<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-K

           X    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         -----          SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997

                                       OR

                TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         ------         SECURITIES EXCHANGE ACT OF 1934

                       FOR THE TRANSITION PERIOD FROM TO

                         COMMISSION FILE NUMBER 0-23212

                              TELULAR CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
          <S>                                                                               <C>
                      DELAWARE                                                                   36-3885440
          (STATE OR OTHER JURISDICTION OF                                                     (I.R.S.  EMPLOYER
           INCORPORATION OR ORGANIZATION)                                                   IDENTIFICATION NO.)
</TABLE>

            647 NORTH LAKEVIEW PARKWAY, VERNON HILLS, ILLINOIS 60061
             (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

                                 (847) 247-9400
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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<S>                                                                                  <C>          <C>
SECURITIES REGISTERED PURSUANT TO 12(b) OF THE ACT:                                  NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:                          COMMON STOCK, $.01 PAR VALUE
</TABLE>

         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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this form 10-K or any amendment to this Form 10-K. [ ]

         As of November 21, 1997, the aggregate market value of the voting
stock held by non-affiliates of the Registrant was approximately $50,787,288*
(based upon the closing sales price of such stock as reported by the NASDAQ
National Market on such date).

         The number of shares outstanding of the Registrant's common stock as
of November 21, 1997, the latest practicable date, was 32,613,543 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE

         Certain portions of the Proxy Statement to be filed with the
Securities and Exchange Commission within 120 days after the close of the
Registrant's fiscal year ended September 30, 1997 are incorporated by reference
in Part III of this Form 10-K.

*        Excludes the common stock held by Named Executive Officers, directors
         and stockholders whose ownership exceeds 5% of the common stock
         outstanding at November 21, 1997.  Exclusion of such shares should not
         be construed to indicate that any such person possesses the power,
         direct or indirect, to direct or cause the direction of management or
         policies of the Registrant or that such person is controlled by or
         under common control with the registrant.





                                       1
<PAGE>   2
                                     PART I

ITEM 1.  BUSINESS

Overview

         Telular Corporation (the "Company") is in the fixed wireless
telecommunications industry.  The Company designs, develops, manufactures and
markets products based on its proprietary interface technologies, which provide
the capability to bridge wireline telecommunications customer premises
equipment ("CPE") with cellular-type transceivers for use in wireless
communication networks, whether cellular, personal communications services
("PCS"), or satellite-based.  Applications of the Company's technology include
fixed wireless telecommunications as a primary service where wireline systems
are unavailable, unreliable or uneconomical, as well as wireless backup systems
for wireline telephone systems and wireless alarm signaling ("WAS").  The
Company's principal product lines: PHONECELL(R), a line of fixed wireless
terminals ("FWTs"); and TELGUARD(R), a line of WAS products, which allow CPE
designed for traditional wireline networks to send and receive voice, data and
facsimile signals over wireless networks.

         The Company in 1986 acquired the intellectual property rights of a
pending patent application dealing with a "cellular interface" concept and
methodology.  The patent not only describes a simple physical circuit or
device, but also the very concept and principles underlying the use of an
intelligent interface device (the "invention") in conjunction with
cellular-type transceivers and systems.

         In March 1990, the Company entered into a cross-license agreement with
Motorola Inc. ("Motorola") under which the Company licensed to Motorola certain
rights to manufacture, sell or use the invention.  The cross-license agreement
allows the Company to use Motorola's transceivers in its products.  In December
1992, Telular Canada, Inc. ("Telular Canada"), an independent Toronto-based
distributor of telecommunications products, purchased the title to the Canadian
patents for the Company's technology and the right to acquire the Company's
technologies solely for use and sale within Canada.

         In May 1993, Telular Canada acquired a minority interest in the
Company.  As a result of sales and dilution, Telular Canada owned approximately
2% of the outstanding stock as of November 21, 1997.  In November 1993,
Motorola partnered with the Company by acquiring an equity interest in the
Company, and owns approximately 15% of the shares outstanding as of November
21, 1997.

         During 1993, the Company also began to solidify its market position by
acquiring two key distributors/licensees: Telular International, Inc. ("Telular
International"), formerly known as Codecom Rural Communications located in
Puerto Rico, and Telular-Adcor Security Products, Inc. located in Atlanta,
formerly known as Adcor Electronics International, Inc..

         In January 1994, the Company completed an initial public offering
("IPO") of its common stock, which raised approximately $56.4 million.  The
Company's stock is traded on the NASDAQ National Market System under the ticker
symbol "WRLS".   In December 1995, the Company raised $18.0 million from a
private placement of convertible debentures.  In April and June 1997, the
Company raised an additional $18.8 million from private placements of series A
convertible preferred stock. See "Liquidity and Capital Resources" - Part II.

         In 1996, the Company announced and implemented a restructuring
program.  Under the restructuring, the Company consolidated three manufacturing
locations into its Atlanta, Georgia, facility, reduced the number of employees
from over 250 to 110 and eliminated a number of less profitable products.
During 1997, faced with terminating leases in Atlanta, Georgia and at its
headquarters in Buffalo Grove, Illinois, the Company consolidated the majority
of its manufacturing, sales and marketing, engineering, finance and
administrative functions into a new facility in Vernon Hills, Illinois.

         In three separate transactions on June 28, 1996, January 29, 1997 and
August 29, 1997, the Company acquired a total of 50% interest in Wireless
Domain Incorporated ("WD") (formerly Telepath Corporation) for $1.5 million of
cash and common stock of the Company valued at approximately $2.9 million.  WD
is a radio developer, based in Hauppauge, New York, that specializes in the
design of advanced cellular and personal communication services products. The
agreement between WD and the Company includes a multi-year product development
program designed to provide a new generation of state-of-the-art FWTs, which
include both analog and digital radio standards, for markets worldwide.  During
fiscal year 1997, the Company purchased services from WD approximating $2.7
million.





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<PAGE>   3
         On November 10, 1997, the Company acquired the remaining 50% of WD.
Under the terms of the merger, the Company issued 500,000 shares of common
stock and relinquished control of the 500,000 shares of common stock held by
WD.  The Company expects to achieve more rapid deployment of new products with
the full-time addition of WD's 29 engineers.

Wireless Telecommunications Overview

         The vast majority of the telephones in the world continue to be
concentrated in a relatively small number of industrialized countries.  While
telecommunications infrastructure is a critical element of economic growth,
most developing nations have telephone systems that are inadequate to sustain
essential services.  Thus, developing countries are seeking basic
communications solutions which are cost effective and can be deployed rapidly
to support aggressive economic development programs.

         The process of improving and expanding telephone networks using
advanced wireless technology in developed and developing countries has created
a major market for wireless telecommunication equipment such as the Company's
FWT.  In developed countries, mobile cellular systems have changed the way
people communicate and have enjoyed phenomenal growth that is expected to
continue in the future.  In developing countries, wireless local loop ("WLL")
systems represent what is very often the fastest and most cost-effective way of
providing basic telephone service.  WLL systems are conventional cellular
networks constructed and operated primary for fixed users.

         The International Telecommunications Union ("ITU") estimates that more
than 400 million access lines will be added worldwide during the 1995-2000 time
period. Of these access lines, 191 million are expected to be added in
developing countries.  The average projected cost per access line is $1,200
with most of the growth in developing countries occurring in urban areas.  The
potential role of wireless products and systems could be a significant factor
in the deployment of basic phone service as the cost per access line is
potentially lower and speed of deployment faster versus traditional wireline
systems.  Additionally, where wired telephone networks exist, wireless networks
offer an adjunct as well as an alternative method of communicating.  Where
wired telephone networks are non-existent or substandard, wireless
cellular-type networks are a primary service option.

         In the domestic market, rapid and dramatic advances in digital
wireless and wireline technology (Time Divisional Multiple Access ("TDMA"),
Group Special Mobile ("GSM, DCS 1800 and PCS 1900") and Code Division Multiple
Access ("CDMA")) along with fiber optic deployment have had, or are anticipated
to have, significant impact on the number and quality of telecommunications
service offerings. These technological advancements, coupled with the changes
in regulation, are reshaping the domestic telecommunications landscape as
evidenced by the creation of a new service offering, PCS, and the addition of
many new service providers in the local exchange telecommunications business.
If technological advances and price decreases continue to occur, a market in
the United States for fixed wireless service to be used in conjunction with, or
in place of, traditional wireline service may emerge for a variety of wireless
alternative access ("WAA") applications.

         The WAA market involves FWTs operating on mobile cellular networks
built primarily for handheld cellular phone users.  For WAA applications, FWT
sales generally begin developing after a new mobile network has been in
operation for a few years, when the growth rate in new cellular phone
subscribers slows and the mobile operator begins looking for new revenue
sources. FWTs offer this opportunity since they are less costly to support
(permanently linked to a specific cell site), generate more average airtime and
operate mainly at off-peak times.  The number of FWTs presently operating on
WAA networks exceeds that of WLL and is driven by the relative price for
airtime, as well as by the large installed base of mobile networks worldwide.





                                       3
<PAGE>   4
Company Strategy

         The Company's strategy is to leverage eleven years of pioneering
experience in the market, internationally-accepted products, and court-tested
patents into a continuing leadership position in the rapidly developing WLL and
WAA FWT equipment industry.  Global telecommunications equipment manufacturers
together with national and international service providers are increasingly
sharing the Company's vision that wireless systems in both developed and
developing countries are well suited for use as basic telephone service
networks.  The key trends that are fueling the worldwide adoption of WLL/WAA
programs include the following:

             -   Rapid acceptance of cellular mobile communications;
             
             -   An accelerating trend toward privatization of
                 telecommunication service in both developed and developing
                 countries;
             
             -   Development and adoption of digital wireless transmission
                 standards (e.g., TDMA, GSM, DCS 1800, PCS 1900 and CDMA)
                 which enhance network capacity and service capability while
                 significantly reducing the effective cost per subscriber
                 served;
             
             -   Service network providers acceptance of wireless network
                 solutions as fast, cost effective answers to their
                 customers' unfulfilled demand for telecommunications; and
             
             -   PCS licensing within the U.S., which should intensify
                 competition by wireless service providers to capture
                 wireline minutes of usage and the potential for a large
                 bypass market.

         Based upon its proprietary interface technology, the Company designs,
manufactures and markets a full line of FWT's covering all major radio
standards, allowing cost-effective, innovative communications solutions where
wired telephone networks are (1) of substandard quality, (2) unavailable on a
timely basis, (3) too costly, or (4) in need of alternative access or
backup/diverse routing capability for local telephone service exists.

         During fiscal year 1997, the Company's FWTs gained market position on
the following major radio standards:

             Analog - While the overall FWT market is shifting from analog
             cellular to digital cellular, there are many analog opportunities.
             Analog is sometimes used to meet regulatory deadlines on new WLL
             deployments in which the new digital infrastructure cannot be
             deployed fast enough.  Also, when new digital mobile networks are
             installed in urban areas, the older analog infrastructure often is
             displaced and then redeployed for WLL use in the surrounding
             suburban area.  The Company is the original supplier of analog
             FWTs and one of the few remaining analog suppliers, enabling it to
             capture a sizeable share of all new analog FWT business worldwide.

             Digital GSM - Despite the historical importance of analog, most
             planned FWT deployment in both WLL and WAA markets will be on one
             of the various digital standards - GSM, CDMA, or TDMA.  Digital is
             more desirable than analog because it provides superior capacity,
             voice privacy, higher transmission rates for fax and data, and
             additional user services such as Caller ID and messaging.  The
             Company's new GSM 900 FWTs was introduced during fiscal 1997. It
             should allow the Company to capture a fair share of the growth in
             the digital market.

         The Company spotted the beginning of a new trend in the WLL market
during the year.  Previously, most FWTs going onto WLL networks were sold by
infrastructure manufacturers who "bundled" the FWT/infrastructure for sale to
the WLL operator. Now, however, more savvy operators are unbundling: buying
infrastructure and FWTs separately.  The Company has already realized the
initial benefits of this trend with major new contracts with operators to
supply FWTs in the Philippines and Guinea.





                                       4
<PAGE>   5
Target Markets and Product Applications

         The Company's fiscal 1997 revenues have been primarily international,
derived from the sale of PHONECELL(R) FWTs for integration into WLL/WAA systems
being installed in developing countries.  Significant revenues were derived
domestically from the Company's TELGUARD(R)  product line, which provides
wireless backup to traditional wireline telephone and security systems, and
remote data acquisition and monitoring applications.

