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


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

         For the quarterly period ended June 30, 1999

                                       OR

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

         For the transition period from ___________ to __________



Commission File Number  0-27266


                           WESTELL TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

                DELAWARE                                      36-3154957
     (State or other jurisdiction of                        (I.R.S. Employer
     incorporation or organization)                   Identification Number)

     750 N. COMMONS DRIVE, AURORA, IL                            60504
    (Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code   (630) 898-2500

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                         if changed since last report)


Indicate  by check or mark  whether  the  registrant  (1) has filed all  reports
required to be filed by Sections 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 .


Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.


Class A Common  Stock,  $0.01 Par Value -  17,459,163  shares at August 12, 1999
Class B Common Stock, $0.01 Par Value - 19,124,869 shares at August 12, 1999


<PAGE>


<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
                                    FORM 10-Q
                                      INDEX
<CAPTION>


PART I  FINANCIAL INFORMATION:                                                               Page No.
                                                                                             --------
         <S>                                                                                       <C>
         Item 1. Financial Statements

                  Condensed Consolidated Balance Sheets                                             3
                  - As of March 31, 1999 and June 30, 1999 (unaudited)

                  Condensed Consolidated Statements of Operations (unaudited)                       4
                  - Three months ended June 30, 1998 and 1999

                  Condensed Consolidated  Statements of Cash Flows (unaudited)                      5
                  - Three months ended June 30, 1998 and 1999

                  Notes to the Condensed Consolidated Financial Statements (unaudited)              6

         Item 2. Management's Discussion and Analysis of Financial Condition
                    and Results of Operations                                                       8


PART II  OTHER INFORMATION
         Item 2.  Changes in Securities and  Use of Proceeds.
         Item 5.  Other Events.
         Item 6. Exhibits and Reports on Form 8-K                                                   13

</TABLE>

SAFE HARBOR STATEMENT
Certain  statements  contained  under  "Management's  Discussion and Analysis of
Financial  Condition  and  Results of  Operations"  in this 10-Q,  which are not
historical facts  (including,  without  limitation,  statements about future DSL
pricing,  our expected cost  savings,  our  confidence  and  strategies  and our
expectations  about new and  existing  products,  our  ability  to meet our cash
requirements  for the next twelve months,  technologies,  opportunities,  market
growth, demand and acceptance of new and existing products and future commercial
deployment  of the  Company's  products  such as its DSL  systems)  are  forward
looking  statements that involve risks and  uncertainties.  These risks include,
but are not limited to, product demand and market  acceptance  risks  (including
the future  commercial  acceptance  of the  Company's  DSL systems by  telephone
companies  and  other  customers),   the  impact  of  competitive  products  and
technologies (such as cable modems and fiber optic cable),  competitive  pricing
pressures, product development, excess and obsolete inventory due to new product
development,   commercialization   and  technological   delays  or  difficulties
(including delays or difficulties in developing,  producing, testing and selling
new products and technologies), the effect of the Company's accounting policies,
the effect of economic conditions and trade,  legal,  social, and economic risks
(such as import,  licensing and trade  restrictions)  and other risks more fully
described in the Company's  Annual Report on Form 10-K for the fiscal year ended
March 31, 1999 under the section  "Risk  Factors".  The  Company  undertakes  no
obligation  to release  publicly the result of any  revisions  to these  forward
looking statements that may be made to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.



<PAGE>




<TABLE>



                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>

                                     ASSETS
                                                                              March 31,           June 30,
                                                                                1999                1999
                                                                           ----------------    ----------------
                                                                                                 (unaudited)
                                                                                     (in thousands)
<S>                                                                              <C>                 <C>
 Current assets:
   Cash and cash equivalents...........................................          $   6,715           $  14,811
   Short term investments..............................................                  -                   -
   Accounts receivable (net of allowance of $703,000 and $695,000,
   respectively).......................................................             14,132              16,301
   Inventories.........................................................             10,376              11,680
   Prepaid expenses and other current assets...........................              1,108                 822
   Refundable income taxes.............................................                 60                  55
   Deferred income tax asset...........................................              1,000               1,000
                                                                           ----------------    ----------------
       Total current assets............................................             33,391              44,669
                                                                           ----------------    ----------------
 Property and equipment:
   Machinery and equipment.............................................             18,561              19,809
   Office, computer and research equipment.............................             18,230              17,923
   Leasehold improvements..............................................              2,091               2,090
                                                                           ----------------    ----------------
                                                                                    38,882              39,822
   Less accumulated depreciation and amortization......................             25,531              27,317
                                                                           ----------------
                                                                                               ----------------
    Property and equipment, net........................................             13,351              12,505
                                                                           ----------------    ----------------
 Deferred income tax asset and other assets............................             17,665              19,019
                                                                                               ----------------
                                                                           ================
       Total assets....................................................          $  64,407           $  76,193
                                                                           ================    ================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
   Accounts payable....................................................          $   7,616           $   6,130
   Accrued expenses....................................................              6,655               5,248
   Accrued compensation................................................              4,305               2,649
   Current portion of long-term debt...................................              2,189               1,853
   Deferred revenue....................................................                413                 413
                                                                           ----------------    ----------------
    Total current liabilities..........................................             21,178              16,293
                                                                           ----------------    ----------------
 Long-term debt........................................................              2,625               2,291
                                                                           ----------------    ----------------
 Other long-term liabilities...........................................              1,480               1,694
                                                                           ----------------    ----------------
                                                                           ----------------    ----------------
 Commitments and contingencies
 Convertible debt (net of debt discount of $1,000,000 as of June 30,                     -              19,000
 1999)...............................................................
 Stockholders' equity:
 Class A common stock, par $0.01.......................................                169                 169
   Authorized - 43,500,000 shares
   Issued and  outstanding - 16,928,650  shares at March 31, 1999 and 16,950,323
   shares at June 30, 1999
 Class B common stock, par $0.01.......................................                195                 195
   Authorized - 25,000,000 shares
   Issued and  outstanding - 19,527,569  shares at March 31, 1999 and 19,527,569
   shares at June 30, 1999
 Preferred stock, par $0.01............................................                  -                   -
   Authorized - 1,000,000 shares
   Issued and outstanding - none
 Additional paid-in capital............................................             97,561              98,694
 Cumulative translation adjustment.....................................                455                 545
 Accumulated deficit...................................................           (59,256)            (62,688)
                                                                           ----------------    ----------------
       Total stockholders' equity......................................             39,124              36,915
                                                                           ================    ================
         Total liabilities and stockholders' equity....................          $  64,407           $  76,193
                                                                           ================    ================

 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

</TABLE>

<PAGE>

<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>

                                                                Three Months Ended
                                                                        June 30,
                                                    ---------------------------------------
                                                            1998                  1999
                                                    ----------------        ---------------

                                                                   (unaudited)
                                                    (in thousands, except per share data)
                                                    ---------------------------------------

<S>                                                        <C>                    <C>
Equipment revenue.............................             $ 18,386               $ 17,188
Service revenue...............................                4,627                  6,971
                                                    ----------------        ---------------
  Total revenues..............................               23,013                 24,159

Cost of equipment sales.......................               13,608                 11,890
Cost of services..............................                2,491                  4,764
                                                    ----------------        ---------------
  Cost of goods sold..........................               16,099                 16,654
                                                    ----------------        ---------------

