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                                    FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(Mark One)
     [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 1, 2000

                                       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 No. 0-11003

                               WEGENER CORPORATION

             (Exact name of registrant as specified in its charter)

        DELAWARE                                                 81-0371341
(State of incorporation)                                      (I.R.S. Employer
                                                             Identification No.)
11350 TECHNOLOGY CIRCLE, DULUTH, GEORGIA                         30097-1502
(Address of principal executive offices)                         (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 623-0096

                 REGISTRANT'S WEB SITE: HTTP://WWW.WEGENER .COM

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                          Common Stock, $.01 par value

                                (Title of class)

     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 [ ]

     As of November 16, 2000,  11,865,478  shares of  registrant's  Common Stock
were  outstanding  and the  aggregate  market  value of the Common Stock held by
nonaffiliates  was $11,334,427  based on the last sale price of the Common Stock
as  quoted on the  NASDAQ  Small-Cap  Market on such  date.  (The  officers  and
directors of the registrant,  and owners of over 10% of the registrant's  common
stock, are considered affiliates for purposes of this calculation.)

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the definitive  Proxy  Statement  pertaining to the January 23,
2001 Annual  Meeting of  Stockholders,  only to the extent  expressly  so stated
herein, are incorporated herein by reference into Part III.
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<PAGE>

                               WEGENER CORPORATION
                                    FORM 10-K
                          YEAR ENDED SEPTEMBER 1, 2000
                                      INDEX

                                     PART I

                                                                            Page
Item 1.   Business ........................................................    2
Item 2.   Properties ......................................................   10
Item 3.   Legal Proceedings ...............................................   10

                                     PART II

Item 5.   Market for Registrant's Common Stock and Related Stockholder
          Matters..........................................................   10
Item 6.   Selected Financial Data .........................................   11
Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations..............................   12
Item 7a.  Quantitative and Qualitative Disclosures About Market Risk.......   20
Item 8.   Financial Statements and Supplementary Data .....................   20
Item 9.   Changes in and Disagreements With Accountants on Accounting and
          Financial Disclosures............................................   38

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant ..............   38
Item 11.  Executive Compensation ..........................................   38
Item 12.  Security Ownership of Certain Beneficial Owners
          and Management...................................................   38
Item 13.  Certain Relationships and Related Transactions ..................   38

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and
          Reports on Form 8-K..............................................   39

                                       1
<PAGE>

                                     PART I

ITEM 1.   BUSINESS

     Wegener  Corporation,  the Registrant,  together with its subsidiaries,  is
referred to herein as the "Company" or "WGNR."

     (a)  General development of business.

     Wegener Corporation was formed in 1977 and is a Delaware  corporation.  The
Company conducts its continuing  business through Wegener  Communications,  Inc.
(WCI), its wholly owned subsidiary,  and Wegener  Communications  International,
Inc., a wholly owned subsidiary of WCI.

     WCI was formed in April 1978 and is a Georgia corporation. Its wholly owned
subsidiary, Wegener Communications International, Inc., is a Small Foreign Sales
Corporation.  WCI, a market leader in digital and analog compression technology,
designs and manufactures communications transmission and receiving equipment for
the business broadcast, data communications, internet, cable and broadcast radio
and television industries for worldwide markets.

     (b)  Financial information about segments.

     Segment  information  contained  in Note 11 to the  consolidated  financial
statements  contained  in this report is  incorporated  herein by  reference  in
response to this item.

     (c)  Narrative description of business.

          (i)    Principal products produced and services rendered, and

          (ii)   Status of a product or segment.

Satellite Communications Electronics.
------------------------------------

WCI is an  international  provider  of digital  solutions  for video,  audio and
broadcast  data  networks.  Applications  include  broadcast  television,  cable
television,  radio network,  business television,  distance education,  business
music, satellite paging and financial information distribution. WCI services the
products  that it sells.  The Company  warrants its products for a period of one
year. There were no significant  warranty claims  outstanding as of September 1,
2000.

Throughout  fiscal 2000 and fiscal  1999,  WCI  continued to produce and develop
digital compression  products.  During fiscal 1997 WCI introduced COMPEL network
control software and the UNITY Digital Broadcast  product family.  WCI continues
to ship these products  against  purchase  orders it receives.  COMPEL  provides
networks with  unparalleled  ability to regionalize  programming and commercials
through total receiver control. COMPEL also allows network operators to remotely
control  uplinks  providing  bandwidth on demand.  COMPEL control  capability is
integrated  into  the  UNITY  digital  satellite  receivers.  Wegener's  digital
products are in use worldwide in broadcast

                                       2
<PAGE>

television,  distance learning,  radio,  cable television,  and private business
networks.  In terms of new orders,  digital technology  products are the fastest
growing  product line for the Company.  As  expected,  demand for the  Company's
analog  products has continued to decline  following  market demand for, and the
Company's emphasis on, digital technology.

DIGITAL  COMMUNICATIONS.  The demand for digital products is being driven by the
high cost of satellite capacity and consumer demand for more channels. Satellite
capacity  is scarce due to  pressures  on both the supply and demand side of the
market. On the supply side, satellites are extremely expensive to launch, build,
and  maintain.  The  useful  life of a  satellite  is  limited  by the amount of
positioning  fuel that can be carried.  Also,  the  placement of  satellites  is
regulated  by the Federal  Communications  Commission  (FCC) and  therefore  the
number of  satellites  within  range of any given  location is  limited.  On the
demand side,  the cost of receive  hardware is being  steadily  reduced  through
advancing  technology.  The reduction in the cost of network hardware  increases
the economic  feasibility of a greater number of networks.  This is evidenced by
the trend in both  television  and radio towards  narrowcasting  to well defined
market segments as opposed to broadcasting  to the general  population.  Digital
compression  technology  allows a four to  ten-fold,  or more,  increase  in the
throughput of a satellite channel. For the network, this compression  represents
an opportunity  to reduce the cost of satellite use. For the satellite  operator
it represents an opportunity to increase the revenues  generated by an expensive
asset. Due to existing satellite transponder contracts and the cost of replacing
existing  analog  hardware,  the digital  conversion of major networks is taking
longer than anticipated.  These network conversions are expected to occur in the
near  future,  but it is  impossible  to predict the precise  timing of customer
internal  decision  processes.  Management  believes  the  market as a whole has
considerable built up demand for digital technology.

Major products introduced by WCI during fiscal 2000 include:

o    UNITY500 receiver for private business network  distribution.  The UNITY500
     provides DVB compliant  MPEG-2  digital  video  operating in either SCPC or
     MCPC  modes  from 2.5 to 50 Mb, as well as audio  and data in one unit.  In
     addition, it supports DVB teletext and Line 21.

o    UNITY 5000 PRO Broadcast  Receiver is ideally suited for the discriminating
     broadcast  network or  programming  operator  who  desires  to deliver  the
     highest  quality  video  available.  Including  the latest in digital video
     technology, the UNITY 5000 PRO delivers fully MPEG2/DVB compliant video and
     advanced modulation formats for the highest bit rates possible. MPEG2 4:2:2
     studio  profile,  4:2:0  distribution  profile and RS250C  video  amplitude
     response allow the PRO receiver to fill any high-end  application for video
     delivery.  Both NTSC and PAL video formats are supported with  auto-detect,
     which  allows the UNITY 5000 PRO to be used in  international  transmission
     applications without switching receivers.

o    iPump Media Server is an  integrated  store and forward  digital  satellite
     receiver  and  multi-media  server.  The iPump is  designed  for  business,
     broadcast and cable  applications where the user wants to customize content
     playout by specific  locations,  without the high cost of a server cluster.
     Combined with Wegener's  patented Compel Control,  the network operator can
     transmit  digital  video,  audio or data to  individual  or groups of iPump
     Media  Servers in either real time or non-real  time.  iPump  shipments are
     expected to begin during fiscal year 2001.

                                       3
<PAGE>

o    Compel(TM)  Bandwidth  on Demand  system  lets you  manage  your  satellite
     network  and  available  bandwidth  for  maximum   efficiency.   Compel(TM)
     Bandwidth  on Demand  provides  uplink  contribution  management  for total
     network   control  and  provides  a  window  into  available  and  utilized
     bandwidth.  Its powerful,  end-to-end command structure  simplifies network
     control  functions  while  easily  accomplishing  equipment  and  bandwidth
     objectives -  network-wide,  by equipment  groups,  even down to individual
     IRDs.

BROADCAST  AND  PROGRAM  DISTRIBUTION.  With  ongoing  breakthroughs  in digital
compression,  digitized  audio  and  video  products  have  become  increasingly
important.  WCI manufactures MPEG-2 broadcast quality digital video products for
commercial  program  distribution.  During fiscal 2000, WCI received  additional
orders for cable  products from  FOX/SportsNet  for its Unity 4000 MPEG2 digital
video satellite receivers.

Orders received during FY 2000 include:

Wegener  received  an order from  Turner  Broadcasting  System,  Inc.  for ENVOY
encoders/modulators,  UNITY4422 IRD, and DiviCom  digital video  encoders.  This
equipment will be utilized by Turner  Broadcasting System for CNN video links to
Atlanta  from  London,  Moscow,  and  Jerusalem,  plus  digital  satellite  news
gathering activities.

An order in excess of $375,000 for digital  video  products  was  received  from
ASCENT Network Services, a division of ASCENT Entertainment Group, Inc. NBC News
Channel  will use  this  equipment  to  upgrade  DSNG  (Digital  Satellite  News
Gathering)  vehicles and NBC affiliate  stations.  This is a continuation of NBC
News Channel's  announced  commitment to both Wegener digital video products and
ASCENT network support services.

A  substantial  order from CONUS  Communications  consisting  of UNITY4422  IRDs
(Integrated  Receiver  Decoders)  plus COMPEL  Network  Control  with  COMPEL-CA
encryption was also  received.  The UNITY4422 IRDs will be used with a SONY MPEG
encoding and multiplexing  system to distribute high quality 4:2:2 profile video
feeds to CONUS member stations. CONUS will provide members with the equipment at
no cost to the  stations as the new service  transitions  to a fully  integrated
digital distribution system.

Wegener also  announced it received an order in excess of $1 million for digital
video  broadcast  equipment  from TV  Azteca,  located  in  Mexico.  This  order
consisted of Wegener UNITY4422 Digital IRD (Integrated  Receiver Decoders),  the
UNITYMUX  4010 Data  Multiplexer,  plus COMPEL  Network  Control with  COMPEL-CA
encryption.

BUSINESS TELEVISION/DISTANCE LEARNING. The Company's analog and digital products
are used by businesses and educational  institutions to transmit  programming to
remote locations.

WCI  announced it received an order from  Sweden's  national  broadcast  agency,
TERACOM AB, for Wegener's COMPEL Web Access software module.

                                       4
<PAGE>

TERACOM AB also placed  orders for 3,000  Wegener  UNITY 500 Digital  Television
Receivers.

CABLE  TELEVISION  PRODUCTS.  During fiscal 2000,  WCI continued  rollout of the
UNITY 4000 digital  video  receivers to FX Networks  and Fox's  regional  sports
networks.

Orders received during FY 2000 include:

Wegener received an order from Christian Communications of Chicagoland, Inc. for
digital video  products,  COMPEL  Network  Control and a DiviCom MCPC  (Multiple
Channels Per Carrier)  digital  video  system.  This  equipment  will be used to
distribute programming for The Total Living Network (TLN).

A $1.4  million  dollar  order  from MEGA  HERTZ  (MHz) was  placed  for  analog
subcarrier  demodulator  cards and products  that Wegener  supplies to the cable
television industry.

RADIO AND TELEVISION BROADCASTING.  Broadcasters use WCI equipment to distribute
digital audio, analog audio, video, and cue/network control signals.  Television
networks  such as  FOX,  NBC  and  Turner  Broadcasting,  use  WCI  products  to
distribute  high  quality   programming   from  remote   locations  and  between
affiliates.  Satellite based radio networks  distribute  programming and network
control signals to network affiliates.

During the first quarter of fiscal 2000,  Wegener  received an order from IMPSAT
Argentina,  a  division  of  IMPSAT  Corporation,  for DR Series  digital  audio
equipment.  IMPSAT  Argentina will use the Wegener DR96Q QPSK digital  receivers
and their existing ANCS system  customized  with a Data Delivery  Module to send
and trigger customized commercial spots using HARDATAis DiNeSat system.

OPTICAL  FIBER  AND  TERRESTRIAL  MICROWAVE.  Most  of  WCI's  products  used on
satellite  communications  links are easily used on existing  microwave or fiber
circuits.  Typical  applications  are digital  video links,  plus voice and data
circuits that accompany a video signal.

DirecTV,  Inc.  selected Wegener to provide digital receivers to support its new
service of local  broadcast  programming  to its  direct  broadcast-by-satellite
(DBS) subscribers.

BUSINESS  MUSIC.  This  market  consists  of  suppliers  of  business  music  to
restaurants,  offices and various retail  establishments.  WCI  manufactures the
equipment  required to transmit  audio and data from the business music supplier
to the end user via satellite. The equipment is controlled by the business music
supplier using WCI's network  control  technology.  Potential  users include any
business purchasing background music, foreground music and broadcast data.

In early fiscal 2000,  MultiPoint  Communications,  a leading provider of system
integration services based in the United Kingdom, ordered 150 additional Wegener
digital audio  receivers for the  expansion of one of several  existing  digital
audio networks in the U.K.

                                       5
<PAGE>

          (iii)  Sources and availability of raw materials.

     Raw materials consist of passive electronic components,  electronic circuit
boards and fabricated sheet metal. WCI purchases  approximately  one-half of its
raw  materials  from  direct  suppliers  and the other  half is  purchased  from
distributors.  Passive and active  components  include  parts such as resistors,
integrated  circuits and diodes.  WCI uses  approximately  ten  distributors and
three  subcontractors  to supply  its  electronic  components.  WCI often uses a
single  distributor or  subcontractor  to supply a total sub-assembly or turnkey
solution  for higher  volume  products.  Direct  sources  provide  sheet  metal,
electronic  circuit  boards and other  materials  built to  specifications.  WCI
maintains relationships with approximately twenty direct suppliers.  Most of the
Company's materials are available from a number of different suppliers; however,
certain components used in existing and future products are currently  available
from  single  or  limited  sources.  Although  the  Company  believes  that  all
single-source  components currently are available in adequate quantities,  there
can be no assurance that shortages or unanticipated  delivery interruptions will
not develop in the future.  Any  disruption or  termination of supply of certain
single-source  components could have an adverse effect on the Company's business
and results of operations.

          (iv)   Patents, trademarks, licenses, franchises and concessions held.

     The Company holds certain  patents with respect to some of its products and
markets its services and  products  under  various  trademarks  and  tradenames.
Additionally, the Company licenses certain analog audio processing technology to
several   manufacturing   companies   which   generated   royalty   revenues  of
approximately  $257,000,  $73,000 and $184,000 in fiscal 2000,  1999,  and 1998,
respectively.  Although  the Company  believes  that the patents and  trademarks
owned are of value,  the Company  believes  that success in its industry will be
dependent upon new product  introductions,  frequent product  enhancements,  and
customer support and service. However, the Company intends to protect its rights
when, in its view, these rights are infringed upon.

          (v)    Seasonal variations in business.

     There  does not  appear  to be any  seasonal  variations  in the  Company's
business.

