<PAGE>

                      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, 1997
                                       
                                       
                                      OR
                                       
                                       
[   ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                                       
                                       
            for the transition period from __________to __________
                                       
                                       
                                       
                        Commission file number 0-11402
                                       

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


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

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

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













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

At June 30, 1997, there were 15,608,926 outstanding shares of the
registrant's Common Stock.



<PAGE>

                      TELXON CORPORATION AND SUBSIDIARIES
       INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION

                                                         Page No.
                                                         --------
PART I.        FINANCIAL INFORMATION:

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

    Item 2:   Management's Discussion and Analysis of 
               Financial Condition and Results 
               of Operations . . . . . . . . . . . . . .    10-16

PART II.       OTHER INFORMATION:

    Item 1:   Legal Proceedings . . . . . . . . . . . . .     17

    Item 6:   Exhibits and Reports on Form 8-K  . . . . .    17-24


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







                                      2

<PAGE>


                         PART I. FINANCIAL INFORMATION
                  ITEM 1:  CONSOLIDATED FINANCIAL STATEMENTS
                                       
                      TELXON CORPORATION AND SUBSIDIARIES
                                       
                          CONSOLIDATED BALANCE SHEET
                                       
                    (In thousands except per share amounts)
<TABLE>
<CAPTION>
                                                                   
                                                June 30,     March 31,
ASSETS                                            1997         1997  
                                                --------     --------
                                               (Unaudited)
<S>                                            <C>           <C>
Current assets:
  Cash (including cash equivalents of 
   $22,100 and $38,100) . . . . . . . . . .     $ 31,302      $  45,386
  Accounts receivable, net of allowance for
   doubtful accounts of $1,731 and $1,596 .      106,408        111,959
  Notes and other accounts receivable . . .       15,572         16,312
  Inventories . . . . . . . . . . . . . . .       85,814         84,499
  Prepaid expenses and other  . . . . . . .       12,092         11,956
                                                --------       --------
    Total current assets  . . . . . . . . .      251,188        270,112
Property and equipment, net . . . . . . . .       45,936         45,578
Intangible and other assets, net  . . . . .       45,061         46,094
                                                --------       --------
    Total . . . . . . . . . . . . . . . . .     $342,185       $361,784
                                                --------       --------
                                                --------       --------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Notes payable . . . . . . . . . . . . . .     $     --        $    50
  Current portion of long-term debt . . . .          383            383
  Capital lease obligations due within 
    one year  . . . . . . . . . . . . . . .          632            627
  Accounts payable  . . . . . . . . . . . .       35,206         47,917
  Income taxes payable  . . . . . . . . . .        3,392          3,077
  Accrued liabilities . . . . . . . . . . .       41,241         49,000
                                                --------       --------
    Total current liabilities . . . . . . .       80,854        101,054

Capital lease obligations . . . . . . . . .          806            968
Convertible subordinated notes 
   and debentures  . . . . . . . . . . . . .     107,224        107,224
Other long-term liabilities  . . . . . . . .       5,926          5,837
                                                --------       --------
    Total liabilities. . . . . . . . . . . .     194,810        215,083

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, 16,203 and 16,186 shares 
   issued  . . . . . . . . . . . . . . . . .         162            162
  Additional paid-in capital . . . . . . . .      86,962         87,105
  Retained earnings  . . . . . . . . . . . .      72,387         70,821
  Equity adjustment for foreign currency 
     translation . . . . . . . . . . . . . .      (2,930)        (2,643)
  Unearned compensation relating to restricted 
     stock awards  . . . . . . . . . . . . .        (150)          (210)
  Treasury stock; 594 and 557 shares of 
     common stock at cost  . . . . . . . . .      (9,056)        (8,534)
                                                --------       --------
    Total stockholders' equity . . . . . . .     147,375        146,701
                                                --------       --------
Commitments and contingencies  . . . . . . .          --             --
                                                --------       --------
    Total  . . . . . . . . . . . . . . . . .    $342,185       $361,784
                                                --------       --------
                                                --------       --------
</TABLE>

See accompanying notes to
consolidated financial statements


                                       3

<PAGE>

                      TELXON CORPORATION AND SUBSIDIARIES
                                       
                     CONSOLIDATED STATEMENT OF OPERATIONS
                                       
                    (In thousands except per share amounts)
                                  (Unaudited)
                                       
<TABLE>
<CAPTION>
                                                                  
                                           Three Months Ended June 30,
                                           ---------------------------
                                             1997            1996
                                           --------        --------
<S>                                         <C>            <C>

Revenues:                                                                      
Product, net . . . . . . . . . . . . . .   $ 86,691        $ 94,025
  Customer service, net  . . . . . . . .     18,222          18,358
                                           --------        --------
    Total net revenues . . . . . . . . .    104,913         112,383

Cost of revenues:
  Product  . . . . . . . . . . . . . . .     52,561          65,825
  Customer service . . . . . . . . . . .     11,126          11,048
                                           --------        --------
    Total cost of revenues . . . . . . .     63,687          76,873
                                           --------        --------

  Gross profit . . . . . . . . . . . . .     41,226          35,510

Operating expenses:
  Selling expenses . . . . . . . . . . .     18,100          21,183
  Product development and engineering 
    expenses   . . . . . . . . . . . . .      9,126          11,108
  General and administrative expenses  .      9,703          11,163
                                           --------        --------
                                             36,929          43,454
                                           --------        --------

      Income (loss) from operations . . .     4,297          (7,944)

Interest income  . . . . . . . . . . . . .      498             215
Interest expense   . . . . . . . . . . . .   (1,792)         (1,970)
Other non-operating (expense) income . . .     (157)            105
                                           --------        --------
      Income (loss) before income taxes. .    2,846          (9,594)

Provision (benefit) for income taxes . . .    1,252          (4,797)
                                           --------        --------
      Net income (loss)  . . . . . . . . .   $1,594         $(4,797)
                                           --------        --------
                                           --------        --------

Earnings per common and common equivalent 
  share:

      Net income (loss) per share  . . . .    $ .10         $  (.29)
                                           --------        --------
                                           --------        --------
Average number of common and common 
  equivalent shares outstanding  . . . . .   15,776          16,544

</TABLE>

See accompanying notes to
consolidated financial statements

                                      4

<PAGE>
                      TELXON CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENT OF CASH FLOWS

                                (In thousands)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                        Three Months Ended June 30,
                                                        ---------------------------
                                                           1997            1996
                                                         --------        --------
<S>                                                      <C>             <C>
Cash flows from operating activities:
  Net income (loss). . . . . . . . . . . . . . . . . . .   $1,594         $(4,797)
  Adjustments to reconcile net income 
     (loss) to net cash used in 
     operating activities:
        Depreciation and amortization. . . . . . . . . .    5,941           6,874
        Amortization of restricted stock
           awards, net . . . . . . . . . . . . . . . . .       60             123
        Provision for doubtful accounts. . . . . . . . .      274             124
        Provision for inventory
           obsolescence. . . . . . . . . . . . . . . . .    2,018           2,298
        Deferred income taxes. . . . . . . . . . . . . .      210          (1,026)
        Loss on disposal of assets . . . . . . . . . . .      225             277
        Trading securities, net. . . . . . . . . . . . .      --               26
        Changes in assets and liabilities:
                  Accounts and notes receivable  . . . .    4,528          11,558
                  Inventories  . . . . . . . . . . . . .   (3,862)          1,192
                  Prepaid expenses and other . . . . . .     (146)          1,266
                  Intangible and other assets  . . . . .     (307)           (272)
                  Accounts payable and accrued 
                     liabilities   . . . . . . . . . . .  (19,133)        (35,779)
                  Other long-term liabilities  . . . . .       89           1,455
                                                          -------         -------
                               Total adjustments . . . .  (10,103)        (11,884)
                                                          -------         -------
  Net cash used in operating activities. . . . . . . . .   (8,509)        (16,681)