   Gross margin...............................                6,914                  7,505
Operating expenses:
  Sales and marketing.........................                4,768                  3,697
  Research and development....................                6,132                  3,597
  General and administrative..................                2,991                  3,240
                                                    ----------------        ---------------
    Total operating expenses..................               13,891                 10,534
                                                    ----------------        ---------------
  Operating loss..............................              (6,977)                (3,029)

Other (income) expense, net...................                (435)                     24
Interest expense..............................                   89                    379
                                                    ----------------        ---------------
Loss before tax benefit.......................              (6,631)                (3,432)
Benefit for income taxes......................                    -                      -
                                                    ----------------        ---------------
                                                                            ---------------
Net loss......................................             $(6,631)               $(3,432)
                                                    ================        ===============

Net loss per basic and diluted common share...             $ (0.18)               $ (0.09)
                                                    ================        ===============
  Average number of basic and diluted
   common shares outstanding..................               36,412                 36,468
                                                    ================        ===============




 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements

</TABLE>

<PAGE>

<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>

                                                                                 Three Months Ended
                                                                                      June 30,
                                                                       ----------------------------------------
                                                                            1998                    1999
                                                                       -----------------       ----------------

                                                                                    (unaudited)
                                                                                   (in thousands)

 <S>                                                                     <C>                     <C>
Cash flows from operating activities:
Net loss                                                                 $ (6,631)               $ (3,432)
Reconciliation of net income to net cash provided by
  (used in) operating activities:
  Depreciation and amortization                                             1,756                   1,857
  Stock awards                                                               --                      --
  Deferred taxes                                                             --                      --
Changes in assets and liabilities:
  Increase in accounts receivable                                          (1,055)                 (2,136)
  Increase in inventory                                                       (70)                 (1,252)
  Decrease in prepaid expenses and deposits                                     4                     286
  Decrease in refundable income taxes                                          30                       5
  Decrease in accounts payable and accrued expenses                          (254)                 (2,678)
  Decrease in accrued compensation                                         (2,394)                 (1,656)
  Decrease in deferred revenues                                                (1)                   --
                                                                         --------                --------
     Net cash used in operating activities                                 (8,615)                 (9,006)
                                                                         --------                --------

Cash flows from investing activities:
  Purchases of property and equipment                                      (2,958)                   (940)
  Increase in other assets                                                     (7)                 (1,425)
  Increase in short term investments                                         (211)                   --
                                                                         --------                --------
     Net cash used in investing activities                                 (3,176)                 (2,365)
                                                                         --------                --------

Cash flows from financing activities:
  Repayment of long-term debt and leases payable                             (540)                   (669)
  Proceeds from issuance of convertible debt                                 --                    19,000
  Proceeds from the issuance of common stock                                  172                   1,132
                                                                         --------                --------
     Net cash used in financing activities                                   (368)                 19,463
                                                                         --------                --------

Effect of exchange rate changes on cash                                        (3)                      4
     Net increase (decrease) in cash                                      (12,162)                  8,096
Cash and cash equivalents, beginning of period                             43,515                   6,715
                                                                         ========                ========
Cash and cash equivalents, end of period                                 $ 31,353                $ 14,811
                                                                         ========                ========




 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements

</TABLE>

<PAGE>


                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1.  BASIS OF PRESENTATION

         The accompanying  unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted  accounting  principles
for interim  financial  information  and with the  instructions to Form 10-Q and
Rule  10-01 of  Regulation  S-X.  Accordingly,  they do not  include  all of the
information and footnotes required by generally accepted  accounting  principles
for  complete  financial  statements.  It  is  suggested  that  these  condensed
consolidated  financial  statements be read in conjunction with the consolidated
financial  statements and notes thereto  included in the Company's Annual Report
on Form 10-K for the year ended March 31, 1999.

         In  the  opinion  of  management,   the  unaudited   interim  financial
statements  included  herein  reflect  all  adjustments,  consisting  of  normal
recurring  adjustments,  necessary to present fairly the Company's  consolidated
financial  position  and the  results of  operations  and cash flows at June 30,
1999,  and for all periods  presented.  The results of operations  for the three
month period ended June 30, 1999 are not  necessarily  indicative of the results
that may be expected for the fiscal year ending March 31, 2000.

NOTE 2. COMPUTATION OF NET LOSS PER SHARE

         The Company  follows the  provisions  of SFAS No. 128,  which  requires
companies to present basic and diluted  earnings per share.  The  computation of
basic earnings per share is computed using the weighted average number of common
shares  outstanding  during the period.  Diluted earnings per share includes the
number of  additional  common  shares  that would have been  outstanding  if the
dilutive potential common shares had been issued. The effect of this computation
on the number of outstanding  shares is antidilutive  for the periods ended June
30, 1998,  and 1999,  and therefore the net loss per basic and diluted  earnings
per share are the same.

NOTE 3. RESTRUCTURING CHARGE:

         The Company  recognized a  restructuring  charge of $1.4 million in the
three  months  ended  December  31, 1997 and  $800,000 in the three months ended
March  31,  1999.  These  charges  included  personnel,  facility,  and  certain
development  contract costs related to restructuring  global  operations.  As of
June  30,  1999,  the  Company  has  paid  approximately  $1.2  million  of  the
restructuring  costs  charged in fiscal 1998 and  $750,000 of the  restructuring
costs charged in fiscal 1999.

         The fiscal 1998 restructuring plan was to decrease costs and streamline
operations  related to DSL products.  The fiscal 1999  restructuring plan was to
further  decrease  costs,  primarily by reducing the workforce by  approximately
11%, and focus DSL sales efforts on indirect sales to the major phone  companies
through  licensing and OEM  arrangements  with strategic  partners.  The Company
anticipates the remaining  expenditures related to this restructuring reserve to
occur by March 31, 2000. The Company expects cost savings of approximately  $5.0
million in fiscal 2000 related to this restructuring.

The restructuring charges and their utilization are summarized as follows:

<TABLE>

                            Charge  Utilized     Balance   Charge  Utilized     Balance   Utilized     Balance
                            fiscal    fiscal   March 31,   fiscal    fiscal   March 31,     fiscal    June 30,
 (in thousands)               1998      1998        1998     1999      1999        1999       2000        1999
---------------------------------------------------------------------------------------------------------------
<S>                         <C>       <C>         <C>      <C>       <C>         <C>        <C>         <C>
Employee costs...........   $  561    $  287      $  274   $  690    $  363      $  601     $  495      $  106
Contract costs...........      736       647          89       --        --          89         --          89
Legal & other costs......       86        23          63      110        17         156         93          63
===============================================================================================================
Total....................  $ 1,383    $  957      $  426   $  800    $  380      $  846     $  588      $  258
===============================================================================================================

</TABLE>



<PAGE>


                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 4. INTERIM SEGMENT INFORMATION:

         Westell's  reportable  segments are strategic business units that offer
different  products  and  services.  They are managed  separately  because  each
business requires different technology and market strategy. They consist of:

          1)   A telecommunications  equipment manufacturer of local loop access
               products, and
          2)   A multi-point  telecommunications  service bureau specializing in
               audio teleconferencing, multi-point video conferencing, broadcast
               fax and multimedia teleconference services.

