<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, 1999

                                       OR

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

             FOR THE TRANSITION PERIOD FROM __________TO __________

                         COMMISSION FILE NUMBER 0-11402

                               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)

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

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 [ ]. No [X].*

*        Other than its Quarterly Report on form 10-Q for the fiscal quarter
         ended December 31, 1998 and its Annual Report on Form 10-K for the
         fiscal year ended March 31, 1999, the registrant has filed all reports
         required to be filed by Section 13 of 15(d) of the Securities Exchange
         Act of 1934 during the preceding twelve months (during which the
         registrant has been subject to such filing requirements).

At June 30, 1999, there were 16,155,606 outstanding shares of the registrant's
Common Stock.


                        This document contains 48 pages.
<PAGE>   2

                               TELXON CORPORATION
        INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
   PART I.  FINANCIAL INFORMATION:                                         Page No.
                                                                           --------
<S>                                                                        <C>
         Item 1:  Consolidated Financial Statements
                  Balance Sheet                                               3
                  Statement of Operations                                     4
                  Statement of Cash  Flows                                    5
                  Notes to Consolidated Financial Statements                  6-19

         Item 2:  Management's Discussion and Analysis of Financial
                  Condition  and Results of Operations                        20-35

PART II. OTHER INFORMATION:

                  Item 6:  Exhibits and Reports on Form 8-K                   36-47
</TABLE>

                                       2

<PAGE>   3

PART I. FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS

                       TELXON CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                (In thousands except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                       June 30,               March 31,
                                                                                         1999                    1999
                                                                                    ----------------       -----------------
ASSETS                                                                                (Unaudited)

<S>                                                                                       <C>                     <C>
Current assets:
Cash (including cash equivalents of $8,000 and $--)                                       $  26,095               $  22,459
Account receivable, net of allowance for doubtful
   accounts of $6,677 and $11,069                                                            76,640                  84,500
Notes and other accounts receivable                                                           5,687                   4,015
Inventories                                                                                 121,250                 129,049
Prepaid expenses and other                                                                    8,655                   9,029
                                                                                    ----------------       -----------------
             Total current assets                                                           238,327                 249,052
Property and equipment, net                                                                  73,272                  69,557
Intangibles and other assets, net                                                            28,142                  30,235
                                                                                    ================       =================
             Total                                                                        $ 339,741               $ 348,844
                                                                                    ================       =================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable                                                                              $ 63,482               $  68,567
Capital lease obligations due within one year                                                   406                     525
Accounts payable                                                                             69,036                  64,966
Income taxes payable                                                                          9,017                   6,434
Accrued liabilities                                                                          80,937                  74,285
                                                                                    ----------------       -----------------
             Total current liabilities                                                      222,878                 214,777
Capital lease obligations                                                                     1,330                   1,435
Convertible subordinated notes and debentures                                               106,913                 106,913
Other long-term liabilities                                                                   5,221                   5,446
                                                                                    ----------------       -----------------
             Total liabilities                                                              336,342                 328,571
Minority interest                                                                             3,371                   3,307
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, 16,234  shares issued                                                             162                     162
Additional paid-in capital                                                                   87,029                  87,029
Retained deficit                                                                            (78,678)                (61,977)
Accumulated other comprehensive income for foreign currency translation                      (5,719)                 (5,464)
Unearned compensation relating to restricted stock awards                                       (64)                    (82)
Treasury stock; 78 shares of common stock at cost                                            (1,423)                 (1,423)
Notes related to purchase of subsidiary stock                                                (1,279)                 (1,279)
                                                                                    ----------------       -----------------
             Total stockholders' equity                                                          28                  16,966
                                                                                    ----------------       -----------------
Commitments and contingencies                                                                     -                       -
                                                                                    ================       =================
             Total                                                                        $ 339,741               $ 348,844
                                                                                    ================       =================
</TABLE>



See accompanying notes to consolidated financial statements.

                                       3
<PAGE>   4


                     TELXON CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENT OF OPERATIONS
              (In thousands except share and per share amounts)
                                 (Unaudited)

<TABLE>
<CAPTION>
                                                                                                Three Months Ended
                                                                                                     June 30,
                                                                                       ---------------------------------------
                                                                                             1999                  1998
                                                                                       -----------------     -----------------
                                                                                                                (Restated)
<S>                                                                                            <C>                   <C>
Revenues:
      Product, net                                                                             $ 77,180              $ 90,192
      Customer service, net                                                                      20,139                20,970
                                                                                       -----------------     -----------------
Total net revenue                                                                                97,319               111,162

Cost of revenues:
      Product                                                                                    54,184                54,473
      Customer Service                                                                           12,433                12,826
                                                                                       -----------------     -----------------
Total cost of revenues                                                                           66,617                67,299

Gross profit                                                                                     30,702                43,863

Operating expenses:
      Selling expenses                                                                           20,965                23,542
      Product development and engineering expenses                                                8,908                 9,014
      General  & administrative expenses                                                         12,240                 9,506
      Unconsummated business combination costs                                                        -                 1,749
                                                                                       -----------------     -----------------
Total operating expenses                                                                         42,113                43,811

(Loss) income from  operations                                                                  (11,411)                   52

Interest income                                                                                     323                   179
Interest expense                                                                                 (3,292)               (1,713)
Gain on sale of subsidiary stock                                                                      -                   340
Other non-operating (expense) income, net                                                          (629)                1,020
                                                                                       -----------------     -----------------
Loss before income taxes                                                                        (15,009)                 (122)
Provision (benefit) for income taxes                                                              1,692                   (22)
                                                                                       -----------------     -----------------
Net loss                                                                                      $ (16,701)             $   (100)
                                                                                       =================     =================
Net loss per common share:
             Basic                                                                            $   (1.03)             $  (0.01)
             Diluted                                                                          $   (1.03)             $  (0.01)
Average number of common shares outstanding:
             Basic                                                                               16,156                16,080
             Diluted                                                                             16,156                16,080
</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,
                                                                                          -------------------------------------
                                                                                                1999                1998
                                                                                          -----------------   -----------------
<S>                                                                                              <C>                  <C>
Cash flows from operating activities:                                                                            (Restated)
  Net loss                                                                                       $ (16,701)           $   (100)
  Adjustments to reconcile net loss to net cash provided by (used in) operating
  activities:
      Depreciation and amortization                                                                  6,177               6,233
      Amortization of restricted stock awards, net                                                      18                  78
      Provision for doubtful accounts                                                                1,157               2,431
      Provision for inventory obsolescence                                                           1,725                 688
      Gain on sale of subsidiary                                                                         -                (900)
      Gain on sale of non-marketable investments                                                      (761)                  -
      Loss on disposal of property and equipment                                                       108                  32
      Loss on carrying value of non-marketable investment                                            1,283                   -
      Minority interest                                                                                161                  37
      Changes in assets and liabilities:
             Accounts and notes receivable                                                           5,588              (2,805)
             Inventories                                                                             6,103              (5,707)
             Prepaid expense and other                                                                   7              (1,706)
             Intangibles and other assets                                                             (325)               (312)
             Accounts payable and accrued liabilities                                               13,312             (17,047)
             Other long-term liabilities                                                              (323)             (1,732)
                                                                                          -----------------   -----------------
   Net cash provided by (used in) operating activities                                              17,529             (20,810)
Cash flows from investing activities:
      Additions to property and equipment                                                           (7,845)             (9,868)
      Software and other investments                                                                (1,031)             (1,178)
      Purchase of non-marketable investments                                                             -              (1,950)
      Proceeds from the sale of non-marketable investment                                            1,523                   -
      Additions to long-term notes receivable                                                            -                (608)
                                                                                          -----------------   -----------------
   Net cash used in investing activities                                                            (7,353)            (13,604)
Cash flows from financing activities:
      (Repayments)  borrowings on notes payable, net                                                (5,085)             22,005
      Principal payments on capital leases                                                            (223)               (175)
      Costs related to public offering of subsidiary                                                (1,179)                  -
      Exercise of stock options (includes tax benefit)                                                   -                 584
                                                                                          -----------------   -----------------
   Net cash (used in) provided by financing activities                                              (6,487)             22,414
      Effect of exhange rate changes on cash                                                           (53)                 36
                                                                                          -----------------   -----------------
   Net increase (decrease) in cash and cash eqivalents                                               3,636             (11,964)
Cash and cash equivalents at beginning of period                                                    22,459              27,500
                                                                                          -----------------   -----------------
Cash and cash equivalents at end  of period                                                      $  26,095            $ 15,536
                                                                                          =================   =================
</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)
                           (Unaudited and As Restated)

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, 1999, are not necessarily
         indicative of the results that may be achieved for the year ending
         March 31, 2000. The statements, including the March 31, 1999 balance
         sheet, 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 for the fiscal year ended March 31, 1999.
         Comparative June 30, 1998 consolidated financial statements are
         unaudited and as restated as discussed in Note 3 - Restatement.

2.       Financial Results and Liquidity

         The Company incurred a net loss in fiscal 1999 of $136,982 with a
         decrease in consolidated revenues of $74,862 as compared to fiscal
         1998. Cash flows used by operations were $27,616 and cash flows used in
         investing activities were $40,921 for fiscal 1999. The primary source
         of cash flows for fiscal 1999 was net borrowings under its credit
         facilities (including product financing arrangements) which aggregated
         $65,567. The Company is currently in violation of its debt covenants
         related to these credit facilities and is unable to borrow additional
         funds against these facilities. Waivers for non-compliance have been
         obtained through August 30, 1999. The Company's stockholders' equity
         and working capital at March 31, 1999 was $16,966 and $34,275,
         respectively.

         During the quarter ended June 30, 1999, the Company incurred a net
         loss of $16,701 with a decrease in consolidated revenues of $13,843 as
         compared to the quarter ended June 30, 1998. Compared to the fourth
         quarter of fiscal 1999 ended March 31, 1999, revenues in the June 30,
         1999 quarter increased $20,236. The Company generated cash flows
         from operating activities of $17,529 for the quarter ended June 30,
         1999. The Company's stockholders' equity and working capital at June
         30, 1999 was $28 and $15,449, respectively.

         Since joining the Company in March 1999, the Chief Executive Officer
         has formed the Company's executive management team and is in the
         process of implementing the team's operating plan to stabilize the
         Company and pursue growth opportunities in the mobile information
         systems industry. Management is actively seeking opportunities to
         generate cash from sources such as inventories and accounts receivable,
         managing vendor payments and related operating expenditures, and is
         improving operating processes (such as material requirements planning
         and design-to-cost) required to achieve its operating and financial
         goals. However, there can be no assurance that the cash flows generated
         from such sources will be sufficient to support the Company's efforts
         to manage the payment of the amounts presently owing to, or
         subsequently incurred with, its suppliers. If cash flows are not
         sufficient there could be disruption of the flow of necessary
         materials, components, services or other cash requirements of the
         Company. In addition, payments may ultimately be required in the
         near-term in settlement of the litigation, commitments and
         contingencies referenced in Note 9 - Litigation and

                                       6
<PAGE>   7

         Contingencies. Such payments could have a material adverse effect on
         the Company's cash flows and, in turn, on the Company's results of
         operations and financial condition.

         In connection with the granting of the waivers discussed above, the
         Company's existing lenders exercised their rights under the terms of
         their respective loans to file UCC financing statements to perfect the
         security interests previously conditionally granted in their favor by
         the Company in its accounts receivable, inventory and equipment, and
         the proceeds thereof, and subsequently required that the Company grant
         them security interests in substantially all of the Company's assets.
         The Company has been negotiating with financial institutions to provide
         adequate financial resources to execute the management team's operating
         plans.

         As discussed in Note 12 - Subsequent Events, the Company has received a
         commitment letter from a financial institution for a $100,000 senior
         credit facility. This commitment letter contains conditions precedent
         and subsequent. Therefore, there can be no absolute assurance that this
         credit facility will ultimately be executed and provide the financing
         sufficient to fund management's plans.

         Subsequent to June 30, 1999 the Company received $20,460 of the
         proceeds from the Initial Public Offering ("IPO") of Aironet Wireless
         Communications, Inc. ("Aironet"). One-half of these proceeds were used
         in order to partially repay the Company's current borrowings under its
         existing credit agreement. The remaining proceeds have been
         utilized to reduce amounts payable to vendors.

         The Company is currently meeting cash flow requirements from internally
         generated cash flows and has successfully managed the payments of
         vendors and employees without the disruption of the flow of necessary
         materials, components and services. However, there can be no assurance
         that the Company will continue to do so in the future. If the
         contemplated financing is not obtained prior to August 30, 1999, the
         Company will be required to obtain additional waivers under its current
         credit facilities. The lenders thereunder are under no obligation to
         grant such waivers. In the absence of any required further waivers the
         Company will be in default and subject to the lenders' rights of
         acceleration under its existing credit agreements and the lenders'
         rights and remedies as secured parties. Pending establishment of
         replacement credit facilities, the Company will continue to rely upon
         internally generated cash flows.

         Management believes that, despite the financial hurdles, liquidity
         shortfall and funding uncertainties going forward, it has a business
         plan that, if successfully funded and executed, can significantly
         improve the Company's operations and financial results. The support of
         the Company's vendors, customers, lenders, stockholders and employees
         will continue to be key to the Company's future success.

3.       Restatement

         On February 23, 1999, the Company announced that it would restate its
         previously issued financial statements for the fiscal years 1996, 1997
         and 1998, and its unaudited interim financial statements for the first
         and second quarters of fiscal 1999. This restatement was based upon the
         completion of a review of certain judgmental accounting matters by the
         Audit Committee of the Board of Directors, the Company's management and
         the Company's then outside auditors, PricewaterhouseCoopers LLP.

