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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                                       OR

[_]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO ______

                        Commission File Number 000-29053

                       TELAXIS COMMUNICATIONS CORPORATION
             (Exact name of registrant as specified in its charter)

         MASSACHUSETTS                                     04-2751645
 (State or other jurisdiction of                       (I.R.S. Employer
  incorporation or organization)                      Identification No.)

                            20 INDUSTRIAL DRIVE EAST
                            SOUTH DEERFIELD, MA 01373
                    (Address of principal executive offices)

                                 (413) 665-8551
              (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 [ ]

         As  of  October  31,  2000,   there  were  16,670,559   shares  of  the
registrant's common stock outstanding.

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


<PAGE>



                                      INDEX
<TABLE>
<CAPTION>

                                                                                           PAGE NO.
                                                                                      ----------------
<S>          <C>                                                                             <C>
    PART I.  FINANCIAL INFORMATION

    Item 1.            Index to Financial Statements...............................          2

                       Balance Sheets as of September 30, 2000 and December 31,              3
                         1999......................................................

                       Statements of Operations and Comprehensive Loss for the               4
                         three months and nine months ended September 30, 2000 and
                         1999......................................................

                       Statement of Changes in Stockholders' (Deficit) Equity for
                         the nine months ended September 30, 2000..................          5

                       Statements of Cash Flows for the nine months ended
                         September 30, 2000 and 1999...............................          6

                       Notes to Financial Statements...............................          7

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

    Item 3.        Quantitative and Qualitative Disclosures About Market Risk......         15

    PART II. OTHER INFORMATION

    Item 1.        Legal Proceedings...............................................         16

    Item 2.        Changes in Securities and Use of Proceeds.......................         16

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

    SIGNATURES                                                                              17

</TABLE>

<PAGE>


                         PART I - FINANCIAL INFORMATION

         This Quarterly Report on Form 10-Q contains forward-looking  statements
as  defined  by  federal   securities  laws.   Forward-looking   statements  are
predictions  that  relate to future  events or our  future  performance  and are
subject  to known  and  unknown  risks,  uncertainties,  assumptions,  and other
factors that may cause actual results, outcomes, levels of activity, performance
or  achievements to be materially  different from any future results,  outcomes,
levels of  activity,  performance  or  achievements  expressed,  anticipated  or
implied by these forward-looking  statements.  Forward-looking statements should
be read in light of the cautionary statements and important factors described in
this Form 10-Q, including Part I, Item 2.-- Management's Discussion and Analysis
of   Financial   Condition   and   Results  of   Operations,   Safe  Harbor  for
Forward-Looking  Statements.  We undertake no obligation to update or revise any
forward-looking  statement to reflect events,  circumstances  or new information
after the date of this Form 10-Q or to reflect the  occurrence of  unanticipated
events.

Item 1.  Financial Statements and Supplementary Data.

                          INDEX TO FINANCIAL STATEMENTS

                                                                          Page
                                                                        --------
Balance Sheets.....................................................        3
Statements of Operations and Comprehensive Loss....................        4
Statement of Changes in Stockholders' (Deficit) Equity.............        5
Statements of Cash Flows...........................................        6
Notes to Financial Statements .....................................        7


                                       2
<PAGE>

                       TELAXIS COMMUNICATIONS CORPORATION
                                 BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                                         Pro Forma
                                                                                         December 31,   December 31,  September 30,
                                                                                             1999          1999           2000
                                                                                        --------------------------------------------
                                                                                                        (unaudited)   (unaudited)
  Assets

  Current assets
<S>                                                                                     <C>            <C>           <C>
       Cash and cash equivalents....................................................... $       6,603  $       6,603 $       24,002
       Marketable securities...........................................................            --             --         22,591
       Trade accounts receivable, less allowance for doubtful accounts ($57
         in 1999 and $100 in 2000).....................................................         2,900          2,900          6,300
       Other accounts receivable.......................................................            --             --            302
       Inventories.....................................................................         7,101          7,101         19,757
       Net assets to be disposed of....................................................         1,954          1,954             --
       Other current assets............................................................           170            170            877
                                                                                        --------------------------------------------

           Total current assets........................................................        18,728         18,728         73,829
       Property, plant and equipment, net..............................................         6,444          6,444         12,766
       Intangible assets, net of accumulated amortization .............................            --             --            216
       Other assets....................................................................           125            125             85
                                                                                        --------------------------------------------

           Total assets................................................................ $      25,297  $      25,297 $       86,896
                                                                                        ============================================

  Liabilities, Redeemable Preferred Stock and Stockholders' (Deficit) Equity

  Current liabilities

       Line of credit.................................................................. $         500  $         500 $           --
       Accounts payable................................................................         4,305          4,305          5,368
       Customer prepayments............................................................           285            285            429
       Accrued expenses................................................................         2,319          2,319          2,011
       Current maturities of long-term debt............................................         1,149          1,149            648
       Current maturities of capital lease obligations.................................           982            982          1,525
                                                                                        --------------------------------------------

           Total current liabilities...................................................         9,540          9,540          9,981
  Long-term debt.......................................................................         1,578          1,578          1,311
  Capital lease obligations............................................................           807            807          2,336
                                                                                        --------------------------------------------

           Total liabilities...........................................................        11,925         11,925         13,628
                                                                                        --------------------------------------------

  Redeemable Preferred Stock

       Redeemable preferred stock, Class A, $.01 par value; $3.25 redemption value;
         authorized 0 shares (3,090,323 in 1999); issued and outstanding 0 shares               9,899             --             --
         (3,045,696 in 1999)...........................................................
       Redeemable preferred stock, Class B, $.01 par value; $3.25 redemption value;
         authorized 0 shares (789,677 in 1999); issued and outstanding 0 shares (789,677        2,566             --             --
         in 1999)......................................................................
       Redeemable preferred stock, Class D, $.01 par value; $1.80 redemption value;
         authorized 0 shares (7,200,000 in 1999); issued and outstanding 0 shares              12,960             --             --
         (7,200,000 in 1999)...........................................................
       Redeemable preferred stock, Class E, $.01 par value; $2.25 redemption value;
         authorized 0 shares (11,000,000 in 1999): issued and outstanding 0 shares             22,368             --             --
         (9,941,508 in 1999)...........................................................
                                                                                        --------------------------------------------
                                                                                               47,793             --             --
  Stockholders' (Deficit) Equity