          (vi)   Working capital practices.

     Information  contained  under  the  caption  "Management's  Discussion  and
Analysis of Financial Condition and Results of Operations" (MD&A) in this report
is incorporated herein by reference in response to this item.

          (vii)  Dependence upon a limited number of customers.

     The Company sells to a variety of domestic and  international  customers on
an  open-unsecured  account basis.  These customers  principally  operate in the
cable  television,   broadcast  business  music,   private  network,   and  data
communications  industries.   Sales  to  Autotote  Communications  Services  and
MegaHertz  accounted  for  approximately  16.2% and 11.1% of  revenues in fiscal
2000, respectively.

                                       6
<PAGE>

Sales to FOX/Liberty  Networks,  L.L.C.  accounted for  approximately  19.2% amd
34.2% of revenues in fiscal 1999 and 1998,  respectively.  At  September 1, 2000
four customers accounted for more than 10% of the Company's accounts receivable.
At September 3, 1999,  no customer  accounted for more than 10% of the Company's
accounts receivable.  Sales to a relatively small number of major customers have
typically comprised a majority of the Company's revenues. This trend is expected
to continue in fiscal 2001.  There can be no  assurance  that the loss of one or
more of  these  customers  would  not  have a  material  adverse  effect  on the
Company's operations.

          (viii) Backlog of orders.

     The Company's  backlog is comprised of undelivered,  firm customer  orders,
which are scheduled to ship within eighteen  months.  The Company's  backlog was
approximately  $9,210,000 at September 1, 2000 and  $15,691,000  at September 3,
1999.  Reference  is  hereby  made to MD&A,  which  is  incorporated  herein  by
reference in response to this item.

     Approximately  $9,162,000  of the  September 1, 2000 backlog is expected to
ship during fiscal 2001.

          (ix)   Government contracts.

     Not applicable.

          (x)    Competitive Conditions.

     The  Company  competes  with  companies  that  have  substantially  greater
resources,  as well as with small specialized  companies.  Through relationships
with component and  integrated  solution  providers,  the Company has positioned
itself to provide end-to-end digital video and audio solutions to its customers.
Competition  in  the  market  for  the  Company's  MPEG-2  broadcast  television
electronics   products,   including  digital  video  equipment,   is  driven  by
timeliness,  performance,  and price.  The  Company's  broadcast  digital  video
products are in production and are competitively priced, with unique,  desirable
features.  Due to the large number of potential end users,  both small and large
competitors continue to emerge. The Company believes it has positioned itself to
capitalize on the market trends in this business through careful  development of
its product and market  strategies,  which have proven  successful in increasing
revenues from this sector.  In the cable television  market the Company believes
that the competitive position for many of its products is dominant. However, the
UNITY product family is competing with  significant and established  firms.  WCI
believes  that it maintains a  competitive  advantage in the cable and broadcast
video markets for advertising-supported  networks through its ability to provide
regionalized  programming  and  control.  Other  products  for cable  television
include  proprietary  cueing and network control devices.  Competition for radio
network  products,  including the  Company's  digital  audio  products,  is very
aggressive  and  pricing is very  competitive.  The  Company  believes  that its
continued success in all of its markets will depend on aggressive  marketing and
product development.

          (xi)   Research and development activities.

                                       7
<PAGE>

     The  Company's  research  and  development  is designed to  strengthen  and
broaden its  existing  products  and systems  and to develop  new  products  and
systems.  A major portion of the fiscal 2000 research and  development  expenses
were spent in the digital  video product area.  WCI's  research and  development
expenses  totaled  $3,048,000  in fiscal 2000,  and  $2,924,000  in fiscal 1999.
Additional  information  contained  on pages  3-4 and in MD&A in this  report is
incorporated herein by reference in response to this item.

          (xii)  Environmental Regulation.

     Federal,  state and local pollution  control  requirements have no material
effect upon the capital  expenditures,  earnings or the competitive  position of
the Company.

          (xiii) Number of employees.

     As of September 1, 2000, the Company had 130 employees  employed by the WCI
manufacturing  subsidiary and no employees employed by Wegener  Corporation.  No
employees  are  parties to a  collective  bargaining  agreement  and the Company
believes that employee relations are good.

     (d)  Financial information about geographic areas.

     Information  contained in Note 11 to the consolidated  financial statements
contained in this report is incorporated herein by reference in response to this
item.

                                       8
<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT

The  executive  officers  of the  Company,  for  purposes  of section  401(b) of
Regulation S-K, are as follows:

NAME AND BUSINESS EXPERIENCE                    AGE      OFFICE HELD

ROBERT A. PLACEK                                62       President,
President and Chief Executive Officer                    Chief Executive Officer
of the Company since August 1987 and                     and Chairman of the
Director of the Company since July 1987.                 Board of the Company
Chairman of the Board since 1995.
Chairman and Chief Executive Officer
and Director of WCI since 1979.
President of WCI from October 1979 to
June 1998.

KEITH N. SMITH                                  42       President of WCI
Director of the Company since March
1999. President of WCI since June 1998.
Vice President, Business Development of
WCI from March 1997 to June 1998. Co-
founder and Vice President/General
Manager of Microspace Communications
Corporation from April 1989 through May
1995. From June 1995 until February
1997, Mr. Smith and his wife pursued a
sailing sabbatical.

C. TROY WOODBURY, JR.                           53       Treasurer and
Treasurer and Chief Financial Officer of                 Chief Financial Officer
the Company since June 1988 and                          of the Company and WCI
Director since 1989. Treasurer and Chief
Financial Officer of WCI since 1992.
Executive Vice President of WCI since
July 1995. Chief Operating Officer of
WCI from September 1992 to June 1998. Group
Controller for Scientific-Atlanta,
Inc. from March 1975 to June 1988.

JAMES T. TRAICOFF                               50       Controller of the
Controller of the Company since                          Company and WCI
November 1991; Controller of WCI since
July 1988; Controller for BBL Industries,
Inc. from April 1985 to July 1988.

                                       9
<PAGE>

ITEM 2.   PROPERTIES

     The  executive  offices of the  Company  are  located  at 11350  Technology
Circle, Duluth, Georgia 30097-1502.  This 40,000 square foot facility,  which is
located on a 4.7-acre site, was purchased by WCI in February 1987. During August
1989,  WCI  purchased an  additional  4.4 acres of adjacent  property.  WCI also
leased  approximately  11,300 square feet under a lease that expired  during the
second  quarter of fiscal 2000,  at an annual rental of  approximately  $87,000.
During the third  quarter  of fiscal  2000,  the  Company  moved its  production
department,  materials  management  and  service  departments  into a new leased
facility located in Alpharetta, Georgia. This new 21,000 square foot facility is
covered by a lease expiring during the second quarter of fiscal 2005. The annual
rent is  approximately  $136,000  for the first three (3) years and $143,000 for
the fourth and fifth years.  WCI's 40,000  square foot  facility is subject to a
mortgage  note  securing the  indebtedness.  WCI's 4.4 acres of adjacent land is
pledged as collateral under the Company's line of credit facility.

ITEM 3.   LEGAL PROCEEDINGS

     No significant legal proceedings  involving the Company or its subsidiaries
were pending as of September 1, 2000.

                                     PART II

ITEM 5.   MARKET  FOR THE  REGISTRANT'S  COMMON  STOCK AND  RELATED  STOCKHOLDER
          MATTERS

     The Company's Common Stock is traded on the NASDAQ Small-Cap Market (NASDAQ
symbol WGNR). As of November 20, 2000 there were  approximately  382* holders of
record of Common Stock.  *(This number does not reflect beneficial  ownership of
shares held in nominee names).

The  quarterly  ranges of high and low  closing  sale prices for fiscal 2000 and
1999 were as follows:

                                    FISCAL 2000               FISCAL 1999
                                    -----------               -----------
                                HIGH          LOW         HIGH           LOW
First Quarter                 $3 14/32      $1 5/8      $1 27/32       $1  3/8
Second Quarter                 8  3/16       2 1/8       2  9/32        1  1/2
Third Quarter                  8             2           2  1/2         1 15/32
Fourth Quarter                 3 13/32       1 7/16      2  3/16        1  3/8

                                       10
<PAGE>

     The Company has not paid any cash  dividends on its Common  Stock.  For the
foreseeable future, the Company's Board of Directors does not intend to pay cash
dividends,  but  rather  plans to  retain  earnings  to  support  the  Company's
operations  and  growth.  Furthermore,  the  Company is  prohibited  from paying
dividends in accordance with its financing agreement, as more fully described in
the MD&A section of this report.

ITEM 6.   SELECTED FINANCIAL DATA

                             SELECTED FINANCIAL DATA
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                               YEAR ENDED
                          ------------------------------------------------------
                          SEPTEMBER 1,  SEPTEMBER 3,  AUGUST 28,   AUGUST 29,
                              2000          1999          1998         1997
--------------------------------------------------------------------------------
Revenue                   $     22,894  $     25,259  $     34,255 $     21,812

Net earnings (loss)             (3,329)          213         2,760       (1,809)

Net earnings (loss)
  per share
Basic                     $       (.28) $        .02  $        .24 $       (.19)
Diluted                   $       (.28) $        .02  $        .23 $       (.19)

Cash dividends paid
  per share (1)                     --            --            --           --
--------------------------------------------------------------------------------

Total assets              $     24,147  $     24,954  $     25,905 $     25,614

Long-term obligations inclusive
  of current maturities            578         1,205         1,829        3,667
================================================================================

(1)  The Company has never paid cash  dividends on its common stock and does not
     intend to pay cash dividends in the foreseeable future.

                                       11
<PAGE>

ITEM 7.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATION

     Certain   statements   contained   in  this  filing  are   "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995, such as statements  relating to financial  results,  future business or
product  development  plans,  research  and  development   activities,   capital
spending,  financing sources or capital structure, the effects of regulation and
competition,  and are thus  prospective.  Such  forward-looking  statements  are
subject to risks,  uncertainties  and other  factors,  which could cause  actual
results to differ  materially  from future results  expressed or implied by such
forward-looking  statements.  Potential risks and uncertainties include, but are
not limited to, economic  conditions,  customer plans and  commitments,  product
demand,  government  regulation,  rapid technological  developments and changes,
performance  issues with key  suppliers  and  subcontractors,  delays in product
development   and   testing,    material   availability,    new   and   existing
well-capitalized competitors, and other uncertainties detailed from time to time
in the Company's periodic Securities and Exchange Commission filings.

     The Company manufactures satellite communications equipment through Wegener
Communications, Inc. (WCI), a wholly owned subsidiary. WCI manufactures products
for transmission of audio, data, and video via satellite.

RESULTS OF OPERATIONS

     Net loss for the year ended  September 1, 2000 was  $(3,329,000) or $(0.28)
per share  diluted,  compared to earnings of $213,000 or $0.02 per share diluted
for the year ended  September  3, 1999 and earnings of  $2,760,000  or $0.23 per
share diluted for the year ended August 28, 1998.

     Revenues for fiscal 2000 decreased  $2,365,000 or 9.4% to $22,894,000  from
$25,259,000 in fiscal 1999. Direct Broadcast  Satellite (DBS) revenues in fiscal
2000  decreased  $2,342,000 or 10.5% to $19,910,000  from  $22,252,000 in fiscal
1999.  Telecom and Custom Product revenues  decreased $22,000 or less than 1% in
fiscal  2000 to  $2,985,000  from  $3,007,000  in  fiscal  1999.  Revenues  were
$4,124,000  for the fourth  fiscal  quarter of 2000,  compared  to  revenues  of
$4,717,000  for the final  three  months of fiscal  1999.  The  decrease  in DBS
revenues  in the  fourth  quarter  and fiscal  2000 was due to  delayed  product
introductions  by the Company and delayed  purchasing  decisions  in the digital
satellite transmission market. Industry-wide new product introductions,  as well
as increased pricing  competition,  contributed to the expanded range of choices
available to buyers.  The Telecom and Custom  Product Group revenue  decrease in
fiscal 2000 was primarily  due to the continued  lower level of shipments of cue
and control  equipment to provide local  commercial  insertion  capabilities  to
cable television headend systems.

     Fiscal 1999  revenues  decreased  $8,996,000 or 26.3% to  $25,259.000  from
fiscal  1998  revenues of  $34,255,000.  DBS  revenues in fiscal 1999  decreased
$7,725,000 or 25.8% to $22,252,000 from $29,977,000 in fiscal 1998.  Telecom and
Custom  Product  revenues  decreased  $1,271,000  or  29.7%  in  fiscal  1999 to
$3,007,000  from  $4,278,000  in fiscal  1998.  The  decrease in DBS revenues in
fiscal 1999 was due to a slowdown in the pace of digital  video  product  orders
for both the cable and  broadcast  TV  industries  and also in products  for the
radio network business. The Telecom and Custom Product Group revenue decrease in
fiscal 1999 was  primarily  due to a lower level of  shipments in fiscal 1999 of
cue and

                                       12
<PAGE>

control  equipment to provide local commercial  insertion  capabilities to cable
television headend systems.

     WCI's backlog of orders  scheduled to ship within eighteen months decreased
$6,481,000  or 41.3% to  $9,210,000  at  September 1, 2000 from  $15,691,000  at
September 3, 1999. The September 3, 1999 backlog  increased  $3,095,000 or 24.6%
to $15,691.000 from $12,596,000 at August 28, 1998.  Approximately $9,162,000 of
the September 1, 2000 backlog is expected to ship during  fiscal 2001.  Although
no assurance  may be given,  the Company  believes it will book  sufficient  new
orders  in fiscal  2001 to  improve  operating  results,  although  there can be
fluctuations in quarter to quarter operating results due to the timing of orders
received.

     International  sales are generated through a direct sales  organization and
through foreign  distributors.  International  sales were $4,150,000 or 18.1% of
revenues in fiscal 2000,  compared to  $3,494,000 or 13.8% of revenues in fiscal
1999,  and  $3,311,000 or 9.7% of revenues in fiscal 1998.  Management  believes
that international  sales could increase as more business  opportunities  become
available  for  WCI  products  in  the  future.  All  international   sales  are
denominated  in U.S.  dollars.  Additional  financial  information on geographic
areas is provided in Note 11 of the consolidated financial statements.

     Gross  profit  decreased  $3,385,000  or 41.3% in fiscal  2000  compared to
fiscal 1999. Gross profit as a percent of sales was 21% in fiscal 2000, compared
to 32.5% in fiscal 1999 and 34.5% in fiscal 1998. The decrease in margin dollars
and  percentages  in fiscal  2000 was  mainly due to lower  revenues  during the
period which resulted in higher unit fixed overhead  costs.  Variable costs were
also higher in fiscal 2000. Profit margins in fiscal 2000 included: 1) inventory
reserve  charges  of  $1,246,000  compared  to  $750,000  in fiscal  1999 and 2)
warranty  provisions  of $215,000  compared to  $150,000 in fiscal  1999.  Gross
profit margin  percentages  were favorably  impacted in fiscal 1999 by a product
mix of lower  variable  cost  components  which was offset by higher  unit fixed
costs due to the  decrease  in sales  volumes.  Profit  margins  in fiscal  1999
included:  1) inventory  reserve  charges of $750,000  compared to $1,150,000 in
fiscal 1998,  2) warranty  provisions  of $150,000  compared to no provisions in
fiscal 1998 and 3) no charges for write-offs of capitalized software compared to
$200,000 in fiscal 1998.