          The Company believes that its future revenues will be increasingly
derived from its international target markets, new product applications and
licensing, and the domestic expansion of the PCS service providers and its WAS
business.   As described below, the range of opportunities can be grouped into
four categories:

                 -   Wireless basic local and long-distance voice, data and
                     facsimile telephone service through repeat sales into
                     established mobile cellular networks and through joint
                     selling of terminals and to new WLL projects with
                     infrastructure providers;

                 -   Licensing and OEM supplier of the Company's technology;

                 -   Remote monitoring and supervisory control and data
                     acquisition ("SCADA"), including WAS products;

                 -   Disaster recovery and emergency back-up circuits.

Wireless Basic Telephone Service

         Many countries are evaluating or have already deployed wireless basic
telecommunications systems in conjunction with, or as an alternative to, the
expansion of their basic wireline systems.  The most significant market
opportunity for the Company's products is to continue to provide wireless basic
telephone service ("WBTS") in such developing countries.  A customer's needs
are very basic: simple voice, data and facsimile service. The primary customers
for WBTS in developing countries are businesses and medium-to-upper income
residential users, such as those in Hungary, Spain, Portugal, China,
Bangladesh, Philippines, Brazil, and Columbia.

         In developed countries, the Company's products represent an "enabling
technology" for competitive access service providers.  The use of wireless
technology to gain rapid and transparent WAA to a customer's long distance
service provider will be a significant application for the Company's products,
especially in the coming U.S. PCS environment.  Several wireless operators,
such as Sprint and AT&T Wireless, have already publicly identified WLL/WAA for
long distance traffic as a potentially major market segment.

Licensing and Original Equipment Manufacturer ("OEM") supplier of the Company's
technology

         In response to the international demand for the Company's proprietary
interface technology, which allows most standard wireline customer premises
equipment to operate over wireless telecommunications networks, the Company has
been promoting the use of its interface technology in other telecommunication
companies' products.  Such a marketing strategy may result in licensing,
selling of component parts and OEM production of complete units.  The Company
is actively talking with large international telecommunication companies with
respect to licensing its proprietary interface technology and providing product
under OEM arrangements.

Remote Monitoring and Security Alarm Monitoring

         The use of fixed wireless cellular systems for remote monitoring and
SCADA applications has been the most prevalent WAA application in developed
countries, especially in the U.S.  The Company's products have been
successfully marketed to numerous companies in a wide range of industries such
as highway authorities, oil companies, utility companies, agribusinesses, banks
and law enforcement agencies.

         A major sub-group within the wireless monitoring application segment
is security alarm monitoring.  Alarm monitoring was one of the first
applications of the Company's technology and continues to be a growing segment
of the market. Use of the Company's specialized products allows an alarm
monitoring system to automatically switch to a cellular network in the event of
a telephone line failure, allowing alarms to be transmitted.





                                       5
<PAGE>   6
Disaster Recovery and Back-Up Services

         Hundreds of major telephone network outages occur annually in the U.S.
and other countries around the world. Additionally, individual circuit outages
occur hourly, which not only cost businesses major sums of money annually, but
may also be life threatening, such as when hospitals or law enforcement or fire
departments are affected.  Today, with the widespread availability of wireless
telephone networks, a readily available and cost-effective solution is possible
with the Company's technology.

         The Company's products are installed in hospitals, financial
institutions, airports, emergency response and public service centers and
utility companies.  The wireless back-up approach also allows businesses to
take advantage of other communications situations where wireless service may be
a desirable option to wired phone service.  For example, wireless service may
be used for overflow traffic relief when regular telephone lines become blocked
due to usage or for least-cost routing for long distance where wireless may be
less expensive than local exchange carrier (LEC) rates. Wireless back-up
capability may also be integrated as part of a security monitoring system.

TECHNOLOGY AND PRODUCTS

Core Technology

         The Company's core patented technology is an intelligent interface
invention that permits standard wireline CPE to operate on wireless networks.
The Company's products containing the invention provide the capability to
bridge wireline telecommunications CPE and wireless networks, whether cellular,
PCS or satellite-based. The invention provides a standard dial tone, off-hook
detection signal and other signals usually provided by the LEC, through its
"tip" and "ring" wired local loop connection, which automatically generates a
"send" signal to the cellular transceiver once the user has finished entering
the telephone number. The Company has incorporated this core technology into a
variety of products and radio standards and continues to develop and exploit
derivative products and technologies for customer-specific applications.

Interface Technology

         The Company's products contain printed circuit boards that incorporate
its patented intelligent interface invention. The interface components are used
in the Company's finished products and are also sold separately.  In certain
cases, the Company licenses its interface technology or patent rights to other
companies, for which, in most cases, royalty fees are received.  However, to
date the bulk of the Company's revenues have been generated primarily through
the sale of finished products.

Transceivers

         The Company historically has contracted with several suppliers for the
critical components of its products. The major exception to this policy has
been transceiver units, which have been principally supplied by Motorola. The
Company's interface technology is compatible with several other manufacturers'
transceivers and the Company has been able to utilize transceivers from such
manufacturers. In addition, the Company will design and build its own radios
for selected FWTs in the future.

The Company's Product Line

         The product requirements for WLL and WAA can be categorized as
single-line fixed subscriber terminals (PHONECELL(R) series), and WAS units
(TELGUARD(R) /Series).  The Company believes future product offerings will
reflect a continued evolution of its existing product line.





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              PRODUCT                                           FEATURES
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 <S>                               <C>
 o PHONECELL(R)/Series             Single-line, self-contained unit for voice, data and facsimile
 (FWT products)                    that is available in a variety of standards (AMPS, NAMPS, ETACS,
                                   TDMA, CDMA, GSM, PCS, DCS) and various housings

----------------------------------------------------------------------------------------------------
 o TELGUARD(R)/Series              Specialized, single-line security alarm backup units for
   (WAS products)                  commercial and residential use; available with a range of options
                                   and features
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SALES, MARKETING AND SERVICE

International Sales

         The international marketplace is characterized by new and repeat sales
into established mobile cellular networks and to the emerging WLL programs
throughout the world. The Company has built an international sales and
marketing team made up of professionals with experience in the Middle-East,
Latin America, Asia, Europe, and Africa.  It has regional sales offices in
Chicago, Illinois; Atlanta, Georgia; Miami, Florida; Oxford, England and
Singapore. The ability to provide on-site customer technical assistance and
support has been identified as a key selling requirement, and these regional
offices aid in providing this important service.

U.S. Sales

         The Company markets certain products in the U.S. directly via an OEM
sales group in Chicago, Illinois.  With the imminent deployment of PCS networks
in the U.S., the Company is focusing on establishing product development and
supply relationships with network operators and PCS transceiver/infrastructure
manufacturers and large telecommunication companies.

         The Company's TELGUARD(R)  line of WAS products is marketed almost
exclusively in the U.S. for operation on AMPS - based cellular networks.

 Service and Support

         The Company believes that providing customers with comprehensive
product service and support is critical to maintaining a competitive position
in the wireless telecommunications equipment industry. The Company offers
warranty and repair service for its products through three primary methods: (1)
advance replacement kits shipped as warranty with orders, (2) in-house service
and technical sales support technicians and engineers at its Vernon Hills,
Illinois and Hauppauge, New York facilities, as well as each regional sales
offices (domestic and international) and (3) authorized third party service
centers in various regions of the world (often operated by authorized
distributors).

MOTOROLA RELATIONSHIP

         In November 1993, the Company entered into a strategic agreement with
Motorola, whereby Motorola, through its Cellular Subscriber Group, acquired an
interest in the Company of approximately 19% and, pursuant to an option,
subsequently increased its holdings to 20%.  Motorola, after dilution due to
the issuance of additional shares of common stock by the Company, now owns
approximately 15% of the outstanding shares of the Company.  Motorola also
obtained the right to representation on the Company's Board of Directors and
presently has one director.  The agreement provided the Company with access to
certain of Motorola's engineering, technical service and other resources on a
fee basis, subject to availability.  In addition, Motorola makes its Advanced
Mobile Phone System ("AMPS"), Extended Total Access Communication System
("ETACS"), NAMPS, TDMA, GSM, CDMA, Iridium and other transceivers available for
purchase by the Company for use in its products when, if, and as available.





                                       7
<PAGE>   8
         During October and November of 1995 the Company expanded its
relationship with Motorola.  It was awarded a contract to supply a customized
version of its PHONECELL(R)  product to Motorola's Cellular Infrastructure
Group ("CIG") for deployment in existing and future WLL projects in Hungary.
In addition, CIG agreed to purchase $100 million of the Company's FWTs and
provide funding for engineering and product development activities over a
three-year period, commencing January 1, 1996. During 1996 and 1997 the Company
shipped $6 million and $21 million, respectively, of product under this
agreement.

RESEARCH AND DEVELOPMENT

         The Company believes that its future success depends on its ability to
adapt to the rapidly changing telecommunications environment and to continue to
meet customers' needs. The Company is currently adapting its products to new
wireless technologies and is working closely with several companies, including
long-distance carriers, cellular service providers and telecommunications
infrastructure providers and equipment manufacturers, to develop new FWT
products.

         As of September 30, 1997, the Company's research and development staff
comprised 19 engineers segregated into four teams.  Each team is responsible
for a specific standard such as GSM, CDMA or AMPS.  Additionally, the research
area continually investigates methods by which the Company can reduce the costs
of its products.  During 1996 and 1997 the Company acquired a 50% interest in
WD which has 29 engineers available for research and development projects on a
contract basis.  On November 10, 1997, the Company acquired the remaining 50%
of WD.  The Company expects to achieve more rapid deployment of new products
now that it has nearly 50 full-time engineers.

         The Company plans to introduce five new FWTs in fiscal 1998.  These
include one analog FWT-the SX3 AMPS, and four digital FWTs-the SX2 TDMA, the 
SX2 CDMA, the SX2 DCS1800 and the SX4 GSM900.  All of these will operate 
from a common hardware/software platform, will cost less to make and will have 
more features than the present versions they will replace.

MANUFACTURING

         Fabrication of the Company's products is accomplished through a
combination of in-house manufacturing and subcontracting.  The assembly of
printed circuit board interfaces for both FWT and WAS products is performed at
the Company's facility in Vernon Hills, Illinois. The Company has developed
proprietary testing equipment and procedures to conduct comprehensive quality
control and quality assurance throughout the manufacturing and assembly
process. Quality programs are a high priority at the Company.  The Vernon Hills
facility expects to become ISO 9001 certified during fiscal year 1998.  The
Company utilizes contract manufacturers to augment its manufacturing
capability, thereby enabling it to more rapidly expand capacity when required
to meet large orders.  The Company's quality assurance department works closely
with contract manufacturers to ensure compliance to the strict quality
standards of the Company.

EMPLOYEES

         As of November 21, 1997, the Company had 155 employees, of which 26%
are in sales and marketing, 31% in engineering and product development, 35% in
manufacturing and 8% in finance and administration.  None of the Company's
employees are represented by organized labor.

COMPETITION

         The industry consists of major domestic and international
telecommunications equipment companies, many of which have substantially
greater financial, technical, marketing, sales, manufacturing, distribution and
other resources than those of the Company, and includes companies such as
Motorola, Northern Telecom, Ericsson and Nokia.  There are also international
and domestic companies with less resources that make products that compete
directly with the Company where the Company's patent protection is not
available.  The Company competes with these companies primarily by selling
products that provide features and qualities not otherwise available on the
market, by developing new products incorporating its technology and by
promoting new applications of its existing product line. The Company's
interface and its related technology have been, and will continue to be,
afforded substantial protection in those markets in which it holds patents (See
"Business--Patents, Licenses and Other Intellectual Property").  In markets
where the Company holds no patents, the Company competes directly with a range
of competitors.  Approximately 82% of the Company's fiscal 1997 shipments were
destined for foreign countries, most of which afforded little or no patent
protection.





                                       8
<PAGE>   9
         The wireless telecommunications industry is experiencing significant
technological change, such as the transformation of cellular systems from
analog to digital. The rate at which this change occurs and the success of such
new technologies may have a material effect on the rate at which the Company
expands its business and on its ability to achieve profitability.  The Company
continues to invest in research and development in order to meet the
technological advances in the industry and stay abreast of changes in cellular
standards and end-user requirements.

         Presently, the Company licenses its patent rights to Motorola, under
which Motorola is licensed to produce its own cellular interface. Motorola also
sells fixed cellular products, and several other companies purchase Motorola's
interface for inclusion in there own fixed cellular products. The Company
receives a per unit royalty for any such products sold that are covered by the
Company's patents. Motorola is a competitor with the Company in markets for
analog AMPS and digital CDMA products both domestically and internationally.

