<PAGE>   1

             Form 10QSB for REGISTRY MAGIC INC filed on Jul 13 1998
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 

                For the quarterly period ended January 31, 1999
                                               -----------------  
[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

            For the transition period from ___________ to __________

                         Commission File Number: 0-24283

                           REGISTRY MAGIC INCORPORATED
-------------------------------------------------------------------------------
       (Exact name of Small Business Issuer as specified in its Charter)

              FLORIDA                                65-0623427
-------------------------------           ------------------------------------
(State or other jurisdiction of           (I.R.S. Employer Identification No.) 
  incorporation or organization)

         One South Ocean Boulevard, Suite 206, Boca Raton, Florida 33432
-------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (561) 367-0408
                    ----------------------------------------
                          (Issuer's telephone number)

-------------------------------------------------------------------------------
      (Former Name, former address and former fiscal year, if changed since
                                 last Report.)

         Check mark whether the Issuer (1) has filed all reports required to
befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
thepast 12 months (or for such shorter period that the registrant was required
tofile such reports), and (2) has been subject to such filing requirements
forthe past 90 days. Yes X   No

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

         Check whether the registrant filed all documents and reports requiredto
be filed by Section 12, 13 or 15(d) of the Exchange Act after thedistribution of
securities under a plan confirmed by a court. Yes No

                     APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's
classesof common equity, as of the latest practicable date: 5,813,000 shares of
CommonStock as of March 12, 1999



                                       1
<PAGE>   2

                           REGISTRY MAGIC INCORPORATED

                                      INDEX

PART 1.       FINANCIAL INFORMATION

Item 1.       Financial Statements

              Condensed Balance Sheets - January 31, 1999 (unaudited) and 
                     July 31, 1998 

              Condensed Statements of Operations (unaudited) for the Three and 
                     Six Months Ended January 31, 1999 and 1998

              Condensed Statements of Cash Flows (unaudited) for the Six
                     Months Ended January 31, 1999 and 1998

              Notes to Condensed Financial Statements

Item 2.       Management's Discussion and Analysis and Plan of
              Operation

PART II.      OTHER INFORMATION

Item 2.       Changes in Securities and Use of Proceeds

Item 6.       Exhibits and Reports on Form 8-K




                                       2
<PAGE>   3
                           REGISTRY MAGIC INCORPORATED
                            CONDENSED BALANCE SHEETS

                                             January 31, 1999     July 31, 1998
                                             ----------------     -------------
                                               (unaudited)

                               ASSETS
Current assets:   
  Cash and cash equivalents .................  $ 7,087,349         $ 10,252,511
  Accounts receivable, net...................      701,517              124,060
  Inventories, net...........................      310,918              238,494
  Other current assets  .....................       47,444               43,621
                                               -----------         -----------
              Total current assets ..........  $ 8,147,228           10,658,686

Property and equipment, net  ................      492,796              337,209
Deferred patent costs .......................       38,789               36,073
Other assets ................................       10,906               21,092
                                               -----------          -----------
                                               $ 8,689,719          $11,053,060
                                               ===========          ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued 
     liabilities ............................  $   512,726          $   708,896
   Notes payable - related party ............       50,000               50,000
                                               -----------          -----------
               Total current liabilities.....      562,726              758,896
                                               -----------          -----------

Shareholders' equity: 
 Preferred stock, $.01 par value; 5,000,000
   shares authorized; no shares 
   outstanding...............................
 Common stock, $.001 par value; 30,000,000
   shares authorized; 5,813,000 and 
   5,813,000 shares issued and
   outstanding respectively..................        5,813                5,813
   Additional paid-in capital ...............   14,013,881           14,013,881
   Accumulated deficit  .....................   (5,892,701)          (3,725,530)
                                               -----------          ----------- 
             Total shareholders' equity .....    8,126,993           10,294,164
                                               -----------          -----------
                                               $ 8,689,719          $11,053,060
                                               ===========          ===========



           See accompanying notes to condensed financial statements.