Cash flows from investing activities:
  Additions to property and equipment. . . . . . . . . .   (4,208)         (5,012)
  Software investments   . . . . . . . . . . . . . . . .   (1,290)         (1,714)
  Proceeds from the sale of assets . . . . . . . . . . .      866             150
  Purchase of non-marketable investments . . . . . . . .       --            (400)
  Additions to long-term notes receivable. . . . . . . .       --            (100)
                                                          -------         -------
  Net cash used in investing activities. . . . . . . . .   (4,632)         (7,076)

Cash flows from financing activities:
  Notes payable, net . . . . . . . . . . . . . . . . . .      (50)          7,804
  Principal payments on capital leases . . . . . . . . .     (157)           (280)
  Principal payments on long-term borrowing. . . . . . .       --             (66)
  Purchase of treasury stock   . . . . . . . . . . . . .   (3,256)         (1,051)
  Debt issue costs paid  . . . . . . . . . . . . . . . .       --             (38)
  Proceeds from exercise of stock options 
    (includes tax benefit) . . . . . . . . . . . . . . .    2,563             490
                                                          -------         -------
  Net cash (used in) provided by financing 
    activities   . . . . . . . . . . . . . . . . . . . .     (900)          6,859

  Effect of exchange rate changes on cash. . . . . . . .      (43)           (125)
                                                          -------         -------
  Net decrease in cash and cash 
    equivalents. . . . . . . . . . . . . . . . . . . . .  (14,084)        (17,023)
  Cash and cash equivalents at beginning 
    of period  . . . . . . . . . . . . . . . . . . . . .   45,386          34,828
                                                          -------         -------
  Cash and cash equivalents at end of 
    period . . . . . . . . . . . . . . . . . . . . . . .  $31,302         $17,805
                                                          -------         -------
                                                          -------         -------
</TABLE>
See accompanying notes to
consolidated financial statements
                                       5
<PAGE>
                      TELXON CORPORATION AND SUBSIDIARIES
                                       
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
                                       
               (In thousands except share and per share amounts)
                                       
1.  Management Representation
    
    The consolidated financial statements of Telxon Corporation ("Telxon") 
    and its subsidiaries (collectively, the "Company") have been prepared 
    without audit. In the opinion of the Company, all adjustments, consisting 
    of normal recurring adjustments necessary for a fair statement of results 
    for the interim period(s), have been made.  The statements, including the 
    March 31, 1997, condensed balance sheet data derived from audited 
    financial statements, do not include all of the information and notes 
    required by generally accepted accounting principles for complete 
    financial statements and should be read in conjunction with the audited 
    consolidated financial statements as contained in the Company's Annual 
    Report on Form 10-K for the fiscal year ended March 31, 1997.
    
2.  Earnings Per Share
    
    Computations of earnings per common and common equivalent share of
    common stock are based on the weighted average number of common
    shares outstanding during the period increased by the net shares
    issuable on the assumed exercise of stock options using the
    treasury stock method. 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.
    
    In February 1997, the Financial Accounting Standards Board ("FASB") 
    issued Statement of Financial Accounting Standards No. 128, "Earnings Per 
    Share" ("SFAS No. 128"). SFAS No. 128 revises the standards for computing 
    and presenting earnings per share. The Company is required to adopt the 
    provisions of SFAS No. 128 beginning with the third quarter ending 
    December 31, 1997, at which time all prior and interim period earnings 
    per share amounts will be restated. The Company has determined that, once 
    adopted, the restated basic and fully diluted earnings per share amounts 
    for the quarters ended June 30, 1997 and 1996, would not be materially 
    different from the earnings per share amounts presented in the accompanying
    consolidated statement of operations.

3.  Inventories
    
    Inventories consisted of the following:

                                         June 30,
                                           1997       March 31,
                                        (Unaudited)     1997
                                        -----------   ---------
    Purchased components . . . . .        $26,447       $29,983
    Work-in-process  . . . . . . .         37,298        31,579
    Finished goods . . . . . . . .         22,069        22,937
                                        ---------      --------
                                          $85,814       $84,499
                                        ---------      --------
                                        ---------      --------
4.  Accrued Liabilities
    
    Accrued liabilities consisted of the following:
    
                                          June 30,
                                            1997       March 31,
                                         (Unaudited)     1997
                                        ------------   ---------
    Deferred customer service 
      revenues . . . . . . . . . . .       $13,771      $14,329
    Accrued payroll and other 
      employee compensation  . . . .         9,090       15,799
    Other accrued liabilities  . . .        18,380       18,872
                                         ---------     --------
                                           $41,241      $49,000
                                         ---------     --------
                                         ---------     --------

                                      6
<PAGE>
                     TELXON CORPORATION AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

              (In thousands except share and per share amounts)

5. Supplemental Cash Flow Information

                                              Three Months
                                              Ended June 30,
                                              1997     1996
                                              -----    -----
                                                (Unaudited)
    Cash paid during the period for: 
    Interest . . . . . . . . . . . . .       $1,104   $1,173
    Income taxes . . . . . . . . . . .        1,289    2,613

    Effective April 1, 1996, the Company sold the assets of certain
    retail application software operations, with net assets of
    approximately $5,000, to a third-party in exchange for $150 in cash
    and $7,000 in secured promissory notes, including interest.  The
    $7,000 of secured promissory notes received in connection with the
    sale have been excluded from the accompanying consolidated
    statement of cash flows as a non-cash transaction.

6.  Litigation and Contingencies

    In December 1992, four class action suits 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
    defendants and their affiliates, who purchased the Company's common
    stock between May 20, 1992 and January 19, 1993. The named
    defendants are the Company, former President and Chief Executive
    Officer Raymond D. Meyo, and then President, Chief Operating
    Officer and Chief Financial Officer Dan R. Wipff. On February 1,
    1993, the plaintiffs filed their Amended and Consolidated Class
    Action Complaint related to the four actions, alleging claims for
    fraud on the market and negligent misrepresentation, arising from
    alleged misrepresentations and omissions with respect to the
    Company's financial performance and prospects, and alleged trading
    activities of the named individual defendants. The Amended
    Complaint seeks unspecified compensatory damages, the imposition of
    a constructive trust on certain of the defendants' assets and other
    unspecified extraordinary equitable and/or injunctive relief,
    interest, attorneys' fees and costs. The defendants, including the
    Company, filed a Motion to Dismiss which was denied by the court on
    June 3, 1993.

    On April 16, 1993, the Plaintiffs filed their Motion for Class
    Certification. The defendants, including the Company, filed their
    briefs in opposition to Class Certification on October 13, 1993. On
    December 17, 1993, the District Court certified the class,
    consisting of Telxon stockholders, other than defendants and their
    affiliates, who purchased Telxon common stock between May 20, 1992
    and December 14, 1992.

