SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For the fiscal year ended:                              Commission file number:
    December 31, 1998                                           0-28138

                          SPANLINK COMMUNICATIONS, INC.

      Minnesota                                          41-1618845
(State of Incorporation)                    (I.R.S. Employer Identification No.)

                             7125 Northland Terrace
                          Minneapolis, Minnesota 55428
                    (Address of principal executive offices)

                    Issuer's telephone number: (612) 971-2000

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

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

                      Common Stock, no par value per share

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 __

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  [X]

State issuer's revenues for its most recent fiscal year: $11,083,239.

State the aggregate market value of the voting stock (Common Stock) held by
non-affiliates of the registrant based on the closing average price as reported
by The Nasdaq SmallCap Market on March 22, 1999: $7,894,931.63.*

As of March 22, 1999, 5,107,739 shares of the registrant's Common Stock were
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company's 1998 Annual Report are incorporated by reference into
Items 6 and 7 of Part II. Portions of the Company's definitive Proxy Statement
for the Annual Meeting of Shareholders to be held May 12, 1999 are incorporated
by reference into Items 9, 10, 11 and 12 of Part III.

Transitional Small Business Disclosure Format (check one): Yes _ No X

----------------
*Shares of Common Stock held beneficially by affiliates, i.e., directors,
executive officers and persons known to own beneficially in excess of 5 percent
of the Common Stock have been excluded in calculating this value.


<PAGE>


                                     PART I

Unless the context indicates otherwise, all references to the "Company" or the
"Issuer" in this Annual Report on Form 10-KSB relate to Spanlink Communications,
Inc.

The following United States registered trademarks appear in this Annual Report
on Form 10-KSB and are owned by the Company: Spanlink, ExtraAgent, FastCall, and
PRODiag. WebCall is a registered trademark in the United Kingdom.

ITEM 1.  DESCRIPTION OF BUSINESS

General Development

The Company designs, develops and markets computer telephony software and
services that help automate the customer interaction process in call centers
using technologies which link business computer systems, telecommunications
systems and the Internet. The Company has been shifting its focus from
developing custom software for interactive communications systems to developing
configurable software packages. These packages can be configured to meet the
needs of particular customers or markets without modifying the underlying
computer programming. The Company's software employs touch tone, speech
recognition, or dial-pulse recognition to allow consumers to use a telephone,
rather than a company sales or service agent, to bank by phone, place a catalog
order, temporarily suspend newspaper deliveries, obtain up-to-date stock quotes,
check on airline arrivals and departures and provide callers alternatives to
waiting on hold. The software also provides an integration availability between
telephone systems and a company's host computer system that allow a screen full
of information to "pop" up on a customer service agent's computer monitor. In
addition, one of the Company's products can facilitate telephone communication
between a user of the Internet's World Wide Web and a company's sales and
service agents.

In December 1997, the Company acquired the FastCall product line, including all
intellectual property and intangible assets, from Aurora Systems, Inc., a
subsidiary of Comdial Corporation. The acquisition will be paid for by royalties
on future product revenues.

Using the Company's products, a business can allow its customers to interact
with its computer system via the telephone, a fax machine or an Internet Web
browser, or talk to a live "call center" agent when required. (A call center is
a group of employees, called agents, dedicated to handling a high volume of
incoming or outgoing calls). Spanlink products also assist the call center agent
in handling the call efficiently. Products include the EXTRAAGENT and FASTCALL
product families as well as SELECTSOLUTIONS which provides custom interactive
computer telecommunications software applications utilizing the Company's core
software modules. In addition, the Company provides professional software
services, including consulting, training, system integration, customization of
its configurable software packages and maintenance.

The Company's strategy is to develop configurable software packages which meet a
significant portion of the needs of a variety of interactive computer
telecommunications markets. The Company plans to use these standard products as
a foundation on which the Company, with a limited amount of additional work, can
build application packages specific to its target markets. The Company's current
target markets are call centers, newspapers and financial institutions. In
addition, these configurable software packages can be modified to meet the
particular needs of an individual customer within that market. For example, the
Company's ExtraAgent product, which streamlines telephone calls into a call
center, is used across a wide variety of industries. In the newspaper market,
the Company has enhanced ExtraAgent to allow customers to report a delivery
problem or temporarily stop their newspaper service. Historically, the Company
has relied significantly on the marketing and distribution network of Lucent

<PAGE>

Technologies, Inc. (Lucent) to deliver its products and services into the
marketplace. In 1997 and 1998, the Company expanded and strengthened its own
direct sales force to focus on strategic accounts. The Company has created
distribution agreements with telephone and data processing dealers and alliances
with original equipment manufacturers where appropriate. Over the past five
years, the interactive computer telecommunications industry has begun to emerge
as a major component of the communications industry. Based on information
provided by Frost & Sullivan, an independent research organization, the Company
believes that the interactive voice response (IVR) market is approximately $580
million and the computer telephony integration (CTI) market is approximately
$379 million. According to Frost & Sullivan, expected growth rates for the IVR
and CTI markets are approximately 17.5% and 16.1%, respectively.

