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 February 26, 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, as of March 25, 1999.

Common Stock, $.01 par value                               11,864,089 Shares
----------------------------                          --------------------------
           Class                                      Outstanding March 25, 1999

<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                Form 10-Q For the Quarter Ended February 26, 1999

                                      INDEX
                                                                         Page(s)
                                                                         -------

PART I.  Financial Information

  Item 1.  Consolidated Financial Statements

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

           Consolidated Statements of Operations
           (Unaudited) - Three and Six Months Ended
           February 26, 1999 and February 27, 1998 ............................4

           Consolidated Balance Sheets - February 26,
           1999 (Unaudited) and August 28, 1998 ...............................5

           Consolidated Statements of Shareholders' Equity
           (Unaudited) - Six Months Ended February 26,
           1999 and February 27, 1998 .........................................6

           Consolidated Statements of Cash Flows
           (Unaudited) - Six Months Ended February 26,
           1999 and February 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 ............................12-16

  Item 3.  Quantitative and Qualitative Disclosures About Market Risk.........16

PART II. Other Information

  Item 1.   None
  Item 2.   None
  Item 3.   None
  Item 4.   Submission of Matters to a Vote of Security Holders ..............17
  Item 5.   None
  Item 6.   Exhibits and Reports on Form 8-K .................................17

           Signatures ........................................................18

                                       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  February  26,  1999;  the  consolidated
statements  of  shareholders'  equity as of February  26, 1999 and  February 27,
1998;  the  consolidated  statements of operations  for the three and six months
ended February 26, 1999 and February 27, 1998; and the  consolidated  statements
of cash flows for the six months  ended  February 26, 1999 and February 27, 1998
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)

<TABLE>
<CAPTION>
                                                 Three months ended                 Six months ended
                                            FEBRUARY 26,     February 27,     FEBRUARY 26,     February 27,
                                                1999             1998             1999             1998
-----------------------------------------------------------------------------------------------------------
<S>                                         <C>              <C>              <C>              <C>         
Revenues                                    $  7,025,955     $ 10,165,264     $ 13,492,206     $ 16,871,284
-----------------------------------------------------------------------------------------------------------

Operating costs and expenses
    Cost of products sold                      4,476,980        6,472,192        8,844,260       11,003,931
    Selling, general, and administrative       1,267,010        1,194,904        2,392,749        2,245,214
    Research and development                     724,481          698,390        1,358,120        1,368,286
-----------------------------------------------------------------------------------------------------------

Operating costs and expenses                   6,468,471        8,365,486       12,595,129       14,617,431
-----------------------------------------------------------------------------------------------------------

Operating income                                 557,484        1,799,778          897,077        2,253,853
    Interest expense                             (34,887)         (62,893)         (78,383)        (138,679)
    Interest income                               92,961          157,922          175,917          235,556
-----------------------------------------------------------------------------------------------------------

Earnings before income taxes                     615,558        1,894,807          994,611        2,350,730

Income tax expense                               220,000          720,000          368,000          893,000
-----------------------------------------------------------------------------------------------------------

Net earnings                                $    395,558     $  1,174,807     $    626,611     $  1,457,730
===========================================================================================================

Net earnings per share:
    Basic                                   $        .03     $        .10     $        .05     $        .13
    Diluted                                 $        .03     $        .10     $        .05     $        .12
===========================================================================================================

Shares used in per share calculation
    Basic                                     12,001,631       11,826,964       11,986,754       11,586,234
    Diluted                                   12,206,553       12,003,591       12,131,871       11,967,977
===========================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                          FEBRUARY 26,      August 28,
                                                              1999             1998
---------------------------------------------------------------------------------------
ASSETS
<S>                                                       <C>              <C>
Current assets
    Cash and cash equivalents                             $  7,442,596     $  6,492,760
    Accounts receivable                                      4,839,404        5,314,938
    Inventories                                              6,760,547        7,120,393
    Deferred income taxes                                    1,085,500        1,011,000
    Other                                                      149,660           23,710
---------------------------------------------------------------------------------------