                                       3
<PAGE>   4



                           REGISTRY MAGIC INCORPORATED
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                       For the Three Months          For the Six Months
                                                         Ended January 31,            Ended January 31,
                                                     ------------------------    --------------------------
                                                        1999          1998           1999           1998
                                                     -----------   ----------    -----------     ----------
<S>                                                  <C>           <C>           <C>             <C>       
Revenues:
  Consulting fees ..............................     $        --   $  225,000    $        --     $ 338,384
  Product sales ................................         788,523           --      1,070,562
                                                     -----------   ----------    -----------     ---------
    Total income ...............................         788,523      225,000      1,070,562       338,384

Costs and expenses:  
  Cost of goods sold ...........................         228,954           --        332,649            --

  General and administrative ...................       1,020,231      311,736      1,769,686       531,748

  Research and development .....................         391,307      252,736        763,427       441,530

  Royalty expense ..............................         300,000           --        500,000            --

  Depreciation and amortization ................          49,039       23,742         89,388        43,789

Interest expense (income), net .................         (96,754)      (3,521)      (217,417)       (3,444)
                                                     -----------   ----------    -----------    ---------- 
        Total costs and expenses ...............       1,892,777      584,693      3,237,733     1,013,623
                                                     -----------   ----------    -----------    ----------
        Net loss ...............................     $(1,104,254)  $ (359,693)   $(2,167,171)   $ (675,239)
                                                     ===========   ==========    ===========    ==========
Weighted average shares 
     outstanding ...............................       5,813,000    3,882,130      5,813,000     3,882,130
Net loss per common share (basic 
     and diluted) ..............................     $      (.19)  $     (.09)   $      (.37)   $    (0.17)
                                                     ===========   ==========    ===========    ==========

</TABLE>

              See accompanying notes to condensed financial statements.



                                       4
<PAGE>   5
                           REGISTRY MAGIC INCORPORATED
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                              For the
                                                         Six months ended
                                                           January 31,
                                               ---------------------------------
                                                   1999                  1998 
                                               ------------           ----------
<S>                                              <C>                  <C>       
Operating Activities:
 Net loss ....................................   $(2,167,171)          $(675,239)
 Adjustments to reconcile net loss to
   net cash in operating activities:
 Depreciation and amortization ...............        89,388              43,789
 Stock option compensation                                                26,366
(Increase) decrease in accounts receivable ...      (577,457)              5,140
(Increase) in inventories ....................       (72,424)           (136,078)
(Increase) in other current assets ...........        (3,823)                --
Decrease (increase) in other assets ..........        10,186             (13,851)
(Decrease) increase in accounts 
  payable and accrued expenses ...............      (196,170)            103,167
(Decrease) in deferred revenue ...............            --            (237,500)
                                                 -----------           ---------
              Net cash used in operating
                 activities ..................    (2,917,471)           (884,206)
                                                 -----------           ---------
Investing Activities:
    Purchase of equipment ....................      (244,975)           (117,390)
    Proceeds from sale of equipment ..........            --               6,435
    Deferred patent costs ....................        (2,716)             (5,237)
                                                 -----------           ---------
              Net cash used in investing
                 activities ..................      (247,691)           (116,192)
                                                 -----------           ---------
Financing Activities:
    Payment of deferred offering costs .......            --             (96,096)
    Net proceeds from sale of common stock....            --             997,159
                                                 -----------           ---------
            Net cash from financing activities            --             901,063
                                                 -----------           ---------
              Net decrease in cash ...........    (3,165,162)            (99,335)
Cash beginning of period .....................    10,252,511             928,680
                                                 -----------           ---------
    Cash end of period .......................   $ 7,087,349           $ 829,345
                                                 ===========           =========
    Supplemental disclosures:
    Cash paid for interest ...................   $        76           $  17,945
                                                 ===========           =========
</TABLE>


            See accompanying notes to condensed financial statements.