     Selling,  general and administrative expenses increased $2,094,000 or 40.7%
to $7,241,000 in fiscal 2000 from  $5,147,000 in fiscal 1999. As a percentage of
revenues, selling, general and administrative expenses were 31.6% of revenues in
fiscal  2000 and 20.4% in fiscal  1999.  These  costs  increased  in fiscal 2000
primarily due to efforts to strengthen the marketing and sales capability of the
Company,  increased  awareness of the Company through advertising and the hiring
of a financial relations firm, non-cash stock compensation  expenses,  and costs
related to an improved  management  information  system.  The dollar increase of
expenses  in fiscal  2000  compared  to fiscal  1999  includes  increases  in 1)
advertising  expense of $94,000,  2) repairs and maintenance expense of $73,000,
3) consulting expense of $72,000,  4) depreciation and amortization of $135,000,
5) taxes and licenses of $103,000,  6) professional fees of $366,000, 7) outside
sales agent commissions of $210,000, 8) travel expenses of $120,000, 9) salaries
and benefit  costs of  $356,000,  and 10)  non-cash  stock  option  compensation
expenses of $489,000.  Selling,  general and  administrative  expenses increased
$217,000 or 4.4% to  $5,147,000  in fiscal 1999 from  $4,930,000 in fiscal 1998.
The dollar  increase of expenses in fiscal 1999 compared to fiscal 1998 includes
increases  in 1)  advertising  expense of $82,000,  2) repairs  and  maintenance
expense of $112,000,  and 3) consulting expense of $102,000.  These increases in
fiscal 1999 were  partially  offset by a decrease of  approximately  $143,000 in
sales  incentive  costs  due to lower  levels  of  revenues.  General  corporate
expenses  included  in  selling,   general  and   administrative   expense  were
approximately $805,000,

                                       13
<PAGE>

$467,000,  and $456,000 in 2000,  1999,  and 1998,  respectively.  The corporate
expenses include $238,000 of professional  fees,  including a non-cash charge of
$175,000  related  to the  amortization  of the fair  value  of  stock  options,
pursuant to the Company's  agreement  with RCG Capital  Markets  Group,  Inc. to
provide a national financial relations program.

     Research  and  development  expenditures,  including  capitalized  software
development  costs,  were  $3,689,000  or  16.1% of  revenues  in  fiscal  2000,
$3,331,000  or 13.2% of  revenues  in fiscal  1999,  and  $3,080,000  or 9.0% of
revenues in fiscal 1998. The increase in expenditures in fiscal 2000 compared to
fiscal 1999 was  primarily  due to  increases in  engineering  labor and related
support costs and engineering  consulting.  Software  development costs totaling
$641,000,  $407,000,  and $436,000 were capitalized during fiscal 2000, 1999 and
1998,  respectively.  The increase in  expenditures  in fiscal 1999  compared to
fiscal 1998 was primarily due to increases in  engineering  consulting and group
medical  insurance  expenses.  Research  and  development  expenses,   excluding
capitalized  software development costs, were $3,048,000 or 13.3% of revenues in
fiscal 2000,  $2,924,000 or 11.6% of revenues in fiscal 1999,  and $2,644,000 or
7.7% of revenues in fiscal 1998.

     Interest expense  decreased 41% in fiscal 2000 compared to fiscal 1999, and
decreased 39% in fiscal 1999 compared to fiscal 1998. The decrease during fiscal
2000 was due primarily to a decrease in total indebtedness.  The decrease during
fiscal 1999 was primarily due to a decrease in total indebtedness and a decrease
in the interest rate on the mortgage  debt.  The Company  believes that interest
expense in fiscal 2001 will increase as a result of an expected  increase in the
line of credit.

     Interest  income was $334,000 in fiscal 2000 compared to $355,000 in fiscal
1999 and  $465,000  in fiscal  1998.  The  decrease  in fiscal 2000 was due to a
decrease  in the  average  outstanding  balance  of cash  and  cash  equivalents
primarily as a result of a decrease in customer  deposits received during fiscal
2000 and an increase in the use of cash. Interest income is expected to decrease
in fiscal 2001 due to expected  lower average  outstanding  balances of cash and
cash equivalents.

     Fiscal 2000 income tax benefit was comprised of a current federal and state
income tax  benefit  of  $262,000  and  $123,000,  respectively,  and a deferred
federal and state income tax benefit of $1,409,000  and $101,000,  respectively.
Net deferred tax assets increased  $1,510,000 to $2,323,000 at September 1, 2000
from  $813,000 at September 3, 1999.  The  increase was  principally  due to net
operating loss and tax credit carryforwards and increases in inventory reserves.
Realization of deferred tax assets is dependent on generating  sufficient future
taxable  income prior to the  expiration  of the loss and credit  carryforwards.
Although realization is not assured,  management believes it is more likely than
not that all of the  deferred  tax asset  will be  realized.  The  amount of the
deferred tax asset considered realizable,  however, could be reduced in the near
term if estimates of further taxable income during the  carryforward  period are
reduced.  Fiscal 1999 income tax expense was comprised of a current  federal and
state income tax expense of $480,000 and $55,000,  respectively,  and a deferred
federal and state tax benefit of $366,000 and $44,000, respectively. Fiscal 1998
income tax  expense was  comprised  of a current  federal  and state  income tax
expense of $93,000 and $221,000,  respectively, and a deferred federal and state
tax expense of $1,335,000 and $56,000,  respectively.  A  reconciliation  of the
Company's effective income tax rate as compared to the statutory U.S. income tax
rate is provided in Note 8 of the consolidated financial statements.

     The Company  operates on a 52-53 week fiscal year.  The fiscal year ends on
the Friday  nearest to August 31. Fiscal years 2000 and 1998 contained 52 weeks,
while fiscal 1999 contained 53 weeks.

                                       14
<PAGE>

All references  herein to 2000,  1999, and 1998 refer to the fiscal years ending
September 1, 2000, September 3, 1999, and August 28, 1998, respectively.

LIQUIDITY AND CAPITAL RESOURCES

     Cash used by  operating  activities  in fiscal  2000 was  $4,236,000.  Cash
provided by operating  activities  was $4,787,000 in fiscal 1999, and $5,787,000
in fiscal 1998. Fiscal 2000 net loss adjusted for non-cash expenses used cash of
$609,000  while  changes in accounts  receivable  and  inventories  used cash of
$6,401,000. Changes in accounts payable, accrued expenses, customer deposits and
other assets provided cash of $2,774,000.

     Cash used by investment  activities  was $1,748,000 in fiscal 2000 compared
to $1,041,000 in 1999 and $959,000 in 1998. Cash used in 2000 includes  property
and equipment  expenditures of $1,107,000 and capitalized  software additions of
$641,000.

     Cash  used  by  financing  activities  was  $802,000  in  fiscal  2000  and
$1,380,000 in fiscal 1999 and $578,000 in fiscal 1998. In fiscal 2000, financing
activities  used  cash  of  $627,000  for  scheduled   repayments  of  long-term
obligations,  $398,000  for  repurchase  of common  stock and  $28,000  for debt
issuance costs. Proceeds from stock options exercised provided cash of $251,000.

     On January 28,  1999,  the Board of Directors  approved a stock  repurchase
program  authorizing  the  repurchase of up to one million  shares of its common
stock.  As of September 1, 2000, the Company had  repurchased  485,500 shares of
its common stock in open market transactions at an average price of $2.27.

     Net accounts  receivable  increased  $1,493,000  or 57.0% to  $4,111,000 at
September 1, 2000, from $2,618,000 at September 3, 1999,  compared to $5,315,000
at August 28, 1998.  The increase in fiscal 2000 was  primarily  due to a higher
percentage  of shipments  occurring  in the last month of the fourth  quarter of
fiscal 2000  compared to the same period of fiscal 1999 and  recoverable  income
taxes of $659,000 at  September  1, 2000  compared to none at September 3, 1999.
The allowance for doubtful accounts was $166,000 at September 1, 2000,  $173,000
at  September  3, 1999,  and  $257,000 at August 28,  1998.  Write-offs,  net of
recoveries,  in fiscal 2000, 1999 and 1998 were $52,000,  $124,000 and $180,000,
respectively.   Increases   to  the   allowance   and  charges  to  general  and
administrative  expense were $45,000 in fiscal 2000,  $40,000 in fiscal 1999 and
$75,000 in fiscal 1998.

     Inventory before reserves, increased $4,864,000 to $13,551,000 at September
1, 2000 from  $8,687,000  at  September  3, 1999.  The  increase was due to 1) a
planned  production  increase of certain  digital video  products to provide for
"off the shelf"  availability,  2)  increased  inventory  associated  with a new
UNITY500  receiver and 3) lower than  expected  shipments.  During  fiscal 2000,
inventory  reserves  were  increased by  provisions  charged to cost of sales of
$1,246,000. The increase in the provision was to provide additional reserves for
1) slower moving analog Telecom products,  2) excess digital audio  inventories,
and 3)  potentially  slow-moving  inventories  of earlier  generations  of other
digital  products.  These products  continue to sell but at reduced  quantities.
During fiscal 1999,  inventory  reserves were increased by provisions charged to
cost of sales of $750,000. During fiscal 1998, inventory reserves were increased
by provisions  charged to cost of sales of $1,150,000  and reduced by write-offs
of

                                       15
<PAGE>

$1,577,000.  In fiscal 2000 and fiscal 1999, increases in inventory used cash of
$4,864,000  and  $118,000,  respectively.   During  fiscal  1998,  decreases  in
inventories provided cash of $1,722,000.

     On June 21, 2000, WCI's existing bank loan facility  automatically  renewed
for a one year  period  and  maintained  a  maximum  available  credit  limit of
$10,000,000 with sublimits as defined. The renewed loan facility matures on June
21, 2001 or upon demand and  requires an annual  facility fee of $27,500 plus an
additional .5% of $3,000,000 if borrowings, at any time, exceed $5,500,000.  The
loan facility  consists of 1) a term loan and a revolving  line of credit with a
combined  borrowing  limit of $8,500,000,  bearing  interest at the bank's prime
rate (9.5% at September 1, 2000) and 2) a real estate  advance  facility  with a
maximum  borrowing limit of $1,500,000  bearing  interest at a fixed rate of 250
basis points over the five year U.S. Treasury rate.

     The term loan portion  provides for a maximum of $1,000,000 for advances of
up to 80% of the cost of equipment acquisitions.  Principal advances are payable
monthly over sixty months with a balloon payment due at maturity.  The revolving
line of credit is  subject  to  availability  advance  formulas  of 80%  against
eligible accounts receivable;  20% of eligible raw material inventories;  20% of
eligible  work-in-process  kit inventories;  and 40% to 50% of eligible finished
goods  inventories.  Advances  against  inventory  are  subject to a sublimit of
$2,000,000.  The real estate advance  portion of the loan facility  provides for
advances of up to 70% of the appraised value of certain real property.  Advances
for real  property  are payable in 35 equal  principal  payments  with a balloon
payment due at maturity.

     The  Company is  required  to  maintain a minimum  tangible  net worth with
annual  increases  at each  fiscal  year end  commencing  with fiscal year 1997,
retain  certain key  employees,  limit  expenditures  of Wegener  Corporation to
$600,000 per fiscal year, and is precluded from paying  dividends.  At September
1, 2000 the  Company  was in  violation  of the  tangible  net worth and Wegener
Corporation  annual  spending limit covenants with respect to which the bank has
granted a  waiver.  As a result of the  convenant  violations,  the bank has the
right to amend any terms of the loan facility. The Company believes that it will
be  necessary to borrow on the line of credit  during  fiscal year 2001 and that
the existing  facility  will be sufficient  to support  fiscal 2001  operations.
While no assurances may be given,  the Company believes that it will continue to
be able to obtain  waivers prior to requiring any future  borrowings on the line
of credit.  However,  if the Company is unable to meet the minimum  tangible net
worth  covenant or obtain a waiver,  it may be required to obtain  other debt or
equity financing.  The loan facility's  outstanding  balance under real property
advances was $505,000 at September 1, 2000 and $971,000 at September 3, 1999. At
September  1,  2000,  $3,096,000  was  available  to borrow  under the  accounts
receivable and inventory advance formulas. At September 1, 2000 no balances were
outstanding under the accounts receivable and inventory advances.  Additionally,
Wegener Corporation guarantees the loan facility.

     The Company does not have any material  scheduled  commitments  for capital
expenditures during fiscal 2001.

     The Company has never paid cash  dividends on its common stock and does not
intend to pay cash dividends in the foreseeable future.

     On January 25, 2000, the Company entered into an agreement with RCG Capital
Markets Group,  Inc., to provide a national  financial  relations  program.  The
agreement is for an eighteen (18) month period and provides for a monthly fee of
$6,000 and stock options for 200,000 shares of Wegener

                                       16
<PAGE>

Corporation common stock exercisable for a period of five years from the date of
grant at $5.63 per share.  Fifty  percent of the  options  granted  vested  upon
execution of the agreement  with the balance  vesting upon  completion of agreed
upon performance  criteria. In accordance with EITF Issue No. 96-18 and SFAS No.
123,  the  fair  value  of the  stock  options  has been  calculated  using  the
Black-Scholes  option  pricing  model and will result in an  aggregate  non-cash
charge to earnings of approximately $445,000 over the eighteen month term of the
agreement.  For the year ended  September  1, 2000,  charges  of  $175,000  were
included in selling,  general and administrative expenses. At September 1, 2000,
options for 100,000 shares were vested.

IMPACT OF INFLATION

     The Company does not believe that  inflation  has had a material  impact on
revenues or expenses during its last three fiscal years.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

     In June 1998, the Financial  Accounting Standards Board issued SFAS No. 133
"Accounting  for Derivative  Instruments and Hedging  Activities."  SFAS No. 133
establishes  accounting and reporting  standards requiring that every derivative
instrument,   including  certain  derivative   instruments   imbedded  in  other
contracts,  be  recorded in the  balance  sheet as either an asset or  liability
measured at its fair value.  The  statement  also  requires  that changes in the
derivative's  fair  value  be  recognized  in  earnings  unless  specific  hedge
accounting criteria are met. SFAS No. 137 delayed the effective date of SFAS No.
133 to fiscal years  beginning after June 15, 2000. SFAS No. 138 "Accounting For
Certain Derivative Instruments and Certain Hedging Activities, Amendment of SFAS
133",  liberalized  the  application  of SFAS No. 133 in a number of areas.  The
Company  expects  that the  adoption  of SFAS No.  133 will not have a  material
impact on its financial position or results of operations.

     In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting   Bulletin   (SAB)  No.  101,   "Revenue   Recognition  in  Financial
Statements,"  which provides  guidance related to revenue  recognition  based on
interpretations  and  practices  followed by the SEC and was effective the first
fiscal  quarter of fiscal years  beginning  after December 15, 1999 and requires
companies to report any changes in revenue recognition as a cumulative change in
accounting principle at the time of implementation in accordance with Accounting
Principles Board Opinion 20, "Accounting  Changes."  Subsequently,  SAB No. 101A
and 101B were  issued to delay the  implementation  of SAB No.  101.  It will be
effective  no later than the  fourth  quarter of fiscal  years  beginning  after
December 15, 1999. The Company is currently  evaluating the impact,  if any, SAB
No. 101 will have on its financial position or results of operations.