        Total current assets                                20,277,707       19,962,801

Property and equipment                                       4,415,438        4,523,297
Capitalized software costs                                   1,114,760        1,211,914
Other assets                                                    59,051          207,002
---------------------------------------------------------------------------------------

                                                          $ 25,866,956     $ 25,905,014
=======================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
    Accounts payable                                      $  1,680,216     $  2,113,205
    Accrued expenses                                         1,591,082        1,490,041
    Customer deposits                                          972,719          784,621
    Current maturities of long-term obligations                644,511          597,664
---------------------------------------------------------------------------------------

       Total current liabilities                             4,888,528        4,985,531

Long-term obligations, less current maturities                 897,167        1,231,338
Deferred income taxes                                          571,000          608,000
---------------------------------------------------------------------------------------

       Total liabilities                                     6,356,695        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                             19,450,451       19,407,417
     Retained earnings (deficit)                               509,119         (117,492)
     Less treasury stock, at cost (450,486 and 358,546
          shares)                                             (572,455)        (332,926)
---------------------------------------------------------------------------------------

            Total shareholders' equity                      19,510,261       19,080,145
---------------------------------------------------------------------------------------

                                                          $ 25,866,956     $ 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                        Treasury Stock
                                                    ------------            Paid-in                         --------------  
                                                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                   --            --        20,670            --         22,325         20,730
    Issuance of common stock for
       convertible debentures                     950,658         9,507     1,238,320            --             --             --
    Net earnings for the six months                    --            --            --     1,457,730             --             --
---------------------------------------------------------------------------------------------------------------------------------

BALANCE, AT FEBRUARY 27, 1998                  12,314,575   $   123,146   $19,343,690   $(1,419,945)      (410,405)   $  (381,080)
=================================================================================================================================

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                   --            --        43,034            --         53,060         49,268
    Treasury stock repurchased                         --            --            --            --       (145,000)      (288,797)
    Net earnings for the six months                    --            --            --       626,611             --             --
---------------------------------------------------------------------------------------------------------------------------------

     BALANCE, AT FEBRUARY 26, 1999             12,314,575   $   123,146   $19,450,451   $   509,119       (450,486)   $  (572,455)
=================================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       6
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                 Six months ended
                                                            FEBRUARY 26,   February 27,
                                                               1999           1998
--------------------------------------------------------------------------------------

CASH PROVIDED (USED) BY OPERATING ACTIVITIES
<S>                                                        <C>            <C>        
    Net earnings                                           $   626,611    $ 1,457,730
    Adjustments to reconcile net earnings to
           cash provided (used) by operating activities
        Depreciation and amortization                          817,496        966,135
        Issuance of treasury stock for
            compensation expenses                               84,755         38,682
        Bad debt allowance                                      50,000             --
        Inventory reserves                                     150,000        350,000
        Deferred income taxes                                 (111,500)       893,000
    Changes in assets and liabilities
            Accounts receivable                                425,534        638,651
            Inventories                                        209,846      1,043,883
            Other assets                                      (137,583)        16,381
            Accounts payable and accrued expenses             (331,948)      (709,998)
            Customer deposits                                  188,098      3,495,507
--------------------------------------------------------------------------------------

                                                             1,971,309      8,189,971
--------------------------------------------------------------------------------------

CASH PROVIDED (USED) BY INVESTMENT ACTIVITIES
    Property and equipment expenditures                       (270,187)      (246,460)
    Capitalized software additions                            (182,712)      (197,347)
--------------------------------------------------------------------------------------

                                                              (452,899)      (443,807)
--------------------------------------------------------------------------------------

CASH PROVIDED (USED) BY FINANCING ACTIVITIES
    Proceeds from long-term debt                             1,359,508             --
    Purchase of treasury stock                                (288,797)            --
    Repayment of long-term debt and capitalized
        lease obligations                                   (1,646,832)      (284,072)
    Proceeds from stock options exercised                        7,547          2,719
--------------------------------------------------------------------------------------

                                                              (568,574)      (281,353)
--------------------------------------------------------------------------------------

