FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
(Mark One)
   [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 3, 1999

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

For the transition period from ______________________ to________________________

Commission file No. 0-11003

                               WEGENER CORPORATION

             (Exact name of registrant as specified in its charter)

        DELAWARE                                                 81-0371341
(State of incorporation)                                      (I.R.S. Employer
                                                             Identification No.)

11350 TECHNOLOGY CIRCLE, DULUTH, GEORGIA                         30097-1502
(Address of principal executive offices)                         (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 623-0096

                  REGISTRANT'S WEB SITE: HTTP://WWW.WEGENER.COM

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  [ ]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock:

Common Stock, $.01 par value                             11,771,016 Shares
----------------------------                       -----------------------------
           Class                                   Outstanding December 31, 1999

<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                Form 10-Q For the Quarter Ended December 3, 1999

                                      INDEX
                                                                         Page(s)
                                                                         -------
PART I.   Financial Information

Item 1.   Consolidated Financial Statements

          Introduction ........................................................3

          Consolidated Statements of Operations
          (Unaudited) - Three Months Ended
          December 3, 1999 and November 27, 1998 ..............................4

          Consolidated Balance Sheets - December 3,
          1999 (Unaudited) and September 3, 1999 ..............................5

          Consolidated Statements of Shareholders' Equity
          (Unaudited) -  Three Months Ended December 3,
          1999 and November 27, 1998 ..........................................6

          Consolidated Statements of Cash Flows
          (Unaudited) - Three Months Ended December 3,
          1999 and November 27, 1998 ..........................................7

          Notes to Consolidated Financial
          Statements (Unaudited) ...........................................8-11

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations..............................12-14

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

PART II.  Other Information

Item 1.   None
Item 2.   None
Item 3.   None
Item 4.   None
Item 5.   None
Item 6.   Exhibits and Reports on Form 8-K ...................................16

          Signatures .........................................................17

                                       2
<PAGE>

PART I. FINANCIAL INFORMATION                       Item 1. Financial Statements
-----------------------------                       ----------------------------

                INTRODUCTION - CONSOLIDATED FINANCIAL STATEMENTS

     The consolidated  financial  statements  included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
The  consolidated  balance  sheet  as of  December  3,  1999;  the  consolidated
statements of shareholders' equity as of December 3, 1999 and November 27, 1998;
the consolidated statements of operations for the three months ended December 3,
1999 and November 27, 1998;  and the  consolidated  statements of cash flows for
the three months ended December 3, 1999 and November 27, 1998 have been prepared
without audit. The  consolidated  balance sheet as of September 3, 1999 has been
examined by independent  certified public  accountants.  Certain information and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted  pursuant to such rules and  regulations,  although the Company believes
that the disclosures  herein are adequate to make the information  presented not
misleading. It is suggested that these consolidated financial statements be read
in conjunction  with the financial  statements and the notes thereto included in
the Company's Annual Report on Form 10-K, for the fiscal year ended September 3,
1999, File No. 0-11003.

     In the opinion of the Company,  the  statements  for the unaudited  interim
periods  presented  include all  adjustments,  which were of a normal  recurring
nature,  necessary  to present a fair  statement  of the results of such interim
periods.  The results of operations  for the interim  periods  presented are not
necessarily indicative of the results of operations for the entire year.

                                       3
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                        Three months ended
                                                   DECEMBER 3,      November 27,
                                                       1999             1998
--------------------------------------------------------------------------------
Revenues                                          $  7,014,503     $  6,466,251
--------------------------------------------------------------------------------
Operating costs and expenses
    Cost of products sold                            4,687,903        4,367,280
    Selling, general, and administrative             1,479,827        1,125,739
    Research and development                           810,933          633,639
--------------------------------------------------------------------------------
Operating costs and expenses                         6,978,663        6,126,658
--------------------------------------------------------------------------------
Operating income                                        35,840          339,593
    Interest expense                                   (24,888)         (43,496)
    Interest income                                    104,239           82,956
--------------------------------------------------------------------------------
Earnings before income taxes                           115,191          379,053