     In  March  2000,   the   Financial   Accounting   Standards   Board  issued
Interpretation  No. 44,  "Accounting  for Certain  Transactions  involving Stock
Compensation," an  interpretation  of Accounting  Principles Board (APB) Opinion
No. 25,  "Accounting  for Stock  Issued to  Employees."  Interpretation  No,. 44
clarifies the  application  of APB No. 25 for the  definition of an employee for
purposes of applying  APB No. 25, the criteria  for  determining  whether a plan
qualifies as a  noncompensatory  plan,  the  accounting  consequence  of various
modifications  to the terms of a previously  fixed stock option or award and the
accounting  for  an  exchange  of  stock  compensation   awards  in  a  business
combination.  The  interpretation  was adopted by the Company  effective July 1,
2000, but certain conclusions cover

                                       17
<PAGE>

specific  events that occur after either  December 15, 1998 or January 12, 2000.
This interpretation did not have a material impact on the Company's consolidated
financial statements.

OUTLOOK: ISSUES AND UNCERTAINTIES

     The market for the Company's  products is characterized by rapidly changing
technology,  evolving  industry  standards and frequent  product  introductions.
Product introductions are generally characterized by increased functionality and
better  quality,  sometimes  at reduced  prices.  The  introduction  of products
embodying new technology may render existing  products obsolete and unmarketable
or  marketable  at  substantially  reduced  prices.  The  Company's  ability  to
successfully  develop and introduce on a timely basis new and enhanced  products
that  embody new  technology,  and  achieve  levels of  functionality  and price
acceptable to the market,  will be a significant factor in the Company's ability
to grow and remain  competitive.  If the Company is unable, for technological or
other reasons, to develop competitive products in a timely manner in response to
changes in the industry,  the Company's  business and operating  results will be
materially and adversely affected.

     WCI competes with companies that have substantially greater resources and a
larger number of products, as well as with small specialized companies.  Through
relationships with technology partners and original equipment manufacturer (OEM)
suppliers,  the Company has positioned itself to provide end-to-end solutions to
its  customers.  Competition  in the market for the Company's  MPEG-2  broadcast
television electronics products, including digital video equipment, is driven by
timeliness,  performance,  and price.  The  Company's  broadcast  digital  video
products  in  production  are  competitively  priced,  with  unique,   desirable
features.  The COMPEL  Network  Control System meets customer needs by providing
regionalization  of receiver  control and spot  advertisement.  Due to the large
number of  potential  end users,  both small and large  competitors  continue to
emerge.  The Company  believes it has  positioned  itself to  capitalize  on the
market trends in this business  through  careful  development of its product and
market strategies, which have proven successful in increasing revenues from this
sector. In the cable television market the Company believes that the competitive
position for many of its products is strong.  However,  the UNITY product family
competes  with  significant  and  established  firms.  Other  products for cable
television include  proprietary cueing and network control devices.  Competition
for radio network products,  including the Company's digital audio products,  is
very aggressive and pricing is very  competitive.  The Company believes that its
continued success in all of its markets will depend on aggressive  marketing and
product development.

     The  demand  for  digital  products  is being  driven  by the high  cost of
satellite capacity and increasing demand for video and multi-media  content. The
digital  conversion  of major  networks is expected to continue,  but it remains
difficult to predict the precise  timing and number of customers  converting  to
digital.  Management  believes the market as a whole has  considerable  built up
demand for digital technology.  Although no assurances can be given, the Company
expects  to  directly  benefit  from  this  increase  in  demand.  There  may be
fluctuations  in the Company's  revenues and  operating  results from quarter to
quarter due to several factors,  including the timing of significant orders from
customers and the timing of new product introductions by the Company.

     The Company has invested a  significant  amount of  financial  resources to
acquire  certain raw  materials,  to incur  direct labor and to contract to have
specific  outplant  procedures  performed on  inventory in process.  The Company
purchased this inventory  based upon  previously  known backlog and  anticipated
future  sales  given  existing  knowledge  of  the  marketplace.  The  Company's
inventory reserve

                                       18
<PAGE>

of $3,444,000 at September 1, 2000, is to provide for items that are potentially
slow moving,  excess,  or  obsolete.  Changes in market  conditions,  lower than
expected  customer  demand,  and rapidly  changing  technology  could  result in
additional obsolete and slow-moving  inventory that is unsaleable or saleable at
reduced  prices.  No  estimate  can be made of a range of  amounts  of loss from
obsolescence  that  might  occur  should  the  Company's  sales  efforts  not be
successful.

     The Company's gross margin percentage is subject to variations based on the
product mix sold in any period and on sales volumes.  Start-up costs  associated
with new product introductions could adversely impact costs and future margins.

     Certain raw materials, video sub-components,  and licensed video processing
technologies  used in existing and future products are currently  available from
single or limited sources.  Although the Company believes that all single-source
components  currently  are  available  in adequate  quantities,  there can be no
assurance  that  shortages  or  unanticipated  delivery  interruptions  will not
develop  in the  future.  Any  disruption  or  termination  of supply of certain
single-source components or technologies could have a material adverse effect on
the Company's business and results of operations.

     The  Company  has made  significant  investments  in  capitalized  software
principally  related to digital audio and video  products.  At September 1, 2000
capitalized  software costs were $1,209,000.  These costs are amortized based on
the  larger of the  amounts  computed  using (a) the ratio  that  current  gross
revenues for each product bears to the total of current and  anticipated  future
gross  revenues  for  that  product  or (b) the  straight-line  method  over the
remaining  estimated economic life of the product.  Expected future revenues and
estimated  economic  lives are subject to  revisions  due to market  conditions,
technology  changes,  and other  factors  resulting  in  shortfalls  of expected
revenues or reduced economic lives.

     The   industry  in  which  the   Company   operates  is  subject  to  rapid
technological advances and frequent product  introductions.  The Company expects
to remain  committed to research  and  development  expenditures  as required to
effectively  compete and maintain pace with the rapid  technological  changes in
the communications  industry and to support innovative engineering and design in
its future products.

     The Company had an accumulated deficit of $3,283,000 September 1, 2000. The
Company is very focused on  controlling  both direct and indirect  manufacturing
costs and other operating expenses. These costs will be adjusted as necessary if
revenues  do  not  increase  as  planned.   Management   believes  that  digital
compression technology may be profitably employed to create increased demand for
its satellite  receiving  equipment if those products are manufactured in a high
volume standardized production environment.

                                       19
<PAGE>

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The  Company's  exposure to market rate risk for changes in interest  rates
relates  primarily to its  revolving  line of credit and cash  equivalents.  The
interest  rate on  certain  advances  under  the line of  credit  and term  loan
facility  fluctuates  with the  bank's  prime  rate.  There  were no  borrowings
outstanding at September 1, 2000 subject to variable interest rate fluctuations.

     At  September 1, 2000,  cash  equivalents  consisted  of a $1,125,000  bank
certificate  of deposit and variable rate  municipals in the amount of $500,000.
The cash equivalents have maturities of less than three months and therefore are
subject to minimal market risk.

     The Company does not enter into derivative financial instruments. All sales
and purchases are denominated in U.S. dollars.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                            Page

Consolidated Statements of Operations
  Years ended September 1, 2000, September 3, 1999, and August 28, 1998 ....  21

Consolidated Balance Sheets
  As of September 1, 2000 and September 3, 1999 ............................  22

Consolidated Statements of Shareholders' Equity
  Years ended September 1, 2000, September 3, 1999, and August 28, 1998 ....  23

Consolidated Statements of Cash Flows
  Years ended September 1, 2000, September 3, 1999, and August 28, 1998 ....  24

Notes to Consolidated Financial Statements .................................  25

Report of Independent Certified Public Accountants .........................  37

Consolidated Supporting Schedules Filed:

Schedule II-Valuations and Qualifying Accounts
  Years ended September 1, 2000, September 3, 1999, and August 28, 1998 ....  41

                                       20
<PAGE>

Wegener Corporation and Subsidiaries

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                   Year Ended
                                                 ----------------------------------------------
                                                 SEPTEMBER 1,     September 3,      August 28,
                                                     2000             1999             1998
-----------------------------------------------------------------------------------------------
<S>                                              <C>              <C>              <C>
Revenue                                          $ 22,894,314     $ 25,259,155     $ 34,254,673
-----------------------------------------------------------------------------------------------

Operating costs and expenses
    Cost of products sold                          18,075,326       17,055,600       22,435,716
    Selling, general and administrative             7,240,636        5,147,117        4,929,999
    Research and development                        3,047,754        2,924,097        2,644,353
-----------------------------------------------------------------------------------------------

Operating costs and expenses                       28,363,716       25,126,814       30,010,068
-----------------------------------------------------------------------------------------------

Operating income (loss)                            (5,469,402)         132,341        4,244,605
    Interest expense                                  (88,085)        (149,288)        (244,607)
    Interest income                                   333,597          355,220          465,185
-----------------------------------------------------------------------------------------------

Earnings (loss) before income taxes                (5,223,890)         338,273        4,465,183

Income tax expense (benefit)                       (1,895,000)         125,000        1,705,000
-----------------------------------------------------------------------------------------------

Net earnings (loss)                              $ (3,328,890)    $    213,273     $  2,760,183
===============================================================================================

Net earnings (loss) per share
    Basic                                        $       (.28)    $        .02     $        .24
    Diluted                                      $       (.28)    $        .02     $        .23
===============================================================================================

Shares used in per share calculation
    Basic                                          11,798,458       11,849,383       11,727,447
    Diluted                                        11,798,458       12,007,270       12,090,911
===============================================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       21
<PAGE>

Wegener Corporation and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                       SEPTEMBER 1,     September 3,
                                                           2000             1999
------------------------------------------------------------------------------------
ASSETS

Current assets
<S>                                                    <C>              <C>
    Cash and cash equivalents                          $  2,072,853     $  8,858,591
    Accounts receivable                                   4,110,827        2,618,296
    Inventories                                          10,106,776        6,488,813
    Deferred income taxes                                 1,858,000        1,325,000
    Other                                                    62,573          263,090
------------------------------------------------------------------------------------

          Total current assets                           18,211,029       19,553,790

Property and equipment, net                               4,207,183        4,242,588
Capitalized software costs, net                           1,209,139        1,100,747
Deferred income taxes                                       465,000               --
Other assets                                                 54,311           56,690
------------------------------------------------------------------------------------

                                                       $ 24,146,662     $ 24,953,815
====================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
    Accounts payable                                   $  2,781,470     $  2,018,149
    Accrued expenses                                      2,533,262        1,554,572
    Customer deposits                                     2,076,361          884,066
    Current maturities of long-term obligations             539,628        1,119,835
------------------------------------------------------------------------------------

          Total current liabilities                       7,930,721        5,576,622

Long-term obligations, less current maturities               38,843           85,424
Deferred income taxes                                            --          512,000
------------------------------------------------------------------------------------

          Total liabilities                               7,969,564        6,174,046
------------------------------------------------------------------------------------

Commitments and contingencies

Shareholders' equity
    Common stock, $.01 par value; 20,000,000
      shares authorized; 12,314,575 shares issued           123,146          123,146
    Additional paid-in capital                           20,324,568       19,492,570
    Retained earnings (deficit)                          (3,233,109)          95,781
    Less treasury stock, at cost                         (1,037,507)        (931,728)
------------------------------------------------------------------------------------

Total shareholders' equity                               16,177,098       18,779,769
------------------------------------------------------------------------------------
                                                       $ 24,146,662     $ 24,953,815
====================================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       22
<PAGE>

Wegener Corporation and Subsidiaries

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                         COMMON STOCK    Additional      Retained                                    TREASURY STOCK
                                         ------------      Paid-in       Earnings                                    --------------
                                             Shares         Amount        Capital       (Deficit)         Shares          Amount
----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>           <C>            <C>            <C>                 <C>         <C>
BALANCE, at August 29, 1997                11,363,917    $   113,639    $18,084,700    $(2,877,675)        432,730     $  (401,810)

    Treasury stock reissued through
       stock options and 401(k) plan               --             --         84,398             --         (74,184)         68,884
    Issuance of common stock for
       convertible debentures                 950,658          9,507      1,238,319             --              --              --
    Net earnings for the year                      --             --             --      2,760,183              --              --
----------------------------------------------------------------------------------------------------------------------------------

BALANCE, at August 28, 1998                12,314,575        123,146     19,407,417       (117,492)        358,546        (332,926)

    Treasury stock reissued through
       stock options and 401(k) plan               --             --         85,153             --        (112,587)        104,542
    Treasury stock purchased                       --             --             --             --         386,500        (703,344)
    Net earnings for the year                      --             --             --        213,273              --              --
----------------------------------------------------------------------------------------------------------------------------------

BALANCE, at September 3, 1999              12,314,575        123,146     19,492,570         95,781         632,459        (931,728)

    Treasury stock reissued through
       stock options and 401(k) plan               --             --        155,810             --        (249,988)        292,691
    Treasury stock purchased                       --             --             --             --          99,000        (398,470)
    Value of stock options granted for
       Services                                    --             --        175,188             --              --              --
    Value of stock
       option compensation                         --             --        349,000             --              --              --
    Tax benefit of stock
       options exercised                           --             --        152,000             --              --              --
    Net loss for the year                          --             --             --     (3,328,890)             --              --
----------------------------------------------------------------------------------------------------------------------------------

BALANCE, AT SEPTEMBER 1, 2000              12,314,575    $   123,146    $20,324,568    $(3,233,109)        481,471     $(1,037,507)
==================================================================================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       23
<PAGE>

Wegener Corporation and Subsidiaries

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                        YEAR ENDED       Year ended       Year ended
                                                       SEPTEMBER 1,     September 3,      August 28,
                                                           2000             1999             1998
-----------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
<S>                                                    <C>              <C>              <C>
    Net earnings (loss)                                $ (3,328,890)    $    213,273     $  2,760,183
    Adjustments to reconcile net earnings (loss) to
           cash provided by operating activities
        Depreciation and amortization                     1,710,389        1,649,546        1,784,787
        Write-down of capitalized software                       --               --          200,000
        Issuance of treasury stock for
            compensation expenses                           197,808          176,398          124,079
        Tax benefit of stock
            options exercised                               152,000               --               --
        Non-cash stock option
            compensation                                    489,000               --               --
        Other non-cash expenses                             175,188               --               --
        Provision for bad debts                              45,000           40,000           75,000
        Provision for inventory reserves                  1,246,000          750,000        1,150,000
        Provision for deferred income taxes              (1,510,000)        (410,000)       1,391,000
        Warranty provisions                                 215,000          150,000               --
        Changes in assets and liabilities
            Accounts receivable                          (1,537,531)       2,656,642         (777,304)
            Inventories                                  (4,863,963)        (118,420)       1,722,279
            Other assets                                    194,638         (239,380)          (2,334)
            Accounts payable and accrued expenses         1,387,011         (180,525)          33,360
            Customer deposits                             1,192,295           99,445       (2,673,780)
-----------------------------------------------------------------------------------------------------

                                                         (4,236,055)       4,786,979        5,787,270
-----------------------------------------------------------------------------------------------------

CASH USED FOR INVESTMENT ACTIVITIES
    Property and equipment expenditures                  (1,106,558)        (634,239)        (522,066)
    Capitalized software additions                         (641,060)        (406,486)        (436,465)
-----------------------------------------------------------------------------------------------------

                                                         (1,747,618)      (1,040,725)        (958,531)
-----------------------------------------------------------------------------------------------------

CASH USED FOR FINANCING ACTIVITIES
    Repayment of long-term debt and capitalized
        lease obligations                                  (626,788)      (1,983,251)        (552,615)
    Proceeds from long-term debt                                 --        1,359,508               --
    Purchase of treasury stock                             (398,470)        (703,344)              --
    Debt issuance costs                                     (27,500)         (66,633)         (55,000)
    Proceeds from stock options exercised                   250,693           13,297           29,203
-----------------------------------------------------------------------------------------------------

                                                           (802,065)      (1,380,423)        (578,412)
-----------------------------------------------------------------------------------------------------

(Decrease) increase in cash and cash equivalents         (6,785,738)       2,365,831        4,250,327
Cash and cash equivalents, beginning of year              8,858,591        6,492,760        2,242,433
-----------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year                    2,072,853     $  8,858,591     $  6,492,760
=====================================================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       24
<PAGE>

Wegener Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS AND PRINCIPLES OF CONSOLIDATION.  The financial  statements
include the  accounts of Wegener  Corporation  (WGNR)  (the  "Company")  and its
wholly  owned  subsidiaries.   Wegener   Communications,   Inc.  (WCI)  designs,
manufactures and distributes satellite  communications  electronics equipment in
the U.S., and internationally through Wegener Communications  International Inc.
All significant  intercompany  balances and transactions have been eliminated in
consolidation.

