, 1997, the Company had an accumulated deficit of $12,066,648, and
had incurred operating losses of $4,705,350 and $3,670,910 for the years ended
December 31, 1997 and 1996, respectively. The Company expects to continue to
incur substantial operating losses at least through its fiscal year ending
December 31, 1999.

 Potential Fluctuations in Quarterly Results

  The Company has experienced and expects to continue to experience fluctuations
in operating results. Fluctuations in operating results may result in volatility
in the price of the Company's common stock. Operating results may fluctuate as a
result of many factors, including the volume and timing of orders received or
product returns, if any, during the period, the timing of commercial
introduction of future products and enhancements, competitive products and the
impact of price competition on the Company's average selling prices, product
announcements by the Company and its competition and the Company's level of
research and development and sales and marketing activities. Many of these
factors are beyond the Company's control. In addition, due to the short product
life cycles that characterize the personal communications management market, the
Company's failure to introduce competitive new and enhanced products in a timely
manner would have a material adverse effect on the Company's business, financial
condition and results of operations.
<PAGE>

  The Company's operating and other expenses are relatively fixed in the short
term. As a result, variations in timing of revenues, if any, will cause
significant variations in quarterly results of operations. Notwithstanding the
difficulty in forecasting future sales, the Company generally must undertake its
sales and marketing and research and development activities and other
commitments months or years in advance. Accordingly, any shortfall in product
revenues, if any, in a given quarter may materially adversely affect the
Company's business, financial condition and results of operations due to the
inability to adjust expenses during the quarter to match the level of product
revenues, if any, for the quarter. In addition, the Company's sales expectations
are based entirely on its internal estimates of future demand. Due to these and
other factors, the Company believes that quarter to quarter comparisons of its
results of operations are not necessarily meaningful, and should not be relied
upon as indications of future performance.

 RISK FACTORS

   Recent Product Introductions; Emerging Market; Dependence on Market
Acceptance of Products; Lack of Adequate Marketing Resources The Company has
only recently introduced its current products and to date the Company has
received only limited revenue from the sale of these products. The market for
personal communications management products is only beginning to emerge, and
there can be no assurance that it will develop sufficiently to enable the
Company to achieve broad commercial acceptance of its products. Because this
market is relatively new and because current and future competitors are likely
to introduce a variety of competing products and services, it is difficult to
predict the rate at which this market will grow, if at all, or the degree of
market penetration which the Company will be able to achieve, if any. To date,
the market for personal communications management products has developed at a
significantly slower rate than the Company had originally anticipated. If the
personal communications management market fails to grow or grows at a slower
rate than the Company currently anticipates, or if the Company fails to achieve
sufficient market penetration, the Company's business, financial condition and
results of operations will be materially adversely affected. Even if the market
for personal communications management products does grow, there can be no
assurance that the Company's current products or any future personal
communications management products introduced by the Company will achieve
commercial acceptance within such a market. Marketing newly introduced products
such as those of the Company in a developing market requires extensive financial
resources and marketing efforts. To date, the Company has not had sufficient
financial resources to adequately market its products.

  Risks Associated with Strategic Relationships The Company believes that its
future success, if any, will be largely dependent on its ability to either sell
its products to or enter into joint marketing arrangements with RBOCs and LECs
in the United States. In particular, the Company believes that certain of its
products can be sold profitably only if they are sold to or in conjunction with
RBOCs and LECs. Selling a product to or entering into a marketing relationship
with an RBOC or LEC is generally a lengthy process. A failure by the Company to
develop significant relationships with RBOCs and LECs would have a materially
adverse effect on the Company's business and operating results. The Company has
entered into a marketing agreement with Pacific Bell which calls for Pacific
Bell to market a co-branded version of the Company's SmartScreen S-100 product.
There can be no assurance that the marketing agreement with Pacific Bell will be
successful or that the Company will be able to establish relationships with
other RBOCs. Even if the Company is successful in establishing alliances or
relationships with RBOCs, LECs or other strategic partners, there can be no
assurance that such alliances or relationships will result in an increase in the
Company's distribution channels or product revenues or otherwise provide any
benefit to the
<PAGE>

Company. In addition, the strategic partners may be in direct or indirect
competition with the Company or among each other. The presence of potential or
actual conflicts of interest could materially adversely affect the Company's
relationships with potential strategic partners, which in turn could have a
material adverse effect on the Company's business, financial condition and
results of operations.

  Dependence on Limited Number of Customers During the year ended December 31,
1997, two customers accounted for approximately 31% and 24% of the Company's net
revenues. The Company expects that sales to relatively few customers will
continue to account for a significant percentage of the Company's revenues for
the foreseeable future. Substantially all of the Company's sales are made on a
purchase order basis, and none of the Company's customers has entered into an
agreement requiring them to purchase the Company's products. The loss of, or any
reduction in orders or returns of product from a current customer could have a
material adverse effect on the Company's business, financial condition and
results of operations in the near term.

  The Company's ability to increase its sales will depend in part upon its
ability to obtain orders from new customers. In this regard, the Company intends
to expand its efforts to sell to RBOCs and LECs. The Company has had only
nominal sales to one RBOC to date and there can be no assurance of significant
sales to any RBOC or LEC in the future. In the event that such sales do not
materialize, the Company's business, financial condition and results of
operations would be materially adversely affected.

  Delisting of Securities from the Nasdaq Market; Limited Liquidity of Trading
Market Shares of the Company's Common Stock are quoted on the Nasdaq SmallCap
Market. The Nasdaq Small-Cap Market is a significantly less liquid market than
the Nasdaq National Market. If the Company should continue to experience losses
from operations, it may be unable to maintain the standards for continued
quotation on the Nasdaq SmallCap Market. Trading, if any, in the Common Stock
would therefore be conducted in the over-the-counter market on an electronic
bulletin board established for securities that do not meet the Nasdaq SmallCap
Market listing requirements, or in what are commonly referred to as the "pink
sheets." As a result, an investor would find it more difficult to dispose of,
or to obtain accurate quotations of the price of, the Company's Common Stock.
Nasdaq has recently promulgated new rules which make continued listing of
companies on the Nasdaq SmallCap Market more difficult and has significantly
increased its enforcement efforts with regard to the Nasdaq standards for such
listing. In addition, if the Company's Common Stock were removed from the Nasdaq
SmallCap Market, the Company's Common Stock would be subject to so-called
"penny stock" rules that impose additional sales practice and market making
requirements on broker-dealers who sell and/or make a market in such securities.
Consequently, removal from the Nasdaq SmallCap Market, if it were to occur,
could affect the ability or willingness of broker-dealers to sell and/or make a
market in the Company's Common Stock and the ability of purchasers of the
Company's Common Stock to sell their securities in the secondary market. In
addition, because the market price of the Company's Common stock is less than
$5.00 per share, the Company may become subject to certain penny stock rules
even if still quoted on the Nasdaq SmallCap Market. Such rules may further limit
the market liquidity of the Company's Common Stock. The Company recently
received notification from Nasdaq that the Company, based upon its then most
current public filings was not in compliance with Nasdaq's new net tangible
assets/market capitalization/net income requirement for continued listing on the
Nasdaq SmallCap Market and as such is subject to delisting. Based upon the
proceeds received by the Company upon the completion of its public offering on
January 14, 1998, the Company is currently in compliance with such requirements
and is in the process of appealing any potential delisting.