       Preferred stock, $.01 par value; authorized 4,500,000 shares in 2000 and 1999;              --             --             --
         none issued...................................................................
       Common stock, $.01 par value; authorized 100,000,000 shares in 2000 and 1999;
         issued and outstanding 16,670,076 shares (843,872 shares in 1999).............             8            113            167
       Additional paid-in capital......................................................         1,224         48,912        124,674
       Notes receivable................................................................          (281)          (281)          (331)
       Accumulated deficit.............................................................       (35,205)       (35,205)       (51,072)
       Deferred stock compensation.....................................................          (167)          (167)          (170)
                                                                                        --------------------------------------------
           Total stockholders' (deficit) equity........................................       (34,421)        13,372         73,268
                                                                                        --------------------------------------------
           Total liabilities, redeemable preferred stock and stockholders' (deficit)
           equity...................................................................... $      25,297  $      25,297 $       86,896
                                                                                        ============================================
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>


                       TELAXIS COMMUNICATIONS CORPORATION
                 STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                               Three months ended September 30,      Nine months ended September 30,
                                             ---------------------------------------------------------------------------
                                                    1999               2000              1999               2000
                                             ---------------------------------------------------------------------------
                                                (unaudited)        (unaudited)        (unaudited)       (unaudited)
<S>                                          <C>                <C>                <C>               <C>
Sales....................................... $           2,742  $           8,095  $           5,504 $         23,142
Cost of sales...............................             2,291             10,225              5,103           25,282
                                             ---------------------------------------------------------------------------
Gross margin (loss).........................               451             (2,130)               401           (2,140)
Operating expenses
     Research and development, net..........             1,192              2,425              3,368            6,907
     Selling, general and administrative....               984              1,963              2,474            6,846
                                             ---------------------------------------------------------------------------
       Total operating expenses.............             2,176              4,388              5,842           13,753
                                             ---------------------------------------------------------------------------
Operating loss..............................            (1,725)            (6,518)            (5,441)         (15,893)
                                             ---------------------------------------------------------------------------
Other income (expense)
     Interest and other expense.............              (384)              (207)              (561)            (597)
     Interest and other income..............                30                829                 55            2,441
                                             ---------------------------------------------------------------------------
       Total other income (expense).........              (354)               622               (506)           1,844
                                             ---------------------------------------------------------------------------
Loss from continuing operations before
   income taxes.............................            (2,079)            (5,896)            (5,947)         (14,049)
Income tax benefit..........................                --                 --                 --               --
                                             ---------------------------------------------------------------------------
Loss from continuing operations.............            (2,079)            (5,896)            (5,947)         (14,049)
                                             ---------------------------------------------------------------------------
Discontinued operations:
Income (loss) from operations of MMWP
   segment, net of taxes....................              (109)                --                258               --
Income (loss) on disposition of MMWP
   segment..................................                --                534             (1,900)           1,030
Stock compensation cost on disposition of
   MMWP segment.............................                --                 --                 --           (2,848)
                                             ---------------------------------------------------------------------------
Income (loss) from discontinued operations..              (109)               534             (1,642)          (1,818)
                                             ---------------------------------------------------------------------------
Net loss and comprehensive loss............. $          (2,188) $          (5,362) $          (7,589) $       (15,867)
                                             ===========================================================================

Basic and diluted earnings (loss) per share from:

     Continuing operations.................. $           (3.44) $           (0.36) $          (11.14) $        (0.99)
                                             ===========================================================================

     Discontinued operations................ $           (0.18) $             .03  $           (3.07) $        (0.13)
                                             ===========================================================================

     Net loss............................... $           (3.62) $           (0.32) $          (14.21) $        (1.12)
                                             ===========================================================================

Shares used in computing basic and diluted
   earnings (loss) per share................               604             16,526                534           14,191
                                             ===========================================================================
</TABLE>


The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>

                       TELAXIS COMMUNICATIONS CORPORATION
             STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
                        (in thousands, except share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                             Common Stock        Additional
                                       ------------------------   Paid-in     Notes    Deferred Stock   Accumulated
                                          Shares      Amount      Capital   Receivable  Compensation      Deficit      Total
                                       -----------------------------------------------------------------------------------------
<S>                                         <C>     <C>         <C>         <C>         <C>            <C>           <C>
Balances, January 1, 2000.............      843,872 $        8  $    1,224  $     (281) $       (167)  $    (35,205) $  (34,421)
Sale of common stock..................    4,600,000         46      78,154          --            --             --      78,200
Exercise of common stock options......      505,004          5         717         (50)           --             --         672
Exercise of common stock warrants.....      232,795          3          68          --            --             --          71
Amortization of deferred stock
   compensation.......................           --         --          --          --            42             --          42
Offering costs........................           --         --      (6,330)         --            --             --      (6,330)
Stock compensation costs..............           --         --         305          --           (45)            --         260
Stock compensation cost on
   discontinued operations............           --         --       2,848          --            --             --       2,848
Conversion of preferred stock.........   10,488,405        105      47,688          --            --             --      47,793
Net loss..............................           --         --          --          --            --        (15,867)    (15,867)
                                       -----------------------------------------------------------------------------------------
Balances, September 30, 2000..........   16,670,076 $      167  $  124,674  $     (331) $       (170)  $    (51,072) $   73,268
                                       =========================================================================================
</TABLE>


The accompanying notes are an integral part of these financial statements.

                                       5
<PAGE>

                       TELAXIS COMMUNICATIONS CORPORATION
                            STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                     Nine months ended
                                                                                       September 30,
                                                                                 ---------------------------
                                                                                     1999          2000
                                                                                 ------------- -------------
                                                                                 (unaudited)   (unaudited)
Cash flows from operating activities
<S>                                                                              <C>           <C>
   Net loss..................................................................... $    (7,589)  $    (15,867)
   Adjustments to reconcile net loss to net cash utilized
   by operating activities:
     Depreciation and amortization..............................................       2,072          2,518
     Loss (gain) on disposition of MMWP segment.................................       1,900         (1,020)
     Non-cash compensation expense..............................................         225          3,140
     Changes in assets and liabilities
       Accounts receivable trade................................................         229         (3,400)
       Other accounts receivable................................................          --           (302)
       Contracts in progress....................................................          23             --
       Inventories..............................................................      (3,577)       (12,656)
       Other current assets.....................................................        (149)          (743)
       Accounts payable and accrued expenses....................................       1,802          1,739
       Customer prepayments.....................................................         (10)           144
                                                                                 ------------- -------------
       Net cash utilized by operating activities................................      (5,074)       (26,447)
                                                                                 ------------- -------------

