EXHIBIT 10.7

                                 PROMISSORY NOTE

                                               Date of Execution: March 29, 1999
                                                           Amount: $1,500,000.00

FOR VALUE RECEIVED,  the undersigned  ("Borrower")  unconditionally (and jointly
and severally,  if more than one) promise(s) to pay to the order of NATIONSBANK,
N.A., a National Banking Association ("Bank"), Sarasota (Banking Center) without
setoff, at its offices at 1605 Main Street, Suite 101, Sarasota,  Florida, 34236
or at such other place as may be designated by Bank, the principal amount of ONE
MILLION FIVE HUNDRED  THOUSAND AND 00/100  DOLLARS  ($1,500,000.00),  or so much
thereof as may be advanced  from time to time in  immediately  available  funds,
together with  interest  computed  daily on the  outstanding  principal  balance
hereunder,  at an annual  interest  rate,  and in  accordance  with the  payment
schedule, indicated below.

Rate

         1. The  interest  rate  ("Rate")  due under  the Note  shall be one and
one-half  percent  (1.5%) in  excess  of the  Eurodollar  Rate,  as  hereinafter
defined,  which  interest  rate shall adjust with each change in the  Eurodollar
Rate.

         2. a. The  Eurodollar  Rate  shall  mean the  rate per  annum  (rounded
upwards,  if  necessary,  to the nearest 1/100 of 1%) appearing on Telerate Page
3750 (or any successor page) as the London  interbank  offered rate for deposits
of United States Dollars at approximately 11:00 a.m. (Charlotte,  North Carolina
time)  on such  day,  or if such  day is not a  Domestic  Business  Day,  on the
immediately  preceding  Domestic  Business Day, for a one month term. If for any
reason  such rate is not  available  for any day,  the rate per  annum  (rounded
upwards,  if necessary,  to the nearest 1/100 of 1%) shall be the rate appearing
on Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at  approximately  11:00 a.m.  (Charlotte,  North Carolina time) on such
day, or if such day is not a Domestic Business Day, on the immediately preceding
Domestic Business Day, for a one month term; provided, however, if more than one
such rate is  specified on the Reuters  Screen LIBO Page,  the  applicable  rate
shall be the arithmetic mean of all such rates.  The rate shall be adjusted on a
daily basis to reflect  changes in the rate  determined in  accordance  with the
foregoing, effective on the date the change occurs.

                  b. "Domestic  Business Day" means a day other than a Saturday,
Sunday or day on which  commercial banks are authorized or permitted to close in
Charlotte, North Carolina.

                  c. The  Borrower  shall pay to Bank,  from time to time and on
demand, any sum(s) required to compensate the Bank for any additional cost (such
as, but not limited to, a reserve requirement)  incurred by the Bank at any time
which (i) is attributable to the Bank's obtaining a deposit or deposits to cover
the outstanding  principal balance, (ii) decreases the effective spread or yield
represented by the 1.5% component, that would be earned by the Bank but for such
cost,  and  (iii)  is  caused  or  occasioned  by  any  presently   existing  or
subsequently  introduced law, rule,  regulations or other requirement (or by any
change therein, changed effect or interpretation thereof or change in the Bank's
cost of complying therewith) imposed,  interpreted,  administered or enforced by
any federal, state or other governmental or monetary authority, which is imposed
on or applied to the Bank or any assets  held by,  deposits  or  accounts  in or
with, or credits extended by the Bank. The Bank shall notify the Borrower

<PAGE>

from time to time of any such  additional  cost and such notice shall be binding
and conclusive evidence of the Borrower's  obligation to pay the stated sum upon
receipt of the notice.

Notwithstanding any other provision contained in this Note, Bank does not intend
to charge and  Borrower  shall not be  required to pay any amount of interest or
other fees or charges that is in excess of the maximum  permitted by  applicable
law.  Any  payment in excess of such  maximum  shall be  refunded to Borrower or
credited against principal, at the option of Bank.

Accrual Method

Interest  at the Rate set  forth  above,  unless  otherwise  indicated,  will be
calculated on the basis of the 365/360 method,  which computes a daily amount of
interest for a hypothetical year of 360 days, then multiplies such amount by the
actual number of days elapsed in an interest calculation period.

Rate Change Date

Any Rate based on a fluctuating index or base rate will change, unless otherwise
provided, each time and as of the date that the index or base rate changes.

Payment Schedule

All payments  received  hereunder  shall be applied  first to the payment of any
expense or charges payable  hereunder or under any other  documents  executed in
connection with this Note ("Loan Documents"),  then to interest due and payable,
with the  balance  being  applied to  principal,  or in such other order as Bank
shall determine at its option.

