<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION


                              WASHINGTON, DC 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, 1998


                                       OR


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

             for the transition period from __________to __________


                         Commission file number 0-11402


                               TELXON CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


            Delaware                                       74-1666060
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. employer identification no.)
incorporation or organization)



    3330 West Market Street, Akron, Ohio                      44333
----------------------------------------                    ----------
(Address of principal executive offices)                    (Zip Code)


                                 (330) 664-1000
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


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

At June 30, 1998, there were 16,111,215 outstanding shares of the registrant's
$.01 par value Common Stock.


<PAGE>   2

                               TELXON CORPORATION
        INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>

                                                                                                        Page No.
                                                                                                        --------

PART I.       FINANCIAL INFORMATION:

<S>                                                                                                       <C>  
     Item 1:  Consolidated Financial Statements
                         Balance Sheet..................................................................    3
                         Statement of Operations........................................................    4
                         Statement of Cash Flows........................................................    5
                         Notes to Consolidated Financial Statements.....................................   6-9

     Item 2:  Management's Discussion and Analysis of Financial
                         Condition and Results of Operations............................................  10-17

PART II.      OTHER INFORMATION:

     Item 1:  Legal Proceedings.........................................................................   18

     Item 6:  Exhibits and Reports on Form 8-K..........................................................  18-24

All Items of Form 10-Q other than those listed above have been omitted as
inapplicable.
</TABLE>


                                       2
<PAGE>   3


PART I. FINANCIAL INFORMATION

ITEM 1:  CONSOLIDATED FINANCIAL STATEMENTS

                       TELXON CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                     (In thousands except per share amounts)
<TABLE>
<CAPTION>

                                                                                                 June 30,            March 31,
                                                                                                   1998                1998
                                                                                                ----------          ----------
                                                                                                (Unaudited)
<S>                                                                                               <C>                <C>     
ASSETS

Current assets:
  Cash (including cash equivalents of $1,000 and
    $6,778)   ...............................................................................     $ 15,536           $ 27,500
  Accounts receivable, net of allowance for
    doubtful accounts of $1,152 and $1,142...................................................      136,826            125,739
  Notes and other accounts receivable........................................................       15,496             22,949
  Inventories ...............................................................................      110,860            108,178
  Prepaid expenses and other.................................................................       12,844             11,307
                                                                                                  --------           --------
     Total current assets....................................................................      291,562            295,673
Property and equipment, net..................................................................       58,398             52,108
Intangibles and other assets, net............................................................       45,739             42,758
                                                                                                  --------           --------
     Total   ................................................................................     $395,699           $390,539
                                                                                                  ========           ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Notes payable..............................................................................     $ 25,005           $  3,000
  Capital lease obligations due within one year..............................................          988                968
  Accounts payable...........................................................................       45,621             58,634
  Income taxes payable.......................................................................        1,729              3,390
  Accrued liabilities........................................................................       39,374             41,034
                                                                                                  --------           --------
     Total current liabilities...............................................................      112,717            107,026
Capital lease obligations....................................................................        1,956              1,876
Convertible subordinated notes and debentures................................................      106,913            107,224
Other long-term liabilities..................................................................        5,525              6,897
                                                                                                  --------           --------
     Total liabilities.......................................................................      227,111            223,023

Minority interest............................................................................        2,828              2,791

Stockholders' equity:
  Preferred Stock, $1.00 par value per share; 500
    shares authorized, none issued...........................................................           --                 --
  Common Stock, $.01 par value per share; 50,000
    shares authorized, 16,230 and 16,219 shares issued.......................................          162                162
  Additional paid-in capital.................................................................       88,213             87,994
  Retained earnings..........................................................................       85,233             85,053
  Equity adjustment for foreign currency translation.........................................       (5,112)            (4,929)
  Unearned compensation relating to restricted stock awards..................................         (415)              (493)
  Treasury stock; 119 and 162 shares of common stock at cost.................................       (2,321)            (3,062)
                                                                                                  --------           --------
     Total stockholders' equity..............................................................      165,760            164,725
                                                                                                  --------           --------
Commitments and contingencies................................................................           --                 --
                                                                                                  --------           --------
     Total    ...............................................................................     $395,699           $390,539
                                                                                                  ========           ========
</TABLE>


See accompanying notes to consolidated financial statements.

                                       3
<PAGE>   4


                       TELXON CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS

                     (In thousands except per share amounts)

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                             Three Months
                                                                            Ended June 30,
                                                                        1998               1997
                                                                   ---------------    ---------------

<S>                                                                    <C>                <C>     
Revenues:
     Product, net..............................................        $ 94,077           $ 86,691
     Customer service, net.....................................          20,970             18,222
                                                                       --------           --------
              Total net revenues...............................         115,047            104,913

Cost of revenues:
     Product...................................................          57,310             52,561
     Customer service..........................................          12,826             11,126
                                                                       --------           --------
              Total cost of revenues...........................          70,136             63,687
                                                                       --------           --------

     Gross profit..............................................          44,911             41,226

Operating expenses:
     Selling expenses..........................................          21,361             18,100
     Product development and engineering
          Expenses.............................................           8,930              9,126
     General and administrative expenses.......................           9,436              9,703
     Take-over defense costs...................................           1,749                 --
                                                                       --------           --------
              Total operating expenses.........................          41,476             36,929
                                                                       --------           --------

              Income from operations...........................           3,435              4,297

Interest income................................................             179                498
Interest expense...............................................          (1,713)            (1,792)
Other non-operating expense, net...............................          (1,490)              (157)
                                                                       --------           --------

              Income before income taxes.......................             411              2,846

Provision for income taxes.....................................             165              1,252
                                                                       --------           --------

              Net income.......................................        $    246           $  1,594
                                                                       ========           ========

Net income per common share:
                           Basic...............................        $    .02           $    .10
                                                                       ========           ========
                           Diluted.............................        $    .01           $    .10
                                                                       ========           ========

Average number of common shares outstanding:
                           Basic...............................          16,080             15,525
                                                                       ========           ========
                           Diluted.............................          16,924             15,783
                                                                       ========           ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>   5
                       TELXON CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                 (In thousands)

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                             Three Months Ended June 30,
                                                                                      -------------------------------------------
                                                                                            1998                      1997
                                                                                      -----------------         -----------------
<S>                                                                                         <C>                       <C>     
Cash flows from operating activities:
     Net income....................................................................        $     246                 $   1,594
     Adjustments to reconcile net income to
         net cash used in operating activities:
              Depreciation and amortization........................................            6,034                     5,941
              Amortization of restricted stock
                  awards, net......................................................               78                        60
              Provision for doubtful accounts......................................              250                       274
              Provision for inventory obsolescence.................................            1,301                     2,018
              Deferred income taxes................................................               28                       210
              Loss on disposal of fixed assets.....................................               32                       225
              Minority interest....................................................               37                        31
              Changes in assets and liabilities:
                   Accounts and notes receivable...................................           (7,049)                    4,528
                   Inventories.....................................................           (3,921)                   (3,862)
                   Prepaid expenses and other......................................           (1,547)                     (146)
                   Intangibles and other assets....................................             (312)                     (307)
                   Accounts payable and accrued liabilities........................          (16,564)                  (19,133)
                   Other long-term liabilities.....................................           (1,373)                       58
                                                                                      -----------------         -----------------
                             Total adjustments.....................................          (23,006)                  (10,103)
                                                                                      -----------------         -----------------
     Net cash used in operating activities.........................................          (22,760)                   (8,509)

Cash flows from investing activities:
     Additions to property and equipment...........................................           (9,868)                   (4,208)
     Software investments..........................................................           (1,178)                   (1,290)
     Proceeds from the sale of fixed assets........................................                -                       866
     Additions to long-term notes receivable.......................................             (608)                        -
                                                                                      -----------------         -----------------
     Net cash used in investing activities.........................................          (11,654)                   (4,632)

Cash flows from financing activities:
     Borrowings (repayment) on notes payable, net..................................           22,005                       (50)
     Principal payments on capital leases..........................................             (175)                     (157)
     Purchase of treasury stock....................................................                -                    (3,256)
     Proceeds from exercise of stock options
         (includes tax benefit)....................................................              584                     2,563
                                                                                      -----------------         -----------------
     Net cash provided by (used in) financing activities...........................           22,414                      (900)

     Effect of exchange rate changes on cash.......................................               36                       (43)
                                                                                      -----------------         -----------------

     Net decrease in cash and cash equivalents.....................................          (11,964)                  (14,084)
     Cash and cash equivalents at beginning of period..............................           27,500                    45,386
                                                                                      -----------------         -----------------
     Cash and cash equivalents at end of period....................................         $ 15,536                  $ 31,302
                                                                                      =================         =================
</TABLE>


See accompanying notes to consolidated financial statements.

                                       5
<PAGE>   6
                       TELXON CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                (In thousands except share and per share amounts)


1.       Management Representation

         The consolidated financial statements of Telxon Corporation ("Telxon")
         and its subsidiaries (collectively with Telxon, the "Company") have
         been prepared without audit and in accordance with the instructions to
         Form 10-Q. In the opinion of the Company, all adjustments, consisting
         of normal recurring adjustments necessary for a fair statement of
         results for the interim periods, have been made. The operating results
         for the three months ended June 30, 1998, are not necessarily
         indicative of the results that may be achieved for the year ending
         March 31, 1999. The statements, including the March 31, 1998, balance
         sheet data derived from audited financial statements, do not include
         all of the information and notes required by generally accepted
         accounting principles for complete financial statements and should be
         read in conjunction with the audited consolidated financial statements
         as contained in the Company's Annual Report on Form 10-K, as amended by
         Amendments No. 1 and No. 2 on Form 10-K/A, for the fiscal year ended
         March 31, 1998.


2.       Earnings Per Share

         Computations of basic and diluted earnings per share of common stock
         have been made in accordance with the Financial Accounting Standards
         Board's (FASB) Statement of Financial Accounting Standards No. 128,
         "Earnings Per Share". All securities having an anti-dilutive effect on
         earnings per share have been excluded from such computations. Common
         stock purchase rights outstanding under the Company's stockholder
         rights plan, which potentially have a dilutive effect, have been
         excluded from the weighted common shares computation as preconditions
         to the exercisability of such rights were not satisfied.

                  Reconciliation of Numerators and Denominators
                    Of the Basic and Diluted EPS Computations
                 (Dollars in thousands except per share amounts)

In the following table, income represents the numerator and the shares represent
the denominator in the Earnings per Share Calculation.
<TABLE>
<CAPTION>
                                           For the Quarter ended                              For the Quarter ended
                                               June 30, 1998                                      June 30, 1997
                                       ----------------------------------                -----------------------------------
                                                                Per-Share                                          Per-Share
                                       Income       Shares        Amount                 Income       Shares         Amount
                                       ------       ------        ------                 ------       ------         ------
                                                   (Unaudited)                                       (Unaudited)

<S>                                     <C>        <C>             <C>                   <C>           <C>            <C>  
Net income                              $246                                             $1,594

BASIC EPS
Income available to
   Common stockholders                  $246       16,080          $0.02                 $1,594        15,525         $0.10
                                                                   =====                                              =====

EFFECT OF DILUTIVE SECURITIES
Options                                               844                                                 258

DILUTED EPS
Income available to
   Stockholders of common shares
   and common stock equivalents         $246       16,924          $0.01                  $1,594       15,783         $0.10
                                        ====       ======          =====                  ======       ======         =====
</TABLE>


         Options to purchase 10,000 shares of common stock at a price of $34.00
         per share were outstanding at June 30, 1998, but were not included in
         the computation of diluted earnings per share because the options'
         exercise price was greater that the average market price for the
         common shares during fiscal 1999 to date. The shares issuable upon
         conversion of Telxon's 5-3/4% Convertible Subordinated Notes and 7-1/2%
         Convertible Subordinated Debentures were omitted from the diluted
         earnings per share calculations because their inclusion at June 30,
         1998 and 1997 would have had an anti-dilutive effect on earnings.


                                       6
<PAGE>   7

         As more fully described in Note 11 - Subsequent Events, subsequent to
         June 30, 1998, Telxon re-issued 23,574 shares of treasury stock to
         satisfy purchases made by employees through its 1995 Employee Stock
         Purchase Plan and 5,544 shares of treasury stock to satisfy stock
         options exercised under its stock option plans.


