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 JUNE 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 Identification No.)
incorporation  or organization)


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



  (Registrant's telephone number, including area code)  (413) 665-8551
                                                        --------------

           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 July 31, 2000, there were 16,558,322 shares of the registrant's
common stock outstanding.

<PAGE>
<TABLE>
<CAPTION>

                                      INDEX
                                      ------
                                                                                                               PAGE NO.
                                                                                                              ---------
    PART I.            FINANCIAL INFORMATION

<S>                   <C>                                                                                        <C>
    Item 1.                  Index to Financial Statements................................................       2

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

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

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

                                   Statements of Cash Flows for the six months ended June 30, 2000 and
                                     1999.................................................................       6

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

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

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

    PART II.           OTHER INFORMATION

    Item 1.                  Legal Proceedings............................................................      15

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

    Item 4.                  Submission of Matters to a Vote of Security Holders..........................      16

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

    SIGNATURES                                                                                                  17

</TABLE>

                                       1
<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,    June 30,
                                                                                              1999           1999          2000
                                                                                         -----------------------------------------
                                                                                                         (unaudited)   (unaudited)
<S>                                                                                      <C>        <C>            <C>
  Assets
  Current assets
        Cash and cash equivalents....................................................... $    6,603 $       6,603  $      33,481
        Marketable securities...........................................................         --            --         20,898
        Accounts receivable, less allowance for doubtful accounts ($57 in 1999
        and $100 in 2000)...............................................................      2,900         2,900          8,385
        Inventories.....................................................................      7,101         7,101         19,102
        Net assets to be disposed of....................................................      1,954         1,954             --
        Other current assets............................................................        170           170          2,432
                                                                                         ----------------------------------------

             Total current assets.......................................................     18,728        18,728         84,298
        Property, plant and equipment, net..............................................      6,444         6,444         12,081
        Other assets....................................................................        125           125             85
                                                                                         -----------------------------------------


             Total assets............................................................... $   25,297 $      25,297  $      96,464
                                                                                         ========================================

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

        Line of credit.................................................................. $      500 $         500  $          --
        Accounts payable................................................................      4,305         4,305          8,691
        Customer prepayments............................................................        285           285            309
        Accrued expenses................................................................      2,280         2,280          2,577
        Income taxes payable............................................................         39            39             39
        Current maturities of long-term debt............................................      1,149         1,149            789
        Current maturities of capital lease obligations.................................        982           982          1,653
                                                                                         ----------------------------------------

             Total current liabilities..................................................      9,540         9,540         14,058
  Long-term debt........................................................................      1,578         1,578          1,440
  Capital lease obligations.............................................................        807           807          2,620
                                                                                         ----------------------------------------

             Total liabilities..........................................................     11,925        11,925         18,118
                                                                                         ----------------------------------------

  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 (3,045,696 in 1999)......................................................      9,899            --             --
        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 in 1999)...............................................................      2,566            --             --
        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
        (7,200,000 in 1999).............................................................     12,960            --             --
        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 (9,941,508 in 1999)......................................................     22,368            --             --
                                                                                         ----------------------------------------
                                                                                             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 16,317,943 shares (843,872 shares in 1999).........          8           113            163
        Additional paid-in capital......................................................      1,224        48,912        124,419
        Notes receivable................................................................       (281)         (281)          (348)
        Accumulated deficit.............................................................    (35,205)      (35,205)       (45,709)
        Deferred stock compensation.....................................................       (167)         (167)          (179)
                                                                                         ----------------------------------------
             Total stockholders' (deficit) equity.......................................    (34,421)       13,372         78,346
                                                                                         ----------------------------------------
             Total liabilities, redeemable preferred stock and stockholders'
             equity..................................................................... $   25,297 $      25,297     $    96,464
                                                                                         ========================================

</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 June 30,               Six months ended June 30,
                                                     -----------------------------------------------------------------------------
                                                             1999                  2000                1999               2000
                                                     -----------------------------------------------------------------------------
                                                          (unaudited)           (unaudited)        (unaudited)         (unaudited)