Income tax expense                                      43,000          148,000
--------------------------------------------------------------------------------
Net earnings                                      $     72,191     $    231,053
================================================================================
Net earnings per share:
    Basic                                         $        .00     $        .02
    Diluted                                       $        .00     $        .02
================================================================================
Shares used in per share calculation
    Basic                                           11,740,545       11,971,877
    Diluted                                         12,189,009       12,035,217
================================================================================

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                     DECEMBER 3,    September 3,
                                                        1999            1999
--------------------------------------------------------------------------------
ASSETS

Current assets
    Cash and cash equivalents                       $  8,015,676   $  8,858,591
    Accounts receivable                                4,103,486      2,618,296
    Inventories                                        7,192,318      6,488,813
    Deferred income taxes                              1,334,000      1,325,000
    Other                                                 27,645        263,090
--------------------------------------------------------------------------------
         Total current assets                         20,673,125     19,553,790

Property and equipment                                 4,298,159      4,242,588
Capitalized software costs                             1,093,717      1,100,747
Other assets                                              42,248         56,690
--------------------------------------------------------------------------------
                                                    $ 26,107,249   $ 24,953,815
================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
    Accounts payable                                $  2,749,039   $  2,018,149
    Accrued expenses                                   1,787,798      1,554,572
    Customer deposits                                  1,011,450        884,066
    Current maturities of long-term obligations          996,888      1,119,835
--------------------------------------------------------------------------------
          Total current liabilities                    6,545,175      5,576,622

Long-term obligations, less current maturities            52,769         85,424
Deferred income taxes                                    509,000        512,000
--------------------------------------------------------------------------------
          Total liabilities                            7,106,944      6,174,046
--------------------------------------------------------------------------------
Commitments

Shareholders' equity
    Common stock, $.01 par value; 20,000,000 shares
        authorized; 12,314,575 shares issued             123,146        123,146
    Additional paid-in capital                        19,558,367     19,492,570
    Retained earnings                                    167,972         95,781
    Less treasury stock, at cost                        (849,180)      (931,728)
--------------------------------------------------------------------------------

         Total shareholders' equity                   19,000,305     18,779,769
--------------------------------------------------------------------------------
                                                    $ 26,107,249   $ 24,953,815
================================================================================

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  Common Stock          Additional    Retained            Treasury Stock
                                                  ------------           Paid-in      Earnings            --------------
                                              Shares        Amount       Capital      (Deficit)         Shares       Amount
------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>           <C>           <C>               <C>         <C>
BALANCE, at August 28, 1998                 12,314,575   $   123,146   $19,407,417   $  (117,492)      (358,546)   $  (332,926)

    Treasury stock reissued through
       stock options and 401(k) plan                --            --        20,289            --         24,796         23,024
    Net earnings for the three months               --            --            --       231,053             --             --
------------------------------------------------------------------------------------------------------------------------------
BALANCE, at November 27, 1998               12,314,575   $   123,146   $19,427,706   $   113,561       (333,750)   $  (309,902)
==============================================================================================================================
BALANCE, at September 3, 1999               12,314,575   $   123,146   $19,492,570   $    95,781       (632,459)   $  (931,728)