3.       Comprehensive Income

         Beginning with the first quarter of fiscal 1999, the Company is
         required to adopt the provisions of the FASB's Statement of Financial
         Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
         No. 130"). SFAS No. 130 establishes standards for reporting
         comprehensive income, which has been defined as the change in equity of
         an entity during a period from transactions and other events and
         circumstances from nonowner sources. SFAS No. 130 requires the
         Company's foreign currency translation adjustment to be included in
         other comprehensive income. Refer to the "Consolidated Statement of
         Operations" for details of the components of net income.


         Total comprehensive income consisted of the following:
<TABLE>
<CAPTION>

                                                                                             Three Months
                                                                                            Ended June 30,
                                                                                            --------------
                                                                                       1998                  1997
                                                                                       ----                  ----
                                                                                              (Unaudited)

<S>                                                                                    <C>                  <C>     
         Net income                                                                    $246                 $1,594

         Other comprehensive income:
         Foreign Currency Translation Adjustment                                       (183)                  (287)
                                                                                      -----                 ------
         Total other comprehensive income                                              (183)                  (287)
                                                                                      -----                 ------

         Total comprehensive income                                                   $  63                 $1,307
                                                                                      =====                 ======


4.       Inventories

         Inventories consisted of the following:

                                                                                   June 30,
                                                                                     1998                 March 31,
                                                                                  (Unaudited)               1998
                                                                                  -----------               ----

         Purchased components                                                      $ 53,474               $ 49,514
         Work-in-process                                                             35,341                 37,375
         Finished goods                                                              22,045                 21,289
                                                                                   --------               --------
                                                                                   $110,860               $108,178
                                                                                   ========               ========


5.       Accrued Liabilities

         Accrued liabilities consisted of the following:

                                                                                   June 30,
                                                                                     1998                  March 31,
                                                                                  (Unaudited)                1998
                                                                                  -----------                ----

         Deferred customer service revenues                                         $15,227                 $13,448
         Accrued payroll and other employee compensation                              8,710                  12,353
         Other accrued liabilities                                                   15,437                  15,233
                                                                                    -------                 -------
                                                                                    $39,374                 $41,034
                                                                                    =======                 =======
</TABLE>


                                       7
<PAGE>   8
<TABLE>
<CAPTION>


<S>                                                                                   <C>                      <C>     
6.       Supplemental Cash Flow Information

                                                                                                  Three Months
                                                                                                 Ended June 30,
                                                                                                 --------------
                                                                                             1998               1997
                                                                                             ----               ----
                                                                                                   (Unaudited)

         Cash paid during the period for:
         Interest                                                                           $1,212            $ 1,104
         Income taxes                                                                        2,156              1,289
</TABLE>


         Capital lease additions of $276 for manufacturing equipment in fiscal
         1999 have been excluded from the accompanying consolidated statement of
         cash flows as a non-cash transaction.


7.       Litigation and Contingencies

         On September 21, 1993, a derivative Complaint was filed in the Court of
         Chancery of the State of Delaware, in and for Newcastle County, by an
         alleged stockholder of the Company derivatively on behalf of Telxon.
         The named defendants are the Company; Robert F. Meyerson, former
         Chairman of the Board, Chief Executive Officer and director; Dan R.
         Wipff, then President, Chief Operating Officer and Chief Financial
         Officer and director; Robert A. Goodman, Corporate Secretary and
         outside director; Norton W. Rose, outside director; and Dr. Raj Reddy,
         outside director. The Complaint alleges breach of fiduciary duty to the
         Company and waste of the Company's assets in connection with certain
         transactions entered into by Telxon and compensation amounts paid by
         the Company. The Complaint seeks an accounting, injunction, rescission,
         attorney's fees and costs. While the Company is nominally a defendant
         in this derivative action, no monetary relief is sought by the
         plaintiff from the Company. On November 12, 1993, Telxon and the
         individual director defendants filed a Motion to Dismiss. The plaintiff
         filed his brief in opposition to the Motion on May 2, 1994, and the
         defendants filed a final responsive brief. The Motion was argued before
         the Court on March 29, 1995, and on July 18, 1995, the Court issued its
         ruling. The Court dismissed all of the claims relating to the
         plaintiff's allegations of corporate waste, however, the claims
         relating to breach of fiduciary duty survived the Motion to Dismiss.

         On October 31, 1996, plaintiff's counsel filed a Motion to Intervene in
         the derivative action on behalf of a new plaintiff stockholder. As part
         of the Motion to Intervene, the intervening plaintiff asked that the
         Court designate as operative for the action the intervening plaintiff's
         proposed Complaint, which alleges that a series of transactions in
         which the Company acquired technology from a corporation affiliated
         with Mr. Meyerson was wrongful in that Telxon already owned the
         technology by means of a pre-existing consulting agreement with another
         affiliate of Mr. Meyerson; the intervenor's complaint also names
         Raymond D. Meyo, President, Chief Executive Officer and director at the
         time of the first acquisition transaction, as a new defendant. The
         defendants opposed the Motion of grounds that the new claim alleged in
         the proposed Complaint and the addition of Mr. Meyo were time-barred by
         the statute of limitations and the intervening plaintiff did not
         satisfy the standards for intervention. After taking legal briefs, the
         Court ruled on June 13, 1997, to permit the intervention. On March 18,
         1998, defendant Meyo filed a Motion for Judgement on the Pleadings (as
         to himself), in response to which Plaintiff has filed his Answer and
         Brief in Opposition, and which remains pending before the Court. The
         post-intervention claims are the subject of ongoing discovery, and no
         deadline for the completion of the discovery has yet been set by the
         Court.

         The defendants believe that the post-intervention claims lack merit,
         and they intend to continue vigorously defending this action. While the
         ultimate outcome of this action cannot presently be determined, the
         Company does not anticipate that this matter will have a material
         adverse effect on the Company's consolidated financial position,
         results of operations or cash flows and accordingly has not made
         provisions for any loss or related insurance recovery in the
         accompanying consolidated financial statements.

         On February 17, 1998, a complaint was filed against the Company in the
         District Court of Harris County, Texas, by Southwest Business
         Properties, the landlord of the Company's former Wynnwood Lane facility
         in Houston, Texas. The complaint alleges counts for breach of contract
         and temporary and permanent injunctive relief, all related to alleged
         environmental contamination at the Wynnwood property, and seeks
         specific performance, unspecified monetary damages for all injuries
         suffered by plaintiff, payment of pre-judgement interest, attorneys'
         fees and costs and other unspecified relief. In its Answer, Telxon
         denied plaintiff's allegations. No hearing has been had on, or is
         currently scheduled for, plaintiff's claim for temporary injunctive
         relief. Pursuant to the Court's Scheduling Order for this action, trial
         is set for March 8, 1999. If the Company were ultimately to become
         responsible for the alleged contamination, the associated

                                       8
<PAGE>   9
         loss could have a material adverse effect on results of operations for
         one or more quarters in which the associated charge(s) would be taken.
         Telxon believes that these claims lack merit, and it intends to
         vigorously defend this action.

         On May 8, 1998, two class action suits were filed in the Court of
         Chancery of the State of Delaware, in and for the County of New Castle,
         by certain alleged stockholders of Telxon on behalf of themselves and
         purported classes consisting of Telxon stockholders, other than
         defendants and their affiliates, relating to an alleged offer by Symbol
         Technologies, Inc. ("Symbol") to acquire the Company. The named
         defendants are Telxon and its current Board of Directors, namely, Frank
         E. Brick, Robert A. Goodman, Dr. Raj Reddy, John H. Cribb, Richard J.
         Bogomolny, and Norton W. Rose.

         The plaintiffs allege that on April 21, 1998, Symbol made an offer to
         purchase Telxon for $38.00 per share in cash and that on May 8, 1998,
         Telxon rejected Symbol's proposal. Plaintiffs further allege that
         Telxon has certain anti-takeover devices in place purportedly designed
         to thwart hostile bids for the Company. Plaintiffs charge the Director
         defendants with breach of fiduciary duty and claim that they are
         entrenching themselves in office. The plaintiffs seek certification of
         the purported class, unspecified compensatory damages, equitable and/or
         injunctive relief requiring the defendants to act in specified manners
         consistent with the defendant Directors' fiduciary duties, and payment
         of attorney's fees and costs. The parties have stipulated that the
         plaintiffs will file an Amended Complaint and that the defendants will
         answer only the Amended Complaint.

         On June 2, 1998, the Court ordered consolidation of the above-captioned
         cases. This action is in its early stages, with no scheduling order
         having been issued by the Court; discovery has not yet commenced. The
         defendants believe that these claims lack merit and intend to
         vigorously defend the consolidated action.

         In the normal course of its operations, the Company is subject to
         performance under contracts and assertions that technologies it
         utilizes may infringe third party intellectual properties, and has
         various legal actions and certain contingencies pending. In
         management's opinion, all such matters have either been reflected in
         the consolidated financial statements, are covered by insurance or
         would not have a material adverse effect on the Company's consolidated
         financial position, results of operations or cash flows.


8.       Income Taxes

         The Company's consolidated effective income tax rate reflects income
         before taxes increased by non-deductible goodwill amortization and the
         tax effect of unutilized subsidiary net operating loss benefits, which
         sum is multiplied by the United States statutory rate and increased by
         foreign tax rate differentials. The effective income tax rate was
         decreased by a credit for research and development and the favorable
         tax treatment of the Company's foreign sales corporation.


9.       Subsidiary Stock Transactions

         During the first quarter of fiscal 1999, the Company repurchased
         400,000 shares of the voting common stock of its Metanetics Corporation
         ("Metanetics") subsidiary, a licensor and developer of image processing
         technology, from a third party at $4.875 per share. The associated
         pre-tax non-operating loss of $1,950 has been recorded in the
         accompanying consolidated statement of operations. Giving effect to
         this repurchase of shares, the Company's interest in the voting
         common stock of Metanetics was 60% at June 30, 1998.

         During the first quarter of fiscal 1999, the Company's Aironet Wireless
         Communications, Inc. ("Aironet") subsidiary, a developer, manufacturer
         and marketer of wireless LAN systems, sold 222,222 shares of its
         voting common stock to various third-party investors at a price of
         $3.50 per share. Proceeds from this sale of stock were $778. The
         resulting pre-tax net gain of $340 was recorded as other non-operating
         income in the accompanying consolidated statement of operations. In
         addition to the sale of the shares of stock, 66,667 warrants for the
         purchase of Aironet voting common stock were issued. A gain of $47
         relating to these warrants has been deferred until the warrants are
         exercised or lapse. The Company's remaining interest in the voting
         common stock of Aironet at June 30, 1998, was 76%.


                                       9


<PAGE>   10
10.      Other Transactions

         During the first quarter of fiscal 1999, $311 in aggregate principal
         amount of the Company's 7-1/2% Convertible Subordinated Debentures were
         surrendered for conversion into 11,621 shares of the Company's Common
         Stock, $.01 par value per share. The surrendered Convertible
         Subordinated Debentures have been cancelled effective as of their
         conversion into common stock.

         During the first quarter of fiscal 1999, the Company re-issued 44,848
         shares of treasury stock, at a weighted average cost of $19.27, to
         satisfy options exercised under the Company's stock option plans.


11.      Subsequent Events

         Subsequent to June 30, 1998, the Company re-issued 23,574 shares of
         treasury stock to satisfy purchases made by employees through the
         Telxon Corporation 1995 Employee Stock Purchase Plan. Additionally, the
         Company re-issued 5,544 shares of treasury stock in July 1998 to
         satisfy stock options exercised under the Company's stock option plans.

         Also subsequent to June 30, 1998, the Company extended to August 3,
         1999, the $20.0 million in bank credit which it maintains under its
         business purpose revolving promissory note in addition to its ongoing
         $100.0 million credit agreement.


12.      Reclassifications

         Certain items in the fiscal 1998 consolidated financial statements and
         notes thereto have been reclassified to conform to the fiscal 1999
         presentation.