1.       Commencing  April  28,  1999,  and  on  the  same  day  of  each  month
         thereafter,  except  for months  containing  less than 30 days in which
         case payment shall be made on the last day of such months  through July
         31,  2000,  payments of all accrued and unpaid  interest  shall be made
         until maturity as set forth below.

2.       The entire  principal  balance,  together  with all  accrued and unpaid
         interest shall be due and payable in full on July 31, 2000.

Revolving Feature

         Borrower may borrow,  repay and reborrow hereunder at any time, up to a
         maximum  aggregate  amount  outstanding  at any one  time  equal to the
         principal amount of this Note; provided,  however, that Borrower is not
         in default under any provision of this Note, any Loan Document,  or any
         other  obligation of Borrower to Bank, and provided that the borrowings
         hereunder  do not exceed any  borrowing  base or other  limitations  on
         borrowings by Borrower. Bank shall have no liability for its refusal to
         advance funds based upon its determination  that any conditions of such
         further  advances  have not  been  met.  Bank  records  of the  amounts
         borrowed from time to time shall be conclusive proof thereof.

Automatic Payment

         Borrower  has elected to authorize  Bank to effect  payment of sums due
         under  this  Note  by  means  of  debiting  Borrower's  account  number
         ____________________________________.   This  authorization  shall  not
         affect the  obligation  of Borrower to pay such sums when due,  without
         notice,  if there are  insufficient  funds in such account to make such
         payment in full on the due date thereof,  or if Bank fails to debit the
         account.


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<PAGE>

Borrower  represents  to Bank  that  the  proceeds  of this  loan are to be used
primarily  for  business,   commercial  or   agricultural   purposes.   Borrower
acknowledges having read and understood, and agrees to be bound by all terms and
conditions of this Note, including the Additional Terms and Conditions set forth
in the Addendum attached hereto and made a part hereof, and hereby executes this
Note under seal.

                           BORROWER:

                           ELCOTEL, INC., a Delaware
                           corporation

                           By: /s/ William H. Thompson
                               -----------------------------------------
                               William Thompson, Senior Vice President

                                    (CORPORATE SEAL)

                           ELCOTEL DIRECT, INC., a Delaware
                           corporation

                           By: /s/ William H. Thompson
                               -------------------------------------
                                William Thompson, Vice President

                                    (CORPORATE SEAL)

                           TECHNOLOGY SERVICE GROUP, INC.(ELCOTEL HOSPITALITY
                           SERVICES, INC.), a Delaware corporation

                           By: /s/ William H. Thompson
                               ---------------------------------------
                               William Thompson, Vice President

                                    (CORPORATE SEAL)


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<PAGE>

                                    ADDENDUM

                                       OF

                         ADDITIONAL TERMS AND CONDITIONS

1.       Waivers,  Consents and Covenants.  Borrower, any indorser, or guarantor
         hereof or any other party hereto (collectively  "Obligors") and each of
         them jointly and severally:  (a) waive presentment,  demand,  notice of
         demand,  notice of intent to accelerate,  and notice of acceleration of
         maturity, protest, notice of protest, notice of non-payment,  notice of
         dishonor,  and any other  notice  required to be given under the law to
         any  of  Obligors,   in  connection  with  the  delivery,   acceptance,
         performance, default or enforcement of this Note, of any indorsement or
         guaranty of this Note or of any Loan Documents;  (b) consent to any and
         all delays, extensions, renewals or other modifications of this Note or
         the  Loan  Documents,  or  waivers  of any term  hereof  or of the Loan
         Documents,  or  releases  or  discharge  by Bank of any of  Obligors or
         release,  substitution,  or  exchange of any  security  for the payment
         hereof,  or the  failure  to act on the part of Bank or any  indulgence
         shown by Bank, from time to time and in one or more instances  (without
         notice to or further  assent  from any of  Obligors)  and agree that no
         such action,  failure to act or failure to exercise any right or remedy
         on the part of Bank shall in any way  affect or impair the  obligations
         of any  Obligors or be  construed  as a waiver by Bank of, or otherwise
         affect,  any of Bank's rights under this Note, under any indorsement or
         guaranty of this Note or under any of the Loan Documents; and (c) agree
         to pay, on demand, all costs and expenses of collection of this Note or
         of any  indorsement or guaranty hereof and/or the enforcement of Bank's
         rights   with   respect   to,  or  the   administration,   supervision,
         preservation, protection of, or realization upon, any property securing
         payment hereof,  including without  limitation,  reasonable  attorneys'
         fees,  including  fees related to any trial,  arbitration,  bankruptcy,
         appeal or other proceeding.