         The Company has granted licenses under its patents to others for
various uses and applications and continues to pursue such license
arrangements.  It may face competition from those licensees, their
sublicensees, or their customers.

         It is inevitable in growing markets with huge potential that
competition will increase.  Accordingly, a few infrastructure suppliers
introduced FWTs during the year.  The Company believes its advantages over
industry competition are:

             Better focus/commitment -  In the WLL market, the Company's only
             business is FWTs.  Most often, competitors sell FWTs to support
             their infrastructure business.

             More experience -  The Company has been in the FWT business for 
             eleven years.

             Broader product line - The Company offers FWTs that operate on all
             major non-proprietary radio standards.

To ensure that our leadership position is maintained, we are doing a
comprehensive makeover of our entire product line for introduction in fiscal
1998.

PATENTS, LICENSES AND OTHER INTELLECTUAL PROPERTY

         The Company's success in the United States depends to a considerable
extent upon its ability to obtain and enforce intellectual property rights for
its technology in the United States.  With respect to its interface technology,
the Company currently has seven United States patents, as well as 24 foreign
patents, and two pending foreign patent application.

         Principal Patent.  The patent for the Company's "system for
interfacing a standard telephone set with a radio transceiver", U.S. Patent No.
4,658,096 (the "096 Patent"), was issued by the U.S. Patent Office on April 14,
1987 and expires on April 14, 2004.  The '096 Patent has been filed in 16
countries and to date has been issued in all but one of these countries.

         The invention covered by the claims of the '096 Patent is an interface
between a standard telephone and a cellular transceiver and its equivalents.
The interface provides dial tone, off-hook detection signals, and many of the
other signals usually provided by regular wireline telephones.  The interface
also provides for the automatic generation of a "send" signal from the cellular
transceiver once the telephone number has been entered.

         In 1989, the validity of the '096 Patent was upheld by a U.S. District
Court, which enjoined a company from further infringement on the patent.  See
"Item 3 - Legal Proceedings".





                                       9
<PAGE>   10
       Continuation Patents.  In October, 1988 and May, 1990, the Company
obtained two patents (U.S. Patent Nos. 4,775,997 and 4,922,517, respectively),
the first of which is a continuation and broadening of the '096 Patent and the
second of which is a continuation of the first and further broadens the '096
Patent.  These continuation patents are meant to protect devices that are used
for outgoing calls only and do not require incoming call detection, and have
been terminally disclaimed to expire on April 14, 2004.  In April, 1988, the
Company obtained a continuation-in-part of the '096 Patent (U.S. Patent
4,737,975), which allows the interface to be programmed to enable it to
intelligently detect when various types of dialing formats are used (e.g.,
three digit numbers such as 911 or 411) and to set the proper logic to cause
the transceiver to send the dialed phone number and allows the reprogramming of
the interface for use in countries where other dialing formats are used.

         The Company has successfully defended these continuation patents in
separate infringement actions.  See "Item 3 - Legal Proceedings".

         Other Patents.  In July, 1992, and November, 1994 patents were granted
to the Company (U.S. Patent Nos. 5,134,651 and 5,361,297) for "a method and
apparatus for providing answer supervision and an autonomous pay telephone
incorporating the same which relates to an interface for use with a pay
telephone and provides a real time display or printout of the costs associated
with a placed call".

         The following patents were granted to the Company: for the
self-diagnostic system for cellular transceivers, in November 1995, U.S. Patent
No. 5,469,494; in September 1991, U.S. Patent No. 5,046,085 for "interfacing
system for an international-type pay telephone" (in which the Company has
equitable rights); in the following countries for the "self-diagnostic system
for cellular transceiver systems": in December 1994, South Africa Patent
94/1880; in December 1995, Peru Patent 595; in November 1996, Slovenian Patent
9420026; in September 1996, Turkey Patent 28486; in November 1996, New Zealand
Patent 263661; in May 1997, Israel Patent 108809; for the "self-diagnostic
systems for cellular transceiver systems with remote reporting capability" in
June 1996, South Africa Patent 95/8218; and for the "method and apparatus for
providing answer supervision and an autonomous pay telephone incorporating the
same" in June 1994, Mexico Patent 174,818.

         In addition, the Company has the following patent applications: in the
U.S. (i) "Concurrent Wireline/Landline Interface Apparatus & Method"; (ii)
"Concurrent Wireline/Landline Interface Apparatus & Method" ("CIP"); (iii)
"Concurrent Wireline/Landline Interface Apparatus & Method"; (iv) "Method and
Apparatus for Generating Tariff Pulses for a Cellular Pay-Telephone (patent
pending)"; and (v) Self Diagnostic Systems on Cellular Transceiver Systems with
Remote Reporting CIP; and in foreign countries: (i) "Self-Diagnostic System for
Cellular Transceiver Systems" in 35 countries ending most parties contracting
to the European Patent Convention or PCT; (ii) "Self-Diagnostic System for
Cellular Transceiver Systems with Remote Reporting Capabilities" in 3
countries; and (iii) "Concurrent Wireline/Landline Interface Apparatus &
Method" in Israel.

         Applicability of the Company's Patents to Emerging Wireless
Technologies.  Although the Company believes its intelligent interface can be
adapted to accommodate emerging wireless technologies (such as PCS, ESMR and
satellite networks), there can be no assurance that these new applications will
fall within the scope of the existing patent protection because in certain
circumstances the licenses for these technologies have not been granted or have
not yet been defined.

         Infringement Claims.  The only claim is by two individuals, and it is
a reassertion of a claim against the Company originally made in 1986.  The
Company, in reliance on the advice of its patent counsel, believes the claim is
both erroneous and legally precluded.  The Company's patent counsel is Hamman &
Benn, the principals of which are stockholders of the Company and stockholders
of DNIC, a major shareholder of the Company.  See "Item 3(b) - Legal
Proceeding."

         Foreign Patents.  While the Company has obtained patent protection in
certain foreign jurisdictions, and has patent applications pending in some
countries, it has not established patent protection in many other countries,
including the principal countries of Western Europe for its principal patents.
The Company, as well as any third party, is now precluded from obtaining patent
coverage for the Company's core technology in any country where it does not
currently have patent protection in Western Europe and throughout the world
under the Patent Cooperation Treaty for new uses of the invention in
conjunction with a pending U.S.  patent application.  In the absence of patent
protection, the Company has relied upon other competitive factors, including
the quality of its products and the desirability of using products that meet
the same specifications as those in the United States and other countries where
the Company has obtained patent protection.





                                       10
<PAGE>   11
         The Canadian patents for the Company's technology are owned by Telular
Canada, which is the Company's exclusive distributor in Canada.

Licensing of Technology.

The Company has granted licenses to a number of other companies, which include
the following:

<TABLE>
<S>                                              <C>
Motorola                                         (See Motorola Relationship);

CKG Technologies                                 (non-exclusive, nontransferable license limited
                                                 to the manufacture of a portable cellular workstation
                                                 and/or a cellular modem);

Harvest Electronics, Ltd.                        (non-exclusive license for manufacture and
                                                 sale of an interface for vending equipment);

Millidyne, Inc.                                  (non-exclusive license for manufacture and
                                                 sale of subscriber data modems and mobile data gateway equipment, incorporating
                                                 certain technology transferred by the Company); and

Powertek Industries                              (non-exclusive U.S. license for manufacture
                                                 and sale of a portable cellular workstation).

ADI                                              (non-exclusive world-wide license for manufacture
                                                 and sale of  fixed wireless terminals).
</TABLE>

Trademarks and Other Proprietary Information.

         The Company has 11 registered trademarks which are: TELULAR plus
design, TELULAR, CELJACK, MAXJACK,  TELCEL, Hexagon Logo, PHONECELL, CELSERV,
TELGUARD, CPX, and AXCELL.  In addition, the Company has six registered Mexican
trademarks covering the names and logos used for some of its products.  The
Company has one pending U.S. trademark application, which is: PCS(one). The
Company has 80 other foreign trademark registrations and 15 other foreign
trademark applications.

ITEM 2.  PROPERTIES.

         The Company leases, pursuant to a ten-year lease, its corporate
headquarters in Vernon Hills, Illinois which occupies 72,000 square feet.  In
addition to serving as corporate headquarters, the facility houses
manufacturing, sales and marketing, engineering, finance and administrative
functions.  The Company also leases space for international sales offices in
Miami, Florida, Oxford, England and Singapore.  The Company also leases space
to house its domestic salesforce in Atlanta, Georgia.

ITEM 3.  LEGAL PROCEEDINGS

The Company is party to the following actions:

         (a) Alliance Research Corporation v. Telular Corporation and Spectrum
Information Technologies, Inc. ("Spectrum"), CV 94 1065 RG, United States
District Court, Central District of California.

         On February 17, 1994, Alliance Research Corporation sued the Company
and Spectrum seeking Declaratory Judgment for invalidity and non-infringement
of the Company's 4,658,096 patent as well as its two continuation patents,
4,922,517 and 4,775,997.  The Company has denied the allegations and has
counterclaimed for patent infringement of the two continuation patents. On May
2, 1994, the Federal court in Los Angeles ruled in favor of Telular and
rejected the lawsuit challenging the '096 patent. Spectrum was dismissed as a
defendant on a motion made by Spectrum.  The Company has acquired Spectrum's
rights to receive court awarded damages in this case.  The Federal court, on
October 23, 1995, granted the Company's Motion for Partial summary judgment on
all issues except damages.  The





                                       11
<PAGE>   12
court enjoined Alliance from selling its CDL line of products.  Alliance has
appealed the summary judgment decision.  In May 1997, the United States Court
of Appeals for the Federal Circuit affirmed the lower court's summary judgement
decision on all issues except damages.  The matter is now back with the
district court for damage determination.  The Company intends to vigorously
pursue its claims.

         (b) Arthur L. Serrano and Andrew W. Holman v. Telular Corporation and
Spectrum, CV 94 1272, United States District Court, Central District of
California.

         On February 28, 1994, Serrano and Holman filed a Declaratory Judgment
action against the Company and Spectrum.  The suit involves the Company's
4,658,096 patent, as well as its two continuation patents, 4,922,517 and
4,775,997. The Company has answered and counterclaimed for patent infringement
of its continuation patents.  Plaintiffs are the former principals of Morrison
& Dempsey, which is now out of business. On July 13, 1995, Judge Letts entered
an order finding for the Company on all counts of the Complaint and
Counterclaims, and determining the Serrano and Holman infringement to be
willful, enabling the Company to receive treble damages, attorney's fees and
costs.  The final order was entered on March 20, 1996 granting the Company a
total of $663,178.82 in treble damages, attorney's fees and costs.  This
decision has been appealed by Serrano and Holman.  In April 1997, the United
States Court of Appeals for the Federal Circuit unanimously affirmed the lower
court's conclusion that patents 4,775,997 and 4,922,517 are valid and had been
infringed by the Plaintiffs.  The Company is currently executing its judgement
of $663,178.82 against the Plaintiffs.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended September 30, 1997.





                                       12
<PAGE>   13
                                    PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK

         The Company's common stock trades publicly on the NASDAQ National
Market System under the symbol "WRLS".  The following table sets forth the
quarterly high and low sales prices for each quarter of fiscal 1997, 1996,
1995, as reported by NASDAQ. Such quotations reflect inter-dealer prices
without markup, markdown or commissions and may not necessarily represent
actual transactions.

<TABLE>
<CAPTION>
                                                       QUARTER ENDED DURING FISCAL 1997                 
                                    -------------------------------------------------------------
                                      DECEMBER 31       MARCH 31       JUNE 30       SEPTEMBER 30
                                      -----------      ---------       -------       ------------
         <S>                          <C>               <C>            <C>              <C>
         High     . . . . . . . . .   $ 5.56            $ 8 .38        $ 6.00           $ 3.13
         Low      . . . . . . . . .   $ 4.31            $ 5 .00        $ 3.50           $ 2.25
</TABLE>

<TABLE>
<CAPTION>
                                                       QUARTER ENDED DURING FISCAL 1996                 
                                    -------------------------------------------------------------
                                      DECEMBER 31       MARCH 31       JUNE 30       SEPTEMBER 30
                                      -----------       --------       -------       ------------
         <S>                         <C>               <C>             <C>              <C>
         High     . . . . . . . . .  $ 15.37           $ 10 .50        $ 9.00           $ 6.62
         Low      . . . . . . . . .  $  8.00           $   2.00        $ 4.12           $ 4.12
</TABLE>

<TABLE>
<CAPTION>
                                                       QUARTER ENDED DURING FISCAL 1995                 
                                    -------------------------------------------------------------
                                      DECEMBER 31       MARCH 31       JUNE 30       SEPTEMBER 30
                                      -----------       --------       -------       ------------
         <S>                         <C>               <C>            <C>              <C>
         High     . . . . . . . . .  $ 10.62           $ 10 .25       $ 20.50          $ 20.25
         Low      . . . . . . . . .  $  6.00           $   6.50       $  7.25          $ 12.75
</TABLE>

         On November 21, 1997, there were approximately 359 shareholders of
record, 9,064 beneficial shareholders and 32,613,543 shares of common stock
outstanding.  The Company has not paid any dividends since its inception and
does not intend to pay any dividends on its common stock in the foreseeable
future.  Pursuant to the Company's Loan and Security Agreement with Sanwa
Commercial Credit Corporation, the Company has agreed that, during the term of
that agreement, the Company will not, without the consent of the lender,
declare or pay any dividend or other distribution on any class of its stock.