    Treasury stock reissued through
       stock options and 401(k) plan                --            --        65,797            --         88,900         82,548
    Net earnings for the three months               --            --            --        72,191             --             --
------------------------------------------------------------------------------------------------------------------------------
BALANCE, AT DECEMBER 3, 1999                12,314,575   $   123,146   $19,558,367   $   167,972       (543,559)   $  (849,180)
==============================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       6
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                          Three months ended
                                                      DECEMBER 3,   November 27,
                                                         1999           1998
--------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
    Net earnings                                     $    72,191    $   231,053
    Adjustments to reconcile net earnings to
           cash provided by operating activities
        Depreciation and amortization                    424,365        407,123
        Issuance of treasury stock for
            compensation expenses                         43,478         42,954
        Bad debt allowance                                20,000             --
        Inventory reserves                                25,000         50,000
        Deferred income taxes                            (12,000)       (47,000)
    Changes in assets and liabilities
            Accounts receivable                       (1,505,190)       773,369
            Inventories                                 (728,505)      (250,681)
            Other assets                                 235,445        (30,433)
            Accounts payable and accrued expenses        964,116        207,654
            Customer deposits                            127,384        664,865
--------------------------------------------------------------------------------
                                                        (333,716)     2,048,904
--------------------------------------------------------------------------------
CASH USED FOR INVESTMENT ACTIVITIES
    Property and equipment expenditures                 (353,618)      (200,168)
    Capitalized software additions                      (104,846)       (84,647)
--------------------------------------------------------------------------------
                                                        (458,464)      (284,815)
--------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
    Proceeds from long-term debt                              --      1,359,508
    Repayment of long-term debt and capitalized
        lease obligations                               (155,602)    (1,456,076)
    Debt issuance cost                                        --        (11,632)
    Proceeds from stock options exercised                104,867            359
--------------------------------------------------------------------------------
                                                         (50,735)      (107,841)
--------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents        (842,915)     1,656,248
Cash and cash equivalents, beginning of period         8,858,591      6,492,760
--------------------------------------------------------------------------------
Cash and cash equivalents, end of period             $ 8,015,676    $ 8,149,008
================================================================================
Supplemental disclosure of cash flow information:
    Cash paid during the three months for:
          Interest                                   $    24,888    $    53,569
          Income taxes                               $    38,500    $        --
================================================================================

See accompanying notes to consolidated financial statements.

                                       7
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1    Significant Accounting Policies

          The significant  accounting  policies  followed by the Company are set
          forth  in  Note  1 to the  Company's  audited  consolidated  financial
          statements  included  in the  annual  report on Form 10-K for the year
          ended September 3, 1999.

          Earnings Per Share

          Basic and diluted net earnings per share were  computed in  accordance
          with Statement of Financial  Accounting  Standards No. 128,  "Earnings
          Per Share".  Basic net  earnings per share is computed by dividing net
          earnings available to common shareholders  (numerator) by the weighted
          average number of common shares outstanding  (denominator)  during the
          period and excludes the dilutive effect of stock options.  Diluted net
          earnings  per share  gives  effect to all  dilutive  potential  common
          shares  outstanding during a period. In computing diluted net earnings
          per  share,  the  average  stock  price  for  the  period  is  used in
          determining  the number of shares  assumed to be reacquired  under the
          treasury stock method from the exercise of stock options.

          Use of Estimates

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that  affect  the  reported  amounts  of assets  and
          liabilities,  the disclosure of contingent  assets and  liabilities at
          the date of the  financial  statements  and the  reported  amounts  of
          revenue and expenses during the reporting period. Actual results could
          vary from these estimates.

          Fiscal Year

          The Company uses a fifty-two,  fifty-three  week year. The fiscal year
          ends on the Friday  closest to August 31.  Fiscal  year 2000  contains
          fifty-two weeks while fiscal 1999 contained fifty-three weeks.

                                       8
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

Note 2    Accounts Receivable

          Accounts receivable are summarized as follows:

                                             DECEMBER 3,         September 3,
                                                 1999                1999
                                             -----------         -----------
                                             (UNAUDITED)

          Accounts receivable - trade        $ 4,187,207         $ 2,675,022
          Other receivables                      108,828             115,859
                                             -----------         -----------
                                               4,296,035           2,790,881

          Less allowance for
               doubtful accounts                (192,549)           (172,585)
                                             -----------         -----------

                                             $ 4,103,486         $ 2,618,296
                                             ===========         ===========

Note 3    Inventories

          Inventories are summarized as follows:

                                             DECEMBER 3,         September 3,
                                                 1999                1999
                                             -----------         -----------
                                             (UNAUDITED)