<S>                                                      <C>                 <C>                <C>                 <C>
Sales..............................................      $      1,585        $   8,731          $     2,762         $  15,047
Cost of sales......................................             1,162            8,543                2,812            15,057
                                                     -----------------------------------------------------------------------------

Gross margin (loss)................................               423              188                  (50)              (10)
Operating expenses
      Research and development, net................             1,242            2,799                2,176             4,482
      Selling, general and administrative..........               800            2,756                1,490             4,882
                                                     -----------------------------------------------------------------------------

        Total operating expenses...................             2,042            5,555                3,666             9,364
                                                     -----------------------------------------------------------------------------

Operating loss.....................................            (1,619)          (5,367)              (3,716)           (9,374)
                                                     -----------------------------------------------------------------------------

Other income (expense)
      Interest and other expense...................              (109)            (203)                (177)             (390)
      Interest and other income....................                 8            1,001                   25             1,612
                                                     -----------------------------------------------------------------------------

        Total other income (expense)...............              (101)             798                 (152)            1,222
                                                     -----------------------------------------------------------------------------

Loss from continuing operations before income taxes
                                                               (1,720)          (4,569)              (3,868)           (8,152)
Income tax benefit.................................                --               --                   --                --
                                                     -----------------------------------------------------------------------------

Loss from continuing operations....................            (1,720)          (4,569)              (3,868)           (8,152)
                                                     -----------------------------------------------------------------------------

Discontinued operations:
Income from operations of MMWP segment, net of taxes                9               58                  367                58
Income (loss) on disposition of MMWP
   segment.........................................            (1,900)             438               (1,900)              438
Stock compensation cost on disposition of MMWP
   segment.........................................                --               --                   --            (2,848)
                                                     -----------------------------------------------------------------------------

Income (loss) from discontinued operations.........            (1,891)             496               (1,533)           (2,352)
                                                     -----------------------------------------------------------------------------

Net loss and comprehensive loss....................       $    (3,611)       $  (4,073)         $   (5,401)         $ (10,504)
                                                     =============================================================================

Basic and diluted earnings (loss) per share from:

      Continuing operations........................       $     (3.44)       $   (0.28)         $     (7.78)        $   (0.63)
                                                     =============================================================================

      Discontinued operations......................       $     (3.78)       $     .03          $     (3.08)        $   (0.18)

                                                     =============================================================================


      Net loss.....................................       $     (7.22)       $   (0.25)         $    (10.87)        $   (0.81)
                                                      ============================================================================

Shares used in computing basic and diluted earnings
   (loss) per share................................               500           16,283                  497            13,011
                                                     =============================================================================
</TABLE>


