SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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


              [X] For the Quarterly Period Ended: October 31, 1998

                                       or

             [ ] Transition Report Pursuant to Section 13 or 15 (D)
                     of The Securities Exchange Act of 1934

              For the Transition Period From _________ To ________


                        Commission File Number: 333-5753


                           Exigent International, Inc.
             (Exact name of Registrant as specified in its charter)

         Delaware                                       59-3379927
(State or Other Jurisdiction                         (I.R.S. Employer
of Incorporation or Organization)                    Identification No.)

                                 1225 Evans Road
                          Melbourne, Florida 32904-2314
               (Address of principal executive offices) (Zip code)

                                  407-952-7550
               (Registrant's telephone number including area code)


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

     The number of shares outstanding of the registrant's common stock, $.01 par
value, on November 30, 1998 was 4,111,003.


<PAGE>


                           EXIGENT INTERNATIONAL, INC.

                         QUARTER ENDED OCTOBER 31, 1998

                                      INDEX



PART I - FINANCIAL INFORMATION



Item 1.  Financial Statements.                                             Page

         Consolidated Balance Sheets as of
             October 31, 1998 and January 31, 1998                           3

         Consolidated Statements of Income for 
             the Nine Months Ended October 31, 1998 and 1997                 5

         Consolidated Statements of Income for 
             the Three Months Ended October 31, 1998 and 1997                6

         Consolidated Statements of Cash Flows for
              the Nine Months Ended October 31, 1998 and 1997                7


         Notes to Consolidated Financial Statements                          9


Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations.                               12


PART II - OTHER INFORMATION

Item 5.  Other Information.                                                 21

Item 6.  Exhibits and Reports on Form 8-K.                                  21

         Signatures                                                         22



<PAGE>


PART I - FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

                           EXIGENT INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS

<TABLE>
<CAPTION>

                                                        October 31, 1998            January 31,
                                                          (unaudited)                  1998
                                                        -------------------   --------------------
CURRENT ASSETS
<S>                                                           <C>                   <C>          
      Cash and cash equivalents                               $     69,996          $   3,640,508
      Accounts receivable, pledged                               3,982,236              2,747,383
      Costs and estimated earnings in excess of
          billings on uncompleted contracts, pledged             5,042,373              3,823,768
      Inventories                                                      166                  5,288
      Prepaid expenses                                              36,609                 64,288
      Deferred income taxes                                        663,000                663,000
      Prepaid income taxes                                           7,066                      -
                                                        -------------------   --------------------
      TOTAL CURRENT ASSETS                                       9,801,446             10,944,235
                                                        -------------------   --------------------

PROPERTY AND EQUIPMENT
      Cost                                                       6,059,496              5,304,630
      Accumulated depreciation                                  (3,922,481)            (3,135,923)
                                                        -------------------   --------------------
      NET PROPERTY AND EQUIPMENT                                 2,137,015              2,168,707
                                                        -------------------   --------------------

OTHER ASSETS
      Software development costs, net of accumulated
        amortization                                             4,258,879              1,508,887
      Organizational costs                                          10,638                 10,638
      Deposits                                                      71,983                 43,466
      Cash surrender value of life insurance                        17,028                 17,028
                                                         ------------------   --------------------
      TOTAL OTHER ASSETS                                         4,358,528              1,580,019
                                                         ------------------   --------------------
      TOTAL ASSETS                                          $   16,296,989          $  14,692,961
                                                         ==================   ====================
</TABLE>

See accompanying Notes


<PAGE>



                           EXIGENT INTERNATIONAL, INC.
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                              October 31, 1998          January 31,
                                                                (unaudited)                1998
                                                            ---------------------   --------------------
CURRENT LIABILITIES
<S>                                                                <C>                        <C>      
      Line of credit                                               $   2,200,000              $       -
      Accounts payable                                                   304,376                392,799
      Accrued expenses                                                 3,484,101              3,401,311
      Billings in excess of costs and estimated earnings
          on uncompleted contracts                                       380,773              1,252,700
      Income taxes payable                                                32,159                242,524
      Current portion, long-term debt                                    466,667                511,111
                                                            ---------------------   --------------------
      TOTAL CURRENT LIABILITIES                                        6,868,076              5,800,445
                                                            ---------------------   --------------------

LONG-TERM LIABILITIES
      Long-term debt, less current portion                               241,030                466,667
      Deferred income taxes                                              645,000                645,000
      Other liabilities                                                       44                      -
                                                             --------------------   --------------------
      TOTAL LONG-TERM LIABILITIES                                        886,074              1,111,667
                                                             --------------------   --------------------
      TOTAL LIABILITIES                                                7,754,150              6,912,112
                                                             --------------------   --------------------


STOCKHOLDERS' EQUITY
      Class A Preferred  Shares,  $.01 par value,
        5,000,000 shares  authorized, 610,230  and
        688,792  issued and  outstanding  at
        October  31, 1998 and January 31, 1998,
        respectively,  at $2.50 per share
        liquidation/dissolution preference                                 6,102                  6,888
      Common Shares, $.01 par value, 40,000,000 
        shares authorized, 4,106,955 and 3,872,655
        issued and  outstanding  at October 31,1998
        and January 31, 1998, respectively                                41,070                 38,726
      Paid in capital                                                  1,946,393              1,585,007
      Retained earnings                                                6,549,274              6,150,228
                                                            ---------------------   --------------------
      TOTAL STOCKHOLDERS' EQUITY                                       8,542,839              7,780,849
                                                            ---------------------   --------------------
      TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                    $   16,296,989          $  14,692,961
                                                            =====================   ====================
</TABLE>