                                       5
<PAGE>   6

                           REGISTRY MAGIC INCORPORATED
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

1.       BASIS OF PRESENTATION

         The accompanying condensed financial statements have been prepared
in accordance with generally accepted accounting principals for interim
financial information and with instructions to Form 10-QSB. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principals for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The results of operations
for the three-month and six-month period ended January 31, 1999 are not
necessarily indicative of the results to be expected for the year ended July 31,
1999. The condensed interim financial statements should be read in conjunction
with the audited financial statements and notes, contained in the Company's
Annual Report on Form 10-KSB for the year-end July 31, 1998.

2.       ACCOUNTS RECEIVABLE 

Accounts receivable consisted of the following:

                                          January 31, 1999
                                          ----------------

         Trade accounts receivable            $776,517
         Allowance for doubtful accounts       (75,000)
                                              --------
                  Total                       $701,517
                                              ========

Included in accounts receivable at January 31, 1999 are $200,000 of trade
receivable from Lernout and Hauspie Speech Products and $150,000 from Veritel
Corporation as part of a Joint Development Agreement.
 
3.      INVENTORIES 

Inventories are stated as the lower of cost or market. Cost is
determined using the first-in first-out method.

                                            January 31, 1999
                                            ----------------

         Computer components                    $340,918
         Allowance for obsolescence              (30,000)
                                                --------
             Total                              $310,918
                                                ========
4.       NET LOSS PER COMMON SHARE

         In February 1997, the Financial Accounting Standards Board issued
SFAS No. 128, "Earnings Per Share," which simplifies the standards for
computing earnings per share ("EPS") previously found in APB No. 15, "Earnings
Per Share," It replaces the presentation of primary EPS with a presentation
of basic EPS. It also requires dual presentation of basic and diluted EPS on
the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of the
diluted EPS computation. The Company adopted SFAS No. 128 in January 1998 and
its implementation did not have a material effect on the financial statements.




                                       6
<PAGE>   7

         Net loss per common share (basic and diluted) is based on the net
loss divided by the weighted average number of common shares outstanding during
each year.

         On February 1, 1999 the Company granted options to purchase 420,000
shares of the Company's common stock at an exercise price of $ 3.875 per share
to directors and employees of the Company. The options have been granted at
market value.

         The Company also granted options to purchase 119,600 shares of the
Company's common stock at fair market value to certain employees, pursuant to
commitment letters to such employees. 

         The Company's potentially issuable shares of common stock pursuant
to outstanding stock purchase options and warrants (totaling 1,207,876 with
prices, ranging from $0.50 to $7.00) are excluded from the Company's
diluted computation as their effect would be antidilutive to the Company's net
loss per share.

5.       COMMITMENTS AND CONTINGENCIES

         The Company has entered into a Licensing Agreement and
Distribution Agreement with Veritel Corporation. Such Agreements grant the
Company rights to use certain software object code and source code in the
development of its products in exchange for non-refundable payments totaling
$500,000 for non-recurring engineering fees, derivative rights and distribution
rights. As of January 31, 1999, the Company paid Veritel Corporation a total of
$500,000.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

         THIS ANNUAL REPORT FORM 10-QSB CONTAINS "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALL STATEMENTS,
OTHER THAN STATEMENTS OF HISTORICAL FACTS, INCLUDED IN OR INCORPORATED BY
REFERENCE INTO THIS FORM 10-QSB, ARE FORWARD-LOOKING STATEMENTS. IN ADDITION,
WHEN USED IN THIS DOCUMENT, THE WORDS "ANTICIPATE," "ESTIMATE," "PROJECT" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND
ASSUMPTIONS INCLUDING THOSE RISKS DESCRIBED IN THE COMPANY'S ANNUAL REPORT ON
FORM 10-KSB AS WELL AS IN THIS REPORT ON FORM 10-QSB SHOULD ONE OR MORE OF THESE
RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE
INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE ANTICIPATED, ESTIMATED
OR PROJECTED. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS WE INCLUDE IN
SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CANNOT ASSURE YOU THAT THESE
EXPECTATIONS WILL PROVE TO BE CORRECT.