                                       10
<PAGE>   11


                       TELXON CORPORATION AND SUBSIDIARIES

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

IN ADDITION TO DISCUSSING AND ANALYZING THE COMPANY'S RECENT HISTORICAL
FINANCIAL RESULTS AND CONDITION, THE FOLLOWING MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INCLUDES STATEMENTS
REGARDING CERTAIN TRENDS OR OF OTHER FORWARD-LOOKING INFORMATION CONCERNING THE
COMPANY'S ANTICIPATED REVENUES, COSTS, FINANCIAL RESOURCES OR OTHERWISE
AFFECTING OR RELATING TO THE COMPANY WHICH ARE INTENDED TO QUALIFY FOR THE
PROTECTIONS AFFORDED "FORWARD-LOOKING STATEMENTS" UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995, PUBLIC LAW 104-67. THE FORWARD-LOOKING STATEMENTS
MADE HEREIN AND ELSEWHERE IN THIS FORM 10-Q ARE INHERENTLY SUBJECT TO RISKS AND
UNCERTAINTIES, WHICH COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS. THE SUMMARY OF CERTAIN OF THE
RISKS AND OTHER IMPORTANT FACTORS WHICH MAY AFFECT THE COMPANY'S BUSINESS,
OPERATING RESULTS AND FINANCIAL AND OTHER CONDITION UNDER "FACTORS THAT MAY
AFFECT FUTURE RESULTS" BELOW SHOULD BE READ IN CONJUNCTION WITH THE MORE
COMPLETE DISCUSSION OF THOSE AND OTHER RISKS AND IMPORTANT FACTORS AFFECTING THE
BUSINESS, OPERATING RESULTS AND CONDITION OF THE COMPANY UNDER "ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION - FACTORS THAT MAY AFFECT FUTURE RESULTS" (WHICH IS INCORPORATED
HEREIN BY THIS REFERENCE), AND OTHER CAUTIONARY STATEMENTS APPEARING UNDER "ITEM
1. BUSINESS" AND ELSEWHERE, IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K, AS
AMENDED BY AMENDMENTS NO. 1 AND NO. 2 ON FORM 10-K/A, FOR THE FISCAL YEAR ENDED
MARCH 31, 1998.

Overview

The Company recorded net income of $.2 million or $.01 per common share
(diluted) for the first quarter of fiscal 1999. In comparison, the Company
recorded net income of $1.6 million or $.10 per common share (diluted) for the
first quarter of fiscal 1998. The results for the first quarter of fiscal 1999
include after-tax charges of $1.0 million or $.06 per common share (diluted)
for costs incurred in response to an unsolicited takeover proposal and $1.0
million or $.06 per common share (diluted) related to transactions in the
voting common stock and warrants of two of the Company's subsidiaries.

The Company operates in a rapidly changing and dynamic market, and the Company's
strategies and plans are designed to adapt to changing market conditions where
and when possible. However, there can be no assurance that the Company's
management will identify the risks (especially those newly emerging from time to
time) affecting, and their impact on, the Company and its business, that the
Company's strategies and plans will take into account all market conditions and
changes thereto or that such strategies and plans will be successfully
implemented. Accordingly, neither the historical results presented in the
Company's consolidated financial statements and discussed herein, nor any
forward-looking statements in this Form 10-Q, are necessarily indicative of the
Company's future results. See "Factors That May Affect Future Results" for a
discussion of risk factors which may affect the Company's future results of
operations.

Factors That May Affect Future Results

The Company's business, operating results and financial and other condition may
be affected by a number of risks and other important factors, including, without
limitation, the following, some of which are inherently difficult to identify
and predict and/or are beyond the Company's control: general and
industry-specific economic conditions; the identification and implementation of
appropriate cost saving and operational efficiency initiatives; sales and
manufacturing cycles from quarter to quarter and within each quarter; serving
markets characterized by increasingly rapid technological change and associated
changes in market demand and product obsolescence and by price erosion; intense
competition; concentration of revenues in the retail industry; ability to
penetrate and expand revenues in new and existing markets; risks associated with
foreign sales and operations; timely and efficient enhancement of appropriate
product offerings through internal development and acquisition of or investment
in new businesses and technologies; dependence on, and freedom from infringement
of, technologies and other proprietary rights of or by third parties; government
regulation of radio and other products and product health and safety concerns;
dependence on sole source, or a limited number of, suppliers; and attracting and
retaining qualified employees. In addition to being subject to the foregoing
factors and other cautionary statements elsewhere in this Form 10-Q, the
Company's conduct of its business and the results and condition thereof are also
subject to the possible adverse effects of certain pending litigation and other
contingencies discussed in Note 7 to the accompanying consolidated financial
statements included in Item 1 above.

Readiness for the Year 2000

As the end of the twentieth century nears, there is worldwide concern regarding
the use by many existing computer programs of only the last two digits rather 
than four to identify the year in a date field. If not corrected, many 
computer applications may fail to treat year dates intended to represent years 
in the twenty-first century as such but instead treat them as still in the 
twentieth century,



                                       11
<PAGE>   12


potentially resulting in system failure or miscalculations disruptive of
business operations, including, among other things, an inability to initiate,
receive, process, invoice or otherwise complete normal business activities.
These Year 2000 issues affect virtually all companies and organizations.

The Year 2000 issues affect both the Company's own internal operations and the
computer products and related services it provides. As further discussed below
under "FINANCIAL CONDITION - Cash Flows from Investing Activities" below, the
Company is working with outside contractors to develop and install new
corporate-wide information systems. The new systems were identified as strategic
business initiative independent of Year 2000 considerations. While the new
information systems will be dynamic ones permitting ongoing improvements as
business needs are identified, the basic operational systems are expected to be
substantially completed during early 1999 at a total estimated capital
expenditure of approximately $23.3 million. Those time and cost targets are
management's current best estimates based on presently available information and
numerous assumptions. Given the uncertainties and complexities inherent in any
new system installation, there can be no assurance that the project will be
completed within the expected time and cost parameters. The portions of the
Company's existing information systems which would require correction for Year
2000 issues will be superseded as part of the new systems, which are being
designed to be Year 2000 ready.

With respect to its own products, the Company has identified those of its
existing products (released prior to December 31, 1997) that are or will be made
Year 2000 ready. Those already- or to-be-made-Year 2000 ready products represent
the existing products which management believes will continue to be a
significant part of the Company's ongoing product line. Customers may continue
to order the Company's other existing products, but with no assurance from the
Company as to their Year 2000 readiness or the feasibility or availability of an
upgrade path to readiness. All new products released after December 31, 1997
will be Year 2000 ready when released.

The Company has substantially completed the initial writing of the
software/firmware upgrades for the existing products which are not presently,
but are to be made Year 2000 ready, and has completed a majority of the testing
of those upgrades. Subject to negotiated contractual commitments, the Company
will make the upgrades available free of charge for products purchased after
December 31, 1997, but customers will be responsible for installing the upgrades
(or they may retain the Company to do so for a fee). Given the technical nature
of the task of isolating and correcting non-compliant programming and the
limited internal resources available, and the increasing demand for available
external resources, to perform the work, there can be no assurance as to if,
when and at what cost the upgrades can be completed.

The Company could be adversely affected by the Year 2000 readiness of its
customers as well as of its suppliers of raw materials, components, peripherals,
finished products and software and its providers of facilities, equipment and
services and any failure on their part to achieve readiness in their own
operations or with respect to the items they supply or otherwise provide to the
Company. While the Company is in the process of determining what inquiries might
be appropriate to make of such other parties (principally of its suppliers and
other providers) in these regards, there can be no assurance that the Year 2000
issues confronting such other parties and any failure on their part to timely
address them will not have a material adverse effect on the Company. Disruptions
in the economy generally, domestically and/or in foreign countries, resulting
from Year 2000 issues could also materially adversely affect the Company.


                                       12
<PAGE>   13

RESULTS 

Revenues
--------
<TABLE>
<CAPTION>
                                                             Quarter ended June 30,                      Increase
                                                             ----------------------                      --------
                                                            1998                1997              Dollar        Percentage
                                                            ----                ----              ------        ----------
                                                                          (in thousands)
<S>                                                       <C>                  <C>               <C>                <C> 
Net Revenues:
  Product, net                                            $ 94,077             $ 86,691          $ 7,386            8.5%
  Customer service, net                                     20,970               18,222            2,748           15.1%
                                                          --------             --------          -------
  Total net revenues                                      $115,047             $104,913          $10,134            9.7%
                                                          ========             ========          =======
</TABLE>

Net product revenues include the sale of portable tele-transaction computers
("PTCs"), including rugged, wireless mobile computers and pen-based and
touch-screen workslates; hardware accessories; wireless data communication
products; custom application software, network management software and
software licenses; and a variety of professional services, including system
integration and project management.

The increase in the first quarter fiscal 1999 consolidated product revenues from
the fiscal 1998 level was due primarily to a 4.1% increase in PTC unit volume
and a 5.1% increase in the average selling price per PTC unit. The increase in
consolidated PTC unit volume was the result of an approximately 400.0% increase
in pen-based product sales in the first quarter of fiscal 1999 from the first
quarter of fiscal 1998, the result of the increased market penetration achieved
by the Company with its more powerful workslate models. The Company expects
consolidated product revenues for the remainder of fiscal 1999 to increase from
the fiscal 1998 level.

The increase in the first quarter fiscal 1999 consolidated customer service
revenues from the fiscal 1998 level was primarily the result of the continued
increase in the installed base of the Company's products, which generated a
26.4% increase in domestic time and material billings and a 9.7% increase in
domestic maintenance billings. The Company anticipates increased consolidated
customer service revenues for the remainder of fiscal 1999.

Revenues from the Company's international operations (including Canada)
increased $1.5 million or 4.9% in the first quarter of fiscal 1999 from the
fiscal 1998 level. This increase was attributable primarily to the increased
revenues recorded by the Company's Canadian operations.


Cost of Revenues
----------------
<TABLE>
<CAPTION>
                                                             Quarter ended June 30,                      Increase
                                                             ----------------------                      --------
                                                            1998              1997                Dollar        Percentage
                                                            ----              ----                ------        ----------
                                                                          (in thousands)

<S>                                                           <C>               <C>               <C>            <C> 
Cost of Revenues:
  Product                                                  $57,310              $52,561           $4,749            9.0%
  Customer service                                          12,826               11,126            1,700           15.3%
                                                           -------              -------           ------
  Total cost of revenues                                   $70,136              $63,687           $6,449           10.1%
                                                           =======              =======           ======

Cost of product revenues as a
  percentage of product revenues,
  net                                                         60.9%                60.6%

Cost of customer service revenues
  as a percentage of customer
  service revenues, net                                       61.2%                61.1%
</TABLE>

Consolidated product gross margins decreased to 39.1% in the first quarter of
fiscal 1998 from 39.4% in the first quarter of fiscal 1998. This decrease was
due primarily to an increase in the average cost per PTC unit, the result of a
shift in product mix from the higher-margin non-pen-based units to the more
complex and costly pen-based and touch-screen workslates.

At June 30, 1998, consolidated inventory allowance accounts increased to $12.4
million from $11.5 million at March 31, 1998. As a percentage of consolidated
gross inventories, the Company's consolidated inventory allowances increased to
9.9% at June 30, 1998, from 9.6% at March 31, 1998. This increase is the result
of the Company's fiscal 1999 first quarter provisions for inventory
obsolescence The Company anticipates continuing to provide for inventory
obsolescence resulting from technological change.

                                       13
<PAGE>   14
Operating Expenses
------------------
<TABLE>
<CAPTION>

                                                               Quarter ended June 30,               Increase/(Decrease)
                                                               ----------------------               -------------------
                                                               1998              1997            Dollar        Percentage
                                                               ----              ----            ------        ----------
                                                                          (in thousands)

<S>                                                           <C>               <C>               <C>            <C>  
Operating Expenses:
  Selling expenses                                            $21,361           $18,100           $3,261         18.0%
  Product development and
    engineering expenses                                        8,930             9,126             (196)        (2.1)%
  General and administrative
    expenses                                                    9,436             9,703             (267)        (2.8)%
  Take-over defense costs                                       1,749                 -            1,749          N.M.
                                                              -------           -------           ------
  Total operating expenses                                    $41,476           $36,929           $4,547         12.3%
                                                              =======           =======           ======
</TABLE>
Selling expenses as a percentage of total revenues increased to 18.6% in the
first quarter of fiscal 1999 from 17.3% in the first quarter of fiscal 1998. The
increase in the consolidated selling expense percentage of total revenues was
due primarily to investments in personnel and resources to support the revenue
growth of the Company and its investment in indirect channel distribution. Due
to these investments, the Company expects selling expenses as a percentage of
total revenues for the remainder of fiscal 1999 to be higher than the
comparable fiscal 1998 levels.

The decrease in product development and engineering expenses in the first
quarter of fiscal 1999 from the first quarter of fiscal 1998 levels is primarily
the result of the absence in fiscal 1999 of costs associated with the
consolidation and relocation of certain of the Company's engineering and product
development operations from Akron, Ohio to Houston, Texas during fiscal 1998 as
well as the benefit derived from this action. The Company expects product
development and engineering expenses for the remainder of fiscal 1999 to be
below fiscal 1998 levels.