         Performance of these segments is evaluated utilizing revenue, operating
income and total asset measurements. The accounting policies of the segments are
the same as those for Westell  Technologies,  Inc.  Segment  information for the
three-month periods ended June 30, 1998 and 1999, is as follows:

<TABLE>

                                            Telecom         Telecom                          Consolidated
                                           Equipment       Services           Other (a)          Total
                                           ---------       --------           ---------          -----
<S>                                     <C>               <C>             <C>              <C>
Three months ended June 30, 1998
      Revenues........................  $ 18,386          $  4,627        $      -         $ 23,013
      Net income (loss) ..............    (7,999)            1,022               346         (6,631)
      Depreciation and amortization...     1,301               455               -            1,756
      Total assets....................    78,789            10,024               -           88,813

Three months ended June 30, 1999
      Revenues........................    17,188             6,971               -           24,159
      Net income (loss)...............    (3,673)              644             (403)         (3,432)
      Depreciation and amortization...     1,328               529               -            1,857
      Total assets....................    61,682            14,511               -           76,193

         a)Other  represents  Other  income,  net and interest  expense for each
           period.  The Company does not  evaluate  its  segments  based on this
           information.

</TABLE>

NOTE 5. FUJITSU TELECOMMUNICATIONS EUROPE LIMITED AGREEMENT:

         In June 1999,  the  Company  entered  into a strategic  agreement  with
Fujitsu  Telecommunications  Europe Limited ("FTEL") on DSL product development,
manufacturing,  and  global  marketing.  As part of this  agreement,  FTEL  will
provide the Company with funding of certain future  developments of DSL products
that FTEL has  expressed an interest in  marketing.  Additionally,  employees of
Westell  Europe  Limited   ("WEL"),   which  is  the  Company's  United  Kingdom
operations,  headquartered  in  Cambridge,  England,  became  employees of FTEL.
Furthermore,  FTEL assumed WEL's lease of office space,  purchased certain fixed
assets  from WEL and  earned  manufacturing  rights.  FTEL also  reimbursed  the
Company  for  operating  expenses  incurred  by WEL during the first  quarter of
fiscal 2000 prior to the completion of the agreement.


<PAGE>


                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 6. SUBORDINATED SECURED CONVERTIBLE DEBENTURE PRIVATE PLACEMENT:

         In April 1999, the Company completed a private place of 6% subordinated
secured convertible debentures totaling $20 million. The conversion price of the
debentures  is the  lower of (a) a  periodically  reset  fixed  price,  which is
initially  $6.372 per share and which will reset on April 16, 2000 and April 16,
2001 to the ten day average market price then in effect (provided that the fixed
price may not be less than  $4.4604 or greater  than $6.372 per share),  and (b)
the  floating  market  price of our Class A Common  Stock at time of  conversion
(except  that the  floating  market  price may only be  imposed  under  specific
conditions  set  forth in the  securities  purchase  agreement  under  which the
debentures  were sold).  The reset fixed price can not fall below  $4.4604 or be
greater than $6.372 per share.  In addition,  under the terms of the debentures,
additional shares are issuable due to anti-dilution price protection  provisions
and/or if the Company enters into certain major  transactions  (such as the sale
of  substantially  all of our  assets,  a merger or a change  in  actual  voting
control).  In  connection  with the  financing,  the  Company  issued  five-year
warrants for approximately 909,000 shares of Class A Common stock at an exercise
price  equal to $8.921 per share,  which is  approximately  140% of the  initial
conversion price of the debentures.

NOTE 7. EVENT SUBSEQUENT TO JUNE 30, 1999:

         Commitments and Contingencies
         -----------------------------

         Subsequent to the quarter ended June 30, 1999, the Company has
committed to sell binding purchase orders for ADSL products from customers
priced below anticipated production costs. The Company anticipates recognizing
an estimated loss of $975,000 in the quarter ended September 1999 relating to
these orders. The Company could continue to record losses on ADSL product sales
if management enters into similar sales arrangements prior to achieving
manufacturing cost reductions of ADSL products through (i) obtaining more cost
effective DSL chipsets, (ii) product design efficiencies and (iii) economies
related to volume production.




<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATION
------------

OVERVIEW
         Westell Technologies, Inc. ("Westell" or the "Company") derives most of
its  revenues  from  the  sale  of  telecommunications   equipment  that  enable
telecommunications  services over copper  telephone  wires. The Company offers a
broad range of products that facilitate the  transmission of high-speed  digital
and analog  data  between a  telephone  company's  central  office and  end-user
customers.  The Company's  service  revenues are derived from audio,  multi port
video and multi media  teleconferencing  services from the Company's  Conference
Plus, Inc. subsidiary.

         The  Company  has   historically   used  the  following  three  product
categories in its discussion of equipment revenue:

o     DSL PRODUCTS:  products based on DSL technologies;
o     T-1 OR DS1  PRODUCTS:  products  used by  telephone  companies  to  enable
      digital T-1 transmission at approximately  1.5 megabits per second and E-1
      transmission at approximately 2.0 megabits per second; and
o     TRADITIONAL  OR DS0  PRODUCTS:  products  used by  telephone  companies to
      deliver digital  services at speeds ranging from  approximately  2.4 to 64
      kilobits per second  and  traditional  analog  services  with 4  kilohertz
      bandwidth.

Below is a table that compares  equipment revenue for the quarter ended June 30,
1998 with the quarter ended June 30, 1999 by product type:
                                   June 30,        June 30,
(in thousands)                         1998            1999
                                ------------    ------------
DSL products.................     $   3,396       $   1,988
T-1 or DS1 products..........        13,291          13,699
Traditional or DS0 products..         1,011             690
Other equipment..............           688             811
                                ============================
Total equipment..............     $  18,386       $  17,188
                                ============================

To better reflect the current business model, beginning for the quarter ended
June 30, 1999, Westell has decided to use the following new product groupings
in its discussion of its equipment revenue:

o    HIGH  CAPACITY  ("HiCAP"):  Products  that  maintain,  repair  and  monitor
     circuits  used over  copper  telephone  wires in the  portion  of the phone
     companies'  network  connecting  the  central  office  with the  customers'
     locations (the "Local Loop"). Products include all of Westell's traditional
     or DS0 products such as its analog  products and a portion of Westell's T-1
     or DS1 products which include Network Interface Unit ("NIU") products.
o    TRANSPORT  SYSTEMS:  Products that contain components that are located both
     in the phone companies' central offices and customers' locations,  creating
     integrated   systems.   Products  include   Westell's  DSL  product  called
     Supervision,  a system  comprised of modems and central  office shelves and
     electronics  that enable  high-speed  transmission  over  copper  telephone
     lines. The Transport Systems business unit also provides  SmartLink(TM),  a
     back-up system for wireless or cellular  providers,  and  LinkReach(TM),  a
     joint  effort with Lucent to enable  high-speed  transmission  over certain
     Lucent products.
o    CUSTOMER PREMISE EQUIPMENT  ("CPE"):  Products that provide  high-speed DSL
     modems that are located at the customers' premises.  These products include
     Westell's  WireSpeed(TM)  modems that are  designed to hook up to single or
     multiple personal computers and to provide high-speed access.