          Raw material                       $ 3,108,465         $ 2,845,784
          Work-in-process                      2,430,556           3,146,479
          Finished goods                       3,876,791           2,695,044
                                             -----------         -----------
                                               9,415,812           8,687,307

          Less inventory reserves             (2,223,494)         (2,198,494)
                                             -----------         -----------

                                             $ 7,192,318         $ 6,488,813
                                             ===========         ===========

Note 4    Income Taxes

          For the three  months  ended  December 3, 1999,  income tax expense of
          $43,000  was  comprised  of a current  federal  and state  income  tax
          expense of $51,000 and $4,000,  respectively,  and a deferred  federal
          tax benefit of $12,000.  Net deferred tax assets increased  $12,000 in
          the first quarter.

                                       9
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

Note 5   Earnings Per Share

The following tables represent required  disclosure of the reconciliation of the
numerators  and  denominators  of the basic and diluted net  earnings  per share
computations.

<TABLE>
<CAPTION>
                                                                       Three months ended
                                             ----------------------------------------------------------------------
                                                       DECEMBER 3, 1999                   November 27, 1998
                                             ----------------------------------  ----------------------------------
                                                                           PER                                 Per
                                              EARNINGS       SHARES       SHARE   Earnings       Shares       share
                                             (NUMERATOR)  (DENOMINATOR)  AMOUNT  (Numerator)  (Denominator)  amount
                                             -----------  -------------  ------  -----------  -------------  ------
<S>                                            <C>         <C>           <C>       <C>         <C>           <C>
Net earnings                                   $ 72,191                            $231,053
                                               ========                            ========

Basic earnings per share:
    Net earnings available
        to common shareholders                 $ 72,191    11,740,545    $ 0.00    $231,053    11,971,877    $ 0.02
                                                                         ======                              ======

Effect of dilutive potential common shares:
        Stock options                                --       448,464                    --        63,340
                                               --------    ----------              --------    ----------
Diluted earnings per share:
    Net earnings available
        to common shareholders
        plus assumed conversions               $ 72,191    12,189,009    $ 0.00    $231,053    12,035,217    $ 0.02
                                               ========    ==========    ======    ========    ==========    ======
</TABLE>

Stock  options  which were  excluded  from the  diluted net  earnings  per share
calculation due to their anti-dilutive effect are as follows:

                                                  Three months ended
                                         ------------------------------------
                                           DECEMBER 3,          November 27,
                                              1999                  1998
                                         --------------        --------------
Common stock options:
    Number of shares                                  -               173,500
    Range of exercise prices                          -        $2.00 to 12.13
                                         ==============        ==============

Note 6    Segment Information and Significant Customers

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  131,
Disclosure about Segments of an Enterprise and Related Information,  the Company
operates  within  a  single  reportable  segment,  the  manufacture  and sale of
satellite communications equipment.

                                       10
<PAGE>

In this single  operating  segment the Company has three distinct product lines.
Revenues from customers in each of these product lines are as follows:

                                                  Three months ended
                                         ------------------------------------
                                           DECEMBER 3,          November 27,
                                              1999                  1998
--------------------------------------------------------------------------------
Product Line
    Direct Broadcast Satellite             $6,210,248            $5,673,730
    Telecom and Custom Products               675,548               595,572
    Service                                   128,707               196,949
--------------------------------------------------------------------------------

                                           $7,014,503            $6,466,251
================================================================================

For the three months ended December 3, 1999,  revenues by geographical area were
approximately:  United  States -  $5,878,000;  Mexico -  $820,000;  all  other -
$317,000. For the three months ended November 27, 1998, revenues by geographical
area were approximately:  United States - $6,038,000;  Europe - $191,000;  Latin
America - $140,000; all other - $97,000.  Revenue attributed to geographic areas
is based on the location of the customer. All of the Company's long-lived assets
are located in the United States.

For the three months ended December 3, 1999,  two customers  accounted for 27.1%
and 11.7% of revenues,  respectively.  For the three  months ended  November 27,
1998,  three other customers  accounted for 27.7%,  14.0% and 11.8% of revenues,
respectively.