During the first quarter of fiscal 1999, the Company capitalized internal
software development costs in accordance with the requirements of Statement of
Financial Accounting Standards No. 86, "Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed" aggregating $1.2 million,
offset by amortization of $1.8 million. The Company anticipates the dollar
amount of internal software development cost capitalized during the remainder of
fiscal 1999 to remain generally consistent with the fiscal 1998 level.

During the first quarter of fiscal 1999, the Company recorded $1.7 million
related to costs incurred in response to an unsolicited takeover proposal by
Symbol Technologies, Inc. ("Symbol"). Citing the Company's rejection of the
Symbol proposal, a stockholder of the Company has notified the Company of his
intention to present six proposals to reform the Company's corporate governance
structure, particularly as it relates to takeover proposals such as Symbol's,
and to nominate a director at the Company's 1998 annual meeting of stockholders
scheduled to be held September 15, 1998 and has filed with the Securities and
Exchange Commission preliminary proxy materials for his solicitation of proxies
in that regard; on August 11, 1998, the Company filed its responsive, definitive
proxy materials for the annual meeting. The Company anticipates incurring
additional continuing litigation and other costs relating to the unsolicited
takeover proposal and the ensuing proxy solicitation.

Other Non-Operating Expense, net
--------------------------------
<TABLE>
<CAPTION>

                                                                 Quarter ended June 30,                  Increase
                                                                 ----------------------                  --------
                                                               1998              1997            Dollar        Percentage
                                                               ----              ----            ------        ----------
                                                                          (in thousands)
<S>                                                           <C>                 <C>            <C>     
Non-Operating Income (Expense):
     Gain on sale of subsidiary stock                         $   340             $   -          $   340        N.M.
     Loss on purchase of subsidiary stock                      (1,950)                -           (1,950)       N.M.
     Other non-operating income (expense)                         120              (157)             277      176.4%
                                                              -------             -----          -------
Total other non-operating expense, net                        $(1,490)            $(157)         $(1,333)
                                                              =======             =====          =======
</TABLE>

During the first quarter of fiscal 1999, the Company repurchased 400,000 shares
of the voting common stock of its Metanetics Corporation ("Metanetics")
subsidiary, a licensor and developer of image processing technology, from a
third party at $4.875 per share. The resulting pre-tax non-operating loss of
$1,950 has been recorded in the accompanying consolidated statement of
operations. The initial sale of this Metanetics voting common stock during
fiscal 1996 was recorded as a non-operating gain in the Company's consolidated
statement of operations.

During the first quarter of fiscal 1999, the Company's Aironet Wireless
Communications, Inc. ("Aironet") subsidiary, a developer, manufacturer, and
marketer of wireless LAN systems, sold 222,222 shares of its voting common stock
to various third-party investors at a price of $3.50 per share. The resulting
pre-tax gain of $340, net of a deferred gain of $47 related to warrants for an
additional 66,667 shares that were also issued, was recorded as other
non-operating income in the accompanying consolidated statement of operations.

                                       14
<PAGE>   15

Income Taxes
------------
<TABLE>
<CAPTION>

                                                             Quarter ended June 30,                     (Decrease)
                                                             ----------------------                     ----------
                                                            1998                 1997            Dollar        Percentage
                                                            ----                 ----            ------        ----------
                                                                          (in thousands)
<S>                                                          <C>                 <C>             <C>              <C>    
Income Taxes:
  Provision for income taxes                                 $165                $1,252          $(1,087)         (86.8)%
</TABLE>

The Company's consolidated effective tax rate was 40.1% in the first quarter of
fiscal 1999 and 44.0% in the first quarter of fiscal 1998. The consolidated
effective income tax rate for the first quarter of fiscal 1999 reflects income
before taxes multiplied by the United States federal statutory tax rate. The tax
rate was increased by nondeductible goodwill amortization, international tax
rate differentials and unutilized subsidiary net operating loss benefits. The
effective income tax rate was decreased as a result of the utilization of
research and development credits earned in prior periods and the favorable tax
treatment of the Company's foreign sales corporation.

The consolidated effective income tax rate for the first quarter of fiscal 1998
reflects income before taxes multiplied by the United States federal statutory
tax rate increased by nondeductible goodwill amortization, international tax
rate differentials and subsidiaries' net operating loss benefits not currently
utilized and decreased by the favorable tax treatment of the Company's foreign
sales corporation.


FINANCIAL CONDITION

Liquidity
---------
<TABLE>
<CAPTION>

                                                                                                           Dollar
                                                                        June 30,          March 31,       Increase
                                                                          1998              1998         (Decrease)
                                                                          ----              ----         ----------
                                                                               (in thousands except ratios)

<S>                                                                      <C>               <C>              <C>      
Cash and cash equivalents                                                $ 15,536          $ 27,500         $(11,964)
Accounts and notes receivable                                             152,322           148,688            3,634
Inventories                                                               110,860           108,178            2,682
Other                                                                      12,844            11,307            1,537
                                                                         --------          --------         --------
Total current assets                                                     $291,562          $295,673         $ (4,111)
                                                                         ========          ========         ========

Notes payable                                                            $ 25,005          $  3,000         $ 22,005
Accounts payable                                                           45,621            58,634          (13,013)
Income taxes payable                                                        1,729             3,390           (1,661)
Accrued liabilities                                                        39,374            41,034           (1,660)
Other                                                                         988               968               20
                                                                         --------          --------         --------
Total current liabilities                                                $112,717          $107,026         $  5,691
                                                                         ========          ========         ========
Working capital (current assets
  less current liabilities)                                              $178,845          $188,647         $ (9,802)
                                                                         ========          ========         ========
Current ratio (current assets divided
  by current liabilities)                                                2.6 to 1          2.8 to 1
</TABLE>

As illustrated in the preceding table, the decrease in the Company's
consolidated working capital at June 30, 1998, from March 31, 1998, was due
primarily to the decreases in cash and accounts payable, offset by increases in
notes payable, accounts and notes receivable and inventories. The decrease in
cash was the result of payments to vendors, resulting in the decrease in
accounts payable. The increase in notes payable was the result of increased
borrowings from the Company's revolving credit facilities due to the timing of
revenues within the quarter. Consolidated days sales outstanding ("DSO")
increased to 105 days at June 30, 1998, from 85 days at March 31, 1998. The
increase in accounts receivable and DSO was due primarily to significant
billings late in the quarter, for which payment was not received until after
June 30, 1998. The increase in inventory was the result of investments in
customer service inventory to support new products and increased revenues and in
used equipment to support the Company's expanded remanufacturing program.
Consolidated inventory turns decreased to 2.0 at June 30, 1998, from 2.4 at
March 31, 1998.

The Company had $25 million outstanding under its bank credit agreements at June
30, 1998, and was in compliance with all restrictive covenants contained in
those agreements.

The Company believes its existing resources, including available cash and cash
equivalents, internally generated funds and bank credit facilities ($100 million
credit agreement and $20 million promissory note) will be sufficient to meet
working capital requirements for the next twelve months.

                                       15

<PAGE>   16


Cash Flows from Operating Activities
------------------------------------
<TABLE>
<CAPTION>
                                                                                                                     
                                                                                                             Dollar
                                                                                                            Increase
                                                                                                           (Decrease)
                                                                         Three Months ended June 30,           in
                                                                         ---------------------------        Cash Flow
                                                                            1998             1997            Impact
                                                                            ----             ----            ------
                                                                                      (in thousands)

<S>                                                                      <C>               <C>               <C>     
  Net income                                                             $    246          $  1,594          $(1,348)
  Depreciation and amortization                                             6,112             6,001              111
  Provision for inventory obsolescence                                      1,301             2,018             (717)
  Deferred income taxes                                                        28               210             (182)
  Accounts and notes receivable                                            (7,049)            4,528          (11,577)
  Inventories                                                              (3,921)           (3,862)             (59)
  Prepaid expenses and other                                               (1,547)             (146)          (1,401)
  Accounts payable and accrued liabilities                                (16,564)          (19,133)           2,569
  Other                                                                    (1,366)              281           (1,647)
                                                                         --------          --------         --------
Net cash used in operating activities                                    $(22,760)         $ (8,509)        $(14,251)
                                                                         ========          ========         ========
</TABLE>

As detailed in the preceding table, the increase in the net cash used in the
Company's consolidated operating activities for the first three months of fiscal
1999 as compared to the first three months of fiscal 1998 was the result of the
decrease in net income in the fiscal 1999 period and the change in the cash flow
impact of accounts and notes receivable and prepaid expenses, partially offset
by the change in the cash flow impact of accounts payable and accrued
liabilities.

Cash Flows from Investing Activities
------------------------------------
<TABLE>
<CAPTION>
                                                                                                                      
                                                                                                              Dollar
                                                                                                             Increase
                                                                                                            (Decrease)
                                                                         Three Months ended June 30,            in
                                                                         ---------------------------        Cash Flow
                                                                           1998              1997             Impact
                                                                           ----              ----             ------
                                                                                      (in thousands)

<S>                                                                      <C>                <C>              <C>     
  Additions to property and equipment                                    $ (9,868)          $(4,208)         $(5,660)
  Software investments                                                     (1,178)           (1,290)             112
  Proceeds from sale of assets                                                  -               866             (866)
  Other                                                                      (608)                -             (608)
                                                                         --------           -------          -------
Net cash used in investing activities                                    $(11,654)          $(4,632)         $(7,022)
                                                                         ========-          =======-         =======
</TABLE>
As detailed in the preceding table, the increase in the amount of cash used in
the Company's consolidated investing activities in the first three months of
fiscal 1999 from the first three months of fiscal 1998 was due primarily to
increased investments in property and equipment, primarily the capitalization
of $3.7 million of expenditures relating to the installation of new
corporate-wide information systems. As of June 30, 1998, the Company has
capitalized $12.4 million of the total estimated capital expenditure of
approximately $23.3 million for the new system. The Company anticipates
increased capitalization of costs associated with the new information systems
during the remainder of fiscal 1999.


Cash Flows from Financing Activities
------------------------------------
<TABLE>
<CAPTION>
                                                                                                                    
                                                                                                            Dollar
                                                                                                           Increase
                                                                                                          (Decrease)
                                                                         Three Months ended June 30,          in
                                                                         ---------------------------       Cash Flow
                                                                           1998              1997            Impact
                                                                           ----              ----            ------
                                                                                      (in thousands)

<S>                                                                       <C>               <C>              <C>    
  Notes payable, net                                                      $22,005           $   (50)         $22,055
  Purchase of treasury stock                                                    -            (3,256)           3,256
  Proceeds from exercise of stock options                                     584             2,563           (1,979)
  Other                                                                      (175)             (157)             (18)
                                                                          -------           -------          -------
Net cash provided by (used in) financing activities                       $22,414           $  (900)        $ 23,314
                                                                          =======           =======         ========
</TABLE>

As detailed in the preceding table, the increase in the Company's net cash
provided by financing activities for the first three months of fiscal 1999 from
the first three months of fiscal 1998 was due primarily to the increase in the
level of borrowings from the Company's revolving credit facilities during the
first quarter of fiscal 1999 and the absence in the fiscal 1999 period of the
cash flow 


                                       16
<PAGE>   17
impact of the repurchase of treasury stock during the first quarter of
fiscal 1998, partially offset by the decrease in the cash flow impact of the
proceeds from the exercise of stock options.

Other Transactions
------------------

During the first quarter of fiscal 1999, $311 in aggregate principal amount of
the Company's 7-1/2% Convertible Subordinated Debentures were surrendered for
conversion into 11,621 shares of the Company's Common Stock, $.01 par value per
share. The surrendered Convertible Subordinated Debentures have been cancelled
effective as of their conversion into common stock.

During the first quarter of fiscal 1999, the Company re-issued 44,848 shares of
treasury stock, at a weighted average cost of $19.27, to satisfy stock options
exercised under the Company's stock option plans.


Subsequent Events
-----------------

Subsequent to June 30, 1998, the Company re-issued 23,574 shares of treasury
stock to satisfy purchases made by employees through the Telxon Corporation 1995
Employee Stock Purchase Plan. Additionally, the Company re-issued 5,544 shares
of treasury stock in July 1998 to satisfy stock options exercised under the
Company's stock option plans.