    Following the completion of discovery (other than of experts), each
    defendant filed a Motion for Summary Judgment on May 19, 1995, all
    of which were opposed by the plaintiffs. On September 14, 1995, the
    Court granted each defendant summary judgment on all counts, which
    the plaintiffs appealed to the United States Sixth Circuit Court of
    Appeals. The appeal was heard on October 24, 1996, and the parties
    are awaiting the decision from the Court of Appeals. The defendants
    intend to continue vigorously defending the Consolidated Class
    Action. Though there can be no assurance that the Company's summary
    judgment will be upheld on appeal on all counts or as to the
    ultimate outcome of any portion of the case with respect to which
    the summary judgment may be reversed, no provision has been made in
    the accompanying consolidated financial statements for any
    liability that may result to the Company in such an event.

    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 

                                     7

<PAGE>

                     TELXON CORPORATION AND SUBSIDIARIES
                                       
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
                                       
             (In thousands except share and per share amounts)
                                       

    stockholder of Telxon 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, attorneys' fees and costs. While the
    Company is nominally a defendant in this derivative action, no
    monetary relief is sought by the plaintiff from the Company. On
    November 12, 1993, Telxon and the individual director defendants
    filed a Motion to Dismiss. The plaintiff filed his brief in
    opposition to the Motion on May 2, 1994, and the defendants filed a
    final responsive brief. The Motion was argued before the Court on
    March 29, 1995, and on July 18, 1995, the Court issued its ruling.
    The Court dismissed all of the claims relating to the plaintiff's
    allegations of corporate waste but allowed the claims relating to
    breach of fiduciary duty to continue.
    
    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
    certain 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.  Discovery is continuing, and no deadline for its
    completion has yet been set by the Court. The defendants believe
    that the post-intervention claims lack merit, and they intend to
    continue vigorously defending this action. While the ultimate
    outcome of this action cannot presently be determined, the Company
    does not anticipate that this matter will have a material adverse
    effect on the Company's consolidated financial position, results of
    operations or cash flows and accordingly has not made provisions
    for any loss or related insurance recovery in the accompanying
    consolidated financial statements.
    
    In the normal course of its operations, the Company is subject to
    performance under contracts and assertions that technologies it
    utilizes may infringe third party intellectual properties, and has
    various legal actions and certain contingencies pending, including
    a claim made by the owner of a manufacturing facility formerly
    leased by the Company that the Company caused and should remediate
    soil contamination at the facility and may be responsible for
    possible diminution in the economic value of the premises allegedly
    resulting from the contamination. The Company, with professional
    assistance, is continuing to investigate the scope, nature and
    cause of the contamination. Information necessary to support a
    reasonable estimate of the scope of loss, if any, is not presently
    available and, accordingly, no provision has been made in
    accompanying financial statements. The Company, while not conceding
    denial of coverage, has been advised by its insurers that coverage
    is not available concerning this matter. While the Company, based
    on the information currently available to it, continues to believe
    the matter's ultimate resolution will not have a material adverse
    effect on the Company's business or financial condition, if the
    Company were ultimately held 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 

                                       8

<PAGE>

                     TELXON CORPORATION AND SUBSIDIARIES
                                       
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
                                       
              (In thousands except share and per share amounts)
                                       
                                       
    charge(s) would be taken. In management's opinion, all other such
    outstanding matters have either been reflected in the consolidated
    financial statements, are covered by insurance or would not have a
    material adverse effect on the Company's business, consolidated
    financial position or results of operations or cash flows.

7.  Income Taxes

    The Company's consolidated effective income tax rate reflects income 
    before taxes plus non-deductible goodwill amortization and the tax effect 
    of subsidiaries' net operating loss benefits not currently utilized, 
    which sum is multiplied by the United States statutory rate and increased 
    by foreign tax rate differentials.  The effective income tax rate was 
    decreased by the favorable tax treatment of the Company's foreign sales 
    corporation.
    
    The decrease in the Company's first quarter fiscal 1998
    consolidated effective income tax rate from the rate experienced
    during the first quarter of fiscal 1997 was due primarily to the
    decrease in non-deductible goodwill amortization and an increase in
    consolidated pre-tax income without a corresponding increase in
    non-deductible reconciling items.

8.  Other Transactions

    During the first quarter of fiscal 1998, the Company repurchased
    215,700 shares of its common stock, at a weighted average price of
    $15.09 per share, pursuant to its open market repurchase program. 
    Additionally, the Company re-issued 179,290 shares of treasury
    stock to satisfy the stock options exercised under the Company's
    stock option plans during the first quarter of fiscal 1998.
    
    The Company also repurchased during the first quarter of fiscal 1998
    80,000 shares of voting common stock of its Metanetics Corporation 
    ("Metanetics") subsidiary at a price of $1.04 per share from former 
    employees, increasing the Company's interest in Metanetics to 51%.

9.  Subsequent Transactions and Events

    Subsequent to June 30, 1997, the Company re-issued 36,140 shares of
    treasury stock to satisfy purchases made by employees through the
    Telxon Corporation 1995 Employee Stock Purchase Plan. 
    Additionally, the Company re-issued 60,763 shares of treasury stock
    in July 1997 to satisfy stock options exercised under the Company's
    stock option plans.
    
    Also subsequent to June 30, 1997, the Company extended to August 
    4, 1998, the $20.0 million in bank credit which it maintains under 
    its business purpose revolving promissory note in addition to its 
    ongoing $100.0 million credit agreement.

10.  Newly Issued Accounting Pronouncements

    During June 1997, 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 is required to 
    adopt the provisions of SFAS No. 130 for the fiscal year ending March 31, 
    1999, beginning with the quarter ended June 30, 1998, and redisplay any 
    prior period financial statements included for comparative purposes to 
    reflect the application of SFAS No. 130. As the adoption of this 
    pronouncement will only modify disclosures, there will be no effect on 
    the Company's consolidated financial position or results of operations or 
    cash flows.

    Also during June 1997, 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 
    is required to adopt the provisions of SFAS No. 131 for the fiscal year 
    ending March 31, 1999, and restate any prior period financial statements 
    included for comparative purposes to reflect the application of SFAS No. 
    131. As the adoption of this pronouncement will only modify 
    disclosures, there will be no effect on the Company's consolidated 
    financial position or results of operations or cash flows.


11. Reclassifications
    
    Certain items in the fiscal 1997 consolidated financial statements
    and notes thereto have been reclassified to conform to the fiscal
    1998 presentation.

                                      9

<PAGE>

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

IN ADDITION TO DISCUSSING AND ANALYZING THE COMPANY'S RECENT HISTORICAL 
FINANCIAL RESULTS AND CONDITION, THE FOLLOWING MANAGEMENT'S DISCUSSION AND 
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INCLUDES STATEMENTS 
REGARDING CERTAIN TRENDS OR OF OTHER FORWARD-LOOKING INFORMATION CONCERNING 
THE COMPANY'S ANTICIPATED REVENUES, COSTS, FINANCIAL RESOURCES OR OTHERWISE 
AFFECTING OR RELATING TO THE COMPANY WHICH ARE INTENDED TO QUALIFY FOR THE 
PROTECTIONS AFFORDED "FORWARD-LOOKING STATEMENTS" UNDER THE PRIVATE 
SECURITIES LITIGATION REFORM ACT OF 1995, PUBLIC LAW 104-67.  THE 
FORWARD-LOOKING STATEMENTS MADE HEREIN AND ELSEWHERE IN THIS FORM 10-Q ARE 
INHERENTLY SUBJECT TO RISKS AND UNCERTAINTIES WHICH COULD CAUSE THE COMPANY'S 
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS.  THE 
SUMMARY OF CERTAIN OF THE RISKS AND OTHER IMPORTANT FACTORS WHICH MAY AFFECT 
THE COMPANY'S BUSINESS, OPERATING RESULTS AND FINANCIAL AND OTHER CONDITION 
UNDER "FACTORS THAT MAY AFFECT FUTURE RESULTS" BELOW SHOULD BE READ IN 
CONJUNCTION WITH THE MORE COMPLETE DISCUSSION OF THOSE AND OTHER RISKS AND 
IMPORTANT FACTORS AFFECTING THE BUSINESS, OPERATING RESULTS AND CONDITION OF 
THE COMPANY UNDER "ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS 
OF OPERATIONS AND FINANCIAL CONDITION -- FACTORS THAT MAY AFFECT FUTURE 
RESULTS" (WHICH IS INCORPORATED HEREIN BY THIS REFERENCE), AND OTHER 
CAUTIONARY STATEMENTS APPEARING UNDER "ITEM 1. BUSINESS" AND ELSEWHERE, IN 
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31, 
1997.