2.       Indemnification.  Obligors  agree to promptly  pay,  indemnify and hold
         Bank  harmless  from all state and federal  taxes of any kind and other
         liabilities with respect to or resulting from advances made pursuant to
         this  Note;  provided  however  this  shall not apply to income  taxes,
         Federal, State or otherwise,  of the Bank. If this Note has a revolving
         feature and is secured by a mortgage, Obligors expressly consent to the
         deduction of any applicable taxes from each taxable advance extended by
         Bank.

3.       Prepayments.  Prepayment  may be made in whole or in part at any  time.
         All  prepayments of principal  shall be applied in the inverse order of
         maturity,  or in such other order as Bank shall  determine  in its sole
         discretion.

4.       Events of Default.  The following are events of default hereunder:  (a)
         the  failure to make any  payment  due under this Note  within ten (10)
         days  after  the  due  date  or  the  failure  to pay  or  perform  any
         obligation, liability or indebtedness of any Obligor to Bank, or to any
         affiliate of Bank, whether under this Note or any other agreement, note
         or instrument now or hereafter existing,  as and when due (whether upon
         demand,  at  maturity  or by  acceleration);  (b) the failure to pay or
         perform  any other  obligation,  liability  or  indebtedness  of any of
         Obligors  whether to Bank or some other  party,  the security for which
         constitutes  an encumbrance on the security for this Note; (c) death of
         any  Obligor  (if  an  individual),  or a  proceeding  being  filed  or
         commenced  against any Obligor for dissolution or  liquidation,  or any
         Obligor voluntarily or involuntarily


<PAGE>

         terminating  or  dissolving  or  being  terminated  or  dissolved;  (d)
         insolvency  of,  business  failure of, the  appointment of a custodian,
         trustee, liquidator or receiver for or for any other property of, or an
         assignment for the benefit of creditors by, or the filing of a petition
         under  bankruptcy,  insolvency  or  debtor's  relief  law  or  for  any
         adjustment of indebtedness,  composition or extension by or against any
         Obligor; (e) any lien or additional security interest being placed upon
         any of the property which is security for this Note; (f) acquisition at
         any time or from  time to time of title to the  whole of or any part of
         the   property   which  is  security  for  this  Note  by  any  person,
         partnership, corporation or other entity; (g) Bank determining that any
         representation or warranty made by any Obligor in any Loan Documents or
         otherwise  to Bank is, or was,  untrue or  materially  misleading;  (h)
         failure of any Obligor to timely  deliver  such  financial  statements,
         including  tax  returns,  and other  statements  of  condition or other
         information  as Bank shall  request from time to time;  (i) any default
         under any Loan Documents;  (j) entry of a judgment  against any Obligor
         which Bank deems to be of a material nature, in Bank's sole discretion;
         (k) the  seizure  or  forfeiture  of,  or the  issuance  of any writ of
         possession,  garnishment or  attachment,  or any turnover order for any
         property of any Obligor;  (l) the determination by Bank that a material
         adverse change has occurred in the financial  condition of any Obligor;
         or, (m) the failure to comply with any law or regulation regulating the
         operation  of  Borrower's  business  which  has a  material  effect  on
         Borrower's business.

5.       Remedies Upon Default. Whenever there is a default under this Note, (a)
         the entire balance  outstanding and all other obligations of Obligor to
         Bank  (however  acquired or  evidenced)  shall,  at the option of Bank,
         become immediately due and payable,  and/or (b) to the extent permitted
         by law,  the Rate of interest  on the unpaid  principal  shall,  at the
         option of Bank,  be  increased at Bank's  discretion  up to the maximum
         rate allowed by law, or if none,  twenty-five  percent  (25%) per annum
         (the  "Default  Rate");  and/or (c) to the extent  permitted  by law, a
         delinquency  charge  may be  imposed  in an amount  not to exceed  five
         percent (5%) of any payment in default for more than fifteen (15) days.
         The provisions herein for a Default Rate or a delinquency  charge shall
         not be  deemed  to  extend  the time for any  payment  hereunder  or to
         constitute  a "grace  period"  giving the  Obligors a right to cure any
         default.  At Bank's option,  any accrued and unpaid  interest,  fees or
         charges may, for purposes of computing and accruing interest on a daily
         basis  after the due date of the Note or any  installment  thereof,  be
         deemed to be a part of the principal balance, and interest shall accrue
         on a daily  compounded  basis  after such date at the rate  provided in
         this  Note  until the  entire  outstanding  balance  of  principal  and
         interest  is paid in full.  Bank is  hereby  authorized  at any time to
         setoff and charge against any deposit accounts of any Obligor,  as well
         as any other  property  of such party at or under the  control of Bank,
         without notice or demand, any and all obligations due hereunder.