  Year 2000 Compliance The Company does not currently expect any year 2000
compliance issues or material costs to arise related to primary internal
business information systems. However, the Company utilizes third party vendor
network equipment, telecommunication products, and third party software products
which may or may not be Year 2000 compliant. A number of the computers of the
Company's customers and vendors that interface with the Company's systems may
run on programs that have Year 2000 problems and may disrupt the Company's
business operations. Although the Company is currently taking steps to address
the impact, if any, of the Year 2000 issue surrounding such third parties,
failure of any critical technology components to operate properly in the Year
2000 may have an adverse impact on business operations or require the Company to
incur unanticipated expenses to remedy any problems.

  Forward-looking Statements This Form 10-KSB contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such forward-looking
statements may be deemed to include the Company's plans to create a line of
personal communications management products, establish strategic alliances and
business relationships, implement a multichannel distribution strategy, expend
resources to create end-user demand and brand name recognition and file
additional patent applications. Such forward-looking statements may also be
deemed to include the Company's expectations concerning factors affecting the
market for its current products and any future personal communications
management products it may develop, including growth in the personal
communications management product marketplace, the dependence of mobile
individuals on the ability to manage business communications effectively in a
mobile environment and the shortcomings of commercially available personal
communications management products. Actual results could differ from those
projected in any forward-looking statements for the reasons detailed in the
other sections of this Form 10-KSB.

                                      (2)
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Shareholders
SoloPoint, Inc.

  We have audited the accompanying balance sheets of SoloPoint, Inc. (a
development stage company, formerly SoHo Communications, Inc.) as of December
31, 1997 and 1996 and the related statements of operations, redeemable
convertible preferred stock and shareholders' equity and cash flows for the
years then ended and for the period from inception (March 26, 1993) to December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

  We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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 provide a reasonable basis for our opinion.

  In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SoloPoint, Inc. (a development
stage company) at December 31, 1997 and 1996, and the results of its operations
and its cash flows for the years then ended and for the period from inception
(March 26, 1993) to December 31, 1997, in conformity with generally accepted
accounting principles.

                                  /s/ Ernst & Young LLP

Palo Alto, California
February 10, 1998
<PAGE>

                                SOLOPOINT, INC.
                         (a development stage company)

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                       ---------------------------------
                                                                                            1997              1996
                                                                                       ---------------  ----------------
<S>                                                                                    <C>              <C>
Assets
Current assets:
 Cash................................................................................    $     65,858       $ 4,066,825
 Accounts receivable, net of allowances of  $188,233 in 1997 and $20,777 in 1996.....         163,586           327,916
 Inventories.........................................................................         403,529           835,254
 Other current assets................................................................          29,876            39,330
                                                                                         ------------       -----------
Total current assets.................................................................         662,849         5,269,325
Furniture and equipment, at cost:
 Computers and software..............................................................         275,150           231,479
 Furniture and fixtures..............................................................         203,609           148,944
                                                                                         ------------       -----------
                                                                                              478,759           380,423
 Accumulated depreciation and amortization...........................................         320,032           205,165
                                                                                         ------------       -----------
                                                                                              158,727           175,258
Deposits and other assets............................................................         325,407            37,997
                                                                                         ------------       -----------
Total assets.........................................................................    $  1,146,983       $ 5,482,580
                                                                                         ============       ===========

Liabilities and shareholders' equity
Current liabilities:
 Accounts payable....................................................................    $    678,380       $   299,926
 Accrued compensation................................................................          33,294           137,872
 Notes payable, current portion......................................................          41,537            39,594
 Other accrued liabilities...........................................................          25,308             3,787
                                                                                         ------------       -----------
Total current liabilities............................................................         778,519           481,179
Notes payable, non-current portion...................................................          96,776           140,165

Commitments and contingencies

Shareholders' equity:
 Common stock, no par value:
  Authorized shares--35,000,000
  Issued and outstanding shares--3,505,818 in 1997, 3,499,780 in 1996................      12,423,836        12,410,005
 Deficit accumulated during the development stage....................................     (12,066,648)       (7,391,269)
 Notes receivable from shareholders..................................................         (85,500)         (157,500)
                                                                                         ------------       -----------
Total shareholders' equity...........................................................         271,688         4,861,236
                                                                                         ------------       -----------
Total liabilities and shareholders' equity...........................................    $  1,146,983       $ 5,482,580
                                                                                         ============       ===========
</TABLE>

                            See accompanying notes.
<PAGE>

                                SOLOPOINT, INC.
                         (a development stage company)

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                        PERIOD FROM
                                                                                                         MARCH 26,
                                                                                                            1993
                                                                                                        (INCEPTION)
                                                                       YEAR ENDED DECEMBER 31,            THROUGH
                                                                  ----------------------------------    DECEMBER 31,
                                                                        1997              1996              1997
                                                                  ----------------  ----------------  ----------------
<S>                                                               <C>               <C>               <C>
Net revenues....................................................      $   492,260       $   380,113      $    872,373
Cost of sales...................................................          940,822           289,050         1,229,872
                                                                      -----------       -----------      ------------
    Gross margin................................................         (448,562)           91,063          (357,499)
Costs and expenses:
 Research and development.......................................        1,385,544         1,523,599         4,739,261
 Sales and marketing............................................        1,696,021         1,120,400         3,318,001
 General and administrative.....................................        1,175,223         1,117,974         3,717,613
                                                                      -----------       -----------      ------------
Total costs and expenses........................................        4,256,788         3,761,973        11,774,875
                                                                      -----------       -----------      ------------
Loss from operations............................................        4,705,350         3,670,910        12,132,374
Other income (expense):
 Interest income................................................           73,028           108,774           199,374
 Other income...................................................               --             1,000             3,000
 Interest expense...............................................          (43,057)          (32,476)         (103,530)
                                                                      -----------       -----------      ------------
Net loss........................................................      $(4,675,379)      $(3,593,612)     $(12,033,530)
                                                                      ===========       ===========      ============
Basic and diluted net loss per share............................           $(1.33)           $(1.46)
                                                                      ===========       ===========
Shares used in computing basic and diluted net loss per share...        3,502,799         2,461,715
                                                                      ===========       ===========
</TABLE>

