Management's Discussion and Analysis
of Financial Condition and Results of Operations

         RESULTS OF OPERATIONS
         The following table sets forth, for the periods indicated, certain
items from the Company's statement of operations, expressed as a percentage of
total revenues:


Year ended December 31,                                 1998       1997
----------------------------------------------------- --------- -----------
Revenues                                                100%       100%
Cost of revenues                                        45.5       42.8
----------------------------------------------------- --------- -----------
Gross profit                                            54.5       57.2
Operating expenses:
     Sales, general and administrative                  40.1       68.7
     Research and product development                   11.6       22.1
----------------------------------------------------- --------- -----------
          Total operating expenses                      51.7       90.8
Income (loss) from operations                            2.8      (33.6)
Interest income (expense)                                (.4)       1.3
----------------------------------------------------- --------- -----------
Income (loss) before income taxes                        2.4      (32.3)
Provision for income taxes                               --        --
Net income (loss)                                        2.4      (32.3)%
----------------------------------------------------- --------- -----------


         YEARS ENDED DECEMBER 31, 1998 AND 1997
         Revenues

         Total revenues increased 67% from $6,637,018 in 1997 to $11,083,239 in
1998. All product lines reflected strong growth in 1998, with the largest gains
from packaged (configurable) software, hardware and services. The Company's
revenues are derived primarily from the sale of hardware, packaged
(configurable) software, custom software and services. The software component
(including both packaged and custom software) increased 65% from $3,485,157 in
1997 to $5,741,492 in 1998. The software increase was attributable to a
significant increase in the number of packaged software products sold as well as
a higher level of custom software revenue. The sales increase in packaged
software is partially due to the success of the Company's continued focus on
selling packaged solutions to its customers. The hardware component of revenue
increased 98% from $1,670,028 in 1997 to $3,311,817 in 1998. The hardware
revenue increase was primarily due to a large hardware sale in the Company's
fourth quarter, together with an increase in customer demand for hardware
upgrades related to Year 2000 compliance. The Company anticipates, but can
provide no assurance, that revenues from packaged software will continue to
increase as a percentage of total revenues and that custom software revenues
will continue to decrease as a percentage of total revenues over the next
several years. Services revenue increased 37% from $1,481,833 in 1997 to
$2,029,930 in 1998.

         Cost of Revenues
         Cost of revenues increased 78% from $2,842,424 in 1997 to $5,047,616 in
1998. The increase was due primarily to the increased sales levels together with
the higher percentage of hardware revenue.

         Gross Profit
         Gross profit increased 59% to $6,035,623 in 1998 from $3,794,594 in
1997. Gross profit as a percentage of total revenues decreased to 55% in 1998
from 57% in 1997. The decrease resulted in part from higher levels of hardware
revenue which generally have a lower gross profit percentage. Gross profit as a
percentage of total revenue will vary from period to period depending on the
product mix of sales revenue.

         Sales, General and Administrative
         Sales, general and administrative expenses decreased 3% in 1998 to
$4,440,679 from $4,562,239 in 1997. Sales, general and administrative expenses
as a percentage of total revenues were 40% in 1998, down from 69% in 1997. The
decrease as a percentage of total revenues resulted from the Company's higher
revenue levels achieved with comparable expenditures.


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         Research and Product Development
         Research and product development expenses decreased 12% in 1998 to
$1,282,549 from $1,463,905 in 1997. Research and product development expenses as
a percentage of total revenues were 12% in 1998 and 22% in 1997. A portion of
the Company's custom software development efforts are included in cost of
revenues and are essentially customer sponsored product development expenses.
Accordingly, the Company's total research and development efforts are greater as
a percentage of total revenues than the amounts indicated above.

        Research and product development expenses are charged to operations as
incurred. Costs, otherwise capitalizable, also have been expensed because they
have been insignificant or the timing of realization is not determinable. The
Company expects the dollar amount of product development expenses to increase,
although such expenses as a percentage of total revenues will vary from period
to period.

        Net Interest Income
        The Company recorded net interest expense of $48,442 for the year ended
December 31, 1998, versus net interest income of $86,020 for the comparable
period in 1997. The change was attributable to borrowings on the Company's bank
credit line to support increased working capital needs primarily resulting from
the Company's revenue growth. Interest income in 1997 and 1998 resulted from
investment of the cash proceeds from the Company's initial public offering
completed in the second quarter of 1996.

       Income Tax Provision
       The Company did not record a tax benefit for the year ended December 31,
1998 or December 31, 1997, as the likelihood of realization of the benefit is
presently not assured.

       Net Income (Loss)
       The Company realized net income of $263,953 in 1998 compared with a net
loss of $2,145,530 in 1997. The 1997 loss was due primarily to high operating
expenses relative to the revenue levels the Company was able to achieve. The
Company initiated an expense reduction plan at mid-year 1997. That expense
reduction, in addition to increased revenues, allowed the Company to
significantly improve its operating performance in the second half of 1997 and
in 1998.

       Impact of Inflation
       The Company believes that generally, inflation has no appreciable effect
on the Company's operations.

       Liquidity and Capital Resources
       The Company had cash and cash equivalents of $161,558 as of December 31,
1998, a decrease of $542,100 from December 31, 1997. The Company's cash
equivalents and marketable securities are invested primarily in short-term
obligations of government agencies, treasury notes, money market funds or
high-grade commercial paper.