Cash flows from investing activities
   Purchase of marketable securities............................................          --        (22,591)
   Proceeds from sale of discontinued operations................................          --          1,990
   Additions to property and equipment..........................................      (1,487)        (5,425)
   (Increase) to other assets, intangibles......................................         (74)          (208)
                                                                                 ------------- -------------
       Net cash utilized by investing activities................................      (1,561)       (26,234)
                                                                                 ------------- -------------

Cash flows from financing activities
   Proceeds from note payable...................................................       2,000             --
   Net (repayment) borrowing under line of credit...............................         500           (500)
   Proceeds from long-term debt.................................................       1,420             --
   Repayments of long-term debt and capital lease obligations...................        (862)        (2,034)
   Issuance of common stock upon exercise of options and warrants...............         184            744
   Issuance of redeemable preferred stock.......................................      12,950             --
   Issuance of common stock.....................................................          --         78,200
   Stock issuance costs.........................................................         (34)        (6,330)
                                                                                 ------------- -------------
       Net cash provided  by financing activities...............................      16,158         70,080
                                                                                 ------------- -------------

Net increase in cash and cash equivalents.......................................       9,523         17,399
Cash and cash equivalents at beginning of period................................       2,635          6,603
                                                                                 ------------- -------------
Cash and cash equivalents at end of period...................................... $    12,158   $     24,002
                                                                                 ============= =============

Supplemental   disclosure  of  cash  flow  information
  Non-cash  investing  and financing activities:
     Equipment acquired under capital lease agreement........................... $       438   $      3,323
     Conversion of redeemable preferred stock...................................          --         47,793
     Issuance of preferred stock for subordinated promissory note...............       2,000             --
     Notes received for issuance of common stock................................         281             67
</TABLE>


The accompanying notes are an integral part of these financial statements.

                                       6
<PAGE>


                       TELAXIS COMMUNICATIONS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


1.   Summary of Significant Accounting Policies

     Basis of Presentation

         The  financial  information  as of September 30, 2000 and for the three
months and nine months ended  September 30, 1999 and 2000 is  unaudited.  In the
opinion  of  management,   such  interim  financial   information  includes  all
adjustments,  consisting of normal recurring  adjustments,  necessary for a fair
presentation of the results for such interim periods.  The financial  statements
do not include all the information and footnotes  required by generally accepted
accounting principles for complete financial  statements.  The statements should
be read in conjunction with the financial statements and footnotes as of and for
the year ended December 31, 1999 included in the Company's Annual Report on Form
10-K filed with the  Securities and Exchange  Commission.  The December 31, 1999
balance sheet data was derived from audited financial  statements,  but does not
include all disclosures  required by generally accepted  accounting  principles.
The results of operations  for the three months and nine months ended  September
30, 2000 are not  necessarily  indicative  of the results to be expected for any
future period.

     Unaudited Pro Forma Balance Sheet

         The outstanding  shares of the Company's  preferred stock class A, B, D
and E automatically  convert to common stock upon a public offering resulting in
gross  proceeds of at least  $15,000,000  and with an offering price of at least
$4.50 per share.  These  conversions  have been  reflected in the  unaudited pro
forma balance sheet as of December 31, 1999.

     Marketable Securities

         The Company has invested the proceeds from its initial public  offering
in accordance with its corporate cash management policy.  Marketable  securities
are  carried at cost plus  accrued  interest,  which  approximates  fair  value.
Investments are placed in instruments  with  institutions  that have "Investment
Grade"  ratings or better.  The Company's  investments  consist of municipal and
government  bonds, and commercial  paper. At September 30, 2000, the Company had
$22.6  million  invested  in  securities  with  maturities  from three to twelve
months.

     Intangible Assets

         Intangible  assets are  recorded  at cost and are  amortized  using the
straight-line method over their expected useful life, which is five years.

     Comprehensive Income

         For the three months and nine months ended September 30, 1999 and 2000,
comprehensive loss equaled net loss.

     Recent accounting pronouncements

         In March 2000,  the Financial  Accounting  Standards  Board issued FASB
Interpretation  No. 44  "Accounting  for certain  Transactions  Involving  Stock
Compensation-an   interpretation   of  APB  Opinion  No.  25"  ("FIN  44").  The
application of FIN 44 did not have a material impact on the Company's  financial
position or results of operations.

                                       7
<PAGE>

     Reclassification

         Certain prior year amounts have been reclassified to conform to current
year's presentation.

2.       Inventories

         Inventories  are stated at the lower of cost or market  and  consist of
the following (in thousands):

                                            December 31,     September 30,
                                                1999              2000
                                          ----------------  -----------------
                                                              (unaudited)
         Finished goods.................. $            95   $         1,846
         Parts and subassemblies.........           3,257            14,311
         Work-in process.................           3,749             3,600
                                          ----------------  -----------------
                                          $         7,101   $        19,757
                                          ================  =================

         The Company has  recorded  inventory  reserves of $1.8 million and $3.4
million at December 31, 1999 and September 30, 2000,  respectively,  in order to
reflect the net realizable value of the inventory. Included in cost of sales for
the nine months ended  September 30, 2000 was $1.9 million of expense related to
inventory reserves.

3.       Property, Plant and Equipment

         Property, plant and equipment consist of the following (in thousands):

                                               December 31,      September 30,
                                                  1999               2000
                                              --------------   ----------------
                                                                 (unaudited)
         Machinery and equipment............. $       9,803    $       15,233
         Furniture and fixtures..............           679               769
         Leasehold improvements..............         1,970             2,206
         Equipment under capital leases......         3,469             6,472
                                              --------------   ----------------
                                                     15,921            24,680
         Less accumulated depreciation
           and amortization.... .............        (9,477)          (11,914)
                                              --------------   ----------------
                                              $       6,444    $       12,766
                                              ==============   ================

         The net book value of equipment under capital leases was  approximately
$1,296,000  and  $4,567,000  at  December  31,  1999  and  September  30,  2000,
respectively.

         Depreciation  expense for the nine months ended  September 30, 1999 and
2000 was $1,790,000 and $2,437,000, respectively.