         The following discussion and analysis should be read in conjunction 
with the financial statements of the Company and the notes thereto
appearing elsewhere.




                                       7
<PAGE>   8

OVERVIEW

         Registry Magic(R) Incorporated commercializes speech recognition
technologies through the design, development and marketing of proprietary
intellectual property, products and services. The Company's products and
technology available, or under development, allow a user to speak into a
telephone or to a computer in a natural and conversational manner. In turn,
these products listen, understand and respond by performing employee tasks,
retrieving information or processing transactions.

         The Company's technologies, products and services, among other
attributes, are designed to (i) substantially eliminate the need for telephone
touch-tone menus, (ii) allow for the automation of telephone systems
internationally where touch-tone technology may not be prevalent, (iii) reduce a
company's operational expenses by performing repetitive employee tasks or
improving employee productivity and (iv) extend the reach of the Internet, or
other databases and applications, from any telephone without having to be in
front of a personal computer or having personal computer skills.

         The Company's business strategy is to focus long-term on three distinct
business areas. These business areas include (i) the marketing of products that
reside at a customers location to produce revenue from the sale and support of
the products, (ii) the marketing of technology to original equipment
manufacturers to produce recurring royalty revenue from license fees and (iii)
the provision of a variety of services, that utilize the Company's technologies
and products, to produce revenue on a transaction or recurring basis based on
usage. These business areas are referred to as (i) product sales, (ii)
technology licensing and (iii) teleservices respectively.

         In the product sales business area, the Company has recently entered
into national distribution or "teaming" agreements with Entex Information
Services, Homisco/Voicenet, Inter-Tel Corporate, Lucent Technologies, Teleco as
well as a number of regional dealers. Certain of these distributors and dealers
have ordered or installed their "in-house" units and are working with the
Company to educate and assist their sales organizations to develop plans to
promote the product to their customers.

         In the technology licensing business area, the Company is in active
discussions with telecommunication original equipment manufacturers (OEMs) to
provide technology to "speech enable" their next generation of voicemail
systems. In addition to recurring royalty revenue, it is the objective of the
Company to receive attribution for the Company's Virtual Operator brand within
the products of these OEMs.

         In the teleservices business area, the Company launched a service
bureau offering referred to as Virtual Employee(R) Teleservices. To support this
business, the Company has entered into a subcontracting agreement which allows
the service bureau to process over one thousand calls simultaneously. The
Company has begun to provide Virtual Employee(R) teleservices to Office Depot
for catalog ordering and has begun to receive revenue on a transaction basis.
Teleservices represents a minimal amount of the Company's current revenues. The
Company is seeking to increase revenues from Internet based services in the
future.





                                       8
<PAGE>   9

         Most recently, the Company has announced relationships with a number of
industry leaders to assist with the development of the Company's future Internet
related offerings. The Company is working with Microsoft Corporation and their
new Web-based IVR technology that they intend to introduce in the future. The
Company also announced it had joined, along with sixteen other companies,
including Motorola, AT&T and Lucent Technologies, in an effort to create a
standard for speech recognition for the Internet.

          While the Company is beginning to generate limited sales revenue and
limited recurring royalty revenues, and anticipates continued increased revenues
during its 1999 fiscal year, the Company's expenses will continue to exceed
revenues for at least the remainder of the current fiscal year ending July 31,
1999. There can be no assurance that product sales, technology licensing or
teleservices will generate sufficient revenues to enable the Company to operate
profitably during its 1999 fiscal year or thereafter.

         The Company is subject to all of the risks inherent in the
establishment of a new business enterprise in an emerging technology area. To
address these risks, the Company must, among other things, continue to enhance
its technologies and products, increase the number of key customer
installations, enter into successful distribution arrangements, expand into the
international market, respond to competitive developments, and attract, retain
and motivate qualified executive and other personnel. Failure to achieve one or
more of these goals could have material adverse effect upon the Company's
business, operating results and financial condition.

RESULTS OF OPERATIONS

         Since its inception in October 1995, the Company's efforts have
been principally devoted to research, development and design of products,
marketing activities and raising capital.