See accompanying Notes


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                              For the nine months ending October 31,
                                                    1998                   1997
                                                (unaudited)             (unaudited)
                                         ---------------------   --------------------

<S>                                           <C>                     <C>          
REVENUES FROM SERVICES                        $   25,858,155          $  25,912,356
COST OF SALES                                     19,209,905             19,850,950
                                        ---------------------   --------------------
GROSS PROFIT                                       6,648,250              6,061,406

GENERAL AND ADMINISTRATIVE EXPENSES                5,735,978              4,513,068
 RESEARCH AND DEVELOPMENT COSTS                      162,937                      -
                                        ---------------------   --------------------
OPERATING INCOME                                     749,335              1,548,338
                                        ---------------------   --------------------

OTHER INCOME (EXPENSE)
      Interest income                                 36,205                 26,065
      Interest expense                              (133,047)               (67,117)
      Gain on disposal of fixed assets                (1,213)                      -
      Other, net                                      13,625                      -
                                        ---------------------   --------------------
TOTAL OTHER INCOME (EXPENSE)                         (84,430)               (41,052)
                                        ---------------------   --------------------
INCOME BEFORE INCOME TAXES                           664,905              1,507,286

INCOME TAX EXPENSE                                   265,859                588,065
                                        ---------------------   --------------------
NET INCOME                                      $    399,046           $    919,221
                                        =====================   ====================
EARNINGS PER SHARE - BASIC                       $      0.09             $     0.20
                                        =====================   ====================
WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING - BASIC                           4,653,209              4,709,468
                                        =====================   ====================
EARNINGS PER SHARE - DILUTED                     $      0.08             $     0.19
                                        =====================   ====================
WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING - DILUTED                         5,209,151              4,801,019
                                        =====================   ====================
</TABLE>


See accompanying Notes

<PAGE>

                           EXIGENT INTERNATIONAL, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                      For the three months ended October 31,
                                                            1998                   1997
                                                         (unaudited)             (unaudited)
                                                   ---------------------   --------------------

<S>                                                       <C>                    <C>          
REVENUES FROM SERVICES                                  $   9,361,584          $   9,140,753
COST OF SALES                                               6,468,321              6,879,072
                                                 ---------------------   --------------------
GROSS PROFIT                                                2,893,263              2,261,681

GENERAL AND ADMINISTRATIVE EXPENSES                         2,614,730              1,821,861
 RESEARCH AND DEVELOPMENT COSTS                               106,301                      -
                                                 ---------------------   --------------------
OPERATING INCOME                                              172,232                439,820
                                                 ---------------------   --------------------

OTHER INCOME (EXPENSE)
      Interest income                                          13,109                 23,719
      Interest expense                                       (68,367)               (20,872)
      Loss (gain) on disposal of fixed assets                 (1,213)                  1,732
      Other, net                                                6,659                      -
                                                 ---------------------   --------------------
TOTAL OTHER INCOME (EXPENSE)                                 (49,812)                  4,579
                                                 ---------------------   --------------------
INCOME BEFORE INCOME TAXES                                    122,420                444,399

INCOME TAX EXPENSE                                             48,941                172,935
                                                 ---------------------   --------------------
NET INCOME                                               $     73,479           $    271,464
                                                 =====================   ====================
EARNINGS PER SHARE - BASIC                                $      0.02             $     0.06
                                                 =====================   ====================
WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING - BASIC                                    4,715,894              4,709,468
                                                 =====================   ====================
EARNINGS PER SHARE - DILUTED                              $      0.01             $     0.06
                                                 =====================   ====================
WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING - DILUTED                                  5,349,586              4,801,019
                                                 =====================   ====================
</TABLE>

See accompanying Notes


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                        For the nine months ending October 31,
                                                                                1998                   1997
                                                                            (unaudited)             (unaudited)
                                                                        ---------------------   --------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                            <C>                    <C>     
Net income                                                                     $399,046               $919,221
                                                                        ---------------------   --------------------
Adjustments to  reconcile  net income to net cash
  provided  (used) by operating activities:
      Depreciation and amortization                                           1,463,114                668,825
      Loss on disposal of Fixed Assets                                            1,984                      -
      Deferred income taxes                                                           -                463,000
      Changes in operating assets and liabilities:
         Increase in accounts receivable                                     (1,234,853)              (443,896)
         Decrease (increase) on costs and estimated earnings in
            excess of billings on uncompleted contracts                      (1,218,605)               461,877
         Decrease in prepaid expenses                                            27,679                 17,614
         Decrease in inventory                                                    5,122                      -
         Decrease (increase) in prepaid income taxes                             (7,066)               374,667
         Increase in deposits                                                   (28,517)                (2,865)
         Decrease in cash surrender value of life insurance                           -                  3,241
         Decrease in accounts payable                                           (88,423)            (1,059,462)
         Increase in accrued expenses                                            82,790                527,666
         Decrease in billings in excess of costs and estimated                 (871,927)              (274,949)
            earnings on uncompleted contracts

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

<S>                                                                            <C>                      <C>   
         Increase (decrease) in income taxes payable                           (210,365)                27,300
         Increase in other liabilities                                               44                     75
                                                                        ---------------------   --------------------
Total adjustments                                                            (2,079,023)               763,093
                                                                        ---------------------   --------------------