       Accounts receivable were $2,871,108 at December 31, 1998 compared with
$2,113,271 at December 31, 1997. Inventory and costs and estimated earnings in
excess of billings increased from $900,347 at December 31, 1997 to $2,208,973 at
December 31, 1998. This increase reflects the higher level of jobs in process at
the end of 1998 compared to the end of 1997. Working capital at December 31,
1998 was $1,866,426. The Company currently has a $1.7 million working capital
line of credit with a bank which expires April 30, 1999. Borrowings are limited
to the lesser of $1.7 million or 80% of eligible accounts receivable. Borrowings
bear interest at 1% above the bank's prime rate (7.75% currently) and are
collateralized by all of the Company's assets. Currently, $1,685,000 is
outstanding under the line of credit. Although the Company believes that upon
the April 30, 1999 expiration of the line, the agreement will be renewed or
replaced at similar terms, there is no such assurance that such financing will
be available. The Company believes its cash and cash equivalents, together with
cash flow from operations and the additional financing described above, will be
sufficient to meet the Company's projected capital needs through 1999.


<PAGE>

       Year 2000 Compliance
       Year 2000 Background The Company's overall goal is to be Year 2000 ready.
To accomplish this goal, the Company has been addressing the issue with respect
to both its information technology (IT) and non-IT systems, as well as its
business relationships with key third parties. To be ready, the Company needs to
evaluate the Year 2000 issues and fix any problems it can so that all of its
systems and relationships will be suitable for continued use into and beyond the
Year 2000.

       The Company began addressing the Year 2000 issue in 1998 using a
multi-step approach, including inventory and assessment, remediation and
testing, and contingency planning. The Company began by assessing its major
internal software systems that were susceptible to system failure or processing
errors as a result of the Y2K issue. This phase is substantially complete. The
Company's Year 2000 efforts will also include assessment of "embedded" systems
(such as security and telephone systems, as well as heating and air conditioning
systems).

       As part of the assessment phase, the Company has also had conversations
with many of its major software and service suppliers, and has recently
initiated plans to obtain formal written assurances from such key third parties
in order to determine the extent to which the Company is vulnerable to those
third parties' failure to remediate their own Year 2000 issues. The Company has
not yet completed this part of the assessment phase and cannot predict the
outcome of other companies' remediation efforts.

       Year 2000 Costs The Company currently plans to substantially complete its
Year 2000 compliance efforts by June 30, 1999. To date, the Company has spent
only a minimal amount during the assessment phase, which essentially amounts to
purchases of software and hardware and compensation of internal employees
working on Year 2000 projects. Although the Company has not yet completed its
assessment phase, the total remaining cost of such efforts is estimated at less
than $100,000. The cost of the project and the date on which the Company plans
to complete Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events including the
availability of certain resources, third parties' Year 2000 readiness and other
factors.

       Risk Assessment Possible consequences to the Company or its business
partners not being fully Y2K compliant could include delays in the receipt of
revenues or inability to meet customer needs. These consequences could have a
material adverse impact on the Company's results of operations, financial
condition and cash flows if the Company is unable to conduct its business in the
ordinary course.

       The Company does not currently have a contingency plan but will continue
to monitor the necessity of such in 1999. If a contingency plan is reasonably
necessary, it will likely include identifying and securing alternative
suppliers, and the Company intends to have the plan substantially finalized by
June 30, 1999.


<PAGE>

       Forward-Looking Statements
       Certain statements made in this Management's Discussion and elsewhere in
the Annual Report, which are summarized here, are forward-looking statements
that involve risk and uncertainties. Actual results may differ materially from
the results anticipated by such forward-looking statements. Factors that could
cause the actual results to differ include, but are not limited to those
discussed below with respect to each forward-looking statement:

       o The Company's expectation that revenues from packaged software will
continue to increase as a percentage of total revenues while revenues from
custom software decrease as a percentage of total revenues depends upon (i)
increasing marketplace acceptance and demand of the packaged software products;
(ii) continuing ability of the Company to develop new packaged products to keep
pace with technological advancements; and (iii) availability of financing to
support marketing and distribution.

       o The 1999 introduction and success of new Company applications including
FastCall Enterprise 3.0 is subject to the risk of unanticipated problems or
delays in development and possible lack of financing to support the marketing
necessary for effective marketplace introduction. There is no assurance that
such products will be accepted in the marketplace.

       o The Company's expectation that it will continue to increase revenues
and improve operating performance is subject to the highly competitive nature of
the computer telecommunications marketplace, the Company's dependence on certain
significant customers, the loss of which would have an adverse effect on the
Company, the possibility of adverse changes in the general business and economic
environment and the availability of sufficient financing.

       o The accuracy of the Company's belief that its current capital resources
will be sufficient to fund current and anticipated business operations
throughout 1999 depends, in part, on meeting anticipated revenue goals,
operating efficiencies and effective expense management, in addition to renewal 
of the Company's bank line of credit and general and competitive conditions.

       o The impact of Year 2000 issues on the Company's business depends on the
accuracy, reliability and effectiveness of the Company's and its suppliers' and
customers' assessment and remediation of Year 2000 issues.