4.       Earnings Per Share

         Earnings  per  share  has been  computed  by  dividing  the  loss  from
continuing operations,  income (loss) from discontinued  operations and net loss
by the weighted average common shares  outstanding.  No effect has been given to
the exercise of common stock options, stock warrants, and outstanding redeemable
preferred stock, since the effect would be antidilutive on continuing operations
for all reporting periods.

                                       8
<PAGE>


<TABLE>
<CAPTION>
                                                                  Three months ended                Nine months ended
                                                                     September 30,                    September 30,
                                                                     (unaudited)                       (unaudited)
                                                          ----------------------------------  --------------------------------
                                                                1999               2000             1999             2000
                                                          ----------------   ---------------  ---------------  ---------------
<S>                                                       <C>                <C>              <C>              <C>
Historical: (in thousands, except per share amounts)
   Loss from continuing operations....................... $     (2,079)      $     (5,896)    $     (5,947)    $    (14,049)
                                                          ================   ===============  ===============  ===============

   Weighted average shares of common stock outstanding...          604             16,526              534           14,191
                                                          ================   ===============  ===============  ===============

   Basic and diluted loss per share from continuing
   operations............................................ $      (3.44)      $      (0.36)    $     (11.14)    $      (0.99)
                                                          ================   ===============  ===============  ===============

   Income (loss) from discontinued operations............ $       (109)      $        534     $     (1,642)    $     (1,818)
                                                          ================   ===============  ===============  ===============

   Weighted average shares of common stock outstanding...          604             16,526              534           14,191
                                                          ================   ===============  ===============  ===============

   Basic and diluted income (loss) per share from
    discontinued operations.............................. $      (0.18)      $       0.03     $      (3.07)    $      (0.13)
                                                          ================   ===============  ===============  ===============

   Net loss.............................................. $     (2,188)      $     (5,362)    $     (7,589)    $    (15,867)
                                                          ================   ===============  ===============  ===============

   Weighted average shares of common stock outstanding...          604             16,526              534           14,191
                                                          ================   ===============  ===============  ===============


   Basic and diluted net loss per share.................. $      (3.62)      $      (0.32)    $     (14.21)    $     (1.12)
                                                          ================   ===============  ===============  ===============
</TABLE>


5.       Discontinued Operations

         In August 1999, the Board of Directors voted and authorized  management
to dispose of the Company's  millimeter-wave  products (MMWP) business  segment.
This segment  consisted of the development  and  manufacture of  millimeter-wave
components  and  assemblies,  including  antennas  and  quasi-optical  products,
multiplexer  products,  and passive waveguide products.  On February 8, 2000 the
Company  completed  the  sale of  substantially  all of the  assets  of the MMWP
segment to Millitech LLC for approximately $3.6 million.

         Accordingly,   the  Company  has  restated  its  historical   financial
statements to present the MMWP  segment's  operating  results as a  discontinued
operation.  The  results  of the  MMWP  operations  have  been  segregated  from
continuing  operations  and reported as a separate line item in the statement of
operations and comprehensive loss.

         As a result of the sale,  the Company  received  cash  proceeds of $2.0
million and a subordinated  note for $1.2 million with interest on the principal
at 12%. The principal is payable in five equal  semi-annual  payments of $50,000
beginning on July 1, 2002 through July 1, 2004. On December 31, 2004, the entire
remaining  principal  balance of $960,000 plus accrued interest is due. Interest
is payable  semi-annually  on the first  days of  January  and July of each year
during the term of the note,  beginning  July 1,  2000.  The  Company  has fully
reserved  this  subordinated  note.  The Company  recorded in the  Statement  of
Operations  for the nine months ended  September  30, 2000,  stock  compensation
expense of $2.8 million as a result of  accelerated  vesting of incentive  stock
options for employees who left the Company and were hired by Millitech  LLC, and
a gain on disposition of approximately $1,030,000 as a result of reassessing the
net  realizable  value  of  certain  assets  and  liabilities   related  to  the
divestiture.

         The assets and  liabilities  of the MMWP  segment at December 31, 1999,
consisting primarily of accounts receivable,  inventories,  equipment,  accounts
payable and accrued expenses,  have been segregated as net assets to be disposed
of in the amount of $1,954,000 in the  accompanying  balance sheet.  The Company
has accrued liabilities of approximately  $106,000 at September 30, 2000 related
to the MMWP segment.

         Sales for the MMWP segment were $0 for the three months ended September
30, 2000  ($1,828,000 in 1999) and $770,000 for the nine months ended  September
30, 2000 ($6,517,000 in 1999).


                                       9
<PAGE>


6.       Accrued Expenses

         Accrued expenses consist of the following (in thousands):

                                                     December 31,  September 30,
                                                        1999           2000
                                                     ------------  -------------
                                                                   (unaudited)
 Accrued payroll, commissions and related expenses.. $      978    $      1,128
 Accrued warranty expense...........................        530            352
 Accrued contract costs.............................        168            140
 Accrued liabilities on discontinued operations.....        350            106
 Other accrued expenses.............................        293            285
                                                     ------------  -------------
                                                     $    2,319    $      2,011
                                                     ============  =============

7.       Lines of Credit

         In August 1999,  the Company  entered  into a revolving  line of credit
agreement with a bank. The agreement  provided for an initial borrowing of up to
$1,000,000,  which was  increased  by  $500,000  upon the  Company's  raising an
additional  $3,000,000  in  stockholders'  equity and increased by $500,000 upon
receipt of a machinery and equipment appraisal,  for a total amount available of
$2,000,000.  On June 9, 2000, the Company revised the agreement with the bank to
increase the line of credit to $5,000,000  and extend the expiration of the line
from  August  19,  2000  to  November  30,  2000.  Interest  is  payable  on the
outstanding  balance of the line at prime plus 1%.  Prime was 9.5% at  September
30, 2000. The line is  collateralized  by substantially all of the assets of the
Company.  The  agreement  requires the Company to comply with certain  covenants
including minimum working capital, tangible net worth, and revenue. At September
30, 2000, the Company was not in compliance  with the minimum  revenue  covenant
and subsequently obtained a waiver from the bank. At December 31, 1999, $500,000
was outstanding  under this line of credit. At September 30, 2000, there were no
borrowings  under this line of credit.  The Company is currently  negotiating  a
renewal of the line of credit agreement with the bank.