USE OF ESTIMATES.  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,  the
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period.  Examples include provisions for bad debts,  inventory  obsolescence and
warranties. Actual results could vary from these estimates.

FISCAL YEAR.  The Company  operates on a 52-53 week fiscal year. The fiscal year
ends on the Friday  nearest to August 31. Fiscal 2000 and fiscal 1998  contained
52 weeks,  while fiscal 1999 contained 53 weeks. All references  herein to 2000,
1999, and 1998 relate to the fiscal years ending September 1, 2000, September 3,
1999, and August 28, 1998, respectively.

CASH  EQUIVALENTS.  Cash equivalents  consist of highly liquid  investments with
original  maturities  of three  months  or less.  At  September  1,  2000,  cash
equivalents  consisted of a $1,125,000 bank  certificate of deposit and variable
rate municipals in the amount of $500,000. At September 3, 1999 cash equivalents
consisted of a $7,000,000  repurchase  agreement and $1,500,000 bank certificate
of deposit.

INVENTORIES.  Inventories  are  stated  at the lower of cost  (standards,  which
approximate actual cost on a first-in,  first-out basis) or market.  Inventories
include the cost of raw materials, labor and manufacturing overhead. The Company
makes  provisions  for  obsolete  or slow moving  inventories  as  necessary  to
properly reflect inventory value.

PROPERTY, EQUIPMENT AND DEPRECIATION. Property and equipment are stated at cost.
Certain  assets are financed under lease  contracts that have been  capitalized.
Aggregate lease payments, discounted at appropriate rates, have been recorded as
long-term  debt,  the  related  leased  assets  have been  capitalized,  and the
amortization of such assets is included in depreciation expense. Depreciation is
computed  over the  estimated  useful  lives of the assets on the  straight-line
method for financial  reporting and accelerated methods for income tax purposes.
Substantial  betterments to property and equipment are  capitalized  and repairs
and  maintenance  are expensed as incurred.  Long-lived  assets are reviewed for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be  recoverable.  If the sum of the expected
future  undiscounted cash flows is less than the carrying amount of the asset, a
loss is recognized for the difference  between the fair value and carrying value
of the asset.

REVENUE RECOGNITION. Product sales and services are recorded when the product is
shipped or the service is rendered to the customer, all significant  contractual
obligations  have  been  satisfied  and  the  collectibility  of  the  resulting
receivable is reasonably assured.

RESEARCH AND DEVELOPMENT.  The Company expenses research and development  costs,
including expenditures related to development of the Company's software products
that  do  not  qualify  for  capitalization.   Software  development  costs  are
capitalized  subsequent  to  establishing  the  technological  feasibility  of a
product.  Capitalized  costs are  amortized  based on the larger of the  amounts
computed  using (a) the ratio that current gross revenues for each product bears
to the total of current and  anticipated  future gross revenues for that product
or (b) the straight-line  method over the remaining  estimated  economic life of
the product.  Expected future revenues and estimated  economic lives are subject
to revisions due to market  conditions,  technology  changes,  and other factors
resulting in shortfalls of expected  revenues or reduced economic lives.  During
fiscal 1998, $200,000 of capitalized  software costs were written off to cost of
sales due to a reduction of expected revenues on certain  slow-moving  products.
Software  development  costs  capitalized  during  fiscal 2000,  1999,  and 1998
totaled $641,000,  $406,000, and $436,000,  respectively.  Amortization expense,
included in cost of goods sold was $533,000, $518,000, and $726,000 for the same
periods,   respectively.   Capitalized   software  costs,   net  of  accumulated
amortization,  were  $1,209,000 at September 1, 2000 and $1,101,000 at September
3, 1999.  Accumulated  amortization  amounted to $3,031,000 at September 1, 2000
and $2,498,000 at September 3, 1999.

STOCK BASED COMPENSATION. The Company has adopted the disclosure only provisions
of Statement of Financial  Accounting  Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," but applies Accounting Principles

                                       25
<PAGE>

Wegener Corporation and Subsidiaries

Board  Opinion  (APB) No. 25,  "Accounting  for Stock Issued to  Employees"  and
related  interpretations in accounting for its plans. Under APB No. 25, when the
exercise  price  of  employee  stock  options  equals  the  market  price of the
underlying stock on the date of grant, no compensation expense is recognized.

INCOME TAXES.  Income taxes are based on income  (loss) for financial  reporting
purposes and reflect a current tax  liability  (asset) for the  estimated  taxes
payable  (recoverable)  in the  current-year  tax return and changes in deferred
taxes.  Deferred tax assets or liabilities  are recognized for the estimated tax
effects of temporary  differences between financial reporting and taxable income
(loss) and for tax credit and loss  carryforwards  based on enacted tax laws and
rates.

EARNINGS  PER  SHARE.  Basic and  diluted  net  earnings  (loss)  per share were
computed in  accordance  with SFAS No.  128,  "Earnings  per  Share."  Basic net
earnings  per share is computed by dividing  net  earnings  available  to common
shareholders  (numerator)  by the  weighted  average  number  of  common  shares
outstanding  (denominator) during the period and excludes the dilutive effect of
stock options and convertible  debentures.  Diluted net earnings per share gives
effect to all dilutive  potential common shares  outstanding during a period. In
computing diluted net earnings per share, the average stock price for the period
is used in determining  the number of shares assumed to be reacquired  under the
treasury  stock method from the exercise of stock  options and the  if-converted
method to compute the dilutive effect of convertible debentures.

The following tables represent required  disclosure of the reconciliation of the
earnings  and  shares of the basic and  diluted  net  earnings  (loss) per share
computations.

<TABLE>
<CAPTION>
                                                                    Year ended
                                                   ---------------------------------------------
                                                   SEPTEMBER 1,     September 3,     August 28,
                                                       2000             1999            1998
                                                   ------------     ------------    ------------
BASIC
<S>                                                <C>              <C>             <C>
    Net earnings (loss)                            $ (3,328,890)    $    213,273    $  2,760,183
                                                   ------------     ------------    ------------
 Weighted average shares
        outstanding                                  11,798,458       11,849,383      11,727,447
                                                   ------------     ------------    ------------
    Net earnings (loss) per share                  $       (.28)    $        .02    $        .24
                                                   ============     ============    ============
DILUTED
    Net earnings (loss)                            $ (3,328,890)    $    213,273    $  2,760,183

    Convertible debenture interest
        and amortization of bond
        issue cost, net of income
        taxes                                                --               --          11,658
                                                   ------------     ------------    ------------
    Total                                          $ (3,328,890)    $    213,273    $  2,771,841
                                                   ------------     ------------    ------------
    Weighted average shares
        outstanding                                  11,798,458       11,849,383      11,727,447

    Effect of dilutive potential common shares:
            Stock options                                    --          157,887         250,467
            Convertible debentures                           --               --         112,997
                                                   ------------     ------------    ------------
    Total                                            11,798,458       12,007,270      12,090,911
                                                   ------------     ------------    ------------

    Net earnings (loss) per share                  $       (.28)    $        .02    $        .23
                                                   ============     ============    ============
</TABLE>

                                       26
<PAGE>

Wegener Corporation and Subsidiaries

Options and convertible debentures excluded from the diluted earnings (loss) per
share calculation due to their anti-dilutive effect are as follows:

<TABLE>
<CAPTION>
                                                             Year ended
                                      --------------------------------------------------------
                                       SEPTEMBER 1,       September 3,          August 28,
                                           2000               1999                 1998
                                      ----------------   ---------------   -------------------
Common stock options:
<S>                                    <C>                     <C>            <C>
    Number of shares                     1,188,800             6,000                  48,500
    Range of exercise prices           $.75 TO 5.63            $1.78          $2.44 to 12.13
                                      ================   ===============   ===================
</TABLE>

FINANCIAL  INSTRUMENTS.  The Company's financial instruments consist of cash and
cash equivalents, trade accounts receivable,  accounts payable, accrued expenses
and long and short-term  bank  borrowings.  The fair value of these  instruments
approximates   their  recorded  value.  The  Company  does  not  have  financial
instruments with off-balance  sheet risk. The fair value estimates were based on
market information available to management as of September 1, 2000.

Financial  instruments that potentially subject the Company to concentrations of
credit risk consist  principally of cash and cash equivalents and trade accounts
receivable.  The Company  invests cash through a  high-credit-quality  financial
institution and performs periodic evaluations of the relative credit standing of
the financial institution. A concentration of credit risk may exist with respect
to trade receivables,  as a substantial  portion of the Company's  customers are
affiliated with the cable television,  business broadcast and telecommunications
industries.  The  Company  performs  ongoing  credit  evaluations  of  customers
worldwide  and  generally  does  not  require  collateral  from  its  customers.
Historically,  the Company has not  experienced  significant  losses  related to
receivables  from individual  customers or groups of customers in any particular
industry or geographic area.

FOREIGN  CURRENCY.  The U.S.  dollar is the  Company's  functional  currency for
financial reporting. International sales are made and remitted in U.S. dollars.

RECENTLY ISSUED  ACCOUNTING  STANDARDS.  In June 1998, the Financial  Accounting
Standards Board issued SFAS No. 133  "Accounting for Derivative  Instruments and
Hedging Activities". SFAS No. 133 establishes accounting and reporting standards
requiring  that  every  derivative  instrument,   including  certain  derivative
instruments  imbedded in other  contracts,  be recorded in the balance  sheet as
either an asset or  liability  measured at its fair value.  The  statement  also
requires that changes in the  derivative's  fair value be recognized in earnings
unless  specific  hedge  accounting  criteria are met.  SFAS No. 137 delayed the
effective  date of SFAS No. 133 to fiscal years  beginning  after June 15, 2000.
SFAS No. 138 "Accounting For Certain Derivative  Instruments and Certain Hedging
Activities,  Amendment of SFAS No. 133", liberalized the application of SFAS No.
133 in a number of areas.  The Company expects that the adoption of SFAS No. 133
will  not have a  material  impact  on its  financial  position  or  results  of
operations.

     In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting   Bulletin   (SAB)  No.  101,   "Revenue   Recognition  in  Financial
Statements,"  which provides  guidance related to revenue  recognition  based on
interpretations  and  practices  followed by the SEC and was effective the first
fiscal  quarter of fiscal years  beginning  after December 15, 1999 and requires
companies to report any changes in revenue recognition as a cumulative change in
accounting principle at the time of implementation in accordance with Accounting
Principles Board Opinion 20, "Accounting  Changes."  Subsequently,  SAB No. 101A
and 101B were  issued to delay the  implementation  of SAB No.  101.  It will be
effective  no later than the  fourth  quarter of fiscal  years  beginning  after
December 15, 1999. The Company is currently  evaluating the impact,  if any, SAB
No. 101 will have on its financial position or results of operations.

     In  March  2000,   the   Financial   Accounting   Standards   Board  issued
Interpretation  No. 44,  "Accounting  for Certain  Transactions  involving Stock
Compensation," an  interpretation  of Accounting  Principles Board (APB) Opinion
No. 25,  "Accounting  for Stock  Issued to  Employees."  Interpretation  No,. 44
clarifies the  application  of APB No. 25 for the  definition of an employee for
purposes of applying  APB No. 25, the criteria  for  determining  whether a plan
qualifies as a  noncompensatory  plan,  the  accounting  consequence  of various
modifications  to the terms of a previously  fixed stock option or award and the
accounting  for  an  exchange  of  stock  compensation   awards  in  a  business
combination.  The  interpretation  was adopted by the Company  effective July 1,
2000,  but certain  conclusions  cover  specific  events that occur after either
December  15,  1998 or January  12,  2000.  This  interpretation  did not have a
material impact on the Company's consolidated financial statements.

                                       27
<PAGE>

Wegener Corporation and Subsidiaries

RECLASSIFICATIONS. Certain reclassifications have been made to the 1999 and 1998
financial statements to conform to the 2000 presentation.


2.   ACCOUNTS RECEIVABLE
Accounts receivable are summarized as follows:
                                                  SEPTEMBER 1,      September 3,
                                                      2000              1999
--------------------------------------------------------------------------------
Accounts receivable - trade                        $3,474,717       $2,675,022
Recoverable income taxes                              659,000               --
Other receivables                                     142,688          115,859
--------------------------------------------------------------------------------
                                                    4,276,405        2,790,881

Less allowance for doubtful accounts                 (165,578)        (172,585)
--------------------------------------------------------------------------------

                                                   $4,110,827       $2,618,296
================================================================================


3.  INVENTORIES
Inventories are summarized as follows:

                                                   SEPTEMBER 1,     September 3,
                                                       2000             1999
--------------------------------------------------------------------------------
Raw materials                                      $4,176,521      $2,845,784
Work-in-process                                     5,539,578       3,146,479
Finished goods                                      3,835,171       2,695,044
--------------------------------------------------------------------------------
                                                   13,551,270       8,687,307

Less inventory reserves                            (3,444,494)     (2,198,494)
--------------------------------------------------------------------------------

                                                  $10,106,776      $6,488,813
================================================================================

The Company has invested a significant amount of financial  resources to acquire
certain raw  materials,  to incur direct labor and to contract to have  specific
outplant  procedures  performed on inventory in process.  The Company  purchased
this inventory based upon prior backlog and anticipated  future sales based upon
existing  knowledge  of the  marketplace.  The  Company's  inventory  reserve of
approximately  $3,444,000  at September 1, 2000 is to provide for items that are
potentially  slow moving,  excess,  or obsolete.  Changes in market  conditions,
lower than expected  customer  demand,  and rapidly  changing  technology  could
result in additional  obsolete and  slow-moving  inventory that is unsaleable or
saleable at reduced  prices.  No  estimate  can be made of a range of amounts of
loss from obsolescence  that are reasonably  possible should the Company's sales
efforts not be successful.