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


                                       4
<PAGE>

5

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


<TABLE>
<CAPTION>

                                                    Common Stock        Additional
                                              ------------------------   Paid-in       Note    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 ..........      286,514         3          460        (67)          --             --          396
Exercise of common stock warrants .........       99,152         1           70         --           --             --           71
Amortization of deferred stock compensation           --        --           --         --           33             --           33
Offering costs ............................           --        --       (6,330)        --           --             --       (6,330)
Stock compensation costs ..................           --        --          305         --           --             --          305
Stock compensation cost on discontinued
   operations .............................           --        --        2,848         --          (45)            --        2,803
Conversion of preferred stock .............   10,488,405       105       47,688         --           --             --       47,793
Net loss ..................................           --        --           --         --           --        (10,504)     (10,504)
                                              ----------    ------    ---------     ------     --------     ----------   ----------
Balances, June 30, 2000 ...................   16,317,943    $  163    $ 124,419     $ (348)    $   (179)    $  (45,709)  $   78,346
                                              ==========    ======    =========     ======     ========     ==========   ==========
</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>
                                                                                      Six months ended June 30,
                                                                                    -------------------------------
                                                                                          1999            2000
                                                                                    --------------- ---------------
                                                                                      (unaudited)     (unaudited)
<S>                                                                                     <C>            <C>
Cash flows from operating activities
   Net loss ......................................................................      $ (5,401)      $(10,504)
   Adjustments to reconcile net loss to net cash utilized by operating activities:
      Depreciation and amortization ..............................................         1,185          1,522
      Loss (gain) on disposition of MMWP segment .................................         1,900           (496)
      Non-cash compensation expense ..............................................            88          3,140
      Changes in assets and liabilities
        Accounts receivable ......................................................           625         (5,485)
        Contracts in progress ....................................................           (11)            --
        Inventories ..............................................................        (1,273)       (12,001)
        Other current assets .....................................................          (156)        (2,298)
        Accounts payable and accrued expenses ....................................          (264)         5,143
        Customer prepayments .....................................................            17             24
        Income taxes payable .....................................................             9             --
                                                                                        --------       --------
        Net cash utilized by operating activities ................................        (3,281)       (20,955)
                                                                                        --------       --------
Cash flows from investing activities
   Purchase of marketable securities .............................................            --        (20,898)
   Proceeds from sale of discontinued operations .................................            --          1,990
   Additions to property and equipment ...........................................          (708)        (3,900)
   Decrease (increase) to other assets ...........................................           (39)             8
                                                                                        --------       --------
        Net cash utilized by investing activities ................................          (747)       (22,800)
                                                                                        --------       --------

Cash flows from financing activities
   Proceeds from note payable ....................................................         1,000             --
   Repayment of line of credit ...................................................            --           (500)
   Proceeds from long-term debt ..................................................         1,416             --
   Repayments of long-term debt and capital lease obligations ....................          (624)        (1,205)
   Issuance of common stock upon exercise of options and warrants ................             6            468
   Issuance of common stock ......................................................            --         78,200
   Stock issuance costs ..........................................................            --         (6,330)
                                                                                        --------       --------
        Net cash provided  by financing activities ...............................         1,798         70,633
                                                                                        --------       --------

Net increase (decrease) in cash and cash equivalents .............................        (2,230)        26,878
Cash and cash equivalents at beginning of period .................................         2,635          6,603
                                                                                        --------       --------
Cash and cash equivalents at end of period .......................................      $    405       $ 33,481
                                                                                        ========       ========

Supplemental disclosure of cash flow information
  Non-cash investing and financing activities:
      Equipment acquired under capital lease agreement ...........................      $    125       $  3,181
      Conversion of redeemable preferred stock ...................................            --         47,793
      Notes received for issuance of common stock ................................            --             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 June 30,  2000  and for the  three
months and six months ended June 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 six months ended June 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 our  initial  public
offering in accordance  with our 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 June 30, 2000, the
Company had $16.3 million  invested in securities  with maturities from three to
twelve months,  and $4.5 million  invested with  maturities  greater than twelve
months and through June 2001.

      Comprehensive Income

           For the three  months  and six months  ended June 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").  FIN  44
clarifies the  application of APB Opinion No. 25,  including the following:  the
definition  of an employee  for  purposes  of  applying  APB Opinion No. 25; the
criteria for determining  whether a plan qualifies as a  non-compensatory  plan;
the accounting  consequence of various  modifications to the terms of previously
fixed  stock  options or awards;  and the  accounting  for an  exchange of stock
compensation  awards in a business  combination.  FIN 44 was  effective  July 1,
2000,  but certain  conclusions  in FIN 44 cover  specific  events that occurred
after either  December 15, 1998 or January 12, 2000. The Company does not expect
the application of FIN 44 to have a material  impact on the Company's  financial
position or results of operations.