                             See accompanying notes
<PAGE>

                                SOLOPOINT, INC.
                         (a development stage company)

              STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
               AND SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)

<TABLE>
<CAPTION>
                                                        REDEEMABLE                            DEFICIT                       TOTAL
                                                        CONVERTIBLE                         ACCUMULATED      NOTES     SHAREHOLDERS'
                                                      PREFERRED STOCK      COMMON STOCK      DURING THE    RECEIVABLE   EQUITY (NET
                                                     -----------------  ------------------  DEVELOPMENT       FROM        CAPITAL
                                                     SHARES    AMOUNT    SHARES    AMOUNT      STAGE      SHAREHOLDERS  DEFICIENCY)
                                                     -------  --------  ---------  -------  ------------  ------------ -------------

<S>                                                  <C>      <C>       <C>        <C>      <C>           <C>          <C>
Issuance of founders' stock in November 1993 at
 $.001 per share..................................      --    $     --   300,000   $  300   $        --     $     --    $       300
Common stock to be issued in January 1994.........      --          --        --    3,675            --           --          3,675
Series A-1 redeemable preferred stock to be
 issued in January 1994...........................      --     250,000        --       --            --           --             --
Issuance of Series A-1 redeemable preferred
 stock............................................  25,000          --        --       --            --           --             --
Recapitalization exchange of common stock for
 Series A-1 redeemable preferred stock at $.04
 per share........................................   7,500         300  (300,000)    (300)           --           --           (300)
Issuance of Series A-1 redeemable preferred stock
 in exchange for services in January 1994 at
 $10.00 per share.................................      13         125        --       --            --           --             --
Issuance of common stock from January 1994
 through April 1994 at $.01 per share.............      --          --   396,100      286            --           --            286
Issuance of common stock in exchange for
 services, from February 1994 through October
 1994 at prices ranging from $.01 to $.40
 per share........................................      --          --    16,870    4,935            --           --          4,935
Issuance of Series A-2 redeemable preferred stock
 in May 1994 at $3.50 per share, less issuance
 costs of $8,653..................................  78,571     266,347        --       --            --           --             --
Issuance of Series A-2 redeemable preferred stock
 in May 1994 at $3.50 per share in exchange for
 interest payable.................................     956       3,345        --       --            --           --             --
Issuance of Series A-3 redeemable preferred stock
 in July and August of 1994 at $4.00 per share,
 less issuance costs of $13,292................... 143,750     561,708        --       --            --           --             --
Issuance of Series A-4 redeemable preferred stock
 in December 1994 at $4.50 per share, less
 issuance costs of $6,587.........................  82,378     364,114        --       --            --           --             --
Issuance of common stock in exchange for services
 from January 1995 through December 1995 at
 prices ranging from $.40 to $.50 per share.......      --          --    14,086    6,873            --           --          6,873
Issuance of common stock from July 1995 through
 November 1995 at $.50 per share..................      --          --     2,400    1,200            --           --          1,200
Exercise of stock options.........................      --          --     2,375      950            --           --            950
Repurchase of common stock........................      --          --    (6,667)     (67)           --           --            (67)
Issuance of Series A-4 redeemable preferred stock
 in January 1995 at $4.50 per share, less issuance
 costs of $3,583..................................  18,417      79,295        --       --            --           --             --
Issuance of Series A-5 redeemable preferred stock
 from March 1995 through May 1995 at $5.00
 per share, less issuance costs of $13,227........ 154,000     756,773        --       --            --           --             --
Issuance of Series A-6 redeemable preferred stock
 in June 1995 at $6.00 per share, less issuance
 costs of $15,572.................................  85,000     494,428        --       --            --           --             --
Net loss from inception through
 December 31, 1995................................      --          --        --       --    (3,764,539)          --     (3,764,539)
Accretion of redeemable preferred stock...........      --      22,078        --       --       (22,078)          --        (22,078)
</TABLE>
<PAGE>

                                Solopoint, INC.
                         (a development stage company)
              STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
         AND SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY) (CONTINUED)

<TABLE>
<CAPTION>
                                          REDEEMABLE                                     DEFICIT                         TOTAL
                                          CONVERTIBLE                                  ACCUMULATED       NOTES        SHAREHOLDERS'
                                        PREFERRED STOCK           COMMON STOCK          DURING THE     RECEIVABLE      EQUITY (NET
                                       --------------------    ----------------------   DEVELOPMENT       FROM           CAPITAL
                                       SHARES      AMOUNT       SHARES        AMOUNT       STAGE       SHAREHOLDERS    DEFICIENCY)
                                       -------  -----------    ---------     --------  ------------   ------------    -------------
<S>                                    <C>      <C>            <C>         <C>      <C>            <C>              <C>
Balance at December 31, 1995...........  595,585 $ 2,798,513    425,164    $  17,852    $ (3,786,617)  $                $(3,768,765)
 Exercise of stock options.............       --          --     26,141       11,281              --             --          11,281
 Repurchase of common stock............       --          --    (52,813)        (528)             --             --            (528)
 Conversion of A-6 to A-7
  redeemable preferred stock...........   17,000          --         --           --              --             --              --
 Issuance of common stock at $.50
  per share............................       --          --     11,000        5,500              --             --           5,500
 Issuance of Series A-7 redeemable
  preferred stock for bridge notes
  in February 1996.....................  286,600   1,433,000         --           --              --             --              --
 Issuance of Series A-7 redeemable
  preferred stock from February
  1996 through March 1996 at
  $5.00 per share, less issuance
  costs of $18,843.....................  239,500   1,178,657         --           --              --             --              --
 Issuance of common stock for notes
  receivable...........................       --          --    315,000      157,500              --       (157,500)             --
 Issuance of redeemable preferred
  stock in exchange for services
  from January 1996 through July
  1996.................................    8,004      40,000         --           --              --             --              --
 Issuance of Series A-7 redeemable
  preferred stock in March 1996 at
  $5.00 per share in exchange for
  interest payable.....................    6,753      33,767         --           --              --             --              --
 Accretion of redeemable preferred
  stock................................       --      11,040         --           --         (11,040)            --         (11,040)
 Issuance of common stock in
  exchange for services for 1996.......       --          --     16,302       26,767              --             --          26,767
 Issuance of common stock in
  exchange for bridge note.............       --          --    300,000    1,500,000              --             --       1,500,000
 Issuance of common stock in
  exchange for interest associated
  with bridge note.....................       --          --      2,544       12,720              --             --          12,720
 Shares repurchased....................   (5,000)    (20,000)   (42,000)     (63,000)             --             --         (63,000)
 Conversion of redeemable preferred
  stock to common stock upon
  public offering in August 1996......(1,148,442) (5,474,977) 1,148,442    5,474,977              --             --       5,474,977
 Issuance of common stock upon the
  initial public offering net of
  issuance costs of $1,483,064.........       --          --  1,350,000    5,266,936              --             --       5,266,936
 Net loss..............................       --          --         --          --       (3,593,612)            --      (3,593,612)
                                       ---------  ----------  ---------  -----------    ------------      ---------     -----------
Balance at December 31, 1996...........       --          --  3,499,780   12,410,005      (7,391,269)      (157,500)      4,861,236
 Exercise of stock options.............       --          --        390        1,831              --             --          1,831
 Issuance of common stock in exchange
  for services for 1997................       --          --      5,648       12,000              --             --         12,000
 Proceeds from note receivable from
  shareholders.........................       --          --         --           --              --         72,000         72,000
 Net loss..............................       --          --         --           --      (4,675,379)            --     (4,675,379)
                                       ---------  ----------  ---------  -----------    ------------      ---------     -----------
Balance at December 31, 1997...........       --  $       --   3,505,818  $12,423,836   $(12,066,648)      $(85,500)    $  271,688
                                       =========  ==========  ==========  ===========   ============       ========     ===========
</TABLE>