4.   PROPERTY AND EQUIPMENT
Major classes of property and equipment consist of the following:

                                     Estimated
                                   Useful Lives     SEPTEMBER 1,    September 3,
                                      (Years)           2000            1999
--------------------------------------------------------------------------------
Land                                      -           $ 707,210      $ 707,210
Buildings and improvements             3-30           3,752,521      3,689,643
Machinery and equipment                 3-5           7,786,454      7,191,332
Furniture and fixtures                    5             689,845        592,782
Application software                    3-5           1,034,675        777,568
--------------------------------------------------------------------------------
                                                     13,970,705     12,958,535
Less accumulated depreciation
    and amortization                                 (9,763,522)    (8,715,947)
--------------------------------------------------------------------------------

                                                     $4,207,183     $4,242,588
================================================================================

                                       28
<PAGE>

Wegener Corporation and Subsidiaries

Depreciation  expense  for  fiscal  2000,  1999 and 1998  totaled  approximately
$1,120,000,  $888,000,  and  $777,000,  respectively.  Assets  recorded  under a
capital  lease  included in property  and  equipment  at  September  1, 2000 and
September 3, 1999 are  machinery  and  equipment of  approximately  $613,000 and
accumulated amortization of approximately $578,000 and $474,000, respectively.

5.   ACCRUED EXPENSES
Accrued expenses consist of the following:        SEPTEMBER 1,      September 3,
                                                      2000              1999
--------------------------------------------------------------------------------
        Compensation                             $     631,940      $   464,833
        Royalties                                      443,490          364,676
        Warranty                                       347,423          232,423
        Taxes and insurance                            397,252          255,625
        Commissions                                    225,724          210,153
        Other                                          487,433           26,862
--------------------------------------------------------------------------------
                                                 $   2,533,262      $ 1,554,572
================================================================================

6.   FINANCING AGREEMENTS
REVOLVING LINE-OF-CREDIT AND TERM LOAN FACILITY

On June 21, 2000, WCI's existing bank loan facility  automatically renewed for a
one year period and maintains a maximum  available  credit limit of  $10,000,000
with sublimits as defined. The renewed loan facility matures on June 21, 2001 or
upon demand and requires an annual  facility  fee of $27,500 plus an  additional
 .50% of $3,000,000  if  borrowings,  at any time,  exceed  $5,500,000.  The loan
facility  consists  of 1) a term  loan and a  revolving  line of  credit  with a
combined  borrowing  limit of $8,500,000,  bearing  interest at the bank's prime
rate (9.5% at September 1, 2000) and 2) a real estate  advance  facility  with a
maximum  borrowing limit of $1,500,000  bearing  interest at a fixed rate of 250
basis points over the five year U.S. Treasury rate.

The term loan portion provides for a maximum of $1,000,000 for advances of up to
80% of the  cost of  equipment  acquisitions.  Principal  advances  are  payable
monthly over sixty months with a balloon payment due at maturity.  The revolving
line of credit is  subject  to  availability  advance  formulas  of 80%  against
eligible accounts receivable; 20% of eligible raw materials inventories;  20% of
eligible  work-in-process  kit inventories;  and 40% to 50% of eligible finished
goods  inventories.  Advances  against  inventory  are  subject to a sublimit of
$2,000,000.  The real estate advance  portion of the loan facility  provides for
advances of up to 70% of the appraised value of certain real property.  Advances
for real  property  are payable in 35 equal  principal  payments  with a balloon
payment due at maturity.

During the first quarter of fiscal 1999,  $1,360,000 was advanced to pay off the
existing mortgage note balance. At the time of disbursement, the annual interest
rate was set at 6.519%.  At September 1, 2000, the loans were secured by a first
lien on  substantially  all of  WCI's  assets  except  assets  secured  under an
existing  equipment  note on which the bank had a second  lien.  The  Company is
required to maintain a minimum  tangible net worth with annual increases at each
fiscal year end commencing with fiscal year 1997,  retain certain key employees,
limit  expenditures  of Wegener  Corporation to $600,000 per fiscal year, and is
precluded  from  paying  dividends.  At  September  1, 2000,  the Company was in
violation  of the  tangible net worth and Wegener  Corporation  annual  spending
limit  covenants  as to which the bank has granted a waiver.  As a result of the
convenant  violations,  the bank has the  right to amend  any  terms of the loan
facility.  While no assurances may be given,  the Company  believes that it will
continue to be able to obtain  waivers prior to requiring  future  borrowings on
the line of  credit.  However,  if the  Company  is unable  to meet the  minimum
tangible  net worth  covenant  or obtain a waiver,  it may be required to obtain
other debt or equity financing.  The loan facility's  outstanding  balance under
real  property  advances  was  $505,000  at  September  1, 2000 and  $971,000 at
September  3, 1999.  At September 1, 2000,  $3,096,000  was  available to borrow
under the accounts  receivable and inventory advance formulas.  No balances were
outstanding under the accounts receivable and inventory advances at September 1,
2000. Additionally, Wegener Corporation guarantees the loan facility.

                                       29
<PAGE>

Wegener Corporation and Subsidiaries

LONG-TERM OBLIGATIONS
Long-term obligations consist of:
                                                      SEPTEMBER 1,  September 3,
                                                         2000           1999
--------------------------------------------------------------------------------
Mortgage note, monthly principal $38,843 plus
  interest at 6.519%
    collateralized by real estate and cross
    collateralized under the loan facility              $ 504,960     $ 971,077
Other long-term obligations, collateralized
  by equipment                                             73,511       234,182
--------------------------------------------------------------------------------
                                                          578,471     1,205,259

Less current maturities                                  (539,628)   (1,119,835)
--------------------------------------------------------------------------------
                                                         $ 38,843     $  85,424
================================================================================

At September 1, 2000,  other long-term  obligations  include a promissory  note,
bearing interest at 9.6% per annum, with monthly principal and interest payments
of $12,597 through April 2001.

A summary of future maturities of long-term debt obligations follows:

                                          Debt
                    Fiscal Year        Maturities
               ------------------------------------
                        2001            $539,628
                        2002              38,843
               ------------------------------------
                    Total               $578,471
               ====================================

The Company  leases certain office and  manufacturing  facilities,  vehicles and
equipment under long-term  non-cancelable  operating  leases that expire through
fiscal 2005.  Future minimum lease  commitments  are  approximately  as follows:
2001-$233,000;  2002-$225,000;  2003-$223,000; 2004-$226,000; and 2005-$118,000.
Rent expense under all leases was approximately $314,000,  $225,000 and $209,000
for fiscal years 2000, 1999, and 1998, respectively.

7.   CONVERTIBLE DEBENTURES
On May 31, 1996, the Company issued $5,000,000 of 8% Convertible debentures, due
May 31, 1999,  in a private  placement to various  accredited  investors for net
proceeds  to the  Company of  $4,700,000.  The  proceeds  were used for  working
capital and  reduction of the  line-of-credit  note  payable.  These  debentures
converted  at the option of the  holders at any time  through  maturity,  into a
number of shares of common  stock at a price  equal to the  lesser of (i) $12.25
per share or (ii) a percentage, based on the holding period, ranging from 95% to
82.5%  (82.5% at August 30,  1996 and  thereafter)  of the average of the lowest
sale price on each of the five trading days immediately preceding the conversion
date.  Interest at the rate of 8% per annum was paid quarterly beginning July 1,
1996 in cash or, at the  option of the  Company,  by adding  the  amount of such
interest to the  outstanding  principal  amount due under the debenture.  During
fiscal 1998,  $1,285,000  principal  amount of debentures  were  converted  into
950,658 shares of common stock. No convertible  debentures remained  outstanding
at September 3, 1999.

                                       30

<PAGE>

Wegener Corporation and Subsidiaries

8.   INCOME TAXES
The provision for income tax expense (benefit) consists of the following:

                                                Year ended
                                -------------------------------------------
                                SEPTEMBER 1,    September 3,     August 28,
                                    2000            1999            1998
     ----------------------------------------------------------------------
     Current
         Federal                $  (262,000)    $   480,000     $    93,000
         State                     (123,000)         55,000         221,000
     ----------------------------------------------------------------------
                                   (385,000)        535,000         314,000
     ----------------------------------------------------------------------
     Deferred
         Federal                 (1,409,000)       (366,000)      1,335,000
         State                     (101,000)        (44,000)         56,000
     ----------------------------------------------------------------------
                                 (1,510,000)       (410,000)      1,391,000
     ----------------------------------------------------------------------
     Total                      $(1,895,000)    $   125,000     $ 1,705,000
     ======================================================================

The effective  income tax rate differs from the U.S.  federal  statutory rate as
follows:

<TABLE>
<CAPTION>
                                                                        Year ended
                                                     ------------------------------------------------
                                                     SEPTEMBER 1,      September 3,       August 28,
                                                         2000              1999              1998
     ------------------------------------------------------------------------------------------------
<S>                                                     <C>                <C>               <C>
     Statutory U.S. income tax rate                     (34.0)%            34.0%             34.0%
     State taxes, net of federal
         benefits                                        (3.0)              2.0               4.8
     Foreign sales corporation benefit                     --              (5.0)              (.7)
     Non-deductible expenses                               .2               4.3                .3
     Expired tax credits, net                             1.5                --                --
     Other, net                                          (1.0)              1.7               (.2)
     ------------------------------------------------------------------------------------------------
     Effective income tax rate                          (36.3)%            37.0%             38.2%
     ================================================================================================
</TABLE>

Deferred  tax  assets  and  liabilities  that  arise  as a result  of  temporary
differences are as follows:

                                                 SEPTEMBER 1,     September 3,
                                                     2000             1999
--------------------------------------------------------------------------------
Deferred tax assets (liabilities):
   Accounts receivable and inventory reserves    $  1,520,000     $  1,098,000
   Accrued expenses                                   338,000          227,000
   Net operating loss carryforwards                   404,000               --
   General business credit carryforwards              106,000               --
   AMT credit carryovers                              249,000               --
   Depreciation                                        64,000          (28,000)
    Capitalized software costs                       (463,000)        (418,000)
    Other                                             105,000          (66,000)
--------------------------------------------------------------------------------
Net deferred tax asset                           $  2,323,000     $    813,000
================================================================================
Consolidated balance sheet classifications:
    Current deferred tax asset                   $  1,858,000     $  1,325,000
    Noncurrent deferred tax asset (liability)         465,000         (512,000)
--------------------------------------------------------------------------------
    Net deferred tax asset                       $  2,323,000     $    813,000
================================================================================

Net deferred tax assets increased  $1,510,000 to $2,323,000 at September 1, 2000
from  $813,000 at September 3, 1999.  The  increase was  principally  due to net
operating loss and tax credit carryforwards and increases in inventory reserves.
Net deferred tax assets increased $410,000 to $813,000 at September 3, 1999 from
$403,000 at August 28, 1998.  The increase was  principally  due to increases in
inventory reserves and warranty provisions in fiscal 1999. Realization

                                       31
<PAGE>

Wegener Corporation and Subsidiaries

of deferred tax assets is  dependent on  generating  sufficient  future  taxable
income prior to the  expiration of the loss and credit  carryforwards.  Although
realization is not assured,  management believes it is more likely than not that
all of the deferred  tax asset will be realized.  The amount of the deferred tax
asset  considered  realizable,  however,  could be  reduced  in the near term if
estimates of further taxable income during the carryforward period are reduced.

The  Company's  recoverable  income  taxes have been  increased  by the benefits
associated with dispositions of employee stock options.  The Company receives an
income tax benefit  equal to the tax effect of the  difference  between the fair
market value of the stock  issued at the time of exercise and the option  price.
These benefits amounted to $152,000 in fiscal 2000 and were credited directly to
shareholders' equity.

At September 1, 2000 the Company had a federal net operating  loss  carryforward
of  $1,106,000  which  expires in fiscal  2020.  Additionally,  the  Company had
general  business  and foreign  tax credit  carryforwards  of $106,000  expiring
fiscal 2001 thru fiscal 2005 and an alternative minimum tax credit of $249,000.

No  provision  for  deferred tax  liability  had been made on the  undistributed
earnings of the Foreign Sales  Corporation  as the earnings will not be remitted
in the foreseeable future and are considered permanently invested. The amount of
the  unrecognized  deferred  tax  liability  for the  undistributed  earnings of
approximately $627,000 was approximately $213,000.

9.   COMMON STOCK AND STOCK OPTIONS.
1998 INCENTIVE  PLAN. On February 26, 1998, the  stockholders  approved the 1998
Incentive  Plan (the  "1998  Plan").  The Plan  provides  for awards of up to an
aggregate of 1,000,000  shares of common stock which may be  represented  by (i)
incentive or non-qualified stock options, (ii) stock appreciation rights (tandem
and  free-standing),  (iii)  restricted  stock,  (iv)  deferred  stock,  or  (v)
performance units entitling the holder, upon satisfaction of certain performance
criteria, to awards of common stock or cash. In addition, the 1998 Plan provides
for loans and supplemental cash payments to persons participating in the Plan in
connection with awards granted. Eligible participants include officers and other
key employees,  non-employee directors, consultants and advisors of the Company.
The  exercise  price per share in the case of  incentive  stock  options and any
tandem  stock  appreciation  rights may be not less than 100% of the fair market
value on the date of grant  or,  in the case of an  option  granted  to a 10% or
greater stockholder,  not less than 110% of the fair market value on the date of
grant.  The exercise  price for any other option and stock  appreciation  rights
shall  be at least  75% of the fair  market  value  on the  date of  grant.  The
exercise period for non-qualified stock options may not exceed ten years and one
day from the date of the grant, and the expiration period for an incentive stock
option or stock appreciation  rights shall not exceed ten years from the date of
the grant (five years for a 10% or greater stockholder).  The 1998 plan contains
an  automatic  option  grant  program  to  non-employee  members of the Board of
Directors.  Such members will each be granted an option to purchase 2,000 shares
of common stock on the last day of each December on which regular trading occurs
on the NASDAQ Stock Market,  at an exercise price equal to the fair market value
of such stock on the date of grant. Such options will be exercisable  during the
period  of ten  years  and one day from the  date of  grant  of the  option.  In
addition,  upon the exercise of an option by a director, the Plan provides for a
mandatory,  for a non-employee  director,  and a discretionary,  for an employee
director, supplemental cash amount equal to the greater of the Company's minimum
federal and state tax withholding obligation with respect to the exercise of the
option and such  supplemental  payment,  or an amount  sufficient  to defray the
federal and state tax consequences to the director  attributable to the exercise
of the option and such supplemental payment. At September 1, 2000 options issued
under the 1998  Incentive  Plan for 66,000 shares of common stock at an exercise
price of $2.31 were eligible for a supplemental tax reimbursement  cash payment.
The  effective  date of the  1998  plan is  January  1,  1998 and the plan has a
ten-year  term.  During  fiscal 2000 options for 483,550  shares of common stock
were granted with exercise prices of $2.31 and $5.63. During fiscal 1999 options
for 212,000  shares of common stock were granted with  exercise  prices  ranging
from $1.41 to $1.78.