         For the three months ended January 31, 1999, product sales were
$788,523 as compared to $0 for the three months ended January 31, 1998, of which
$150,000 was received from the Joint Development Agreement with Veritel
Corporation. For the six months ended January 31, 1999 product sales were
$1,070,562 as compared to $0 for the six months ended January 31, 1998, of which
$300,000 was received from the Joint Development Agreement with Veritel
Corporation as described hereafter.

         The Company entered into a Joint Development Agreement with Veritel
Corporation to develop an interface to allow certain future Company products to
be bundled with Veritel products. Veritel Corporation has agreed to pay the
Company a total of $500,000 for the development of such technologies. As of
January 31, 1999, the Company has a recorded total of $300,000 of development
fees, of which $150,000 was recorded as revenue for the quarter ended January
31, 1999. Such amounts do not represent recurring revenue.

         The Company also entered into a Virtual Operator Site Licensing
Agreement with Lernout & Hauspie Speech Products for $200,000. Such Licensing
Agreement provides to Lernout & Hauspie the right to install and use the Virtual
Operator software within an unlimited number of Lernout & Hauspie worldwide
company locations. Such amounts have been recorded as product sales as of
January 31, 1999, and do not represent recurring revenue.




                                       9
<PAGE>   10

         During this period, the Company intends to focus its efforts on
enhancing its Virtual Operator product and refining two of its telephone-based
speech recognition prototypes, Virtual Dialer(TM) and Virtual Assistant(TM),
which it intends to introduce during calendar year 1999. It will also continue
to implement its sales and marketing program for further developing distribution
network initially in North America and thereafter in South America and Europe.

         During the initial six months of the current fiscal year, unit Product
sales have consisted of the Company's Virtual Operator product, and sales of its
Virtual Operator product are expected to represent a substantial portion of the
Company's unit product sales for the remainder of the 1999 fiscal year. Sales
will be achieved primarily through the Company's telecommunications
dealer/interconnect network, telecom distributors employing their own
distribution organizations, computer/CTI distributors and their networks of
value added resellers and system integrators, and through NT Server Based
Telecommunications OEM Licensing agreements.

         For the three months ended January 31, 1999, cost of goods sold
amounted to $228,954 on sales of $788,523, representing hardware costs
associated with the Company's Virtual Operator. For the six months ended January
31, 1999, cost of goods sold amounted to $332,649 on sales of $1,070,562,
representing hardware costs associated with the Company's Virtual Operator. In
the first part of the fiscal year, the Company reduced product-manufacturing
cost of the Virtual Operator by approximately 60%. As a result of additional new
technology and decreased manufacturing costs, the Company has reduced its
published dealer pricing by approximately 50%. The Company believes that
opportunities for product sales will increase as a result of such reduced
pricing.

         General and administrative expense increased by $708,489 to $1,020,231
for the three months ended January 31, 1999 from $311,736 for the three months
ended January 31, 1998. General and administrative expense increased by
$1,237,938 to $1,769,686 for the six months ended January 31, 1999 from $531,748
for the six months ended January 31, 1998. These increases were due to
additional employees hired to market and sell the Virtual Operator, additional
office support staff and increased legal and accountants fees incurred in
connection with the Company's expanding activities and patent applications. The
Company does not anticipate the level of general and administrative expense will
increase substantially above the current level on a quarterly basis for the
remainder of the current fiscal year.

         Research and development expenses for the three months ended January
31, 1999 were $391,307 compared to $252,736 for the three months ended January
31, 1998, an increase of $ 138,571. Research and development expenses for the
six months ended January 31, 1999 were $763,427 compared to $441,530 for the six
months ended January 31, 1998, an increase of $ 321,897. These increases were
due to continued enhancement of the Company's Virtual Operator product, the
development of other product and service prototypes, and expenses related to the
Company's performance of development contracts. Research and development
expenses incurred in the course of establishing technological feasibility of the
Company's software applications have been charged to operations pursuant to
Statement of Financial Accounting Standards "SFAS" No. 86 "Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise Marketed".