OVERVIEW

The Company recorded net income of $1.6 million or $.10 per share for
the first quarter of fiscal 1998.  In comparison, the Company recorded a
net loss of $4.8 million or $.29 per share for the same period in fiscal
1997.

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

FACTORS THAT MAY AFFECT FUTURE RESULTS

The Company's business, operating results and financial and other
condition may be affected by a number of risks and other important
factors, including, without limitation, the following, some of which are
inherently difficult to identify and predict and/or are beyond the
Company's control:  general and industry-specific economic conditions;
the identification and implementation of appropriate cost saving and
operational efficiency initiatives; sales and manufacturing cycles from
quarter to quarter and within each quarter; serving markets
characterized by increasingly rapid technological change and associated
changes in market demand, product obsolescence and price erosion;
intense competition; concentration of revenues in the retail industry;
ability to penetrate and expand revenues in new and existing markets;
risks associated with foreign sales and operations; timely and efficient
enhancement of appropriate product offerings through internal
development and acquisition of or investment in new businesses and
technologies; dependence on, and freedom from infringement of,
technologies and other proprietary rights of or by third parties;
government regulation of radio and other products and product health and
safety concerns; dependence on sole source, or limited number of,
suppliers; and attracting and retaining qualified employees. In addition
to being subject to the foregoing factors and other cautionary
statements elsewhere in this Form 10-Q, the Company's conduct of its
business and the results and condition thereof are also subject to the
possible adverse effects of certain pending litigation and other
contingencies discussed in Note 6 to the accompanying consolidated
financial statements included in Item 1 above.

                                     10
<PAGE>

RESULTS OF OPERATIONS

Revenues

1998 vs. 1997

<TABLE>
<CAPTION>

                          Quarter ended June 30,        (Decrease)
                          ----------------------     ------------------
                            1997          1996       Dollar  Percentage
                            ----          ----       ------  ----------
                                   (in thousands)
<S>                       <C>           <C>        <C>       <C>

Net Revenues:
  Product, net . . . . .  $  86,691     $  94,025  $ (7,334)  (7.8)%
  Customer service, 
    net  . . . . . . . .     18,222        18,358      (136)   (.7)%
                          ---------     ---------  --------    
  Total net revenues . .  $ 104,913     $ 112,383  $ (7,470)  (6.6)%
                          ---------     ---------  --------    
                          ---------     ---------  --------    
</TABLE>

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 and software licenses; and a variety of 
professional services, including system integration and project management.

The decrease in first quarter fiscal 1998 consolidated product revenues from 
first quarter fiscal 1997 levels was due primarily to the absence of product 
revenues from the Company's former Itronix subsidiary, which it sold 
effective December 31, 1996. During the first quarter of fiscal 1997, Itronix 
recorded total product revenues of $20.6 million.  The impact of the sale of 
Itronix on the Company's consolidated product revenues was reduced by an 
increase in the Company's consolidated product revenues from continuing 
operations.  This increase in consolidated product revenues from continuing 
operations from first quarter fiscal 1997 levels was due primarily to an 
increase in PTC unit volume, partially offset by a decrease in the average 
selling price per PTC unit.

Revenues from the Company's international operations (including Canada) 
increased $1.7 million or 5% in the first quarter of fiscal 1998 from first 
quarter fiscal 1997 levels. This increase was attributable primarily to 
increased revenues recorded by certain of the Company's Canadian operations 
as well as to increased sales to foreign distributors.

The Company anticipates consolidated revenues from continuing operations for 
the remainder of fiscal 1998 to increase from fiscal 1997 levels.

Cost of Revenues

1998 vs. 1997

<TABLE>
<CAPTION>

                          Quarter ended June 30,     Increase    (Decrease)
                          ----------------------    -----------------------
                            1997          1996        Dollar     Percentage
                          --------      --------    ---------    ----------


                                   (in thousands)
<S>                       <C>           <C>            <C>           <C>

Cost of Revenues:
  Product  . . . . . .    $ 52,561      $ 65,825       $ (13,264)    (20.2)%
  Customer service . .      11,126        11,048              78        .7%
                          --------      --------       ---------
  Total cost of                                        
    revenues . . . . .    $ 63,687      $ 76,873       $ (13,186)    (17.2)%
                          --------      --------       ---------
                          --------      --------       ---------
  Cost of product
    revenues as a
    percentage of 
    product revenues,
    net . . . . . . . .       60.6%         70.0%
  Cost of customer 
    service revenues
    as a percentage of
    customer service 
    revenues, net . . .       61.1%         60.2%

</TABLE>


The decrease in the first quarter fiscal 1998 consolidated product cost 
percentage from first quarter fiscal 1997 levels was due to the benefit 
recognized during the quarter from the Company's fiscal 1997 cost reduction 
and efficiency initiatives, workforce reductions and early retirements.  The 
improved first quarter fiscal 1998 product gross margins also reflect the 
absence of large-volume/low margin business and new product rollouts 
experienced by the Company during the first quarter of fiscal 1997.

                                     11

<PAGE>

The Company anticipates the consolidated product cost percentage for the 
remainder of fiscal 1998 to decrease from fiscal 1997 levels as a result of 
the continued benefit of the Company's cost reduction and efficiency 
initiatives.

For the quarter ended June 30, 1997, consolidated inventory allowance
accounts increased to $18.1 million from $16.0 million at March 31,
1997.  As a percentage of consolidated gross inventories, the Company's
consolidated inventory allowances increased to 17% at June 30, 1997,
from 16% at March 31, 1997. The Company anticipates continuing to
provide for inventory obsolescence resulting from technological change.


Operating Expenses

1998 vs. 1997


<TABLE>
<CAPTION>

                          Quarter ended June 30,        (Decrease)
                          ----------------------   --------------------
                            1997        1996        Dollar   Percentage
                          --------    --------     --------  ----------
                                   (in thousands)
<S>                       <C>          <C>         <C>       <C>

Operating Expenses:
  Selling expenses . . .  $ 18,100     $ 21,183     $ (3,083)  (14.6)%
  Product development 
    and engineering 
    expenses . . . . . .     9,126       11,108       (1,982)  (17.8)%
  General and 
    administrative 
    expenses . . . . . .     9,703       11,163       (1,460)  (13.1)%
                          --------     --------      --------  -------
  Total operating 
    expenses . . . . . .  $ 36,929     $ 43,454      $(6,525)  (15.0)%
                          --------     --------      --------  -------
                          --------     --------      --------  -------
</TABLE>

Selling expenses as a percentage of total revenues decreased to 17% in the 
first quarter of fiscal 1998 from 19% in the first quarter of fiscal 1997. 
The decrease in the consolidated selling expense percentage was due primarily 
to the benefit recognized during the quarter from the Company's fiscal 1997
workforce reductions and early retirements.  The Company anticipates 
consolidated selling expenses as a percentage of total revenues to decrease 
throughout the remainder of fiscal 1998 from fiscal 1997 levels as a result 
of the continued benefit of the Company's workforce reduction and early 
retirement initiatives.