NET CASH  PROVIDED (USED) BY OPERATING ACTIVITIES                            (1,679,977)             1,682,314
                                                                        ---------------------   --------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Cash paid for acquisition of capital assets                              (774,679)              (137,061)
      Cash paid for capitalized software development                         (3,408,719)            (1,497,871)
                                                                        ---------------------   --------------------
NET CASH USED BY INVESTING ACTIVITIES                                        (4,183,398)            (1,634,932)
                                                                        ---------------------   --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Net borrowings (payments) under line of credit                          2,200,000               (182,000)
      Net borrowings (principal payments) on long-term debt                    (270,081)               551,225
      Proceeds from exercise of stock options and warrants                      362,944                 19,990
                                                                        ---------------------   --------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                     2,292,863                389,215
                                                                        ---------------------   --------------------
 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                         (3,570,512)               436,597

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                3,640,508                428,705
                                                                        ---------------------   --------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                     $   69,996             $  865,302
                                                                        =====================   ====================
</TABLE>

See accompanying Notes


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - GENERAL

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information  in  response  to  the  requirements  of  Article  10  of
Regulation  S-X.  Accordingly,  they do not contain all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  The condensed  consolidated  financial statements for the
three and nine month  periods  ended  October  31, 1998 and October 31, 1997 are
unaudited  and  reflect all  adjustments  (consisting  only of normal  recurring
adjustments)  which are,  in the  opinion of  management,  necessary  for a fair
presentation  of the financial  position and  operating  results for the interim
periods.  The  condensed  consolidated  financial  statements  should be read in
conjunction  with the  consolidated  financial  statements  and  notes  thereto,
together with  management's  discussion and analysis of financial  condition and
results of operations,  contained in Exigent International,  Inc.'s ("Exigent's"
or the "Company's") Annual Report on Form 10-K for the fiscal year ended January
31, 1998.  The results of operations for the three and nine months ended October
31, 1998 are not necessarily  indicative of the results that may be expected for
the entire fiscal year.

As  of  February  1,  1998  the  Company   adopted   Statement  130,   Reporting
Comprehensive Income.  Statement 130 establishes new rules for the reporting and
display of  comprehensive  income and its components.  However,  the adoption of
this Statement had no impact on the Company's net income or shareholders' equity
for the three and nine months ended October 31, 1998 and 1997.

Certain  prior period  amounts have been  restated to  correspond to the current
period presentation.

NOTE 2 - LINE OF CREDIT

Software  Technology,   Inc.  ("STI"),   Exigent's  primary  subsidiary,  had  a
$1,800,000  line of credit  available  from a bank as of  October  31,  1998 and
January 31, 1998. The note bears interest on the unpaid principal  balances at a
rate per annum equal to the bank's prime rate plus .25%.  As of October 31, 1998
and January 31, 1998 the outstanding  draws against the line were $1,800,000 and
$0, respectively. The interest rate at October 31, 1998 and January 31, 1998 was
8.375% and 8.75%, respectively.  All accounts receivable,  equipment,  furniture
and fixtures of STI are pledged as collateral on the line of credit.

On October 30, 1998, Exigent entered into a short-term loan for $400,000 to fund
the Company's  working capital  requirements.  The note bears interest at a rate
per annum equal to the prime rate plus .50%. As of October 31, 1998, there was a
balance  remaining to be paid on the note of $400,000.  The note and all accrued
interest thereon was paid in full in November 1998.

The weighted  average  interest rate on  short-term  borrowings  outstanding  at
October 31, 1998 and January 31, 1998 was 8.66% and 8.25%, respectively.

NOTE 3 - COMMITMENTS AND CONTINGENCIES

The Company had outstanding  purchase  commitments of $3,334,710 and $145,309 as
of  October  31,  1998 and  January  31,  1998,  respectively.  These  represent
outstanding  purchase  orders for customer  projects  where neither the item nor
invoice has been received. This increase is due in large part to the start-up of
a major new contract for which there were extensive material requirements.

In November 1998 the Company entered into a lease for an 11,188-sq. ft. space in
Chantilly,  VA. This space was needed to satisfy program  requirements for a new
customer.

NOTE 4 - CAPITALIZED SOFTWARE DEVELOPMENT

Effective February 1, 1998, the Company determined that the amortization life of
the  existing  capitalized  software  should  be  changed  to two  years to more
appropriately  reflect  the life  span of the  product  release,  rather  than a
three-year  schedule.  As a result of this change in  estimate,  the increase in
amortization   expense  for  the  three  months  ended   October  31,  1998  was
approximately  $100,000.  The impact for the nine months ended  October 31, 1998
was approximately  $225,000. This has impacted the diluted earnings per share by
$0.02 per share.