                                       7
<PAGE>   8

         The accompanying financial statements reflect the announced
         restatement. The more significant restatement adjustments affecting the
         periods covered by the accompanying financial statements are described
         below.

         During the three months ended June 30, 1998, the Company has increased
         its product sales returns reserves by $3,963 to better reflect the
         levels of product returns in the Company's value-add distribution
         channel. The Company has also capitalized $1,950 previously expensed
         during the three months ended June 30, 1998, related to premiums paid
         to repurchase the common stock of its Metanetics Corporation subsidiary
         ("Metanetics") from a business partner, resulting in an investment to
         be amortized over a useful life of three years. Adjustments were also
         made to increase the Company's provision for the past due accounts
         receivable related to a foreign distributor as a result of questions
         regarding the on-going financial viability of the distributor. Such
         adjustments totaled $2,181 for the three months ended June 30, 1998.
         For the three months ended June 30, 1998, the Company also reduced its
         inventory reserves by $697 to better approximate the exposure related
         to on-hand inventories. Additionally, the Company has also made an
         adjustment to record, during the three months ended June 30, 1998, the
         $900 gain related to the sale of its Virtual Vision, Inc. subsidiary,
         which was previously recorded during the three months ended March 31,
         1998, as certain conditions of the sale, though perfunctory, were not
         satisfied until after March 31, 1998.

         The following summarizes the effects of the restatement on the
         Company's consolidated statement of operations for the three months
         ended June 30, 1998:



                                       8
<PAGE>   9


                      CONSOLIDATED STATEMENT OF OPERATIONS

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

                                                  As
                                              Previously
                                               Reported      Restated
                                               --------      --------
<S>                                            <C>          <C>
Revenues:
   Product, net                                $  94,077    $  90,192
   Customer service, net                          20,970       20,970
                                               ---------    ---------
Total net revenues                               115,047      111,162
   Cost of revenues:
   Product                                        57,310       54,473
   Customer service                               12,826       12,826
                                               ---------    ---------
Total cost of revenues                            70,136       67,299

Gross profit                                      44,911       43,863

Operating expenses:
   Selling expenses                               21,361       23,542
   Product development and
     engineering expenses                          8,930        9,014
   General & administrative
     expenses                                      9,436        9,506
   Unconsummated business
      combination costs                            1,749        1,749
  Charge related to transactions with
      business partner                             1,950         --
                                               ---------    ---------
Total operating expenses                          43,426       43,811
                                               ---------    ---------

Income from operations                             1,485           52

Interest income                                      179          179
Interest expense                                  (1,713)      (1,713)
Gain on sale of subsidiary stock                    --            340
Other non-operating income
   (expense)                                         460        1,020
                                               ---------    ---------
Income (loss) before income
   taxes                                             411         (122)
Provision (benefit) for
   income taxes                                      165          (22)
                                               ---------    ---------

Net income (loss)                              $     246    $    (100)
                                               =========    =========
Net income (loss) per
   common share:
      Basic                                    $     .02    $    (.01)
                                               =========    =========
      Diluted                                  $     .01    $    (.01)
                                               =========    =========

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


                                       9
<PAGE>   10


4.       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
                     (In thousands except per share amounts)

         In the following table, net loss represents the numerator, and the
         shares represent the denominator, in the earnings per share
         calculation.

<TABLE>
<CAPTION>
                                             For the Three Months Ended                    For the Three Months Ended
                                                   June 30, 1999                               June 30, 1998
                                   ------------------------------------------------ ------------------------------------------
                                         Net                        Per Share           Net                       Per Share
                                         Loss           Shares          Amount          Loss         Shares         Amount
                                   ----------------- -------------- --------------- ------------- -------------  -------------

<S>                                        <C>              <C>           <C>              <C>          <C>             <C>
Net loss                                   $(16,701)                                       $(100)
                                   =================                                =============
BASIC LOSS PER SHARE
Loss incurred by
  common stockholders                      $(16,701)        16,156        $ (1.03)         $(100)       16,080          $(0.01)
                                   =================                =============== =============                =============

EFFECT OF DILUTIVE
  SECURITIES
Options                                                          -                                           -
                                                     --------------                               -------------

DILUTED LOSS PER SHARE
Loss incurred by
  holders of common
  stock and common
  stock equivalents                        $(16,701)        16,156          (1.03)         $(100)       16,080         $(0.01)
                                   ================= ============== =============== ============= =============  =============
</TABLE>

         Options to purchase 3,788,385 shares of common stock at a weighted
         average exercise price of $14.95 per share were outstanding at June 30,
         1999, but were not included in the computation of diluted earnings per
         share for the three months then ended because the options would have
         had an anti-dilutive effect on the net loss for the period.

         Options to purchase 3,240,391 shares of common stock at a weighted
         average exercise price of $17.80 per share were outstanding at June 30,
         1998, but were not included in the computation of diluted earnings per
         share for the three months then ended because the options would have
         had an anti-dilutive effect on the net loss for the period.

         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, 1999 and 1998 would have had an anti-dilutive
         effect on earnings for the three months then ended.


                                       10
<PAGE>   11
5. Comprehensive Income
             Total comprehensive income consisted of the following:

<TABLE>
<CAPTION>
                                                                               June 30,               June 30,
                                                                                 1999                   1998
                                                                           -----------------      -----------------
                                                                                                     (Restated)
<S>                                                                                <C>                      <C>
             Net loss                                                              $(16,701)                $ (100)
             Other comprehensive (expense) income:
             Foreign currency translation adjustment                                   (255)                  (183)
                                                                           =================      =================
             Total comprehensive loss                                              $(16,956)                $ (283)
                                                                           =================      =================
</TABLE>

6. Inventories
             Inventories consisted of the following:

<TABLE>
<CAPTION>
                                                                               June 30,              March 31,
                                                                                 1999                   1999
                                                                           -----------------      -----------------
<S>                                                                                <C>                    <C>
             Purchased components                                                  $ 51,081               $ 51,112
             Work-in-process                                                         31,426                 32,360
             Finished Goods                                                          38,743                 45,577
                                                                           -----------------      -----------------
                                                                                   $121,250               $129,049
                                                                           =================      =================
</TABLE>

7.  Accrued Liabilities
             Accrued liabilities consisted of the following:

<TABLE>
<CAPTION>
                                                                               June 30,              March 31,
                                                                                 1999                   1999
                                                                           -----------------      -----------------
<S>                                                                                <C>                    <C>
             Deferred customer service revenues                                    $ 15,757               $ 15,351
             Deferred product revenues                                               21,140                 14,168
             Accrued discontinued product costs                                      12,667                 12,422
             Accrued payroll and other
                employee compensation                                                 8,323                 11,649
             Other accrued liabilities                                               23,050                 20,695
                                                                           -----------------      -----------------
                                                                                   $ 80,937               $ 74,285
                                                                           =================      =================
</TABLE>


The Company's domestic accrual for severance costs increased from a balance of
$3,429 at March 31, 1999 to a balance of $3,625 at June 30, 1999. This increase
was caused by severance charges during the first quarter of fiscal 2000 of
$1,018 partially offset by payments to previously terminated employees of $816.
A total of 29 employees were severed during the first quarter of fiscal 2000. Of
the 29 employees, 28 employees were terminated, and 1 employee was given a short
period of notice. The areas of the Company affected were domestic sales
operations, domestic product development, manufacturing operations and corporate
administration. There have been no material changes to the amounts accrued at
either March 31 or June 30, 1999.



                                       11
<PAGE>   12

8.  Supplemental Cash Flow Information

<TABLE>
<CAPTION>
                                                                                                Three Months Ended
                                                                                 June 30,               June 30,
                                                                                   1999                   1998
                                                                             -----------------      -----------------
<S>                                                                                  <C>                    <C>
             Cash paid during the period for:
             Interest                                                                $  2,649               $  1,212
             Income taxes                                                            $    619               $  2,156
</TABLE>


         Capital lease additions of $276 during the three months ended June 30,
         1998 have been excluded from the accompanying consolidated statement of
         cash flows as a non-cash transaction. There were no capital lease
         additions during the three months ended June 30, 1999.


9.       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 its 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 on 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 filed its Answer and Brief
         in Opposition. The Motion was argued before the Court on November 4,
         1998, and was granted from the bench, dismissing Meyo as a



                                       12
<PAGE>   13

         defendant in the case. The post-intervention claims are the subject of
         ongoing discovery, and no deadline for the completion of the discovery
         or trial date 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 its financial
         statements.

         On February 7, 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. The trial previously scheduled for March 1999 has been reset to
         commence on a day during the Court's two week docket beginning October
         5, 1999, with the specific trial date to be set by the Court at that
         time.

         While the litigation with the landlord remains pending, Telxon and the
         landlord have agreed to file, and on July 7, 1999 filed, a joint
         application with the Texas Natural Resource Conservation Commission for
         approval of a proposed Response Action Work Plan for the property
         pursuant to the Commission's Voluntary Cleanup Program. The proposed
         plan projects completion of remediation and issuance of a closure
         certificate in 2002. To date, Telxon has not been advised of any action
         by the Commission with respect to the proposed plan, which could
         require modifications thereto as a condition of approval. Until such
         time as the plan is accepted and completed, its actual cost to Telxon
         cannot be quantified; however, the Company does not believe that
         remediation in accordance with the plan as proposed would have a
         material adverse effect on its results of operations for any quarter in
         which any associated charges would be taken. If the plan is not
         accepted substantially as proposed, or closure is not certified when
         contemplated by the proposed plan, and the Company were ultimately to
         become responsible for the alleged contamination, the associated 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 Directors at the time, 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



                                       13
<PAGE>   14

         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.

         From December 1998 through March 1999, a total of 27 class actions were
         filed in the United States District Court, Northern District of Ohio,
         by certain alleged stockholders of the Company on behalf of themselves
         and purported classes consisting of Telxon stockholders, other than the
         defendants and their affiliates, who purchased stock during the period,
         from May 21, 1996 through February 23, 1999 or various portions
         thereof. The named defendants are the Company, former President and
         Chief Executive Officer Frank E. Brick and former Senior Vice President
         and Chief Financial Officer Kenneth W. Haver. The actions have been
         referred to a single judge, and on February 9, 1999, the plaintiffs
         filed a Motion to Consolidate all of the actions. On April 26, 1999,
         the Court heard motions on naming class representatives and lead class
         counsel, but the Court has not yet ruled on those motions. The
         complaints allege claims for "fraud on the market" arising from alleged
         misrepresentations and omissions with respect to the Company's
         financial performance and prospects and an alleged violation of
         generally accepted accounting principles by improperly recognizing
         revenues. The various complaints seek certification of their respective
         purported classes, unspecified compensatory and punitive damages, pre-
         and post-judgment interest, and attorneys' fees and costs. The
         defendants believe that these claims lack merit, and they intend to
         vigorously defend these actions. Defendants anticipate filing a Motion
         to Dismiss.

         By letter dated December 18, 1998, the Staff of the Division of
         Enforcement of the Securities and Exchange Commission advised the
         Company that it was conducting a preliminary, informal inquiry into
         trading of the securities of the Company at or about the time of the
         Company's December 11, 1998 press release announcing that the Company
         would be restating the revenues for its second fiscal quarter ended
         September 30, 1998. In cooperation with the informal inquiry, the
         Company has voluntarily provided certain responsive information to the
         Staff. On January 20, 1999, the Commission issued a formal Order
         Directing Private Investigation And Designating Officers To Take
         Testimony with respect to the referenced trading and specified
         accounting matters, pursuant to which subpoenas duces tecum have been
         served on the Company requiring the production of specified documents.
         Similar subpoenas have been issued to one of the Company's directors,
         certain current Company officers and, to the belief of the Company,
         former Company officers and certain unaffiliated companies and their
         officers. The Company has delivered documents to, and intends to
         continue cooperating fully with, the Staff. The referenced director and
         current officers have also produced documents, and the director



                                       14
<PAGE>   15

         has given oral testimony, to the Staff. Telxon believes that the
         unaffiliated parties have also responded to the Staff.

         The Company has received a number of letters from its customers
         requesting Telxon to indemnify them with respect to their defense of
         demands which have been made on them by the Lemelson Medical, Education
         & Research Foundation Limited Partnership for the payment of a license
         fee for the alleged infringement of the Foundation's so-called
         "bar-code" patents by the customers' systems utilizing automatic
         identification technology, portions of which have been supplied by the
         Company. However, the Foundation has not to date asserted any claim
         directly against the Company. The Company believes that the patents so
         being asserted against its customers are invalid, unenforceable and not
         infringed. This position has also been taken by seven other companies
         in the automatic identification industry, including the Company's
         principal competitors, which in July 1999 announced their joint filing
         of a federal court action seeking a declaratory judgment to that effect
         against the Foundation.

         Except as otherwise specified, in the event that any of the foregoing
         litigation ultimately results in a money judgment against the Company
         or is otherwise determined adversely to the Company by a court of
         competent jurisdiction, such determination could, depending on the
         particular circumstances, adversely affect the Company's conduct of its
         business and the results and condition thereof. 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 is also subject to various pending legal
         actions and contingencies, which may include matters involving
         suppliers, customers, lessors of Company products to customers and
         lessors of equipment to the Company.