Product development and engineering expenses as a percentage of total 
revenues decreased to 9% in the first quarter of fiscal 1998 from 10% in the 
first quarter of fiscal 1997. The decrease in consolidated product 
development and engineering expenses was due primarily to the absence of such 
expenses for the Company's former Itronix subsidiary. During the first 
quarter of fiscal 1997, Itronix recorded product development and engineering 
expenses of approximately $1.6 million. The Company initiated plans during 
the first quarter of fiscal 1998 to consolidate and relocate engineering and 
product development operations to Houston, Texas. Though the relocation will 
entail certain expenditures in the near term, the consolidation of 
engineering operations is expected to reduce operating costs and 
product-development time as well as improve the Company's ability to 
integrate new technologies through concurrent engineering.

During the first quarter of fiscal 1998, 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" ("SFAS No. 86") 
aggregating $.7 million. The Company anticipates the dollar amount of 
internal software development costs capitalized during the remainder of 
fiscal 1998 to decrease from fiscal 1997 levels.

General and administrative expenses as a percentage of total revenues 
decreased to 9% in the first quarter of fiscal 1998 from 10% in the first 
quarter of fiscal 1997. The decrease in consolidated general and 
administrative expenses was due primarily to the benefit recognized during 
the quarter from the Company's fiscal 1997 workforce reductions, early 
retirements and other cost reduction initiatives as well as the absence of 
the general and administrative expenses of the Company's former Itronix 
subsidiary. Included in the Company's first quarter fiscal 1997 consolidated 
results were approximately $.6 million of general and administrative 

                                     12

<PAGE>

expenses incurred by Itronix. The Company anticipates consolidated general 
and administrative expenses to decrease throughout the remainder of fiscal 
1998 from fiscal 1997 levels as a result of its continued realization of the 
aforementioned expense reductions.


Income Taxes

1998 vs. 1997


<TABLE>
<CAPTION>

                          Quarter ended June 30,        Increase
                          ----------------------   --------------------
                            1997          1996     Dollar    Percentage
                          --------      --------   ------    ----------
                                   (in thousands)
<S>                       <C>           <C>        <C>        <C>

Income Taxes:
  Provision (benefit) 
    for income taxes . .  $ 1,252       $(4,797)   $ 6,049         N.M.

</TABLE>

The Company's consolidated effective income tax rate was 44% in the first 
quarter of fiscal 1998 and 50% in the first quarter of fiscal 1997.  The 
consolidated effective income tax rate for the first quarter of fiscal 1998 
reflects income before taxes multiplied by the United States federal 
statutory tax rate. The tax rate was increased by nondeductible goodwill 
amortization, international tax rate differentials and subsidiaries' net 
operating loss benefits not currently utilized. The effective income tax rate 
was decreased by the favorable tax treatment of the Company's foreign sales 
corporation.  No benefit was recorded for increasing research and development 
expenditures during the first quarter of fiscal 1998 due to the expiration of 
the credit for research and development expenditures at June 1, 1997.  There 
were no other significant tax law changes during the first quarter of fiscal 
1998 that had a significant effect on the calculation of the Company's income 
tax liability.

The consolidated effective income tax rate for the first quarter of fiscal 
1997 reflects income before taxes increased by nondeductible goodwill 
amortization, the sum of which was multiplied by the United States federal 
statutory tax rate and increased by international tax rate differentials and 
subsidiaries' net operating loss benefits not currently utilized.  These 
increases in the consolidated effective income tax rate were partially offset 
by the favorable tax treatment of the Company's foreign sales corporation.

FINANCIAL CONDITION

Liquidity

1998 vs. 1997

<TABLE>
<CAPTION>

                                                                  Dollar
                                June 30,        March 31,        Increase
                                  1997            1997          (Decrease)
                                --------        ---------       ----------
                                       (in thousands except ratios)
<S>                             <C>             <C>              <C>
Cash and cash equivalents . .   $ 31,302        $  45,386        $ (14,084)
Accounts and notes 
  receivable  . . . . . . . .    121,980          128,271           (6,291)
Inventories   . . . . . . . .     85,814           84,499            1,315
Other   . . . . . . . . . . .     12,092           11,956              136
                               ---------        ---------        ---------
Total current assets  . . . .  $ 251,188        $ 270,112        $ (18,924)
                               ---------        ---------        ---------
                               ---------        ---------        ---------

Notes payable   . . . . . . .  $      --        $      50        $     (50)
Accounts payable  . . . . . .     35,206           47,917          (12,711)
Income taxes payable  . . . .      3,392            3,077              315
Accrued liabilities . . . . .     41,241           49,000           (7,759)
Other . . . . . . . . . . . .      1,015            1,010                5
                               ---------        ---------        ---------
Total current liabilities . .  $  80,854        $ 101,054        $ (20,200)
                               ---------        ---------        ---------
                               ---------        ---------        ---------

Working capital (current 
  assets less current 
  liabilities) . . . . . . .   $ 170,334        $ 169,058        $   1,276
                               ---------        ---------        ---------
                               ---------        ---------        ---------
Current ratio (current assets 
  divided by current 
  liabilities) . . . . . . .         3.1              2.7

</TABLE>


The increase in the Company's working capital at June 30, 1997, from
March 31, 1997, was due primarily to the decreases in accounts payable
and accrued liabilities, which

                                      13

<PAGE>

were partially offset by a decrease in cash, as detailed in the preceding 
table. The decreases in accounts payable and accrued liabilities as well as 
the corresponding decrease in cash at June 30, 1997, from amounts recorded at 
March 31, 1997, was due primarily to increased payments to vendors during the 
first quarter of fiscal 1998.  Consolidated days sales outstanding increased 
to 92 days at June 30, 1997, from 88 days at March 31, 1997.

The Company believes its existing resources, including available cash and 
cash equivalents, internally generated funds and bank credit facilities will 
be sufficient to meet working capital requirements for the next twelve months.

Cash Flows from Operations

1998 vs. 1997

<TABLE>
<CAPTION>
                                                            Dollar
                                                           Increase
                                Quarter ended June 30,        in
                                ----------------------     Cash Flow
                                  1997          1996        Impact
                                --------      --------     ---------
                                         (in thousands)
<S>                             <C>          <C>          <C> 

Cash Flows from Operations:
  Net income (loss) . . . .     $ 1,594      $ (4,797)       $ 6,391
  Depreciation and 
    amortization  . . . . .       6,001         6,997           (996)
  Deferred income taxes . .         210        (1,026)         1,236
  Accounts and notes 
    receivable . . . . . . .      4,528        11,558         (7,030)
  Inventories  . . . . . . .     (3,862)        1,192         (5,054)
  Prepaid expenses and 
    other  . . . . . . . . .       (146)        1,266         (1,412)
  Accounts payable and 
    accrued liabilities  . .    (19,133)      (35,779)        16,646
  Other  . . . . . . . . . .      2,299         3,908         (1,609)
                                --------     ---------      ---------
  Net cash used in 
    operating activities . .    $(8,509)     $(16,681)      $  8,172
                                --------     ---------      ---------
                                --------     ---------      ---------

</TABLE>

The Company's first quarter of fiscal 1998 cash flows from operations were 
positively impacted by the increase in net earnings, the change in the cash 
flow impact of accounts payable and accrued liabilities and the change in the 
cash flow impact of the non-cash provision for deferred income taxes, as 
detailed in the preceding table. These positive cash flow impacts were 
partially offset by the change in the cash flow impact of accounts and notes 
receivable, inventories, prepaid expenses and other, the non-cash charge for 
depreciation and amortization, and other operating items, as detailed in the 
preceding table.