8.       Initial Public Offering

         On February  7, 2000 the Company  made  available  4,600,000  shares of
common stock to the general public under the terms and  conditions  contained in
an underwriting agreement dated February 1, 2000 with various underwriters.  The
initial public offering  resulted in the Company receiving  approximately  $71.1
million of net proceeds to be used primarily for general corporate purposes.

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

Overview

         We develop and supply  broadband  point-to-multipoint  wireless  access
equipment used by network service providers to deliver  integrated voice,  video
and data services to business and residential subscribers.  We sell our products
primarily to network system integrators, which include our products in broadband
wireless  systems  sold to network  service  providers.  We have  developed  two
families of broadband  point-to-multipoint wireless access products. Our modular
hubs and customer  premises  equipment can be rapidly  tailored for  competitive
site demonstrations and initial commercial  deployments.  These modular products
address a network  service  provider's  need to offer new services and enter new
markets quickly, which is often referred to as "accelerated time-to-market." Our
planar hubs and customer  premises  equipment,  based on a printed circuit board
design,  can be mass-produced  using low-cost,  highly  automated  manufacturing
techniques.  These planar products address a network service provider's need for
cost-effective deployment to many subscribers.

         We  commenced  operations  in 1982 and  have  derived  the  significant
majority  of our  sales  from our  millimeter-wave  products  business  segment.
Millimeter waves are  electromagnetic  waves having wavelengths

                                       10
<PAGE>

between one and ten millimeters.  In August 1999, we adopted a plan to focus all
of our resources on our broadband  point-to-multipoint  wireless access business
segment and to dispose of the  millimeter-wave  products segment.  We decided to
dispose  of this  segment  because  it  would  have  required  us to  reallocate
financial  and  management   resources  from  the  more   attractive   broadband
point-to-multipoint  wireless access business  segment.  The segment was sold on
February  8,  2000.  As a  result,  we  have  presented  the  operations  of the
millimeter-wave  products  segment as a discontinued  operation in our financial
statements.  The following  management's  discussion and analysis focuses on our
ongoing broadband point-to-multipoint wireless access business.

         Our  first  prototype  broadband  point-to-multipoint  wireless  access
equipment  was evaluated in a trial in 1995.  Before  receiving our first volume
order for  equipment in June 1999,  virtually  all of our  shipments of products
were for site  demonstrations  and initial commercial  deployments.  To date, we
have assembled the majority of our products in-house. In the quarter ending June
30, 2000,  C-MAC  Industries began production of some of our products for us. In
the future, we intend to continue to use third-party manufacturers to supplement
our manufacturing capacity.

         We  intend  to  increase  expenditures  in  engineering,  research  and
development,  and sales and marketing. These increases in operating expenses are
not always apparent from our historical financial statements. This spending will
support  expansion  of our  customer  diversification  and  product  development
efforts to address the  continuing  growth in the market for broadband  wireless
access equipment.

         For the  three  months  and  nine  months  ended  September  30,  2000,
approximately 96% and 94% of our sales, respectively, were to a customer located
in Canada, and 4% and 6% of our sales,  respectively,  were to customers located
in the United  States  and Korea.  For the three  months and nine  months  ended
September 30, 1999, approximately 96% and 81% of our sales,  respectively,  were
to a customer located in Canada, 2% and 17% of our sales, respectively,  were to
customers  located in the United  States,  and 2% of our sales were to customers
located in England and Korea. We expect that sales to customers  located outside
the United States will continue to be significant.

Result of Operations

         The following table provides continuing operations data as a percentage
of sales for the periods presented. The percentages may not add due to rounding.

<TABLE>
<CAPTION>
                                                            Three Months Ended          Nine Months Ended
                                                               September 30,              September 30,
                                                                (unaudited)                (unaudited)
                                                        --------------------------  ---------------------------
                                                           1999          2000          1999            2000
                                                        ------------  ------------  ------------   ------------
<S>                                                        <C>           <C>           <C>             <C>
Sales..................................................    100.0%        100.0%        100.0%          100.0%
Cost of sales..........................................     83.6         126.3          92.7           109.2
                                                        ------------  ------------  ------------   ------------

Gross margin (loss)....................................     16.4         (26.3)          7.3           (9.2)
Operating expenses
    Research and development, net......................     43.5          30.0          61.2            29.8
    Selling, general and administrative................     35.9          24.2          44.9            29.6
      Total operating expenses.........................     79.4          54.2         106.1            59.4
                                                        ------------  ------------  ------------   ------------

Operating loss.........................................    (62.9)        (80.5)        (98.9)          (68.7)
Other income (expense).................................    (12.9)          7.7          (9.2)            8.0
                                                        ------------  ------------  ------------   ------------

Loss from continuing operations before income taxes....    (75.8)        (72.8)       (108.0)          (60.7)
Income tax benefit.....................................     (0.0)         (0.0)         (0.0)           (0.0)
                                                        ------------  ------------  ------------   ------------

Loss from continuing operations........................    (75.8)%       (72.8)%      (108.0)%         (60.7)%
                                                        ============  ============  ============   ============
</TABLE>

                                       11
<PAGE>

Three Months and Nine Months Ended September 30, 1999 and 2000

     Sales

         Sales  increased  195%  to $8.1  million  for the  three  months  ended
September  30,  2000  from $2.7  million  for the same  period in 1999.  Of this
increase, approximately $5.2 million was attributable to an increase in sales of
our planar  products from $2.6 million to $7.8 million.  Sales increased 320% to
$23.1 million for the nine months ended September 30, 2000 from $5.5 million for
the same period in 1999.  Sales of our planar  products have  increased to $21.6
million for the nine months ended  September  30, 2000  compared to $4.2 million
for the same period in 1999.

     Cost of Sales

         Cost of sales  consists of component and material  costs,  direct labor
costs,  warranty  costs,  overhead  related to  manufacturing  our  products and
customer  support costs.  Cost of sales  increased $7.9 million to $10.2 million
for the three  months  ended  September  30, 2000 from $2.3 million for the same
period in 1999.  Cost of sales  increased $20.2 million to $25.3 million for the
nine months  ended  September  30, 2000 from $5.1 million for the same period in
1999. The increase in cost of sales in each comparative  period was attributable
primarily  to  increased  shipments of our products and an increase to inventory
reserves of  approximately  $1.9 million in the three months ended September 30,
2000 due to changing business requirements. Gross margins were negative 26.3% in
the three months ended  September 30, 2000 and positive 16.4% in the same period
in 1999. Gross margins were negative 9.2% and positive 7.3%,  respectively,  for
the nine months ended  September 30, 2000 and 1999.  The decline in gross margin
as a percentage of sales is primarily due to the increase to inventory  reserves
and  reductions  in average  selling  prices which  exceeded the  reductions  in
product cost in the  corresponding  period.  These  declines in average  selling
prices were driven by volume pricing for commercial  deployments as we delivered
significantly higher volumes to support customer requirements.