Increase in cash and cash equivalents                          949,836      7,464,811
Cash and cash equivalents, beginning of period               6,492,760      2,242,433
--------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                   $ 7,442,596    $ 9,707,244
=====================================================================================

Supplemental disclosure of cash flow information:
    Cash paid during the six months for:
       Interest                                            $    88,456    $   140,806
       Income taxes                                        $        --    $        --
=====================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       7
<PAGE>

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

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 and
          six month periods  ending  February 26, 1999 and February 27, 1998 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:

                                            FEBRUARY 26,     August 28,
                                                1999            1998
                                            -----------     -----------
                                            (UNAUDITED)

          Accounts receivable - trade       $ 5,000,319     $ 5,139,414
          Recoverable income taxes                   --         295,000
          Other receivables                     139,837         137,515
                                            -----------     -----------
                                              5,140,156       5,571,929

          Less allowance for
               doubtful accounts               (300,752)       (256,991)
                                            -----------     -----------

                                            $ 4,839,404     $ 5,314,938
                                            ===========     ===========

NOTE 3    INVENTORIES

          Inventories are summarized as follows:

                                            FEBRUARY 26,     August 28,
                                                1999            1998
                                            -----------     -----------
                                            (UNAUDITED)

          Raw material                      $ 2,909,151     $ 2,692,937
          Work-in-process                     2,982,748       3,139,249
          Finished goods                      2,467,142       2,727,727
                                            -----------     -----------
                                              8,359,041       8,559,913

          Less inventory reserves            (1,598,494)     (1,439,520)
                                            -----------     -----------

                                            $ 6,760,547     $ 7,120,393
                                            ===========     ===========

NOTE 4    INCOME TAXES

          For the six months  ended  February  26,  1999,  income tax expense of
          $368,000  was  comprised  of a current  federal  and state  income tax
          expense of $439,300 and $40,200,  respectively, and a deferred federal
          and state tax  benefit of  $101,300  and  $10,200,  respectively.  Net
          deferred  tax  assets  increased  $111,500  in the first six months of
          fiscal 1999.

                                       9
<PAGE>

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
                                             ------------------------------------------------------------------------
                                                        FEBRUARY 26, 1999                    February 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                                   $395,558                            $1,174,807                       
                                               ========                            ==========

Basic earnings per share:
    Net earnings available
        to common shareholders                 $395,558    12,001,631    $ 0.03    $1,174,807    11,826,964    $0.10
                                                                         ======                                =====

Effect of dilutive potential common shares:
        Stock options                                --       204,922                      --       128,988
        Convertible debentures                       --            --                     988        47,639
                                               ----------------------              ----------    ----------

Diluted earnings per share:
    Net earnings available
        to common shareholders
        plus assumed conversions               $395,558    12,206,553    $ 0.03    $1,175,795    12,003,591    $0.10
                                               ========    ==========    ======    ==========    ==========    =====

<CAPTION>
                                                                            Six months ended
                                             ------------------------------------------------------------------------
                                                        FEBRUARY 26, 1999                    February 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                                   $626,611                            $1,457,730                       
                                               ========                            ==========

Basic earnings per share:
    Net earnings available
        to common shareholders                  626,611    11,986,754    $ 0.05    $1,457,730    11,586,234    $0.13
                                                                         ======                                =====

Effect of dilutive potential common shares:
        Stock options                                --       145,117                      --       155,749
        Convertible debentures                       --            --                   9,156       225,994
                                               ----------------------              ----------    ----------

Diluted earnings per share:
    Net earnings available
        to common shareholders
        plus assumed conversions               $626,611    12,131,871    $ 0.05    $1,466,886    11,967,977    $0.12
                                               ========    ==========    ======    ==========    ==========    =====
</TABLE>

                                       10
<PAGE>

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

<TABLE>
<CAPTION>
                                      Three months ended                     Six months ended
                               FEBRUARY 26,       February 27,        FEBRUARY 26,       February 27,
                                   1999               1998                1999               1998
                                ---------        --------------        ---------        --------------
<S>                             <C>              <C>                   <C>              <C>   
Common stock options:
    Number of shares                6,000                48,500            6,000                48,500
    Range of exercise prices    $    1.78        $2.44 to 12.13        $    1.78        $2.44 to 12.13
                                =========        ==============        =========        ==============
</TABLE>