1989 DIRECTORS'  INCENTIVE PLAN. On January 9, 1990, the  stockholders  approved
the Wegener  Corporation  1989  Directors'  Incentive  Plan  permitting  certain
participating  directors  of the  Company to be  eligible  to receive  incentive
awards  consisting  of common stock of the Company,  performance  units or stock
appreciation  rights payable in stock or cash, or non-qualified stock options to
purchase  such  stock,  or any  combination  of  the  foregoing,  together  with
supplemental  cash  payments.  During the second  quarter  of fiscal  1995,  the
Company amended the 1989 Directors'  Stock Option Plan to increase the aggregate
number of shares of common  stock  that may be awarded  from  100,000 to 300,000
shares;  to remove the  ineligibility  provision for certain  directors;  and to
grant annually to each non-employee  director,  options to purchase 2,000 shares
of common  stock at an exercise  price  equal to the fair  market  value of such
stock on the date of grant. The exercise price per share for non-qualified stock
options or stock  appreciation  rights shall not be less than 85% of fair market
value  on the  date  the  award  is made or not  more  than  nine  trading  days
immediately preceding such date. The expiration period for a non-qualified stock
option shall be ten years and one day from the date of the grant. The expiration
period for stock appreciation rights, including any extension,  shall not exceed
ten years from the date of grant. In addition, upon the exercise of an option by
a director, the Plan provides for a mandatory,  for a non-employee director, and
a discretionary, for an employee director, supplemental cash amount equal to the
greater of the Company's minimum federal

                                       32
<PAGE>

Wegener Corporation and Subsidiaries

and state tax withholding  obligation with respect to the exercise of the option
and such supplemental payment, or an amount sufficient to defray the federal and
state tax  consequences  to the  director  attributable  to the  exercise of the
option and such supplemental  payment. At September 1, 2000 options issued under
the 1989  Director  Incentive  Plan for  330,500  shares  of  common  stock at a
weighted  average  exercise price of $1.41 were eligible for a supplemental  tax
reimbursement  cash  payment.  During  fiscal 1999,  options for 2,000 shares of
common stock were granted at an exercise  price of $1.78.  Additionally,  during
fiscal  1999  options for 50,000  shares of common  stock with  exercise  prices
ranging from $1.53 to $12.13 were cancelled and reissued at an exercise price of
$1.41. During fiscal 1998 options were granted for 48,000 shares of common stock
at exercise  prices ranging from $1.44 to $2.00. At September 1, 2000, no common
stock shares remained  available for awards under the plan. This plan terminated
and expired effective December 1, 1999.

1988  INCENTIVE  PLAN. On January 10, 1989, the  stockholders  approved the 1988
Incentive Plan  providing to key employees  other than directors of the Company,
incentive  awards  consisting  of  common  stock,  performance  units  or  stock
appreciation  rights payable in stock or cash,  incentive or non-qualified stock
options to  purchase  stock,  or any  combination  of the above,  together  with
supplemental  cash payments.  The aggregate  number of shares issuable under the
1988 plan is 750,000 common shares.  The exercise price per share in the case of
incentive stock options and any tandem stock  appreciation  rights will be equal
to 100% of the fair market  value or, in the case of an option  granted to a 10%
or greater  stockholder,  l10% of the fair market value.  The exercise price for
any other option and stock appreciation rights shall be at least 85% of the fair
market  value on the  date the  option  is  granted.  The  exercise  period  for
non-qualified  stock options shall be ten years and one day from the date of the
grant,  and the  expiration  period  for an  incentive  stock  option  or  stock
appreciation  rights  shall not  exceed  ten years  from the date of the  grant.
During fiscal 1999,  options for 105,000 shares of common stock with an exercise
price of $2.00 were cancelled and reissued at an exercise price of $1.41. During
fiscal 1998 options were granted for 150,000  shares of common stock at exercise
prices of $1.44 and $2.00. This plan terminated and expired December 1, 1998.

A summary of stock option transactions for the above plans follows:

<TABLE>
<CAPTION>
                                                                                             Weighted
                                                 Number.             Range of                 Average
                                                of Shares         Exercise Prices          Exercise Price
---------------------------------------------------------------------------------------------------------
<S>                                                <C>               <C>                         <C>
Outstanding at
    August 29, 1997                                579,000            $.75 -12.13                $ 1.55
        Granted                                    194,000           1.44 -  2.00                  1.80
        Exercised                                  (26,250)           .75 -  1.44                  1.12
        Forfeited or cancelled                     (10,750)           .75 -  1.44                  1.36
---------------------------------------------------------------------------------------------------------
Outstanding at
    August 28, 1998                                736,000            $.75 -12.13                $ 1.63
       Granted or reissued                         369,000           1.41 -  1.78                  1.45
       Exercised                                    (9,000)                  1.44                  1.44
       Forfeited or cancelled                     (175,250)           1.44 -12.13                  2.33
---------------------------------------------------------------------------------------------------------
Outstanding at
    September 3, 1999                              920,750            $.75 - 1.78                $ l.43
       Granted                                     483,550            2.31 - 5.63                  3.68
       Exercised                                  (174,500)           1.41 - 1.47                  1.44
       Forfeited or cancelled                      (41,000)                  1.44                  1.44
---------------------------------------------------------------------------------------------------------
OUTSTANDING AT
    SEPTEMBER 1, 2000                            1,188,800            $.75 - 5.63                $ 2.35
=========================================================================================================
Options exercisable at
    SEPTEMBER 1, 2000                              697,050            $.75 - 5.63                $ 2.04
    September 3, 1999                              494,250             .75 - 1.78                  1.41
=========================================================================================================
Weighted average fair value of options                              Per Share            Aggregate Total
    granted during the year ended                                 Option Value
---------------------------------------------------------------------------------------------------------
SEPTEMBER 1, 2000                                                      $1.33                   $370,009
September 3, 1999                                                        .68                    140,535
August 28, 1998                                                          .91                    175,493
=========================================================================================================
</TABLE>

The  weighted  average  remaining  contractual  life of options  outstanding  at
September 1, 2000 was 4.6 years.

The Company  applies APB Opinion No. 25 in  accounting  for its stock  incentive
plan and, accordingly, no compensation cost has been recognized for its employee
stock options in the financial statements, except as noted below. If the Company
had  elected  to  recognize  compensation  cost based on the fair value at grant
dates for options issued under the plans described above,

                                       33
<PAGE>

Wegener Corporation and Subsidiaries

consistent  with the method  prescribed by SFAS No. 123, net earnings (loss) and
earnings (loss) per share would have changed to the pro forma amounts  indicated
below:

                                                      Year ended
                                     -------------------------------------------
                                     SEPTEMBER 1,     September 3,    August 28,
                                         2000             1999           1998
--------------------------------------------------------------------------------
Net earnings (loss)
    As Reported                      $(3,328,890)       $213,273     $2,760,183
    Pro Forma                         (3,690,941)         46,662      2,676,143
--------------------------------------------------------------------------------
Earnings (loss) per share
    As Reported
        Basic                        $     ( .28)        $   .02      $     .24
        Diluted                            ( .28)            .02            .23
    Pro Forma
        Basic                              ( .31)            .00            .23
        Diluted                            ( .31)            .00            .22
================================================================================

The fair value of stock  options used to compute pro forma net  earnings  (loss)
and earnings  (loss) per share  disclosures  is the  estimated  present value at
grant date  using the  Black-Scholes  option  pricing  model with the  following
weighted average assumptions for 2000, 1999, and 1998: no dividend yield for all
years;  expected  volatility of 75% in 2000, 50% in 1999 and 60% in 1998; a risk
free  interest  rate of 6.3% in  2000,  5.0% in 1999,  and 5.6% in 1998;  and an
expected  option life of 3.9 years in 2000,  3.3 years in 1999, and 3.9 years in
1998.

At September 1, 2000,  options for 396,500  shares of common stock at a weighted
average exercise price of $1.56, are deemed to be variable stock options.  These
options require the recognition of compensation  expense based on the difference
between the exercise  price and the fair market value of the stock at the end of
a  reporting  period.   For  the  year  ended  September  1,  2000,  a  non-cash
compensation   expense  of  $489,000  was  included  in  selling,   general  and
administrative expenses.

On January 25, 2000,  the Company  entered  into an  agreement  with RCG Capital
Markets  Group,  Inc. to provide a national  financial  relations  program.  The
agreement  is for an eighteen  month  period and  provides  for a monthly fee of
$6,000 and stock options for 200,000 shares of Wegener  Corporation common stock
exercisable  for a period of five  years  from the date of grant at  $5.625  per
share.  Fifty  percent of the  options  granted  vested  upon  execution  of the
agreement with the balance  vesting upon  completion of agreed upon  performance
criteria.   Pursuant  to  the  agreement,   the  Company  has  granted   certain
registration  rights to RCG  covering  the shares  underlying  the  options.  In
accordance  with EITF Issue No.  96-18 and SFAS No.  123,  the fair value of the
stock options has been calculated using the  Black-Scholes  option pricing model
and will result in an  aggregate  non-cash  charge to earnings of  approximately
$445,000  over the  eighteen  month  term of the  agreement.  For the year ended
September 1, 2000,  charges of $175,000  were  included in selling,  general and
administrative  expenses.  At September 1, 2000, options for 100,000 shares were
vested.

OTHER  OPTIONS,  AWARDS AND  WARRANTS.  During  fiscal 1999,  options for 22,500
common shares,  with an exercise price of $2.44 per share expired.  In addition,
stock awards  issued under the 1988  Incentive  Plan of 12,500  shares  remained
outstanding at September 1, 2000.

STOCK REPURCHASE PROGRAM. On January 28, 1999, the Board of Directors approved a
stock repurchase program  authorizing the repurchase of up to one million shares
of its common  stock.  As of  September  1, 2000,  the Company  had  repurchased
485,500  shares of its common  stock in open market  transactions  at an average
price of $2.27.

10.  EMPLOYEE BENEFIT PLANS
WCI has a profit-sharing plan covering  substantially all employees.  Amounts to
be  contributed  to the plan each year are  determined at the  discretion of the
Board of Directors subject to legal limitations.  No contributions were declared
for fiscal years 2000, 1999 and 1998.

Eligible  WCI  employees  are  permitted  to make  contributions,  up to certain
regulatory  limits,  to the plan on a tax deferred basis under Section 401(k) of
the Internal  Revenue  Code.  The plan provides for a minimum  company  matching
contribution on a quarterly  basis at the rate of 25% of employee  contributions
with a quarterly  discretionary  match  subject to WCI's  profitability.  During
fiscal 2000 and fiscal 1999, an additional  discretionary  matching contribution
of 25% of employee contributions was made for all quarters.  During fiscal 1998,
an additional 25% matching contribution was made

                                       34
<PAGE>

Wegener Corporation and Subsidiaries

for the third and fourth quarters. All matching contributions are in the form of
Company stock or cash at the  discretion  of the  Company's  Board of Directors.
Matching Company  contributions  in the form of common stock were  approximately
$198,000 in fiscal 2000, $176,000 in fiscal 1999, and $124,000 in fiscal 1998.

11.  SEGMENT INFORMATION AND SIGNIFICANT CUSTOMERS
During 1999, the Company adopted SFAS No. 131 "Disclosures  about Segments of an
Enterprise and Related Information" which establishes standards for the way that
public business enterprises report information about operating segments in their
financial  statements.  The standard defines operating segments as components of
an enterprise  about which separate  financial  information is available that is
evaluated  regularly by the chief  operating  decision  maker in deciding how to
allocate  resources and in assessing  performance.  Based on these standards the
Company  has  determined  that it operates in a single  operating  segment:  the
manufacture and sale of satellite communications equipment.

In this single operating  segment the Company has three product lines.  Revenues
from customers in each of these product lines are as follows:

                                                    Year ended
                                    --------------------------------------------
                                    SEPTEMBER 1,    September 3,     August 28,
                                        2000            1999            1998
--------------------------------------------------------------------------------
Product Line
    Direct Broadcast Satellite      $ 19,478,042    $ 21,500,769    $ 29,220,638
    Telecom and Custom Products        2,984,593       3,007,288       4,277,727
    Service                              431,679         751,098         756,308
--------------------------------------------------------------------------------
                                    $ 22,894,314    $ 25,259,155    $ 34,254,673
================================================================================

Revenues by geographic areas are as follows:

                                                    Year ended
                                    --------------------------------------------
                                    SEPTEMBER 1,    September 3,     August 28,
                                        2000            1999            1998
--------------------------------------------------------------------------------
Geographic Area
    United States                   $ 18,744,547    $ 21,765,145    $ 30,943,573
    Canada                                41,747       1,585,004          57,090
    Europe                             1,619,724       1,136,041         881,595
    Asia                                  63,242          66,420       1,852,677
    Latin America and Mexico           2,059,456         617,146         488,517
    Other                                365,598          89,399          31,221
--------------------------------------------------------------------------------
                                    $ 22,894,314    $ 25,259,155    $ 34,254,673
================================================================================

Revenues  attributed  to  geographic  areas  are  based on the  location  of the
customer.  All of the  Company's  long-lived  assets  are  located in the United
States.

The Company  sells to a variety of domestic  and  international  customers on an
open-unsecured  account basis. These customers  principally operate in the cable
television,  broadcast business music,  private network, and data communications
industries.  In fiscal  2000,  two  customers  accounted  for 16.2% and 11.1% of
revenues,  respectively.  Single  customers  accounted  for 19.2%,  and 34.2% of
revenues in fiscal years 1999 and 1998, respectively.  These customers represent
revenues  principally  within the Direct  Broadcast  Satellite  product line. At
September 1, 2000,  four customers  accounted for more than 10% of the Company's
accounts receivable.  At September 3, 1999, no customers accounted for more than
10% of the Company's accounts receivable.  When deemed appropriate,  the Company
uses  letters-of-credit  and  credit  insurance  to  mitigate  the  credit  risk
associated with foreign sales.

12.  STATEMENT OF CASH FLOWS
Interest payments were approximately $88,000,  $159,000, and $247,000 for fiscal
years 2000,  1999,  and 1998,  respectively.  Income taxes paid in 1999 and 1998
were  $253,000 and  $488,000,  respectively.  No income taxes were paid in 2000.
Non-cash  financing  activities  in fiscal 2000  included:  1) 75,488  shares of
treasury stock reissued for 401(k)

                                       35
<PAGE>

Wegener Corporation and Subsidiaries

matching Company  contributions  valued at approximately  $198,000,  2) non-cash
stock option compensation of $489,000 and 3) stock options for 200,000 shares of
common stock granted in exchange for financial relations services to be provided
over an eighteen month period. The options were valued at $445,000 and are being
expensed over the eighteen month period. During fiscal 2000, $175,000 related to
the option value was charged to selling,  general and  administrative  expenses.
Non-cash  financing  activities in fiscal 1999  included:  1) 103,337  shares of
treasury  stock reissued for 401(k)  matching  Company  contributions  valued at
approximately  $176,000.  Non-cash investing and financing  activities in fiscal
1998 included:  1) 48,184 shares of treasury stock reissued for 401(k)  matching
Company contributions valued at approximately $124,000, and 2) 950,658 shares of
common  stock  issued  upon  conversion  of  $1,285,000   principal   amount  of
convertible debentures.

