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 November 27, 1998

                                       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, as of December 31, 1998.

Common Stock, $.01 par value                             11,980,825 Shares 
----------------------------                        ----------------------------
           Class                                    Outstanding December 31,1998

<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                Form 10-Q For the Quarter Ended November 27, 1998

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

Item 1.  Consolidated Financial Statements

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

         Consolidated Statements of Operations
         (Unaudited) - Three Months Ended
         November 27, 1998 and November 28, 1997 .............................4

         Consolidated Balance Sheets - November 27,
         1998 (Unaudited) and August 28, 1998 ................................5

         Consolidated Statements of Shareholders' Equity
         (Unaudited) -  Three Months Ended November 27,
         1998 and November 28, 1997 ..........................................6

         Consolidated Statements of Cash Flows
         (Unaudited) - Three Months Ended November 27,
         1998 and November 28, 1997 ..........................................7

         Notes to Consolidated Financial
         Statements (Unaudited) ...........................................8-10

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations............................11-14

Item 3.  Quantitative and Qualitative Disclosures About Market Risk..........14

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 ...................................15

         Signatures .........................................................16

                                       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  November  27,  1998;  the  consolidated
statements  of  shareholders'  equity as of November  27, 1998 and  November 28,
1997;  the  consolidated  statements  of  operations  for the three months ended
November 27, 1998 and November 28, 1997; and the consolidated statements of cash
flows for the three  months  ended  November 27, 1998 and November 28, 1997 have
been prepared  without audit.  The  consolidated  balance sheet as of August 28,
1998 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 August 28, 1998, 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
                                                  NOVEMBER 27,     November 28,
                                                      1998             1997
--------------------------------------------------------------------------------

Revenues                                          $  6,466,251     $  6,706,020
--------------------------------------------------------------------------------

Operating costs and expenses
    Cost of products sold                            4,367,280        4,531,739
    Selling, general, and administrative             1,125,739        1,050,310
    Research and development                           633,639          669,896
--------------------------------------------------------------------------------

Operating costs and expenses                         6,126,658        6,251,945
--------------------------------------------------------------------------------

Operating income                                       339,593          454,075
    Interest expense                                   (43,496)         (75,786)
    Interest income                                     82,956           77,634
--------------------------------------------------------------------------------

Earnings before income taxes                           379,053          455,923

Income tax expense                                     148,000          173,000
--------------------------------------------------------------------------------

Net earnings                                      $    231,053     $    282,923
================================================================================

Net earnings per share:
    Basic                                         $        .02     $        .02
    Diluted                                       $        .02     $        .02
================================================================================

Shares used in per share calculation
    Basic                                           11,971,877       11,345,504
    Diluted                                         12,035,217       11,977,657
================================================================================

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                            NOVEMBER 27,      August 28,
                                                                1998             1998
-----------------------------------------------------------------------------------------
ASSETS

Current assets
<S>                                                         <C>              <C>         
    Cash and cash equivalents                               $  8,149,008     $  6,492,760
    Accounts receivable                                        4,541,569        5,314,938
    Inventories                                                7,321,074        7,120,393
    Deferred income taxes                                      1,030,000        1,011,000
    Other                                                         54,143           23,710
-----------------------------------------------------------------------------------------

        Total current assets                                  21,095,794       19,962,801

Property and equipment                                         4,494,578        4,523,297
Capitalized software costs                                     1,139,165        1,211,914
Other assets                                                     197,794          207,002
-----------------------------------------------------------------------------------------

                                                            $ 26,927,331     $ 25,905,014
=========================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
    Accounts payable                                        $  2,483,430     $  2,113,205
    Accrued expenses                                           1,327,470        1,490,041
    Customer deposits                                          1,449,486          784,621
    Current maturities of long-term obligations                  690,730          597,664
-----------------------------------------------------------------------------------------

       Total current liabilities                               5,951,116        4,985,531

Long-term obligations, less current maturities                 1,041,704        1,231,338
Deferred income taxes                                            580,000          608,000
-----------------------------------------------------------------------------------------

       Total liabilities                                       7,572,820        6,824,869
-----------------------------------------------------------------------------------------

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                               19,427,706       19,407,417
     Retained earnings (deficit)                                 113,561         (117,492)
     Less treasury stock, at cost (333,750 and 358,546
          shares)                                               (309,902)        (332,926)
-----------------------------------------------------------------------------------------