Also subsequent to June 30, 1998, the Company extended to August 3, 1999, the
$20.0 million in bank credit which it maintains under its business purpose
revolving promissory note in addition to its ongoing $100.0 million credit
agreement.

                                       17
<PAGE>   18

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

See Note 7 to the consolidated financial statements included in Part I of this
Quarterly Report on Form 10-Q for a discussion of the material pending legal
proceedings to which the Company is a party, which footnote discussion is
incorporated in this Part II by this reference.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits required by Item 601 of Regulation S-K:

               2        Asset Purchase Agreement by and among Dynatech
                        Corporation, IAQ Corporation, Registrant and Itronix
                        Corporation, a wholly owned subsidiary of Registrant,
                        dated as of December 28, 1996, incorporated herein by
                        reference to Exhibit 2 to Registrant's Form 8-K dated
                        December 31, 1996.

               3.1      Restated Certificate of Incorporation of Registrant,
                        incorporated herein by reference to Exhibit No. 2(b) to
                        Registrant's Registration Statement on Form 8-A with
                        respect to its Common Stock filed pursuant to Section
                        12(g) of the Securities Exchange Act, as amended by
                        Amendment No. 1 thereto filed under cover of a Form 8
                        and Amendment No. 2 thereto filed on Form 8-A/A.

               3.2      Amended and Restated By-Laws of Registrant, as amended,
                        incorporated herein by reference to Exhibit No. 2(b) to
                        Registrant's Registration Statement on Form 8-A with
                        respect to its Common Stock filed pursuant to Section
                        12(g) of the Securities Exchange Act, as amended by
                        Amendment No. 1 thereto filed under cover of a Form 8
                        and Amendment No. 2 thereto filed on Form 8-A/A.

               4.1      Portions of the Restated Certificate of Incorporation of
                        Registrant pertaining to the rights of holders of
                        Registrant's Common Stock, par value $.01 per share,
                        incorporated herein by reference to Exhibit No. 2(b) to
                        Registrant's Registration Statement on Form 8-A with
                        respect to its Common Stock filed pursuant to Section
                        12(g) of the Securities Exchange Act, as amended by
                        Amendment No. 1 thereto filed under cover of a Form 8
                        and Amendment No. 2 thereto filed on Form 8-A/A.

               4.2      Text of form of Certificate for Registrant's Common
                        Stock, par value $.01 per share, and description of
                        graphic and image material appearing thereon,
                        incorporated herein by reference to Exhibit 4.2 to
                        Registrant's Form 10-Q for the quarter ended June 30,
                        1995.

               4.3      Rights Agreement between Registrant and KeyBank National
                        Association, as Rights Agent, dated as of August 25,
                        1987, as amended and restated as of July 31, 1996,
                        incorporated herein by reference to Exhibit 4 to
                        Registrant's Form 8-K dated August 5, 1996.

                        4.3.1    Form of Rights Certificate (included as Exhibit
                                 A to the Rights Agreement included as Exhibit
                                 4.3 above). Until the Distribution Date (as
                                 defined in the Rights Agreement), the Rights
                                 Agreement provides that the common stock
                                 purchase rights created thereunder are
                                 evidenced by the certificates for Registrant's
                                 Common Stock (the text of which and description
                                 thereof is included as Exhibit 4.2 above, which
                                 stock certificates are deemed also to be
                                 certificates for such common stock purchase
                                 rights) and not by separate Rights
                                 Certificates; as soon as practicable after the
                                 Distribution Date, Rights Certificates will be
                                 mailed to each holder of Registrant's Common
                                 Stock as of the close of business on the
                                 Distribution Date.

                        4.3.2    Letter agreement among Registrant, KeyBank
                                 National Association and Harris Trust and
                                 Savings Bank, dated June 11, 1997, with respect
                                 to the appointment of Harris Trust and Savings
                                 Bank as successor Rights Agent under the Rights
                                 Agreement included as Exhibit 4.3 above,
                                 incorporated herein by reference to Exhibit
                                 4.3.2 to Registrant's Form 10-K for the year
                                 ended March 31, 1997.

               4.4      Indenture by and between Registrant and AmeriTrust
                        Company National Association, as Trustee, dated as of
                        June 1, 1987, regarding Registrant's


                                       18
<PAGE>   19


                  7-1/2% Convertible Subordinated Debentures Due 2012,
                  incorporated herein by reference to Exhibit 4.2 to
                  Registrant's Registration Statement on Form S-3, Registration
                  No. 33-14348, filed May 18, 1987.

                  4.4.1    Form of Registrant's 7-1/2% Convertible Subordinated
                           Debentures Due 2012 (set forth in the Indenture
                           included as Exhibit 4.4 above).

         4.5      Indenture by and between Registrant and Bank One Trust
                  Company, N.A., as Trustee, dated as of December 1, 1995,
                  regarding Registrant's 5-3/4% Convertible Subordinated Notes
                  due 2003, incorporated herein by reference to Exhibit 4.1 to
                  Registrant's Registration Statement on Form S-3, Registration
                  No. 333-1189, filed February 23, 1996.

                  4.5.1    Form of Registrant's 5-3/4% Convertible Subordinated
                           Notes due 2003 issued under the Indenture included as
                           Exhibit 4.5 above, incorporated herein by reference
                           to Exhibit 4.2 to Registrant's Registration Statement
                           on Form S-3, Registration No. 333-1189, filed
                           February 23, 1996.

                  4.5.2    Registration Rights Agreement by and among Registrant
                           and Hambrecht & Quist LLC and Prudential Securities
                           Incorporated, as the Initial Purchasers of
                           Registrant's 5-3/4% Convertible Subordinated Notes
                           due 2003, with respect to the registration of said
                           Notes under applicable securities laws, incorporated
                           herein by reference to Exhibit 4.3 to Registrant's
                           Registration Statement on Form S-3, Registration No.
                           333-1189, filed February 23, 1996.

         10.1 Compensation and Benefits Plans of Registrant.

                  10.1.1   Amended and Restated Retirement and Uniform Matching
                           Profit-Sharing Plan of Registrant, effective July 1,
                           1993, incorporated herein by reference to Exhibit
                           10.1.1 to Registrant's Form 10-K for the year ended
                           March 31, 1994.

                           10.1.1.a Amendment, dated January 1, 1994, to the
                                    Plan included as Exhibit 10.1.1 above,
                                    incorporated herein by reference to Exhibit
                                    10.1.1.a to Registrant's Form 10-K for the
                                    year ended March 31, 1994.

                           10.1.1.b Amendment, dated April 1, 1994, to the Plan
                                    included as Exhibit 10.1.1 above,
                                    incorporated herein by reference to Exhibit
                                    10.1.1.b to Registrant's Form 10-K for the
                                    year ended March 31, 1994.

                           10.1.1.c Amendment, dated January 1, 1994, to the
                                    Plan included as Exhibit 10.1.1 above,
                                    incorporated herein by reference to Exhibit
                                    10.1.1.c to Registrant's Form 10-Q for the
                                    quarter ended December 31, 1994.

         10.1.2   1990 Stock Option Plan for employees of Registrant, as
                  amended, incorporated herein by reference to Exhibit 10.1.2 to
                  Registrant's Form 10-Q for the quarter ended September 30,
                  1997.

         10.1.3   1990 Stock Option Plan for Non-Employee Directors of
                  Registrant, as amended, incorporated herein by reference to
                  Exhibit 10.1.3 to Registrant's Form 10-Q for the quarter ended
                  September 30, 1997.

         10.1.4   Non-Qualified Stock Option Agreement between Registrant and
                  Raj Reddy, dated as of October 17, 1988, incorporated herein
                  by reference to Exhibit 10.1.6 to Registrant's Form 10-K for
                  the year ended March 31, 1994.

                  10.1.4.a Description of amendment extending the term of the
                           Agreement included as Exhibit 10.1.4 above,



                                       19
<PAGE>   20

                                    incorporated herein by reference to Exhibit
                                    10.1.6.a to Registrant's Form 10-Q for the
                                    quarter ended September 30, 1994.

                  10.1.5   1992 Restricted Stock Plan of Registrant,
                           incorporated herein by reference to Exhibit 10.1.17
                           to Registrant's Form 10-Q for the quarter ended
                           December 31, 1993.

                           10.1.5.a Amendment, dated December 7, 1993, to the
                                    Plan included as Exhibit 10.1.5 above,
                                    incorporated herein by reference to Exhibit
                                    10.1.17.a to Registrant's Form 10-Q for the
                                    quarter ended December 31, 1993.

                           10.1.5.b Amendment, dated July 18, 1994, to the Plan
                                    included as Exhibit 10.1.5 above,
                                    incorporated herein by reference to Exhibit
                                    10.1.17.b to Registrant's Form 10-Q for the
                                    quarter ended September 30, 1994.

                  10.1.6   1995 Employee Stock Purchase Plan of Registrant, as
                           amended, incorporated herein by reference to Exhibit
                           10.1.7 to Registrant's Form 10-Q for the quarter
                           ended September 30, 1995.

                  10.1.7   1996 Stock Option Plan for employees, directors and
                           advisors of Aironet Wireless Communications, Inc., a
                           subsidiary of Registrant, incorporated herein by
                           reference to Exhibit 10.1.7 to Registrant's Form 10-K
                           for the year ended March 31, 1997.

                           10.1.7.a Amended and Restated 1996 Stock Option Plan
                                    for employees, directors and advisors of
                                    Aironet Wireless Communications, Inc., a
                                    subsidiary of Registrant, incorporated
                                    herein by reference to Exhibit 10.1.7.a to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1998.

                  10.1.8   Non-Competition Agreement by and between Registrant
                           and Robert F. Meyerson, effective February 27, 1997,
                           incorporated herein by reference to Exhibit 10.1.8 to
                           Registrant's Form 10-K for the year ended March 31,
                           1997.

                  10.1.9   Employment Agreement between Registrant and Frank E.
                           Brick, incorporated herein by reference to Exhibit
                           10.1.9 to Registrant's Form 10-K for the year ended
                           March 31, 1998.

                           10.1.9.a 1997 Section 162(m) Performance-Based
                                    Compensation Plan of Registrant with respect
                                    to its President and Chief Executive Officer
                                    adopted by the Performance-Based
                                    Compensation Committee of Registrant's Board
                                    of Directors and approved by Registrant's
                                    Stockholders at the Annual Meeting thereof,
                                    held September 10, 1997, incorporated herein
                                    by reference to Exhibit 10.1.9.a to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1998.

                  10.1.10  Amended and Restated Employment Agreement between
                           Registrant and James G. Cleveland, effective as of
                           April 1, 1997, incorporated herein by reference to
                           Exhibit 10.1.10 to Registrant's Form 10-K for the
                           year ended March 31, 1998.

                  10.1.11  Amended and Restated Employment Agreement between
                           Registrant and Kenneth W. Haver, effective as of
                           April 1, 1997, incorporated herein by reference to
                           Exhibit 10.1.11 to Registrant's Form 10-K for the
                           year ended March 31, 1998.

                  10.1.12  Amended and Restated Employment Agreement between
                           Registrant and David D. Loadman, effective as of
                           April 1, 1997,

                                       20
<PAGE>   21

                           incorporated herein by reference to Exhibit 10.1.12
                           to Registrant's Form 10-K for the year ended March
                           31, 1998.

                  10.1.13  Amended and Restated Employment Agreement between
                           Registrant and David W. Porter, effective as of April
                           1, 1997, incorporated herein by reference to Exhibit
                           10.1.13 to Registrant's Form 10-K for the year ended
                           March 31, 1998.

                  10.1.14  Amended and Restated Employment Agreement between
                           Registrant and Danny R. Wipff, effective as of April
                           1, 1997, incorporated herein by reference to Exhibit
                           10.1.14 to Registrant's Form 10-K for the year ended
                           March 31, 1998.

                  10.1.15  Description of Key Employee Retention Program,
                           incorporated herein by reference to Exhibit 10.1.15
                           to Registrant's Form 10-K for the year ended March
                           31, 1998.

                           10.1.15.a Form of letter agreement made with key
                                    employees selected under the retention
                                    program described in Exhibit 10.1.15 above,
                                    incorporated herein by reference to Exhibit
                                    10.1.15.a to Registrant's Form 10-K for the
                                    year ended March 31, 1998.