                                       11
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES

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

This information  should be read in conjunction with the consolidated  financial
statements and the notes thereto included in Item 1 of this Quarterly Report and
the audited consolidated financial statements and notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations for the
year ended  September 3, 1999  contained in the Company's  1999 Annual Report on
Form 10-K.

Certain  statements  contained in this filing are  "forward-looking  statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, such
as  statements  relating  to  financial  results,  future  business  or  product
development  plans,  research  and  development  activities,  capital  spending,
financing  sources  or  capital   structure,   the  effects  of  regulation  and
competition,  and are thus  prospective.  Such  forward-looking  statements  are
subject to risks,  uncertainties  and other  factors  which could  cause  actual
results to differ  materially  from future results  expressed or implied by such
forward-looking  statements.  Potential risks and uncertainties include, but are
not limited to, economic  conditions,  customer plans and  commitments,  product
demand,  government  regulation,  rapid technological  developments and changes,
performance  issues with key  suppliers  and  subcontractors,  delays in product
development   and   testing,    material   availability,    new   and   existing
well-capitalized  competitors, and other uncertainties detailed in the Company's
Form  10-K for the year  ended  September  3,  1999 and from time to time in the
Company's periodic Securities and Exchange Commission filings.

The Company  manufactures  satellite  communications  equipment  through Wegener
Communications,   Inc.  (WCI),  a  wholly-owned  subsidiary.   WCI  designs  and
manufactures   communications  transmission  and  receiving  equipment  for  the
business  broadcast,   data  communications,   cable  and  broadcast  radio  and
television industries.

RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 3, 1999 COMPARED TO THREE MONTHS
ENDED NOVEMBER 27, 1998

Net  earnings  were  $72,000  or less than  $0.01 per share for the three  month
period ended  December 3, 1999,  compared to $231,000 or $0.02 per share for the
three month period ended November 27, 1998.

REVENUES - The  Company's  revenues  for the first  quarter of fiscal  2000 were
$7,015,000,  up 8.5% as  compared  to  $6,466,000  for the same period in fiscal
1999.

Direct  Broadcast  Satellite (DBS) revenues  increased  $536,000 or 9.5%, in the
first quarter of fiscal 2000 to $6,210,000  from  $5,674,000 for the same period
in fiscal  1999.  The  increase  was mainly due to an increase in  shipments  of
digital  video  products  principally  to one  customer  for an upgrade of their
private network used to distribute live pari-mutuel  racing signals to off-track
facilities.  Telecom and Custom  Products  Group revenues  increased  $80,000 or
13.4% to $675,000 in the first quarter of fiscal 2000 from $595,000 in the first
quarter of fiscal 1999. The increase was mainly due to higher level shipments of
cue and control equipment to provide local commercial insertion  capabilities to
cable television  headend systems.  For the three months ended December 3, 1999,
two customers accounted for 27.1% and 11.7% of revenues,  respectively.  For the
three months ended November 27, 1998, three other customers accounted for 27.7%,
14.0% and 11.8% of revenues,

                                       12
<PAGE>

respectively.  The Company's backlog is comprised of undelivered,  firm customer
orders,  which are scheduled to ship within eighteen  months.  WCI's backlog was
approximately  $12,500,000  at December  3, 1999,  compared  to  $15,691,000  at
September 3, 1999 and $11,600,000 at November 27, 1998.

GROSS  PROFIT  MARGINS - Gross profit  increased  $228,000 or 10.8% in the three
month  period ended  December 3, 1999,  compared to the three month period ended
November 27, 1998.  Gross profit as a percent of revenues was 33.2% in the first
quarter of fiscal 2000  compared to 32.5% in the first  quarter of fiscal  1999.
The increase in gross profit dollars and  percentages  are primarily a result of
an increase in revenues for the period.