The Company has sold over 1,000 of its configurable software packages and has
designed and developed SelectSolutions for more than 180 customers in the United
States, Germany, the United Kingdom, the Netherlands, Spain, Belgium, Mexico and
Canada. The Company's products are installed in numerous government agencies and
corporations such as Cargill, Citibank, Eli Lilly, Knight-Ridder, Minneapolis
Star Tribune, Mobil, Northern States Power Company, Panasonic, Pepsico,
Prudential, Shell Oil, Toro, United Air Lines and USA Today. However, the
Company has no long-term sales agreements with any of these entities, and there
can be no assurance that any future sales will be made to these customers.

The Company began operations and was incorporated under the laws of the state of
Minnesota in August 1988. The Company's principal office is located at 7125
Northland Terrace, Minneapolis, Minnesota 55428, its home page can be located on
the Internet at "http://www.spanlink.com" and its telephone number is (612)
971-2000.

Primary Products

All of the Company's products share an open, modular architecture and the same
system software. This allows the Company to assemble different products into a
computer telephony system to meet the needs of a particular customer. The
Company's software operates in combination with a variety of other telephone
systems, networks, LANs and host computers to allow businesses to improve their
services and typically lower operational costs.

Although subject to many variations, a call from a consumer to a business using
the Company's Computer Telephony Integration (CTI) server might adhere to the
following scenario. When a consumer places a call, it passes through the public
telephone network to the business' PBX/ACD system. The PBX/ACD directs the call
to the CTI server, where the Company's software collects the caller's telephone
number from the public telephone network and accesses the host computer or LAN
servers to obtain consumer information and determines how to manage the call. If
no agents are currently available, the Company's software will give the consumer
an estimate of how long the consumer will have to wait and a list of options.
These options might include leaving a message for immediate or later call back,
choosing the music on hold or transacting business using a touch tone keypad or
by speaking commands. If the caller chooses to wait or leaves a message, the
Company's software directs the information collected from the telephone network,
ACD or computer system to the personal computer of an available call center
agent, along with the call. Since the agent has the consumer information on the
display, the service to the consumer can be delivered more quickly than if the
call center agent were required to ask the consumer these questions first.

As demonstrated by the example, the Company's computer telephony applications
may employ any or all of voice messaging, interactive voice response (IVR),
computer telephone integration (CTI) and Internet technologies and interface
with the public telephone network, telephone systems and computer systems. The
Company has developed a number of applications that interface with a wide
variety of PBX/ACD Systems using standard telephony interfaces (Analog, T-1,
PRI) and protocols (TSAPI, TAPI, ASAI, ISDN, Digital Telephone Set emulation).

<PAGE>

The Company has developed solutions to work with a variety of PBX/ACDs,
including Lucent Technologies, Nortel, Rockwell, and Siemens Business
Communications. The Company also has developed applications that interface with
various computer systems from manufacturers such as IBM, Digital Equipment,
Hewlett Packard, Sun Microsystems, Unisys, NCR and a variety of network servers.
The Company has experience utilizing various network interfaces (Ethernet, Token
Ring, BISYNC, SDLC, RS-232, X.25) as well as various communication and network
protocols (TCP/IP, IPX/SPX, 3270 and 5250 terminal emulation, SNA, Sockets, RPC,
FTP, Asynch).

The Company believes that its competitors typically focus on one or perhaps two
stand-alone computer technologies like voice messaging, IVR, CTI and the
Internet. These technologies generally operate independently and therefore offer
a limited range of services. Voice messaging vendors are focused on recognizing
the number dialed, answering the call with an appropriate personal greeting and
taking a message. In general, voice messaging does not recognize information
about who is calling or the status of the call center and cannot access a
company computer system to enter and retrieve information or digitally instruct
the PBX where to route a call. IVR applications allow callers to enter or
retrieve information from a business computer system but do not normally
recognize information about who is calling, why they are calling or the status
of the call center. IVR is typically not capable of digitally instructing the
PBX where to route a call and normally has limited or no voice message recording
capabilities. CTI applications derive information from the PBX about the caller
and the status of the call center and from the business computer system to
determine where to route a call. CTI is normally capable of digitally
instructing the PBX where to route a call and the computer system where to route
call related information. It is not usually capable of asking questions of the
caller if more information is required, taking a message or providing an
automated transaction. World Wide Web vendors typically integrate with business
computer systems but have no integration with the PBX or call center. The
Company believes that its ability to utilize all of these technologies and to
integrate them into configurable software packages provides greater customer
service at a reduced cost, resulting in a competitive advantage for the Company.

The Company has three main types of interactive software products: the
ExtraAgent family (which includes ExtraAgent, WebCall, FastPoint applications);
FastCall (which includes the FastCall and FastCall Central applications); and
SelectSolutions. These products can be combined in a single interactive computer
telecommunications system that utilizes voice messaging, IVR, CTI and the
Internet. A typical sale ranges from $30,000 to $200,000, although a large
customer sale could exceed $500,000.