                  10.1.16  Letter of the Audit Committee of Registrant's Board
                           of Directors, dated July 22, 1996, engaging Norton
                           Rose to act as the Committee's delegate to advise and
                           assist Registrant's management, incorporated herein
                           by reference to Exhibit 10.1.16 to Registrant's Form
                           10-K for the year ended March 31, 1997.

                  10.1.17  Letter agreement of Registrant with Robert A.
                           Goodman, dated as of December 29, 1997 and executed
                           and delivered January 20, 1998, for continued
                           consulting services following certain changes in his
                           law practice, incorporated herein by reference to
                           Exhibit 10.1.17 to Registrant's Form 10-K for the
                           year ended March 31, 1998.

         10.2     Material Leases of Registrant.

                  10.2.1   Lease between Registrant and 3330 W. Market
                           Properties, dated as of December 30, 1986,
                           incorporated herein by reference to Exhibit 10.2.1 to
                           Registrant's Form 10-K for the year ended March 31,
                           1994.

                  10.2.2   Lease Agreement between The Woodlands Commercial
                           Properties Company, L.P. and Registrant, made and
                           entered into as of January 16, 1998, including Rider
                           No. 1 thereto, for premises at 8302 New Trails Drive,
                           The Woodlands, Texan, incorporated herein by
                           reference to Exhibit 10.2.2 to Registrant's Form 10-K
                           for the year ended March 31, 1998.

                  10.2.3   Standard Office Lease (Modified Net Lease) between
                           Registrant and John D. Dellagnese III, dated as of
                           July 19, 1995, including an Addendum thereto,
                           incorporated herein by reference to Exhibit 10.2.4 to
                           Registrant's Form 10-K for the year ended March 31,
                           1996.

                           10.2.3.a Second Addendum, dated as of October 5,
                                    1995, to the Lease included as Exhibit
                                    10.2.3 above, incorporated herein by
                                    reference to Exhibit 10.2.4.a to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1996.

                           10.2.3.b Third Addendum, dated as of March 1, 1996,
                                    to the Lease included as Exhibit 10.2.3
                                    above, incorporated herein by reference to
                                    Exhibit 10.2.4.b to Registrant's Form 10-K
                                    for the year ended March 31, 1996.

                                       21
<PAGE>   22

                           10.2.3.c Fourth Addendum, dated as of April 16, 1996,
                                    to the Lease included as Exhibit 10.2.3
                                    above, incorporated herein by reference to
                                    Exhibit 10.2.2.c to Registrant's Form 10-Q
                                    for the quarter ended June 30, 1997.

                           10.2.3.d Fifth Addendum, dated as of June 24, 1997,
                                    to the Lease included as Exhibit 10.2.3
                                    above, incorporated herein by reference to
                                    Exhibit 10.2.2.d to Registrant's Form 10-Q
                                    for the quarter ended June 30, 1997.

                  10.2.4   Lease Contract between Desarrollos Inmobiliarios Paso
                           del Norte, S.A. de C.V. and Productos y Servicios de
                           Telxon, S.A. de C.V., a subsidiary of Registrant, for
                           in Ciudad Juarez, Chihuahua, Mexico, made and entered
                           into as of April 10, 1997, incorporated herein by
                           reference to Exhibit 10.2.4 to Registrant's Form 10-K
                           for the year ended March 31, 1998.

         10.3     Credit Agreements of Registrant.

                  10.3.1   Credit Agreement by and among Registrant, the lenders
                           party thereto from time to time and The Bank of New
                           York, as letter of credit issuer, swing line lender
                           and agent for the lenders, dated as of March 8, 1996,
                           incorporated herein by reference to Exhibit 10.3.2 to
                           Registrant's Form 10-K for the year ended March 31,
                           1996.

                           10.3.1.a Amendment No. 1, dated as of August 6, 1996,
                                    to the Agreement included as Exhibit 10.3.1
                                    above, incorporated herein by reference to
                                    Exhibit 10.3.2.a to Registrant's Form 8-K
                                    dated August 16, 1996.

                           10.3.1.b Security Agreement, dated as of August 6,
                                    1996, by and among Registrant and The Bank
                                    of New York, as Agent, incorporated herein
                                    by reference to Exhibit 10.3.2.b to
                                    Registrant's Form 8-K dated August 16, 1996.

                           10.3.1.c Amendment No. 2, dated as of December 16,
                                    1996, to the Agreement included as Exhibit
                                    10.3.1 above, incorporated herein by
                                    reference to Exhibit 10.3.2.c to
                                    Registrant's Form 8-K dated December 16,
                                    1996.

                           10.3.1.d Amendment No. 3, dated as of December 12,
                                    1997, to the Agreement included as Exhibit
                                    10.3.1 above, included herein by reference
                                    to Exhibit 10.3.1.d to Registrant's Form
                                    10-K for the year ended March 31, 1998.
                                    10.3.2 Business Purpose Revolving Promissory
                                    Note (Swing Line) made by Registrant in
                                    favor of Bank One, Akron, N.A., dated August
                                    6, 1996, incorporated herein by reference to
                                    Exhibit 10.3.8 to Registrant's Form 8-K
                                    dated August 16, 1996.

                           10.3.2.a Bank One Security Agreement, dated as of 
                                    August 6, 1996, by and among Registrant 
                                    and Bank One, Akron N.A., incorporated 
                                    herein by reference to Exhibit 10.3.8.a to 
                                    Registrant's Form 8-K dated August 16, 1996.

                  10.3.3   Business Purpose Revolving Promissory Note (Swing
                           Line) made by Registrant in favor of Bank One, NA
                           (fka Bank One, Akron, N.A.), dated August 5, 1997
                           (extending the credit facility evidenced by the Note
                           included as Exhibit 10.3.2 above), incorporated
                           herein by reference to Exhibit 10.3.8 to Registrant's
                           Form 10-Q for the quarter ended June 30, 1997.


                                       22
<PAGE>   23
                  10.3.4   Business Purpose Revolving Promissory Note (Swing
                           Line) made by Registrant in favor of Bank One, NA
                           (fka Bank One, Akron, N.A.), dated August 4, 1998
                           (extending the credit facility evidenced by the Note
                           included as Exhibit 10.3.3 above), filed herewith.

         10.4     Amended and Restated Agreement between Registrant and Symbol
                  Technologies, Inc., dated as of September 30, 1992,
                  incorporated herein by reference to Exhibit 10.4 to
                  Registrant's Form 10-K for the year ended March 31, 1998.

         10.5     License, Rights, and Supply Agreement between Aironet Wireless
                  Communications, Inc., a subsidiary of Registrant, and
                  Registrant, dated as of March 31, 1998, incorporated herein by
                  reference to Exhibit 10.5 to Registrant's Form 10-K for the
                  year ended March 31, 1998.

         10.6     Agreement of Purchase and Sale of Assets by and among Vision
                  Newco, Inc., a subsidiary of Registrant, Virtual Vision, Inc.,
                  as debtor and debtor in possession, and the Official Unsecured
                  Creditors' Committee, on behalf of the bankruptcy estate of
                  Virtual Vision, dated as of July 13, 1995, incorporated herein
                  by reference to Exhibit 10.8 to Registrant's Form 10-Q for the
                  quarter ended June 30, 1995.

         10.7     Stock Purchase Agreement by and among Registrant and FED
                  Corporation, dated as of March 31, 1998, with respect to FED
                  Corporation's purchase of all of the stock of Virtual Vision,
                  Inc. (fka Vision Newco, Inc.), incorporated herein by
                  reference Exhibit 10.7 to Registrant's Form 10-K for the year
                  ended March 31, 1998.

                  10.7.1   Escrow Agreement by and among FED Corporation,
                           Registrant and First Union National Bank, with
                           respect to the transactions under the Stock Purchase
                           Agreement included as Exhibit 10.7 above,
                           incorporated herein by reference to Exhibit 10.7.1 to
                           Registrant's Form 10-K for the year ended March 31,
                           1998.

         10.8     Subscription Agreement by and among New Meta Licensing
                  Corporation, a subsidiary of Registrant, and certain officers
                  of Registrant as Purchasers, dated as of September 19, 1995,
                  incorporated herein by reference to Exhibit 10.8 to
                  Registrant's Form 10-Q for the quarter ended September 30,
                  1995.

         10.9     Amended and Restated Shareholder Agreement by and among
                  Metanetics Corporation fka New Meta Licensing Corporation, and
                  its Shareholders, including the officers of Registrant party
                  to the Agreement included as Exhibit 10.8 above, dated as of
                  March 28, 1996, incorporated herein by reference to Exhibit
                  10.9.3 to Registrant's Form 10-K for the year ended March 31,
                  1996.

         10.10    First Amendment, dated as of March 30, 1996, to the Agreement
                  included as Exhibit 10.9 above, incorporated herein by
                  reference to Exhibit 10.9.4 to Registrant's Form 10-K for the
                  year ended March 31, 1996.

         10.11    Stock Purchase Agreement by and among Meta Holding
                  Corporation, a subsidiary of Registrant, and certain officers
                  of Registrant as Purchasers, dated as of March 30, 1996,
                  incorporated herein by reference to Exhibit 10.8 to
                  Registrant's Form 10-K for the year ended March 31, 1997.

         10.12    Stock Purchase Agreement by and between Metanetics
                  Corporation, a subsidiary of Registrant fka New Meta Licensing
                  Corporation, and Accipiter II, Inc., dated as of September 30,
                  1996, incorporated herein by reference to Exhibit 10.8 to
                  Registrant's Form 10-Q for the quarter ended September 30,
                  1996.

         10.13    Stock Purchase Agreement by and between Registrant and
                  Telantis Capital, Inc., dated as of March 31, 1997,
                  incorporated herein by reference to Exhibit 10.10 to
                  Registrant's Form 10-K for the year ended March 31, 1997.

         10.14    Subscription Agreement by and among Aironet Wireless
                  Communications, Inc., a subsidiary of Registrant, and the
                  investors who executed the same, dated as of March 31, 1998,
                  incorporated herein by reference to Exhibit 10.14 to
                  Registrant's Form 10-K for the year ended March 31, 1998.

                                       23
<PAGE>   24
                  10.14.1  Form of Warrant issued pursuant to the Subscription
                           Agreement included as Exhibit 10.14 above,
                           incorporated herein by reference to Exhibit 10.14.1
                           to Registrant's Form 10-K for the year ended March
                           31, 1998.

                  10.14.2  Stockholders Agreement by and among Aironet Wireless
                           Communications, Inc. and its Stockholders party
                           thereto, including Registrant and the investors party
                           to the Subscription Agreement included as Exhibit
                           10.14 above, entered into as of March 31, 1998 in
                           connection with the transactions under the
                           Subscription Agreement, incorporated herein by
                           reference to Exhibit 10.14.2 to Registrant's Form
                           10-K for the year ended March 31, 1998.

                  10.14.3  Registration Rights Agreement by and among Aironet
                           Wireless Communications, Inc. and certain of its
                           security holders, including Registrant and the
                           investors party to the Subscription Agreement
                           included as Exhibit 10.14 above, entered into as of
                           March 31, 1998 in connection with the transactions
                           under the Subscription Agreement, incorporated herein
                           by reference to Exhibit 10.14.3 to Registrant's Form
                           10-K for the year ended March 31, 1998.

                  27.      Financial Data Schedule as of June 30, 1998, filed
                           herewith.


                  (b)      Reports on Form 8-K

                           During the first quarter of fiscal 1999 to which
                           this Form 10-Q relates, the Registrant filed the
                           following Current Reports on Form 8-K: (i) Current
                           Report dated April 21, 1998, reporting that the
                           Registrant had received a letter from Symbol
                           Technologies, Inc. ("Symbol") expressing interest in
                           a business combination with Registrant; (ii) Current
                           Report dated May 8, 1998, reporting that Registrant's
                           board of directors had determined that Symbol's
                           suggested business combination was not in the best
                           interest of the Company and its shareholders as well
                           as the filing of two purported class action lawsuits
                           alleging claims relating to the suggested business
                           combination against Registrant and its directors; and
                           (iii) Current Report dated June 5, 1998, reporting
                           that, following private discussions with Symbol in an
                           attempt to reach a mutual agreement, Registrant's
                           board of directors had rejected an unsolicited $40
                           cash acquisition proposal from Symbol and that a
                           second Symbol proposal involving up to $42 per share
                           in cash and Symbol shares did not contain enough
                           information to be considered by the board. Subsequent
                           to the end of the first quarter of fiscal 1999, the
                           Company filed a Current Report on Form 8-K dated July
                           20, 1998, attaching the Registrant's press release of
                           that date which announced its financial results for
                           the first quarter of fiscal 1999 (the press release,
                           as incorporated into the Form 8-K, included
                           consolidated balance sheets for the Registrant for
                           June 30, 1998 (unaudited), and March 31, 1998, and
                           condensed consolidated statements of operations for
                           the three-month periods (unaudited) ended June 30,
                           1998 and 1997).