NOTE 5 - EARNINGS PER SHARE

In 1997,  the FASB issued  SFAS No.  128,  Earnings  per Share.  This  statement
replaced the  calculation  of primary and fully diluted  earnings per share with
basic and diluted earnings per share.  Unlike primary earnings per share,  basic
earnings  per share  excludes  any  dilutive  effects of options,  warrants  and
convertible  securities.  Diluted  earnings  per share are very  similar  to the
previously  reported  fully diluted  earnings per share.  All earnings per share
amounts  have been  presented  and,  where  appropriate,  restated to conform to
Statement 128  requirements.  The following  tables set forth the computation of
basic and diluted earnings per share for the nine and three months ended October
31, 1998 and 1997:

<TABLE>
<CAPTION>

                                                        For the nine months ended October 31,
                                                   ---------------------------------------------
                                                   ------------------      ---------------------
                                                         1998                      1997
                                                      (unaudited)              (unaudited)
                                                   ------------------      ---------------------
Numerator:
  Net income (numerator for
<S>                                                       <C>                       <C>        
   basic and diluted earnings per share)              $  399,046                $   919,221
                                                   ==================      =====================
</TABLE>



<PAGE>

<TABLE>
<CAPTION>


Denominator:


<PAGE>


  Denominator for basic earnings per share-
<S>                                                    <C>                       <C>      
      weighted average shares                          4,653,209                 4,709,468

  Effect of dilutive options and warrants                555,942                    91,551
                                                 -----------------      -------------------

  Denominator for diluted earnings per share-
      adjusted weighted average shares                 5,209,151                 4,801,019
                                                 ------------------     --------------------

Basic earnings per share                              $     0.09            $         0.20
                                                 ==================     ====================

Diluted earnings per share                            $     0.08            $         0.19
                                                 ==================     ====================


                                                      For the three months ended October 31,
                                                   ---------------------------------------------
                                                   ------------------      ---------------------
                                                         1998                      1997
                                                      (unaudited)              (unaudited)
                                                   ------------------      ---------------------
Numerator:
  Net income (numerator for basic and diluted
     earnings per share)                             $    73,479               $   271,464
                                                  ==================      =====================

Denominator:
  Denominator for basic earnings per share-
      weighted average shares                          4,715,894                 4,709,468

  Effect of dilutive options and warrants                633,692                    91,551
                                                 ------------------       --------------------

  Denominator for diluted earnings per share-
      adjusted weighted average shares                 5,349,586                 4,801,019
                                                 ------------------       --------------------

Basic earnings per share                            $       0.02            $         0.06
                                                 ==================       ====================

Diluted earnings per share                          $       0.01            $         0.06
                                                 ==================       ====================
</TABLE>



<PAGE>


NOTE 6 - STOCKHOLDERS' EQUITY

The  consolidated  changes in  stockholders'  equity for the nine  months  ended
October 31, 1998 are as follows:

<TABLE>
<CAPTION>

                                                                                   Additional
                                     Common Stock*      Class A Preferred            Paid in      Retained
                                      Shares       Amount     Shares     Amount       Capital      Earnings     Total

<S>              <C>                 <C>          <C>        <C>         <C>       <C>           <C>          <C>       
BALANCE February 1, 1998             3,872,655    $38,726    688,792     $6,888    $1,585,007    $6,150,228   $7,780,849

 Exercise of convertible               155,988      1,560          -          -       361,384             -      362,944
securities

 Class A preferred converted            78,562        786    (78,562)      (786)            -             -            -
          to common
  Canceled shares                         (250)        (2)         -          -             2             -            -

  Net Income                                 -          -          -          -             -       399,046      399,046
                                   ----------------------------------------------------------------------------------------

BALANCE October 31, 1998             4,106,955    $41,070    610,230     $6,102    $1,946,393    $6,549,274   $8,542,839
                                   ========================================================================================

</TABLE>

*Please note:  Class A Preferred  Stock  converts 1:1 to Common Stock and has no
preferential treatment except for a liquidation preference.

NOTE 7 - FISCAL YEAR CHANGE

The Company will change its fiscal year to correspond  with a calendar year end,
effective  December  31, 1998.  The current  fiscal year will  therefore  end on
December 31, 1998. The fiscal quarters will remain  unchanged with the exception
of the fourth quarter,  which will be a two-month quarter ending on December 31,
1998.


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

The following is  management's  discussion and analysis of (i) the  consolidated
financial  condition  as of October 31,  1998 as  compared  with the fiscal year
ended January 31, 1998; and (ii) the consolidated  results of operations for the
three and nine  months  ended  October  31,  1998 and 1997,  of Exigent  and its
subsidiaries  STI and FotoTag.  It should be read together with  Exigent's  Form
10-K for the fiscal year ended  January  31,  1998.  Throughout  the nine months
ended October 31, 1998 the Company has invested  significant  time and resources
into the  restructuring and reform of its corporate  structure and staff.  These
reforms   included   restructuring   of  the  corporate   charter,   bylaws  and
implementation  of a  Shareholder  Rights  Plan  as well as  additions  to,  and
replacement of, several of the key corporate executive  management.  The reforms
are intended to position Exigent to expand and to attract  additional  investors
in the equity  market.  In addition  Exigent has invested  significantly  in the
development  of a  Corporate-wide  wide area  network  (WAN) to enhance  Company
communications. The Company continued to invest approximately 10% of revenues in
product development. These investments are reflected in the three and nine-month
results as well as discussed further in this document.

Liquidity As of October 31, 1998,  Exigent's  ratio of current assets to current
liabilities decreased to 1.4 from 1.9 at January 31, 1998. This decrease was due
largely  to the use of cash  over  the  nine  months  as well as the draw on the
Company's line of credit. The uses of this cash are explained in detail below.