RECENT SALES OF UNREGISTERED SECURITIES

Compensation

         On April 18, 1996, the Company entered into an employment agreement
with Kenneth E. Millard, pursuant to which Mr. Millard agreed to serve as Chief
Executive Officer and President of the Company.  Under the Agreement, Mr.
Millard is to eligible to receive an incentive bonus of $200,000, payable
quarterly, based on performance targets established by the Board of Directors,
a portion of which is to be paid in the form of shares of common stock of the
Company (the "Common Stock") at fair market value.  For the quarter ended
December 31, 1996, the Company awarded Mr. Millard a bonus and in connection
therewith issued Mr. Millard 3,012 shares of Common Stock valued at $15,284.
For the quarter ended March 31, 1997, the Company awarded Mr. Millard a bonus
and in connection therewith issued Mr. Millard 1,546 shares of Common Stock
valued at $8,775.

         On April 22, 1997, the Company entered into a new employment agreement
with Robert C. Montgomery, pursuant to which Mr.  Montgomery agreed to serve as
Chief Operating Officer and Executive Vive President of the Company.  Under the
Agreement, Mr.  Montgomery is eligible to receive an annual incentive bonus of
$100,000 under the Company's Senior Management Bonus Plan, payable quarterly, a
portion of which is to be paid in the form of shares of Common Stock at fair
market value.  For the quarter ended December 31, 1996, the Company awarded Mr.
Montgomery a bonus and in connection therewith issued Mr. Montgomery 1,118
shares of Common Stock valued at $5,675.  For the quarter ended March 31, 1997,
the Company awarded Mr. Montgomery a bonus and in connection therewith issued
Mr. Montgomery 773 shares of Common Stock valued at $4,338.





                                       13
<PAGE>   14
         During the fiscal year ended September 30, 1997, the Company paid the
law of firm of Hamman and Benn aggregate fees of $354,613 for legal services,
which payments were comprised of $331,365 in cash and 5,448 shares of Common
Stock valued at $23,248.  The Company also issued 26,209 shares of Common Stock
valued at $86,045 to William L. De Nicolo, the Chairman of the Company pursuant
to a consulting agreement.  The consulting agreement with Mr. De Nicolo was
terminated effective September 30, 1997.

Wireless Domain Investment

         On June 28, 1996, the Company entered into an agreement to acquire a
50% interest in Wireless Domain in three transactions.  On June 28, 1996, the 
Company purchased a one-third interest in Wireless Domain in exchange for 
$1.0 million in cash and 350,000 shares of Common Stock valued at
approximately $2.2 million.  In two separate transactions on January 29, 1997,
and August 29, 1997, the Company purchased an additional one-sixth interest in
Wireless Domain in exchange for payments totaling $0.5 million and 150,000
shares of Common Stock valued at approximately $0.7 million.

Issuance of Preferred Stock

         The Board of Directors of the Company on April 15, 1997 created a new
series of 21,000 shares of Series A Convertible Preferred Stock (the "Preferred
Stock"), of which 20,000 shares have been issued.  On April 16, 1997, the
Company issued 5,000 shares of Preferred Stock to each of Nelson Partners and
Olympus Securities, Ltd. (collectively, 10,000 shares) in a private placement.
On June 6, 1997, the Company issued 5,000 shares of Preferred Stock to each of
Stark International and Shepherd International Investments, Ltd. (collectively
10,000 shares) in a private placement.  The Company received $20,000,000 from
the sales of the Preferred Stock, and paid to Lehman Brothers a placement fee
in connection with such sales, which was comprised of $996,197 in cash and
38,653 shares of Common Stock valued at approximately $106,296.  Senior
management anticipates that the funds will be used for the development of new
products for its worldwide fixed wireless terminal business.

         Each share of Preferred Stock issued by the Company has a face value
of $1,000, and is convertible into shares of Common Stock at a conversion price
equal to the lower of (i) $6.4856, which represents 110% of the 30-day average
trading price of the Common Stock immediately prior to April 16, 1997, when the
first shares of Preferred Stock were issued, and (ii) 85% (prior to October 15,
1999) or 100% (on or after October 15, 1999) of the 30-day average trading
price of the Common Stock prior to conversion, but in no event lower than a
minimum price.  The minimum price is $3.00 per share until April 15, 1998, and
$2.00 per share thereafter, in each case subject to certain adjustments.  In
addition, at conversion, holders of the Preferred Stock are entitled to an
effective 5% annual dividend on the shares of Preferred Stock, paid in shares
of Common Stock with the conversion price based on the average market price of
the Common Stock for the 30 trading days preceding conversion.

         If a holder of Preferred Stock elects not to convert its shares, then
the shares of Preferred Stock automatically convert to shares of Common Stock
on April 16, 1999, or October 16, 1999, depending upon the conversion price.
The Company also has the right to redeem the Preferred Stock for cash at
defined terms.

         A right of redemption on the part of the holders of the Preferred
Stock may be triggered by a number of events including the merger,
consolidation or sale of substantially all of the assets of the Company, the
purchase of more than 50% of the outstanding shares of Common Stock of the
Company, the failure by the Company to convert Preferred Stock when required to
do so, the delisting of the Company's Common Stock from a national securities
exchange, or the failure by the Company to timely register and keep in effect
the registration of the Common Stock to be issued upon conversion of the
Preferred Stock.

         The Common Stock into which the Preferred Stock is convertible has
been registered with the Securities and Exchange Commission for resale.

         The shares of Common Stock and Preferred Stock described in this
section were issued and sold by the Company in reliance on Section 4(2) of the
Securities Act of 1933, as amended, and the regulations promulgated thereunder.





                                       14
<PAGE>   15
ITEM 6.  SELECTED FINANCIAL DATA.

         The following table is a summary of certain condensed statement of
operations and balance sheet information of the Company.  The table sets forth
selected historical financial data of the Company for the years ended
September 30, 1997, 1996, 1995 and 1994 and the nine month period ended 
September 30, 1993.  The selected financial data were derived from audited 
financial statements.  The summary should be read in conjunction with financial
statements and notes thereto appearing elsewhere in this report.

<TABLE>
<CAPTION>
                                                                                                         NINE MOS.
                                                                      YEAR ENDED SEPTEMBER 30,             ENDED  
                                               --------------------------------------------------                 

                                                      1997          1996         1995         1994         1993(1)
                                                      ----          ----         ----         ----         -------
                                                                    (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                              <C>           <C>          <C>          <C>             <C>
STATEMENT OF OPERATIONS DATA:
Net sales                                          $48,417       $27,271     $ 33,031     $ 17,734         $ 6,575
  Cost of sales                                     37,881        23,906       27,530       13,326           4,741
                                                    ------      --------     --------     --------         -------
Gross profit                                        10,536         3,365        5,501        4,408           1,834

Operating expenses                                  16,753        19,936       27,042       33,809           5,894
Restructuring                                            -        11,019            -            -               -
                                                    ------      --------     --------     --------         -------


Loss from operations                               (6,217)      (27,590)     (21,541)     (29,401)         (4,060)
  Net other income/(expense)                           364           643        1,340        1,187            (12)
  Royalty income                                       551           354          540          281             364
                                                  --------       -------         ----     --------         -------
Net loss                                         $( 5,302)     $(26,593)    $(19,661)    $(27,933)        $(3,708)

Less-amortization of preferred stock
beneficial conversion discount                     (2,222)             -                   -                    -
                                                    ------      --------     --------     --------         -------

Loss applicable to common shares                  $(7,524)     $(26,593)    $(19,661)    $(27,933)        $(3,708)
                                                  --------     ---------    ---------    ---------        --------

Net loss/Pro forma net loss per share (2)         $ (0.24)     $  (0.96)    $  (0.84)    $  (1.25)        $ (0.18)
                                                  ========     ========     ========    =========         ======= 

                                                 SEPT. 30,     SEPT. 30,    SEPT. 30,    SEPT. 30,       SEPT. 30,
                                                      1997          1996         1995      1994(3)            1993
                                                    ------      --------     --------     --------         -------
BALANCE SHEET DATA:
Working capital (deficiency)                       $39,033      $ 26,557     $ 25,930     $ 46,071        $   (361)
Total assets                                        57,553        41,939       54,747       61,242          14,749
Long-term debt                                           -         1,500       10,000           --           4,098
Owners equity                                       25,699        30,770       37,956       56,318           7,338
</TABLE>


 (1)     The Company has a fiscal year end of September 30.

 (2)     Pro forma net loss per common share for the nine month period ended
         September 30, 1993 is unaudited and has been calculated based on
         20,389,994 weighted shares outstanding for the period January 1, 1993
         through September 30, 1993 and includes net losses of Telular Group
         L.P. for the period from January 1, 1993 to May 13, 1993, and
         thereafter for Telular Corporation.  The pro forma net loss per common
         share for the year ended September 30, 1994 is unaudited and has been
         calculated based on 22,362,986 weighted shares outstanding.  Common
         and common equivalent shares issued during the twelve month period
         prior to the January 27, 1994 IPO have been included as if they were
         outstanding for all periods presented using the treasury stock method
         and an IPO price of $20 per share.

(3)      On January 27, 1994, the Company effected an IPO of 4,000,000 shares
         of common stock.  After underwriting discounts and commissions and
         other expenses, proceeds to the Company were approximately
         $56,414,000, and have a material effect on the comparability of the
         information presented.





                                       15
<PAGE>   16
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION

INTRODUCTION

         The Company designs, develops, manufactures and markets products based
on its proprietary interface technologies, which allows most standard wireline
customer premises equipment -- phones, facsimile machines, computer modems,
PBXs, and key systems, among others -- to operate over wireless
telecommunications networks.  Currently, the Company is devoting a substantial
portion of its resources to international market development, extension of its
core product line to new wireless standards, expansion, protection and
licensing of its intellectual property rights, and development of underlying
radio technology.

         The Company's operating expense levels are based in large part on
expectations of future revenues.  If anticipated sales in any quarter do not
occur as expected, expenditure and inventory levels could be disproportionately
high, and the Company's operating results for that quarter, and potentially for
future quarters, could be adversely affected.  Certain factors that could
significantly impact expected results are described in "Cautionary Statements
Pursuant to the Securities Litigation Reform Act" which is an exhibit to this
Form 10-K.

OVERVIEW

         The Company has seen substantial growth in the market for FWTs in both
WLL and WAA systems.  The Company encountered heightened activity during fiscal
1997 that gives it reason to believe that the FWT market is maturing beyond the
nascent stage.  The Company quoted more contracts, shipped more product (78%
more than fiscal 1996) and observed more data that confirmed momentum in the
FWT market than during any previous period.  The major trends driving the
market include a broad consumer acceptance of cellular communications, rapid
privatization of telecommunications in developed and developing countries,
adoption of digital wireless transmission standards that enhance network
capacity and service, service network providers' acceptance of FWTs as
cost-effective answers to customer demand for improved telecommunications and
PCS licensing that will drive down the price of wireless communications and
expand the number of users within the U.S.  If these trends continue, they will
provide significant international and domestic opportunities.

          WLL, which is the core of the Company's FWT business in developing
countries, involves cellular infrastructure employed predominately (and
sometimes exclusively) for the fixed location user.  Continued growth of the
WLL market depends primarily on the pricing of WLL airtime service to the
customer relative to available wireline prices, the relative local availability
of WLL and wireline service, operator regulatory constraints on fixed cellular, 
and money available in a given country.  These factors have contributed
to the increase in the number of new WLL networks commissioned in 1997 compared
with the previous year.  Because FWT deployment lags network commissioning, the
Company believes the "pent up" opportunity is even larger as FWT deployment
materializes on the networks previously commissioned.