                            See accompanying notes

<PAGE>

                                SoloPoint, Inc.
                         (a development stage company)

                           STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                                               PERIOD FROM
                                                                                                              MARCH 26, 1993
                                                                                YEAR  ENDED DECEMBER 31,       (INCEPTION)
                                                                              ----------------------------       THROUGH
                                                                                  1997           1996       December 31, 1997
                                                                              -------------  -------------  ------------------
<S>                                                                           <C>            <C>            <C>
OPERATING ACTIVITIES
Net loss....................................................................   $(4,675,379)   $(3,593,612)       $(12,033,530)
Adjustments to reconcile net loss to net cash used in operating activities:
 Common stock and preferred stock issued for services.......................        12,000         66,767              90,700
 Common stock and preferred stock issued for interest payable...............            --         46,487              49,832
 Depreciation and amortization..............................................       114,867        105,556             320,141
 Provision for inventory reserves...........................................       600,000             --             600,000
 Changes in operating assets and liabilities:
  Accounts receivable.......................................................       164,330       (327,916)           (163,586)
  Inventories...............................................................      (168,275)      (479,060)         (1,003,529)
  Other assets..............................................................      (277,956)       (23,872)           (313,499)
  Accounts payable and other................................................       399,975        (50,786)            678,380
  Accrued compensation......................................................      (104,578)       114,019              54,815
                                                                               -----------    -----------        ------------
Net cash used in operating activities.......................................    (3,935,016)    (4,142,417)        (11,720,276)
INVESTING ACTIVITIES
Acquisitions of furniture and equipment.....................................       (98,336)      (104,273)           (464,361)
Loan to shareholder.........................................................            --             --             (35,000)
Payment received from shareholder...........................................            --          1,500               1,500
Deposits and other assets...................................................            --         (9,997)            (38,107)
                                                                               -----------    -----------        ------------
Net cash used in investing activities.......................................       (98,336)      (112,770)           (535,968)
FINANCING ACTIVITIES
Proceeds from convertible notes payable to shareholders.....................            --             --           1,120,000
Proceeds from convertible notes payable.....................................            --      1,500,000           1,813,000
Proceeds from notes payable.................................................            --         90,386             191,496
Principal payments on capital lease obligation..............................       (41,446)       (11,737)            (67,578)
Proceeds from sale of preferred stock, net of issuance costs................            --      1,178,657           3,951,622
Proceeds from note receivable from shareholders.............................        72,000             --              72,000
Issuance of common stock, net of repurchases................................         1,831      5,233,689           5,241,562
                                                                               -----------    -----------        ------------
Net cash provided by financing activities...................................        32,385      7,990,995          12,322,102
                                                                               -----------    -----------        ------------
Net increase  (decrease) in cash............................................    (4,000,967)     3,735,808              65,858
Cash at beginning of period.................................................     4,066,825        331,017                  --
                                                                               -----------    -----------        ------------
Cash at end of period.......................................................   $    65,858    $ 4,066,825        $     65,858
                                                                               ===========    ===========        ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
 Interest...................................................................   $    43,057    $    33,831        $     82,923
                                                                               ===========    ===========        ============
 Income taxes...............................................................   $       800    $       800        $      6,400
                                                                               ===========    ===========        ============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
Equipment acquired under capital lease financing............................   $        --    $        --        $     14,397
                                                                               ===========    ===========        ============
Conversion of preferred stock to common stock...............................   $        --    $ 5,474,977        $  5,474,977
                                                                               ===========    ===========        ============
Accretion of preferred stock................................................   $        --    $    11,040        $     33,118
                                                                               ===========    ===========        ============
Common stock issued for note receivable from shareholder....................   $        --    $   157,500        $    157,500
                                                                               ===========    ===========        ============
Common and preferred stock forfeited for note receivable....................   $        --    $    33,500        $     33,500
                                                                               ===========    ===========        ============
Conversion of notes payable to common stock.................................   $        --    $ 1,500,000        $  1,500,000
                                                                               ===========    ===========        ============
Conversion of notes payable to preferred stock..............................   $        --    $ 1,433,000        $  1,433,000
                                                                               ===========    ===========        ============
</TABLE>
                             See accompanying notes
<PAGE>

                                SOLOPOINT, INC.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS


NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Organization

  SoloPoint, Inc. (the "Company") was incorporated on March 26, 1993. The
Company changed its name from SoHo Networks, Inc. to SoHo Communications, Inc.
in September 1993 and from SoHo Communications, Inc. to SoloPoint, Inc. in
October 1995. The Company designs, develops and markets personal communications
management solutions that connect people more effectively. Through December 31,
1995, the Company was active in product development, financial planning, the
acquisition of facilities and equipment, raising capital and had begun to build
inventory. The Company began shipping its first product in March 1996 with its
second product shipping in September 1996. Only limited revenues were realized
through December 31, 1996. The Company introduced additional products during
1997. During 1997 the Company made a strategic decision to shift its
distribution strategy and again realized only limited revenue for the year ended
December 31, 1997. As a result, the Company is still considered to be in the
development stage.


 Use of Estimates

  The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.