10.      Income Taxes

         The Company's consolidated income tax provision for the quarter ended
         June 30, 1999 of $1,692 consists primarily of $1,325 and $330 related
         to the Company's operations in foreign tax jurisdictions and the
         Company's Aironet subsidiary, respectively. No tax benefit was
         recognized for the U.S. net operating loss for the three months ended
         June 30, 1999 based on the Company's assessment that it is more likely
         than not that these deferred tax assets will not be utilized through
         future taxable income or implementation of tax planning strategies.

11.      Subsidiary Stock Transactions and Divestitures

         During the three months ended June 30, 1999, the Company repurchased
         60,000 shares of the voting common stock of Metanetics from former key
         employees, at a price of $2.00 per share. Giving effect to the share
         repurchase, the Company's interest in the voting common stock of
         Metanetics was 62% at June, 30, 1999. Prior to the repurchase of these
         shares, the Company's interest in the voting common stock of Metanetics
         was 60%.

         During the three months ended June 30, 1998, the Company entered into a
         series of transactions with a business partner relating to Metanetics,
         a development stage subsidiary that develops image processing
         technology. The Company repurchased 400,000 voting common shares of
         Metanetics for $1,950 or $4.875 per share. Simultaneously, the business
         partner agreed to pay amounts due of $1,850 for previously purchased
         manufacturing rights and software licenses. Additionally, the companies
         mutually agreed to terminate such agreements and released each other
         from any future liability related to the original



                                       15
<PAGE>   16

         agreements. The Company had originally recorded the additional $1,950
         investment in Metanetics as an operating expense as of June 30, 1998,
         because of the historical financial losses of the subsidiary and future
         funding requirements for its operations. However, after further
         assessment as part of the restatement discussed in Note 3 - Restatement
         above, and based in part on an independent valuation of Metanetics, the
         Company has capitalized this additional investment as goodwill to be
         amortized over a useful life of three years. Giving effect to the share
         repurchase, the Company's interest in the voting common stock of
         Metanetics was 60% at June 30, 1998. Prior to the repurchase of these
         shares, the company's interest in the voting common stock of Metanetics
         was 52%.

         During the three months ended June 30, 1998, the Company's Aironet
         subsidiary 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 non-operating income in the accompanying consolidated
         statement of operations. In addition to the sale of the shares of
         stock, 66,667 warrants at $3.50 per share 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 issued voting common stock of
         Aironet at June 30, 1998, was 76%. Prior to the sale of these shares,
         the Company's interest in the voting common stock of Aironet was 78%.

         Effective March 31, 1998, the Company sold the stock of its Virtual
         Vision subsidiary to a third party in exchange for $500 in cash and
         $4,500 in Series F Preferred Shares of the purchaser at a value of
         $6.00 per share or 750,000 shares. As all of the conditions of the sale
         were not satisfied as of March 31, 1998, the related pre-tax gain of
         $900 was deferred. During the three months ended June 30, 1998, all of
         the conditions of the sale were satisfied and the Company recorded a
         pre-tax gain of $900 as non-operating income in the accompanying
         consolidated statement of operations.

12.      Subsequent Events

         Subsequent to June 30, 1999, 6,000,000 Aironet shares of voting common
         stock were sold in the IPO on the Nasdaq National Market at an
         offering price of $11.00 per share. Of the total number of shares
         offered, Aironet sold 4,000,000 shares, and the Company sold 2,000,000
         shares. The aggregate proceeds, net of underwriting discounts and
         commissions, were $40,920 to Aironet and $20,460 to Telxon. Subsequent
         to this transaction the Company's remaining interest in Aironet was
         approximately 39%. Prior to the sale of these shares, the Company's
         interest in the voting common stock of Aironet was approximately 76%.
         As a result of this transaction and the dilution of its voting
         interest and control of Aironet, it is anticipated that the Company's
         consolidated results will no longer include Aironet.

         The following unaudited proforma statement of operations information
         for the three months ended June 30, 1999 and 1998 and the balance
         sheet data as of June  30, 1999 are presented below. The information
         below, which is based upon various assumptions, is not necessarily
         indicative of what would have occurred had the sale of Aironet shares
         occurred on April 1, 1998. The following proforma financial
         information assumes that the results of operations and financial
         position of Aironet have been removed from the Company's results of
         operations, including profit on intercompany transfers, and financial
         position in each period presented. The information presented also
         assumes that one-half of the proceeds from the sale



                                       16
<PAGE>   17

         of Aironet shares was used to partially repay the Company's existing
         credit facilities and one half was used to reduce accounts payable.
         The reduction in the amounts outstanding under the Company's existing
         credit facilities resulted in assumed interest savings computed at
         9.75% per annum. Proforma adjustments were also made to record the
         investment of Aironet on the equity method as if the Company owned a
         39% equity interest in Aironet.


<TABLE>
<CAPTION>
                                                                                       (Unaudited)
                                                                                    Three Months Ended
                                                                         June 30, 1999            June 30, 1998
                                                                         -------------            -------------

<S>                                                                     <C>                      <C>
           Total revenues                                                  $87,825                 $104,942

           (Loss) income from operations                                   (12,230)                      15

           Net (loss) income                                               (16,594)                     245

           (Loss) earnings per share:
               Basic
                   As reported                                              $(1.03)                  $(0.01)
                   Proforma                                                 $(1.03)                  $ 0.02
               Diluted
                   As reported                                              $(1.03)                  $(0.01)
                   Proforma                                                 $(1.03)                  $ 0.02

                                                                         June 30, 1999
                                                                         -------------
           Total assets                                                     $318,441
</TABLE>

         Subsequent to June 30, 1999, the Company received a commitment letter
         from a financial institution to provide a $100,000 senior secured
         credit facility to the Company as a replacement for the Company's
         existing revolving credit agreement and business purpose promissory
         note. Such commitment letter is subject to conditions precedent and
         subsequent to closing. Borrowings under the revolving loan provisions
         of such facility would be subject to availability on qualifying
         accounts receivable and inventory, reduced by amounts borrowed under
         the facility's term loan features and amounts outstanding under
         letters of credit. Availability under the agreement is estimated to be
         $71,000 as of August 1, 1999. The facility would have three term loan
         features. The first term loan would have a limit of $6,000, but would
         be limited to a portion of the liquidation value of the Company's
         machinery and equipment. The repayment terms for this term loan would
         be straight-line over a 10-year period. The second term loan would
         have a limit of $10,000 and would be limited, together with the
         $20,000 term loan discussed below, by specified percentages of the
         market value of Aironet capital stock owned by the Company. The
         repayment of this term loan would be straight-line over a 3-year
         period. The third term loan of $20,000 would be limited by a specified
         percentage of the market value of Aironet capital stock owned by the
         Company. The repayment term of this loan would be due the earlier of
         120 days from closing or upon any sale of additional capital stock of
         Aironet by the Company. The interest rate charged on the revolving
         loan, the $6,000 term loan, and the $20,000 term loan would be 2.75%
         above the Eurodollar rate or 0.5% above the financial institution's
         prime lending rate. Interest would be



                                       17
<PAGE>   18

         payable monthly. The interest rate charged would be subject to change
         based upon the Company's financial results. The interest rate on the
         $10,000 term loan would be fixed at 12.5%. The facility also would call
         for the payment of an unused line fee of 0.375% per annum on a monthly
         basis. The facility will be collateralized by substantially all of the
         Company's assets. Restrictive covenants with respect to this facility
         have not yet been determined.



13.      Business Segments

         The company's business consists of four operating segments:
         a)handhelds, workslates, and other mobile computing devices, through
         which the Company designs, develops, markets, and services a broad
         line of handheld devices ranging from low-end batch terminals to
         highly integrated mobile computers that incorporate laser bar code
         readers, including a variety of pen-based and touch screen workslate
         devices; b)its Aironet subsidiary (majority owned by the Company until
         the  IPO), which designs, develops, markets, and services high speed
         standards-based wireless local area networking (LAN) solutions, for
         which Aironet's products utilize advanced high radio frequency and
         data communication technologies to connect users to computer networks,
         ranging in size and complexity from enterprise-wide    LANs to home
         networks; c)sales and distribution of all its product lines in Europe;
         and d)sales and distribution of all of its product lines in
         international locations outside of Europe.

         Summarized financial information concerning the Company's reportable
segments is shown in the following table.


<TABLE>
<CAPTION>
                                     United States
                               --------------------------
                               Other than   Consolidated                   Other      Adjustment &
                                 Aironet       Aironet       Europe        Int'l      Elimination   Consolidated
                               ------------------------------------------------------------------------------------
<S>                              <C>            <C>         <C>            <C>        <C>              <C>
Three months ended
  June 30, 1999
Revenue from
   unaffiliated
   customers                        $60,466        $9,494      $20,875        $6,484                       $97,319
Revenue from
  intercompany sales                 11,054         2,909          154           733       (14,850)             $0
                               ------------------------------------------------------------------------------------
                Total revenues      $71,520       $12,403      $21,029        $7,217      ($14,850)        $97,319
                               ====================================================================================

(Loss) income before
  income tax                       ($17,772)         $859       $2,320        $1,072       ($1,488)      ($15,009)
                               ====================================================================================

Three months ended
  June 30, 1998
Revenue from
   unaffiliated customers           $80,282        $6,220      $17,561        $7,099                      $111,162
Revenue from
  intercompany sales                 10,826         3,256          146           614       (14,842)             $0
                               ------------------------------------------------------------------------------------
</TABLE>

                                       18

<PAGE>   19
<TABLE>
<S>                              <C>            <C>         <C>            <C>        <C>              <C>
                Total revenues      $91,108        $9,476      $17,707        $7,713      ($14,842)       $111,162
                               ====================================================================================

(Loss) income before
  income tax                        ($4,064)         $277       $2,383        $1,260           $22           ($122)
                               ====================================================================================
</TABLE>


14.      Reclassifications

         Certain items in the fiscal 1999 consolidated financial statements and
         notes thereto have been reclassified to conform to the fiscal 2000
         presentation.




                                       19
<PAGE>   20

                       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 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 OR OTHER FUTURE
EVENTS PERTAINING TO THE COMPANY 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 OR SUCH OTHER FUTURE EVENTS 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", AND OTHER CAUTIONARY
STATEMENTS APPEARING UNDER "ITEM 1. BUSINESS" AND ELSEWHERE, IN THE COMPANY'S
ANNUAL REPORT ON FORM 10-K, FOR THE FISCAL YEAR ENDED MARCH 31, 1999.

On February 23, 1999, the Company announced that it would restate its previously
issued financial statements for the fiscal years 1996, 1997 and 1998, and its
unaudited interim financial statements for the first and second quarters of
fiscal 1999. This restatement was based upon the completion of a review of
certain judgmental accounting matters by the Audit Committee of the Board of
Directors, the Company's management and the Company's then outside auditors,
PricewaterhouseCoopers LLP. See Note 3 - Restatement to the accompanying
consolidated financial statements for further detail concerning the restatement
adjustments made. The financial information for all periods included in the
following discussion gives effect to the restatement and should be read in
conjunction with the restated information presented in Note 3 - Restatement to
the accompanying consolidated financial statements.

Overview

The Company recorded a net loss of $16.7 million or $1.03 per common share
(diluted) for the first quarter of fiscal 2000. In comparison, the Company
recorded a net loss of $.1 million or $.01 per common share (diluted) for the
first quarter of fiscal 1999. Consolidated revenues decreased $13.8 million or
13% from the fiscal 1999 first quarter but increased $20.2 million from the
fiscal 1999 fourth quarter. First quarter fiscal 2000 gross profit fell $13.2
million over the same period. Overall operating expenses decreased $1.7 million
in the fiscal 2000 first quarter primarily due to the absence of $1.7 million
of unconsummated business combination costs incurred in response to takeover
and proxy contest proposals during the first quarter of fiscal 1999.
Additionally, the results include a tax provision of $1.7 million on a pre-tax
loss due to foreign taxes and taxes related to the Company's Aironet subsidiary
of $1.3 million and $.3 million, respectively. No tax benefit has been
recognized for the first quarter of fiscal 2000 U.S. operating loss based on
the Company's current assessment regarding the utilization and realization of
such assets. The Company's operating activities provided cash flows of $17.5
million during the first quarter of fiscal 2000. This compares with cash used
by operating activities of $20.8 million during the first quarter of fiscal
1999.



                                       20
<PAGE>   21

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 reduction, efficiency and other business process improvement
strategies by the Company's new management team; sales and manufacturing cycles
from quarter to quarter and within each quarter; the lengthened sales cycle for
systems sales and possible associated delays in the Company's recognition of
revenue therefrom; serving markets characterized by increasingly rapid
technological change and associated changes in market demand, product
obsolescence and price erosion; intense competition; the Company's ability to
timely and cost-effectively gain and maintain market acceptance of its
products; the levels of customer demand for the Company's products and
customers' commitments of resources to information technology investments;
concentration of revenues in the retail industry and possible decreases in
their purchases from the Company in response to any downturn in general
economic prospects or conditions to the extent that reduced levels of new
store openings are not offset by their investment in the Company's systems to
improve the efficiency of existing stores; ability to penetrate and expand
revenues in new and existing markets; economic and  business 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. The Company's
business, operating results and financial condition is also dependent upon the
adequacy of the working capital and other financial resources available to it
from time to time as discussed in Note 2 to the accompanying consolidated
financial statements. 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, is also subject
to the possible adverse effects of certain pending litigation and other
contingencies discussed in Note 9 - Litigation and Contingencies to the
accompanying consolidated financial statements included in Item 1 above. The
financial results of the Company historically have not been materially
adversely impacted as a result of inflation. However, there can be no assurance
that inflation will not have a material adverse impact in the future.