         WAA, which represents the majority of the Company's sales in developed
countries, has primarily involved wireless back-up of existing wireline systems
and where wireline service is unavailable or unreliable, using mobile cellular
networks built primarily for handheld cellular phone users.  Management
anticipates that additional FWT markets for WAA applications will develop as
existing cellular networks mature and new networks and services are introduced. 
As capacity and price competition increase on new and existing cellular
networks and the growth rate in new cellular phone subscribers slows, mobile
cellular operators will be forced to look for new revenue sources.  FWTs
provide an excellent opportunity for cellular network operators as they are
less costly to support than mobile units (permanently linked to a specific cell
site), generate more average airtime and operate mainly at off-peak times.  The
number of FWTs presently operating on WAA networks exceeds that of WLL and is
driven by the relative price for airtime, as well as by the large installed 
base of mobile networks worldwide.






                                       16
<PAGE>   17
         The Company has a number of undertakings which embody its strategy to
capitalize on the growth it anticipates for FWTs.  The Company added new
personnel in each of its international sales offices and will continue to
strengthen and build its sales and marketing organizations.

         The Company's product development program is designed to result in a
line of FWTs over the next two years that will address the cellular radio
standards projected to serve 85% of all cellular subscribers in the year 2000.
In fiscal 1997, the Company raised approximately $19 million of capital, most
of which will be used for product development purposes.  The Company also
consolidated and upgraded its manufacturing facilities in order to increase
working efficiencies between functions, improve quality, modernize equipment,
increase capacity and facilitate the introduction of new products.

         During fiscal 1997, the Company's FWTs gained market position on the
following major radio standards:

         Analog - While the overall FWT market is shifting from analog cellular
         to digital cellular, there are many analog opportunities.  Analog is
         sometimes used to meet regulatory deadlines on new WLL deployments in
         which the new digital infrastructure cannot be deployed fast enough.
         Also, when new digital mobile networks are installed in urban areas,
         the older analog infrastructure often is displaced and then redeployed
         for WLL use in the surrounding suburban area.  The Company is the
         original supplier of analog FWTs and one of the few remaining analog
         suppliers, enabling it to capture a sizeable share of all new analog
         FWT business worldwide.

         Digital GSM - Despite the historical importance of analog, most
         planned FWT deployment in both WLL and WAA markets will be on one of
         the various digital standards -GSM, CDMA, or TDMA.  Digital is more
         desirable than analog because it provides superior capacity, voice
         privacy, higher transmission rates for fax and data, and additional
         user services such as Caller ID and messaging.  The Company's new GSM
         900 FWT was introduced during fiscal 1997.  It should allow the
         Company to capture a fair share of the growth in the digital market.

         The Company plans to introduce five new FWTs in fiscal 1998.  These
include one analog FWT-the SX3 AMPS, and four digital FWTs-the SX2
TDMA, the SX2 CDMA, the SX2 DCS 1800 and the SX4 GSM 900.  All of these will 
operate from a common hardware/software platform, will cost less to make and 
will have more features than the present versions.




                                      17
<PAGE>   18
         The Company spotted the beginning of a new trend in the WLL market
during the year.  Previously, most FWTs used in WLL networks were sold by
infrastructure manufacturers who "bundled" the FWT/infrastructure for sale to
the WLL operator.  Now, however, more savvy operators are buying infrastructure
and FWTs separately.  The Company already has realized the initial benefits of 
this trend with major new contracts with operators to supply FWTs in the 
Philippines and Guinea.

         Having reversed its strategy of not licensing its intellectual
property in fiscal 1996, the Company has been negotiating licenses with a
number of large international telecommunications companies.  The Company has
agreed to provide component circuit boards to QUALCOMM Incorporated.  In
October, 1997, the Company signed a Memorandum of Understanding with Ericcson
Radio Systems AB to license certain of its technology for use in Ericcson
products.

         It is inevitable in growing markets with huge potential that 
competition will increase.  Accordingly, a few infrastructure suppliers 
introduced FWTs during the year.  The Company believes its advantages over 
industry competition include:

         Better focus/commitment - In the WLL market, the Company's only
         business is FWTs.  Most often, competitors sell FWTs to support their
         infrastructure business.

         More experience - The Company has been in the FWT business for eleven
         years.

         Broader product line - The Company offer FWTs that operate on all
         major non-proprietary radio standards.

RESTRUCTURING AND ORGANIZATIONAL CHANGES

         On January 22, 1996, the Company announced a restructuring program
(the "restructuring program") which was implemented during the second and third
quarters of fiscal 1996. The difficulty in predicting demand for the Company's
products, due in part to immature foreign markets, underscored the importance
of properly aligning costs and expenses to attainable levels of revenue.
Manufacturing and engineering consolidation, outsourcing and the elimination of
non-core product lines were the focus of the restructuring.  The Company's
Puerto Rico and Buffalo Grove manufacturing operations were phased out during
the second fiscal quarter of fiscal 1996, and production was consolidated at
the Company's Atlanta, Georgia facility (Apart from the restructuring, the
Company further consolidated and moved its offices and operations to Vernon
Hills, Illinois during 1997). The restructuring program reduced general,
administrative and manufacturing costs Company-wide. The number of employees
decreased from over 250 to 110 during fiscal 1996.  Restructuring and
impairment charges were incurred during the second and third quarters of fiscal
1996.  Restructuring charges were approximately $6.7 million and consisted of
intangible, inventory and fixed asset write-offs as well as severance payments
to employees separated from the Company.  The Company will experience
approximately $1.2 million in reduced amortization charges in each of the next
five years as the result of intangible assets written off as restructuring or
impairment charges.

         In addition, impairment charges of $4.3 million were recorded, which
represented specific intangibles that were determined to be impaired based on
estimated cash flows over the remaining business life cycle of the related
assets. Events related to a change in management and the corresponding change
in business direction, and the restructuring plan prompted the evaluation of
these intangibles.

CONSOLIDATION OF MANUFACTURING

         The Company signed a lease in December 1996 for a 72,000 square foot
facility located in Vernon Hills, Illinois, which is in the metropolitan
Chicago area.  During fiscal 1997, the Company consolidated most operations,
excluding certain sales offices, into the Vernon Hills facility.  This move
situated engineering, marketing and manufacturing resources in close proximity
to one another.  This effort has increased the overall quality of manufactured
products and will speed the delivery of new products to market.




                                      18
<PAGE>   19
SALES AND MARKETING

         The Company strengthened and rebuilt its sales and marketing
organizations in fiscal 1997.  The Company's sales increased 78% during fiscal
1997  (see Results of Operations - Fiscal 1997 Compared to Fiscal 1996).  New
sales personnel have been added and more will be hired for each international
sales region to meet anticipated demand.  The Company launched an OEM sales
organization during fiscal 1997.  The OEM segment manages the licensing of
technology, sales of components and finished goods components to original
equipment manufacturers and joint ventures.  The Company hired and has plans to
hire additional marketing personnel to coordinate product development and
market opportunities.

RESULTS OF OPERATIONS

FISCAL 1997 COMPARED TO FISCAL 1996

         Net Sales.  For the year ended September 30, 1997, net sales increased
approximately 78% to $48.4 million from $27.3 million in fiscal 1996.  Sales of
FWTs increased approximately 96% to $39.7 million in fiscal 1997, due to an
increase by $15.3 million of shipments to the WLL project in Hungary, as well
as a 28% increase in other than Hungary FWT business during fiscal 1997.  Sales
of WAS products increased 26% to $8.8 million in 1997.

         Gross Profit.  Gross profit for the year ended September 30, 1997,
increased to 22% from 12% in 1996.  This increase was primarily attributable to
$2.5 million in inventory charges incurred during the second fiscal quarter of
1996.  The charges were related to the closing of the Company's Puerto Rico
operation.

         Engineering and Development Expenses.  Engineering and development
expenses of $6.0 million increased 23% compared to 1996, which resulted from
the Company's increased focus on developing analog and digital FWTs that will
operate on additional radio standards.

         Selling and Marketing Expenses.  Selling and marketing expenses
decreased 28% compared to 1996. The Company, as part of the restructuring
program, realigned its worldwide sales organization during fiscal 1996.  Lower
levels of selling and marketing expense were maintained in fiscal 1997.

         General and Administrative Expenses (G&A).  G&A decreased 13% compared
to 1996.  The decrease is essentially attributable to the reduction or
elimination of expenditures, primarily through headcount reductions, achieved
through the restructuring program implemented during the second and third
fiscal quarters of fiscal 1996.  Lower levels of G&A expense were maintained in
fiscal 1997.

         Allowance for Doubtful Accounts. The allowance for doubtful account
expense decreased primarily due to the collection of $0.5 million account
receivable from one customer that was fully reserved for during fiscal year
1996 and an improvement in the Company's collection experience.

         Amortization Charges.  Amortization charges decreased by 43% compared
to 1996. Intangible assets written off as part of restructuring and impairment
charges during the third quarter of fiscal 1996 significantly reduced related
amortization charges.  The write-off reduced the intangible asset balance and
related amortization charges in fiscal 1997 compared to fiscal 1996.

         Other Income (Expense).  Other income for the year ended September 30,
1997 decreased by approximately $0.1 million compared to 1996.  This decrease
was primarily the result of lower royalty income, which was offset by higher
interest income as cash balances in interest bearing accounts were higher in
1997 compared to 1996.

         Net Loss.  The fiscal 1997 loss of $5.3 million compares to a loss of
$26.6 million in fiscal 1996, an improvement of 80%.  The improvement in fiscal
1997 resulted from increased net sales and gross margins and lower operating
expenses.  The fiscal 1996 net loss included restructuring and impairment
charges of $11.0 million.

         Loss applicable to common shares.  After giving effect to amortization
of the preferred stock beneficial conversion discount (see financial statement
footnote 10) of $2.2 million for fiscal 1997, loss applicable to common shares
of $7.5 million or ($0.24) per share, compares to loss applicable to common
shares of $26.6 million or ($0.96) per share for fiscal 1996.





                                       19
<PAGE>   20
FISCAL 1996 COMPARED TO FISCAL 1995

         Net Sales.  For the year ended September 30, 1996, net sales decreased
17% compared to 1995.  Through the first three-quarters of 1996, sales were
down more than 40% compared to 1995.  With the exception of Asia and sales of
WAS products domestically, the Company experienced lower sales in all other
regions compared to fiscal 1995.  Specifically, sales in 1996 were lower due to
large non-recurring orders in Latin America during 1995 and returns during the
first fiscal quarter of 1996 of GSM PHONECELL(R) product.  Sales rose
significantly during the fourth quarter to $13.9 million or more than 50% of
total 1996 revenues.  The Company began to ship significant volumes to Motorola
for the WLL project in Hungary, which represented approximately 40% of the
fourth quarter sales.  Sales of FWTs to the Asian, European, Middle Eastern and
African regions and of WAS products also increased substantially during the
fourth quarter.

         Gross Profit.  Gross profit for the year ended September 30, 1996,
decreased 39% over the same period in 1995.  This decrease was primarily
attributable to $2.5 million in inventory charges incurred during the second
fiscal quarter of 1996. The charges were related to the closing of the
Company's Puerto Rico operation.  Excluding the inventory charges, gross profit
increased in 1996 to 21% from 17% in 1995.

         Selling and Marketing Expenses.  Selling and marketing expenses
decreased 37% compared to 1995.  The Company, as part of the restructuring
program, realigned its worldwide sales organization during fiscal 1996.  In
addition, the sales support functions were consolidated during fiscal 1995 and
1996, which resulted in the closing of the Company's sales support office in
Memphis and the execution of a domestic, non-exclusive master distribution
agreement with a related party.

         General and Administrative Expenses (G&A).  G&A decreased 34% compared
to 1995.  The decrease is essentially attributable to the reduction or
elimination of expenditures, primarily through headcount reductions, achieved
through a restructuring program implemented during the second and third fiscal
quarters of fiscal 1996.

         Allowance for Doubtful Accounts. The allowance for doubtful account
expense increased 210% compared to 1995.  The increase principally reflected
$0.5 million reserved during the third quarter of fiscal 1996 for a trade
receivable due from one customer.

         Amortization Charges.  Amortization charges increased by 11% compared
to 1995.  Although a substantial amount of intangible assets were written off
as part of the aforementioned restructuring and impairment charges during 1995,
amortization charges increased primarily due to deferred financing costs,
related to debentures issued during the year.

         Other Income (Expense).  Other income for the year ended September 30,
1996 decreased by $0.9 million compared to 1995.  This decrease was primarily
the result of lower interest income as cash balances in interest bearing
accounts were lower in 1996 compared to 1995 and lower royalty income.

         Net Loss.  The 1996 loss, net of restructuring and impairment charges,
was $15.6 million or ($0.56) per share, compared to a net loss of $19.7
million, or ($0.84) per share in 1995.  The net loss for the year ended
September 1996, inclusive of restructuring and impairment charges, totaled
$26.6 million, or ($0.96) per share.