 Inventories

  Inventories consist principally of fabricated boards and integrated circuits
and are valued at the lower of cost (determined on the first-in, first-out
(FIFO) basis) or market. The Company increased its inventory reserves by
approximately $600,000 in the fourth quarter of 1997. The inventory reserve
increase was primarily related to the Company's SmartCenter C-120 product
inventory and was done principally as a result of the Company's change in
distribution strategy and the Company's lower than anticipated sales for 1997.
Realization of the value of inventories is dependent upon the Company achieving
adequate levels of revenues. Inventories at December 31, consist of the
following:

<TABLE>
<CAPTION>
                                         1997         1996
                                      -----------  -----------
<S>                                   <C>          <C>
      Raw materials..................    $213,870     $345,886
      Work-in-process................     108,953      355,236
      Finished goods.................      80,706      134,132
                                         --------     --------
                                         $403,529     $835,254
                                         ========     ========
</TABLE>

 Furniture and Equipment

  Furniture and equipment are stated at cost. Depreciation is computed using the
straight-line method over the assets' estimated useful lives of three to five
years.
<PAGE>

                                SOLOPOINT, INC.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Software Development Costs

  The Company expenses software development costs incurred prior to establishing
technological feasibility as incurred. Software development expenses that would
be capitalized pursuant to Statement of Financial Accounting Standards No. 86,
"Software Development Costs," which have been incurred after the product has
reached technological feasibility have not been material and, accordingly, have
been charged to operations as incurred.


Deposits and Other Assets

   Deposits and other assets consist principally of expenses paid related to the
Company's secondary offering of its common stock totaling $287,410 at December
31, 1997. These costs will be transferred to equity as an offset against the
proceeds from the sale of the common stock at the time of closing of the
offering, which occurred on January 14, 1998.

Revenue Recognition

  The Company's products currently have a 30-day unconditional money-back
guarantee. Revenue is recognized 30 days after the date that products are
shipped. Allowances are provided for product returns based on estimated future
product returns, the timing of expected new product introductions and other
factors. These allowances are recorded as direct reductions of revenue and
accounts receivable. The Company establishes allowances, including allowances
for stock balancing and product rotation, based upon estimated future returns of
product and after taking into account channel inventory levels, the timing of
new product introductions and other factors. While the Company maintains
measures to monitor these factors and to provide appropriate allowances, actual
product returns may differ from the Company's reserve estimates and such
differences could be material to the financial statements.

 Basic and Diluted per Share Data

  In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share" ("FAS 128"), which is required to be adopted for
the period ended December 31, 1997. FAS 128 replaced the calculation of primary
and fully diluted net income (loss) per share with the basic diluted net income
(loss) per share. Unlike primary net income (loss) per share, basic net income
(loss) per share excludes any dilutive effects of options, warrants and
convertible securities.

  In February 1998, Staff Accounting Bulletin No. 98 ("SAB 98") was issued and
amends the existing Securities and Exchange Commission staff guidance primarily
to give effect to FAS 128. Topic 4.D of SAB 98 revises the instructions
regarding the dilutive effects of stock issued for consideration below the
initial public offering ("IPO") price or options and warrants to purchase common
stock with exercise prices below the IPO price, previously referred to as cheap
stock. The new guidance highlights the treatment that should be given to the
dilutive effect of common stock or options and warrants to purchase common stock
issued for nominal consideration.

  All net loss per share amounts for all periods have been presented, and where
appropriate, restated to conform to the FAS 128 and SAB 98 requirements. Common
stock equivalent shares from stock options and warrants are not included as the
effect is anti-dilutive.

 Recently Issued Accounting Standards

   In June 1997, Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income ("SFAS 130") was issued. Under SFAS 130 all items that
meet the definition of comprehensive income will be
<PAGE>

reported in a financial statement for the period in which they are recognized.
Comprehensive income will include changes in the balances of items that are
reported directly in a separate component of shareholders' equity in the balance
sheets. The Company will make the disclosures required by SFAS 130 in the first
quarter of 1998.

  Statement of Financial Accounting standards No. 131 "Disclosure about Segments
of an Enterprise and Related Information" ("SFAS 131") was issued in June 1997.
SFAS 131 requires that a public business enterprise report financial and
descriptive information about its reportable operating segments. Generally,
financial information is required to be reported on the basis used internally
for evaluating segment performance and resource allocation. SFAS 131 is
effective for fiscal years beginning after December 31, 1997, however,
disclosure is not required in interim financial statements in the initial year
of adoption. Accordingly, the Company will make the required disclosures for the
year ending Decemebr 31, 1998.

NOTE 2. NOTES RECEIVABLE FROM SHAREHOLDERS

  The Company loaned $35,000 in cash to a shareholder in two installments in
November 1995. The notes were secured by common and redeemable convertible
preferred stock owned by the shareholder. Interest was payable bimonthly at 7%
per annum. Payments for these notes were received in August 1996 upon the
completion of the Company's initial public offering.

  In February and May 1996, the Company issued a total of 215,000 and 100,000
shares respectively, of common stock at $.50 per share to certain officers in
exchange for promissory notes totalling $107,500 and $50,000 respectively,
secured by the stock. These notes receivable are recorded as an offset to
shareholders' equity in the balance sheet. In 1997, one officer used his annual
bonus of $72,000 to pay off a portion of his note receivable. The Company also
issued 11,000 shares of common stock at $.50 per share for $5,500 in cash to a
director.

NOTE 3. NOTES PAYABLE

  In December 1995, the Company borrowed $101,110 from Venture Lending and
Leasing pursuant to a promissory note. The note is secured by the Company's
furniture and equipment. The note is due in monthly installments of $2,841 with
interest payable monthly and at specified dates at rates ranging from 12% to
15.17%. In April 1996 and June 1996 the Company borrowed an additional $45,193
and $45,193, respectively, from Venture Lending and Leasing pursuant to
promissory notes. The 1996 notes are secured by the Company's furniture and
equipment. The notes are due in monthly installments of $1,270 each with
interest payable monthly and at specific dates at a rate of 15.53%. In
connection with the loans, the Company issued to the lender a warrant to
purchase the Company's Series B redeemable convertible preferred stock in the
amount of $32,000 at a per share price equal to the most recent venture capital
equity financing after December 11, 1995. The Company's redeemable convertible
preferred stock was converted to common stock and the warrants were converted
into warrants to purchase the same number of common shares at the completion of
the Company's initial public offering in August 1996. Future maturities of notes
payable for the years ended December 31 are as follows:

<TABLE>
<CAPTION>

<S>                                             <C>
   1998........................................    $ 41,537
   1999........................................      51,078
   2000........................................      45,698
                                                   --------
                                                   $138,313
                                                   ========
</TABLE>
<PAGE>

                                SOLOPOINT, INC.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

In June 1996, the Company issued a total of $1,500,000 of convertible notes to
Ameritech and 4C Ventures. The notes accrued interest at 5.76% per annum and
were due on June 14, 1997. In connection with the issuance of these notes, the
Company also issued to the note holders warrants to purchase an aggregate of
60,000 shares of the Company's common stock at an exercise price equal to the
Company's initial public offering price. Pursuant to the convertible notes and
warrant agreements, the Company appointed one representative from each of the
two convertible note holders to the Company's Board of Directors. These notes
were converted to 300,000 shares of common stock in connection with the
Company's initial public offering.