EXTRAAGENT FAMILY

ExtraAgent is a configurable software package which increases productivity and
customer satisfaction in a call center by combining IVR, CTI and voice messaging
technologies to enhance a telephone system's automatic call distribution
capability. The software provides "extra agents" which can handle routine
transactions by allowing callers to use automated features during peak business
hours, resulting in a more even flow of calls for the human agents in a call
center. ExtraAgent has multilingual capabilities and has been sold to customers
in non-English speaking countries.

ExtraAgent software automatically collects the caller's telephone number using
automatic number identification ("ANI") and queries a data base to determine the
best call center agent to handle the call (for example, if the customer account
is in arrears, ExtraAgent could forward the call to a collections agent). Based
on the query, ExtraAgent will evaluate the approximate length of time the caller
may need to wait in order to be connected to a call center agent. After
providing an approximate wait time, ExtraAgent can provide tailored options to
the caller, so the caller can select the best option. When the caller is
connected with the appropriate call center agent, ExtraAgent has the capability
to send a screen of information about the caller to the agent, reducing call
time by approximately 15-20 seconds.


<PAGE>

The Company has sold ExtraAgent to a variety of organizations in its target
markets. For example, media organizations use ExtraAgent to automate some
transactions and handle calls during peak hours or when the call center is not
staffed. In a newspaper environment, subscribers can serve themselves by dialing
ExtraAgent and pressing touch tone keys or speaking commands to suspend delivery
during vacations, register service errors and request replacement papers at any
time. Financial institutions have purchased ExtraAgent to enable their customers
to perform common retail banking transactions by pressing touch tone keys or
speaking commands. For example, at the Stadtsparkasse Hanover Bank in Hanover,
Germany, customers can call the bank at anytime to check on their account
balance and transfer funds by speaking commands.

Other applications in the ExtraAgent family are WebCall and FastPoint. WebCall
integrates the Internet with a call center. Based on the Company's experience in
the telecommunications industry, including participation in industry trade shows
and conferences, the Company believes that WebCall was among the first to
successfully create a link between traditional business telephone systems and a
World Wide Web site. WebCall allows a consumer on the World Wide Web to select a
button (icon) labeled "Talk To A Real Person" and receive a return call from a
call center agent over a standard telephone. The Company believes that WebCall
benefits a variety of applications on the World Wide Web including electronic
commerce, help desk and marketing. Companies that sell products on the Internet
can use WebCall to connect the consumer to a human operator to complete a credit
card transaction and possibly sell other products. Companies that provide on
line help desks can use WebCall to connect a PC user, accessing a home page on
the World Wide Web, with a person at the Company's help desk after the agent has
analyzed the problem through background provided by WebCall. WebCall also
enables companies to better track and assess the results of marketing programs
that utilize the Internet.

FastPoint provides interactive locator services capability, such as (i)
automated attendant, a series of options that instruct the caller to press
certain numbers on a touch tone phone to be connected to various groups within a
business (for example: "to reach sales, press 1; to reach security, press 2");
(ii) phone-fax, the ability to retrieve a fax using touch tone telephone; and
(iii) service locator, which permits a caller to find the location of the
service provider closest to the caller. These applications are common elements
necessary to provide interactive voice response capability. In some cases,
FastPoint will represent the customer's entire application. In other cases it
might work in tandem with, or as a front end to, a custom application developed
around a very specific customer requirement. FastPoint includes a bundle of
common voice products, just as PC software is sold bundled with a single
software product combining many applications. FastPoint provides basic levels of
voice and fax response functionality without the time and expense of custom
programming.

FASTCALL

FastCall is a Windows-based software package that provides a broad range of
Computer Telephone Integration (CTI) functionality at call center agent desktop
personal computers. FastCall uses a patented "middleware" architecture to link
telephony input with both desktop and client server applications. This approach
allows the agent to enable these applications with inbound and outbound CTI
capabilities, without computer code changes within the application itself. These
so-called "screen pops" populate a call center agent's Windows-based application
screen based on the calling number (ANI), called number (DID, DNIS, ACD group,
or other telephone system identifier), or the caller's touch tone input as the
incoming call is received. These applications could include databases, help desk
packages, sales force automation programs, personal information managers (PIMs),
contact managers, word processors, spreadsheets, customized inquiry systems, or
a combination.


<PAGE>

FastCall is designed for small and large call centers, such as help desks,
telemarketing centers, customer service departments, technical support groups,
payroll and benefits hot lines, legal and financial institutions, and consulting
consortiums. These applications, ideal for "telephony-enabling", have been
rapidly migrating from desktop video terminals to the Microsoft Windows
environment. FastCall can cost-effectively enhance call center agent
productivity without extensive hardware and software overhauls or agent
retraining. In addition, FastCall eliminates the traditional barriers to
implementing CTI solutions by providing a configurable, off-the-shelf package.

FastCall Central is a stand-alone routing package based on the FastCall CTI
application. FastCall Central provides intelligent host-based or table-driven
call routing, directing calls to the proper call center groups or agents based
on customer database information. The package uses ODBC technology, an industry
standard used by database software companies.