LIQUIDITY AND CAPITAL RESOURCES

         At September 30, 1997, the Company had $28.5 million in cash and cash
equivalents and working capital of $39.0 million.

         Cash provided by operations was $0.5 million for the year ended
September 30, 1997, compared to $15.0 million cash used during the same fiscal
period last year due primarily to reduced operating losses.

         Cash used for capital expenditures and other investing activities was
approximately $3.6 million for the year ended September 30, 1997 compared to
$1.7 million for the same fiscal period last year.  In January 1997 and in
August 1997, the Company increased its investment in WD by approximately $0.7
million and $0.5 million, respectively.  The additional investments, comprised
of cash totaling $500,000 and 150,000 shares of the Company's common stock
raised the Company's stake in WD to 50%.  The Company spent approximately $2.6
million in capital expenditures during fiscal 1997, primarily for leasehold
improvements and production/engineering equipment for new products.





                                       20
<PAGE>   21
         Financing activities provided $18.7 million during fiscal 1997,
compared to $7.9 million during fiscal period in 1996. The current period
amount reflects the issuance of redeemable preferred stock, $18.8 million; the
sale of stock through the Company's stock option plan, $0.3 million; and
deferred financing costs, ($0.4) million.  In the prior year, the Company
raised $7.9 million from the sale of convertible debentures, net of payments
against the Company's revolving line of credit (see below).

         On April 23, 1997, the Company entered into a Loan and Security
Agreement with Sanwa Business Credit Corporation that, among other things,
provides a credit facility with a loan limit of $20.0 million (the "Loan").
Borrowings under the Loan are subject to borrowing base requirements and other
restrictions.  Under the Loan and Security Agreement, the Company is required
to comply with certain affirmative and negative covenants.  The Loan matures on
April 23, 2000.  As of September 30, 1997, the Company's borrowing capacity
under the Loan provisions was $11.3 million although there have been no
borrowings and none are contemplated in the near-term.  This facility replaces
a Loan and Security Agreement with LaSalle National Bank that, among other
things, provided a credit facility with a loan limit of up to $20.0 million.
That agreement, which terminated on May 1, 1997, required the Company to
maintain a $10.0 million compensating balance.

         During the third fiscal quarter of 1997, the Company issued 20,000
shares (10,000 shares April 16, 1997 and 10,000 shares on June 6, 1997) of
Series A Convertible Preferred Stock (the "Preferred Stock") for $18.8 million
which is net of issuance cost of $1.2 million.  The Preferred Stock
automatically converts to common stock on April 16, 1999, or October 16, 1999,
depending on the conversion price and includes the equivalent of a 5% annual
stock dividend. Holders of the Preferred Stock are entitled, at their option,
subject to trading volume and other restrictions, to convert Preferred Stock
into shares of common stock using defined conversion formulas based on the
NASDAQ closing bid prices for the Company's common stock.  In addition, the
holders have the option to redeem the Preferred Stock upon the occurrence of a
(i) consolidation or merger with another company; (ii) sale or transfer of
substantially all assets; or (iii) 50% change in ownership.  The redemption
price upon holder redemption is the greater of $1,250 per share and the cash
equivalent of the defined conversion formula on the date of redemption.  The
Company is entitled to require the holders to convert the Preferred Stock and
accrued dividends into shares of common stock of the Company using a defined
conversion formula based upon the NASDAQ closing bid prices for the Company's
common stock.  In addition, the Company has the right to redeem the Preferred
Stock after April 15, 1999 for $1,200 per share plus 120% of the accrued
dividends. Holders of the Preferred Stock are not entitled to vote on matters
submitted for vote to the stockholders of the Company.

         The Preferred Stock reflects a beneficial conversion feature that
allows holders to convert the security to common stock of the Company at a
discount.  The amount of the discount is determined using NASDAQ closing bid
prices for the Company's common stock.  During the year, the Company recorded
$2.2 million of amortization of preferred stock beneficial conversion discount.
The offset entry to amortization of preferred stock beneficial conversion
discount increased redeemable preferred stock by $2.2 million.  This amount
will accrete to the Company's common stock and additional paid in capital
accounts as shares of redeemable preferred stock are converted into shares of
common stock of the Company.  No shares of Preferred Stock were converted to
common stock as of September 30, 1997.

         The Company will use much of the capital recently raised to fund new
product development.  Beyond its specific research and product development
needs, expected future uses of cash include working capital requirements,
marketing and sales support programs in anticipation of future revenues and
certain capital expenditures.  Based upon its current operating plan, the
Company believes its existing capital resources, including the credit facility
and proceeds from the issuance of Preferred Stock, should enable it to maintain
its current and planned operations.  Cash requirements may vary and are
difficult to predict given the nature of the developing markets targeted by the
Company.  The amount of royalty income from the Company's licensees is
unpredictable, but could have an impact on the Company's actual cash flow.

         The Company requires letters of credit or qualification for export
credit insurance underwritten by third party credit insurance companies or the
Export-Import Bank of the United States on a substantial portion of its
international sales orders. Also, to mitigate the effects of currency
fluctuations on the Company's results of operations, the Company endeavors to
conduct all of its international transactions in U.S. dollars.  To date, the
Company's sales have not been adversely affected by currency fluctuations;
however, as the Company's international operations grow, foreign exchange or
the inflation of a foreign currency may pose greater risks for the Company, and
the Company may be required to develop and implement additional strategies to
manage these risks.





                                       21
<PAGE>   22
FORWARD LOOKING INFORMATION

         Statements contained in this filing, other than historical statements,
consist of forward looking information.  The Company's actual results may vary
considerably from those discussed in this filing as a result of various risks
and uncertainties.  For example, there are a number of uncertainties as to the
degree and duration of the revenue momentum, which could impact the Company's
ability to be profitable as lower sales may likely result in lower margins.  In
addition, product development expenditures, which are expected to benefit
future periods, are likely to have a negative impact on near term earnings.
Other risks and uncertainties, which are discussed in Exhibit 99 to this
filing, include the risk that technological change will render the Company's
technology obsolete, the risk of litigation, the Company's ability to develop
new products, the Company's dependence on contractors and Motorola, the 
Company's ability to maintain quality control, the risk of doing
business in developing markets, the Company's dependence on research and
development, the uncertainty of additional funding, the potential for
redemption of preferred stock, the effects of control by existing shareholders,
the effect of changes in management, intense industry competition, and
uncertainty in the development of wireless service generally.


ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

           Not applicable.





                                       22
<PAGE>   23

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

<TABLE>
<S>      <C>                                                                                          <C>
1.       THE FOLLOWING FINANCIAL STATEMENTS ARE INCLUDED IN PART II, ITEM 8 OF THIS FORM 10-K.
            Report of Independent Auditors  . . . . . . . . . . . . . . . . . . . . . . . . .         24
            Consolidated Balance Sheets as of September 30, 1997 and 1996 . . . . . . . . . .         25
            Consolidated Statements of Operations for the years ended
            September 30, 1997, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . .         26
            Consolidated Statements of Equity for the years ended
            September 30, 1997, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . .         27
            Consolidated Statements of Cash Flows for the years ended
            September 30, 1997, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . .         28
            Notes to Consolidated Financial Statements  . . . . . . . . . . . . . . . . . . .         29
</TABLE>





                                       23
<PAGE>   24





                         Report of Independent Auditors

The Board of Directors
Telular Corporation

We have audited the accompanying consolidated balance sheets of Telular
Corporation as of September 30, 1997 and 1996, and the related consolidated
statements of operations, equity, and cash flows for each of the three years in
the period ended September 30, 1997.  Our audits also included the financial
statement schedule listed in the Index at Item 14a.  These financial statements
and schedules are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Telular Corporation at September 30, 1997 and 1996, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended September 30, 1997, in conformity with generally accepted
accounting principles.  Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.


                                        /s/ ERNST & YOUNG LLP

November 7, 1997,
except for the second paragraph of Note 6, as to which the date is
November 12, 1997





                                      24
<PAGE>   25



                              Telular Corporation

                          Consolidated Balance Sheets
                       (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30
                                                                           1997              1996
                                                                       -----------------------------
<S>                                                                      <C>              <C>
ASSETS
Current assets:
  Cash and cash equivalents                                              $  28,451        $  12,838
  Receivables:
    Trade, less an allowance for doubtful accounts of $426 and
      $900 at September 30, 1997 and 1996, respectively                      6,527            6,328
    Related parties                                                          4,670            4,088
                                                                       -----------------------------
                                                                            11,197           10,416
    Inventories, net                                                         9,431           12,792
    Prepaid expenses and other current assets                                  500              181
                                                                       -----------------------------
Total current assets                                                        49,579           36,227
Property and equipment, net                                                  3,611            2,325
Other assets:
  Intangible assets, net                                                       461              180
  Investment in affiliate                                                    3,851            3,146
  Deposits and other                                                            51               61
                                                                       -----------------------------
                                                                             4,363            3,387
                                                                       -----------------------------
Total assets                                                             $  57,553        $  41,939
                                                                       =============================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Revolving line of credit                                               $       -        $       -
  Accounts payable:
    Trade                                                                    3,764            1,794
    Related parties                                                          3,640            6,283
  Accrued liabilities                                                        3,142            1,592
                                                                       -----------------------------
Total current liabilities                                                   10,546            9,669

Convertible debentures                                                           -            1,500
Commitments and contingencies                                                    -                -
                                                                       -----------------------------
Total liabilities                                                           10,546           11,169

Redeemable Preferred Stock:
  Series A convertible preferred stock, $.01 par value; $20,386
    liquidation preference at September 30, 1997; 21,000 shares
    authorized at September 30, 1997; 20,000 shares outstanding
    at September 30, 1997                                                   21,308                -

Stockholders' equity:
  Preferred stock, $.01 par value; 9,979,000 and 10,000,000
    shares authorized at September 30, 1997 and 1996; none
    outstanding                                                                  -                -
  Common stock, $.01 par value; 40,000,000 shares authorized;
    31,684,073 and 31,016,675 outstanding, at September 30, 1997
    and 1996, respectively                                                     322              316
  Additional paid-in capital                                               111,143          108,311
  Deficit                                                                  (84,159)         (76,250)
  Treasury stock, 560,000 shares at cost                                    (1,607)          (1,607)
                                                                       -----------------------------
Total stockholders' equity                                                  25,699           30,770
                                                                       -----------------------------
Total liabilities and stockholders' equity                               $  57,553        $  41,939
                                                                       =============================
</TABLE>
See accompanying notes.





                                      25
<PAGE>   26



                              Telular Corporation

                     Consolidated Statements of Operations
                       (In Thousands, Except Share Data)


<TABLE>
<CAPTION>
                                                                 YEAR ENDED SEPTEMBER 30
                                                          1997              1996              1995
                                                    -------------------------------------------------
<S>                                                    <C>              <C>              <C>
Net sales to unrelated parties                             $27,227         $ 18,642         $ 28,627
Net sales to related parties                                21,190            8,629            4,404
                                                    -------------------------------------------------
Total net sales                                             48,417           27,271           33,031
Cost of sales                                               37,881           23,906           27,530
                                                    -------------------------------------------------
                                                            10,536            3,365            5,501

Engineering                                                  6,007            4,888            5,765
Selling                                                      4,510            6,254            9,848
General and administrative                                   5,863            6,754           10,159
Provision for (recovery of) doubtful accounts                 (231)             974              314
Amortization                                                   604            1,066              956
Restructuring and impairment charges                             -           11,019                -
                                                    -------------------------------------------------
Loss from operations                                        (6,217)         (27,590)         (21,541)

Other income (expense):
  Interest income                                            1,009              936            1,340
  Royalty income                                                55                2               30
  Royalty income from related parties                          496              644              800
  Interest expense                                             (47)            (293)               -
  Interest expense to related parties                            -                -              (12)
  Equity in net loss of investments in
    affiliates                                                (204)             (41)               -
  Other                                                       (394)            (251)            (277)
                                                    -------------------------------------------------
                                                               915              997            1,881
                                                    -------------------------------------------------

Net loss                                                    (5,302)         (26,593)         (19,660)
Less:  amortization of redeemable preferred
  stock beneficial conversion discount                      (2,222)               -                -
                                                    -------------------------------------------------
Loss applicable to common shares                          $ (7,524)        $(26,593)        $(19,660)
                                                    =================================================
Net loss per common share                                 $   (.24)        $   (.96)        $   (.84)
                                                    =================================================
Weighted-average number of common shares
   outstanding                                          31,507,622       27,655,964       23,340,706
</TABLE>

See accompanying notes.