Exigent's cash portfolio (cash and cash equivalents) decreased $3,570,512 during
the nine months  ended  October 31,  1998.  The decrease was due to cash used in
operating  activities  of  $1,679,977,  cash  used in  investing  activities  of
$4,183,398 and cash provided by financing  activities of  $2,292,863.  Exigent's
cash  portfolio  increased  $436,597 for the nine months ended October 31, 1997.
The increase was due to cash  provided by operating  activities  of  $1,682,314,
cash used in investing  activities of $1,634,932  and cash provided by financing
activities  of $389,215.  The decrease in cash from  operating  activities  from
January 31, 1998 to October 31, 1998 was primarily the result of the increase in
Accounts  Receivable  due to the  change  in  payment  procedure  on  Government
projects,  the project  investment  carried awaiting new provisional  government
indirect  rates,  and the  continued  investment  in the ongoing  support of the
Company's  products  including  OS/COMET(R)  and  FotoTag(R).  In addition,  the
Company invested  approximately $800,000 in the ongoing support of the strategic
agreement with Motorola Inc.  SATCOM  projects.  This  investment is intended to
help position Exigent for future Commercial Satellite Market programs.

In the nine months ended October 31, 1998,  Exigent acquired $774,679 of capital
assets  compared to $137,061 in the nine months  ended  October 31,  1997.  This
increase was due  primarily to the expansion  and  improvement  of the Company's
facilities across the corporation including Melbourne, FL, Alexandria,  VA and a
new site in Chantilly,  VA. This new  11,188-sq.  ft.  facility in Chantilly was
required  to  satisfy  program  requirements.  A  portion  of the  expansion  in
Melbourne was funded  through a capital lease for  furnishings  and other office
amenities.  This capital lease will extend through  September of 2003.  However,
capital  needs are  expected  to  continue,  but at a reduced  rate,  as Exigent
remains  current with computing  technologies.  This expansion will be funded in
part through operating leases set up with external leasing companies. The leases
will  extend for a period of three  years  from each draw  against  the  funding
limits  totaling  $1,000,000.  Through the  nine-month  period ended October 31,
1998, Exigent had drawn down approximately $450,000 against these lease lines of
credit.

During the last three fiscal years the Company has made substantial  investments
in the  development  of software  products.  The  investments  made for the nine
months  ended  October  31,  1998 were  again  substantial  as  Exigent  remains
committed to the development of new state-of-the-art products as well as support
of its existing  product  base.  In the nine months  ended  October 31, 1998 and
October 31, 1997,  Exigent spent  $3,408,719 and  $1,497,871,  respectively,  in
capitalized  software  development  costs primarily related to several products.
The  increase in the first nine months of fiscal year 1998  resulted  from costs
incurred in completing  the  development  of FotoTag,  which was completed  June
1998,  developing  product  additions for the OS/COMET  product family including
Pluto(TM),  Calypso(TM), and the Integrated Control Center (ICC)(TM), as well as
development  of its  newest  products,  Active  Tracking  Engine  (ATE)(TM)  and
Interplay(TM).  The Company has  organized a new  subsidiary  expressly  for the
development and distribution of  shrink-wrapped  middleware  software  products.
This  entity  (M-Ware  Solutions  Inc.)  will  be  responsible  for  the ATE and
Interplay as well as other future  shrink-wrapped  products distributed over the
Internet.  For  the  nine  months  ended  October  31,  1998,  Exigent  borrowed
$2,200,000  under  the  line  of  credit  and a  short-term  loan  to  fund  its
operations.  The  Company  reduced  long-term  debt  by  $350,316  offset  by an
obligation  on a new capital  lease of $129,918 of which  $5,240 was paid during
the quarter. There was also a reduction in short-term debt of $44,444.

Results of Operations  for the nine months ended October 31, 1998 and 1997 Sales
for the nine  months  ended  October 31, 1998 were  $25,858,155,  compared  with
$25,912,356  for the nine months  ended  October 31,  1997,  a slight  decrease,
although the mix of government  and  commercial  has changed  dramatically.  The
breakdown  between  government and  commercial  sales for each of the nine-month
periods is as follows:

<TABLE>
<CAPTION>

                    October 31,1998                      October 31, 1997
                 ---------------------                 ---------------------
<S>                <C>                        <C>       <C>                              <C>
   Government      $       20,201,503         78%       $        15,942,207              62%
   Commercial               5,656,652         22%                 9,970,149              38%
                                          --------
                 ==== ================                 === =================     ============
                   $       25,858,155        100%       $        25,912,356             100%
                 ==== ================    ========     === =================     ============
</TABLE>

Gross profit was up  significantly  at $6,648,250  (25.7% of sales)  compared to
$6,061,406  (23.4% of sales) for the nine  months  ended  October  31,  1998 and
October 31, 1997, respectively.  This increase in gross profit was the result of
a significant  decrease in direct costs. Net income  decreased  significantly at
$399,046  (1.5% of sales) for the nine  months  ended  October  31,  1998 versus
$919,221  (3.6% of sales) for the nine  months  ended  October  31,  1997.  This
decrease  was  due  to the  increase  in  general  and  administrative  expenses
(explained  below) and a decrease in revenue  from  commercial  customers.  This
decrease in revenue was the result of the winding down of development  work on a
major fixed  price  contract  and cost  growth in support of the same  contract.
These  factors  decreased  the  nine-month  operating  income  by  approximately
$800,000.  The change in  amortization  schedule  for the  internally  developed
software  products also  decreased the  nine-month  profit.  After  completing a
review of the current  releases and the schedule  for new  releases,  management
determined that a twenty-four month  amortization would be more appropriate than
a thirty-six month schedule.  This change in amortization  schedule impacted net
income before taxes by approximately  $225,000 for the nine months ended October
31, 1998.