                                       7

<PAGE>

      Reclassification

           Certain  prior years  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,       June 30,
                                                   1999             2000
                                               ----------------------------
                                                                 (unaudited
           Parts and subassemblies..............$  3,257       $   14,036
           Work in process......................   3,844            5,066
                                                ---------------------------
                                                $  7,101       $   19,102
                                                ===========================


3.        Property, Plant and Equipment

          Property, plant and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>

                                                                   December 31,    June 30,
                                                                       1999          2000
                                                                  ---------------------------
                                                                                  (unaudited)
<S>                                                               <C>             <C>
           Machinery and equipment............................... $   9,803       $  13,452
           Furniture and fixtures................................       679             707
           Leasehold improvements................................     1,970           2,193
           Equipment under capital leases........................     3,469           6,650
                                                                  -------------------------

                                                                     15,921          23,002
           Less accumulated depreciation and amortization........    (9,477)        (10,921)
                                                                  -------------------------
                                                                  $   6,444       $  12,081
                                                                  ==========================
</TABLE>


           The  net  book  value  of   equipment   under   capital   leases  was
approximately  $1,296,000 and $5,366,000 at December 31, 1999 and June 30, 2000,
respectively.

           Depreciation  expense for the six months ended June 30, 1999 and 2000
was $1,159,000 and $1,444,000, 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               Six months ended
                                                                               June 30,                        June 30,
                                                                              (unaudited)                    (unaudited)
                                                                    -----------------------------------------------------------
                                                                          1999          2000            1999           2000
                                                                    -----------------------------------------------------------
<S>                                                                  <C>            <C>             <C>             <C>
Historical:
    Loss from continuing operations................................  $    (1,720)   $  (4,569)      $  (3,868)      $  (8,152)
                                                                     ==========================================================

    Weighted average shares of common stock outstanding............          500       16,283             497          13,011
                                                                     ==========================================================

    Basic and diluted loss per share from continuing operations....  $     (3.44)       (0.28)          (7.78)      $   (0.63)
                                                                     ==========================================================

    Income (loss) from discontinued operations.....................  $    (1,891)   $     496       $  (1,533)      $  (2,352)
                                                                     ==========================================================

    Weighted average shares of common stock outstanding............          500       16,283             497          13,011
                                                                     ==========================================================

    Basic and diluted income (loss) per share from discontinued
     operations....................................................  $  (   3.78)      $ 0.03       $   (3.08)      $   (0.18)
                                                                     ==========================================================

    Net loss.......................................................  $    (3,611)   $  (4,073)      $  (5,401)      $ (10,504)
                                                                     ==========================================================

    Weighted average shares of common stock outstanding............          500       16,283             497          13,011
                                                                     ==========================================================

    Basic and diluted net loss per share...........................  $     (7.22)   $   (0.25)     $  (10.87)       $   (0.81)
                                                                     ==========================================================
</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 statements 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  Statements of
Operations and Comprehensive  Loss for the six months ended June 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  $438,000 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  $630,000 at June 30, 2000 related to
the MMWP segment.

           Sales for the MMWP  segment  were $0 for the three  months ended June
30, 2000  ($2,039,000  in 1999) and  $770,000  for the six months ended June 30,
2000 ($4,689,000 in 1999).

                                       9
<PAGE>


6.         Accrued Expenses

           Accrued expenses consist of the following (in thousands):
<TABLE>
<CAPTION>

                                                                    December 31,    June 30,
                                                                  --------------------------
                                                                      1999           2000
                                                                  --------------------------
<S>                                                               <C>            <C>
       Accrued payroll, commissions and related expenses......... $      978     $   1,215
       Accrued warranty expense..................................        530           321
       Accrued contract costs....................................        168           140
       Accrued liabilities on discontinued operations............        350           630
       Other accrued expenses....................................        254           271
                                                                  -------------------------
                                                                  $    2,280     $   2,577
                                                                  =========================
</TABLE>



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 June 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. The Company
was in  compliance  with all  covenants at June 30, 2000.  At December 31, 1999,
$500,000 was outstanding under this line of credit. At June 30, 2000, there were
no borrowings under this line of credit.