     Research and Development Expenses

         Research and development  expenses  consist  primarily of personnel and
related costs  associated with our product  development  efforts.  These include
costs for development  and extension of products and components,  test equipment
and related facilities. Gross research and development expenses increased 72% to
$2.6 million in the three months ended  September  30, 2000 from $1.5 million in
the same period in 1999. Gross research and development  expenses  increased 81%
to $7.4 million for the nine months ended  September  30, 2000 from $4.1 million
for the same period in 1999. The increases reflected significant  investments to
develop our products for additional frequency ranges and network interfaces.  To
support the increase in these activities, we substantially increased the size of
our research and development staff by 33% to 77 at September 30, 2000 from 58 at
September 30, 1999.  Research and  development  costs were  partially  offset by
customer  funding of $181,000 and $320,000 for the three months ended  September
30, 2000 and 1999, respectively.  Customer funding was $536,000 and $746,000 for
the nine months ended September 30, 2000 and 1999, respectively. Net of customer
reimbursements,  our research and  development  expenses  increased 103% to $2.4
million in the three months ended  September  30, 2000 from $1.2 million for the
same period in 1999. Net research and  development  costs increased 105% to $6.9
million for the nine months ended  September  30, 2000 from $3.4 million for the
same period in 1999.

     Selling, General and Administrative Expenses

         Selling,  general and  administrative  expenses  consist  primarily  of
employee salaries and associated costs for selling, marketing, customer support,
information systems,  finance, legal, and administration.  Selling,  general and
administrative expenses increased 99% to $2.0 million for the three months ended
September 30, 2000 from $984,000 for the same period in 1999.  Selling,  general
and  administrative  expenses increased 177% to $6.8 million for the nine months
ended  September  30, 2000 from $2.5 million for the same period in 1999.  These
increases  were due  primarily to an increase in  personnel in these  functional
areas to 42 at September  30, 2000 from 30 at September  30, 1999 to support the
Company's  growth  and  operation  as a public  company.  Expenses  relating  to
recruitment of additional  technical personnel increased 18% to $431,000 for the
nine months ended September 30, 2000 from $367,000 for the same period in 1999.

                                       12
<PAGE>

     Other Income (Expense)

         Other  income  (expense)  consists  of  interest  earned  on  cash  and
marketable securities offset by interest expense and miscellaneous non-operating
expenses.  Total other  income  (expense)  changed to $622,000 in income for the
three  months  ended  September  30, 2000 from  $354,000 in expense for the same
period in 1999. Total other income  (expense)  changed to $1.8 million in income
for the nine months ended  September  30, 2000 from  $506,000 in expense for the
same period in 1999.  Interest  expense for the three months ended September 30,
2000 was $177,000  lower than the same period in 1999 and $36,000 higher for the
nine months  ended  September  30, 2000  compared to the same period in 1999 due
primarily  to  additional  equipment  financing.  Interest  income  increased by
$799,000 to $829,000 for the three months ended  September 30, 2000 from $30,000
for the  same  period  in  1999.  Interest  income  increased  $2.4  million  to
approximately  $2.4  million for the nine months ended  September  30, 2000 from
$55,000 for the same period in 1999. The increases were a result of increases in
invested  cash  and  marketable  securities  subsequent  to our  initial  public
offering in February 2000.

Liquidity and Capital Resources

         We  have  financed  our  operations   primarily  through  the  sale  of
redeemable preferred stock, from cash generated by our discontinued  operations,
and from proceeds of our initial public  offering in February 2000. We have also
issued  subordinated  notes and used equipment lease financing and bank lines of
credit to  provide  cash.  Our line of credit and long term debt  agreements  in
effect at  September  30, 2000 contain  certain  financial  covenants  including
minimum working capital, tangible net worth, and revenue. We raised net proceeds
of $12.9 million in 1999 from the issuance of redeemable preferred stock.

         On February 7, 2000 the Company completed an initial public offering of
4,600,000  shares of its common  stock at $17.00  per share  under the terms and
conditions  contained in an  underwriting  agreement dated February 1, 2000 with
various underwriters.  We received net proceeds from our initial public offering
of $71.1  million,  after  underwriting  discounts and  commission  and offering
costs, to be used primarily for general corporate purposes.

         At  September  30,  2000,  we had cash and  cash  equivalents  of $24.0
million and marketable  securities of $22.6  million.  At September 30, 2000, we
had no bank borrowings under our line of credit facility. This line of credit is
collateralized by substantially all of our assets and interest is payable on the
outstanding balance at a rate of prime plus 1% (prime was 9.50% at September 30,
2000).

         The increase in accounts  receivable  from $2.9 million at December 31,
1999 to $6.3 million at September  30, 2000,  the increase in  inventories  from
$7.1 million to $19.8  million,  and the increase in accounts  payable from $4.3
million to $5.4  million  over the  comparable  period  reflects the net working
capital buildup resulting from the significant  increase in production and sales
of our broadband wireless access equipment.

         At September 30, 2000, we had  approximately  $2.0 million in long-term
debt,  of which  approximately  $253,000 is due through  September  2001 with an
interest rate of 10%, and approximately $1,761,000 is due through June 2003 with
interest rates ranging from 10% to 12%.

         At September  30, 2000,  we had  approximately  $3.9 million in capital
lease obligations, which are due through 2003.

         Cash used in operating  activities  in the nine months ended  September
30, 2000 was $26.5 million compared to $5.1 million for the same period in 1999.
For both of these  periods,  cash used in  operating  activities  has  primarily
represented  funding  of our net  losses and  inventory  build to meet  expected
future production requirements.

         Cash used in investing  activities  in the nine months ended  September
30, 2000 was $26.2 million compared to $1.6 million for the same period in 1999.
In the nine months ended September 30, 2000 these amounts  related  primarily to
purchase of equipment  and the purchase of  marketable  securities.  In the nine
months ended September

                                       13
<PAGE>

30, 1999,  these amounts related  primarily to the purchase of equipment used in
our manufacturing and research and development activities.