SELECTSOLUTIONS

The Company develops customized interactive computer telecommunications software
which it refers to as "SelectSolutions." This portion of the Company's business
enables the Company to create direct customer relationships and apply industry
experience to develop additional configurable software packages for specific
industries. SelectSolutions has provided the foundation for many of the
Company's configurable software packages. By retaining ownership of its software
application source code, the Company builds its library of reusable software
modules which can be incorporated into future products, thereby reducing the
cost and time necessary to develop new configurable software packages. The
Company believes that this product line provides a strategic asset to the
Company and its marketing strategy.

CUSTOMER SUPPORT

Once the Company's products are installed, the Company typically provides
ongoing technical assistance for the life of the system. Technical support
representatives provide technical diagnosis, consulting and engineering support
through the Company's 24-hour customer service center. The Company also provides
remote on-line diagnosis. The Company's products are sold with a limited 90 day
software warranty and one-year hardware warranty, commencing on the date of
acceptance. Technical assistance after the warranty period must be purchased as
part of a separately priced maintenance contract. To date, warranty claims have
been negligible.

MAINTENANCE

After the expiration of the warranty, customers may purchase a renewable
maintenance contract for either software or hardware or both. These contracts
enable customers to continue to access the Company's customer service center.
Post warranty hardware maintenance is provided on a time and materials basis
through company employees and third party maintenance providers. The Company has
no written agreements with these maintenance providers.


<PAGE>

PROACTIVE DIAGNOSTICS

PROdiag, the Company's proactive diagnostics package, performs on-line
monitoring and alarm notification of the Company's interactive computer
telecommunications server by performing a series of tests to ensure error-free
operation. PROdiag's diagnostics identify trends that indicate a degradation in
application performance. Upon the discovery of a condition that could result in
system failure, an alarm alerts the Company's technical support center for
remote diagnosis and repair in the event of a system failure. In addition,
PROdiag is capable of reporting functions for notification of error conditions,
status, report of tests, actions taken and results. Notification or reporting of
potentially unstable conditions minimizes potential downtime of the system.

CONSULTING AND PROFESSIONAL SERVICES

The Company offers a variety of consulting and professional services, including
project and system management, application and human factors. Application
consultants with technical engineering expertise survey and analyze the computer
and telephone infrastructure of a business and recommend interactive computer
telecommunications solutions. The Company believes that these consulting
services enable the Company to introduce its products to potential customers.
Through human factors consulting, the Company assists a business in the
assessment of the ease with which callers can use a business' interactive
computer telecommunications system. Businesses purchasing project management
services retain the Company to monitor and control complex development projects
and the installation of interactive computer telecommunications solutions.
Customers not only purchase project management services in connection with the
purchase of SelectSolutions, but also in connection with the purchase of the
Company's configurable software packages.

HARDWARE SALES

The Company's products utilize the Intuity Platform, a hardware and base
software system manufactured by Lucent. Although the Intuity Platform is premium
priced, the Company has sold this platform to both large and small customers. In
connection with the sale of its software, the Company also sells the necessary
hardware to those organizations requiring the equipment. Currently, most of the
Company's customers who purchase an initial system through the Company's direct
sales force also purchase hardware. Hardware sales as a percentage of total
revenues increased in 1998 due to the Company's higher level of business from
its direct sales force, a large hardware order received in the fourth quarter of
1998, and a higher level of hardware upgrades purchased by the Company's
customers. Customers that purchase hardware through the Company receive the
equipment manufacturer's warranty which is generally one year. The Intuity
Platform is generally available from a number of different Lucent distributors.
The Company does not anticipate any difficulty in obtaining the Intuity
Platform.

The Company has also introduced its own hardware line, the Gemstone system,
based on components available from Lucent Technologies. This platform provides
the Company a private-labeled offering and serves as an entry point into
non-Lucent accounts.

COMPETITION

The market for computer telephony products is intensely competitive and
characterized by rapid, technological change. The Company believes that
competition in this market is likely to persist and to intensify as a result of
increasing demand for interactive computer telecommunications products. The
Company's principal competitors include Brite Voice Systems, Edify, Intervoice,
Periphonics, Syntellect and large diversified companies such as Lucent
Technologies and IBM for which interactive computer telecommunications systems
are a small portion of their overall business. Other competitors focusing on CTI
applications, such as Davox, Genesys Labs, and Quintus/Nabnasset also compete

<PAGE>

with the company's line of interactive computer telecommunications products.
Although the Company has an OEM relationship with Lucent Technologies, Lucent
Technologies also markets some software products not manufactured by the Company
which could compete with the Company's products. Substantially all of the
Company's principal competitors have greater financial, marketing, service,
support, technical and other competitive resources than the Company.

Ongoing research and product development for interactive computer
telecommunications products is widespread, and as a result, the Company does not
know the full extent of its competition or the stage of its competitors' product
development. In the future, the Company also may face competition from these and
other parties that develop interactive computer telecommunications products.
There can be no assurance that the market for interactive computer
telecommunications products will not ultimately be dominated by strategies other
than those employed by the Company.

The Company believes that the principal competitive factors affecting the market
for interactive computer telecommunications products include the ease of
implementation, flexibility, expansion of customer service provided and cost
savings resulting from improved operational efficiency. The Company believes
that the Company's customer base will broaden as a result of the benefits
provided by its packaged products developed for growing telecommunications
markets. However, there can be no assurance that the Company can maintain its
competitive position against current and potential competitors, especially those
with significantly greater resources.