Readiness for the Year 2000

THE INFORMATION SET FORTH UNDER THIS CAPTION IS HEREBY DESIGNATED TO BE A "YEAR
2000 READINESS DISCLOSURE" UNDER THE YEAR 2000 INFORMATION READINESS DISCLOSURE
ACT (THE "YEAR 2000 ACT"), PUBLIC LAW 105-271, AND THE STATEMENTS BELOW AND THE
REGISTRANT, AS THE MAKER THEREOF, SHALL BE ENTITLED TO THE PROTECTIONS PROVIDED
BY THE YEAR 2000 ACT.



                                       21
<PAGE>   22

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, 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.

Year 2000 issues affect both the Company's offerings of computer products and
related services to its customers as well as its own operations. The Year 2000
readiness of the Company's operations in turn involves not only its corporate
information systems but also computer-based systems used directly in the conduct
of its business ("Process Management Systems"), such as hardware and software
engineering design tools, manufacturing equipment and customer service and
maintenance tracking systems. In addition, the Company could also be affected by
the Year 2000 readiness of its customers and of its suppliers of raw materials,
components, peripherals, finished products and software and its providers of
facilities, equipment and services. The costs of the Company's Year 2000
readiness efforts are being funded from the Company's consolidated operating
cash flows and borrowings.

With respect to its products, the Company has identified those 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 are being designed to be Year 2000
ready.

The Company has completed the software/firmware upgrades for its products which
were identified to be made Year 2000 ready, subject to the completion of
debugging activities. Subject to negotiated contractual commitments, the Company
will make the upgrades available free of charge for products purchased after
December 31, 1997 which were ordered with the latest software version as of the
order date; an upgrade fee will be charged customers who requested an older
software version when they ordered the equipment. Customers will be responsible
for installing the upgrades, or they may retain the Company to do so for a fee.
The costs to date of upgrading the Company's products to Year 2000 readiness
have not been, and the Company does not expect that the remaining cost of doing
so will be, material to the Company's financial position or results of
operations.

The Company has purchased and continues to work with outside contractors to
complete the installation of new corporate-wide information systems. Though the
new systems were identified as a strategic business initiative independent of
Year 2000 considerations, they are also being designed to make the Company's
information systems Year 2000 ready. To date, the Company has installed the
following phases of the new systems installation: key financial reporting,
accounting, services help desk and contract billing, order entry, manufacturing,
engineering documents management, and accounts receivable. One to four
additional months of work may be required in order to achieve full user
acceptance of these installed systems. While the new information systems will be
dynamic ones permitting ongoing improvements as business needs are identified,
the basic operational systems remaining to be installed are the product repair
and service management systems. The installation of these remaining systems,


                                       22
<PAGE>   23

is expected to be substantially completed during the second quarter of fiscal
2000.

The total capital expenditures for the new systems installation, including the
addition of interfaces for "bolt-on" enhancements, is presently estimated to be
approximately $36.0 million. In addition, the company will also accelerate the
replacement of approximately $6.7 million of computer hardware in connection
with the new systems installation. As of June 30, 1999, the Company had spent
approximately $33.3 million in capital expenditures, purchased $.8 million of
replacement computer hardware and leased an additional $4.2 million of
replacement computer hardware. The company anticipates that it will lease all of
its remaining replacement hardware requirements. The forgoing 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. For
example, to the extent that any additional work is required after the targeted
installation date in order to achieve full user acceptance of the new systems,
the Company's monthly systems development expenditures have ranged from
approximately $1.25 million to approximately $2.1 million.

In addition to these capitalized expenditures, the Company had incurred
approximately $5.3 million of non-capitalizable expenses as of June 30, 1999,
related to the new systems installation. These non-capitalizable expenses
exclude the one-time, after-tax charge of $1.0 million recorded during fiscal
1998 as a change in accounting principle in accordance with the Financial
Accounting Standards Board's Emerging Issues Task Force consensus ruling
"Accounting for Costs Incurred in Connection with a Consulting Contract or an
Internal Project That Combines Business Process Reengineering and Information
Technology Transformation." The Company may incur additional non-capitalizable
expenses in its efforts to complete the project within appropriate time
constraints and to management requirements. These expenses cannot be quantified
at this time.

The Company has engaged an outside consultant to evaluate the Year 2000
readiness of its engineering, manufacturing and customer maintenance and service
Process Management Systems and information technology infrastructure. The
consultant's findings and recommendations were received by the Company on
February 8, 1999. The Year 2000 readiness inventory compiled by the consultant
has been under continuing, extensive review by teams, including senior
management from each of the affected functional areas. Giving effect to the
teams' remediation efforts to date, approximately 80% of the inventoried items
are currently Year 2000 ready. The costs of the study and resulting remediation
are currently being borne by the respective functional areas. The functional
teams continue to work toward completing their review and any necessary
remediation as soon as practicable. To the extent any Year 2000 issues are
identified, remediation options will include re-writing the affected software or
replacing the affected hardware or software with hardware or software that is
Year 2000 ready. The Company believes that, in general, replacement, Year 2000
ready hardware and software for its Process Management Systems and information
technology infrastructure are readily available, making that the most likely
means of addressing any remediation needs. The timetable and cost for any
remediation that may ultimately be required with respect to the Company's
Process Management Systems cannot be estimated.

To the extent that the re-writing of affected software is selected as the means
for remediating any Year 2000 issues, whether in preparing upgrades to Company
products, making Process Management Systems Year 2000 ready or otherwise, given
the technical nature of the task of isolating and correcting non-compliant
programming and the



                                       23
<PAGE>   24

limited internal resources available, the increasing demand for available
external resources and the Company's ability to fund the use of external
resources, to perform the work, there can be no assurances as to if, when and at
what cost any such software work can be completed.

The Company's own Year 2000 readiness is also 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. Insofar as no single customer has accounted
for more than ten percent of the Company's revenues in recent fiscal years, the
Company does not anticipate that its operating results will be materially
adversely affected by the failure of any particular customer to itself be Year
2000 ready. The volume of Year 2000 inquiries which the Company has received
from its customers regarding the Year 2000 readiness of the Company products
they use further suggests that the Company's customers are addressing their Year
2000 issues. The Company has made Year 2000 readiness inquiries of the current
suppliers to its engineering, manufacturing and service functions and is
assessing the responses, which to date have been received from approximately
three-quarters of those suppliers. The responses received from the suppliers
have not identified any material Year 2000 issues but generally indicate only
that the respective suppliers are in the midst of their own Year 2000 readiness
efforts. The Company has also made readiness inquires of its providers of
facilities and related equipment and services (elevators, HVAC, utilities,
etc.). As the result of a limited number of potential Year 2000 issues which
those inquiries have identified to date, the Company has replaced or is in the
process of updating the affected items at a nominal cost. The Company is still
in the process of receiving, assessing and following up on the providers'
responses, most of which have indicated only that the respective providers are
in the midst of their own Year 2000 readiness efforts.

There are several possible scenarios, which, alone or in aggregate effect,
could, depending on the particular circumstances, materially adversely affect
the Company's business and/or its financial results or conditions. These
scenarios could affect the Year 2000 readiness of the Company's own product or
service offerings, disrupt its business operations or negatively impact its
operating results. The Company could be adversely affected by the failure of one
or more of its suppliers of raw materials, components, peripherals, finished
products or software or its providers of facilities, equipment and services to
achieve Year 2000 readiness in their own operations or with respect to the items
they supply or otherwise provide to the Company. If such an event were to, or
circumstances indicate that one is likely to, occur, the Company would seek
alternative sources of supply (the Company periodically reviews its sourcing
options as part of its general operating procedures independent of Year 2000
concerns) or seek to develop or obtain a software upgrade to make the affected
item Year 2000 ready. As with all businesses engaged in some facet of the
computer industry, there is a risk that the Company's customers may, in advance
of or after the change in the millennium, experience Year 2000 failures or other
difficulties in their use of computer systems comprised of or incorporating
products or services furnished by the Company and may commence legal action or
seek other compensation for their resulting losses; such legal actions, even if
not ultimately determined adverse to the Company, would likely involve
significant defense costs to the Company, particularly where the combination of
products and/or services of several different vendors in addition to the Company
in the subject customer system presents complex issues for isolating the cause
of the Year 2000 problem and determining the vendor responsible for that
problem. Disruptions in the economy generally, domestically and/or in foreign
countries, resulting from Year 2000 issues could also materially affect the
Company. At this time, the Company does not believe



                                       24
<PAGE>   25

that the likelihood of any of the above scenarios occurring can be reliably
predicted, or that the nature or extent of their possible adverse effects on the
Company, can be reasonably estimated. Though the Company currently does not have
formal contingency plans in place to address any particular possible Year 2000
scenario, the Company intends to develop appropriate contingency plans if and
when any significant risks relating to its Year 2000 readiness can be more
definitely identified.

RESULTS OF OPERATIONS

The results of operations and financial position of the company discussed below
contains the results of operations and financial position of Aironet for all
periods presented.

Revenues
(in thousands)

<TABLE>
<CAPTION>
                                               Three Months Ended
                                                     June 30,                                Decrease
                                      ---------------------------------------------      --------------------------------------
                                           1999                         1998                  Dollar             Percentage
                                      ---------------             -----------------      ------------------   -----------------
<S>                                          <C>                          <C>                    <C>                   <C>
Product, net                                 $77,180                      $ 90,192               $ (13,012)             -14.4%
Customer service, net                         20,139                        20,970                    (831)              -4.0%
                                      ---------------             -----------------      ------------------
Total net revenues                           $97,319                      $111,162               $ (13,843)             -12.5%
                                      ===============             =================      ==================
</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 decrease in consolidated product revenues for the first quarter of fiscal
2000 as compared to the first quarter of fiscal 1999 was primarily due the
absence of a large rollout of the Company's product to a large domestic
retailer, for which revenue was deferred pending customer acceptance of such
product. The amount of revenue deferred related to this transaction was $8.4
million. The revenues related to this one customer, in total, decreased $5.3
during the first quarter of fiscal 2000 as compared to the first quarter of
fiscal 1999. Additionally, there was an absence of a large rollout of the
Company's product to a mobile services and repair operation of a manufacturing
company which took place in the first quarter of fiscal 1999. The revenues
related to this one transaction were $7.8 million. Also, the volume of revenues
recorded in the Company's Value-Add distributor channel decreased approximately
$5.9 million for the first quarter of fiscal 2000 as compared with the first
quarter of fiscal 1999 as the Company's new management is emphasizing the direct
sales channel. These decreases were partially offset by increases in revenues
recorded in the Company's international operations and at Aironet.

The decrease in the consolidated customer service revenues during the first
quarter of fiscal 2000 was primarily the result of decreased "time and material"
repair billings due to start-up issues with the Company's new business
information systems. This was



                                       25
<PAGE>   26
also supplemented by the impact of decreased product revenues over the past two
quarters. Partially offsetting these decreases was the continued growth in the
Company's installed base of product.

Revenues from the Company's international operations (including Canada)
increased $1.8 million or 5.7% during the first quarter of fiscal 2000 as
compared to fiscal 1999 levels. The increase in the Company's international
revenues was primarily caused by a $2.1 million increase in the Company's
revenues in Germany, where a large rollout to a single customer took place and a
$1.1 million increase in revenues in France. These increases were offset by a
$1.2 million decrease in the Company's Canadian operation's revenues. Changes in
foreign exchange rates did not have a material impact on the results of the
Company's international operations.

The Company's reserve for sales returns and allowances decreased from a balance
at March 31, 1999 of $15.0 million to a balance of $10.8 million at June 30,
1999. This decrease was caused by fewer outstanding accounts receivable from the
Company's Value-Add distributors and improved rates of return and cash
collections in the Company's direct sales channel.

<TABLE>
<CAPTION>
Cost of Revenues
(in thousands)
                                                                            Three Months Ended
                                                      June 30,                              Decrease
                                                   ----------------------------------   -------------------------------------
Cost of Revenues:                                       1999              1998               Dollar            Percentage
                                                   ---------------   ----------------   -----------------   -----------------
<S>                                                   <C>                <C>                  <C>                      <C>
Product                                                   $54,184            $54,473              $ (289)               -0.5%
Customer service                                           12,433             12,826                (393)               -3.1%
                                                   ---------------   ----------------   -----------------
Total cost of revenues                                    $66,617            $67,299              $ (682)               -1.0%
                                                   ===============   ================   =================

Cost of product revenue as a
  percentage of product revenue,
  net                                                          70.2%              60.4%

Cost of customer service revenue
  as a percentage of customer
  service revenue, net                                         61.7%              61.2%
</TABLE>

The increase in the consolidated cost of product revenues as a percentage of
consolidated product revenues was primarily the result of underabsorbed
manufacturing overhead costs of $3.7 million due to lower than expected volumes
and manufacturing inefficiencies. Also contributing to the increased cost
percentage was an increase in the provisions for excess and obsolete
manufacturing components of $.9 million, a negative purchase price variance
related to manufacturing purchased components of $.3 million, and a provision
for the write-down of equipment held subject to a lease of $.6 million. Fees
accrued for distribution services provided by the Company's Value-Add
distributors increased $.9 million during the first quarter of fiscal 2000 as
compared with the first quarter of fiscal 1999. The Company also incurred
severance charges of $.4 million related to terminated manufacturing personnel.

The Company is subject to a high degree of technological change in market and
customer demands. The Company therefore continually monitors its inventories for
excess and obsolete items based upon a combination of historical usage and
forecasted usage of such inventories. Additionally, discrete provisions are made



                                       26
<PAGE>   27

when existing facts and circumstances indicate that the subject inventory will
not be utilized.