                                      26
<PAGE>   27



                              Telular Corporation

                       Consolidated Statements of Equity
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                         ADDITIONAL                               TOTAL
                                   PREFERRED    COMMON    PAID-IN                  TREASURY    STOCKHOLDERS'
                                     STOCK      STOCK     CAPITAL      DEFICIT      STOCK         EQUITY
                                   --------------------------------------------------------------------------
<S>                                  <C>         <C>     <C>          <C>          <C>           <C>
Balance at October 31, 1994          $ -         $237    $  87,684    $(29,997)    $(1,607)      $56,317
Proceeds from issuances of common        
  stock                                -            4          689           -           -           693
Stock issued for services              
  rendered                             -            1          604           -           -           605  
Net loss for year ended September        
  30, 1995                             -            -            -     (19,660)          -       (19,660)
                                   --------------------------------------------------------------------------
Balance at September 30, 1995          -          242       88,977     (49,657)     (1,607)       37,955
Proceeds from issuances of common        
  stock                                             4          551           -           -           555
Conversion of debentures into            
  6,655,315 shares of common stock     -           67       16,598           -           -        16,665
Stock issued in connection with          
  the investment in Wireless Domain    -            3        2,185           -           -         2,188
Net loss for year ended September        
  30, 1996                             -            -            -     (26,593)          -       (26,593)
                                   --------------------------------------------------------------------------
Balance at September 30, 1996          -          316      108,311     (76,250)     (1,607)       30,770
Proceeds from issuances of common        
  stock                                -            1          329           -           -           330
Conversion of debentures into            
  378,200 shares of common stock                    4        1,551                                 1,555
Stock issued in connection with          
  the investment in Wireless Domain    -            1          694           -           -           695
Amortization of redeemable               
  preferred stock beneficial             
  conversion discount                  -            -            -      (2,222)          -        (2,222)
Dividends on redeemable preferred        
  stock                                -            -            -        (385)          -          (385)
Stock issued for services              
  rendered                             -            -          258           -           -           258  
Net loss for year ended September        
  30, 1997                             -            -            -      (5,302)          -        (5,302)
                                   --------------------------------------------------------------------------
Balance at September 30, 1997        $ -         $322     $111,143    $(84,159)    $(1,607)      $25,699
                                   ==========================================================================
</TABLE>

See accompanying notes.





                                      27
<PAGE>   28



                              Telular Corporation

                     Consolidated Statements of Cash Flows
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                         YEAR ENDED SEPTEMBER 30
                                                                  1997             1996             1995
                                                            ------------------------------------------------
<S>                                                           <C>             <C>              <C>
OPERATING ACTIVITIES
Net loss                                                        $ (5,302)        $(26,593)        $(19,660)
Adjustments to reconcile net loss to net cash used in
  operating activities:
    Depreciation                                                   1,016            1,064            1,329
    Amortization                                                     604            1,066              956
    Inventory obsolescence expense                                     -            2,958              736
    Compensation expense related to stock options
      and grants                                                     202               99              129
    Interest on debentures                                            55              209                -
    Common stock issued for services                                   -                -              606
    Restructuring and impairment charges                             319            9,839                -
    Equity in net loss of investments                                204               41                -
    Loss on disposal of property and equipment                         -               16                -
    Changes in assets and liabilities:
      Receivables                                                   (199)            (545)          (1,452)
      Related parties                                             (3,225)           4,029           (1,437)
      Inventories                                                  3,361           (4,782)          (3,363)
      Prepaid expenses, deposits, and other                          (35)             216                7
      Accounts payable                                             1,970           (1,363)            (386)
      Accrued liabilities                                          1,550           (1,207)           1,712
                                                            ------------------------------------------------
Net cash provided by (used in) operating activities                  520          (14,953)         (20,823)

INVESTING ACTIVITIES
Investment in Wireless Domain                                       (500)          (1,000)               -
Acquisition of property and equipment                             (2,620)          (1,267)          (1,197)
Acquisition of licenses and technology                              (525)               -           (3,180)
Proceeds from disposal of equipment                                    -              561                -
                                                            ------------------------------------------------
Net cash used in investing activities                             (3,645)          (1,706)          (4,377)

FINANCING ACTIVITIES
Proceeds from issuances of common stock                              278              459              564
Revolving line of credit                                               -          (10,000)          10,000
Proceeds from issuance of redeemable preferred stock              18,808                -                -
Proceeds from convertible debentures                                   -           18,000                -
Payment of deferred financing costs                                 (348)            (515)               -
                                                            ------------------------------------------------
Net cash provided by financing activities                         18,738            7,944           10,564
                                                            ------------------------------------------------
Net increase (decrease) in cash and cash equivalents              15,613           (8,715)         (14,636)
Cash and cash equivalents, beginning of period                    12,838           21,553           36,189
                                                            ------------------------------------------------
Cash and cash equivalents, end of period                         $28,451         $ 12,838         $ 21,553
                                                            ================================================

SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid - Principally to related parties in 1995           $    47         $     84         $     13
                                                            ================================================
</TABLE>

See accompanying notes.





                                      28
<PAGE>   29



                              Telular Corporation

                   Notes to Consolidated Financial Statements
                       (In Thousands, Except Share Data)


1.  DESCRIPTION OF BUSINESS

Telular Corporation (the Company), operates in a single line of business and
designs, engineers, and manufactures component elements and complete
telecommunications equipment assemblies and other complementary products and
markets such products domestically and internationally by sale, lease, or
license.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, Adcor-Telular Security Products (Adcor) and
Telular International, Inc. (International).  All significant intercompany
balances and transactions have been eliminated.

CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments which have maturities of
three months or less from the date of purchase.

FINANCIAL INSTRUMENTS

Financial instruments which potentially subject the Company to significant
concentrations of credit risk consist principally of trade accounts receivable.
Credit risks with respect to trade receivables are limited due to the diversity
of customers comprising the Company's customer base.  The Company performs
ongoing credit evaluations and charges uncollectible amounts to operations when
they are determined to be uncollectible.

INVENTORIES

Inventories are stated at the lower of first in, first out (FIFO) cost or
market.





                                      29
<PAGE>   30

                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)




2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EARNINGS PER SHARE

The Company will adopt Financial Accounting Standards Board SFAS No. 128
"Earnings Per Share," effective December 15, 1997.  SFAS No. 128 requires the
calculation of basic earnings per share, which is computed by dividing net
income by the weighted-average number of shares of common stock outstanding
during the period and diluted earnings per common share, which is computed
using the weighted-average number of shares of common stock, common stock
equivalents, and any other dilutive securities.  Adoption of the new statement
is not expected to have a material impact on the earnings per share amounts
presently reported in the financial statements.

RECLASSIFICATIONS

Certain amounts in the September 30, 1995 and 1996 financial statements have
been reclassified to conform to the September 30, 1997 presentation.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost.  Depreciation and amortization are
computed using straight-line and accelerated methods for financial reporting
purposes.

INVESTMENTS

Investments in certain affiliates owned 50% or less are accounted for under the
equity method of accounting.

INCOME TAXES

Financial Accounting Standards Board SFAS No. 109 requires that the liability
method be used in accounting for income taxes.  Under this method, deferred tax
assets and liabilities are determined based on differences between financial
reporting and tax basis of assets and liabilities and are measured using the
enacted tax rates and laws in effect at the date of the financial statements.

INTANGIBLE ASSETS

Intangible assets consist primarily of license and technology agreements which
are being amortized over the lives of the related agreements using the
straight-line method.





                                      30
<PAGE>   31
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)




2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED

The excess of cost over fair value of net assets acquired (goodwill) was
amortized based on the straight-line method over the assets' estimated useful
lives, which ranged from eight to ten years (see Note 5).

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that effect the amounts reported in the financial statements and accompanying
notes.  Actual results could differ from those estimates.

DEFERRED FINANCING COSTS

During the year ended September 30, 1996, financing costs incurred to issue the
convertible debentures, totaling $515, were capitalized and were amortized from
the date of issuance to December 1996 (the date that the last of the debentures
was converted).  During the year ended September 30, 1997, financing costs
incurred related to the revolving line of credit were $348.  These costs are
being amortized over 36 months using the straight-line method.  During the
years ended September 30, 1997 and 1996, total amortization of deferred
financing costs were $73 and $481, respectively.

STOCK-BASED COMPENSATION EXPENSE

The Company recognizes stock-based compensation expense using Accounting
Principles Board Opinion No. 25 (APB No. 25), which is based on the excess of
the fair value of the stock on the measurement date, which is the grant date
for stock options, over the exercise price of options granted to employees.

In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation" (Statement 123).  This statement
encourages companies to record compensation costs for stock options granted to
employees on the date of grant based on the fair value of these options.
Alternatively, it allows companies to continue to measure compensation based on
the difference between the option exercise price and the fair market value on
the date of grant.  The Company has elected to continue measuring compensation
under APB No. 25.





                                      31
<PAGE>   32
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)




2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values reported in the statement of financial position for
receivables, revolving line of credit, and accounts payable approximate their
fair values at September 30, 1997 and 1996.

3.  INVENTORIES

Inventories consist of the following:
<TABLE>
<CAPTION>
                                                                          SEPTEMBER 30
                                                                      1997             1996
                                                                    --------------------------
            <S>                                                       <C>              <C>
            Raw materials                                             $6,344           $11,196
            Work in process                                              455               467
            Finished goods                                             3,155             2,328
                                                                    --------------------------
                                                                       9,954            13,991
            Less:  Reserve for obsolescence                              523             1,199
                                                                    --------------------------
                                                                      $9,431           $12,792
                                                                    ==========================
</TABLE>

4.  PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                                          SEPTEMBER 30
                                                                      1997             1996
                                                                    -------------------------
            <S>                                                       <C>              <C>
            Computer equipment                                        $1,809           $1,539
            Shop equipment                                             2,209            1,614
            Office equipment                                             636              462
            Automobiles                                                   21               31
            Leasehold improvements                                       907              455
            Security equipment held for rent                             328              271
            Construction in progress                                     352                -
                                                                    -------------------------
                                                                       6,262            4,372
            Less:  Accumulated depreciation                            2,651            2,047
                                                                    -------------------------
                                                                      $3,611           $2,325
                                                                    =========================
</TABLE>





                                      32
<PAGE>   33
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)




5.  WRITE-DOWN OF INTANGIBLE ASSETS

During the year ended September 30, 1996, the carrying value of goodwill was
determined to be impaired based on the estimated undiscounted cash flow of the
related businesses over the remaining life of the goodwill.  Events relating to
a change in management and the corresponding change in business direction and
the restructuring plan (see Note 12) prompted the evaluation of these
intangibles.  During the year ending September 30, 1996, impairment charges of
approximately $4,812 were included in restructuring and impairment charges.

As part of the restructuring plan (see Note 12), the Company decided to
discontinue the manufacturing and marketing of products under a certain license
agreement.  As a result, during the year ended September 30, 1996, the
remaining unamortized asset of approximately $2,530 was written off and was
included in restructuring and impairment charges.

6.  INVESTMENT IN WIRELESS DOMAIN INCORPORATED (FORMERLY TELEPATH CORPORATION)

On June 28, 1996, the Company entered into an agreement and acquired a 33%
interest in Wireless Domain Incorporated (WD) in exchange for $1 million in
cash and common stock of the Company valued at approximately $2.2 million.
During the year ended September 30, 1997, the Company increased its equity
position in WD to 50% by purchasing an additional 17% of WD in exchange for
$500 in cash and 150,000 shares of common stock valued at $695.  Under the
agreement, the Company purchases various product development services from WD.
The difference between the carrying amount of the Company's equity interest in
the net assets of WD, $2,766, is being amortized over ten years using the
straight-line method.

On November 10, 1997, the Company acquired the remaining 50% of WD in exchange
for one million shares of common stock.  This acquisition will be accounted for
using the purchase method of accounting.

7.  INCOME TAXES

At September 30, 1997, the Company has net operating loss carryforwards of
approximately $74,268 for income tax purposes that begin expiring in 2008.





                                      33
<PAGE>   34
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)




7.  INCOME TAXES (CONTINUED)

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.  Significant components
of the Company's deferred tax assets are as follows:

<TABLE>
<CAPTION>
                                                                       SEPTEMBER 30
                                                                  1997             1996
                                                              -----------------------------
    <S>                                                           <C>              <C>
    Deferred tax assets:
      Reserve for inventories                                     $   203          $   465
      Allowance for doubtful accounts                                 165              349
      Certain intangible assets                                     3,565            3,973
      Other                                                           468              336
      Research and development tax credit                             121              241
      Net operating loss carryforwards                             28,816           26,924
                                                              -----------------------------
    Total deferred tax assets                                      33,338           32,288
    Valuation allowance                                            33,338           32,288
                                                              -----------------------------
    Net deferred tax assets                                       $     -          $     -
                                                              =============================
</TABLE>

The valuation allowance has increased by $1,050 during the year ended September
30, 1997, due principally to the increase in the net operating loss
carryforwards in 1997.