Current and potential competitors have established or may in the future
establish cooperative relationships to increase the ability of their products to
address the interactive computer telecommunications needs of the Company's
prospective customers. Accordingly, it is possible that new competitors or
alliances may emerge and rapidly acquire significant market share. If this were
to occur, the financial condition or results of operations of the Company could
be materially adversely affected.

MARKETING AND SALES

The Company markets its products in North America through its direct sales force
and pursuant to agreements with Lucent Technologies, Inc. The Company has
identified the following target markets on which it focuses its direct marketing
and sales activities:

o    Call centers such as customer service centers, catalog order centers,
     ticket reservation centers and businesses such as service bureaus.

o    Media markets such as newspapers, cable, television and radio
     organizations.

o    Healthcare markets such as HMOs, PPOs, dental insurance and other insurance
     coverage organizations in the health care field.

o    Financial institutions such as banks, credit unions, mortgage banks and
     diversified financial service organizations.

o    Manufacturers with dealer distribution networks such as lawn and garden,
     construction, electronic and other consumer products.

o    Human resources, with the Company's SurveyPower and HireSolution
     applications which aid in call center agent hiring, performance
     measurement, and retention.

In addition, the Company plans to continue to sell its products through its
relationships with Lucent and its network of telephone and data processing
dealers and original equipment manufacturers, such as business systems hardware
and software manufacturers as well as other PBX manufacturers.


<PAGE>

The Company's direct sales employees solicit prospective customers and provide
technical advice and support with respect to the Company's products. During
1998, the Company focused its marketing and sales efforts on enhancing its sales
organization to call directly on system users in its target markets, and on
developing marketing alliances to aid in distribution of the Company's products.

The Company's marketing strategy is to target and penetrate specific markets by
selling and marketing broad based configurable software packages in order to
meet the initial needs of a large group of customers quickly and efficiently. In
addition, the Company intends to market and sell industry specific configurable
software packages to each target market to increase penetration and market
share. The Company also plans to utilize SelectSolutions to customize value
added applications for customers in each target market, thereby increasing
penetration and market share.

LUCENT TECHNOLOGIES RELATIONSHIPS

Since 1989, the Company has worked together in a variety of relationships with
various units of AT&T and its successor Lucent Technologies, Inc., to develop
software, distribute interactive computer telecommunications products, transfer
technology and co-market. The Company currently develops its software products
to operate on the Intuity Platform and has an agreement to purchase Lucent
hardware and system software at discounts. The Company utilizes Lucent services
at times to repair and upgrade Lucent products that have been sold by the
Company. As a result of these relationships the Company has been able to broaden
its distribution of products, accelerate the development of products and
generate revenues and profits from the sale of its products. Total revenues from
Lucent were approximately $4,957,000 and $3,693,000 for the years ended December
31, 1998 and 1997, respectively, which represented 45% and 56% of total revenues
for 1998 and 1997, respectively.

The Company's business relationships with Lucent Technologies fall into three
main categories - Voice Processing Co-Marketer (VPC), Independent Software
Vendor (ISV) and Software Licenser. As a VPC, the Company has access to Lucent
proprietary technology and services, receives volume purchase discounts on
hardware and system software and marketing and selling relationships with Lucent
sales and marketing for purposes of selling Company products. The Company is one
of three companies who have been named "co-marketers with distinction" certified
to handle Lucent's advanced speech technologies such as speech recognition and
ISDN network integration. This relationship is valuable to the Company for
purposes of selling software products to end customers where Lucent PBX products
are installed and where the Intuity Platform is utilized as part of a customer
system. The Company acquires the Intuity Platform at a discount, installs its
software products and resells the hardware and software to the end customer at a
price equal to cost plus a profit margin.

As an Independent Software Vendor (ISV), the Company provides development
services as ordered by Lucent. The Company's right to provide development
services as an ISV is non-exclusive. Lucent may contract with others to procure
the same or comparable services and no minimum amount of work is guaranteed to
the Company. If the Company develops an application for a Lucent customer, which
requires further modification, Lucent has agreed to solicit the Company's
services provided the customer has been satisfied with the Company's services.
The Company has agreed not to contact Lucent's customers directly. This program
provides a method for the Company to distribute its software products and
services through Lucent to end customers. Usage rights for the developed
software are licensed to Lucent and the end customer for purposes of support.
Rights to the source code, design and materials remain the property of the
Company.

The Company has developed and provides to Lucent for distribution two
configurable call center software packages. The Company provides a license to
Lucent to distribute the software in return for royalty payments to the Company.

<PAGE>

The royalty payments will vary based on the number of copies of the software
sold. Lucent is not required to make any minimum royalty payments nor is Lucent
restricted from offering comparable products. The Company also directly
distributes these call center software packages via its direct sales force and
through other dealers.

One current configurable software package offering incorporates the ability to
communicate in 12 languages and can be sold on a global basis. Since 1993, over
1,300 copies of this call center software package have been sold and installed
by Lucent Technologies.