SELLING,  GENERAL  AND  ADMINISTRATIVE  - Selling,  general  and  administrative
expenses  increased  $354,000  or 31.5% to  $1,480,000  in the first  quarter of
fiscal 2000 from  $1,126,000 in the first  quarter of fiscal 1999.  The increase
was primarily due to higher  levels of selling and marketing  expenses,  outside
sales  agent  commissions,   software   implementation  costs,  and  maintenance
expenses.  As a percentage  of  revenues,  selling,  general and  administrative
expenses  were 21.1% for the three month period ended  December 3, 1999 compared
to 17.4% for the same period ended November 27, 1998.

RESEARCH AND  DEVELOPMENT  - Research and  development  expenditures,  including
capitalized  software  development  costs, were $916,000 or 13.1% of revenues in
the first  quarter of fiscal 2000  compared to $718,000 or 11.1% of revenues for
the same period of fiscal 1999.  Capitalized software development costs amounted
to $105,000 in the first quarter of fiscal 2000 compared to $85,000 in the first
quarter of fiscal 1999. Research and development expenses, excluding capitalized
software  development  costs,  were  $811,000  or 11.6% of revenues in the first
quarter of fiscal  2000,  and $634,000 or 9.8% of revenues in the same period of
fiscal  1999.  The  increase in  expenses  was  primarily  due to  increases  in
engineering consulting expenses and personnel costs.

INTEREST  EXPENSE - Interest expense  decreased  $18,000 to $25,000 in the first
quarter of fiscal  2000 from  $43,000  in the same  period in fiscal  1999.  The
decrease was  primarily due to a decrease in average  outstanding  debt balances
and a decrease in the interest rate on the mortgage debt.

INTEREST  INCOME -  Interest  income was  $104,000  for the three  months  ended
December 3, 1999  compared to $83,000 for the same  period  ended  November  27,
1998. The increase was mainly due to higher average cash equivalent balances for
the period.

INCOME TAX EXPENSE - For the three  months  ended  December 3, 1999,  income tax
expense of $43,000  was  comprised  of a current  federal  and state  income tax
expense of $51,000 and $4,000,  respectively,  offset by a deferred  federal tax
benefit of $12,000.

LIQUIDITY AND CAPITAL RESOURCES
THREE MONTHS ENDED DECEMBER 3, 1999

During the first quarter of fiscal 2000,  operating  activities used $334,000 of
cash. Net earnings  adjusted for non-cash  expenses  provided  $573,000 of cash,
while  changes in  accounts  payable  and  customer  deposit  balances  provided
$1,091,000  of cash.  Changes in  accounts  receivable,  inventories,  and other
assets used $1,998,000 of cash.  Cash used by investing  activities for property
and equipment  expenditures  and  capitalized  software  additions was $458,000.
Financing activities used cash of $156,000 for scheduled repayments of long-term
obligations. Proceeds from exercised stock options provided $105,000 of cash.

                                       13
<PAGE>

WCI  maintains a loan facility  with a bank which  provides a maximum  available
credit limit of $10,000,000 with sublimits as defined. The loan facility matures
on June 21, 2000 or upon demand and  requires an annual  facility fee of $55,000
plus an  additional  .75% of  $3,000,000  if  borrowings,  at any  time,  exceed
$5,500,000. The loan facility consists of 1) a term loan and a revolving line of
credit with a combined  borrowing limit of $8,500,000,  bearing  interest at the
bank's  prime rate  (8.50% at  December  3, 1999) and 2) a real  estate  advance
facility  with a maximum  borrowing  limit of $1,500,000  bearing  interest at a
fixed  rate of 250  basis  points  over the five year U.S.  Treasury  rate.  The
interest rate on outstanding real estate advances is 6.519%