Investing Activities

1998 vs. 1997

<TABLE>
<CAPTION>

                                                                 Dollar
                                                                Increase
                                     Quarter ended June 30,        in
                                     ----------------------     Cash Flow
                                       1997         1996         Impact
                                     --------     --------      ---------
                                              (in thousands)
<S>                                  <C>          <C>          <C> 

Cash Flows from Investing 
 Activities:
   Additions to property and 
     equipment . . . . . . . . .     $ (4,208)    $ (5,012)      $    804
  Software investments . . . . .       (1,290)      (1,714)           424
  Proceeds from sale of assets .          866          150            716
  Purchase of non-marketable 
     investments . . . . . . . .           --         (400)           400
  Additions to long-term notes 
     receivable  . . . . . . . .           --         (100)           100
                                     --------     --------       --------
  Net cash used in investing 
     activities  . . . . . . . .     $ (4,632)    $ (7,076)      $  2,444
                                     --------     --------       --------
                                     --------     --------       --------
</TABLE>

The increase in the Company's cash flows from investing activities in
the first quarter of fiscal 1998 from first quarter fiscal 1997 levels
was due to the decrease

                                     14

<PAGE>

in additions to property and equipment and software investments, the proceeds 
from the sale-leaseback of certain office computer equipment, the absence of 
non-marketable investment purchases and the absence of additions to long-term 
notes receivable, as detailed in the preceding table.

Effective April 1, 1996, the Company sold the assets of certain retail 
application software operations, with net assets of approximately $5.0 
million to a third-party for approximately $.2 million in cash and $7.0 
million in secured promissory notes, including interest. In addition to the 
proceeds from the sale, the Company also entered into a software license 
agreement with the third-party purchaser. The agreement provides for the 
Company to receive, over the next five years, license fees amounting to 20% 
of the revenue generated by the purchased software, with minimum required 
payments aggregating $6.6 million. The $7.0 million in promissory notes 
received in connection with the divestiture have been excluded from the 
accompanying consolidated statement of cash flows as a non-cash transaction.

Financing Activities

1998 vs. 1997

<TABLE>
<CAPTION>

                                                                       Dollar
                                                                      Increase
                                                                     (Decrease)
                                           Quarter ended June 30,        in
                                           ----------------------     Cash Flow
                                             1997        1996          Impact
                                             ----        ----        ----------
                                                    (in thousands)
<S>                                        <C>          <C>          <C>

Cash Flows from Financing Activities:
  Notes payable, net . . . . . . .  . . .  $   (50)     $ 7,804       $(7,854)
  Purchase of treasury stock  . . . . . .   (3,256)      (1,051)       (2,205)
  Proceeds from exercise of stock 
    options  . . . . . . . . . . . . . . .   2,563          490         2,073
  Other  . . . . . . . . . . . . . . . . .    (157)        (384)          227
                                           -------      -------       -------
  Net cash (used in) provided by 
    financing activities . . . . . . . . . $  (900)     $ 6,859       $(7,759)
                                           -------      -------       -------
                                           -------      -------       -------
</TABLE>

The decrease in the Company's first quarter fiscal 1998 cash flows from 
financing activities from first quarter fiscal 1997 levels was due primarily 
to the cash flow impact of the decrease in borrowings against the Company's 
credit facilities through the use of proceeds from the sale of Itronix to pay 
down amounts outstanding during fiscal 1997 and the Company's repurchase of 
an additional 215,700 shares of common stock during the first quarter of 
fiscal 1998 under its open market repurchase program, as detailed in the 
preceding table. These negative cash flow impacts were partially offset by 
the increase in proceeds from the exercise of stock options, as detailed in 
the preceding table.  The increase in proceeds from stock option exercises 
reflects increased exercise activity by optionees in response to the increase 
in market price of the Company's common stock.

OTHER TRANSACTIONS

During the first quarter of fiscal 1998, the Company repurchased 215,700
shares of its common stock, at a weighted average price of $15.09 per
share, pursuant to its open market repurchase program.  Additionally,
the Company re-issued 179,290 shares of treasury stock to satisfy the
stock options exercised under the Company's stock option plans during
the first quarter of fiscal 1998.

The Company also repurchased during the first quarter of fiscal 1998 80,000 
shares of voting common stock of its Metanetics Corporation 
("Metanetics") subsidiary at a price of $1.04 per share from 
former key employees, increasing the Company's interest in Metanetics to 51%.

SUBSEQUENT TRANSACTIONS AND EVENTS

Subsequent to June 30, 1997, the Company re-issued 36,140 shares of
treasury stock to satisfy purchases made by employees through the Telxon
Corporation 1995 Employee Stock Purchase Plan.  Additionally, the
Company re-issued 60,763 shares of treasury

                                    15

<PAGE>

stock in July 1997 to satisfy stock options exercised under the Company's 
stock option plans.

Also subsequent to June 30, 1997, the Company extended to August 4, 1998, the 
$20.0 million in bank credit which it maintains under its business purpose 
revolving promissory note in addition to its ongoing $100.0 million credit 
agreement.

NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS

During June 1997, 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 nonowners sources, in  
the basic financial statements. The Company is required to adopt the provisions 
of SFAS No. 130 for the fiscal year ending March 31, 1999, beginning with the 
quarter ended June 30, 1998, and redisplay any prior period financial 
statements included for comparative purposes to reflect the application of 
SFAS No. 130. As the adoption of this pronouncement will only modify 
disclosures, there will be no effect on the Company's consolidated financial 
position or results of operations or cash flows.

Also during June 1997, 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 is required to 
adopt the provisions of SFAS No. 131 for the fiscal year ending March 31, 
1999, and restate any prior period financial statements included for 
comparative purposes to reflect the application of SFAS No. 131. As the 
adoption of this pronouncement will only modify disclosures, 
there will be no effect on the Company's consolidated financial position or 
results of operations or cash flows.





                                     16


<PAGE>

ITEM 1.  LEGAL PROCEEDINGS

See Note 6 to the consolidated financial statements included in Part I
of this Quarterly Report on Form 10-Q for a discussion of the material
pending legal proceedings to which the Company is a party, which
footnote discussion is incorporated in this Part II by this reference.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
    
    (a)  Exhibits required by Item 601 of Regulation S-K:

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

         3.1  Restated Certificate of Incorporation of Registrant,
              incorporated herein by reference to Exhibit No. 3.1 to
              Registrant's Form 10-K for the year ended March 31, 1993.

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

         4.1  Portions of the Restated Certificate of Incorporation of
              Registrant pertaining to the rights of holders of
              Registrant's Common Stock, par value $.01 per share,
              incorporated herein by reference to Exhibit 3.1 to
              Registrant's Form 10-K for the year ended March 31, 1993.

         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.