General and  administrative  expenses for the nine months ended October 31, 1998
were $5,735.978, 27.1% or $1,225,910 greater than expenses of $4,513,068 for the
nine months ended  October 31,  1997.  This  increase  resulted  primarily  from
$500,000 in  administrative  labor costs,  of which  approximately  $250,000 was
associated with the resources required to manage a public company, including the
addition of key  executives,  with the remainder  being the move of personnel in
the  operating  units  from  cost  of  goods  sold  expenses  to  administrative
positions.  Additional increases in general and administrative  expenses include
$367,000 in  professional  fees for marketing  support and outside legal counsel
largely associated with the Corporate reforms put in place during the second and
third quarters.  There was a $278,000 increase in additional  marketing expenses
incurred to pursue new project  opportunities  in both the commercial as well as
government  businesses.  In addition,  there was approximately  $200,000 of cost
incurred in support of the due diligence of potential  acquisitions.  Management
believes existing cash, funds generated by operations, and the available line of
credit may fall short of Exigent's  current operating  requirements  through the
fiscal year  ending  December  31,  1998.  Additional  funds will be required to
fulfill the  development  schedule  for new Exigent  products and to finance any
acquisitions.  The Company is currently  in  discussions  with  several  lending
institutions  to obtain an  alternative  source of financing to support  working
capital requirements and the Company's strategic plan. The Company is seeking an
alternative source of financing to replace the Company's existing line of credit
with SunTrust Bank. There can be no assurance that a definitive credit agreement
relating to this new line of credit or other alternative funding will be entered
into on acceptable terms.

Results of Operations for the three months ended October 31, 1998 and 1997 Sales
for the three months ended October 31, 1998 were $9,361,584, an increase of 2.4%
from  $9,140,753 for the three months ended October 31, 1997, due to an increase
in the  volume of  government  contracts,  offset by a  decrease  in  commercial
revenue.  The breakdown between  government and commercial sales for each of the
three-month periods is as follows:

<TABLE>
<CAPTION>

                    October 31, 1998                      October 31, 1997
                  ---------------------                 ---------------------
<S>                 <C>                        <C>       <C>                          <C>
   Government       $        7,785,481         83%       $         5,738,706          63%
   Commercial                1,576,103         17%                 3,402,047          37%
                                           --------
                  ==== ================                 === =================   ==========
                    $        9,361,584        100%       $         9,140,753         100%
                  ==== ================    ========     === =================   ==========
</TABLE>

Gross profit increased  significantly at $2,893,263 (30.9% of sales) compared to
$2,261,681  (24.7% of sales) for the three  months  ended  October  31, 1998 and
October 31, 1997, respectively, due to the major reduction in the use of outside
services for labor on projects.  Net income  decreased  significantly to $73,479
(0.8% of sales) for the three  months  ended  October 31,  1998 versus  $271,464
(3.0% of sales) for the three months ended  October 31, 1997.  This decrease was
due to a decrease in revenue and associated earnings from commercial  customers,
cost growth in support of the major commercial fixed price  development  project
completion and a delay in product sales. In addition,  after completing a review
of the current releases and the schedule for new releases, management determined
that a  twenty-four  month  amortization  would  be more  appropriate  than  the
thirty-six  month schedule.  This change in amortization  schedule  impacted net
income before taxes by approximately $100,000 for the three months ended October
31, 1998.

Analysis of Operations In 1995,  STI obtained its first  significant  commercial
contracts from Motorola Inc. to provide  satellite ground station software for a
constellation  of  satellites  that  will  provide a direct  link with  portable
handsets for  worldwide  telephone  service.  The Motorola  multi-year  contract
allowed STI to leverage its technology  into the commercial  arena. In 1996, STI
was awarded a contract to provide  similar  software for the Global  Positioning
Satellite (GPS) System. With these two contracts, STI is involved in two premier
satellite endeavors and numerous proprietary ones.

The third quarter 1998 results, as well as the nine-month 1998 results,  reflect
a  lull  in  the  Company's  commercial  satellite  business;  however,  Exigent
continued  to invest  during  these  periods in the  advanced  features  for its
OS/COMET  basic  product as well as the next  generation NT version of OS/COMET.
The  Company  anticipates  that the NT  version  will  have its  first  customer
delivery in the fourth  quarter of 1998. In addition,  the Company  continues to
invest  in its  strategic  alliance  with  Motorola  for the  Celestri/Teledesic
effort,  with an anticipated  start in early 1999. The Company has also invested
significantly  in the  identification  of and the due diligence  associated with
potential acquisitions.

STI  has  recently  been  heavily  involved  in  developing  proposals  for  new
commercial satellite  constellations.  The Company believes that its investments
in OS/COMET,  Pluto,  Calypso,  the  Integrated  Control  Center  (ICC),  Active
Tracking Engine (ATE), and Interplay will position the Company well as it enters
1999.

STI's government  business continues at a record setting pace with orders coming
in from both  existing  and new  customers.  The sale of OS/COMET  licenses  and
maintenance  for use on  government  programs  continues on track with 1997 with
volume running approximately the same as that record year.