            Total shareholders' equity                        19,354,511       19,080,145
-----------------------------------------------------------------------------------------

                                                            $ 26,927,331     $ 25,905,014
=========================================================================================
</TABLE>

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 29, 1997                 11,363,917    $   113,639    $18,084,700    $(2,877,675)       (432,730)    $  (401,810)

    Treasury stock reissued through
       stock options and 401(k) plan                --             --         13,466             --           8,243           7,654
    Issuance of common stock for
       convertible debentures                  659,023          6,590        925,635             --              --              --
    Net earnings for the three months               --             --             --        282,923              --              --
------------------------------------------------------------------------------------------------------------------------------------

BALANCE, at November 28, 1997               12,022,940    $   120,229    $19,023,801    $(2,594,752)       (424,487)    $  (394,156)
====================================================================================================================================

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)
====================================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       6
<PAGE>

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

<TABLE>
<CAPTION>
                                                             Three months ended
                                                        NOVEMBER 27,     November 28,
                                                            1998             1997
-------------------------------------------------------------------------------------

CASH PROVIDED (USED) BY OPERATING ACTIVITIES
<S>                                                     <C>              <C>         
    Net earnings                                        $    231,053     $    282,923
    Adjustments to reconcile net earnings to
           cash provided by operating activities
        Depreciation and amortization                        407,123          422,265
        Issuance of treasury stock for
            compensation expenses                             42,954           21,120
        Inventory reserves                                    50,000           50,000
        Deferred income taxes                                (47,000)         173,000
    Changes in assets and liabilities
            Accounts receivable                              773,369         (242,053)
            Inventories                                     (250,681)         275,045
            Other assets                                     (30,433)           4,511
            Accounts payable and accrued expenses            207,654         (278,225)
            Customer deposits                                664,865        8,064,026
-------------------------------------------------------------------------------------

                                                           2,048,904        8,772,612
-------------------------------------------------------------------------------------

CASH PROVIDED (USED) BY INVESTMENT ACTIVITIES
    Property and equipment expenditures                     (200,168)        (148,008)
    Capitalized software additions                           (84,647)        (121,872)
-------------------------------------------------------------------------------------

                                                            (284,815)        (269,880)
-------------------------------------------------------------------------------------

CASH PROVIDED (USED) BY FINANCING ACTIVITIES
    Proceeds from long-term debt                           1,359,508               --
    Repayment of long-term debt and capitalized
        lease obligations                                 (1,456,076)        (135,000)
    Debt issuance cost                                       (11,632)              --
    Proceeds from stock options exercised                        359               --
-------------------------------------------------------------------------------------

                                                            (107,841)        (135,000)
-------------------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents           1,656,248        8,367,732
Cash and cash equivalents, beginning of period             6,492,760        2,242,433
-------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                $  8,149,008     $ 10,610,165
=====================================================================================

Supplemental  disclosure  of cash flow  information:
  Cash paid during the three
    months for:
          Interest                                      $     53,569     $     80,134
          Income taxes                                  $         --     $         --
=====================================================================================
</TABLE>

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
        August 28, 1998.

        Earnings Per Share

        In fiscal 1998, the Company  adopted  Statement of Financial  Accounting
        Standards No, 128, "Earnings Per Share" (SFAS 128). SFAS 128 establishes
        standards  for computing and  presenting  earnings per share (EPS),  and
        supersedes APB Opinion No. 15. The Statement  replaces  primary EPS with
        basic EPS and requires a dual presentation of basic and diluted EPS.

        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  and   convertible
        debentures.  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 and
        the  if-converted  method to compute the dilutive  effect of convertible
        debentures.

        Comprehensive Net Income

        During the first quarter of fiscal 1999, the Company  adopted  Statement
        of  Financial  Accounting  Standards  No.130,  "Reporting  Comprehensive
        Income,"  (SFAS 130) which  establishes  standards  for the reporting of
        comprehensive  income  and  its  components  in  financial   statements.
        Comprehensive  income  consists of net income and other gains and losses
        affecting shareholders' equity that, under generally accepted accounting
        principles,  are excluded  from net income.  For the three months ending
        November  27, 1998 and November  28, 1997 the  Company's  net income and
        total comprehensive income were the same.