NOTE 6    MAJOR CUSTOMERS

          Customers representing 10% or more of the respective period's revenues
          are as follows:

<TABLE>
<CAPTION>
                                      Three months ended                     Six months ended
                               FEBRUARY 26,       February 27,        FEBRUARY 26,       February 27,
                                   1999               1998                1999               1998
                               ----------------------------------------------------------------------

<S>                               <C>                <C>                 <C>                <C>  
          Customer 1              41.3%              49.1%               21.5%              30.5%
          Customer 2              20.3%               (a)                10.8%               (a)
          Customer 3               (A)                (a)                13.8%               (a)
          Customer 4               (A)                (a)                 (A)               10.7%
          Customer 5               (A)                (a)                 (A)               14.7%
</TABLE>

          (a) Revenues for the period were less than 10% of total revenues.

                                       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 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,  governmental regulation,  rapid technological developments and changes,
performance  issues with key  suppliers  and  subcontractors,  delays in product
development   and  testing,   availability   of  materials,   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,  through  Wegener  Communications,   Inc.  (WCI),  a  wholly-owned
subsidiary,  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 AND SIX MONTHS ENDED  FEBRUARY  26, 1999  COMPARED TO THREE AND SIX MONTHS
ENDED FEBRUARY 27, 1998

The operating  results for the three and six month  periods  ended  February 26,
1999 were net  earnings  of  $396,000  or $0.03 per  share and net  earnings  of
$627,000 or $0.05 per share,  respectively,  compared to $1,175,000 or $0.10 per
share and  $1,458,000  or $0.12 per share,  respectively,  for the three and six
month periods ended February 27, 1998.

REVENUES - The Company's  revenues for the three months ended  February 26, 1999
were  $7,026,000,  down 30.9% from revenues of $10,165,000  for the three months
ended  February 27, 1998.  Revenues  were  $13,492,000  for the six months ended
February 26, 1999,  down 20.0% from revenues of  $16,871,000  for the six months
ended February 27, 1998.

Direct Broadcast  Satellite (DBS) revenues decreased  $2,188,000 or 26.4% in the
second quarter of fiscal 1999 to $6,109,000  from  $8,297,000 in the same period
of fiscal  1998.  The  decrease  was due to lower  shipments  of  digital  video
products,  principally to one customer for conversion of their cable  television
broadcast  network from analog to digital  compression  technology.  Telecom and
Customer  Products  Group  revenues  decreased  $948,000  or 56.9% in the second
quarter of fiscal 1999 to $718,000 from  $1,666,000 in the same period 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

                                       12
<PAGE>

cable television headend systems.  For the three months ended February 26, 1999,
two customers  accounted for  approximately  41.3% and 20.3%,  respectively,  of
revenues.

For the six months ended February 26, 1999, DBS revenues decreased $1,870,000 or
13.7% to  $11,782,000  from  $13,652,000  for the six months ended  February 27,
1998.  The  decrease was due to decreased  shipments of digital  video  products
principally to one cable  television  broadcast  network  customer.  For the six
months ended  February  26,  1999,  Telecom and Custom  Product  Group  revenues
decreased  $1,482,000 or 53.0% to $1,313,000  from $2,795,000 for the six months
ended  February  27,  1998.  The  decrease  was  mainly  due to lower  levels of
shipments of cue and control  equipment.  For the six months ended  February 26,
1999 three  customers  accounted  for 21.5%,  10.8% and 13.8%,  respectively  of
revenues.  The  Company's  backlog is comprised of  undelivered,  firm  customer
orders,  which are scheduled to ship within eighteen  months.  WCI's backlog was
approximately $6,900,000 at February 26, 1999, compared to $12,596,000 at August
28, 1998 and $16,100,00 at February 27, 1998.