Research and Product Development

The Company spent $1,282,549 in 1998 and $1,463,905 in 1997 on research and
product development. Prior to 1996, the majority of the Company's research and
product development efforts were funded through the design of customized
products for its customers and have been included in cost of revenues. The
Company intends to fund research and product development efforts independently
through internally generated funds, as well as through customizing products for
its customers. The Company is conducting research into new products and
technologies including voice processing and computer telephony integration
product extensions.

Backlog

The Company fills hardware and packaged software orders as they are received.
Accordingly, the Company periodically has experienced month to month
fluctuations in its net sales due to the receipt or lack of such orders in
particular months. The Company has experienced and may in the future experience
periods in which low unit volume could result in operating losses.

The Company fills orders for custom software and professional services, which
are designed to the customer's specifications and requirements by Company
engineers, according to the customer's schedule, subject to the availability of
engineers to work on the project. On December 31, 1997, the Company had a
backlog of approximately $814,000 of custom software and professional services
orders which were filled in 1998. By December 31, 1998, the backlog of custom
software and professional services orders had increased to $962,000, which the
Company expects to fill during 1999.

Government Regulation

The Company currently is not subject to direct regulation by any government
agency, other than regulations applicable to businesses generally.

Intellectual Property Rights

The Company's policy is to own most software it has developed for its customers.
The Company believes that its success is dependent, in part, upon its
proprietary software and telecommunications technology. The Company relies on
trademark, copyright and trade secret laws, employee and third-party
non-disclosure agreements and other methods to protect its proprietary rights.
There can be no assurance that these agreements will not be breached, that the
Company will have adequate remedies for any breach, or that the Company's trade
secrets will not otherwise become known to or independently developed by
competitors.

The Company acquired three patents in connection with the acquisition of the
FastCall product line from Aurora Systems, Inc. which relate to aspects of the
FastCall software.

The Company is not aware of any violation of proprietary rights claimed by any
third party relating to the Company or the Company's products. Because the
computer technology market is characterized by frequent and substantial

<PAGE>

intellectual property litigation, there can be no assurance that the Company
will not become involved in such litigation in the future to either enforce or
defend its intellectual property rights. Intellectual property litigation is
complex and expensive, and the outcome of such litigation is difficult to
predict. There can be no assurance that the Company will have the funds
necessary to defend or pursue such litigation.

Employees

At December 31, 1998, the Company employed 95 employees, of which 91 are full
time. No employee of the Company is represented by a labor union or is subject
to a collective bargaining agreement. The Company believes it maintains good
relations with its employees.

ITEM 2.  DESCRIPTION OF PROPERTY

The Company currently leases 26,993 square feet for its office and warehouse
facilities located at 7125 Northland Terrace, Minneapolis, Minnesota under a
lease which will terminate on July 1, 2002. Annual rental costs are
approximately $245,000 over the term of the lease. Rent expense for the years
ended December 31, 1998 and December 31, 1997 was $243,747 and $229,242,
respectively.

ITEM 3.  LEGAL PROCEEDINGS

The Company is not involved in any pending or, to its knowledge, threatened
material litigation.

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

None.


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a)      Market Information

The Company's common stock trades on The Nasdaq SmallCap Market under the symbol
SPLK. The following table shows the range of high and low quotations for the
Company's Common Stock on Nasdaq SmallCap Market for the fiscal quarters
indicated, as reported by Nasdaq. The quotations

<PAGE>


represent prices in The Nasdaq SmallCap Market between dealers in securities,
and do not include retail mark-up, mark-down or commission, and may not
represent actual transactions.

             1998                                 High               Low
             ----                                 ----               ---
             First Quarter                        3                  2
             Second Quarter                       3 3/4              2 3/4
             Third Quarter                        4 1/4              2 1/2
             Fourth Quarter                       4 1/8              3 1/8

             1997                                 High               Low
             ----                                 ----               ---
             First Quarter                        3 5/8              2 3/4
             Second Quarter                       3                  2 1/8
             Third Quarter                        3                  1 3/4
             Fourth Quarter                       2 7/8              2

(b)      Approximate Number of Holders of Common Stock

                                           Approximate Number of Record Holders
             Title of Class                         as of March  19, 1999)
             --------------                ------------------------------------
             Common Stock, No par value                         64*

* In addition to the record holders, the Company has approximately 1,500 holders
who hold the Company's Common Stock in nominee name and/or street name brokerage
accounts.

(c)      Dividends

The Company has not paid any dividends on its Common Stock, and the Board of
Directors intends to retain earnings for the foreseeable future for use in the
expansion of the Company's business.



<PAGE>


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The information contained under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's 1998
Annual Report to Shareholders is hereby incorporated by reference and included 
in Exhibit 13.2 hereto.

ITEM 7.  FINANCIAL STATEMENTS

The following financial statements of the Company are incorporated herein by
reference from the Company's 1998 Annual Report, and included in Exhibit 13.1 of
this document:

         (i)    Report of Independent Accountants dated February 12, 1999
         (ii)   Balance Sheet as of December 31, 1998 and 1997
         (iii)  Statement of Operations for the years ended December 31, 1998 
                and 1997
         (iv)   Statement of Shareholders' Equity for the years ended December 
                31, 1998 and 1997
         (v)    Statement of Cash Flows for the years ended December 31, 1998 
                and 1997
         (vi)   Notes to Financial Statements

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

None.