         Cash  provided  by  financing  activities  in  the  nine  months  ended
September  30, 2000 was $70.1  million  compared  to $16.2  million for the same
period in 1999. The financing activities for the nine months ended September 30,
2000 consisted  primarily of the proceeds from our initial public offering.  The
financing  activities  for the nine months ended  September  30, 1999  consisted
primarily of proceeds from the issuance of redeemable preferred stock.

         Our future  cash  requirements  will  depend  upon a number of factors,
including the timing and level of research and development  activities and sales
and marketing  campaigns,  and our ability to  significantly  increase our sales
orders and  manufacturing  volumes and improve our gross margin. We believe that
our cash and cash equivalent  balances will provide  sufficient  capital to fund
our operations  for at least 12 months.  Thereafter,  we may require  additional
capital  to fund our  operations.  In  addition,  from time to time we  evaluate
opportunities  to acquire  complementary  technologies  or companies.  Should we
identify any of these opportunities,  we may need to raise additional capital to
fund  the  acquisitions  and our  operations.  There  can be no  assurance  that
financing will be available to us on favorable terms or at all.

Disclosures About Market Risk

         The following  discusses our exposure to market risk related to changes
in interest  rates,  equity prices and foreign  currency  exchange  rates.  This
discussion  contains  forward-looking  statements  that are subject to risks and
uncertainties,  many of which are out of our control.  Actual results could vary
materially as a result of a number of factors,  including  those discussed above
under  "Part I -  Financial  Information"  and  below  under  "Safe  Harbor  for
Forward-Looking Statements."

         As of September  30, 2000,  we had cash and cash  equivalents  of $24.0
million.   Substantially  all  of  these  amounts  consisted  of  highly  liquid
investments  with  remaining  maturities at the date of purchase of less than 90
days. As of September 30, 2000,  we had  marketable  securities of $22.6 million
which  consisted of municipal and  government  bonds and  commercial  paper with
maturities  through June 2001.  These  investments  are exposed to interest rate
risk  and  will  decrease  in  value  if  market  interest  rates  increase.   A
hypothetical  increase or decrease in market  interest  rates by 10 percent from
the  December  31,  1999 rates  would  cause the fair value of these  short-term
investments to decline by an insignificant  amount. Due to the short duration of
these  investments,  an  immediate  increase in interest  rates would not have a
material effect on our financial condition or results of operations. Declines in
interest rates over time will, however, reduce our interest income.

         We do not own any significant equity investments.  Therefore, we do not
currently have any direct equity price risk.

         Currently,  all sales to  international  customers are  denominated  in
United States dollars and, accordingly,  we are not currently exposed to foreign
currency exchange rate risks.

Safe Harbor for Forward-Looking Statements

         This Quarterly Report on Form 10-Q contains forward-looking  statements
as defined by federal securities laws which are made pursuant to the safe harbor
provisions   of  the  Private   Securities   Litigation   Reform  Act  of  1995.
Forward-looking  statements  include  statements  concerning plans,  objectives,
goals,  strategies,  expectations,  intentions,  projections,  future  events or
performance,  underlying  assumptions and other  statements which are other than
statements of historical facts. In some cases, you can identify  forward-looking
statements by terminology such as "may," "will," "should," "expects," "intends,"
"plans,"  "anticipates,"   "believes,"   "estimates,"   "predicts,"  "projects,"
"potential,"  "continue," and other similar terminology or the negative of these
terms.   From  time  to  time,  we  may  publish  or  otherwise  make  available
forward-looking statements of this nature. All such forward-looking  statements,
whether written or oral, and whether made by us or on our behalf,  are expressly
qualified by the cautionary  statements  described in this Form 10-Q,  including
those set forth below, and any other

                                       14
<PAGE>

cautionary  statements which may accompany the  forward-looking  statements.  In
addition,  we undertake no  obligation  to update or revise any  forward-looking
statement to reflect events,  circumstances or new information after the date of
this Form 10-Q or to reflect the  occurrence  of  unanticipated  events,  and we
disclaim any such obligation.

         We believe that the  forward-looking  statements  included in this Form
10-Q have a  reasonable  basis.  However,  forward-looking  statements  are only
predictions  that  relate to future  events or our  future  performance  and are
subject  to known  and  unknown  risks,  uncertainties,  assumptions,  and other
factors that may cause actual results, outcomes, levels of activity, performance
or  achievements to be materially  different from any future results,  outcomes,
levels of  activity,  performance  or  achievements  expressed,  anticipated  or
implied by these  forward-looking  statements.  As a result, we cannot guarantee
future results, outcomes, levels of activity,  performance or achievements,  and
there can be no  assurance  that our  expectations,  intentions,  anticipations,
beliefs or projections will result or be achieved or accomplished.

         In addition to other  factors and matters  discussed  elsewhere in this
Form 10-Q, some of the important  factors that, in our view,  could cause actual
results  to  differ  materially  from  those  discussed  in the  forward-looking
statements  include,  without  limitation,  dependence  on a  limited  number of
customers;  inability  to  obtain  additional  customers;  the  time  and  costs
associated  with  obtaining  additional   customers;   difficulty  in  obtaining
necessary  components and raw materials  when, at the cost and in the quantities
needed;  failure of our customers to sell broadband  wireless  access  solutions
that include our products;  manufacturing  capacity  constraints;  difficulty in
obtaining satisfactory performance from third-party manufacturers;  inability to
achieve cost reductions and technological improvements; difficulties in managing
our  expansion;  loss of key  personnel;  inability  to protect our  proprietary
technology;  probable variability in our quarterly operating results; dependence
on third parties;  changes in the market; lack of market acceptance of broadband
wireless  technology  and products;  new products and  announcements  from other
companies;  changes in technology;  and the impact of  competitive  products and
pricing. These and other risks and uncertainties are described in more detail in
our annual  report on Form 10-K for the year ended  December 31, 1999 filed with
the  Securities and Exchange  Commission  and in our other periodic  reports and
filings made from time to time with the Securities and Exchange Commission.