                                   17

<PAGE>

              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, effective July 1, 1993,
                     incorporated herein by reference to Exhibit
                     10.1.1 to Registrant's Form 10-K for the year
                     ended March 31, 1994.

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

                     10.1.1.b  Amendment, dated April 1, 1994, to
                               the Plan included as Exhibit 10.1.1 above,

                                    18

<PAGE>

                                  incorporated herein by reference to
                                  Exhibit 10.1.1.b to Registrant's Form 10-K
                                  for the year ended March 31, 1994.

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

              10.1.2    1990 Stock Option Plan for employees of
                        Registrant, as amended, incorporated herein by
                        reference to Exhibit 10.1.3 to Registrant's
                        Form 10-Q for the quarter ended September 30,
                        1995.

              10.1.3    1990 Stock Option Plan for Non-Employee
                        Directors of Registrant, as amended,
                        incorporated herein by reference to Exhibit
                        10.1.4 to Registrant's Form 10-Q for the
                        quarter ended September 30, 1995.

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

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

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

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

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

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

              10.1.7    1996 Stock Option Plan for employees,
                        directors and advisors of Aironet Wireless
                        Communications, Inc., a subsidiary of
                        Registrant, incorporated herein by

                                     19

<PAGE>

                        reference to Exhibit 10.1.7 to Registrant's Form 10-K
                        for the year ended March 31, 1997.

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

              10.1.9    Description of terms of employment of
                        Frank E. Brick with Registrant for the three
                        fiscal years ending March 31, 2000, filed
                        herewith.

              10.1.10   Employment Agreement between Registrant and
                        Leonard D. Abeita, 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, 1997.

              10.1.11   Employment Agreement between Registrant and
                        James G. Cleveland, effective as of April 1,
                        1997, incorporated herein by reference to
                        Exhibit 10.1.11 to Registrant's Form 10-K for
                        the year ended March 31, 1997.

              10.1.12   Employment Agreement between Registrant and
                        Kenneth W. Haver, effective as of April 1,
                        1997, incorporated herein by reference to
                        Exhibit 10.1.12 to Registrant's Form 10-K for
                        the year ended March 31, 1997.

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

              10.1.14   Employment Agreement between Registrant and
                        David W. Porter, 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, 1997.

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

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

     10.2     Material Leases of Registrant.

              10.2.1    Lease between Registrant and 3330 W.
                        Market Properties, dated as of December 30,
                        1986, incorporated herein by reference to
                        Exhibit 10.2.1

                                      20

<PAGE>

                        to Registrant's Form 10-K for
                        the year ended March 31, 1994.

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

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

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

                        10.2.2.c  Fourth Addendum, dated as of April
                                  16, 1996, to the Lease included as Exhibit
                                  10.2.2 above, filed herewith.

                        10.2.2.d  Fifth Addendum, dated as of June 24,
                                  1997, to the Lease included as Exhibit
                                  10.2.2 above, filed herewith.

         10.3 Credit Agreements of Registrant.

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

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

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

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

                                       21

<PAGE>

              10.3.2    Business Purpose Revolving Promissory Note made
                        by Registrant in favor of Bank One, Akron, N.A.,
                        dated September 8, 1995, and related Letter
                        Agreement between them of even date, incorporated
                        herein by reference to Exhibit 10.3.2 to
                        Registrant's Form 10-Q for the quarter ended
                        September 30, 1995.

              10.3.3    Business Purpose Revolving Promissory Note
                        made by Registrant in favor of Bank One, Akron,
                        N.A., dated November 24, 1995, and related
                        Letter Agreement between them dated November
                        22, 1995, incorporated herein by reference to
                        Exhibit 10.3.3 to Registrant's Form 10-Q for
                        the quarter ended December 31, 1995.

              10.3.4    Business Purpose Revolving Promissory Note
                        made by Registrant in favor of Bank One, Akron,
                        N.A., dated January 31, 1996, and related
                        Letter Agreement between them dated of even
                        date, incorporated herein by reference to
                        Exhibit 10.3.4 to Registrant's Form 10-Q for
                        the quarter ended December 31, 1995.

              10.3.5    Business Purpose Revolving Promissory Note
                        made by Registrant in favor of Bank One, Akron,
                        N.A., dated February 29, 1996, and related
                        Letter Agreement between them dated of even
                        date, incorporated herein by reference to
                        Exhibit 10.3.6 to Registrant's Form 10-K for
                        the year ended March 31, 1996.

              10.3.6    Business Purpose Revolving Promissory Note
                        (Swing Line) made by Registrant in favor of
                        Bank One, Akron, N.A., dated March 20, 1996,
                        incorporated herein by reference to Exhibit
                        10.3.7 to Registrant's Form 10-K for the year
                        ended March 31, 1996.

              10.3.7    Business Purpose Revolving Promissory Note
                        (Swing Line) made by Registrant in favor of
                        Bank One, Akron, NA, dated August 6, 1996 (in
                        replacement of the Note included as Exhibit
                        10.3.6 above), incorporated herein by reference
                        to Exhibit 10.3.8 to Registrant's Form 8-K
                        dated August 16, 1996.

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

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

         10.4 Amended and Restated Agreement between Registrant and
              Symbol Technologies, Inc., dated as of September 30,
              1992, incorporated herein by reference to Exhibit 10.4 to
              Registrant's Form 10-K for the year ended March 31, 1993.

                                      22

<PAGE>

         10.5 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.

         10.6 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.

         10.7 Shareholder Agreement by and among New Meta Licensing
              Corporation, a subsidiary of Registrant, and its
              Shareholders, including the officers of Registrant party
              to the Agreement included as Exhibit 10.6 above, dated as
              of September 29, 1995, incorporated herein by reference
              to Exhibit 10.9 to Registrant's Form 10-Q for the quarter
              ended September 30, 1995.

              10.7.1    First Amendment, dated as of September 29,
                        1995, to the Agreement included as Exhibit 10.7
                        above, incorporated herein by reference to
                        Exhibit 10.9.1 to Registrant's Form 10-Q for
                        the quarter ended December 31, 1995.

              10.7.2    Second Amendment, dated as of January,
                        1996, to the Agreement included as Exhibit 10.7
                        above, incorporated herein by reference to
                        Exhibit 10.9.2 to Registrant's Form 10-Q for
                        the quarter ended December 31, 1995.

              10.7.3    Amended and Restated Shareholder Agreement
                        by and among Metanetics Corporation (fka New
                        Meta Licensing Corporation) and its
                        Shareholders, dated as of March 28, 1996,
                        superseding the Agreement included as Exhibit
                        10.7 above, as amended by the First and Second
                        Amendments thereto included as Exhibits 10.7.1
                        and 10.7.2 above, incorporated herein by
                        reference to Exhibit 10.9.3 to Registrant's
                        Form 10-K for the year ended March 31, 1996.

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

         10.8 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.

         10.9 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.

                                     23

<PAGE>

        10.10 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.

         11.  Computation of earnings per share for the three months 
              ended June 30, 1997 and 1996, filed herewith.

         27.  Financial Data Schedule as of June 30, 1997, filed
              herewith.

    (b)  Reports on Form 8-K

    Registrant did not file any Current Reports on Form 8-K during the
    fiscal quarter for which this Quarterly Report on Form 10-Q is
    filed.




