Management disposes of excess and obsolete inventory as necessary and as
manpower permits, although there are no formal plans to do so. During the first
quarter of fiscal 2000, the Company physically disposed of $1.2 million of
excess and obsolete material. Of this amount, $1.0 million of manufacturing
purchased components were scrapped and $.2 million of inventories in the
Company's international operations were disposed of. There were no recoveries
related to the disposal of this material.

Inventory allowance provisions for the quarter were composed of manufacturing
purchased components of $1.3 million, customer service spare parts and used
equipment of $.1 million and international finished goods inventories of $.3
million. At June 30, 1999, the inventory allowance accounts totaled $29.2
million and were composed of manufacturing purchased components of $22.7
million, customer service spare parts and used equipment of $4.1 million and
international finished goods inventories of $2.0 million. In addition to the
inventory allowance accounts, the Company has recorded accrued liabilities
totaling $12.7 million for the purchase commitments to outside contract
manufacturers for discontinued products.

At June 30, 1999, the Company had approximately $21.9 million of finished goods
inventory held at distributors and customers and approximately $5.5 million of
manufacturing components at contract manufacturers. At March 31, 1999, the
Company had approximately $25.7 million of finished goods inventory held at
distributors and customers and approximately $5.7 million of manufacturing
components at contract manufacturers. The decrease in the amount of finished
goods held at distributors and customers is the result of revenue recognized
upon installation and customer acceptance of the Company's product.
Additionally, the inventory value of finished goods due back from customers as
a result of product returns decreased in proportion to the decrease in the
reserve for sales returns and allowances.

The Company accrues fees due its distributors for the distribution services and
technical support provided to end users as well as cooperative advertising
costs. These fees are generally based upon the sales value of the goods to the
end user. During the first quarter of fiscal 2000, the company incurred $.9
million of these fees.

The increase in the customer service cost of revenues as a percentage of
customer service revenues during the first quarter of fiscal 2000 from
comparable fiscal 1999 levels was due to the decrease in repair volumes as a
result of lower revenues. The decrease in revenues resulted in fixed overhead
costs being spread over a smaller revenue base and therefore negatively
impacting customer service gross margins.




                                       27
<PAGE>   28
<TABLE>
<CAPTION>
Operating Expenses
(in thousands)
                                                                         Three Months Ended                (Decrease)
                                                         June 30,                                 Increase
                                               ------------------------------------     -----------------------------------
Operating expenses:                                 1999                 1998               Dollar           Percentage
                                               ----------------     ---------------     ---------------    ----------------
<S>                                                   <C>                  <C>                 <C>                  <C>
Selling Expenses                                      $ 20,965             $23,542             $(2,577)              -10.9%
Product development and
   engineering expenses                                  8,908               9,014                (106)               -1.2%
General and administrative
   expenses                                             12,240               9,506               2,734                28.8%
Unconsummated business
   combination costs                                         -               1,749              (1,749)             -100.0%
                                               ----------------     ---------------     ---------------
Total operating expenses                              $ 42,113             $43,811             $(1,698)               -3.9%
                                               ================     ===============     ===============
</TABLE>

Consolidated selling expenses as a percentage of total revenues increased to 22%
in the first quarter of fiscal 2000 from 21% in the first quarter of fiscal
1999. The overall decrease in consolidated selling expenses was primarily due to
a decrease in the provision for doubtful accounts related to the past due
accounts receivable of a foreign distributor of $1.5 million. The provision
recorded for the first quarter of fiscal 2000 was $.7 million as compared to
$2.2 million in the first quarter of fiscal 1999. Commission expenses recorded
during the first quarter of fiscal 2000 decreased $1.1 million due to the
overall decrease in product revenues for the quarter as compared to the first
quarter of fiscal 1999. During the first quarter of fiscal 2000, the Company
experienced a decreased level of write-offs related to test equipment sent to
customers of $.6 million and reduced recruitment and relocation costs of $.3
million. These decreases were partially offset by severance costs of $.3
million. Also offsetting the decreases above were increased selling and
marketing expenses at the Company's Aironet subsidiary.

The Company's allowance for doubtful accounts decreased from a balance of $11.1
million at March 31, 1999 to a balance of $6.7 million at June 30, 1999. The
Company provided for $1.1 million of bad debts and bad debt write-offs totaled
$5.5 million during the first quarter of fiscal 2000. These bad debt write-offs
included $3.3 million of accounts receivable related to the foreign distributor
referenced above.

Consolidated product development and engineering expenses as a percentage of
total revenues increased to 9% in the first quarter of fiscal 2000 from 8% in
the first quarter of fiscal 1999. Consolidated product development and
engineering expenses for the first quarter of fiscal 2000 remained consistent
with product development and engineering expenses from comparable fiscal 1999
levels. However, there were decreases in domestic product development and
engineering expenses related to the absence of costs related to the relocation
of certain product development and engineering operations from Akron, Ohio to
Houston, Texas. These costs totaled $.6 million and included recruitment and
relocation costs, duplicate rent, and travel expenses. Engineering and
development efforts also increased at the Company's Metanetics subsidiary $.3
million from comparable fiscal 1999 levels. The Company also incurred severance
charges of $.2 million during the first quarter of fiscal 2000 related to its
product development and engineering operations.

During the first quarter of fiscal 2000, 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 $.7 million,
offset by amortization of $1.1 million on previously unamortized software.



                                       28
<PAGE>   29

Consolidated general and administrative expenses as a percentage of total
revenues were 13% and 9% for the first quarters of fiscal 2000 and 1999,
respectively. Consolidated general and administrative expenses increased
primarily due to increased expenses of $1.5 million related to its corporate
information systems project. Of this increase in costs, $.5 million was due to
an increase in amortization of previously capitalized project costs for systems
modules placed in service and the remaining $1.0 million was related to
increased training and data conversion costs. Also contributing to the increase
in general and administrative expenses was increased depreciation and computer
hardware and software maintenance primarily related to the Company's on-going
information systems of $.7 million. Severance charges of $.1 million also
increased general and administrative expenses for the first quarter of fiscal
2000.

The Company's domestic accrual for severance costs increased from a balance of
$3.4 million at March 31, 1999 to a balance of $3.6 million at June 30, 1999.
This increase was caused by severance charges during the first quarter of fiscal
2000 of $1.0 million partially offset by payments to previously terminated
employees of $.8 million. A total of 29 employees were severed during the first
quarter of fiscal 2000. Of the 29 employees, 28 employees were terminated and 1
employee was given a short period of notice. The areas of the Company affected
were domestic sales operations, domestic product development, manufacturing
operations and corporate administration. There have been no material changes to
the amounts accrued at either March 31 or June 30, 1999.

Operating expenses for fiscal 2000 were favorably impacted by the absence of
unconsummated business combination costs incurred in response to an unsolicited
takeover proposal and to a proxy contest of $1.7 million.

Interest Expense and Other Non-operating Income (Expense), net
(in thousands)

<TABLE>
<CAPTION>
                                                            Three Months Ended                        Increase
                                                                 June 30,                             (Decrease)
                                                    -----------------------------------   ------------------------------------
                                                         1999               1998              Dollar            Percentage
                                                    ---------------   -----------------   ----------------   -----------------
<S>                                                      <C>                <C>                 <C>                     <C>
Interest income                                          $     323          $      179          $     144               80.4%
Interest expense                                            (3,292)             (1,713)            (1,579)              92.2%
Gain on sale of subsidiary stock                                 -                 340               (340)            -100.0%
Other non-operating (expense)
 income                                                       (629)              1,020             (1,649)            -161.7%
                                                    ---------------   -----------------   ----------------
Total interest expense and other
 non-operating (expense) income, net                     $  (3,598)         $     (174)         $  (3,424)               N.M.
                                                    ===============   =================   ================


</TABLE>

Interest expense increased for the first quarter of fiscal 2000 as compared to
the first quarter of fiscal 1999 due to the increased amounts outstanding under
the Company's credit facilities. Amounts oustanding under these facilities
were $63.5 million as of June 30, 1999 and $25.0 million as of June 30, 1998.

During the first quarter of fiscal 2000, the Company recorded $1.3 million of
non-operating expense related to the reduction in carrying value of an
investment in non-marketable securities. The Company's estimate of the reduction
was based upon



                                       29
<PAGE>   30

the market value of subsequent equity transactions of the investee with third
parties. The investment is composed of preferred shares in the development-stage
technology company that purchased the Company's Virtual Vision subsidiary.

During the first quarter of fiscal 2000, the Company sold an investment in
marketable securities for cash proceeds of $1.5 million. As this investment was
previously non-marketable, its carrying value was based upon the cost basis and
was $.7 million. The Company therefore recorded a pre-tax gain of $.8 million.

During the first quarter of fiscal 1999, the transaction to sell the stock of
Virtual Vision to a third party was consummated, resulting in the recording of a
$.9 million non-operating gain. Subsequent to the consummation of the
transaction, positive adjustments to such gain totaling $.1 million were
recorded. These adjustments related to changes in purchase price based upon key
employee retention rates subsequent to the transaction.

During the first quarter of fiscal 1999, Aironet 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 net gain of approximately $.3 million 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 at
$3.50 per share for the purchase of Aironet voting common stock were issued. A
gain of approximately $.05 million 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 approximately 76%.

<TABLE>
<CAPTION>
Income Taxes
(in thousands)
                                            Three Months Ended
                                                  June 30,                                 Increase
                                      -----------------------------------      -----------------------------------
                                          1999                1998                Dollar            Percentage
                                      --------------     ----------------      --------------    -----------------
<S>                                          <C>                   <C>                <C>            <C>
Provision (benefit) for
  income taxes                               $1,692                $ (22)             $1,714           N.M.
</TABLE>


The Company's consolidated tax provision of $1.7 million on a pre-tax loss was
due to foreign taxes and taxes related to the Company's Aironet subsidiary of
$1.3 million and $.3 million, respectively. No tax benefit has been recognized
for the first quarter of fiscal 2000 U.S. operating loss based on the
Company's current assessment that it is more likely than not that these
deferred tax assets will not be utilized through future taxable income or
implementation of tax planning strategies.



                                      30
<PAGE>   31

<TABLE>
<CAPTION>
Liquidity
(in thousands, except ratios)                                                                     Dollar
                                                      June 30,             March 31,             Increase
                                                        1999                 1999               (Decrease)
                                                   ----------------     ----------------     -----------------
<S>                                                       <C>                  <C>                   <C>
Cash and cash equivalents                                 $ 26,095             $ 22,459              $  3,636
Accounts receivable                                         76,640               84,500                (7,860)
Notes and other receivables                                  5,687                4,015                 1,672
Inventories                                                121,250              129,049                (7,799)
Other                                                        8,655                9,029                  (374)
                                                   ----------------     ----------------     -----------------
Total current assets                                      $238,327             $249,052              $(10,725)
                                                   ================     ================     =================

Notes payable                                             $ 63,482             $ 68,567              $ (5,085)
Capital lease obligations                                      406                  525                  (119)
Accounts payable                                            69,036               64,966                 4,070
Income taxes payable                                         9,017                6,434                 2,583
Accrued liabilities                                         80,937               74,285                 6,652
                                                   ----------------     ----------------     -----------------
Total current liabilities                                 $222,878             $214,777              $  8,101
                                                   ================     ================     =================

Working capital (current assets
  less current liabilities)                               $ 15,449             $ 34,275              $(18,826)
                                                   ================     ================     =================

Current ratio (current assets
divided by current liabilities)                           1.1 to 1             1.2 to 1
</TABLE>

The decrease in the Company's consolidated working capital at June 30, 1999,
from March 31, 1999, was due primarily to the decrease in accounts receivable
and inventories and the increases in accrued liabilities and accounts payable.
These reductions in working capital were partially offset by increases in cash
and a decrease in the notes payable balance. The decrease in the accounts
receivable balance reflects improved cash collections in the Company's domestic
operations for the month of June, 1999. Accordingly, consolidated days sales
outstanding decreased from 98 days at March 31, 1999 to 72 days at June 30,
1999. The decrease in the Company's inventories related to the Company's
finished goods inventory held at customers as the Company's reserve for sales
returns and allowances was reduced, and revenues related to such goods has been
recognized. Inventories related to manufacturing operations also declined due to
a decrease in the purchase of components for the Company's products. Finished
goods inventories declined primarily due to a large rollout that occurred in
Germany. These decreases were partially offset by an increase in customer
service spare parts inventories. Consolidated inventory turns decreased to
approximately 1.8 at June 30, 1999, from approximately 2.3 at March 31, 1999.
This decrease in inventory turns was primarily caused by the absence of
inventory and other cost of revenues charges that occurred during the fourth
quarter of fiscal 1999. Accrued liabilities increased primarily due to the
increase in deferred hardware revenues as a large retail customer paid for the
Company's products in advance of delivery of such products. Accounts payable
increased as the Company continues to manage its payments to vendors. Notes
payable decreased as the Company repaid amounts outstanding to financial
institutions. These repayments were primarily related to a product financing
arrangement.