Below is a table that compares  equipment revenue for the quarter ended June 30,
1998 with the quarter ended June 30, 1999 by new product groupings:
                                   June 30,        June 30,
(in thousands)                         1998            1999
                                ------------    ------------
HiCAP........................    $   14,544      $   13,824
Transport Systems............         2,654           2,189
CPE..........................         1,188           1,175
                                ============================
Total equipment..............     $  18,386       $  17,188
                                ============================


<PAGE>


         Westell's  net revenues  increased  5.0% in the three months ended June
30, 1999 when  compared to the same period last year due to a 50.7%  increase in
services  revenue  which was  partially  offset by a 6.5%  decrease in equipment
revenue.   The   increase  in  service   revenue  was  a  result  of   increased
teleconference  call  minutes.  The equipment  revenue  decrease was a result of
decreased  unit sales and  average  sales  prices by each of the  Company's  new
product groups due to changes in product mix and competitive  pricing pressures.
Historically,  revenue from DS1 and DS0  products now reported in the  Company's
new HiCAP product group provided the majority of the Company's revenue.

         The Company  expects to continue to evaluate new product  opportunities
and engage in extensive research and development  activities.  This will require
the Company to continue to invest heavily in research and  development and sales
and marketing,  which could adversely affect  short-term  results of operations.
Due to the  Company's  significant  ongoing  investment in DSL  technology,  the
Company  anticipates  losses in at least each of the fiscal 2000  quarters.  The
Company  believes  that  its  future  revenue  growth  and  profitability   will
principally  depend on its  success  in  increasing  sales of DSL  products  and
developing  new and  enhanced  T-1 and other DSL  products.  The  market for DSL
products continues to be increasingly  competitive.  This has caused the Company
to offer its DSL  products  at prices  below  current  production  costs  (i.e.,
forward pricing of DSL products). For instance, subsequent to June 30, 1999, the
Company received DSL orders from an international and a domestic customer priced
below  anticipated  production  costs.  The Company  anticipates  recognizing an
estimated loss of $975,000 in the quarter ended  September 30, 1999.  Management
believes that  manufacturing  costs will  decrease when (i) more  cost-effective
chipsets are available, (ii) product design efficiencies are obtained, and (iii)
economies of scale are obtained related to increased  volume.  The Company could
continue to record losses on DSL product sales prior to achieving cost-effective
chipsets, product design efficiencies and economies related to volume production
that would have a material adverse effect on the Company's  business and results
of operations.

         In the current  fiscal  year,  the majority of the DSL revenue has been
generated  by  shipments  of DSL  systems  used in trials for data  applications
(i.e.,  Internet  access and work at home) due to the growth in users  accessing
the World Wide Web through the  Internet  and the need to increase  transmission
speed when accessing local area networks and downloading large text graphics and
video files.  In view of the  Company's  reliance on the emerging DSL market for
growth and the unpredictability of orders and subsequent  revenues,  the Company
believes  that period to period  comparisons  of its  financial  results are not
necessarily  meaningful and should not be relied upon as an indication of future
performance.  Revenues from the Company's  analog  products  (traditional or DSO
products) have declined in recent years as telephone  companies continue to move
from analog to digital  transmission  services.  The Company  also  expects that
revenues from Network  Interface Unit ("NIU")  products in its new HiCAP product
group (a T-1/DS1 product) may decline as telephone companies increase the use of
alternative  technologies  such as HDSL.  Failure to increase  revenues from new
products,  whether  due to  lack  of  market  acceptance,  competition,  pricing
pressures,  technological  change or  otherwise,  would have a material  adverse
effect on the Company's business and results of operations.



<PAGE>


RESULTS OF OPERATIONS - Period ended June 30, 1999 compared to period ended June
30, 1998

Revenues. The Company's revenues increased 5.0%, from $23.0 million in the three
months  ended June 30, 1998 to $24.2  million in the three months ended June 30,
1999.  This revenue  increase  was  primarily  due to  increased  teleconference
service  revenue  of $2.3  million  offset in part by a  decrease  in  equipment
revenue of $1.2 million. The increased  teleconference  service revenue reflects
an increase in call minutes at the Company's  subsidiary  Conference  Plus, Inc.
The decreased equipment revenue was due primarily to overall unit volume product
sale decreases in the HiCAP and Transport  Systems product groups offset in part
by higher average sale prices for products in these product groups. Revenue from
the CPE product group decreased by $13,000 due to a decrease in average per unit
prices  resulting from the Company's  aggressive  marketing of DSL modems in the
three months ended June 30, 1999 when compared with the same period of the prior
year.

Gross Margin.  Gross margin as a percentage of revenue  increased  from 30.0% in
the three months ended June 30, 1998 to 31.1% in the three months ended June 30,
1999. This increase in gross margin was primarily due to product mix changes and
product cost  integration in the HiCAP and Transport  systems product groups and
increased service  revenues.  These increases were partially offset by continued
aggressive pricing of the DSL modems in customer trials by the CPE product group
to capture and stimulate market activity.

Sales and Marketing.  Sales and marketing  expenses  decreased 22.5%,  from $4.8
million in the three  months  ended June 30,  1998 to $3.7  million in the three
months  ended  June 30,  1999.  Sales  and  marketing  expenses  decreased  as a
percentage  of revenues  from 20.7% in the three  months  ended June 30, 1998 to
15.3% in the three  months  ended  June 30,  1999.  This  decrease  in sales and
marketing  expenses  was  primarily  due  to  cost  reductions   resulting  from
management's  initiatives  undertaken  late last fiscal year to  streamline  DSL
sales and marketing. Additional cost savings in the current fiscal year were due
to the  elimination  of costs related to the Company's  Westell  Europe  Limited
("WEL") operations. See Note 5 for further discussion. The Company believes that
continued  investment  in sales and  marketing  will be  required  to expand its
product lines, bring new products to market and service customers.

Research and  Development.  Research and development  expenses  decreased 41.3%,
from $6.1 million in the three months ended June 30, 1998 to $3.6 million in the
three months ended June 30, 1999. Research and development expenses decreased as
a percentage  of revenues  from 26.6% in the three months ended June 30, 1998 to
14.9% in the three  months ended June 30,  1999.  This  decrease in research and
development  expenses was  primarily  due to the absence of costs related to the
Company's WEL  operations.  See Note 5 for further  discussion.  Additional cost
savings in the current  fiscal year are due to cost  reductions  resulting  from
management's  initiatives  undertaken late last fiscal year.  Additionally,  the
Company received $700,000 from customers to fund on-going  engineering  projects
during the three months ended June 30, 1999,  which was offset against  research
and development  expenses.  The Company believes that a continued  commitment to
research and development will be required for the Company to remain competitive.

General and Administrative.  General and administrative expenses increased 8.3%,
from $3.0 million in the three months ended June 30, 1998 to $3.2 million in the
three months ended June 30, 1999. General and administrative  expenses increased
as a percentage  of revenues  from 13.0% in the three months ended June 30, 1998
to 13.4% in the three months ended June 30, 1999. The general and administrative
expenses  were up  slightly  from the same  quarter  last  year due to  expenses
related to the implementation of a new integrated computer system in addition to
incurring  legal expenses  related to the strategic  agreement  between  Fujitsu
Telecommunications  Europe Limited and the Company.  These  increases in expense
were  offset  in part by cost  savings  in the  current  fiscal  year due to the
absence of costs related to the Company's WEL operations. See Note 5 for further
discussion.

Other (income) expense,  net. Other (income) expense,  net decreased from income
of $435,000 in the three  months ended June 30, 1998 to an expense of $24,000 in
the three months ended June 30, 1999.  The expense for the period was  primarily
due to  approximately  $160,000  in expense  from  unrealized  losses due to the
impact of  fluctuation  of foreign  currency on  intercompany  payables  and was
offset in part by interest income earned on temporary cash investments made as a
result of investing available funds.