                                    PART III

ITEM 9.  DIRECTORS,  EXECUTIVE OFFICERS,  PROMOTERS AND CONTROL PERSONS;  
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

The information contained under the headings "Election of Directors," "Executive
Officers of the Company," and "Section 16(a) Reporting" in the Company's
definitive proxy statement for its annual meeting of shareholders to be held May
12, 1999, is hereby incorporated by reference.

ITEM 10. EXECUTIVE COMPENSATION

The information contained under the heading "Executive Compensation" in the
Company's definitive proxy statement for its annual meeting of shareholders to
be held May 12, 1999, is hereby incorporated by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information contained under the heading "Security Ownership of Certain
Beneficial Owners and Management" in the Company's definitive proxy statement
for its annual meeting of shareholders to be held May 12, 1999, is hereby
incorporated by reference.



<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information contained under the heading "Certain Transactions" in the
Company's definitive proxy statement for its annual meeting of shareholders to
be held May 12, 1999, is hereby incorporated by reference.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) The following portions of Item 13 are submitted as separate sections of this
report:

                (1)-List of financial statements
                (2)-List of exhibits
                (3) -Exhibits

(b)  Reports on Form 8-K

      No reports on Form 8-K were filed during the quarter ended December 31,
1998.


<PAGE>


                                   SIGNATURES

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


                                      SPANLINK COMMUNICATIONS, INC.

March 30, 1999                        /s/ Brett A. Shockley     
                                      Brett A. Shockley, Chairman, President,
                                      Chief Executive Officer and Director

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


Signature                          Title                             Date


/s/ Brett A. Shockley         Chairman, President, Chief          March 30, 1999
Brett A. Shockley             Executive Officer and Director
                              (Principal Executive Officer)


/s/ Timothy E. Briggs         Vice President Finance, Chief       March 30, 1999
Timothy E. Briggs             Financial Officer
                              (Principal Financial and
                              Accounting Officer )


/s/ Loren A. Singer, Jr.      Secretary, Director                 March 30, 1999
Loren A. Singer, Jr.


/s/ Bruce E. Humphrey         Director                            March 30, 1999
Bruce E. Humphrey


                              Director                           March ___, 1999
Thomas F. Madison

                              Director                           March ___, 1999
Joseph D. Mooney



<PAGE>


                          SPANLINK COMMUNICATIONS, INC.

                         EXHIBIT INDEX TO ANNUAL REPORT
                                 ON FORM 10-KSB
                   For the Fiscal Year Ended December 31, 1998


Exhibit
Number         Description

3.1      First Restatement of Articles of Incorporation of small business issuer
         (incorporated by reference to Exhibit 3.1 to the Registration Statement
         on Form SB-2, Commission File No. 333-2022-C).

3.2      Bylaws of small business issuer (incorporated by reference to Exhibit
         3.2 to the Registration Statement on Form SB-2, Commission File No.
         333-2022-C).

4.1      Specimen of Common Stock Certificate (incorporated by reference to
         Exhibit 4.1 to the Registration Statement on Form SB-2, Commission File
         No. 333-2022-C).

4.2      Form of Subscription and Investment Representation Agreement; Form of
         Lock-up Agreement (pursuant to Section 7 of the Subscription and
         Investment Representation Agreement) (incorporated by reference to
         Exhibit 4.2 to the Registration Statement on Form SB-2, Commission File
         No. 333-2022-C).

4.3      Form of Bridge Note (incorporated by reference to Exhibit 4.3 to the
         Registration Statement on Form SB-2, Commission File No. 333-2022-C).

4.4      Form of Bridge Warrant (incorporated by reference to Exhibit 4.4 to the
         Registration Statement on Form SB-2, Commission File No. 333-2022-C).

10.1     Letter of Credit Agreement between Inacom, Inc. and the Company dated
         January 10, 1996; Personal Guaranties of Brett A. Shockley, Loren A.
         Singer, Jr., and Todd A. Parenteau dated January 11, 1997 (incorporated
         by reference to Exhibit 10.2 to the Registration Statement on Form
         SB-2, Commission File No. 333-2022-C).

10.2     Software Development Agreement between AT&T and Spanlink
         Communications, Inc. dated January 28, 1994; Amendment dated February
         15, 1997 (incorporated by reference to Exhibit 10.4 to the Registration
         Statement on Form SB-2, Commission File No. 333-2022-C).

10.3     Limited Source Code License Agreement between AT&T and Spanlink
         Communications, Inc. dated May 4, 1993 (incorporated by reference to
         Exhibit 10.5 to the Registration Statement on Form SB-2, Commission
         File No. 333-2022-C).

10.4     Escrow Agreement between AT&T, All-Data, Inc. and Spanlink
         Communications, Inc. dated March 1, 1994 (incorporated by reference to
         Exhibit 10.6 to the Registration Statement on Form SB-2, Commission
         File No. 333-2022-C).