The term loan facility  provides for a maximum of $1,000,000  for advances of up
to 80% of the cost of  equipment  acquisitions.  Principal  advances are payable
monthly over sixty months with a balloon payment due at maturity.  The revolving
line of credit is  subject  to  availability  advance  formulas  of 80%  against
eligible accounts receivable; 20% of eligible raw materials inventories;  20% of
eligible  work-in-process  kit inventories;  and 40% to 50% of eligible finished
goods  inventories.  Advances  against  inventory  are  subject to a sublimit of
$2,000,000.  The real estate advance  portion of the loan facility  provides for
advances of up to 70% of the appraised value of certain real property.  Advances
for real  property  are payable in 35 equal  principal  payments  with a balloon
payment  due at  maturity.  At December  3, 1999,  outstanding  balances on real
property advances aggregated  $855,000,  and no balances were outstanding on the
revolving  line of credit or equipment  term loan portions of the loan facility.
Additionally,  at December 3, 1999,  approximately  $4,155,000  was available to
borrow under the advance formulas.

The  Company's  loan  facility  matures  on June 21,  2000  along with a balloon
payment due on the mortgage note. The Company believes that the existing line of
credit  and term loan  facility  will be renewed in June 2000 or that a suitable
replacement  line will be available from other  financing  sources.  The Company
expects that its current cash and cash  equivalents  combined with expected cash
flows  from  operating  activities  and an  available  line  of  credit  will be
sufficient to support the Company's operations during fiscal 2000.

YEAR 2000

Prior to December 31, 1999,  management  of the Company  completed its review of
internal  information  systems,  manufacturing  and engineering  equipment,  and
facilities,  as well as surveys of key vendors and  service  providers  for Year
2000  risks.  As of the date of this  filing,  the Company  has  experienced  no
disruptions  or  other  significant   problems  related  to  Year  2000  issues.
Additionally,  to date,  there have been no Year 2000  related  failures  in the
respect of supplies or services  from  vendors and service  providers.  To date,
there have been no Year 2000 related problems reported from customers  regarding
the Company's hardware or software products.

However, if Year 2000 issues develop subsequent to the date of this filing which
impact the  ability of vendors or service  providers  to  adequately  supply the
Company,  there could be a material adverse impact on the Company's  operations.
Additionally,  if the  Company's  products  were to incur Year 2000  performance
problems,  there  could be an  adverse  impact  on  results  of  operations  and
financial  condition due to increased  warranty costs,  litigation  expenses and
other material liabilities, or a loss of customers.

The Company did not incur significant costs related to Year 2000 issues and does
not expect to incur material Year 2000 transition costs in the future.

                                       14
<PAGE>

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's exposure to market rate risk for changes in interest rates relates
primarily to its  revolving  line of credit and cash  equivalents.  The interest
rate on  certain  advances  under  the line of  credit  and term  loan  facility
fluctuates with the bank's prime rate.  There were no borrowings  outstanding at
December 3, 1999 subject to variable interest rate fluctuations.

The  Company's  cash  equivalents  consist of a repurchase  agreement and a bank
certificate of deposit.  The cash equivalents have maturities of less than three
months and therefore are subject to minimal market risk.

The Company does not enter into derivative financial instruments.  All sales and
purchases are denominated in U.S. dollars.

                                       15
<PAGE>

                           PART II. OTHER INFORMATION
                           --------------------------

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

          (a)  Exhibits: 27 - Financial Data Schedule

          (b)  Reports on Form 8-K - No  reports  on Form 8-K were filed  during
               the quarter ended December 3, 1999.

                                       16
<PAGE>

                                   SIGNATURES
                                   ----------

     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
the  Registrant  has duly  caused  this  Report to be signed on it behalf by the
undersigned thereunto duly authorized.

                                        WEGENER CORPORATION
                                        -------------------
                                        (Registrant)


Date:  January 18, 2000                 By: /s/ Robert A. Placek
                                          --------------------------
                                            Robert A. Placek
                                            President
                                            (Principal Executive Officer)


Date:  January 18, 2000                 By: /s/ C. Troy Woodbury, Jr.
                                          ------------------------------
                                            C. Troy Woodbury, Jr.
                                            Treasurer and Chief
                                            Financial Officer
                                            (Principal Financial and
                                            Accounting Officer)

                                       17