<PAGE>


RESULTS OF OPERATIONS - continued

Interest  expense.  Interest expense  increased from $89,000 in the three months
ended June 30, 1998 to $379,000 in the three  months  ended June 30,  1999.  The
interest  expense during the current period is a result of interest  incurred on
the Company's 6% Subordinated Secured convertible  debentures due April 15, 2004
and Warrants to purchase  909,091  shares of Class A Common Stock at an exercise
price of $8.9208  per share and net  obligations  outstanding  during the period
under promissory notes and equipment borrowings.

Benefit for income  taxes.  There was no Benefit for income  taxes  recorded for
both three month  periods  ended June 30, 1998 and 1999.  As in each  quarter of
fiscal 1999,  the Company  provided a valuation  reserve for the entire  benefit
generated  during the current  quarter of $1.3 million since the resulting gross
deferred  tax asset would have  exceeded  the value of tax  planning  strategies
available to the Company.  The Company will  evaluate on a quarterly  basis it's
ability to record a benefit  for income  taxes in  relation  to the value of tax
planning strategies available in relation to the resulting gross deferred asset.

LIQUIDITY AND CAPITAL RESOURCES

         In April  1999,  the  Company  completed  a  private  placement  of its
convertible  debentures  and  warrants  for an aggregate of $20 million with net
proceeds  after legal and other  expenses  being $19.0  million.  As of June 30,
1999,  the Company  had $14.8  million in cash and cash  equivalents  consisting
primarily of federal  government agency  instruments and the highest rated grade
corporate commercial paper.

         The Company's  operating  activities  used cash of  approximately  $9.0
million in the three months ended June 30, 1999. This primarily  resulted from a
loss from continuing operations before income,  increases in accounts receivable
and inventory and decreases in accounts  payable,  accrued  expenses and accrued
compensation.

         Capital  expenditures  for the three month  period  ended June 30, 1999
were  approximately  $940,000,  all of which was funded by available  cash.  The
Company expects to spend  approximately $5.0 million for the remainder of fiscal
year 2000 related to capital equipment expenditures.

         At June 30, 1999,  the Company's  principle  sources of liquidity  were
$14.8 million of cash and cash  equivalents  and a secured credit  facility that
the Company may borrow up to $14.7 million based upon  receivables and inventory
levels and up to an additional  $5.0 million under a secured  equipment  line of
credit. Cash and cash equivalents, anticipated funds from operations, along with
available  credit lines and other  resources,  are expected to be  sufficient to
meet cash  requirements for the next twelve months.  Cash in excess of operating
requirements  will  continue  to be  invested  on a short  term basis in federal
government agency instruments and the highest rated grade commercial paper.

         As  discussed  in Note 7, the Company  has  committed  to sell  binding
purchase  orders for ADSL  products  from  customers  priced  below  anticipated
production  costs  subsequent to the quarter  ended June 30, 1999.  The expected
loss on these  forward  priced orders is $975,000.  The Company  expects to ship
these  products  during the second and third quarters of fiscal 2000 and expects
to record a reserve  in the  quarter  ended  September  30,  1999 for  losses on
forward priced commitments that have not been shipped.  These losses will affect
results of operations  in the quarter  ended  September 30, 1999 and will impact
liquidity  during the second and third  quarters of fiscal 2000 as the materials
are purchased and the products are  manufactured.  The Company could continue to
record  losses on ADSL product  sales if  management  enters into similar  sales
arrangements  prior to achieving  manufacturing cost reductions of ADSL products
through (i) obtaining  more cost  effective DSL  chipsets,  (ii) product  design
efficiencies and (iii) economies related to volume  production.  The Company can
not  estimate  the amounts of possible  future  forward  priced  orders or their
subsequent effect on liquidity.

         The  Company  has  approximately  $4.6  million  in income  tax  credit
carryforwards and a tax benefit of $28.6 million related to a net operating loss
carryforward  that is available to offset taxable income in the future.  The tax
credit  carryforwards  begin  to  expire  in 2008  and the  net  operating  loss
carryforward begins to expire in 2012.

         Realization of deferred tax assets associated with the Company's future



<PAGE>


deductible  temporary  differences,  net operating  loss  carryforwards  and tax
credit  carryforwards  is dependent upon  generating  sufficient  taxable income
prior to their expiration. Although realization of the deferred tax asset is not
assured and the Company has incurred  operating losses for the 1996, 1997, 1998,
and 1999 fiscal years,  management believes that it is more likely than not that
it will generate  taxable income  sufficient to realize the recorded tax benefit
associated with future temporary  differences,  NOL carryforwards and tax credit
carryforwards  prior  to  their  expiration  through  a  tax  planning  strategy
available to the Company.  Management  has  determined  that the strategy is not
sufficient  to realize all of the deferred  tax assets  available to the Company
and as such, has recorded a valuation allowance of $16.5 million. On a quarterly
basis,  management  will assess whether it remains more likely than not that the
recorded  deferred tax asset will be realized.  If the tax planning  strategy is
not  sufficient to generate  taxable  income to recover the deferred tax benefit
recorded,  an increase in the  valuation  allowance  will be required  through a
charge to the income tax provision.  However, if the Company achieves sufficient
profitability or has available  additional tax planning  strategies to utilize a
greater  portion of the  deferred  tax asset,  an income  tax  benefit  would be
recorded to decrease the valuation allowance.

YEAR 2000 COMPLIANCE ISSUE

         The Company has determined that it is required to modify and/or replace
portions of its software systems so that they will properly utilize dates beyond
December 31, 1999 (the "year 2000  compliance").  The Company believes that with
software upgrades and modifications and with the conversion to new software, the
impact of the year 2000 on its computer  systems can be mitigated.  However,  if
the upgrades,  modifications  and conversions are not made, or are not made in a
timely  manner,  the year  2000  could  have a  material  adverse  impact on the
Company's operations.  The implementation of the plan to remediate the Company's
Information  Technology  ("IT") systems,  which included efforts to mitigate the
impact that the year 2000 will have on the Company, was substantially  completed
as of March 31, 1999 (the "Project").

         The Project included upgrading system software,  hardware and processes
that are not exclusively  related to year 2000 compliance.  The Project utilized
both  internal  and  external  resources.  The Company  has a full-time  manager
dedicated  to the  Project  as well as  addressing  other  year 2000  compliance
issues. The Project cost for the Company is estimated to be $1.8 million.  These
costs are  expensed as  incurred,  except for  approximately  $800,000  that was
capitalized  unrelated  to  year  2000  compliance.  The  Company  has  expensed
approximately  $300,000  related  this  Project,  as of March 31,  1999 with the
remaining  $700,000 to be expensed  over the next two years as  operating  lease
payments come due. The upgrading of system software,  hardware and processes was
essentially  completed as of March 31, 1999, as planned and within previous cost
estimates.

         The Company has  assessed  how the year 2000 will impact both  internal
and  external  non-IT  systems  including  product  compliance,   machinery  and
equipment,  engineering  support  systems and tools,  human resource data bases,
payroll processing,  banking systems,  benefit plan third party  administrators,
and customer systems and vendor  compliance.  The Company has made an assessment
that  products  produced  by the  Company,  and  systems  used by the Company to
manufacture products, are year 2000 compliant; however, the Company is currently
testing its products and  manufacturing  systems to assure that year 2000 issues
have been entirely  addressed.  The Company is continuing to question  customers
and  vendors to  determine  whether  their  systems and  products  are year 2000
compliant.  The Company has received  sufficient  information from a majority of
its customers and vendors that year 2000 compliance of customers or vendors will
not materially impact the Company's operations.  The Company expects to complete
the  assessment  of the impact of vendor and/or  customer  year 2000  compliance
deficiency by October 31, 1999. The Company has completed its assessment of year
2000  compliance of its engineering  support  systems and automated  engineering
tools.  The  engineering  systems and tools  utilized  by the  Company  that are
integral to product development  schedules are upgraded annually through license
renewals.  The current upgrades of the engineering support systems and automated
engineering tools are year 2000 compliant.