NOTE 4. CONVERTIBLE NOTES PAYABLE TO SHAREHOLDERS

  In October and November 1995, the Company borrowed $1,120,000 from certain
existing preferred and common shareholders and $313,000 from others in exchange
for promissory notes and warrants to purchase $286,000 of the Company's Series
A-7 redeemable convertible preferred stock at an exercise price per share
equivalent to the Series A-7, redeemable convertible preferred stock issuance
price. The notes were unsecured with interest at 5.75% per annum.

  In February 1996, the notes were converted into 286,600 shares of Series A-7
redeemable convertible preferred stock (see Note 6). At the completion of the
Company's initial public offering, the warrants to purchase Series A-7 preferred
stock were converted into warrants to purchase the same number of common shares.

NOTE 5. INCOME TAXES

  As of December 31, 1997, the Company had federal and state net operating loss
carryforwards of approximately $6,000,000. The Company also had federal and
state research and development tax credit carryforwards of approximately
$100,000 and $150,000, respectively. The net operating loss carryforwards will
expire at various dates beginning in 1998 through 2012, if not utilized.

  Utilization of the net operating losses and credits is subject to a
substantial annual limitation due to the ownership change limitations provided
by the Internal Revenue Code of 1986 and similar state provisions. The annual
limitation may result in the expiration of net operating losses and credits
before utilization.

  Deferred income taxes reflect the net tax effects of carryforwards and
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets at December 31, are
as follows:

<TABLE>
<CAPTION>
                                                        1997            1996
                                                    -----------      -----------
   <S>                                              <C>              <C>
   Deferred tax assets:
     Net operating loss carryforwards.............  $ 2,500,000      $ 1,500,000
     Research credits.............................      200,000          133,000
     Capitalized research costs...................    1,900,000        1,383,000
     Other........................................      400,000           36,000
                                                    -----------      -----------
   Total deferred tax assets......................    5,000,000        3,052,000
   Valuation allowance for deferred tax assets....   (5,000,000)      (3,052,000)
                                                    -----------      -----------
   Net deferred tax assets........................  $        --      $        --
                                                    ===========      ===========
</TABLE>

  The valuation allowance increased by $1,948,000 and $1,552,000 for 1997 and
1996, respectively.
<PAGE>

                                SOLOPOINT, INC.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 6. SHAREHOLDERS' EQUITY

  In February 1996, the Company amended its Articles of Incorporation to
increase the number of shares of authorized common and preferred stock to
35,000,000 and 25,000,000, respectively. The Company then issued 624,855 shares
of Series A-7 preferred stock at $5.00 per share, in exchange for cash of
$1,200,500 and cancellation of $1,433,000 of convertible notes payable plus
$30,770 of accrued interest. Investors purchasing Series A-7 preferred shares
for cash were issued a warrant to purchase 50% of the number of shares they
purchased resulting in the issuance of warrants for 120,500 shares of Series A-7
preferred stock at an exercise price of $5.00 per share. Holders of convertible
notes payable who converted their notes into Series A-7 preferred and purchased
shares of Series A-7 preferred for cash as requested by the Company, were issued
additional warrants to purchase the number of shares of Series A-7 preferred
stock that when combined with the warrants previously issued in connection with
the convertible promissory notes, equaled 50% of the number of shares of Series
A-7 preferred purchased in the financing by cash or cancellation of
indebtedness. This resulted in the issuance of warrants to purchase an
additional 66,900 shares of Series A-7 preferred stock at $5.00 per share. As
part of the Series A-7 financing, 76,667 shares of Series A-6 preferred stock
were converted into 92,000 shares of Series A-7 preferred stock.

  In connection with the completion of the Company's initial public offering in
August 1996, all of the shares of preferred stock were converted into shares of
common stock and the warrants to purchase Series A-7 preferred stock converted
into warrants to purchase common stock.

  In July 1996 the Company amended its Articles of Incorporation to reduce the
number of shares of authorized preferred stock to 5,000,000 and to effect a one
for ten reverse stock split. All share and per share information has been
restated to reflect the reverse stock split.


 Preferred Stock

  The Board of Directors has the authority to issue up to 5,000,000 shares of
undesignated preferred stock and to determine the rights, preferences,
privileges and restrictions of such shares without any further vote or action by
the shareholders. At December 31, 1997, no shares of preferred stock are issued
and outstanding.

 Employee Stock Option Plan

  The Company's 1993 Incentive Stock Plan (the Plan) provides for the grant of
incentive stock options and nonstatutory stock options to employees, directors
and consultants of the Company. Incentive stock options may be granted at prices
ranging from 100% to 110% (depending on the type of grant) of the fair market
value of the common stock on the date of grant as determined by the Board of
Directors. The price for nonstatutory stock options is determined by the Board
of Directors. The options generally vest at a rate of 25% one year after the
grant date and one-forty eighth every month thereafter. The vesting and exercise
provisions of the option grants are determined by the Board of Directors.
<PAGE>

                                SOLOPOINT, INC.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

  Activity under the Plan was as follows:

<TABLE>
<CAPTION>
                                                                           Options Outstanding
                                                                    ---------------------------------
                                                                                       WEIGHTED
                                                                       NUMBER      AVERAGE EXERCISE
                                                                     OF SHARES           PRICE
                                                                    ------------  -------------------
<S>                                                                 <C>           <C>
Balance at March 26, 1993.........................................           --                 $ --
      Granted.....................................................       64,700                 $ .40
                                                                       --------
Balance at December 31, 1994......................................       64,700                 $ .40
      Granted.....................................................       62,300                 $ .50
      Exercised...................................................       (2,375)                $ .40
                                                                       --------
Balance at December 31, 1995......................................      124,625                 $ .45
      Granted.....................................................      161,667                 $3.07
      Exercised...................................................      (26,141)                $ .44
      Canceled....................................................      (75,060)                $ .46
                                                                       --------
Options outstanding at December 31, 1996..........................      185,091                 $2.77
      Granted.....................................................      536,911                 $1.30
      Exercised...................................................         (390)                $ .50
      Canceled....................................................     (267,363)                $2.90
                                                                       --------
Options outstanding at December 31, 1997..........................      454,249                 $ .97
                                                                       ========
Shares available for grant at December 31, 1997...................      320,531
                                                                       ========
Outstanding options exercisable at December 31, 1997..............       72,663
                                                                       ========
</TABLE>

  In January 1997, holders of qualified and nonqualified stock options were
given the opportunity to exchange their existing options for an equivalent
number of similar stock options at an exercise price of $2.375 per share, the
then fair market value. A total of 34,500 options with exercise prices of $2.75
to $4.25 per share were exchanged.  In December 1997, under a similar exchange
program, option holders were given an opportunity to exchange common stock
options for new options with an exercise price of $0.875 per share. A total of
103,625 options with exercise prices ranging from $1.75 to $2.813 per share were
exchanged. The exchanged options are included in grants and cancellations.