        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  years 1999 and 1998
        contain fifty-three and fifty-two weeks, respectively.

                                       8
<PAGE>

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

Note 2  Accounts Receivable

        Accounts receivable are summarized as follows:

                                       NOVEMBER 27,     August 28,
                                           1998            1998
                                       -----------     -----------
                                       (UNAUDITED)

        Accounts receivable - trade    $ 4,532,000     $ 5,139,414
        Recoverable income taxes           124,000         295,000
        Other receivables                  136,321         137,515
                                       -----------     -----------
                                         4,792,321       5,571,929
        Less allowance for
             doubtful accounts            (250,752)       (256,991)
                                       -----------     -----------

                                       $ 4,541,569     $ 5,314,938
                                       ===========     ===========

Note 3  Inventories

        Inventories are summarized as follows:

                                       NOVEMBER 27,     August 28,
                                           1998            1998
                                       -----------     -----------
                                       (UNAUDITED)

        Raw material                   $ 2,764,020     $ 2,692,937
        Work-in-process                  3,188,764       3,139,249
        Finished goods                   2,859,984       2,727,727
                                       -----------     -----------
                                         8,812,768       8,559,913

        Less inventory reserves         (1,491,694)     (1,439,520)
                                       -----------     -----------

                                       $ 7,321,074     $ 7,120,393
                                       ===========     ===========

Note 4  Income Taxes

        For the three  months ended  November  27,  1998,  income tax expense of
        $148,000 was comprised of a current federal and state income tax expense
        of $171,000 and $24,000,  respectively, and a deferred federal and state
        tax benefit of $42,000 and $5,000, respectively. Net deferred tax assets
        increased $47,000 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
                                         ----------------------------------------------------------------------------------------

                                                    NOVEMBER 27, 1998                              November 28, 1997
                                         -----------------------------------------       ----------------------------------------
                                                                              PER                                            Per
                                           EARNINGS           SHARES         SHARE         Earnings         Shares          share
                                         (NUMERATOR)       (DENOMINATOR)    AMOUNT       (Numerator)     (Denominator)     amount
                                         -----------       -------------    ------       -----------     -------------     ------
<S>                                        <C>              <C>              <C>           <C>            <C>               <C>
Net earnings                               $231,053                                        $282,923
                                           ========                                        ========

Basic earnings per share:
    Net earnings available
        to common shareholders             $231,053         11,971,877       $0.02         $282,923       11,345,504        $0.02
                                                                             =====                                          =====
Effect of dilutive potential common shares:
        Stock options                            --             63,340                           --          178,470
        Convertible debentures                   --                 --                        9,848          453,683
                                           --------         ----------                     --------       ----------
Diluted earnings per share:
    Net earnings available
        to common shareholders
        plus assumed conversions           $231,053         12,035,217       $0.02         $292,771       11,977,657        $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
                                       ----------------------------------
                                         NOVEMBER 27,        November 28,
                                             1998                1997
                                       ==============      ==============
Common stock options:
    Number of shares                          173,500              48,500
    Range of exercise prices           $2.00 TO 12.13      $2.44 to 12.13
                                       ==============      ==============

                                       10
<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 August 28, 1998 contained in the Company's 1998 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  August  28,  1998 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 NOVEMBER 27, 1998 COMPARED TO THREE MONTHS 
ENDED NOVEMBER 28, 1997

Net earnings  were  $231,000 or $0.02 per share for the three month period ended
November 27,  1998,  compared to $283,000 or $0.02 per share for the three month
period ended November 28, 1997.

REVENUES - The  Company's  revenues  for the first  quarter of fiscal  1999 were
$6,466,000, compared to $6,706,000 for the same period in fiscal 1998.

Direct  Broadcast  Satellite (DBS) revenues  increased  $319,000 or 5.9%, in the
first quarter of fiscal 1999 to $5,674,000  from  $5,355,000 for the same period
in fiscal  1998.  The  increase  was mainly due to an increase in  shipments  of
digital video and audio  products.  Telecom and Custom  Products  Group revenues
decreased $534,000 or 47.3% to $595,000 in the first quarter of fiscal 1999 from
$1,129,000 in the first  quarter of fiscal 1998.  The decrease was mainly due to
lower  levels  of  shipments  of cue and  control  equipment  to  provide  local
commercial  insertion  capabilities to cable  television  headend  systems.  The
Company's backlog is comprised of undelivered,  firm customer orders,  which are
scheduled  to ship within  eighteen  months.  WCI's  backlog  was  approximately
$11,600,000 at November 27, 1998, compared to $12,596,000 at August 28, 1998 and
$19,268,000 at November 28, 1997.