<PAGE>



         The Company has  completed  its testing of year 2000  compliance of the
engineering  systems and tools.  Management  believes that year 2000  compliance
will not have a significant impact on the Company's development  schedules.  The
Company's human resource database and the payroll  processing  systems have been
evaluated for year 2000 compliance and must be upgraded in order to be year 2000
compliant.  The cost of this  upgrade  will not be  significant  and the Company
anticipates that this upgrade will be completed by October 31, 1999. The Company
has  received  confirmation  that its primary  banks and its benefit  plan third
party administrators systems are or will be year 2000 compliant.

         The Company  believes that it is proactive in assessing the impact that
the year 2000 will have on both its internal and external IT and non-IT systems.
Where  material and where  feasible,  the cost of year 2000  compliance has been
quantified.  The Company is at varying  stages of evaluating  the impacts of the
year 2000 on its business and its results of  operations.  The Company  believes
that its actions,  evaluations and processes currently undertaken are sufficient
to assess and  mitigate the impacts that the year 2000 will have on the Company.
However,  since the evaluations described above are, at this time, not complete,
the Company may discover ways in which the lack of year 2000 compliance, whether
by the  Company or by third  parties,  could  materially  affect  the  Company's
operations.

         The Company has  developed  a  contingency  plan to address the effects
that the year  2000 may have on its  operations.  Management  believes  that its
actions, evaluations and processes should provide sufficient time to address the
year 2000  risks as they are  revealed.  Risks  related  to  customer  year 2000
noncompliance are not within the Company's control,  however, and therefore, the
noncompliance of customer systems may materially  adversely impact the Company's
operations. Year 2000 compliance of the Company's vendors is also not within the
control  of the  Company.  However,  the  Company  believes  that it  will  have
sufficient  time to mitigate  vendor year 2000  noncompliance  and replace  such
vendors  with  vendors  that  are  year  2000   compliant  due  to  the  general
availability  of  electrical  component  material  contained  in  the  Company's
products.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
---------------------------------------------------------------------

         Westell is subject to certain market risks,  including foreign currency
and interest rates.  The Company has foreign  subsidiaries in Canada and Ireland
that develop and sell products and services in those respective  countries.  The
Company  is  exposed  to  potential  gains  and  losses  from  foreign  currency
fluctuation  affecting  net  investments  and  earnings  denominated  in foreign
currencies.  After the sale of Westell's  European  subsidiary in June 1999, the
Company's  future primary  exposure is to changes in exchange rates for the U.S.
Dollar versus the Canadian dollar and the Irish pound.

         In fiscal  1999,  the net  change in the  cumulative  foreign  currency
translation  adjustments account,  which is a component of stockholders' equity,
was an unrealized gain of $455,000. The Company also recorded a transaction gain
of $284,000 for fiscal 1998 and a  transaction  loss of $729,000 for fiscal 1999
in  Other  income  (expense)  for  fluctuations  on  foreign  currency  rates on
intercompany accounts anticipated by management to be settled in the foreseeable
future.

         As of June 30, 1999, the net change in the cumulative  foreign currency
translation  adjustments account,  which is a component of stockholders' equity,
was an unrealized gain of $545,000. The Company also recorded a transaction loss
of $160,000 for the quarter  ended June 30, 1999 in Other income  (expense)  for
fluctuations on foreign currency rates on intercompany  accounts  anticipated by
management to be settled in the foreseeable future.

         The Company does not have  significant  exposure to interest  rate risk
related  to  its  debt  obligations,  primarily  U.S.  Dollar  denominated.  The
Company's  market risk is the  potential  loss arising  from adverse  changes in
interest  rates.  As further  described in Note 2 of the Company's  10-K for the
period  ended  March 31,  1999,  the  Company's  debt  consists  primarily  of a
floating-rate  bank line-of  credit.  Market risk is estimated as the  potential
decrease in pretax earnings  resulting from a hypothetical  increase in interest
rates of 10% (i.e. from  approximately 8% to approximately 18%) average interest
rate on the  Company's  debt.  If such an increase  occurred,  the Company would
incur  approximately  $450,000 per annum in additional interest expense based on
the average debt  borrowed  during the twelve  months ended March 31, 1999.  The
Company does not feel such additional expense is significant.

The Company does not currently use any derivative financial instruments relating
to the risk associated with changes in interest rates.

PART II. OTHER INFORMATION
--------------------------


<PAGE>


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
--------------------------------------------------

         On  April  16,  1999,  the  Company  issued  in  a  private   placement
$20,000,000   aggregate   principal  amount  of  the  6%  Subordinated   Secured
convertible  debentures  due April 15, 2004 and  Warrants  to  purchase  909,091
shares of Class A Common Stock at an exercise price of $8.9208 per share.  Gross
proceeds to the Company pursuant to the private placement were $20,000,000.  The
Company  entered  into the private  placement  to raise  capital  for  operating
activities,  and  currently  intends to use the  proceeds of the  financing  for
working  capital,  purchases  of capital  equipment  and to pay the costs of the
private placement.

         Assuming no limitations on the conversion of the convertible debentures
and  exercise  of  the  Warrants,   the  convertible  debentures  are  currently
convertible into approximately 3,138,732 shares of Class A Common Stock, and the
Warrants  are  exercisable  for  909,091  shares  of  Class A Common  Stock,  or
4,047,823 shares of Class A Common Stock in the aggregate. Currently, unless the
Company's  stockholders  approve  the  issuance  of  class A common  stock  upon
conversion of the convertible  debentures and the warrants, the number of shares
of Class A Common Stock issuable upon conversion of the  convertible  debentures
and the exercise of Warrants is limited to an aggregate of 7,291,107 shares. The
Company agreed in connection with the private  placement to use its best efforts
to seek this stockholder approval.

         The rights,  preferences and privileges of the outstanding  convertible
debentures are summarized as follows:

RATE

         The convertible  debentures accrue interest at the rate of 6% per year,
but the interest rate of the  convertible  debentures  shall  increase to 8% per
year if the conversion price for the convertible debentures at any time is equal
to or less than $4.4604 per share. Interest payments are payable in cash and may
be paid in  convertible  debentures  or  Class A Common  Stock at the  Company's
option if (a) no Event of  Failure  (as  described  below)  has  occurred  or is
continuing, (b) the resale registration statement is effective and available for
use by the holders of the Convertible Debenture, (c) the Class A Common Stock is
listed on the Nasdaq National Market,  and (d) a sufficient  amount of shares of
Class A Common Stock are available for conversion of the convertible debentures.
The  number of  shares  of Class A Common  Stock  issued  as  interest  shall be
determined by dividing the interest  amount by the average of the Class A Common
Stock  closing  price for each of the five  business  days prior to the interest
payment date.