13.  FOURTH QUARTER ADJUSTMENTS
During the  fourth  quarter of the year ended  September  1, 2000,  the  Company
recorded as a charge to cost of sales 1) a $646,000  increase  in the  inventory
obsolescence  reserve, and 2) a $165,000 increase in the warranty provision.  In
addition,  the Company  recorded  non-cash  adjustments in previous  quarters to
account for certain  variable  stock  options.  The Company will file an amended
Form 10Q for each of the quarters ended December 3, 1999, March 3, 2000 and June
2, 2000.  The impact of the  accounting  for variable stock options on all other
previous periods is not significant. The following unaudited schedule summarizes
the effect of the changes on net earnings (loss) and diluted earnings (loss) per
share:

                                                 Earnings (loss) Per Share
                                Additional       -------------------------
                                 (Expense)       Previously
                                  Income          Reported        Restated
     --------------------------------------      -------------------------
     Fiscal 2000
         First Quarter            (239,000)          .00            (.02)
         Second Quarter         (1,616,000)          .02            (.11)
         Third Quarter           1,452,000          (.14)           (.02)
     --------------------------------------      -------------------------

During the  fourth  quarter of the year ended  September  3, 1999,  the  Company
recorded  as a charge  to cost of sales a  $500,000  increase  in the  inventory
obsolescence reserve.

                                       36
<PAGE>

Wegener Corporation and Subsidiaries

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The  management  of Wegener  Corporation  is  responsible  for the  accuracy and
consistency of all the information contained in the annual report, including the
accompanying  consolidated  financial  statements.  These  statements  have been
prepared to conform with generally accepted accounting principles appropriate to
the  circumstances  of the Company.  The  statements  include  amounts  based on
estimates and judgments as required.

Wegener  Corporation  maintains internal accounting controls designed to provide
reasonable assurance that the financial records are accurate, that the assets of
the Company are safeguarded,  and that the financial  statements  present fairly
the consolidated financial position, results of operations and cash flows of the
Company.

The Audit  Committee of the Board of  Directors  reviews the scope of the audits
and the findings of the independent  certified public accountants.  The auditors
meet regularly with the Audit Committee to discuss audit and financial reporting
issues, with and without management present.

BDO Seidman,  LLP the Company's  independent  certified public accountants,  has
audited the financial  statements  prepared by management.  Their opinion on the
statements is presented below.

/s/ Robert A. Placek

Robert A. Placek,
President, Chief Executive Officer
and Chairman of the Board


/s/ C. Troy Woodbury, Jr.
C. Troy Woodbury, Jr.
Treasurer and Chief Financial Officer

--------------------------------------------------------------------------------

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
    of Wegener Corporation
Duluth, Georgia

     We have audited the  accompanying  consolidated  balance  sheets of Wegener
Corporation and  subsidiaries as of September 1, 2000 and September 3, 1999, and
the related consolidated statements of operations, shareholders' equity and cash
flows for each of three  years in the period  ended  September  1,  2000.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all  material  respects,  the  consolidated  financial  position  of  Wegener
Corporation  and  subsidiaries as of September 1, 2000 and September 3, 1999 and
the  consolidated  results of their  operations and their cash flows for each of
the  three  years in the  period  ended  September  1, 2000 in  conformity  with
generally accepted accounting principles.

                              /s/ BDO Seidman, LLP

Atlanta, Georgia                  BDO Seidman, LLP
November 20, 2000

                                       37
<PAGE>

ITEM 9.   CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

          None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information  contained  under the caption  "ELECTION OF  DIRECTORS"  in the
Proxy   Statement   pertaining  to  the  January  23,  2001  Annual  Meeting  of
Stockholders  ("Proxy Statement") is incorporated herein by reference in partial
response to this item.  See also Item 1.  "Business - Executive  Officers of the
Registrant" on page 8 of this Report.

ITEM 11.  EXECUTIVE COMPENSATION

     Information contained under the caption "EXECUTIVE  COMPENSATION" contained
in the Proxy Statement is  incorporated  herein by reference in response to this
item.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information  contained  under the  captions  "ELECTION  OF  DIRECTORS"  and
"SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT"  contained in
the Proxy  Statement  is  incorporated  herein by  reference in response to this
item.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information contained under the caption "CERTAIN  RELATIONSHIPS AND RELATED
TRANSACTIONS"  contained  in the  Proxy  Statement  is  incorporated  herein  by
reference in response to this item.

<PAGE>

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)  (1)  The  following   consolidated  financial  statements  of  Wegener
Corporation  and  subsidiaries  and the related Report of Independent  Certified
Public Accountants thereon are filed as part of this report:

Consolidated Balance Sheets September 1, 2000 and September 3, 1999

Consolidated  Statements of Operations Years ended September 1, 2000,  September
    3, 1999, and August 28, 1998

Consolidated  Statements of Shareholders'  Equity Years ended September 1, 2000,
    September 3, 1999, and August 28, 1998

Consolidated  Statements of Cash Flows Years ended September 1, 2000,  September
    3, 1999, and August 28, 1998

Notes to Consolidated Financial Statements

Report of Independent Certified Public Accountants

     Separate  financial  statements of the Registrant have been omitted because
the Registrant is primarily a holding company and all  subsidiaries  included in
the consolidated financial statements are wholly owned.

     (a)(2) The following consolidated financial statements schedule for Wegener
Corporation and  subsidiaries,  and the related Report of Independent  Certified
Public Accountants are included herein, beginning on page 40:

     Schedule II - Valuation and Qualifying  Accounts  Years ended  September 1,
2000, September 3, 1999, and August 28, 1998

     (a) (3) The exhibits  filed in response to Item 601 of  Regulation  S-K are
listed in the Exhibit Index on pages 41 and 42.

     (b) There were no reports on Form 8-K filed for the Quarter ended September
1, 2000.

     (c) See Part IV, Item 14(a)(3).

     (d) Not applicable.

                                       39
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

 Board of Directors and Shareholders
     of Wegener Corporation
 Duluth, Georgia

     The audits  referred to in our report dated November 20, 2000,  relating to
the consolidated  financial  statements of Wegener Corporation and subsidiaries,
which  is  contained  in Item 8 of this  Form  10-K  included  the  audit of the
financial  statement  schedule listed in the  accompanying  index. The financial
statement  schedule  is the  responsibility  of the  Company's  management.  Our
responsibility  is to express an opinion  on the  financial  statement  schedule
based on our audits.

     In our opinion,  such financial  statement schedule presents fairly, in all
material respects, the information set forth therein.


                              /s/ BDO Seidman, LLP

Atlanta, Georgia                  BDO Seidman, LLP
November 20, 2000

                                       40
<PAGE>

                                   SCHEDULE II
                      WEGENER CORPORATION AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                  Balance at     Charged to                       Balance at
                                  Beginning      Costs and                          End of
                                  of Period       Expenses       Write-offs       Recoveries        Period
                                ------------    ------------    ------------     ------------    ------------
Allowance for doubtful
accounts receivable:
<S>                             <C>             <C>             <C>              <C>             <C>
YEAR ENDED SEPTEMBER 1, 2000    $    172,585    $     45,000    $    (58,748)    $      6,741    $    165,578
                                ------------    ------------    ------------     ------------    ------------

Year ended September 3, 1999    $    256,991    $     40,000    $   (124,406)    $         --    $    172,585

Year ended August 28, 1998      $    361,743    $     75,000    $   (180,018)    $        266    $    256,991


Inventory Reserves:

YEAR ENDED SEPTEMBER 1, 2000    $  2,198,494    $  1,246,000    $         --     $         --    $  3,444,494

Year ended September 3, 1999    $  1,439,520    $    750,000    $         --     $      8,974    $  2,198,494

Year ended August 28, 1998      $  1,865,453    $  1,150,000    $ (1,576,764)    $        831    $  1,439,520
</TABLE>

                                       41
<PAGE>

EXHIBIT INDEX

     The following  documents are filed as exhibits to this report.  An asterisk
identifies those exhibits  previously filed and incorporated herein by reference
below. For each such asterisked  exhibit there is shown below the description of
the previous  filing.  Exhibits,  which are not  required  for this report,  are
omitted.

Exhibit Number      Description of Document
--------------      -----------------------

   *3.1             By-Laws (Reg. No. 2-81795, Exhibits 3(a) and 3(b)).

   *3.2             Certificate of  Incorporation as amended through May 4, 1989
                    (1989 10-K, filed November 30, 1989, Exhibit 3.2).

   *3.3             Amendment to Certificate of Incorporation  (1997 10-Q, filed
                    June 27, 1997, Exhibit 3.1).

   *4.0             See By-Laws and Certificate of  Incorporation,  Exhibits 3.1
                    and 3.2. See Articles II and VIII of the By-Laws and Article
                    IV of the Certificate.

   *4.1             Loan and  Security  Agreement  and Demand Note dated June 5,
                    1996 by and between Wegener Communications, Inc. and LaSalle
                    National  Bank  respecting   $8,500,000  combined  revolving
                    credit note and term note (1996  10-K,  filed  November  27,
                    1996, Exhibit 4.1).

   *4.2             Loan Agreement, Promissory Note and Deed to Secure Debt, and
                    Security  Agreement  dated  February  27, 1987  between Bank
                    South,  N.A.  and Wegener  Communications,  Inc.  respecting
                    $3,500,000  promissory  note (1990 10-K,  filed November 29,
                    1990, Exhibit 4.4).

   *4.3             Promissory  Note dated April 8, 1996 in favor of Lyon Credit
                    Corporation   and  Wegener   Communications,   Inc.  in  the
                    principal amount of $600,000 (1996 10Q, filed July 11, 1996,
                    Exhibit 4.1).

   *4.5             Loan and Security  Agreement - First  Amendment dated August
                    4, 1998 by and  between  Wegener  Communications,  Inc.  and
                    LaSalle  National  Bank  respecting   $10,000,000   combined
                    revolving credit note and term note.

                    No other  long-term debt instrument of the Registrant or its
                    subsidiaries  authorizes  indebtedness  exceeding 10% of the
                    total assets of the  Registrant  and its  subsidiaries  on a
                    consolidated  basis and the Registrant  hereby undertakes to
                    provide the Commission  upon request with any long-term debt
                    instrument not filed herewith.

                                       42
<PAGE>

Exhibit Number      Description of Document
--------------      -----------------------

   *10.1            1988  Incentive  Plan (1989 10-K,  filed  November 30, 1989,
                    Exhibit 10.2).

   *10.2            License Agreement, Distributorship and Supply Agreement, and
                    Purchase Pooling and Warehouse  Agreement dated May 28, 1994
                    by  and  between  Wegener  Communications,  Inc.  and  Cross
                    Technologies,  Inc.  (1995 10-K,  filed  December  15, 1994,
                    Exhibit 10.4).

   *10.3            Wegener  Communications,  Inc. Profit Sharing Plan and Trust
                    dated January 1, 1982, amended and restated as of January 1,
                    1984. (1987 10-K, dated and filed November 25, 1987, Exhibit
                    10.14).

   *10.4            1989  Directors'  Incentive Plan (1990 10-K,  filed November
                    29, 1990, Exhibit 10.9).

   *10.4.1          Amendment  to  1989  Directors'   Incentive  Plan  effective
                    February 1, 1995 (1995 10-K, filed December 13, 1996).

   *10.5            1998  Incentive  Plan  (1998  Form  S-8,   Registration  No.
                    333-51205, filed April 28, 1998, Exhibit 10.1).

   *21.             Subsidiaries  of the Registrant  (1990 10-K,  filed November
                    29, 1990, Exhibit 22).

   23.              Consent of BDO Seidman, LLP.

   27.              Financial Data Schedule.

                                       43
<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) 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.

 WEGENER CORPORATION
 Date:  November 30, 2000               By  /s/ ROBERT A. PLACEK
                                            ---------------------------
                                            Robert A. Placek
                                            President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities indicated on this 30th day of November, 2000.

Signature                               Title
---------                               -----

/s/ Robert A. Placek                President, Chief Executive Officer and
-----------------------------       Chairman of the Board
Robert A. Placek                    (Principal Executive Officer)


/s/ C. Troy Woodbury, Jr.           Treasurer and Chief Financial Officer,
-----------------------------       Director (Principal Financial and
C. Troy Woodbury, Jr.               Accounting Officer)

/s/ James T. Traicoff               Controller
-----------------------------
James T. Traicoff

/s/ James H. Morgan, Jr.            Director
-----------------------------
James H. Morgan, Jr.

/s/ Joe K. Parks                    Director
-----------------------------
Joe K. Parks

/s/ Thomas G. Elliot                Director
-----------------------------
Thomas G. Elliot

                                       44
<PAGE>

DIRECTORS
Robert A. Placek
Chairman of the Board,
President and Chief
Executive Officer
Wegener Corporation

James H. Morgan, Jr., Esq.
Partner
Smith, Gambrell & Russell, LLP

C. Troy Woodbury, Jr.
Treasurer and Chief
Financial Officer
Wegener Corporation

Keith N. Smith
President, Wegener
Communications, Inc.

Joe K. Parks
Retired, Served as
Laboratory Director
Systems Development Laboratory
Georgia Tech Research Institute
Georgia Institute of Technology

Thomas G. Elliot
Senior Vice President of
Technical Projects
CableLabs

OFFICERS
Robert A. Placek
Chairman of the Board,
President and Chief
Executive Officer

Keith N. Smith
President, Wegener
Communications, Inc.

C. Troy Woodbury, Jr.
Treasurer and Chief
Financial Officer

James T. Traicoff
Controller


INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
BDO Seidman, LLP
285 Peachtree Center Avenue
Suite 800
Atlanta, Georgia 30303-1230

TRANSFER AGENT
Securities Transfer Corporation
2591 Dallas Parkway
Suite 102
Frisco, Texas 75034

CORPORATE
HEADQUARTERS
11350 Technology Circle
Duluth/Atlanta, Georgia 30097-1502

ANNUAL MEETING

The annual meeting of stockholders will be held on January 23, 2001 at 7:00 p.m.
at the Corporate Headquarters.

COMMON STOCK NASDAQ
NASDAQ Small-Cap Market Symbol: WGNR

FORM 10-K REPORT
Wegener  Corporation's Annual Report on Form 10-K, filed with the Securities and
Exchange Commission, is available free of charge by written request to:
     Elaine Miller, Secretary
     Investor Relations
     Wegener Corporation
     11350 Technology Circle
     Duluth, Georgia 30097-1502

WEB SITE
HTTP://WWW.WEGENER.CO

QUARTERLY COMMON
STOCK PRICES
The  Company's  common  stock is  traded on the  NASDAQ  Small-Cap  Market.  The
quarterly  ranges of high and low  closing  sale prices for fiscal 2000 and 1999
were as follows:

                            High            Low
----------------------------------------------------

FISCAL YEAR ENDING SEPTEMBER 1, 2000

First Quarter             $3 14/32         $1 5/8

Second Quarter             8 3/16           2 1/8

Third Quarter              8                2

Fourth Quarter             3 13/32          1 7/16
----------------------------------------------------

FISCAL YEAR ENDING SEPTEMBER 3, 1999

First Quarter             $1 27/32         $1 3/8

Second Quarter             2 9/32           1 1/2

Third Quarter              2 1/2            1 15/32

Fourth Quarter             2 3/16           1 3/8
----------------------------------------------------

The Company had approximately  382* shareholders of record at November 20, 2000.
The  Company  has never paid cash  dividends  on its  common  stock and does not
intend to pay cash dividends in the foreseeable future.

*(This  number does not reflect  beneficial  ownership of shares held in nominee
names).

                                       45