 Stock-based Compensation

  As permitted under FASB No. 123, "Accounting for Stock-based Compensation"
("FASB 123"), the Company has elected to follow Accounting Principles Board
Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25") in
accounting for stock-based awards to employees. Under APB 25, the Company
generally recognizes no compensation expense with respect to such awards.

  Pro forma information regarding net income and earnings per share is required
by FASB 123 for awards granted after December 31, 1994 as if the Company had
accounted for its stock-based awards to employees under the fair value method of
FASB 123. The fair value of the Company's stock-based awards to employees was
estimated using a Black-Scholes option pricing model. Limitations of the
effectiveness of the Black-Scholes option valuation model are that it was
developed for use in estimating the fair value of traded options which have no
vesting restrictions and are fully transferable and that the model requires the
use of highly subjective assumptions including expected stock price volatility.
Because the Company's stock-based awards to employees have characteristics
significantly different from those of traded options and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its stock-based awards to employees. The
Company's plan awards employee stock options, ("Options"), at time of hire and
occasionally as incentive awards. The fair value of the Company's stock-based
awards to employees for the years ended December 31, was estimated assuming no
expected dividends and the following weighted-average assumptions:

<TABLE>
<CAPTION>
             OPTIONS TO PURCHASE COMMON STOCK         1997         1996
             --------------------------------      -----------  ----------
<S>                                                <C>          <C>
          Expected life (in years)................       4.00        4.00
          Expected volatility.....................       1.39        0.70
          Risk free interest rate.................       6.34%       6.45%
          Fair value..............................      $ .76       $1.44
</TABLE>
<PAGE>

                                SOLOPOINT, INC.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
                                         OPTIONS OUTSTANDING                    OPTIONS EXERCISABLE
                           -----------------------------------------------  ----------------------------
                                       WEIGHTED AVERAGE
                                           REMAINING
        RANGE OF           NUMBER OF       CONTRACT       WEIGHTED AVERAGE  NUMBER OF   WEIGHTED AVERAGE
     EXERCISE PRICE          SHARES      LIFE IN YEARS     EXERCISE PRICE     SHARES     EXERCISE PRICE
-------------------------  ----------  -----------------  ----------------  ----------  ----------------
<S>                        <C>         <C>                <C>               <C>         <C>
     $ .40-$ .85               48,188               7.94             $0.47      25,415             $ .46
     $.875-$1.88              355,661               9.46             $0.88      39,848             $ .875
     $2.13-$4.25               50,400               9.35             $2.15       7,400             $2.328
                              -------                                           ------
                              454,249                                           72,663
                              =======                                           ======
</TABLE>

  Pro Forma Disclosure

  Had compensation cost for the Company's stock option plan been determined
consistent with FASB No. 123, the Company's reported net loss of $4,675,379 and
net loss per share of $1.33 for the year ended December 31, 1997, would have
been increased to $4,764,193 and $1.36, respectively, on a pro forma basis. The
Company's reported net loss of $3,593,612 and net loss per share of $1.46 for
the year ended December 31, 1996, would have been increased to $3,622,790 and
$1.47, respectively, on a pro forma basis. The effects of these pro forma
disclosures are not representative of the pro forma effects on future periods
because they only include options granted in 1994 and subsequent years.

 Warrants

  In connection with a debt financing agreement entered into in November 1993,
the Company issued warrants to purchase 8,570 shares of Series A-2 preferred
stock at $3.50 per share. The warrants are currently exercisable, subject to
certain antidilution provisions and expire ten years after the date of grant. As
of December 31, 1997 the Company had issued 6,400 warrants to a third party at
an exercise price of $5.00 per share as part of an equipment financing
agreement. In connection with the Series A-7 redeemable convertible preferred
financing agreement the Company issued warrants to purchase 244,270 shares of
Series A-7 preferred stock at $5.00 per share between August 1995 and March
1996. In connection with a bridge note, entered into in June 1996, the Company
issued warrants to purchase 60,000 shares of common stock at $5.00 per share. In
connection with the Company's initial public offering, in August 1996, the
Company issued warrants to purchase 135,000 shares of common stock at $6.00 per
share. Upon the closing of the Company's initial public offering on August 6,
1996 all warrants to purchase preferred stock became exercisable for an
equivalent number of shares of common stock at an identical per share exercise
price.

  Warrants outstanding at December 31, 1997 are as follows:

<TABLE>
<CAPTION>
                                                              EXERCISE
                                                NUMBER OF      PRICE
                TYPE OF SHARES                    SHARES     PER SHARE         EXPIRATION DATE
                --------------                  ----------  ------------       ---------------
      <S>                                       <C>         <C>           <C>
      Common..................................       8,570     $3.50           November 2003
      Common..................................       6,400     $5.00           December 2005
      Common..................................     244,270     $5.00           August 1999-March 2000
      Common..................................      60,000     $5.00           June 2000
      Common..................................     135,000     $6.00           August 2000
</TABLE>

  The Company believes that the value of these warrants at the date of issuance
was not material and no value has been attributed to them in these financial
statements.
<PAGE>

                                SOLOPOINT, INC.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Common Stock Reserved

  As of December 31, 1997, the Company has reserved shares of common stock for
future issuance as follows:
<TABLE>
      <S>                                           <C>
      Warrants....................................      454,240
      Stock option plan...........................      774,780
                                                      ---------
                                                      1,229,020
                                                      =========
</TABLE>

NOTE 7. RETIREMENT PLAN

  The Company has a deferred compensation plan for all full-time employees which
qualifies under Section 401(k) of the Internal Revenue Code. Participants can
contribute up to 20% of their annual salary up to a maximum of $9,500 for the
year ended December 31, 1997. The Plan provides for discretionary employer
contributions to the Plan. As of December 31, 1997 there have been no employer
contributions to the Plan.

NOTE 8. COMMITMENT AND CONTINGENCIES

  The Company leases its facilities under a noncancelable operating lease that
expires on September 30, 1998. The lease is renewable at the Company's option
for one additional year. Total rent expense for the years ended December 31,
1997 and 1996 was $110,973 and $116,000, respectively. Future minimum lease
payments under the noncancelable facilities lease total $66,986.

  The Company has received notification from various parties regarding patent
matters in the normal course of business activities. In management's opinion,
resolution of these matters is not expected to have a material adverse impact on
the Company's results of operations or its financial position. However,
depending on the amount and timing, an unfavorable resolution of a matter could
materially affect the Company's future results of operations or cash flows in a
particular period.