CONVERSION PRICE

         The  convertible  debentures  are  convertible  into  shares of Class A
Common  Stock at the  election  of the holder  after  September  16,  1999.  The
conversion price is the lower of:

                  (a) the variable  conversion price,  which is initially $6.372
         per share, but will be adjusted on April 16, 2000 and April 16, 2001 to
         be the greater of (i) the weighted  average  sales price of the Class A
         Common  Stock  for the  ten  trading  days  immediately  preceding  the
         adjustment date and (ii) $4.4604; and

                  (b) the  floating  market price of our Class A Common Stock at
         time of conversion  which is calculated by taking the lowest average of
         the Class A Common  Stock  closing bid price over any five  consecutive
         trading  days  during  the  ten  trading  day  period  ending  the  day
         immediately prior to the conversion date.

The  variable  conversion  price can not be less than  $4.4604 or  greater  than
$6.372  per  share.  If the ten day  average  closing  sale price of the Class A
Common Stock on April 16, 2000 is $9.5625 or greater, then the market conversion
price may not be used after that date to determine the conversion  price as long
as certain  events  materially  adverse to the Company  have not  occurred.  The
conversion  price will also be  adjusted  to the  benefit of the  holders of the
convertible debentures during the period in which the Company has restricted the
use of the resale registration  statement registering the convertible debentures
and warrants.

         If the Company is suspended  from trading or is no longer listed on the
Nasdaq National Market or is not listed on the New York Stock Exchange, then (i)


<PAGE>


the  conversion  price shall be reduced by 10% and the market  conversion  price
shall be available for use in calculating the conversion price, and (ii) as long
as the suspension or delisting continues, the Company will make monthly payments
to the holders  equal to 1.25%  times the  outstanding  principal  amount of the
convertible debentures plus accrued and unpaid interest.

REGISTRATION RIGHTS

         In connection with the sale and issuance of the convertible  debentures
and Warrants,  the Company filed a resale registration  statement on Form S-3 to
permit  the  public  sale of  shares  of  Class A  Common  Stock  issuable  upon
conversion of the convertible debentures and upon exercise of the Warrants. This
resale registration statement must remain effective until the earlier of (i) the
date that all Class A Common Stock issuable upon  conversion of the  convertible
debentures or upon exercise of the Warrants has been sold pursuant to the resale
registration  statement or (ii) the date that all Class A Common Stock  issuable
upon conversion of the  convertible  debentures or upon exercise of the Warrants
may be immediately sold to the public without registration and without regard to
the amount to be sold by the holder of such securities.

REDEMPTION AT COMPANY'S OPTION

         If after April 16, 2000 the weighted average sales price of the Class A
Common Stock is equal to or greater than 200% of the average variable conversion
price over a specified time period,  then the Company may redeem the convertible
debentures  at a price  equal  to 115% of the  face  amount  of the  convertible
debentures plus accrued and unpaid interest. Upon receipt of a redemption notice
from the Company,  the holders of convertible  debentures may convert all or any
of their  convertible  debentures at the  conversion  price then in effect.  The
Company may not redeem the convertible  debentures under certain  circumstances,
including  during any "Event of Failure"  described  below or if such redemption
would cause a holder of  convertible  debentures to own in excess of 4.9% of the
Class A Common Stock,  assuming that all  convertible  debentures were converted
prior to the redemption by the holders.

         Upon  satisfaction  of certain  conditions,  the  Company  may elect to
exchange  convertible  debentures  for which  conversion  has been requested for
debentures  with the same face amount but which accrue interest at a rate of 12%
per annum and mature one year from issuance. The amount that can be exchanged is
equal  the  amount  of  convertible  debentures  held by the  holder  requesting
conversion  that  represents  such holder's pro rata amount that is  convertible
into the  portion  of Class A  Common  Stock  issuable  upon  conversion  of the
convertible  debentures that exceeds 20% of the outstanding  voting power of the
Company.

REDEMPTION AT HOLDER'S OPTION

         Upon the occurrence of certain "Events of Failure," (i) the convertible
debentures  are  redeemable  at the  election of the holders of the  convertible
debentures; or (ii) the holder may demand the Company pay damages equal to 1% of
the outstanding  principal amount of the convertible  debentures for each day of
the Event of Failure (but not to exceed 135% of the outstanding amount).

         The redemption price shall equal $1,150 for each Convertible  Debenture
being redeemed, plus accrued and unpaid interest, if certain "Events of Failure"
occur,  including  the  following  (i) the Company  becomes  bankrupt or suffers
certain  other  bankruptcy  events,  (ii) an event of default  occurs  under the
Company's  existing  loan  agreements  with  LaSalle  National  Bank (the  "Loan
Agreement"),   (iii)  the  Company   breaches  any  agreement  with  respect  to
indebtedness  of  $500,000 or more,  (iv) the  Company's  accountants  deliver a
"going  concern"  qualification  or  exception  with  respect  to the  Company's
financial  statements,  (v) the Company suffers a $500,000  judgment that is not
discharged  within  sixty  days,  or (vi) an event of default  occurs  under the
debentures issued by the Company in exchange for the convertible debentures.

         For other  "Events of Failure,"  the  redemption  price shall equal the
greater of (i) $1,350 for each Convertible Debenture being redeemed plus accrued
and unpaid  interest,  or (ii) the product of (A) the highest price at which the
Class A Common  Stock is  traded  from the date of the Event of  Failure  to the
redemption  divided by the lowest  conversion price in effect during such period
(assuming the market conversion price is in effect) and (B) the principal amount
of the  convertible  debentures  plus  accrued and unpaid  interest.  Such other
"Events of Failure"  include:  (i) the Company's  failure to deliver in a timely
manner Class A Common  Stock upon  submission  by such  investors of a notice of
conversion, (ii) the Company fails to reserve the amount of Class A Common Stock
required  under  the  terms of the  convertible  debentures,  (iii)  the  resale


<PAGE>


registration  statement is not declared effective by the SEC or cannot otherwise
be used by the holders of the convertible debentures for certain time periods or
is not amended as required under the terms of the private  placement  documents,
(iv) the Class A Common Stock is suspended  from trading on the Nasdaq  National
Market for five days in any nine (9) month period;  (v) the Company's failure to
remove  restrictive  legends on its Common Stock when  required  pursuant to the
private  placement  documents,  (vi) the Company  commits an uncured breach of a
material provision of any private placement  document,  (vii) any representation
or warranty of the Company  made in any of the private  placement  documents  is
false or misleading in any material respect,  (viii) the Company's  announcement
of its  intention  not to issue  Class A Common  Stock  upon  conversion  of the
convertible debentures or exercise of the warrants,  (ix) the Company's material
breach, as a result of performance under the private placement documents, of any
agreement to which it is or becomes a party,  and (x) the  Company's  failure to
obtain  stockholder  approval to issue more than 20% of the voting  power of the
Company on conversion  of the  convertible  debentures  and upon exercise of the
Warrants.

SUBORDINATED SECURITY INTEREST

         The convertible debentures are subordinate in right of cash payments to
certain  permitted  senior  indebtedness  of  the  Company.   "Permitted  Senior
Indebtedness"  includes: (i) the obligations of the Company pursuant to the Loan
Agreement  and  certain  extensions,  amendments  and  replacements  of the Loan
Agreement,  (ii)  capitalized  leases of the Company in existence as of the date
hereof or for certain capital expenditures permitted under the private placement
documents,  (iii) existing purchase money financing and purchase money financing
for certain  capital  expenditures  and (iv) financing for certain  acquisitions
permitted under the private placement documents.  The convertible debentures are
secured by substantially all of the assets of the Company,  except its shares of
Conference Plus.