                                       10
<PAGE>   11

         Royalty expenses for the three months ended January 31, 1999
were $300,000. Royalty expenses for the six months ended January 31, 1999
were $500,000. These amounts represent non-refundable payments to Veritel
Corporation for non-recurring engineering fees for certain software object code
and software source code for the development and distribution of personal
computer software products that utilize speaker verification and file encryption
technologies. The Company expensed such non-recurring engineering fees in the
absence of any contracts for the sale of its products at the time of payment.

         Interest income net for the three months ended January 31, 1999
amounted to $96,754 compared to $3,521 for the three months ended January 31,
1998. Interest income for the six months ended January 31, 1999 amounted to
$217,417 compared to interest income of $3,444 for the six months ended January
31, 1998.The increase in interest income was due to the completion of the
Company's Initial Public Offering and receipt of approximately $11,300,000 in
net proceeds. Such funds are invested in money market accounts and high grade
short-term corporate paper.

LIQUIDITY AND CAPITAL RESOURCES

         As of January 31, 1999, the Company had $7,087,349 in cash and cash
equivalents. The Company does not have any available lines of credit. Since
inception, and until completition of the Company's public offering in June 1998,
the Company financed its operations through loans from the Company's Chairman
and his wife and from private placements of both debt and equity. On June 2,
1998, the Company closed an initial public offering of Common Stock. The Company
offered and sold 1,600,000 shares of Common Stock at an initial public offering
price of $7.25 per share, raising proceeds, net of offering costs, of
approximately $9,900,000. On June 26, 1998 the Company closed on the
underwriting over-allotment. The Company sold an additional 220,000 shares of
Common Stock at an initial public offering price of $7.25 per share, raising
proceeds, net of offering costs of approximately $1,400,000

         Net cash used in operating activities increased by $2,033,265 to
$2,917,471 from $884,206 for the six months ended January 31, 1998. Net cash
used in operating activities primarily related to the Company's continued
expansion of its research and development and sales and marketing efforts. 

         Net cash used in investing activities during the six months ended
January 31, 1999 and 1998 was $247,691 and $116,192 respectively. The
expenditures primarily related to purchases of computer equipment and patent
costs.

         Net cash from financing activities during the six months ended January
31, 1998 amounted to $901,063. The Company received net proceeds of $997,159
from the issuance of 200,000 shares of common stock at $5.00 per share. The
Company incurred $96,096 of costs related to its initial public offerings during
this period.

IMPACT OF THE YEAR 2000 ON COMPANY PRODUCTS

         Computers, software and other equipment utilizing microprocessors that
use only two digits to identify a year in a date field may be unable to process
accurately certain date-based information at or after the year 2000. The Company
recognizes the need to insure that its operations will not be adversely 




                                       11
<PAGE>   12

affected by Year 2000 software failures. Software failures due to processing
errors potentially arising from calculations using the year 2000 date are a
recognized risk, and the Company is addressing this issue on several different
fronts. The Company is in contact with its suppliers to assess their compliance.
There can be no assurance that there will not be a material adverse effect on
the Company if third parties do not convert their systems in a timely manner and
in a way that is compatible with the Company's systems. The Company believes
that its actions with suppliers will minimize these risks.

         Finally, the Company has established an internal workforce to
coordinate solutions for the Year 2000 issue with a goal of having all its
products Year 2000 compliant by the end of the third quarter of fiscal 1999.
After evaluation of the responses from suppliers, which the Company anticipates
to complete in the third quarter of fiscal 1999, the Company will prepare a
contingency plan to mitigate such Year 2000 issues, if necessary.