6.       Non-waiver.  The  failure  at any time of Bank to  exercise  any of its
         options or any other  rights  hereunder  shall not  constitute a waiver
         thereof, nor shall it be a bar to the exercise of any of its options or
         rights at a later  date.  All  rights  and  remedies  of Bank  shall be
         cumulative and may be pursued singly,  successively or together, at the
         option of Bank. The acceptance by Bank of any partial payment shall not
         constitute  a waiver of any  default or of any of Bank's  rights  under
         this  Note.  No  waiver  of  any  of  its  rights  hereunder,   and  no
         modification  or amendment of this Note,  shall be deemed to be made by
         Bank  unless the same  shall be in  writing,  duly  signed on behalf of
         Bank;  and each such wavier,  if any,  shall apply only with respect to
         the specific instance involved, and


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<PAGE>

         shall in no way impair the rights of Bank or the obligations of Obligor
         to Bank in any other respect at any other time.

7.       Applicable  Law.  This Note shall be construed  under the internal laws
         and  judicial  decisions  of the State of Florida,  and the laws of the
         United States as the same may be applicable.

8.       Partial Invalidity. The unenforceability or invalidity of any provision
         of this Note shall not affect the enforceability or the validity of any
         other provision  herein and the invalidity or  unenforceability  of any
         provision  of this  Note or of the  Loan  Documents  to any  person  or
         circumstance  shall not affect the  enforceability  or validity of such
         provision as it may apply to other persons or circumstances.

9.       Jurisdiction  and Venue.  In any  litigation in  connection  with or to
         enforce  this Note or any  indorsement  or guaranty of this Note or any
         Loan Documents,  Obligors, and each of them, irrevocably consent to and
         confer  personal  jurisdiction on the courts of the State of Florida or
         the United  States  courts  located  within the State of  Florida,  and
         expressly  waive any  objections  as to venue in any such  courts,  and
         agree that service of process may be made on Obligors by mailing a copy
         of the summons and complaint by registered  or certified  mail,  return
         receipt  requested,  to their respective  addresses.  Nothing contained
         herein  shall,  however,  prevent  Bank  from  bringing  any  action or
         exercising  any rights within any other state or  jurisdiction  or from
         obtaining  personal  jurisdiction  by  any  other  means  available  by
         applicable law.

10.      ARBITRATION.  ANY  CONTROVERSY  OR CLAIM  BETWEEN OR AMONG THE  PARTIES
         HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO
         THIS NOTE OR ANY  RELATED  NOTES OR  INSTRUMENTS,  INCLUDING  ANY CLAIM
         BASED ON OR  ARISING  FROM AN  ALLEGED  TORT,  SHALL BE  DETERMINED  BY
         BINDING  ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR
         IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
         PROCEDURE  FOR THE  ARBITRATION  OF  COMMERCIAL  DISPUTES  OR  JUDICIAL
         ARBITRATION AND MEDIATION  SERVICES,  INC.  (J.A.M.S.) AND THE "SPECIAL
         RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY,  THE SPECIAL
         RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED
         IN ANY COURT HAVING JURISDICTION.  ANY PARTY TO THE NOTICE MAY BRING AN
         ACTION,  INCLUDING  A  SUMMARY  OR  EXPEDITED  PROCEEDING,   TO  COMPEL
         ARBITRATION  OF ANY  CONTROVERSY OR CLAIM TO WHICH THIS NOTE APPLIES IN
         ANY COURT HAVING JURISDICTION OVER SUCH ACTION.

         1. SPECIAL  RULES.  THE  ARBITRATION  SHALL BE CONDUCTED IN THE CITY OF
         BRADENTON,  FLORIDA AND  ADMINISTERED  BY J.A.M.S.  WHO WILL APPOINT AN
         ARBITRATOR;   IF  J.A.M.S.   IS  UNABLE  OR  LEGALLY   PRECLUDED   FROM
         ADMINISTERING   THE   ARBITRATION,   THEN  THE   AMERICAN   ARBITRATION
         ASSOCIATION  WILL SERVE.  ALL  ARBITRATION  HEARINGS  WILL BE COMMENCED
         WITHIN  NINETY (90) DAYS OF THE DEMAND FOR  ARBITRATION;  FURTHER,  THE
         ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE


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<PAGE>

         PERMITTED TO EXTEND THE  COMMENCEMENT OF SUCH HEARING FOR AN ADDITIONAL
         SIXTY (60) DAYS.