The backlog as of October 31, 1998 for commercial  and government  contracts was
$62,360,574,  of which  $57,806,976  is unfunded.  In April 1998, STI executed a
contract with the Naval  Research  Laboratory to provide  services over the next
five years for a value of $61,538,419.  Subsequent to the close of the quarter a
similar,  but unrelated  contract worth  approximately  $7,500,000 was signed to
cover a five-year  period  providing  additional  services to the Naval Research
Laboratory.  With the addition of these  contracts,  the current  base  provides
sufficient backlog to maintain STI's operations through December 31, 2001.

STI has  invested  in  excess of  $4,500,000  over the last  three  years in its
premier software product OS/COMET.  This investment  facilitated the significant
contract awards that management believes would have been otherwise unattainable.
Commitment  to maintain  support  for the  product  and  research of new product
opportunities will continue.

Exigent completed  development of its commercial software product,  FotoTag, and
has  invested  approximately  $1,100,000  during  the last three  fiscal  years.
Management continues the promotion of this product,  which was completed in June
1998.  FotoTag is currently being marketed worldwide to address the growing need
for airport security and baggage and passenger reconciliation products.

OUTLOOK

Exigent completed expansion of its corporate  headquarters in February 1998 with
the completion of a new building at its Melbourne,  Florida  location.  This new
facility houses the corporate staff as well as the Product  Development team and
the FotoTag  staff.  These  increased  facility costs should not have a material
impact  on the  Company's  indirect  expense  rates as the  growth  is needed to
support the current business as well as growth planned into 1999. The commercial
satellite  business is projected to continue with strong sales  worldwide and is
expected to show  moderate  increases  through the end of the decade,  providing
additional opportunities for Exigent.

General and administrative expenses are expected to decline going forward as the
current level of expenditures included the nonrecurring cost associated with the
implementation  of  corporate  reforms  as well as the  due  diligence  expenses
associated with a potential  acquisition.  This potential  acquisition presented
excess  expenses over a normal level due to the due diligence of complex issues.
These  combined  expenses  totaled  in  excess  of  $500,000.  In  addition  the
transition  to the new  independent  audit firm  resulted  in some  overlap  and
duplicative efforts during the first two quarters of the current fiscal year.

Demand for  software  engineers  continues  to  provide  new  opportunities  for
Exigent,  but will place a premium on the  efforts  to retain the  current  work
force. This risk will put additional  pressure on overall payroll costs. This is
an industry wide challenge. Management believes that benefits offered by Exigent
remain  above the level of its  competition  and should  help to  stabilize  its
workforce.  Overhead costs for benefits  should remain at the same percentage of
wages for the fiscal  year  ending  December  31, 1998 as compared to the fiscal
year ended January 31, 1998.  Management  believes it is important  that Exigent
not  reduce  benefits.  To do so and hold  costs  stable  has been a  management
challenge and will continue to be so in the near future.  Maintaining  Exigent's
comprehensive  benefit  plan will also  facilitate  its  ability  to  sustain an
effective recruiting campaign.

     The Company's current long-term  business plan is to seek opportunities for
growth  and  diversification  of  its  product  and  service  offerings  through
acquisitions  and internal  growth.  To implement its long-term growth strategy,
the Company will seek to raise capital through private or public debt and equity
financing.  The Company's  application to the Nasdaq Stock Market for listing on
the Nasdaq  SmallCap  Market has been initially  denied because of the Company's
failure to meet the  requirements  of Sections  4310(c)(6) and 4330(a)(3) of the
Marketplace  Rules of the Nasdaq Stock Market due to an  insufficient  number of
shareholders who made an independent economic decision to invest in the Company.
The Company has filed an appeal and  management  believes the Company  satisfies
the listing  criteria for inclusion on the Nasdaq  SmallCap Market but there can
be no assurance that the appeal will be successful.

RISKS AND UNCERTAINTIES

Statements  contained  in this  Form  10-Q  that are not  historical  facts  are
forward-looking  statements  made pursuant to the safe harbor  provisions of the
Private  Securities  Litigation  Reform Act of 1995. In addition,  words such as
"believes,"  "anticipates,"  "expects" and similar  expressions  are intended to
identify  forward-looking  statements.  Such forward-looking  statements involve
known and unknown  risks,  uncertainties,  and other factors which may cause the
actual results,  performance or achievements of the Company or events, or timing
of events, relating to the Company to differ materially from any future results,
performance  or  achievements  of the  Company or  events,  or timing of events,
relating to the Company expressed or implied by such forward-looking statements.
The more  prominent  known risks and  uncertainties  inherent  in the  Company's
business are set forth below.  However, not all possible risks and uncertainties
to which the Company is subject are discussed herein, nor can it be assumed that
there are not other risks and uncertainties which may be more significant to the
Company.

Such other factors include,  among others,  those described in "Outlook" and the
following:

o    continued  dependence  on a  small  number  of  significant  customers  for
     substantially all of the Company's revenue and the potential loss of one or
     more of the Company's principal customers;

o    continued dependence on government agencies for a significant portion of
     the Company's revenue;

o    the shortage of qualified  and  competent  software  engineers and the risk
     that the Company will be unable to retain its key  employees  and managers,
     especially  in the  event  the  Company  loses  one or  more  contracts  or
     principal customers;

o    dependence on the satellite  command and control industry and the potential
     failure to diversify  the  Company's  product and service  offerings and to
     expand its markets for commercial applications;

o    possible  difficulties  in raising  private or public capital for financing
     working  capital needs and  potential  acquisitions  on terms  favorable or
     acceptable to the Company;

o    the  possible  inability of the Company to find or secure  acquisitions  on
     terms  favorable  or  acceptable  to the Company in pursuit of its plan for
     growth and diversification;

o    continued availability of a commercial line of credit;

o    the  expense  of new  product  development,  the  potential  failure by the
     Company to complete new products on a timely basis, and the failure of such
     products to achieve substantial market acceptance;

o    the  potential  loss of  customers or  opportunities  because of the
     Company's  relationship  as a competitor  to some of its principal
     customers;

o    the potential  loss of other  broadband  satellite  customer  opportunities
     because of the  Company's  strategic  alliance  relationship  with Motorola
     SatCom on the IRIDIUM and Teledesic project;

o    the potential  negative impact of salary  increases on bid rates due to the
     amount of the Company's revenue related to services.