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  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

                                       10
<PAGE>

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  all  areas,   including
manufacturing  and  engineering,   research  and  development,   and  sales  and
marketing.  These  increases in operating  expenses are not always apparent from
our historical  financial  statements.  As our sales continue to grow, we expect
that our  operating  expenses as a percentage of sales will decrease even though
we will  significantly  increase  amounts  spent on  research  and  development,
selling and  marketing,  and  general and  administrative.  This  spending  will
support  expansion  of our  production  and  design  areas,  greater  recruiting
efforts,  and a larger customer  support  organization to address the continuing
growth in the market for broadband wireless access equipment.

           For both  the  three  months  and six  months  ended  June 30,  2000,
approximately  93% of our sales were to a customer located in Canada,  and 7% of
our sales were to  customers  located in the  United  States and Korea.  For the
three months and six months ended June 30,  1999,  approximately  76% and 66% of
our sales,  respectively,  were to a customer located in Canada,  24% and 32% of
our sales, respectively,  were to customers located in the United States, and 0%
and 2% of our sales,  respectively,  were to  customers  located in England.  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         Six Months Ended
                                                                      June 30,                  June 30,
                                                                     (unaudited)               (unaudited)
                                                           --------------------------------------------------------
                                                                   1999          2000       1999           2000
                                                           --------------------------------------------------------
<S>                                                                <C>           <C>        <C>           <C>
Sales......................................................        100.0%        100.0%     100.0%        100.0%
Cost of sales..............................................         73.3          97.8      101.8         100.1
                                                           --------------------------------------------------------

Gross margin (loss)........................................         26.7           2.2       (1.8)        (0.1)
Operating expenses
    Research and development, net..........................         78.4          32.1       78.8          29.8
    Selling, general and administrative....................         50.5          31.6       53.9          32.4

       Total operating expenses............................        128.8          63.6      132.7          62.2
                                                           --------------------------------------------------------

Operating loss.............................................       (102.1)        (61.5)    (134.5)        (62.3)
Other income (expense).....................................         (6.4)          9.1       (5.5)          8.1
                                                           --------------------------------------------------------

Loss from continuing operations before income taxes........       (108.5)        (52.3)    (140.0)        (54.2)
Income tax benefit.........................................         (0.0)         (0.0)      (0.0)         (0.0)
                                                           --------------------------------------------------------

Loss from continuing operations............................       (108.5)%       (52.3)%   (140.0)%       (54.2)%
                                                           ========================================================
</TABLE>


                                       11
<PAGE>


Three Months and Six Months Ended June 30, 1999 and 2000

      Sales

           Sales  increased 451% to $8.7 million for the three months ended June
30,  2000 from $1.6  million  for the same  period  in 1999.  Of this  increase,
approximately  $7 million was attributable to an increase in sales of our planar
products  from $1.1  million  to $8.2  million.  Sales  increased  445% to $15.0
million for the six months  ended June 30,  2000 from $2.8  million for the same
period in 1999. Sales of our planar products have increased to $13.8 million for
the six months ended June 30, 2000  compared to $1.6 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 $7.3 million to $8.5 million for
the three  months  ended June 30, 2000 from $1.2  million for the same period in
1999.  Cost of sales increased $12.3 million to $15.1 million for the six months
ended June 30, 2000 from $2.8 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. Gross margins were 2.2% in the three months
ended June 30, 2000 and 26.7% in the same  period in 1999.  Gross  margins  were
negative 0.1% and negative 1.8%, respectively, for the six months ended June 30,
2000 and 1999. The decline in gross margin as a percentage of sales is primarily
due to a reduction in average  selling  prices.  Average  selling prices for the
three months and six months ended June 30, 2000 decreased by  approximately  60%
and 64%, respectively, from the same periods in 1999. These declines were driven
by volume  pricing  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 97% to
$3.1  million in the three  months  ended June 30, 2000 from $1.5 million in the
same period in 1999.  Gross research and development  expenses  increased 86% to
$4.8  million for the six months  ended June 30, 2000 from $2.6  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 30% to 82 at June 30, 2000 from 63 at June 30,
1999.  In  addition,  we incurred  significant  material  costs for  development
projects in the three months ended June 30, 2000. Research and development costs
were partially offset by customer funding of $252,000 and $306,000 for the three
months ended June 30, 2000 and 1999, respectively. Customer funding was $356,000
and $426,000 for the six months ended June 30, 2000 and 1999, respectively.  Net
of customer reimbursements, our research and development expenses increased 125%
to $2.8  million in the three  months  ended June 30, 2000 from $1.2 million for
the same period in 1999. Net research and  development  costs  increased 106% to
$4.5  million for the six months  ended June 30, 2000 from $2.2  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  245% to $2.8  million for the three  months
ended June 30, 2000 from $800,000 for the same period in 1999. Selling,  general
and  administrative  expenses  increased 228% to $4.9 million for the six months
ended  June 30,  2000  from $1.5  million  for the same  period  in 1999.  These
increases  were due  primarily to a increase in  personnel  in these  functional
areas to 42 at June 30, 2000 from 22 at June 30,  1999 to support the  Company's
growth and operation as a public  company.  Expenses  relating to recruitment of
additional  technical  personnel  increased  98% to $367,000  for the six months
ended June 30,  2000 from  $185,000  for the same  period in 1999.  In the three