                                       31
<PAGE>   32

<TABLE>
<CAPTION>
Cash Flows from Operating Activities
(in thousands)                                                                                                   Dollar
                                                                       Three Months Ended                      (Decrease)
                                                                            June 30,                            Increase
                                                               ---------------------------------------         in Cash Flow
                                                                    1999                   1998                   Impact
                                                               ----------------      -----------------    --------------------
<S>                                                                   <C>                      <C>                  <C>
Net loss                                                              $(16,701)                $ (100)              $ (16,601)
Depreciation and amortization                                            6,177                  6,233                     (56)
Provision for doubtful accounts                                          1,157                  2,431                  (1,274)
Provision for inventory obsolescence                                     1,725                    688                   1,037
Accounts and notes receivable                                            5,588                 (2,805)                  8,393
Gain on sale of subsidiary                                                   -                   (900)                    900
Inventories                                                              6,103                 (5,707)                 11,810
Prepaid expenses and other                                                   7                 (1,706)                  1,713
Accounts payable and acrued liabilities                                 13,312                (17,047)                 30,359
Other                                                                      161                 (1,897)                  2,058
Net cash provided by (used in)
                                                               ================      =================    ====================
   operating activities                                               $ 17,529               $(20,810)               $ 38,339
                                                               ================      =================    ====================
</TABLE>

The increase in cash flows from the Company's consolidated operating activities
for the first quarter of fiscal 2000 from the corresponding fiscal 1999 period
was primarily due to the increased cash flow impact of accounts payable and
accrued liabilities, inventories, and accounts and notes receivable. These
positive cash flow impacts were partially offset by the increase in the net
loss incurred and decrease in the provision for doubtful accounts.

<TABLE>
<CAPTION>
Cash Flows from Investing  Activities
(in thousands)
                                                                        Three Months Ended                     Dollar
                                                                            June 30,                          Increase
                                                               -------------------------------------       in Cash Flow
                                                                    1999                 1998                  Impact
                                                               ---------------     -----------------     -------------------
<S>                                                                   <C>                  <C>                      <C>
Additions to property and equipment                                   $(7,845)             $ (9,868)                $ 2,023
Software and other investments                                         (1,031)               (1,178)                    147
Purchase of non-marketable investments                                      -                (1,950)                  1,950
Proceeds from sale of non-marketable
   investments                                                          1,523                     -                   1,523
Other                                                                       -                  (608)                    608
                                                               ===============     =================     ===================
Net cash used in investing activities                                 $(7,353)             $(13,604)                $ 6,251
                                                               ===============     =================     ===================
</TABLE>

The decrease in cash flows used in investing activities was primarily due to a
decrease in the fixed asset additions for the first quarter of fiscal 2000 as
compared to the first quarter of fiscal 1999. The decrease in fixed asset
additions was primarily the result of the absence of $2.7 million of capital
additions related to the Company's relocation of certain product development and
engineering operations from Akron, Ohio to Houston, Texas. This decrease was
partially offset by a $1.4 million increase in the amount of capitalization of
costs related to the Company's new corporate-wide information systems as this
project nears completion. Capitalized project costs related to the project were
$5.2 million during the first



                                       32
<PAGE>   33

quarter of fiscal 2000 as compared to $3.8 million in the first quarter of
fiscal 1999. Also contributing to the decrease in cash flows used in investing
activities was the absence of purchases of non-marketable investments. Proceeds
from the sale of non-marketable securities occurring during the first quarter of
fiscal 2000 also contributed to the net decrease in cash flows used in investing
activities.

<TABLE>
<CAPTION>
Cash Flows from Financing  Activities
(in thousands)
                                                                           Three Months Ended                    Dollar
                                                                                June 30,                        Decrease
                                                                  ---------------      ---------------        in Cash Flow
                                                                       1999                 1998                 Impact
                                                                  ---------------      ---------------   --------------------
<S>                                                                      <C>                  <C>                  <C>
(Repayments) borrowings on notes
  payable, net                                                           $(5,085)             $22,005              $ (27,090)
Principal payments on capital leases                                        (223)                (175)                   (48)
Costs related to the public offering of
  subsidiary                                                              (1,179)                   -                 (1,179)
Proceeds from exercise of stock options                                        -                  584                   (584)
                                                                  ===============      ===============   ====================
Net cash  (used in)  provided by
  financing activities                                                   $(6,487)             $22,414              $ (28,901)
                                                                  ===============      ===============   ====================
</TABLE>

The decrease in cash flows provided by financing activities was primarily the
result of increased borrowings during the first quarter of fiscal 1999 in order
to meet operating cash flow requirements for that period. There were no similar
borrowings during the first quarter of fiscal 2000 as the Company could not
borrow additional amounts under its existing credit facilities. The Company
repayment of amounts due under product financing arrangements during the
quarter reduced the outstanding notes payable balance.

Subsequent Events

Subsequent to June 30, 1999, the Company's Aironet subsidiary sold 6,000,000
shares of Aironet voting common stock in an initial public offering  on the
Nasdaq National Market at an offering price of $11.00 per share. Of the total
number of shares offered, Aironet sold 4,000,000 shares and the Company sold
2,000,000 shares. The aggregate proceeds, net of underwriting discounts and
commissions, were $40.9 million to Aironet and $20.5 million to Telxon.
Subsequent to this transaction the Company's remaining interest in Aironet was
approximately 39%. Prior to the sale of these shares, the Company's interest in
the voting common stock of Aironet was approximately 76%. As a result of this
transaction and the dilution of its voting interest and control of Aironet, the
Company intends to cease consolidation of the results of Aironet.

Subsequent to June 30, 1999, the Company received a commitment letter from a
financial institution to provide a $100.0 million senior secured credit facility
to the Company as a replacement for the Company's existing revolving credit
agreement and business purpose promissory note. Such commitment letter is
subject to conditions precedent and subsequent to closing. Borrowings under the
revolving loan provisions of such facility would be subject to availability on
qualifying accounts receivable and inventory, reduced by amounts borrowed under
the facility's term loan features and amounts outstanding under letters of
credit. Availability under the agreement is estimated to be $71.0 million as of
August 1, 1999. The facility would have three term loan features. The first term
loan would have a limit of $6.0 million, but would be limited to a portion of
the liquidation value of the Company's machinery and equipment. The repayment
terms for this term loan



                                       33
<PAGE>   34

would be straight-line over a 10-year period. The second term loan would have a
limit of $10.0 million and would be limited, together with the $20.0 million
term loan discussed below, by specified percentages of the market value of
Aironet capital stock owned by the Company. The repayment of this term loan
would be straight-line over a 3-year period. The third term loan of $20.0
million would be limited by a specific percentages of the market value of
Aironet capital stock owned by the Company. The repayment term of this loan
would be due the earlier of 120 days from closing or upon any sale of
additional capital stock of Aironet by the Company. The interest rate charged
on the revolving loan, the $6.0 million term loan, and the $20.0 million term
loan would be 2.75% above the Eurodollar rate or 0.5% above the financial
institution's prime lending rate. Interest would be payable monthly. The
interest rate charged would be subject to change based upon the Company's
financial results. The interest rate on the $10.0 million term loan would be
fixed at 12.5%. The facility also would call for the payment of an unused line
fee of 0.375% per annum on a monthly basis. The facility will be collateralized
by substantially all of the Company's assets. Restrictive covenants with
respect to this facility have not yet been determined.

New Accounting Standards

In fiscal 1998, the FASB issued 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, in the basic financial statements. The
Company was required to adopt the provisions of SFAS No. 130 for the fiscal year
ended March 31, 1999, beginning with the quarter ended June 30, 1998, and to
restate any prior period financial statements included for comparative purposes
to reflect the application of SFAS No. 130. As the adoption of this
pronouncement only modifies disclosures, there is no effect on the Company's
consolidated financial position, results of operations or cash flows.

During fiscal 1998, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures About Segments of an Enterprise and Related Information"
("SFAS No. 131"). SFAS No. 131 revises the manner in which an entity determines
the operating segments it must report as well as requires the disclosure of
additional segment information. The Company adopted the provisions of SFAS No.
131 for the fiscal year ended March 31, 1999, and has restated prior period
financial statements included for comparative purposes to reflect the
application of SFAS No. 131. As the adoption of this pronouncement only modifies
disclosures, there is no effect on the Company's consolidated financial
position, results of operations or cash flows.

In fiscal 1998, the AICPA issued Statement of Position 97-2, "Software Revenue
Recognition" ("SOP 97-2"). SOP 97-2 provides guidance on the recognition of
revenue for the licensing, selling, leasing and marketing of computer software
to customers. The Company adopted the provisions of SOP 97-2 for the fiscal year
ended March 31, 1999. The adoption of this pronouncement did not have a material
effect on the Company's consolidated financial position, results of operations
or cash flows.

In fiscal 1998, the AICPA issued Statement of Position 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1").
SOP 98-1 requires the capitalization of certain costs incurred in the
development of software used by a company for its own internal operations. The
Company adopted the provisions of SOP 98-1 for the fiscal year ended March 31,
1999. The adoption of this pronouncement did not have a material effect on the
Company's consolidated financial position, results of operations or cash flows.



                                       34
<PAGE>   35

During fiscal 1999, the AICPA issued Statement of Position 98-5, "Reporting on
the Costs of Start-Up Activities" ("SOP 98-5"). SOP 98-5 requires costs of
start-up activities and organization costs to be expensed as incurred. The
Company adopted the provisions of SOP 98-5 for the fiscal year ended March 31,
1999. The adoption of this pronouncement did not have a material effect on the
Company's consolidation financial position, results of operations or cash flows.

During fiscal 1999, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
No. 133"). SFAS No. 133 provides accounting and reporting standards for
derivative instruments. This standard will require the Company to recognize all
derivatives as either assets or liabilities in the statement of financial
position and to measure those instruments at fair value. The Company is required
to adopt the provisions of SFAS No. 133 during the first quarter of fiscal 2002
(as delayed by Statement of Financial Accounting Standards No. 137 - Deferral of
the Effective Date of FASB Statement No. 133). Management believes that the
adoption of this pronouncement will not have a material effect on the Company's
consolidated financial position, results of operations or cash flows.


                                       35

<PAGE>   36



PART II.  OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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

                  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,
                           incorporated herein by reference to Exhibit 3.2 to
                           Registrant's Form 10-K for the year ended March 31,
                           1999.

                  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.

                                       36
<PAGE>   37

                           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 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, as amended, incorporated
                                         herein by reference to Exhibit 10.1.1
                                         to Registrant's Form 10-K for the year
                                         ended March 31, 1999.

                           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.




                                       37
<PAGE>   38

                           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, 1998.

                           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 10.1.4
                                         to Registrant's Form 10-Q for the year
                                         ended March 31, 1999.

                                         10.1.4.a          Description of
                                                           amendments extending
                                                           the term of the
                                                           Agreement included as
                                                           Exhibit 10.1.4 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.1.4.a to
                                                           Registrant's Form
                                                           10-Q for the quarter
                                                           ended September 30,
                                                           1998.

                           10.1.5        1992 Restricted Stock Plan of
                                         Registrant, as amended, incorporated
                                         herein by reference to Exhibit 10.1.5
                                         to Registrant's Form 10-Q for the
                                         quarter ended December 31, 1998.

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

                                         10.1.7.b          First Amendment to
                                                           Amended and Restated
                                                           1996 Stock Option
                                                           Plan for employees,
                                                           directors and
                                                           advisors of Aironet
                                                           Wireless
                                                           Communications, Inc.,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.1.7.b to
                                                           Registrant's Form
                                                           10-K for the year
                                                           ended March 31, 1999.

                           10.1.8        1999 Stock Option Plan for Non-Employee
                                         Directors of Aironet Wireless
                                         Communications, Inc., incorporated
                                         herein by reference to Exhibit 10.1.8
                                         to Registrant's Form 10-K for the year
                                         ended March 31, 1999.



                                       38
<PAGE>   39

                           10.1.9        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.

                           10.1.10       Employment Agreement between Registrant
                                         and John W. Paxton, Sr., effective as
                                         of March 22, 1999, incorporated herein
                                         by reference to Exhibit 10.1.10 to
                                         Registrant's Form 10-K for the year
                                         ended March 31, 1999.

                           10.1.11       Employment Agreement between Registrant
                                         and Kenneth A. Cassady, effective as of
                                         June 7, 1999, incorporated herein by
                                         reference to Exhibit 10.1.11 to
                                         Registrant's Form 10-K for the year
                                         ended March 31, 1999.

                           10.1.12       Employment Agreement between Registrant
                                         and Woody M. McGee, effective as of
                                         June 1, 1999, incorporated herein by
                                         reference to Exhibit 10.1.12 to
                                         Registrant's Form 10-K for the year
                                         ended March 31, 1999.

                           10.1.13       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.

                           10.1.14       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       Employment Agreement, effective as of
                                         April 1, 1997, between Registrant and
                                         Frank E. Brick, a former executive
                                         officer, incorporated herein by
                                         reference to Exhibit 10.1.9 to
                                         Registrant's Form 10-K for the year
                                         ended March 31, 1998.

                           10.1.17       Amended and Restated Employment
                                         Agreement, effective as of April 1,
                                         1997, between Registrant and Kenneth W.
                                         Haver, a former executive officer,
                                         incorporated herein by



                                       39
<PAGE>   40

                                         reference to Exhibit 10.1.11 to
                                         Registrant's Form 10-K for the year
                                         ended March 31, 1998.

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

                           10.1.19       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.

                           10.1.20       Amended and Restated Employment
                                         Agreement between Registrant and
                                         Gerald J. Gabriel, effective as of
                                         April 1, 1997, incorporated herein by
                                         reference to Exhibit 10.1.20 to
                                         Amendment No. 1 on Form 10-K/A to
                                         Registrant's Form 10-K for the year
                                         ended March 31, 1999.

                           10.1.21       Amended and Restated Employment
                                         Agreement between Registrant and David
                                         D. Loadman, a former executive
                                         officer, incorporated herein by
                                         reference to Exhibit 10.1.12   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, for premises at 3330 West
                                         Market Street, Akron, Ohio,
                                         incorporated herein by reference to
                                         Exhibit 10.2.1 to Registrant's Form
                                         10-K for the year ended March 31, 1999.