                                    24

<PAGE>

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

    Date: August 14, 1997





                                     TELXON CORPORATION  
                                     ---------------------------
                                     (Registrant)



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











<PAGE>

                               TELXON CORPORATION
                                        
                                   EXHIBITS TO
                                        
                                    FORM 10-Q
                                        
                       FOR THE QUARTER ENDED JUNE 30, 1997
                                        

















<PAGE>
                                 INDEX TO EXHIBITS

<TABLE>
<CAPTION>

Where
Filed
-----
<S>            <C>      <C>

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

 *              3.1      Restated Certificate of Incorporation of Registrant,
                         incorporated herein by reference to Exhibit No. 3.1 to
                         Registrant's Form 10-K for the year ended March 31, 1993.

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

 *              4.1      Portions of the Restated Certificate of Incorporation of
                         Registrant pertaining to the rights of holders of
                         Registrant's Common Stock, par value $.01 per share,
                         incorporated herein by reference to Exhibit 3.1 to
                         Registrant's Form 10-K for the year ended March 31, 1993.

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

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

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

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

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

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

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

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

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

                10.1     Compensation and Benefits Plans of Registrant.

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

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

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

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

 *                       10.1.2    1990 Stock Option Plan for employees of
                                   Registrant, as amended, incorporated herein by
                                   reference to Exhibit 10.1.3 to Registrant's Form
                                   10-Q for the quarter ended September 30, 1995.

 *                       10.1.3    1990 Stock Option Plan for Non-Employee
                                   Directors of  Registrant, as amended, incorporated
                                   herein by reference to Exhibit 10.1.4 to
                                   Registrant's Form 10-Q for the quarter ended
                                   September 30, 1995.

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


<PAGE>

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

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

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

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

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

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

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

 **                      10.1.9    Description of terms of employment of Frank
                                   E. Brick with Registrant for the three fiscal
                                   years ending March 31, 2000, filed herewith.

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

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

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

 *                       10.1.14   Employment Agreement between Registrant and
                                   David W. Porter, 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, 1997.

<PAGE>

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

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

                10.2     Material Leases of Registrant.

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

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

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

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

 **                                10.2.2.c  Fourth Addendum, dated as of April 16,
                                             1996, to the Lease included as Exhibit
                                             10.2.2 above, filed herewith.

 **                                10.2.2.d  Fifth Addendum, dated as of June 24,
                                             1997, to the Lease included as Exhibit
                                             10.2.2 above, filed herewith.

                10.3     Credit Agreements of Registrant.

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

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

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

<PAGE>

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

 *                       10.3.2    Business Purpose Revolving Promissory Note
                                   made by  Registrant in favor of Bank One, Akron,
                                   N.A., dated  September 8, 1995, and related Letter
                                   Agreement between them of even date, incorporated
                                   herein by reference to Exhibit 10.3.2 to
                                   Registrant's Form 10-Q for the quarter ended
                                   September 30, 1995.

 *                       10.3.3    Business Purpose Revolving Promissory Note
                                   made by Registrant in favor of Bank One, Akron,
                                   N.A., dated November 24, 1995, and related Letter
                                   Agreement between them dated November 22, 1995,
                                   incorporated herein by reference to Exhibit 10.3.3
                                   to Registrant's Form 10-Q for the quarter ended
                                   December 31, 1995.

 *                       10.3.4    Business Purpose Revolving Promissory Note
                                   made by Registrant in favor of Bank One, Akron,
                                   N.A., dated January 31, 1996, and related Letter
                                   Agreement between them dated of even date,
                                   incorporated herein by reference to Exhibit 10.3.4
                                   to Registrant's Form 10-Q for the quarter ended
                                   December 31, 1995.

 *                       10.3.5    Business Purpose Revolving Promissory Note
                                   made by Registrant in favor of Bank One, Akron,
                                   N.A., dated February 29, 1996, and related Letter
                                   Agreement between them dated of even date,
                                   incorporated herein by reference to Exhibit 10.3.6
                                   to Registrant's Form 10-K for the year ended March
                                   31, 1996.

 *                       10.3.6    Business Purpose Revolving Promissory Note
                                   (Swing Line) made by Registrant in favor of Bank
                                   One, Akron, N.A., dated March 20, 1996,
                                   incorporated herein by reference to Exhibit 10.3.7
                                   to Registrant's Form 10-K for the year ended March
                                   31, 1996.

 *                       10.3.7    Business Purpose Revolving Promissory Note
                                   (Swing Line) made by Registrant in favor of Bank
                                   One, Akron, NA, dated August 6, 1996 (in
                                   replacement of the Note included as Exhibit 10.3.6
                                   above), incorporated herein by reference to
                                   Exhibit 10.3.8 to Registrant's Form 8-K dated
                                   August 16, 1996.

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

 **                      10.3.8    Business Purpose Revolving Promissory Note
                                   (Swing Line) made by Registrant in favor of Bank
                                   One, NA (fka Bank One, Akron, NA), dated August 5,
                                   1997 (extending the credit facility evidenced by
                                   the Note included as Exhibit 10.3.7 above), filed
                                   herewith.

 *              10.4     Amended and Restated Agreement between Registrant and
                         Symbol Technologies, Inc., dated as of September 30, 1992,
                         incorporated herein by reference to Exhibit 10.4 to
                         Registrant's Form 10-K for the year ended March 31, 1993.

 *              10.5     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.
 
 *              10.6     Subscription Agreement by and among New Meta Licensing
                         Corporation, a subsidiary of Registrant, and certain
                         officers of Registrant as Purchasers,

<PAGE>

                         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.

 *              10.7     Shareholder Agreement by and among New Meta Licensing
                         Corporation, a subsidiary of Registrant, and its
                         Shareholders, including the officers of Registrant party to
                         the Agreement included as Exhibit 10.6 above, dated as of
                         September 29, 1995, incorporated herein by reference to
                         Exhibit 10.9 to Registrant's Form 10-Q for the quarter ended
                         September 30, 1995.

 *                       10.7.1    First Amendment, dated as of September 29,
                                   1995, to the Agreement included as Exhibit 10.7
                                   above, incorporated herein by reference to Exhibit
                                   10.9.1 to Registrant's Form 10-Q for the quarter
                                   ended December 31, 1995.

 *                       10.7.2    Second Amendment, dated as of January, 1996,
                                   to the Agreement included as Exhibit 10.7 above,
                                   incorporated herein by reference to Exhibit 10.9.2
                                   to Registrant's Form 10-Q for the quarter ended
                                   December 31, 1995.

 *                       10.7.3    Amended and Restated Shareholder Agreement by
                                   and among Metanetics Corporation (fka New Meta
                                   Licensing Corporation) and its Shareholders, dated
                                   as of March 28, 1996, superseding the Agreement
                                   included as Exhibit 10.7 above, as amended by the
                                   First and Second Amendments thereto included as
                                   Exhibits 10.7.1 and 10.7.2 above, incorporated 
                                   herein by reference to Exhibit 10.9.3 to
                                   Registrant's Form 10-K for the year ended March
                                   31, 1996.

 *                       10.7.4    First Amendment, dated as of March 30, 1996,
                                   to the Agreement included as Exhibit 10.7.3 above,
                                   incorporated herein by reference to Exhibit 10.9.4
                                   to Registrant's Form 10-K for the year ended March
                                   31, 1996

 *              10.8     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.

 *              10.9     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.

 *              10.10    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.

 **             11.      Computation of earnings per share for the three months
                         ended June 30, 1997 and 1996, filed herewith.
                  
 **             27.      Financial Data Schedule as of June 30, 1997, filed herewith.
                                        
----------
</TABLE>
 *             Previously filed

 **            Filed herewith