                                       11
<PAGE>

GROSS PROFIT MARGINS - Gross profit decreased $75,000 or 3.5% in the three month
period  ended  November  27,  1998,  compared  to the three month  period  ended
November 28, 1997,  as a result of a decrease in revenues for the period.  Gross
profit as a percent of  revenues  was 32.5% in the first  quarter of fiscal 1999
compared to 32.4% in the first quarter of fiscal 1998.

SELLING,  GENERAL  AND  ADMINISTRATIVE  - Selling,  general  and  administrative
expenses  increased $76,000 or 7.2% to $1,126,000 in the first quarter of fiscal
1999 from  $1,050,000  in the first  quarter of fiscal  1998.  The  increase was
primarily  due to higher  levels of selling  and  marketing,  compensation,  and
maintenance  expenses.  As  a  percentage  of  revenues,  selling,  general  and
administrative expenses were 17.4% for the three month period ended November 27,
1998 compared to 15.7% for the same period ended November 28, 1997.

RESEARCH AND  DEVELOPMENT  - Research and  development  expenditures,  including
capitalized  software  development  costs, were $718,000 or 11.1% of revenues in
the first  quarter of fiscal 1999  compared to $777,000 or 11.6% of revenues for
the same period of fiscal 1998.  Capitalized software development costs amounted
to $85,000 in the first quarter of fiscal 1999 compared to $107,000 in the first
quarter of fiscal 1998. Research and development expenses, excluding capitalized
software  development  costs,  were  $634,000  or 9.8% of  revenues in the first
quarter of fiscal 1999,  and $670,000 or 10.0% of revenues in the same period of
fiscal  1998.  The decrease in expenses was  primarily  due to lower  proto-type
material expenses.

INTEREST  EXPENSE - Interest expense  decreased  $33,000 to $43,000 in the first
quarter of fiscal  1999 from  $76,000  in the same  period in fiscal  1998.  The
decrease was primarily due to a decrease in the average  outstanding  balance of
the  convertible  debentures and a decrease in the interest rate on the mortgage
debt.

INTEREST  INCOME -  Interest  income  was  $83,000  for the three  months  ended
November  27, 1998  compared to $78,000 for the same period  ended  November 28,
1997.

INCOME TAX EXPENSE - For the three  months ended  November 27, 1998,  income tax
expense of $148,000  was  comprised  of a current  federal and state  income tax
expense of $171,000 and $24,000,  respectively, and a deferred federal and state
tax benefit of $42,000 and $5,000, respectively.

LIQUIDITY AND CAPITAL RESOURCES
THREE MONTHS ENDED NOVEMBER 27, 1998

During the first quarter of fiscal 1999,  operating  activities provided cash of
$2,049,000.  Net earnings  adjusted for non-cash  expenses  provided $684,000 of
cash,  while  changes in  accounts  receivable  and  customer  deposit  balances
provided $1,438,000 of cash. Changes in inventories, accounts payable, and other
assets used $73,000 of cash. Cash used by investing  activities for property and
equipment   expenditures  and  capitalized   software  additions  was  $285,000.
Financing activities used cash of $108,000 for scheduled repayments of long-term
obligations.

On August 4, 1998,  WCI amended its  secured  revolving  line of credit and term
loan facility (loan facility) with a bank to provide a maximum  available credit
limit of $10,000,000 (previously $8,500,000). The credit limit increase provides
for  advances  of up to 70% of the  appraised  value of  certain  real  property
subject to a sublimit  of  $1,500,000.  The loan  facility  was also  amended to
extend the term  through  June 21, 2000 or upon  demand,  to reduce the interest
rate to the bank's  prime rate (7.75% at November 27,  1998)  (previously  prime
plus 1/2% on the revolving line and