NOTE 9. MAJOR CUSTOMERS

  During the year ended December 31, 1997, two customers accounted for
approximately 31% and 24% of net revenues.

NOTE 10. SUBSEQUENT EVENTS

   On January 14, 1998 the Company completed a secondary offering of 4,800,000
shares of its common stock. The offering was completed at a stock price of $1.00
per share. The net proceeds of the offering were approximately $3,520,000.
<PAGE>

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

  Not applicable

ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

  Information required by this item will be contained in the Company's Notice of
1997 Annual Meeting of Shareholders and Proxy Statement, pursuant to Regulation
14A, to be filed with the securities and Exchange Commission within 120 days
after December 31, 1997. Such information is incorporated herein by reference.

ITEM 10.   EXECUTIVE COMPENSATION

  Information required by this item will be contained in the Company's Notice of
1998 Annual Meeting of Shareholders and Proxy Statement, pursuant to Regulation
14A, to be filed with the securities and Exchange Commission within 120 days
after December 31, 1997. Such information is incorporated herein by reference.

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  Information required by this item will be contained in the Company's Notice of
1998 Annual Meeting of Shareholders and Proxy Statement, pursuant to Regulation
14A, to be filed with the securities and Exchange Commission within 120 days
after December 31, 1997. Such information is incorporated herein by reference.

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  Information required by this item will be contained in the Company's Notice of
1998 Annual Meeting of Shareholders and Proxy Statement, pursuant to Regulation
14A, to be filed with the securities and Exchange Commission within 120 days
after December 31, 1997. Such information is incorporated herein by reference.
<PAGE>

ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K

  (a)  Documents filed as part of this report:

       1.    Exhibits

             The following exhibits are filed as part of, or incorporated by
             reference into, this report.

<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                                          DESCRIPTION OF DOCUMENTS
--------                                         ------------------------
<C>       <S>
  * 3.1   Company's Articles of Incorporation, as currently in effect.
  * 3.2   Company's Bylaws, as currently in effect.
  * 4.1   Specimen Certificate of Company's Common Stock.
  * 4.2   Form of Representative's Warrant.
  * 4.3   Amended and Restated Information and Registration Rights Agreement (included in Exhibit 10.9).
  * 4.4   Form of Series A-2 Preferred Stock Warrant and Warrant Amendment Agreement.
  * 4.5   Form of Series A-7 Preferred Stock Warrant.
  * 9.1   Voting Agreement (included in Exhibit 10.9).
  *10.1   Multi-Tenant Net Lease Agreement dated August 24, 1995, between the Company and Dell
          Enterprises, as amended.
  *10.2   Form of Indemnification Agreement.
  *10.3   Purchase Agreement dated December 18, 1995, by and between Ameritech Corporation and the
          Company.
  *10.4   Supplier Agreement dated February 22, 1996, by and between Hello Direct, Inc. and the Company.
  *10.5   Amended and Restated 1993 Incentive Stock Plan.
  *10.6   1995 Profit Sharing 401(k) Plan.
  *10.7   Employment Letter dated October 26, 1995, between the Company and Edward M. Esber, Jr.
  *10.8   Loan Agreement dated as of December 11, 1995, between SoloPoint, Inc. and Venture Lending &
          Leasing, Inc.
  *10.9   Bridge Loan and Warrant Purchase Agreement dated June 14, 1996, by and between Ameritech
          Corporation, 4C Ventures, L.P., and the Company, including a Security Agreement, a Patent Security
          Agreement, a Voting Agreement, an Amended and Restated Information and Registration Rights
          Agreement, Warrants and Secured Convertible Promissory Notes.
  *10.10  Employment Letter dated February 1, 1996, between the Company and Arthur Chang.
  *10.12  Agreement dated June 14, 1996 by and between Ameritech Corporation and the Company.
 **10.13  Employment Letter dated October 8, 1996, between the Company and Ronald J. Tchorzewski.
***10.14  Line of Credit Agreement with Silicon Valley Bank dated February 7, 1997.
  +10.15  Product Referral Agreement dated May 1, 1997 amongst the Company, Pacific Bell and Pacific
          Bell Information Services.
   23.1   Consent of Ernst & Young LLP, Independent Auditors.
   24.1   Power of Attorney included on the signature page of this Form 10-KSB.
   27.1   Financial Data Schedule.
</TABLE>

*   Incorporated by reference to the same-numbered exhibit in Registrant's
    Registration Statement on Form SB-2, (No. 333-5056-LA), declared effective
    by the Securities and Exchange Commission on August 6, 1996.

**  Incorporated by reference to the same-numbered exhibits in Registrant's Form
    10-KSB (No. 000-21037) filed with the Securities and Exchange Commission on
    March 31, 1997.

*** Incorporated by reference to the same-numbered exhibit in Registrant's Form
    10-QSB (No. 000-21037) filed with the Securities and Exchange Commission on
    May 15, 1997.

  + Incorporated by reference to the same-numbered exhibit in Registrant's
    Registration Statement on Form SB-2 (No. 333-33263), filed with the
    Securities and Exchange Commission on January 9, 1998.

  (b)  Reports on Form 8-K:

       No reports on Form 8-K were filed during the quarter ended December 31,
       1997.
<PAGE>

                                   SIGNATURES

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

                                  SOLOPOINT, INC.
                                  a California Corporation


                                 By: /s/ Arthur G. Chang
                                     _______________________________________
                                     Arthur G. Chang
                                     President and Chief Executive Officer

                                  Date: March 30, 1998

                               POWER OF ATTORNEY

  KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Arthur G. Chang and Ronald J. Tchorzewski,
jointly and severally his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendment to this
Report on Form 10-KSB, 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 each of said attorneys-in-fact, or his
substitute or substitutes, may or cause to be done by virtue hereof.

  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
         SIGNATURE                             TITLE                         DATE
         ---------                             -----                         ----
<S>                           <C>                                       <C>

 /s/  Edward M. Esber, Jr.    Chairman of the Board of Directors        March 30, 1998
----------------------------
    Edward M. Esber, Jr.

/s/ Ronald J. Tchorzewski     Chief Financial Officer and Vice          March 30, 1998
----------------------------  President of Finance
   Ronald J. Tchorzewski      (Principal Financial and Accounting
                              Officer)

  /s/ Arthur G. Chang         President and Chief Executive Officer     March 30, 1998
----------------------------
      Arthur G. Chang

  /s/  Charlie Bass           Director                                  March 30, 1998
----------------------------
       Charlie Bass

  /s/  Patrick Grady          Director                                  March 30, 1998
----------------------------
       Patrick Grady

  /s/ Giuliano Raviola        Director                                  March 30, 1998
----------------------------
      Giuliano Raviola

    /s/ Charles Ross          Director                                  March 30, 1998
----------------------------
        Charles Ross
</TABLE>