GROSS PROFIT MARGINS - The Company's gross profit margin  percentages were 36.3%
and 34.4% for the three and six month periods  ended  February 26, 1999 compared
to 36.3% and 34.8% for the three and six month periods ended  February 27, 1998.
Gross profit margin  dollars  decreased  $1,144,000 and $1,219,000 for the three
and six month  periods  ended  February  26,  1999 from the same  periods  ended
February 27,  1998.  The  decreases  in margin  dollars were mainly due to lower
sales  during the  periods.  Gross  profit  margin  percentages  were  favorably
impacted in the three and six month periods ended February 26, 1999 by a product
mix of lower  variable  cost  components  which was offset by higher  unit fixed
costs due to the decrease in sales volumes.  Profit margins in the three and six
month periods of fiscal 1999 included  inventory reserve charges of $100,000 and
$150,000  compared to $300,000 and $350,000 for the same periods of fiscal 1998.
Additionally, the three and six month periods of fiscal 1998 included a $100,000
charge for  write-offs  of  capitalized  software  compared  to none in the same
periods of fiscal 1999.

SELLING, GENERAL AND ADMINISTRATIVE - Selling, general and administrative (SG&A)
expenses  increased  $72,000 or 6.0% to  $1,267,000  for the three  months ended
February 26, 1999 from  $1,195,000 for the three months ended February 27, 1998.
For the six months ended February 26, 1999, SG&A expenses  increased $148,000 or
6.6% to $2,393,000  from $2,245,000 for the same period ended February 27, 1998.
The three and six month  changes  were  mainly  due to  increases  in  marketing
expenses, bad debt provisions, and non-employee  administrative costs which were
partially offset by lower sales incentive expenses. As a percentage of revenues,
SG&A  expenses  were 18.0% and 17.7% for the three and six month  periods  ended
February  26, 1999  compared  to 11.8% and 13.3% for the same  periods of fiscal
1998. The increases in  percentages  for the three and six months ended February
26, 1999 compared to the same periods of fiscal 1998 were primarily due to lower
revenues.

RESEARCH AND  DEVELOPMENT  - Research and  development  expenditures,  including
capitalized software development costs, were $822,000,  or 11.7% of revenues and
$1,541,000  or 11.4% of  revenues  for the  three and six  month  periods  ended
February 26, 1999,  compared to $788,000 or 7.8% of revenues and  $1,565,000  or
9.3% of  revenues  for the same  periods of fiscal  1998.  Capitalized  software
development  costs  amounted to $98,000 and $183,000 for the second  quarter and
first six months of fiscal 1999  compared to $90,000 and  $197,000  for the same
periods of fiscal 1998. The increase in expenditures  for the three months ended
February  26, 1999 was  primarily  due to an increase in  engineering  personnel
expenses.  The decrease in  expenditures  for the six months ended  February 26,
1999 was  primarily  due to lower  prototype  material  expenses.  Research  and
development expenses, excluding capitalized software expenditures, were $724,000
or 10.3% of revenues and  $1,358,000  or 10.1% of revenues for the three and six
months  ended  February  26, 1999  compared to $698,000 or 6.9% of revenues  and
$1,368,000 or 8.1% of revenues for the same periods of fiscal 1998.

                                       13
<PAGE>

INTEREST EXPENSE - Interest expense  decreased  $28,000 to $35,000 for the three
months ended  February 26, 1999 from $63,000 for the three months ended February
27, 1998. For the six months ended February 26, 1999, interest expense decreased
$61,000 to $78,000 from  $139,000  for the same period ended  February 27, 1998.
The decreases for the three and six month periods in fiscal 1999 were  primarily
due to a decrease  in the  average  outstanding  balance of  indebtedness  and a
decrease in the interest rate on the mortgage debt.

INTEREST INCOME - Interest income was $93,000 and $176,000 for the three and six
month periods ended February 26, 1999, compared to $158,000 and $236,000 for the
same periods ended  February 27, 1998.  The decreases  were due to lower average
cash equivalent balances during the periods and a decrease in investment yields.

INCOME TAX  EXPENSES - For the six months ended  February  26, 1999,  income tax
expense of $368,000  was  comprised  of a current  federal and state  income tax
expense of $439,300 and $40,200,  respectively, and a deferred federal and state
tax benefit of $101,300  and  $10,200,  respectively.  Net  deferred  tax assets
increased $111,500 in the first six months of fiscal 1999.