The Company  cannot assure that it will be able to anticipate or respond  timely
to changes which could  adversely  affect its  operating  results in one or more
fiscal  quarters.  Results  of  operations  in any  past  period  should  not be
considered indicative of results to be expected in future periods.  Fluctuations
in operating  results may result in  fluctuations  in the price of the Company's
common stock.

Year 2000 Issues

Some existing  computer  programs will be unable to recognize  dates properly in
the Year 2000  ("Y2K") and beyond.  During 1997,  Exigent  conducted an informal
study  of  its  products,  systems  and  operations,   including  systems  under
development,  to  improve  business  functionality,  to  identify  those  of its
computer  hardware,  software and process  control  systems that do not properly
recognize  dates after  December  31,  1999,  and those that are linked to third
parties'  systems.  Based on this informal  study,  Exigent  recognized that the
OS/COMET  product  required  certain  modifications  to be Y2K compliant.  Those
modifications  have been made to the software  and are  available in the current
release,  Version 3.5.  Exigent has also initiated  communications  with certain
third parties whose computer systems'  functionality  could adversely impact the
Company.  These  communications,  which the Company  expects to complete by July
1999,  will  facilitate  coordination of any necessary Y2K conversions and will,
additionally, permit Exigent to determine the extent to which the Company may be
vulnerable to the failure of third parties to address their own Y2K issues.

The costs of Exigent's Y2K  compliance  efforts are being funded with cash flows
from  operations.  Some of these  costs  relate  solely to the  modification  of
existing  systems,  while others are for new systems that will improve  business
functionality.  In total,  these  costs  are not  expected  to be  substantially
different  from the  normal,  recurring  costs  that are  incurred  for  systems
development  and  implementation,  in part due to the  reallocation  of internal
resources and the deferral of other projects.  As a result,  these costs are not
expected  to have a material  adverse  effect on  Exigent's  overall  results of
operations or cash flows.

The  assessment  of the  costs  of  Exigent's  Y2K  compliance  effort,  and the
timetable for the Company's planned completion of its own Y2K modifications, are
management's   best   estimates.   These  estimates  were  based  upon  numerous
assumptions  regarding future events,  including assumptions as to the continued
availability of certain resources, and, in particular,  personnel with expertise
in this  area,  and as to the  ability  of such  personnel  to locate and either
re-program or replace,  and test, all affected computer  hardware,  software and
process control systems in accordance with the Company's planned schedule. There
can be no guarantee that these estimates will prove accurate, and actual results
could differ from those estimated if these assumptions prove inaccurate.

Based upon progress to date, however,  Exigent believes that it is unlikely that
the foregoing  factors will cause actual  results to differ  significantly  from
those  estimated.  As to the  systems  of the third  parties  that are linked to
Exigent's, there can be no guarantee that those of such systems that are not now
Y2K-compliant will be timely converted to compliance. Additionally, there can be
no  guarantee  that  third  parties  of  business  importance  to  Exigent  will
successfully  and  timely  reprogram  or  replace,  and  test,  all of their own
computer hardware, software and process control systems.



<PAGE>


PART II - OTHER INFORMATION


Item 5.  Other Information

     1. On August 11, 1998,  Exigent entered into a consulting  arrangement with
Daniel J. Stark, a former employee of STI, who resigned his position on July 17,
1998. Mr. Stark is currently serving as a Director of Exigent and was one of the
original  founders  of STI in 1978.  Under the terms of the  agreement,  Exigent
agrees to pay consulting  fees to Mr. Stark for one year on regularly  scheduled
Company pay periods commencing with the pay period beginning August 31, 1998 and
ending with the pay period on August 31, 1999. For more information,  please see
Confidential Release and Waiver Agreement, attached hereto as Exhibit 10.18.

     2. Exigent  Warrants  currently  trading on the Chicago  Stock  Exchange as
XNTWS and on the NASD OTC BB as XGNTW will expire on January 30, 2000.

Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits

         Number                     Exhibit

         10                         Confidential Release and Waiver Agreement
                                    between Daniel J. Stark and Exigent
                                    International, Inc. executed on
                                    August 11, 1998

         27                         Financial Data Schedule

     (b) Reports on Form 8-K:

         None



<PAGE>



                                   SIGNATURES

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

                           Exigent International, Inc.



December 15, 1998          By: /s/ B.R. "Bernie" Smedley
Date                       -----------------------------
                                   B.R. "Bernie" Smedley,
                                   Chief Executive Officer



December 15, 1998         By:  /s/ Jeffery B. Weinress
Date                      ------------------------------
                                   Jeffery B. Weinress,
                                   Chief Financial Officer


<PAGE>