                           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, Texas,
                                         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, for premises at 3875 Embassy
                                         Parkway, Bath, Ohio, 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.
                                       40
<PAGE>   41

                                         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.

                                         10.2.3.e          Sixth Addendum, dated
                                                           as of March, 1998, to
                                                           the Lease included as
                                                           Exhibit 10.2.3 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.2.3.e to
                                                           Registrant's Form
                                                           10-Q for the quarter
                                                           ended September 30,
                                                           1998.

                                         10.2.3.f          Seventh Addendum,
                                                           dated as of July 20,
                                                           1998, to the Lease
                                                           included as Exhibit
                                                           10.2.3 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.2.3.f to
                                                           Registrant's Form
                                                           10-Q for the quarter
                                                           ended September 30,
                                                           1998.

                                         10.2.3.g          Eighth Addendum,
                                                           dated as of September
                                                           8, 1998, to the Lease
                                                           included as Exhibit
                                                           10.2.3 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.2.3.g to
                                                           Registrant's Form
                                                           10-Q for the quarter
                                                           ended September 30,
                                                           1998.

                                         10.2.3.h          Sublease Agreement,
                                                           dated as of
                                                           September 1,
                                                           1998, between
                                                           Registrant and
                                                           Aironet Wireless
                                                           Communications, Inc.
                                                           for the premises
                                                           subject to the Lease
                                                           included as Exhibit
                                                           10.2.3 above, as
                                                           amended through the
                                                           Eighth Addendum
                                                           thereto included as
                                                           Exhibit 10.2.3.g
                                                           above, incorporated
                                                           herein by reference
                                                           to Exhibit 10.2.3.h
                                                           to Registrant's
                                                           Form 10-K for the
                                                           year ended March 31,
                                                           1999.

                                         10.2.3.i          Renewal, dated June
                                                           16, 1999, with
                                                           respect to the
                                                           Sublease Agreement
                                                           included as Exhibit
                                                           10.2.3.h above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.2.3.i to
                                                           Registrant's Form



                                       41
<PAGE>   42

                                                           10-K for the year
                                                           ended March 31, 1999.

                           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 premises 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          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.c          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.

                                         10.3.1.d          Waiver and Agreement,
                                                           dated as of December
                                                           29, 1998, with
                                                           respect to the
                                                           Agreement included as
                                                           Exhibit 10.3.1 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.3.1.e to
                                                           Registrant's Form
                                                           10-Q for the quarter
                                                           ended December 31,
                                                           1998.

                                         10.3.1.e          Waiver Extension and
                                                           Agreement, dated as
                                                           of February 12, 1999,
                                                           with respect to the
                                                           Agreement included as
                                                           Exhibit 10.3.1 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.3.1.f to



                                       42
<PAGE>   43

                                                           Registrant's Form
                                                           10-Q for the quarter
                                                           ended December 31,
                                                           1998.

                                         10.3.1.f          Second Waiver
                                                           Extension Agreement
                                                           and Amendment No. 4,
                                                           dated as of March 26,
                                                           1999, with respect to
                                                           the Agreement
                                                           included as Exhibit
                                                           10.3.1 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.3.1.a to
                                                           Registrant's Form 8-K
                                                           dated April 1, 1999.

                                         10.3.1.g          Amended and  Restated
                                                           Security  Agreement,
                                                           dated as of March
                                                           26, 1999, by and
                                                           among Registrant and
                                                           The Bank of New
                                                           York, as Agent for
                                                           the Lenders from
                                                           time to time party to
                                                           the Agreement
                                                           included as Exhibit
                                                           10.3.1 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.3.1.b to
                                                           Registrant's Form
                                                           8-K dated April 1,
                                                           1999.

                                         10.3.1.h          Deed of Trust,
                                                           Assignment of Leases
                                                           and Rents, Security
                                                           Agreement, Fixture
                                                           Filing and Financing
                                                           Statement, dated as
                                                           of March 26, 1999,
                                                           by Registrant to
                                                           First American Title
                                                           Insurance Company as
                                                           Trustee for the
                                                           benefit of The Bank
                                                           of New York, as
                                                           Agent for the
                                                           Lenders from time to
                                                           time party to the
                                                           Agreement included
                                                           as Exhibit 10.3.1
                                                           above, incorporated
                                                           herein by reference
                                                           to Exhibit 10..3.1.h
                                                           to Registrant's Form
                                                           10-K for the year
                                                           ended March 31, 1999.

                                         10.3.1.i          Patent and Trademark
                                                           Security Agreement,
                                                           dated as of March 26,
                                                           1999, by Registrant
                                                           and certain of its
                                                           subsidiaries to The
                                                           Bank of New York, as
                                                           Agent for the
                                                           benefit of the
                                                           Lenders from time to
                                                           time party to the
                                                           Agreement included as
                                                           Exhibit 10.3.1 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.3.1 to
                                                           Registrant's Form
                                                           10-K for the year
                                                           ended March 31, 1999.

                                         10.3.1.j          Pledge Agreement,
                                                           dated as of March 26,
                                                           1999, by Registrant
                                                           to The Bank of New
                                                           York, as Agent for
                                                           the benefit of the
                                                           Lenders from time to
                                                           time party to the
                                                           Agreement included as
                                                           Exhibit 10.3.1
                                                           above, incorporated
                                                           herein by reference
                                                           to Exhibit 10.3.1.j
                                                           to Registrant's Form



                                       43
<PAGE>   44

                                                           10-K for the year
                                                           ended March 31, 1999.

                                         10.3.1.k          Third Waiver
                                                           Extension Agreement
                                                           and Amendment No. 5,
                                                           dated as of June 29,
                                                           1999, with respect to
                                                           the Agreement
                                                           included as Exhibit
                                                           10.3.1 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.3.1.a to
                                                           Registrant's Form 8-K
                                                           dated July 1, 1999.

                           10.3.2        Business Purpose Revolving Promissory
                                         Note (Swing Line) made by Registrant in
                                         favor of Bank One, NA , dated August 4,
                                         1998 , incorporated herein by reference
                                         to Exhibit 10.3.4 to Registrant's Form
                                         10-Q for the quarter ended June 30,
                                         1998.

                                         10.3.2.a          Consent, dated as of
                                                           December 29, 1998,
                                                           with respect to the
                                                           Note included as
                                                           Exhibit 10.3.2 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.3.4.a to
                                                           Registrant's Form
                                                           10-Q for the quarter
                                                           ended December 31,
                                                           1998.

                                         10.3.2.b          Further Consent,
                                                           dated as of February
                                                           12, 1999, with
                                                           respect to the Note
                                                           included as Exhibit
                                                           10.3.2 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.3.4.a to
                                                           Registrant's Form
                                                           10-Q for the quarter
                                                           ended December 31,
                                                           1998.

                                         10.3.2.c          Second Further
                                                           Consent and
                                                           Agreement, dated as
                                                           of March 26, 1999,
                                                           with respect to the
                                                           Note included as
                                                           Exhibit 10.3.2 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.3.4.c b to
                                                           Registrant's Form 8-K
                                                           dated April 1, 1999.

                                         10.3.2.d          Amended and
                                                           Restated Security
                                                           Agreement, dated as
                                                           of March 26, 1999,
                                                           by and among
                                                           Registrant and Bank
                                                           One, NA with respect
                                                           to the Note included
                                                           as Exhibit 10.3.2
                                                           above, incorporated
                                                           herein by reference
                                                           to Exhibit 10..3.2.d
                                                           to Registrant's Form
                                                           10-K for the year
                                                           ended March 31, 1999.

                                         10.3.2.e          Deed of Trust,
                                                           Assignment of Leases
                                                           and Rents, Security
                                                           Agreement, Fixture
                                                           Filing and Financing
                                                           Statement, dated as
                                                           of March 26, 1999,
                                                           by Registrant to
                                                           First American Title
                                                           Insurance Company as
                                                           Trustee for the

                                       44
<PAGE>   45

                                                           benefit of Bank One,
                                                           NA with respect to
                                                           the Note included as
                                                           Exhibit 10.3.2 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.3.2.e to
                                                           Registrant's Form
                                                           10-K for the year
                                                           ended March 31,
                                                           1999..

                                         10.3.2.f          Patent and Trademark
                                                           Security Agreement,
                                                           dated as of March
                                                           26, 1999, by
                                                           Registrant and
                                                           certain of its
                                                           subsidiaries to Bank
                                                           One, NA with respect
                                                           to the Note included
                                                           as Exhibit 10.3.2
                                                           above, incorporated
                                                           herein by reference
                                                           to Exhibit 10.3.2.f
                                                           to Registrant's Form
                                                           10-K for the year
                                                           ended March 31, 1999.

                                         10.3.2.g          Third Further Consent
                                                           and Note Modification
                                                           Agreement, dated as
                                                           of June 29, 1999,
                                                           with respect to the
                                                           Note included as
                                                           Exhibit 10.3.2 above,
                                                           incorporated herein
                                                           by reference to
                                                           Exhibit 10.3.2.g b to
                                                           Registrant's Form 8-K
                                                           dated July 1, 1999.

                  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.

                           10.5.1        First Amendment, dated as of March 8,
                                         1996, to the Agreement included as
                                         Exhibit 10.5 above, incorporated
                                         herein by reference to Exhibit 10.5.1
                                         to Registrant's Form 10-K for the year
                                         ended March 31, 1999.

                  10.6     Asset Purchase Agreement by and among Dynatech
                           Corporation, IAQ Corporation, Registrant and Itronix
                           Corporation, then a 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.

                  10.7     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.

                  10.8     Stock Purchase Agreement by and among Registrant and
                           FED Corporation, dated as of March 31, 1998, with



                                       45
<PAGE>   46

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

                           10.8.1        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.

                  10.9     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.

                  10.10    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.

                           10.10.1       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.



                                       46
<PAGE>   47

                           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.

                  10.15    DFS Vendor Agreement between Registrant and Deutsche
                           Financial Services Corporation, dated as of September
                           30, 1998, incorporated herein by reference to Exhibit
                           10.15 to Registrant's Form 10-Q for the quarter ended
                           December 31, 1998.

                  27.      Financial Data Schedule as of June 30, 1999, filed
                           herewith.

        (b) Reports on Form 8-K

        During the first quarter of fiscal 2000 to which this Annual Report on
Form 10-Q relates, the Registrant filed the following Current Reports on Form
8-K: (1) Current Report bearing a cover date of April 1, 1999, attaching
Registrant's press release of that date, announcing the extension of waivers
under Registrant's revolving credit facility and separate business purpose
revolving promissory note, effective through June 29, 1999, and certain related
amendments to the underlying credit agreements, including the broadening of the
lenders' collateral, as well as an approximately 4% reduction in Registrant's
workforce; (2) Current Report bearing a cover date of May 14, 1999, attaching
the press release issued by Registrant's Aironet Wireless Communications, Inc.
subsidiary on that date regarding the filing of a Registration Statement with
the Securities and Exchange Commission for a contemplated initial public
offering of Aironet common stock; (3) Current Report bearing a cover date of
June 16, 1999, attaching the Registrant's press release of that date,
announcing a delay in the release of its financial results for the fourth
quarter, ended March 31, 1999, of its 1999 fiscal year, that it expects a
significant loss for the quarter, including adjustments for the "end-of-life"
and discontinuation of certain products, a further restatement of the
previously released results for its second fiscal quarter ended September 30,
1998 based on a year-end review by Registrant's outside auditors of a customer
lease transaction and progress made by Registrant in the implementation of its
new strategic plan.

        Subsequent to the end of the first quarter of fiscal 2000, Registrant
filed the following Current Reports on Form 8-K: (i) Current Report bearing a
cover date of July 1, 1999, attaching Registrant's press release of that date,
announcing the further extension of waivers under Registrant's revolving credit
facility and separate business purpose revolving promissory note, effective
through August 30, 1999, and certain related amendments to the underlying
credit agreements as well as a delay in the filing of the Form 10-K for
Registrant's fiscal year ended March 31, 1999 pending completion of the closing
of the Registrant's fourth fiscal quarter and the annual audit of its fiscal
1999 financial statements; (ii) Current Report bearing a cover date of July 14,
1999, which announced Registrant's financial results for the fourth quarter of
fiscal 1999, and the fiscal year, ended March 31, 1999 (the press release, as
incorporated in the Form 8-K, includes unaudited condensed consolidated balance
sheets for the Registrant for March 31, 1999 and March 31, 1998 and unaudited
condensed consolidated statements of operations for Registrant for the
quarterly and twelve-month periods ended March 31, 1999 and March 31, 1998,
which financial statements give effect to the restatements previously discussed
in the Registrant's February 23, 1999, March 1, 1999 and June 16, 1999 press
releases, each of which have been filed under cover of a form 8-K bearing a
cover date as of the respective press release dates); and (iii) Current Report
bearing a cover date of July 19, 1999, reporting the Company's engagement of
Arthur Andersen LLP to audit the Company's consolidated financial statements
for the fiscal year ending March 31, 2000 and the dismissal of
PricewaterhouseCoopers LLP as the principal accountant to audit the Company's
consolidated financial statements effective upon the completion of the audit of
the Company's consolidated financial statements for the fiscal year ended
March 31, 1999 and the issuance of their report thereon.


                                       47
<PAGE>   48


                               TELXON CORPORATION

                                   SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934,the
registrant has duly caused this Form 10-Q to be signed and on its behalf by the
undersigned thereunto duly authorized.