                                       12
<PAGE>


months ended June 30, 2000, we also recorded a $261,000 non-recurring charge for
the  accelerated  vesting of stock  options on the  retirement  of a  long-time,
valued employee.

      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 $798,000 in income for the three
months ended June 30, 2000 from $101,000 in expense for the same period in 1999.
Total other  expense  changed to $1.2 million in income for the six months ended
June 30, 2000 from  $152,000  in expense  for the same period in 1999.  Interest
expense for the three  months  ended June 30,  2000 was $94,000  higher than the
same period in 1999 and  $213,000  higher for the six months ended June 30, 2000
compared  to the same  period  in 1999 due  primarily  to  additional  equipment
financing.  Interest  income  increased  by $993,000 to $1 million for the three
months  ended June 30, 2000 from  $8,000 for the same  period in 1999.  Interest
income increased $1.6 million to  approximately  $1.6 million for the six months
ended June 30, 2000 from $25,000 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 June 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 we  completed  an initial  public  offering  of
4,600,000  shares of our 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 June 30, 2000, we had cash and cash  equivalents  of $33.5 million
and  marketable  securities of $20.9  million.  At June 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 9.5% at June 30,
2000).

           The increase in accounts receivable from $2.9 million at December 31,
1999 to $8.4 million at June 30, 2000,  the  increase in  inventories  from $7.1
million to $19.1 million, and the increase in accounts payable from $4.3 million
to $8.7  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 June 30,  2000,  we had  approximately  $2.2  million in long-term
debt,  of which  $406,250 is due through  December 2000 with an interest rate of
10%,  $200,000  is due  through  June 2003  with an  interest  rate of 10%,  and
$1,683,000 is due through April 2003 with an interest rate of 12%.

           At June 30, 2000, we had approximately  $4.3 million in capital lease
obligations, which are due through 2003.

           Cash used in  operating  activities  in the six months ended June 30,
2000 was $21.0 million compared to $3.3 million for the same period in 1999. For
the six months  ended  June 30,  2000,  cash used in  operating  activities  has
primarily  represented  funding of our net losses and inventory increase to meet
future  production  requirements.  For the six months ended June 30, 1999,  cash
used in operating activities primarily represented funding of our net losses.