         Through January 31, 1999, the Company has not incurred material
expenses relating to Year 2000 compliance efforts and believes that the expenses
associated with completing its Year 2000 compliance plans will not have a
material adverse impact on the Company's operations. Internal and external
expenses specifically associated with modifying internal-use software for the
Year 2000 will be expensed as incurred. The Company's current estimates of the
amount of time and expenses necessary to implement and test its computer systems
are based on the facts and circumstances existing at this time. Nevertheless,
achieving Year 2000 compliance is dependent on many factors, some of which are
not completely within the Company's control. Should either the Company's
internal system or the internal systems of one or more significant vendors or
suppliers fail to achieve Year 2000 compliance, the Company's business and its
results of operations could be adversely affected.

YEAR 2000 IMPACT ON INTERNAL BUSINESS OPERATIONS

         The Company uses a significant number of computer software programs and
operating systems in its internal operations, including applications used in
financial business systems and various administration functions. To the extent
that these software applications contain source code that is unable to
appropriately interpret the upcoming calendar year "2000", some level of
modification or even replacement of such source code or applications will be
necessary. The Company is in the process of identifying the software
applications that are not "Year 2000" compliant. Given the information known at
this time about the Company's systems, coupled with the Company's ongoing
efforts to upgrade or replace business critical systems as necessary, it is
currently not anticipated that these "Year 2000" costs will have a material
adverse impact on the Company's business, financial condition and results of
operations. However, the Company is still analyzing its software applications
and, to the extent they are not fully "Year 2000" compliant, there can be no
assurance that the costs necessary to update software or potential systems
interruptions would not have a material adverse effect on the Company's
business, financial condition and results of operations.






                                       12
<PAGE>   13

PART II. OTHER INFORMATION

ITEM 2.  Changes in Securities and Use of Proceeds

         On June 2, 1998, the Company closed an initial public offering of
Common Stock. The Company offered and sold 1,600,000 shares of Common Stock at
an initial public offering price of $7.25 per share, raising proceeds, net of
offering costs, of approximately $9,900,000. On June 26, 1998 the Company closed
on the underwriting over-allotment. The Company sold an additional 220,000
shares of Common Stock at an initial public offering price of $7.25 per share,
raising proceeds, net of offering costs of approximately $1,400,000.
Supplementing the Company's previous disclosures, through the quarter ended
January 31, 1999, the Company had used a portion of the proceeds received from
its public offering completed in the final quarter of its 1998 fiscal year for
The following purposes: approximately $1,263,000 for research and development,
technical personnel and royalties on certain technologies (ii) approximately
$1,770,000 for the expansion of the Company's marketing program and the addition
of executive and other sales personnel (iii) approximately $245,000 for the
purchase of property and equipment.

ITEM 5.  Other Information

         On February 1, 1999 the Company's Board elected Bruce S. Carlsmith and
Dennis P. Wolf to be directors of the Company.

         Mr. Carlsmith is currently President of Sayre Consulting, a
telecommunications consulting firm. From April 1995 until October 1998 he served
as an industry analyst with NationsBanc Montgomery Securities. From April 1993
to April 1995 served as Director, Strategy and Planning with Pacific Telesis
Video Services. Prior to Pacific Telesis, he was employed at the Boston
Consulting Group.

         Mr. Wolf is currently the Co-President and Executive Vice President and
Chief Financial Officer for Credence Systems Corporation, a leader in automatic
test equipment used in the production of semiconductors. From December 1996
until March 1998 Mr. Wolf previously served as Vice President, Chief Financial
Officer and acting Chief Executive Officer of Centigram Communications
Corporation. Prior thereto, he held executive and management positions at
Pyramid Technology, IBM, Apple Computer and Sun Microsystems.

ITEM 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits required by item 601 of Regulation S-B

             The following exhibits are filed as part of this report:

             27.1  Financial Data Schedule

         (b) Reports on Form 8-K

             None.




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<PAGE>   14


                                 SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                           REGISTRY MAGIC INCORPORATED



                                      By: /s/ Walt Nawrocki
                                          -------------------------------------
                                          Walt Nawrocki,
                                          President and Chief Executive Officer



                                      By: /s/ Martin Scott
                                          -------------------------------------
                                          Martin Scott,
                                          Secretary, Treasurer and Principal
                                          Financial and Accounting Officer



DATED: March 22, 1999




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