10.5     Software Modification Agreement between AT&T and Spanlink
         Communications, Inc. dated May 4, 1993 (incorporated by reference to
         Exhibit 10.7 to the Registration Statement on Form SB-2, Commission
         File No. 333-2022-C).

10.6     Certification Agreement for Resale of AT&T Voice Processing Products by
         Authorized Voice Processing Co-Marketer with Distinction between the
         Global Business Communications Systems unit of AT&T and Spanlink
         Communications, Inc. dated July 29, 1993; Amendment dated November 30,
         1993 (incorporated by reference to Exhibit 10.8 to the Registration
         Statement on Form SB-2, Commission File No. 333-2022-C).


<PAGE>

10.7     Agreement between NCR GmbH and Spanlink Communications, Inc. dated
         March 18, 1994 (incorporated by reference to Exhibit 10.9 to the
         Registration Statement on Form SB-2, Commission File No. 333-2022-C).

10.8     Maintenance Agreement between State of New York Department of Labor and
         Spanlink Communications, Inc. dated May 6, 1993; Renewal Agreement
         dated February 13, 1996 (incorporated by reference to Exhibit 10.10 to
         the Registration Statement on Form SB-2, Commission File No.
         333-2022-C).

10.9     Office Lease Agreement between Spanlink Communications, Inc. and Ryan
         Companies US, Inc. dated December 6, 1997 (incorporated by reference to
         Exhibit 10.11 to the Company's Annual Report on Form 10-KSB for the
         year ended December 31, 1996).

10.10    Employment Agreement between Spanlink Communications, Inc. and Patrick
         P. Irestone dated September 23, 1994; Amendment dated January 31, 1997
         (incorporated by reference to Exhibit 10.12 to the Registration
         Statement on Form SB-2, Commission File No. 333-2022-C).*

10.11    Office Lease Agreement between Spanlink Communications, Inc. and
         Riverplace Inc. dated August 8, 1994 (incorporated by reference to
         Exhibit 10.13 to the Registration Statement on Form SB-2, Commission
         File No. 333-2022-C).

10.12    Spanlink Communications, Inc. 1996 Omnibus Stock Plan (incorporated by
         reference to Exhibit 10.14 to the Registration Statement on Form SB-2,
         Commission File No. 333-2022-C).

10.13    Spanlink Communications, Inc. 1998 Employee Stock Purchase Plan
         (incorporated by reference to Exhibit 10.15 to the Company's Annual
         Report on Form 10-KSB for the year ended December 31, 1997).*

10.14    Software Acceptance and Distribution Agreement between the Company and
         Lucent Technologies, Inc. dated December 31, 1996 (incorporated by
         reference to Exhibit 10.16 to the Company's Annual Report on Form
         10-KSB for the year ended December 31, 1997).


<PAGE>

10.15    Software Co-Marketing Agreement between the Company and Lucent
         Technologies, Inc. dated December 31, 1996 (incorporated by reference
         to Exhibit 10.17 to the Company's Annual Report on Form 10-KSB for the
         year ended December 31, 1997).

10.16    Continuation Agreement between the Company and Lucent Technologies,
         Inc., which amends the Software Modification Agreement between the
         Company and AT&T dated May 4, 1993 (incorporated by reference to
         Exhibit 10.18 to the Company's Annual Report on Form 10-KSB for the
         year ended December 31, 1997).

10.17    FastCall Purchase Agreement between the Company and Aurora Systems,
         Inc. dated December 31, 1997 (incorporated by reference to Exhibit
         10.19 to the Company's Annual Report on Form 10-KSB for the year ended
         December 31, 1997).

10.18    Separation Agreement and Release between the Company and Patrick P.
         Irestone dated July 15, 1997 (incorporated by reference to Exhibit
         10.20 to the Company's Annual Report on Form 10-KSB for the year ended
         December 31, 1997).*

10.19    Amendment No. 1 to Software Acceptance and Distribution Agreement
         between the Company and Lucent Technologies, Inc. dated June 23, 1998.

10.20    Amendment No. 2 to Software Acceptance and Distribution Agreement
         between the Company and Lucent Technologies, Inc. dated August 6, 1998.

10.21    Agreement for Resale of Lucent Technologies Interactive Voice Response
         between Lucent Technologies, Inc., the Company and Inacom
         Communications, Inc. dated June 5, 1998.

10.22    Second Renewal Agreement dated July 24, 1998 to the Maintenance
         Agreement between the State of New York Department of Labor and the
         Company.

10.23    Letter Agreement Regarding $1,000,000 Line of Credit and $1,000,000
         Promissory Note between the Company and Marquette Capital Bank, N.A.,
         each dated April 30, 1998.

13.1     Audited Financial Statements.

13.2     Portion of the 1998 Annual Report containing Management's Discussion
         and Analysis.

23.1     Consent of PricewaterhouseCoopers LLP.

24.1     Power of Attorney (included in the signature page to the Form 10-KSB).

27.1     Financial Data Schedule; included in electronic filing only.

* Management contract or compensatory arrangement.