Date:             August 16, 1999


                                                   TELXON CORPORATION
                                                   (Registrant)



                                                   /s/  Woody M. McGee
                                                   -----------------------
                                                   Woody M. McGee,
                                                   Vice President and Chief
                                                     Financial Officer


                                       48
<PAGE>   49



                               TELXON CORPORATION

                                    EXHIBITS

                                       TO

                                    FORM 10-Q

                       FOR THE QUARTER ENDED JUNE 30, 1999

<PAGE>   50



                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Where
Filed
-----
<S>               <C>      <C>
*                 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  3.2 to  Registrant's  Form 10-K for the year ended March
                           31, 1999.

*                 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
</TABLE>


<PAGE>   51
<TABLE>
<S>              <C>
                                         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
                           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, as amended, incorporated herein
                                         by reference to Exhibit 10.1.1  to Registrant's Form  10-K for the
                                         year ended March 31, 1999.

*                          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.
</TABLE>

<PAGE>   52

*                 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, 1998.

*                 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
                           10.1.4 to Registrant's Form 10-K for the year ended
                           March 31, 1999.

*                          10.1.4.a Description of amendments extending the term
                                    of the Agreement included as Exhibit 10.1.4
                                    above, incorporated herein by reference to
                                    Exhibit 10.1.4.a to Registrant's Form 10-Q
                                    for the quarter ended September 30, 1998.

*                 10.1.5   1992 Restricted Stock Plan of Registrant, as amended,
                           incorporated herein by reference to Exhibit 10.1.5 to
                           Registrant's Form 10-Q for the quarter ended December
                           31, 1998.

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

*                          10.1.7.b First Amendment to Amended and Restated 1996
                                    Stock Option Plan for employees, directors
                                    and advisors of Aironet Wireless
                                    Communications, Inc., incorporated herein by
                                    reference to Exhibit 10.1.7.b to
                                    Registrant's Form 10-K for the year ended
                                    March 31, 1999.

*                 10.1.8   1999 Stock Option Plan for Non-Employee Directors of
                           Aironet Wireless Communications, Inc., incorporated
                           herein by reference to Exhibit 10.1.8 to
                           Registrant's Form 10-K for the year ended
                           March 31, 1999.

*                 10.1.9   Non-Competition Agreement by and between Registrant
                           and Robert F. Meyerson, effective



<PAGE>   53

                              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.

*                   10.1.10   Employment Agreement between Registrant and John
                              W. Paxton, Sr., effective as of March 22, 1999,
                              incorporated herein by reference to Exhibit
                              10.1.10 to Registrant's Form 10-K for the year
                              ended March 31, 1999.

*                   10.1.11   Employment Agreement between Registrant and
                              Kenneth A. Cassady, effective as of June 7, 1999,
                              incorporated herein by reference to Exhibit
                              10.1.11 to Registrant's Form 10-K for the year
                              ended March 31, 1999.

*                   10.1.12   Employment Agreement between Registrant and Woody
                              M. McGee, effective as of June 1, 1999,
                              incorporated herein by reference to Exhibit
                              10.1.12 to Registrant's Form 10-K for the year
                              ended March 31, 1999.

*                   10.1.13   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.

*                   10.1.14   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   Employment Agreement, effective as of April 1,
                              1997, between Registrant and Frank E. Brick, a
                              former executive officer, incorporated herein by
                              reference to Exhibit 10.1.9 to Registrant's Form
                              10-K for the year ended March 31, 1998.

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



<PAGE>   54
*                   10.1.18   Amended and Restated Employment Agreement,
                              effective as of April 1, 1997, between Registrant
                              and David W. Porter, a former executive officer,
                              incorporated herein by reference to Exhibit
                              10.1.13 to Registrant's Form 10-K for the year
                              ended March 31, 1998.

*                   10.1.19   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.

*                  10.1.20    Amended and Restated Employment Agreement
                              between Registrant and Gerald J. Gabriel,
                              effective as of April 1, 1997, incorporated
                              herein by reference to Exhibit 10.1.20 to
                              Amendment No. 1 on Form 10-K/A to Registrant's
                              Form 10-K for the year ended March 31, 1999.

*                  10.1.21    Amended and Restated Employment Agreement
                              between Registrant and David D. Loadman, a former
                              executive officer, incorporated herein by
                              reference to Exhibit 10.1.12 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, for
                              premises at 3330 West Market Street, Akron, Ohio,
                              incorporated herein by reference to Exhibit 10.2.1
                              to Registrant's Form 10-K for the year ended March
                              31, 1999.

*                   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, Texas, 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, for premises at 3875 Embassy
                              Parkway, Bath, Ohio, 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.

*                             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

<PAGE>   55


                                        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.

*                             10.2.3.e  Sixth Addendum, dated as of March,
                                        1998, to the Lease included as Exhibit
                                        10.2.3 above, incorporated herein by
                                        reference to Exhibit 10.2.3.e to
                                        Registrant's Form 10-Q for the quarter
                                        ended September 30, 1998.

*                             10.2.3.f  Seventh Addendum, dated as of July 20,
                                        1998, to the Lease included as Exhibit
                                        10.2.3 above, incorporated herein by
                                        reference to Exhibit 10.2.3.f to
                                        Registrant's Form 10-Q for the quarter
                                        ended September 30, 1998.

*                             10.2.3.g  Eighth Addendum, dated as of September
                                        8, 1998, to the Lease included as
                                        Exhibit 10.2.3 above, incorporated
                                        herein by reference to Exhibit  10.2.3.g
                                        to Registrant's Form 10-Q for the
                                        quarter ended September 30, 1998.

*                             10.2.3.h  Sublease Agreement, dated as of
                                        September 1, 1998, between Registrant
                                        and Aironet Wireless Communications,
                                        Inc. for the premises subject to the
                                        Lease included as Exhibit 10.2.3 above,
                                        as amended through the Eighth
                                        Addendum thereto included as Exhibit
                                        10.2.3.g above, incorporated herein by
                                        reference to Exhibit 10.2.3.h to
                                        Registrant's Form 10-K for the year
                                        ended March 31, 1999.

*                             10.2.3.i  Renewal, dated June 16, 1999, with
                                        respect to the Sublease Agreement
                                        included as Exhibit 10.2.3.h    above,
                                        incorporated herein by reference to
                                        Exhibit 10.2.3.i to Registrant's Form
                                        10-K for the year ended March 31, 1999.



<PAGE>   56

*                   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 premises 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  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.c  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.

*                             10.3.1.d  Waiver and Agreement, dated as of
                                        December 29, 1998, with respect to the
                                        Agreement included as Exhibit 10.3.1
                                        above, incorporated herein by reference
                                        to Exhibit 10.3.1.e to Registrant's Form
                                        10-Q for the quarter ended December 31,
                                        1998.

*                             10.3.1.e  Waiver Extension and Agreement, dated as
                                        of February 12, 1999, with respect to
                                        the Agreement included as Exhibit 10.3.1
                                        above, incorporated herein by reference
                                        to Exhibit 10.3.1.f to Registrant's Form
                                        10-Q for the quarter ended December 31,
                                        1998.



<PAGE>   57

*                             10.3.1.f  Second Waiver Extension Agreement and
                                        Amendment No. 4, dated as of March 26,
                                        1999, with respect to the Agreement
                                        included as Exhibit 10.3.1 above,
                                        incorporated herein by reference to
                                        Exhibit 10.3.1.a to Registrant's Form
                                        8-K dated April 1, 1999.

*                             10.3.1.g  Amended and Restated Security Agreement,
                                        dated as of March 26, 1999, by and among
                                        Registrant and The Bank of New York, as
                                        Agent for the Lenders from time to time
                                        party to the Agreement included as
                                        Exhibit 10.3.1 above, incorporated
                                        herein by reference to Exhibit 10.3.1.b
                                        to Registrant's Form 8-K dated April 1,
                                        1999.

*                             10.3.1.h  Deed of Trust, Assignment of Leases and
                                        Rents, Security Agreement, Fixture
                                        Filing and Financing Statement, dated as
                                        of March 26, 1999, by Registrant to
                                        First American Title Insurance Company
                                        as Trustee for the benefit of The Bank
                                        of New York, as Agent for the Lenders
                                        from time to time party to the Agreement
                                        included as Exhibit 10.3.1 above,
                                        incorporated herein by reference to
                                        Exhibit 10.3.1.h to Registrant's Form
                                        10-K for the year ended March 31, 1999.

*                             10.3.1.i  Patent and Trademark Security Agreement,
                                        dated as of March 26, 1999, by
                                        Registrant and certain of its
                                        subsidiaries to The Bank of New York, as
                                        Agent for the benefit of the Lenders
                                        from time to time party to the Agreement
                                        included as Exhibit 10.3.1 above,
                                        incorporated herein by reference to
                                        Exhibit 10.3.1.i to Registrant's Form
                                        10-K for the year ended March 31, 1999.

*                             10.3.1.j  Pledge Agreement, dated as of March 26,
                                        1999, by Registrant to The Bank of New
                                        York, as Agent for the benefit of the
                                        Lenders from time to time party to the
                                        Agreement included as Exhibit 10.3.1
                                        above, incorporated herein by reference
                                        to Exhibit 10.3.1.j to Registrant's Form
                                        10-K for the year ended March 31, 1999.

<PAGE>   58

*                   10.3.1.k  Third Waiver Extension Agreement and Amendment No.
                              5, dated as of June 29, 1999, with respect to the
                              Agreement included as Exhibit 10.3.1 above,
                              incorporated herein by reference to Exhibit
                              10.3.1.a to Registrant's Form 8-K dated July 1,
                              1999.

*         10.3.2    Business Purpose Revolving Promissory Note (Swing Line) made
                    by Registrant in favor of Bank One, NA , dated August 4,
                    1998 , incorporated herein by reference to Exhibit 10.3.4 to
                    Registrant's Form 10-Q for the quarter ended June 30, 1998.

*                   10.3.2.a  Consent, dated as of December 29, 1998, with
                              respect to the Note included as Exhibit 10.3.2
                              above, incorporated herein by reference to Exhibit
                              10.3.4.a to Registrant's Form 10-Q for the quarter
                              ended December 31, 1998.

*                   10.3.2.b  Further Consent, dated as of February 12, 1999,
                              with respect to the Note included as Exhibit
                              10.3.2 above, incorporated herein by reference to
                              Exhibit 10.3.4.a to Registrant's Form 10-Q for the
                              quarter ended December 31, 1998.

*                   10.3.2.c  Second Further Consent and Agreement, dated as of
                              March 26, 1999, with respect to the Note included
                              as Exhibit 10.3.2 above, incorporated herein by
                              reference to Exhibit 10.3.4.c b to Registrant's
                              Form 8-K dated April 1, 1999.

*                   10.3.2.d  Amended and Restated Security Agreement, dated as
                              of March 26, 1999, by and among Registrant and
                              Bank One, NA with respect to the Note included as
                              Exhibit 10.3.2 above, incorporated herein by
                              reference to Exhibit 10.3.2.d to Registrant's Form
                              10-K for the year ended March 31, 1999.

*                   10.3.2.e  Deed of Trust, Assignment of Leases and Rents,
                              Security Agreement, Fixture Filing and Financing
                              Statement, dated as of March 26, 1999, by
                              Registrant to First American Title Insurance
                              Company as Trustee for the benefit of Bank One, NA
                              with respect to the Note included as Exhibit
                              10.3.2 above,

<PAGE>   59

                                        incorporated herein by reference to
                                        Exhibit 10.3.2.e to Registrant's Form
                                        10-K for the year ended March 31, 1999.

*                             10.3.2.f  Patent and Trademark Security Agreement,
                                        dated as of March 26, 1999, by
                                        Registrant and certain of its
                                        subsidiaries to Bank One, NA with
                                        respect to the Note included as Exhibit
                                        10.3.2 above, incorporated herein by
                                        reference to Exhibit 10.3.2.f to
                                        Registrant's Form 10-K for the year
                                        ended March 31, 1999.

*                             10.3.2.g  Third Further Consent and Note
                                        Modification Agreement, dated as of June
                                        29, 1999, with respect to the Note
                                        included as Exhibit 10.3.2 above,
                                        incorporated herein by reference to
                                        Exhibit 10.3.2.g b to Registrant's Form
                                        8-K dated July 1, 1999.

*         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.

*                   10.5.1    First Amendment, dated as of March 8, 1996, to the
                              Agreement included as Exhibit 10.5 above,
                              incorporated herein by reference to Exhibit 10.5.1
                              to Registrant's Form 10-K for the year ended March
                              31, 1999.

*         10.6      Asset Purchase Agreement by and among Dynatech Corporation,
                    IAQ Corporation, Registrant and Itronix Corporation, then a
                    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.

*         10.7      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.

*          10.8     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

<PAGE>   60

                    stock of Virtual Vision, Inc. (fka Vision Newco, Inc.),
                    incorporated herein by reference to Exhibit 10.7 to
                    Registrant's Form 10-K for the year ended March 31, 1998.

*                   10.8.1    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.

*         10.9      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.

*         10.10     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.

*                   10.10.1   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.


<PAGE>   61

*                             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.

*                   10.15     DFS Vendor Agreement between Registrant and
                              Deutsche Financial Services Corporation, dated as
                              of September 30, 1998, incorporated herein by
                              reference to Exhibit 10.15 to Registrant's Form
                              10-Q for the quarter ended December 31, 1998.


**                  27.       Financial Data Schedule as of June 30, 1999, filed
                              herewith.


-------------------------------
*        Previously filed

**       Filed herewith