PROTECTIVE PROVISIONS

         The  Company  has agreed  that it will not,  without  the  consent of a
majority of the holders of the convertible  debentures,  (i) alter or change the
rights  of  any  capital  stock  so  as  to  adversely  affect  the  convertible
debentures,  (ii) redeem or declare or pay any cash dividend on any common stock
or other securities  junior to the convertible  debentures,  or (iii) do any act
not contemplated by the terms of the convertible debentures that would result in
any taxation under Section 305 of the Internal Revenue Code of 1986, as amended.

         The  conversion  price  shall also be  adjusted  to the  benefit of the
holders if certain events or transactions  occur,  including the following:  (i)
the announcement by the Company of certain types of sales of the Company,  or an
announcement  of a merger or a tender  offer for 50% or more of the Common Stock
of the Company,  (ii) the Company declares a dividend or makes a distribution of
assets,  Common Stock or other  securities,  (iii) the Company issues securities
that  are  convertible  into or  exchangeable  for  Class A  Common  Stock  at a
conversion  price  based  upon a discount  from the market  price of the Class A
Common Stock or the variable  conversion price then in effect, (v) a sale by any
executive  officer or director  of more than 10% of their  Class A Common  Stock
during the six month period commencing on the date that the resale  registration
statement  is  declared  effective,  (vi) the Company  restricts  the use of the
resale registration  statement,  and (vii) certain other transactions that would
have a dilutive  effective  on the  convertible  debentures  or  materially  and
adversely affect a investment in the convertible debentures.

CHANGE OF CONTROL

         If the Company merges into, sells  substantially  all of its assets to,
or incurs a change of control with respect to, a company  meeting certain market
liquidity and similar  tests,  then the holders of the  Convertibles  Debentures
shall receive the consideration they would have received in such transaction had
they  converted  their   convertible   debentures  the  day  before  the  public
announcement of the merger. The Company is, however,  permitted to acquire other
companies without having to provide special  consideration to the holders of the
convertible debentures if the Company does not issue more than 20% of its Common
Stock as merger  consideration.  If the Company merges into, sells substantially
all of its assets to, or incurs a change of control  with  respect to, a company
that does not meet certain market liquidity and similar tests,  then the holders
shall  have  the  option,  in lieu of the  consideration  set  forth  above,  of
receiving 125% of the principal  amount of the  convertible  debentures in cash.
The holders of the warrants  are entitled to similar  rights in the event of the
Company's merger or consolidation  with another company and would have the right


<PAGE>


to receive approximately 94% of the Black Scholes valuation of the Warrants.

WARRANTS

         The Warrants are  exercisable  until April 16, 2004. The exercise price
for the Class A Common  Stock  underlying  the  Warrants  is  $8.9208  per share
(subject to adjustment).  If the Company merges or  consolidates  with any other
company,  the  Warrant  holders  are  entitled  to  similar  choices  as to  the
consideration  they will  receive  in such  transaction  as the  holders  of the
convertible   debentures  or  retain  the  Warrants   which  would  then  become
exercisable  for the new  company's  common  stock.  In addition,  the number of
shares  issuable  upon  exercise  of the  Warrants  is subject to  anti-dilution
adjustment if the Company sells Common Stock or securities  convertible  into or
exercisable for Common Stock (excluding  certain  issuances such as Common Stock
issued under  employee,  director or  consultant  benefit  plans) at a price per
share less than the market price.

STOCKHOLDER APPROVAL

         The issuance of the Company's  Class A Common Stock upon  conversion of
the  convertible  debentures and upon exercise of the Warrants that is in excess
of 7,291,107 shares is subject to stockholder  approval pursuant to the rules of
the NASD. Rule  4460(i)(1)(D) of the National  Association of Securities Dealers
(the "20%  Rule")  requires  companies  that are listed on the  Nasdaq  National
Market  to  obtain  stockholder  approval  prior to  issuing  common  stock  (or
securities  convertible  into or  exercisable  for  common  stock)  in a private
financing at a price less than the market value of the common  stock,  where the
amount of common  stock to be issued  exceeds  20% of either  the  common  stock
outstanding or voting power outstanding immediately prior to the issuance.

         Because the conversion  rate of the  convertible  debentures  will vary
with the  trading  price of the Class A Common  Stock,  the  number of shares of
Class A Common Stock issuable upon conversion of convertible debentures and upon
exercise of the Warrants may exceed 7,291,107  shares.  If stockholder  approval
for the exercise of class A common stock upon the conversion of the  convertible
debentures  and the exercise of the warrants is not  obtained,  then the Company
will be  prohibited  by the 20% Rule  from  issuing  20% or more of its  Class A
Common  Stock in  connection  with the  private  placement.  If the  stockholder
approval  is not  granted,  then the  Company  will be  obligated  to redeem all
convertible  debentures  at a price equal to a cash payment equal to the greater
of (i)  $1,350  plus  accrued  and  unpaid  interest;  or  (ii) a  predetermined
redemption  formula  based on the  average  of the  closing  bid  prices for the
Company's Class A Common Stock. See "--Redemption at Holders Option."

FURTHER INFORMATION

         The terms of the  convertible  debentures  and warrants are complex and
are only briefly  summarized in this Form 10-Q. Further  information  concerning
the rights,  preferences and terms of the convertible debentures and Warrants is
contained in the Company's Current Report on Form 8-K and exhibits thereto filed
with the  Securities  and Exchange  Commission  on April 20, 1999,  which may be
viewed in the public  reading rooms  maintained by the  Commission at Securities
Exchange  Commission,  Public Reference Branch,  Stop 1-2, 450 Fifth Street, NW,
Washington,  DC, 20549-1004,  or viewed on the web site maintained by the SEC at
http://www.sec.gov.

ITEM 5. OTHER EVENTS
--------------------

         None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
----------------------------------------

   a)    The  following  documents  are  furnished  as  an  exhibit and numbered
          pursuant to Item 601 of regulation S-K:


<PAGE>


                  Exhibit 3.1: Restated Certificate of Incorporation, as amended
                    (incorporated  herein by  reference  to  Exhibit  3.1 to the
                    Company's  Registration  Statement on Form S-3 (SEC File No.
                    333-79407), as amended.
                  Exhibit 3.2:  Amended and Restated Bylaws of the Company.
                  Exhibit 27:  Financial Data Schedule

   b) The following two Form 8-Ks were filed in the quarter ended June 30,1999:
       1)     an "Item 5" Form  8-K  was filed  on April 20, 1999 disclosing the
              Company's issuance of the convertible debentures and the warrants,
              and
       2)     An "Item 5" Form 8-K was filed on June 14,  1999  which  disclosed
              Westell's agreement with Fujitsu Telecom Europe  Limited described
              above.






                                   SIGNATURES
                                   ----------


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


                                          WESTELL TECHNOLOGIES, INC.
                                          --------------------------
                                             (Registrant)



DATE: August 13, 1999                     By: ROBERT H. GAYNOR
                                             -----------------
                                             ROBERT H. GAYNOR
                                             Chairman of the Board of Directors
                                             and Chief Executive Officer


                                          By: NICHOLAS C. HINDMAN
                                             --------------------
                                             NICHOLAS C. HINDMAN
                                             Interim Chief Financial Officer