                                       24
<PAGE>   25

                               TELXON CORPORATION

                                    SIGNATURE


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

Date:    August 13, 1998


                                                        TELXON CORPORATION
                                                        (Registrant)

                                                        /s/ Kenneth W. Haver
                                                        ------------------------
                                                        Kenneth W. Haver, Senior
                                                        Vice President and Chief
                                                        Financial Officer


<PAGE>   26


                               TELXON CORPORATION

                                   EXHIBITS TO

                                    FORM 10-Q

                       FOR THE QUARTER ENDED JUNE 30, 1998


<PAGE>   27



                                INDEX TO EXHIBITS

Where
Filed
-----

*        2        Asset Purchase Agreement by and among Dynatech Corporation,
                  IAQ Corporation, Registrant and Itronix Corporation, a wholly
                  owned subsidiary of Registrant, dated as of December 28, 1996,
                  incorporated herein by reference to Exhibit 2 to Registrant's
                  Form 8-K dated December 31, 1996.

*        3.1      Restated Certificate of Incorporation of Registrant,
                  incorporated herein by reference to Exhibit No. 2(b) to
                  Registrant's Registration Statement on Form 8-A with respect
                  to its Common Stock filed pursuant to Section 12(g) of the
                  Securities Exchange Act, as amended by Amendment No. 1 thereto
                  filed under cover of a Form 8 and Amendment No. 2 thereto
                  filed on Form 8-A/A.

*        3.2      Amended and Restated By-Laws of Registrant, as amended,
                  incorporated herein by reference to Exhibit No. 2(b) to
                  Registrant's Registration Statement on Form 8-A with respect
                  to its Common Stock filed pursuant to Section 12(g) of the
                  Securities Exchange Act, as amended by Amendment No. 1 thereto
                  filed under cover of a Form 8 and Amendment No. 2 thereto
                  filed on Form 8-A/A.

*        4.1      Portions of the Restated Certificate of Incorporation of
                  Registrant pertaining to the rights of holders of Registrant's
                  Common Stock, par value $.01 per share, incorporated herein by
                  reference to Exhibit No. 2(b) to Registrant's Registration
                  Statement on Form 8-A with respect to its Common Stock filed
                  pursuant to Section 12(g) of the Securities Exchange Act, as
                  amended by Amendment No. 1 thereto filed under cover of a Form
                  8 and Amendment No. 2 thereto filed on Form 8-A/A.

*        4.2      Text of form of Certificate for Registrant's Common Stock, par
                  value $.01 per share, and description of graphic and image
                  material appearing thereon, incorporated herein by reference
                  to Exhibit 4.2 to Registrant's Form 10-Q for the quarter ended
                  June 30, 1995.

*        4.3      Rights Agreement between Registrant and KeyBank National
                  Association, as Rights Agent, dated as of August 25, 1987, as
                  amended and restated as of July 31, 1996, incorporated herein
                  by reference to Exhibit 4 to Registrant's Form 8-K dated
                  August 5, 1996.

*                 4.3.1    Form of Rights Certificate (included as Exhibit A to
                           the Rights Agreement included as Exhibit 4.3 above).
                           Until the Distribution Date (as defined in the Rights
                           Agreement), the Rights Agreement provides that the
                           common stock purchase rights created thereunder are
                           evidenced by the certificates for Registrant's Common
                           Stock (the text of which and description thereof is
                           included as Exhibit 4.2 above, which stock
                           certificates are deemed also to be certificates for
                           such common stock purchase rights) and not by
                           separate Rights Certificates; as soon as practicable
                           after the Distribution Date, Rights Certificates will
                           be mailed to each holder of Registrant's Common Stock
                           as of the close of business on the Distribution Date.

*                 4.3.2    Letter agreement among Registrant, KeyBank National
                           Association and Harris Trust and Savings Bank, dated
                           June 11, 



<PAGE>   28

                           1997, with respect to the appointment of Harris Trust
                           and Savings Bank as successor Rights Agent under the
                           Rights Agreement included as Exhibit 4.3 above,
                           incorporated herein by reference to Exhibit 4.3.2 to
                           Registrant's Form 10-K for the year ended March 31,
                           1997.

*                 4.4      Indenture by and between Registrant and AmeriTrust
                           Company National Association, as Trustee, dated as of
                           June 1, 1987, regarding Registrant's 7-1/2%
                           Convertible Subordinated Debentures Due 2012,
                           incorporated herein by reference to Exhibit 4.2 to
                           Registrant's Registration Statement on Form S-3,
                           Registration No. 33-14348, filed May 18, 1987.

*                          4.4.1    Form of Registrant's 7-1/2% Convertible
                                    Subordinated Debentures Due 2012 (set forth
                                    in the Indenture included as Exhibit 4.4
                                    above).

*                 4.5      Indenture by and between Registrant and Bank One
                           Trust Company, N.A., as Trustee, dated as of December
                           1, 1995, regarding Registrant's 5-3/4% Convertible
                           Subordinated Notes due 2003, incorporated herein by
                           reference to Exhibit 4.1 to Registrant's Registration
                           Statement on Form S-3, Registration No. 333-1189,
                           filed February 23, 1996.

*                          4.5.1    Form of Registrant's 5-3/4% Convertible
                                    Subordinated Notes due 2003 issued under the
                                    Indenture included as Exhibit 4.5 above,
                                    incorporated herein by reference to Exhibit
                                    4.2 to Registrant's Registration Statement
                                    on Form S-3, Registration No. 333-1189,
                                    filed February 23, 1996.

*                          4.5.2    Registration Rights Agreement by and among
                                    Registrant and Hambrecht & Quist LLC and
                                    Prudential Securities Incorporated, as the
                                    Initial Purchasers of Registrant's 5-3/4%
                                    Convertible Subordinated Notes due 2003,
                                    with respect to the registration of said
                                    Notes under applicable securities laws,
                                    incorporated herein by reference to Exhibit
                                    4.3 to Registrant's Registration Statement
                                    on Form S-3, Registration No. 333-1189,
                                    filed February 23, 1996.

*                 10.1     Compensation and Benefits Plans of Registrant.

*                          10.1.1   Amended and Restated Retirement and Uniform
                                    Matching Profit-Sharing Plan of Registrant,
                                    effective July 1, 1993, incorporated herein
                                    by reference to Exhibit 10.1.1 to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1994.

*                                   10.1.1.a Amendment, dated January 1, 1994,
                                             to the Plan included as Exhibit
                                             10.1.1 above, incorporated herein
                                             by reference to Exhibit 10.1.1.a to
                                             Registrant's Form 10-K for the year
                                             ended March 31, 1994.

*                                   10.1.1.b Amendment, dated April 1, 1994, to
                                             the Plan included as Exhibit 10.1.1
                                             above, incorporated herein by
                                             reference to Exhibit 10.1.1.b to
                                             Registrant's Form 10-K for the year
                                             ended March 31, 1994.

*                                   10.1.1.c Amendment, dated January 1, 1994,
                                             to the Plan included as Exhibit
                                             10.1.1 above, 

<PAGE>   29

                                             incorporated herein by reference to
                                             Exhibit 10.1.1.c to Registrant's 
                                             Form 10-Q for the quarter ended 
                                             December 31, 1994.

*                          10.1.2   1990 Stock Option Plan for employees of
                                    Registrant, as amended, incorporated herein
                                    by reference to Exhibit 10.1.2 to
                                    Registrant's Form 10-Q for the quarter ended
                                    September 30, 1997.

*                          10.1.3   1990 Stock Option Plan for Non-Employee
                                    Directors of Registrant, as amended,
                                    incorporated herein by reference to Exhibit
                                    10.1.3 to Registrant's Form 10-Q for the
                                    quarter ended September 30, 1997.

*                          10.1.4   Non-Qualified Stock Option Agreement between
                                    Registrant and Raj Reddy, dated as of
                                    October 17, 1988, incorporated herein by
                                    reference to Exhibit 10.1.6 to Registrant's
                                    Form 10-K for the year ended March 31, 1994.

*                                   10.1.4.a Description of amendment extending
                                             the term of the Agreement included
                                             as Exhibit 10.1.4 above,
                                             incorporated herein by reference to
                                             Exhibit 10.1.6.a to Registrant's
                                             Form 10-Q for the quarter ended
                                             September 30, 1994.

*                          10.1.5   1992 Restricted Stock Plan of Registrant,
                                    incorporated herein by reference to Exhibit
                                    10.1.17 to Registrant's Form 10-Q for the
                                    quarter ended December 31, 1993.

*                                   10.1.5.a Amendment, dated December 7, 1993,
                                             to the Plan included as Exhibit
                                             10.1.5 above, incorporated herein
                                             by reference to Exhibit 10.1.17.a
                                             to Registrant's Form 10-Q for the
                                             quarter ended December 31, 1993.

*                                   10.1.5.b Amendment, dated July 18, 1994, to
                                             the Plan included as Exhibit 10.1.5
                                             above, incorporated herein by
                                             reference to Exhibit 10.1.17.b to
                                             Registrant's Form 10-Q for the
                                             quarter ended September 30, 1994.

*                          10.1.6   1995 Employee Stock Purchase Plan of
                                    Registrant, as amended, incorporated herein
                                    by reference to Exhibit 10.1.7 to
                                    Registrant's Form 10-Q for the quarter ended
                                    September 30, 1995.

*                          10.1.7   1996 Stock Option Plan for employees,
                                    directors and advisors of Aironet Wireless
                                    Communications, Inc., a subsidiary of
                                    Registrant, incorporated herein by reference
                                    to Exhibit 10.1.7 to Registrant's Form 10-K
                                    for the year ended March 31, 1997.

*                                   10.1.7.a Amended and Restated 1996 Stock
                                             Option Plan for employees,
                                             directors and advisors of Aironet
                                             Wireless Communications, Inc., a
                                             subsidiary of 

<PAGE>   30

                                             Registrant, incorporated herein by 
                                             reference to Exhibit 10.1.7.a to 
                                             Registrant's Form 10-K for the year
                                             ended March 31, 1998.

*                          10.1.8   Non-Competition Agreement by and between
                                    Registrant and Robert F. Meyerson, effective
                                    February 27, 1997, incorporated herein by
                                    reference to Exhibit 10.1.8 to Registrant's
                                    Form 10-K for the year ended March 31, 1997.

*                          10.1.9   Employment Agreement between Registrant and
                                    Frank E. Brick, incorporated herein by
                                    reference to Exhibit 10.1.9 to Registrant's
                                    Form 10-K for the year ended March 31, 1998.

*                                   10.1.9.a 1997 Section 162(m)
                                             Performance-Based Compensation Plan
                                             of Registrant with respect to its
                                             President and Chief Executive
                                             Officer adopted by the
                                             Performance-Based Compensation
                                             Committee of Registrant's Board of
                                             Directors and approved by
                                             Registrant's Stockholders at the
                                             Annual Meeting thereof, held
                                             September 10, 1997, incorporated
                                             herein by reference to Exhibit
                                             10.1.9.a to Registrant's Form 10-K
                                             for the year ended March 31, 1998.

*                          10.1.10  Amended and Restated Employment Agreement
                                    between Registrant and James G. Cleveland,
                                    effective as of April 1, 1997, incorporated
                                    herein by reference to Exhibit 10.1.10 to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1998.

*                          10.1.11  Amended and Restated Employment Agreement
                                    between Registrant and Kenneth W. Haver,
                                    effective as of April 1, 1997, incorporated
                                    herein by reference to Exhibit 10.1.11 to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1998.

*                          10.1.12  Amended and Restated Employment Agreement
                                    between Registrant and David D. Loadman,
                                    effective as of April 1, 1997, incorporated
                                    herein by reference to Exhibit 10.1.12 to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1998.

*                          10.1.13  Amended and Restated Employment Agreement
                                    between Registrant and David W. Porter,
                                    effective as of April 1, 1997, incorporated
                                    herein by reference to Exhibit 10.1.13 to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1998.

*                          10.1.14  Amended and Restated Employment Agreement
                                    between Registrant and Danny R. Wipff,
                                    effective as of April 1, 1997, incorporated
                                    herein by reference to Exhibit 10.1.14 to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1998.