LIQUIDITY AND CAPITAL RESOURCES
SIX MONTHS ENDED FEBRUARY 26, 1999

During the first six months of fiscal 1999,  operating  activities provided cash
of $1,971,000.  Net earnings adjusted for non-cash expenses provided  $1,617,000
of cash, while changes in accounts receivable,  inventories and customer deposit
balances  provided  $824,000  of cash.  Changes  in  accounts  payable,  accrued
expenses  and  other  assets  used  $470,000  of cash.  Cash  used by  investing
activities  for property and equipment  expenditures  and  capitalized  software
additions was $453,000. Financing activities used cash of $287,000 for scheduled
repayments of long-term  obligations  and $289,000 for the  repurchase of common
stock. Proceeds from stock options exercised provided cash of $8,000.

On January 28, 1999 the Board of Directors  approved a stock repurchase  program
authorizing  the repurchase of up to one million shares of its common stock over
the next twelve  months.  During the second  quarter of fiscal 1999, the Company
repurchased 145,000 shares of its common stock in open market transactions at an
average price of $1.99.  Subsequent to the second quarter an additional  109,000
shares have been  repurchased  bringing the  year-to-date  total of  repurchased
shares to 254,000 at an average price of $1.84.

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 February 26,  1999)  (previously  prime
plus 1/2% on the  revolving  line and 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

                                       14
<PAGE>

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 February  26, 1999,  the  outstanding  balance on real  property
advances was $1,204,000.  No balances were  outstanding on the revolving line of
credit or equipment  term loan portions of the loan facility.  Additionally,  at
February 26, 1999,  approximately  $3,386,000  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.  Conversions to the
new systems are expected to be completed by the end of fiscal 1999.

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
and service  providers.  There have been no indications  that these parties 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 and
service  providers are not Year 2000  compliant,  there can be no assurance that
the Company will be able to find  suitable  alternate  sources and contract with
them on reasonable  terms,  or at all, and such inability  could have a material
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 are Year 2000 compliant or not date dependent.

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.

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

Management of the Company believes 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 products in the event of a shutdown of

                                       15
<PAGE>

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.

                                       16
<PAGE>

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

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

          On January 28, 1999, the Annual Meeting of  Shareholders  was held and
          the following matters were voted upon:

          (1.) The shareholders  approved the election of the following nominees
               to the Board of Directors:

               (A.) Class I Directors

                            C. Troy Woodbury, Jr.
                                     11,314,645 votes FOR
                                        204,434 votes WITHHELD

                            Joe K. Parks
                                     11,254,218 votes FOR
                                        264,861 votes WITHHELD

               (B.) Class III Director

                            Thomas G. Elliot
                                     11,377,640 votes FOR
                                        141,439 votes WITHHELD


               The terms of office of James H. Morgan, Jr., and Robert A. Placek
               continued subsequent to the Annual Meeting.

          (2.) An amendment to the Company's  Certificate  of  Incorporation  to
               authorize a class of preferred  stock was defeated with 4,291,703
               votes FOR, 1,308,064 votes AGAINST, and 380,011 votes ABSTAINING.
               Broker non-votes totaled 5,539,302.

          (3.) The  appointment of BDO Seidman,  LLP as auditors for the Company
               for the fiscal year 1999 was approved with 11,286,177  votes FOR,
               92,792 votes AGAINST, and 140,011 votes ABSTAINING.

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 February 26, 1999.

                                       17
<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 its behalf by the
undersigned, thereunto duly authorized.

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


Date:  April 1, 1999                     By: /s/ Robert A. Placek               
                                             -----------------------------------
                                             Robert A. Placek
                                             President
                                             (Principal Executive Officer)


Date:  April 1, 1999                     By:  /s/ C. Troy Woodbury, Jr.         
                                             -----------------------------------
                                             C. Troy Woodbury, Jr.
                                             Treasurer and Chief
                                             Financial Officer
                                             (Principal Financial and
                                             Accounting Officer)

                                       18