                                       12
<PAGE>

prime  plus 1 1/2% on the term  line) and to amend the  annual  facility  fee to
$55,000 plus an additional .75% of $3,000,000,  if borrowings  exceed $5,500,000
(previously $85,000).  Advances for real property are payable over 35 months and
bear interest at a fixed annual rate of 250 basis points over the five year U.S.
Treasury rate in effect at the time of disbursement. During the first quarter of
fiscal  1999,  $1,360,000  was advanced to pay off the  existing  mortgage  note
balance. At the time of disbursement the annual interest rate was set at 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 material 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.  Revolving line of credit advances plus equipment term loan advances
are  subject to a sublimit of  $8,500,000.  At November  27,  1998,  outstanding
balances on real property advances were $1,321,000. No balances were outstanding
on the  revolving  line of credit or  equipment  term loan  portions of the loan
facility.  Additionally,  at November 27,  1998,  approximately  $3,790,000  was
available to borrow under the advance formulas.

The Company  expects that its current cash and cash  equivalents  combined  with
expected  cash flows  from  operating  activities  and the  Company's  available
line-of-credit  will be sufficient to support the  Company's  operations  during
fiscal 1999.

YEAR 2000

State of Readiness
------------------

Management of the Company has reviewed the Company's current information systems
and has found  them,  with a few minor  exceptions,  to be Year 2000  compliant.
However,  the  Company  is  currently  in the  process  of  replacing  its older
information  systems with new systems that offer easier  access to more data and
are certified to be able to handle the Year 2000 transition.

Management  of the Company has reviewed and tested the  Company's  phone,  voice
mail,  e-mail,  and  security  systems  and all  are  believed  to be Year  2000
compliant.  Utility  companies  have been  contacted  and have  reported  to the
Company  that only minor  problems  have been noted in regards to their  billing
software as a result of their Year 2000 testing completed to date.

The  Company  has  requested  Year  2000  compliance  statements  from all major
vendors. There have been no indications that major vendors will not be Year 2000
compliant. However, there can be no absolute assurances in this regard and their
failure to be  compliant  remains a  possibility.  If vendors  are not Year 2000
compliant,  there  can be no  assurance  that the  Company  will be able to find
suitable  alternate  suppliers and contract with them on reasonable terms, or at
all,  and such  inability  could  have a  material  and  adverse  impact  on the
Company's business and results of operations.

All test equipment used in engineering,  service, and manufacturing  departments
has been reviewed and all are Year 2000 compliant.

All of the Company's  products have been reviewed for Year 2000 compliance.  All
are compliant  with the exception of certain minor  problems in the schedule and
repetitive  scheduler  programs  of an older  version  of uplink  software.  All
customers  affected by this are being offered a migration path to newer software
which is Year 2000 compliant. 

                                       13
<PAGE>

Costs to Address the Year 2000 Issues
-------------------------------------

Management  of the Company  believes  that  although the  evaluation of internal
systems  is still in  process,  the  impact of the Year 2000  transition  on the
Company's  internal  systems will not result in material costs to the Company or
have a material adverse impact on future results.

Risks of the Year 2000 Issues
-----------------------------

The main risk to the Company  with  respect to Year 2000 is the failure of major
vendors and service  providers to be Year 2000 compliant.  Failure on their part
could result in delays in obtaining parts,  increased cost of parts, and overall
inability  to  manufacture  product in the event of a shutdown of major  utility
providers. Major vendors and service providers have reported to the Company that
they will be Year 2000  compliant.  The Company  cannot  estimate the  financial
impact of any failure to be Year 2000  compliant by such third party vendors and
service providers.

Contingency Plans
-----------------

The Company does not have a contingency plan for Year 2000 compliance because it
does not anticipate that it will fail to be Year 2000 compliant, particularly in
relation to those systems,  software  programs,  and hardware that are under its
control.  However,  there can be no assurances  that all measures being taken to
avoid Year 2000 problems will be effective and as such,  unforeseen issues could
arise that could lead to a material adverse effect upon the Company's  business,
operating results and financial condition.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

No response to this item is required.

                                       14
<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 November 27, 1998.

                                       15
<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 11, 1999                 By: /s/ Robert A. Placek           
                                        -------------------------------------
                                                Robert A. Placek
                                                President
                                                (Principal Executive Officer)



Date:  January 11, 1999                 By: /s/ C. Troy Woodbury, Jr.       
                                        -------------------------------------
                                                C. Troy Woodbury, Jr.
                                                Treasurer and Chief
                                                Financial Officer
                                                (Principal Financial and
                                                Accounting Officer)

                                       16