         The integration of the former Newbridge Networks into Alcatel continues
to be a factor  that  could  affect  our  future  results,  outcomes,  levels of
activity, performance or achievements. For the quarter ended September 30, 2000,
Alcatel accounted for 96% of our sales. Prior to the acquisition of Newbridge by
Alcatel, each company had its own business practices and procedures.  We believe
the process of integrating  the different  business  practices and procedures is
ongoing and the result will be different  practices and procedures being applied
in some areas of our relationship  with Alcatel than applied in our relationship
with  Newbridge.  For example,  Alcatel is presently  implementing  its approval
processes  relating to product  development and production,  which are different
from those that  Newbridge  employed.  Although we continue to work closely with
Alcatel  concerning  the  integration  of the different  business  practices and
procedures, we do not know all the changes that may occur or the extent to which
we might be affected by these changes. Application of new or different practices
and procedures  could result in delays in developing,  producing and/or shipping
our products which could reduce our sales,  negatively  impact our gross margin,
and increase our net loss.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

         See  Item  2  -  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations, Disclosures about Market Risk.

                                       15
<PAGE>

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

         The Company is not currently a party to any material legal proceedings.

Item 2.  Changes in Securities and Use of Proceeds.

Recent Sales of Unregistered Securities

         The Company has issued or sold the following unregistered securities in
the three months ended September 30, 2000:

         o        An  aggregate  of 135,000  shares of common stock at $1.00 per
                  share in July 2000 to an option  holder  upon the  exercise of
                  options held by that  individual and issued in connection with
                  the divestiture of a line of business by the Company in 1996.

         o        An  aggregate  of 18,824  shares of common  stock at $1.00 per
                  share in July 2000 to a warrant  holder  upon the  exercise of
                  warrants on a cashless basis  (3,398.5  shares of common stock
                  were  withheld  by the  Company as payment  for the  aggregate
                  exercise price of the warrants).

         o        An  aggregate  of 68,535  shares of common  stock at $1.00 per
                  share in July 2000 to a warrant  holder  upon the  exercise of
                  warrants on a cashless  basis  (3,465  shares of common  stock
                  were  withheld  by the  Company as payment  for the  aggregate
                  exercise price of the warrants).

         o        An  aggregate  of 18,437  shares of common  stock at $1.00 per
                  share in August 2000 to a warrant  holder upon the exercise of
                  warrants on a cashless basis  (3,785.5  shares of common stock
                  were  withheld  by the  Company as payment  for the  aggregate
                  exercise price of the warrants).

         o        An  aggregate  of 27,847  shares of common  stock at $1.00 per
                  share in August 2000 to a warrant  holder upon the exercise of
                  warrants on a cashless  basis  (2,153  shares of common  stock
                  were  withheld  by the  Company as payment  for the  aggregate
                  exercise price of the warrants).

         The foregoing  numbers relating to the Company's common stock have been
adjusted to reflect the one for two reverse  stock split which became  effective
on December 16, 1999. As a result of the reverse  stock split,  every two shares
of outstanding  preferred stock were  automatically  converted into one share of
common stock upon the closing of the initial public  offering of common stock on
February 7, 2000.

         Each of the sales described above were completed  without  registration
under the Securities  Act in reliance upon the  exemptions  contained in Section
4(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the
Securities Act for transactions not involving a public offering.

         None of the sales of the  securities  issued by the  Company  described
above have involved the use of an underwriter,  and no commissions  were paid in
connection  with  the  sale  of any  of the  securities  issued  by the  Company
described above.

Use of Proceeds from Registered Offerings

         On February 1, 2000, the Securities  and Exchange  Commission  declared
effective a Form S-1  Registration  Statement (File No.  333-87885) filed by the
Company in connection with an initial public offering of 4,600,000 shares of its
Common Stock,  par value $.01 per share.  The offering of Common Stock commenced
on February  2, 2000 and closed on  February  7, 2000 with all of the  4,600,000
shares  sold at a price of  $17.00  per share  for an

                                       16
<PAGE>


aggregate  price of $78.2  million.  All shares were sold by the Company;  there
were no selling  stockholders.  Credit Suisse First Boston was the lead managing
underwriter  of the offering and Banc of America  Securities  LLC and CIBC World
Markets Corp. were co-managers of the offering.

         The gross  proceeds of the offering were  approximately  $78.2 million.
The Company incurred  approximately  $7.1 million of expenses in connection with
the  offering,  of which  approximately  $5.5 million  represented  underwriting
discounts and commission, and $1.6 million represented offering costs, including
legal fees, accounting fees,  underwriters'  out-of-pocket expenses and printing
expenses.

         The Company received  approximately  $71.1 million of net proceeds from
the offering.  Those net proceeds will be used for general  corporate  purposes.
Pending  such  use,  the  net  proceeds  have  been   invested  in   short-term,
interest-bearing,   investment   grade   securities   or  direct  or  guaranteed
obligations of the U.S.  government.  From the time of receipt through September
30,  2000,  the Company has applied its net proceeds  from the  offering  toward
working capital,  financing capital expenditures,  and funding operating losses.
Net cash  used  from the  offering  through  September  30,  2000 for  operating
activities totaled $24.5 million.

Item 6.  Exhibits and Reports on Form 8-K.

         (a)  Exhibits

Exhibit
Number   Description
-------  -----------
10.1     Agreement  and License  between the Company and  California  Amplifier,
         Inc. dated as of August 25, 2000
10.2     Supplemental   Agreement  between  the  Company  and  Alcatel  Networks
         Corporation dated September 14, 2000*
10.3     Form of  Indemnification  Agreement  dated as of September  18, 2000, a
         substantially  similar version of which was entered between the Company
         and each of  Mssrs.  Doyle,  Fleming,  Paladino,  Norbury,  Youngblood,
         Renauld, Reynolds, and Stempel
27.1     Financial Data Schedule

----------------------
*        Certain  portions  of this  exhibit  have been  omitted  pursuant  to a
         request  for  confidential  treatment  filed  with the  Securities  and
         Exchange Commission.

         (b)      Reports on Form 8-K

         The  Company  filed no reports on Form 8-K  during  the  quarter  ended
September 30, 2000.

                                   SIGNATURES

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

                                Telaxis Communications Corporation

Date:  November 14, 2000        By: /s/ Dennis C. Stempel
                                    --------------------------------------------
                                    Dennis C. Stempel,
                                    Chief Financial Officer, Principal Financial
                                    Officer, Principal Accounting Officer and
                                    Duly Authorized Officer