*                          10.1.15  Description of Key Employee Retention
                                    Program, incorporated herein by reference to
                                    Exhibit 10.1.15 to 

<PAGE>   31
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1998.

*                                   10.1.15.a Form of letter agreement made with
                                             key employees selected under the
                                             retention program described in
                                             Exhibit 10.1.15 above, incorporated
                                             herein by reference to Exhibit
                                             10.1.15.a to Registrant's Form 10-K
                                             for the year ended March 31, 1998.

*                          10.1.16  Letter of the Audit Committee of
                                    Registrant's Board of Directors, dated July
                                    22, 1996, engaging Norton Rose to act as the
                                    Committee's delegate to advise and assist
                                    Registrant's management, incorporated herein
                                    by reference to Exhibit 10.1.16 to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1997.

*                          10.1.17  Letter agreement of Registrant with Robert
                                    A. Goodman, dated as of December 29, 1997
                                    and executed and delivered January 20, 1998,
                                    for continued consulting services following
                                    certain changes in his law practice,
                                    incorporated herein by reference to Exhibit
                                    10.1.17 to Registrant's Form 10-K for the
                                    year ended March 31, 1998.

*                 10.2     Material Leases of Registrant.

*                          10.2.1   Lease between Registrant and 3330 W. Market
                                    Properties, dated as of December 30, 1986,
                                    incorporated herein by reference to Exhibit
                                    10.2.1 to Registrant's Form 10-K for the
                                    year ended March 31, 1994.

*                          10.2.2   Lease Agreement between The Woodlands
                                    Commercial Properties Company, L.P. and
                                    Registrant, made and entered into as of
                                    January 16, 1998, including Rider No. 1
                                    thereto, for premises at 8302 New Trails
                                    Drive, The Woodlands, Texan, incorporated
                                    herein by reference to Exhibit 10.2.2 to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1998.

*                          10.2.3   Standard Office Lease (Modified Net Lease)
                                    between Registrant and John D. Dellagnese
                                    III, dated as of July 19, 1995, including an
                                    Addendum thereto, incorporated herein by
                                    reference to Exhibit 10.2.4 to Registrant's
                                    Form 10-K for the year ended March 31, 1996.

*                                   10.2.3.a Second Addendum, dated as of
                                             October 5, 1995, to the Lease
                                             included as Exhibit 10.2.3 above,
                                             incorporated herein by reference to
                                             Exhibit 10.2.4.a to Registrant's
                                             Form 10-K for the year ended March
                                             31, 1996.

*                                   10.2.3.b Third Addendum, dated as of March
                                             1, 1996, to the Lease included as
                                             Exhibit 10.2.3 above, incorporated
                                             herein by reference to Exhibit
                                             10.2.4.b to 
<PAGE>   32

                                             Registrant's Form 10-K for the year
                                             ended March 31, 1996.

*                                   10.2.3.c Fourth Addendum, dated as of April
                                             16, 1996, to the Lease included as
                                             Exhibit 10.2.3 above, incorporated
                                             herein by reference to Exhibit
                                             10.2.2.c to Registrant's Form 10-Q
                                             for the quarter ended June 30,
                                             1997.

*                                   10.2.3.d Fifth Addendum, dated as of June
                                             24, 1997, to the Lease included as
                                             Exhibit 10.2.3 above, incorporated
                                             herein by reference to Exhibit
                                             10.2.2.d to Registrant's Form 10-Q
                                             for the quarter ended June 30,
                                             1997.

*                          10.2.4   Lease Contract between Desarrollos
                                    Inmobiliarios Paso del Norte, S.A. de C.V.
                                    and Productos y Servicios de Telxon, S.A. de
                                    C.V., a subsidiary of Registrant, for in
                                    Ciudad Juarez, Chihuahua, Mexico, made and
                                    entered into as of April 10, 1997,
                                    incorporated herein by reference to Exhibit
                                    10.2.4 to Registrant's Form 10-K for the
                                    year ended March 31, 1998.

*                 10.3     Credit Agreements of Registrant.

*                          10.3.1   Credit Agreement by and among Registrant,
                                    the lenders party thereto from time to time
                                    and The Bank of New York, as letter of
                                    credit issuer, swing line lender and agent
                                    for the lenders, dated as of March 8, 1996,
                                    incorporated herein by reference to Exhibit
                                    10.3.2 to Registrant's Form 10-K for the
                                    year ended March 31, 1996.

*                                   10.3.1.a Amendment No. 1, dated as of August
                                             6, 1996, to the Agreement included
                                             as Exhibit 10.3.1 above,
                                             incorporated herein by reference to
                                             Exhibit 10.3.2.a to Registrant's
                                             Form 8-K dated August 16, 1996.

*                                   10.3.1.b Security Agreement, dated as of
                                             August 6, 1996, by and among
                                             Registrant and The Bank of New
                                             York, as Agent, incorporated herein
                                             by reference to Exhibit 10.3.2.b to
                                             Registrant's Form 8-K dated August
                                             16, 1996.

*                                   10.3.1.c Amendment No. 2, dated as of
                                             December 16, 1996, to the Agreement
                                             included as Exhibit 10.3.1 above,
                                             incorporated herein by reference to
                                             Exhibit 10.3.2.c to Registrant's
                                             Form 8-K dated December 16, 1996.

*                                   10.3.1.d Amendment No. 3, dated as of
                                             December 12, 1997, to the Agreement
                                             included as Exhibit 10.3.1 above,
                                             incorporated herein by reference to
                                             Exhibit 10.3.1.d 


<PAGE>   33

                                             to Registrant's Form 10-K for the 
                                             year ended March 31, 1998.

*                          10.3.2   Business Purpose Revolving Promissory Note
                                    (Swing Line) made by Registrant in favor of
                                    Bank One, Akron, N.A., dated August 6, 1996,
                                    incorporated herein by reference to Exhibit
                                    10.3.8 to Registrant's Form 8-K dated August
                                    16, 1996.

*                                   10.3.2.a Bank One Security Agreement, dated
                                             as of August 6, 1996, by and among
                                             Registrant and Bank One, Akron
                                             N.A., incorporated herein by
                                             reference to Exhibit 10.3.8.a to
                                             Registrant's Form 8-K dated August
                                             16, 1996.

*                          10.3.3   Business Purpose Revolving Promissory Note
                                    (Swing Line) made by Registrant in favor of
                                    Bank One, NA (fka Bank One, Akron, N.A.),
                                    dated August 5, 1997 (extending the credit
                                    facility evidenced by the Note included as
                                    Exhibit 10.3.2 above), incorporated herein
                                    by reference to Exhibit 10.3.8 to
                                    Registrant's Form 10-Q for the quarter ended
                                    June 30, 1997.

*                          10.3.4   Business Purpose Revolving Promissory Note
                                    (Swing Line) made by Registrant in favor of
                                    Bank One, NA (fka Bank One, Akron, N.A.),
                                    dated August 5, 1997 (extending the credit
                                    facility evidenced by the Note included as
                                    Exhibit 10.3.3 above), filed herewith.

*                 10.4     Amended and Restated Agreement between Registrant and
                           Symbol Technologies, Inc., dated as of September 30,
                           1992, incorporated herein by reference to Exhibit
                           10.4 to Registrant's Form 10-K for the year ended
                           March 31, 1998.

*                 10.5     License, Rights, and Supply Agreement between Aironet
                           Wireless Communications, Inc., a subsidiary of
                           Registrant, and Registrant, dated as of March 31,
                           1998, incorporated herein by reference to Exhibit
                           10.5 to Registrant's Form 10-K for the year ended
                           March 31, 1998.

*                 10.6     Agreement of Purchase and Sale of Assets by and among
                           Vision Newco, Inc., a subsidiary of Registrant,
                           Virtual Vision, Inc., as debtor and debtor in
                           possession, and the Official Unsecured Creditors'
                           Committee, on behalf of the bankruptcy estate of
                           Virtual Vision, dated as of July 13, 1995,
                           incorporated herein by reference to Exhibit 10.8 to
                           Registrant's Form 10-Q for the quarter ended June 30,
                           1995.

*                 10.7     Stock Purchase Agreement by and among Registrant and
                           FED Corporation, dated as of March 31, 1998, with
                           respect to FED Corporation's purchase of all of the
                           stock of Virtual Vision, Inc. (fka Vision Newco,
                           Inc.), incorporated herein by reference Exhibit 10.7
                           to Registrant's Form 10-K for the year ended March
                           31, 1998.

*                 10.7.1   Escrow Agreement by and among FED Corporation,
                           Registrant and First Union National Bank, with
                           respect to the transactions under the Stock Purchase
                           Agreement included as Exhibit 10.7 above,
                           incorporated herein by reference to Exhibit 10.7.1 to
                           Registrant's Form 10-K for the year ended March 31,
                           1998.
<PAGE>   34

*                 10.8     Subscription Agreement by and among New Meta
                           Licensing Corporation, a subsidiary of Registrant,
                           and certain officers of Registrant as Purchasers,
                           dated as of September 19, 1995, incorporated herein
                           by reference to Exhibit 10.8 to Registrant's Form
                           10-Q for the quarter ended September 30, 1995.

*                 10.9     Amended and Restated Shareholder Agreement by and
                           among Metanetics Corporation fka New Meta Licensing
                           Corporation, and its Shareholders, including the
                           officers of Registrant party to the Agreement
                           included as Exhibit 10.8 above, dated as of March 28,
                           1996, incorporated herein by reference to Exhibit
                           10.9.3 to Registrant's Form 10-K for the year ended
                           March 31, 1996.

*                 10.10    First Amendment, dated as of March 30, 1996, to the
                           Agreement included as Exhibit 10.9 above,
                           incorporated herein by reference to Exhibit 10.9.4 to
                           Registrant's Form 10-K for the year ended March 31,
                           1996.

*                 10.11    Stock Purchase Agreement by and among Meta Holding
                           Corporation, a subsidiary of Registrant, and certain
                           officers of Registrant as Purchasers, dated as of
                           March 30, 1996, incorporated herein by reference to
                           Exhibit 10.8 to Registrant's Form 10-K for the year
                           ended March 31, 1997.

*                 10.12    Stock Purchase Agreement by and between Metanetics
                           Corporation, a subsidiary of Registrant fka New Meta
                           Licensing Corporation, and Accipiter II, Inc., dated
                           as of September 30, 1996, incorporated herein by
                           reference to Exhibit 10.8 to Registrant's Form 10-Q
                           for the quarter ended September 30, 1996.

*                10.13    Stock Purchase Agreement by and between Registrant
                           and Telantis Capital, Inc., dated as of March 31,
                           1997, incorporated herein by reference to Exhibit
                           10.10 to Registrant's Form 10-K for the year ended
                           March 31, 1997.

*                 10.14    Subscription Agreement by and among Aironet Wireless
                           Communications, Inc., a subsidiary of Registrant, and
                           the investors who executed the same, dated as of
                           March 31, 1998, incorporated herein by reference to
                           Exhibit 10.14 to Registrant's Form 10-K for the year
                           ended March 31, 1998.

*                          10.14.1  Form of Warrant issued pursuant to the
                                    Subscription Agreement included as Exhibit
                                    10.14 above, incorporated herein by
                                    reference to Exhibit 10.14.1 to Registrant's
                                    Form 10-K for the year ended March 31, 1998.

*                          10.14.2  Stockholders Agreement by and among Aironet
                                    Wireless Communications, Inc. and its
                                    Stockholders party thereto, including
                                    Registrant and the investors party to the
                                    Subscription Agreement included as Exhibit
                                    10.14 above, entered into as of March 31,
                                    1998 in connection with the transactions
                                    under the Subscription Agreement,
                                    incorporated herein by reference to Exhibit
                                    10.14.2 to Registrant's Form 10-K for the
                                    year ended March 31, 1998.

*                          10.14.3  Registration Rights Agreement by and among
                                    Aironet Wireless Communications, Inc. and
                                    certain of its security holders, including
                                    Registrant and the investors party to the
                                    Subscription Agreement included as Exhibit
                                    10.14 above, entered into as of March 31,
                                    1998 in connection with the transactions
                                    under the Subscription Agreement,
                                    incorporated 
<PAGE>   35

                                    herein by reference to Exhibit 10.14.3 to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1998.

**              27.      Financial Data Schedule as of June 30, 1998,
                         filed herewith.


*        Previously filed

**       Filed herewith