         2. RESERVATION  OF RIGHTS.  NOTHING IN THIS NOTE SHALL BE DEEMED TO (I)
         LIMIT  THE  APPLICABILITY  OF  ANY  OTHERWISE  APPLICABLE  STATUTES  OF
         LIMITATIONS  OR REPOSE AND ANY WAIVERS  CONTAINED IN THIS NOTE; OR (II)
         BE A WAIVER BY THE BANK OF THE  PROTECTION  AFFORDED TO IT BY 12 U.S.C.
         ss.91 OR ANY  SUBSTANTIALLY  EQUIVALENT  STATE LAW;  OR (III) LIMIT THE
         RIGHT OF THE BANK HERETO (A) TO  EXERCISE  SELF HELP  REMEDIES  SUCH AS
         (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSURE  AGAINST ANY REAL OR
         PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL
         OR ANCILLARY  REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE  RELIEF,
         WRIT OF  POSSESSION  OR THE  APPOINTMENT  OF A  RECEIVER.  THE BANK MAY
         EXERCISE  SUCH SELF HELP RIGHTS,  FORECLOSURE  UPON SUCH  PROPERTY,  OR
         OBTAIN SUCH PROVISIONALLY OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER
         THE PENDENCY OF ANY  ARBITRATION  PROCEEDING  BROUGHT  PURSUANT TO THIS
         NOTE. NEITHER THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
         MAINTENANCE OF AN ACTION FOR FORECLOSURE OR  PROVISIONALLY OR ANCILLARY
         REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING
         THE CLAIMANT IN SUCH

         ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
         RESORT TO SUCH REMEDIES.

11.      Binding  Effect.  This  Note  shall be  binding  upon and  inure to the
         benefit of Borrower, Obligors and Bank and their respective successors,
         assigns, heirs and personal representatives; provided, however, that no
         obligations  of the Borrower or the Obligor  hereunder  can be assigned
         without prior written consent of Bank.

12.      NOTICE OF FINAL AGREEMENT.  THIS WRITTEN  PROMISSORY NOTE AND ANY OTHER
         DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT
         BETWEEN THE PARTIES AND MAY NOT BE  CONTRADICTED  BY EVIDENCE OF PRIOR,
         CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
         NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

13.      Year 2000 Representations,  Covenants and Warranties.  (1) Borrower has
         (i) begun analyzing the operations of Borrower and its subsidiaries and
         affiliates  that could be adversely  affected by failure to become Year
         2000  compliant   (that  is,  that  computer   applications,   imbedded
         microchips  and other  systems  will be able to perform  date-sensitive
         functions  prior to and after  December 31, 1999) and; (ii) developed a
         plan  for  becoming  Year  2000  compliant  in  a  timely  manner,  the
         implementation  of  which  is on  schedule  in all  material  respects.
         Borrower  reasonably  believes that it will become Year 2000  compliant
         for its  operations and those of its  subsidiaries  and affiliates on a
         timely  basis  except to the  extent  that a failure to do so could not
         reasonably  be  expected  to have a material  adverse  effect  upon the
         financial  condition of Borrower.  (2) Borrower reasonably believes any
         suppliers  and vendors that are material to the  operations of Borrower
         or its  subsidiaries  and  affiliates  will be Year 2000  compliant for
         their own computer  applications except to the extent that a failure to
         do so could not reasonably be


                                       4
<PAGE>

         expected to have a material adverse effect upon the financial condition
         of  Borrower.  (3)  Borrower  will  promptly  notify  Bank in the event
         Borrower determines that any computer  application which is material to
         the  operations of Borrower,  its  subsidiaries  or any of its material
         vendors or suppliers  will not be fully Year 2000 compliant on a timely
         basis,  except to the extent that such failure could not  reasonably be
         expected to have a material adverse effect upon the financial condition
         of Borrower."


                           BORROWER:

                           ELCOTEL, INC., a Delaware
                           corporation

                           By: s/s William H. Thompson
                               ----------------------------------------
                               William Thompson, Senior Vice President

                           (CORPORATE SEAL)

                           ELCOTEL DIRECT, INC., a Delaware
                           corporation

                           By: s/s William H. Thompson
                               ----------------------------------------
                               William Thompson, Vice President

                                    (CORPORATE SEAL)

                           TECHNOLOGY SERVICE GROUP, INC.(ELCOTEL HOSPITALITY
                           SERVICES, INC.), a Delaware corporation

                           By: s/s William H. Thompson
                               ----------------------------------------
                               William Thompson, Vice President

                                    (CORPORATE SEAL)


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