                                       13
<PAGE>


           Cash used in  investing  activities  in the six months ended June 30,
2000 was $22.8 million  compared to $747,000 for the same period in 1999. In the
six months ended June 30, 2000 these  amounts  related  primarily to purchase of
equipment  and the purchase of  marketable  securities.  In the six months ended
June 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 six months ended June
30, 2000 was $70.6 million compared to $1.8 million for the same period in 1999.
The  financing  activities  for the six  months  ended June 30,  2000  consisted
primarily  of the  proceeds  from our initial  public  offering.  The  financing
activities  for the six  months  ended  June 30,  1999  consisted  primarily  of
proceeds from a note payable and  additional  debt  partially  offset by capital
lease and debt repayments.

           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
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 exposed 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
below in "Safe Harbor for Forward-Looking Statements."

           As of June  30,  2000,  we had cash  and  cash  equivalents  of $33.5
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 June 30, 2000, we had  marketable  securities of $20.9 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,


                                       14
<PAGE>

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  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;  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.

           Another factor that could affect our future results, outcomes, levels
of activity,  performance or achievements is the recent acquisition of Newbridge
Networks by Alcatel.  That acquisition was consummated on May 25, 2000. Prior to
the acquisition,  Newbridge was our largest customer,  accounting for 88% of our
sales for the year ended  December 31, 1999 and 93% of our sales for the quarter
ended March 31, 2000.  For the quarter  ended June 30,  2000,  Alcatel/Newbridge
accounted for 93% of our sales.  Prior to the acquisition,  Alcatel provided its
own  transmitter/receiver  equipment for its broadband  wireless access efforts.
The process and results of integrating the two companies are still not complete.
Therefore,  we are not certain what effect, if any, the acquisition of Newbridge
will have on our  business.  The  acquisition  could result in our  shipments of
product to Alcatel  decreasing  or being  delayed  with  resulting  reduction in
revenue.  In particular,  it is likely that sales of our products to Alcatel for
the  remainder of 2000 may be reduced.  The  acquisition  could  present us with
opportunities  to develop  additional  products for Alcatel and to assist in the
technological  development and supply of their current products.  However, these
opportunities  and sales to other customers may not compensate for any potential
reduction in sales of our current products to Alcatel.

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.

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

           We are not currently a party to any material legal proceedings.

                                       15
<PAGE>

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 June 30, 2000:

           o    An aggregate of 28,552 shares of common stock at $1.00 per share
                in April 2000 to a warrant holder upon the exercise of warrants
                on a cashless basis (752 shares of common stock were withheld by
                the Company as payment for the aggregate exercise price of the
                warrants).

           o    An aggregate of 30,600 shares of common stock at $1.00 per share
                in May 2000 to two warrant holders upon the exercise of
                warrants.

           The foregoing numbers relating to our 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
our outstanding  preferred stock were automatically  converted into one share of
our common stock upon the closing of our 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  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 and
for  potential  acquisitions.  Pending  such uses,  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  June 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  for  operating  activities
totaled $16.7 million.

Item 4.  Submission of Matters to a Vote of Security Holders.

           The Company held its annual meeting of stockholders on June 21, 2000.
In connection with that meeting, beginning May 12, 2000, the Company distributed
a definitive proxy statement to its stockholders of record as of May 1, 2000. At

                                       16
<PAGE>

that meeting, the following two nominees were each elected to serve a three-year
term as Directors of the Company:


             BOARD'S NOMINEES                 FOR                      AGAINST
             ----------------                 ---                      -------
           Allan M. Doyle, Jr.             12,952,250                   34,467
            Robert C. Fleming              12,952,550                   34,167

           The terms of office of each of Albert E. Paladino,  David A. Norbury,
and John L. Youngblood as a director of the Company continued after the June 21,
2000 annual meeting of stockholders.

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

           (a)       Exhibits

           Exhibit 27.1 - Financial Data Schedule

           (b)       Reports on Form 8-K

           The  Company  filed no reports on Form 8-K during the  quarter  ended
June 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:  August 11, 2000         By:  Dennis C. Stempel
                                    ----------------------------------
                                    Dennis C. Stempel
                                    Chief Financial Officer, Principal Financial
                                    Officer, Principal Accounting Officer and
                                    Duly Authorized Officer