Based on the Internal Revenue Code and changes in the ownership of the Company,
utilization of the net operating loss carryforwards may be subject to annual
limitations.

8.  REVOLVING LINE OF CREDIT

On April 23, 1997, the Company entered into a Loan and Security Agreement with
Sanwa Business Credit Corporation that, among other things, provides a
revolving credit facility with a loan limit of $20,000 (the Loan).  Borrowings
under the Loan are limited to certain percentages and amounts of accounts
receivable and inventories.  The Loan requires the Company to maintain a $4,000
compensating balance; beginning with the second fiscal quarter of 1998, this
compensating balance requirement may be waived based upon attainment of
specified tangible net worth levels.  At September 30, 1997, the Company had
approximately $11.4 million in available borrowings under this agreement.
Under the Loan and Security Agreement, the Company is restricted from making
certain dividend payments and is required to comply with certain affirmative
and negative covenants.  The Loan matures on April 23, 2000.  At the Company's
election, the Loan carries interest at the bank's prime rate plus 1.0%





                                      34
<PAGE>   35
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)




8.  REVOLVING LINE OF CREDIT (CONTINUED)

or the Eurodollar rate (Libor) plus 3.00%.  The Company has not
borrowed any amounts pursuant to the loan as of September 30, 1997.

9.  CONVERTIBLE DEBENTURES

On December 11, 1995, the Company issued $18 million in convertible debentures
(the Debentures) at 4% per annum.  The Debentures were issued under the
provisions of Regulation S as promulgated under the United States Securities
Act of 1933, as amended.  Holders of the Debentures were entitled, at their
option any time after issuance until December 10, 1997, to convert principal
and interest accrued thereon, in whole or in part, into shares of common stock
using defined conversion formulas based on NASDAQ closing bids for the
Company's common stock.  The Company is entitled, at its option any time
commencing one year after issuance (and under certain circumstances prior to
that date) through maturity, to require the holders to convert the principal
and accrued interest into shares of common stock of the Company using defined
conversion formulas based on NASDAQ closing bids for the Company's common
stock.  During the years ended September 30, 1997 and 1996, all convertible
debentures and accrued interest totaling $1,555 and $16,665 were converted into
378,200 and 6,655,315 shares of common stock, respectively.

10.  REDEEMABLE PREFERRED STOCK

During year ending September 30, 1997, the Company issued 20,000 shares (10,000
shares on April 16, 1997 and 10,000 shares on June 6, 1997) of Series A
Convertible Preferred Stock (the "Preferred Stock") for $18.8 million which is
net of issuance cost of $1.2 million.  The Preferred Stock automatically
converts to Common Stock on April 16, 1999, or October 16, 1999, depending on
the conversion price and includes the equivalent of a 5% annual stock dividend
($385 at September 30, 1997).  Holders of the Preferred Stock are entitled, at
their option, subject to trading volume and other restrictions, to convert
Preferred Stock into shares of Common Stock using defined conversion formulas
based on the NASDAQ closing bid prices for the Company's Common Stock.  In
addition, the holders have the option to redeem the Preferred Stock upon the
occurrence of a:  (i) consolidation or merger with another company; (ii) sale
or transfer of substantially all assets; or (iii) 50% change in ownership.  The
redemption price upon holder redemption is the greater of $1,250 per share or
the cash equivalent of the defined conversion formula on the date redemption.
The Company is entitled to require the holders to convert the Preferred Stock
and accrued dividends into shares of common stock of the Company using a
defined conversion formula based upon the NASDAQ closing bid prices for the 






                                      35
<PAGE>   36
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)




10.  REDEEMABLE PREFERRED STOCK (CONTINUED)

Company's common stock.  In addition, the Company has the right to
redeem the Preferred Stock after April 15, 1999, for $1,200 per share plus
120% of the accrued dividends.  Holders of the Preferred Stock are not entitled
to vote on matters submitted for vote to the stockholders of the Company.

The Preferred Stock reflects a beneficial conversion feature that allows
holders to convert the security to common stock of the Company at a discount.
The amount of the discount is determined using NASDAQ closing bid prices for
the Company's common stock.  During year ending September 30, 1997, the Company
recorded $2.2 million of amortization of preferred stock beneficial conversion
discount.  The offset entry to amortization of preferred stock beneficial
conversion discount increased redeemable preferred stock by $2.2 million.  This
amount will accrete to the Company's common stock and additional paid-in
capital accounts as shares of redeemable preferred stock are converted into
shares of common stock of the Company.  No shares of Preferred Stock have been
converted to common stock as of September 30, 1997.

11.  RELATED PARTY TRANSACTIONS

Pursuant to the terms of a 1993 Stock Purchase Agreement, the Company issued
and sold 3,824,240 shares of common stock to Motorola, Inc. (Motorola) in
exchange for cash proceeds of $11 million, access to specified services of
Motorola, and certain transceiver supply and pricing arrangements.  Among other
things, the Stock Purchase Agreement contains restrictions on certain actions
that would adversely impair the rights of Motorola and on the sale of
additional Company stock to strategic investors, as defined.  In connection
with this transaction, the patent cross-license agreement was amended to revise
the royalty due to Motorola for units leased, used, or sold and to reduce the
purchase price of certain products purchased by the Company from Motorola.

In addition, the Company has an agreement with Motorola, whereby the Company
will provide engineering services, at their typical rates, over a three-year
period ending November 10, 1998.  For the years ended September 30, 1997 and
1996, payments received under this agreement were approximately $1,850 and
$1,000, respectively.  The Company has also obtained a volume purchase
commitment, as defined, from Motorola over a three-year period commencing
January 1, 1996.  Sales made to Motorola and its affiliates pursuant to this
purchase commitment were $21,190 and $6,000 during the fiscal years ended
September 30, 1997 and 1996.





                                      36
<PAGE>   37
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)




11.  RELATED PARTY TRANSACTIONS (CONTINUED)

Pursuant to the terms of the patent license agreement with Motorola, the
Company receives a royalty for each unit leased, used, or sold by Motorola.
The agreement will remain in effect for the life of the patents by country,
unless it is terminated by either party in accordance with the terms of the
agreement.  Pursuant to a technology transfer agreement with DNIC Brokerage Co.
(DNIC), the Company's predecessor, the Company remits the first $250 of
royalties received annually to DNIC.  For the years ended September 30, 1997,
1996, and 1995, royalty income earned by the Company pursuant to the Motorola
agreement was approximately $496, $644, and $800, respectively.

A note receivable in the amount of $72 was entered into with a former officer
of the Company related to his exercise of an option to purchase 72,170 shares
of common stock during November 1993.  This note was forgiven in accordance
with the officer's amended employment agreement entered into during the period
ended September 30, 1995.

On June 1, 1994, the Company entered into an agreement with Access Technologies
Group (ATG) that called for ATG to provide a variety of multimedia services to
the Company over an 18-month period commencing July 1, 1994.  The estimated fee
of $300 was prepaid after the contract was signed contingent upon a 50% owner
of ATG joining the Company as an officer and ATG granting an option to the
Company to acquire 20% of ATG for $200.  The Company did not exercise the
option, which expired in May 1995.  The prepayment was fully utilized at
September 30, 1995.  The officer, who no longer is employed by the Company,
subsequently reduced his ownership from 50% to 4% of ATG.

Net sales to related parties consist of the following:

<TABLE>
<CAPTION>
                                                                YEAR ENDED SEPTEMBER 30
                                                      1997               1996               1995
                                                  --------------------------------------------------
             <S>                                      <C>                 <C>               <C>
             Motorola and affiliates                  $21,190             $8,586            $3,663
             Telular Canada Inc.                            -                  1               219
             Global Data, Inc.                              -                 42               522
                                                  --------------------------------------------------
                                                      $21,190             $8,629            $4,404
                                                  ==================================================
</TABLE>

Accounts receivable from related parties consist of the following:

<TABLE>
<CAPTION>
                                                                              SEPTEMBER 30
                                                                         1997               1996
                                                                      ----------------------------
             <S>                                                          <C>               <C>   
             Motorola and affiliates                                      $4,670            $4,069
             Global Data, Inc.                                                 -                20
                                                                      ----------------------------
                                                                          $4,670            $4,089
                                                                      ============================
</TABLE>





                                      37
<PAGE>   38
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)




11.  RELATED PARTY TRANSACTIONS (CONTINUED)

Purchases from Motorola totaled approximately $9,557, $12,983, and $11,006 for
the years ended September 30, 1997, 1996, and 1995, respectively.  Purchases
from Wireless Domain totaled approximately $2,709 and $675 for the years ended
September 30, 1997 and 1996, respectively.

Accounts payable to Motorola, were approximately $3,449 and $6,197 for the
years ended September 30, 1997 and 1996, respectively.  Accounts payable to
Wireless Domain were approximately $191 and $86 at September 30, 1997 and 1996,
respectively.

During the years ended September 30, 1996 and 1995, the Company incurred
expenses of approximately $50 and $239, respectively, for professional services
rendered by a firm controlled by a director of the Company.  The Company and
the director's firm entered into an agreement, whereby the Company issued
shares of common stock in lieu of cash for services rendered during the period
January 1, 1995 through September 30, 1995.  The Company issued 16,488 common
shares pursuant to the terms of this agreement.  During the year ended
September 30, 1997, this individual ceased to be a director of the Company.

12.  RESTRUCTURING AND IMPAIRMENT COSTS

On January 22, 1996, the Company announced a restructuring program which was
completed during the third quarter of fiscal 1996.  The difficulty in
predicting demand for the Company's products, due in part to immature foreign
markets, underscored the importance of properly aligning costs and expenses to
attainable levels of revenue.  Manufacturing and engineering consolidation,
outsourcing, and the elimination of noncore product lines were the focus of the
restructuring.  The Company's Puerto Rico and Illinois manufacturing operations
were phased out during the second fiscal quarter of fiscal 1996, and production
was consolidated at the Company's Atlanta, Georgia, facility.  The
restructuring program has reduced general, administrative, and manufacturing
costs Company-wide.

Restructuring charges related to the activities discussed above were
approximately $6,740 and consist of intangible ($3,062), inventory, and fixed
asset write-offs as well as severance payments to employees separated from the
Company.  Restructuring payments were approximately $675 in fiscal 1996.  These
charges are included in restructuring and impairment charges.  See Note 5 for
discussion of impairment of intangibles assets.





                                      38
<PAGE>   39
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)




13.  LEASES

The Company and its subsidiaries occupy certain facilities under lease
agreements and lease certain equipment under various agreements expiring
through December 31, 2003.  Rent expense for the years ended September 30,
1997, 1996, and 1995 was approximately $596, $595, and $805, respectively.
Future minimum obligations under noncancelable operating leases are as follow:

<TABLE>
                   <S>                                       <C>
                   1998                                      $  573
                   1999                                         566
                   2000                                         547
                   2002                                         519
                   Thereafter                                 2,687
                                                         --------------
                                                             $4,892
                                                         ==============
</TABLE>

14.  CAPITAL STOCK AND STOCK OPTIONS

The Company has a Stock Incentive Plan (the Plan).  Under the Plan, options to
purchase shares of common stock may be granted to all employees and employed
directors.  Outside of the Plan, the Company has entered into stock option
agreements (the Non-Qualified Stock Option Agreements) with officers and key
employees of the Company.

Under the Non-Qualified Stock Option Agreements, certain employees were granted
options before the Company's 1994 initial public offering.  These options were
granted at exercise prices, which range from $.93 to $6.93 per share, were
determined by the Board of Directors, and represented estimated fair market
values of the Company's common stock at the grant date.  These options are
fully vested and, if not exercised or terminated, will terminate on the fifth
anniversary of the vesting date.

Under the Plan, certain officers and key employees have been granted stock
options.  These options vest over two years, as defined in the agreement.  Upon
termination of employment for any reason other than death or termination
without cause, any options that have not vested shall terminate.  All options,
if not exercised or terminated, will terminate on the tenth anniversary of the
date of grant.  The executive may purchase at any time less than the full
number of shares for which the option is then exercisable.





                                      39
<PAGE>   40
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)




14.  CAPITAL STOCK AND STOCK OPTIONS (CONTINUED)

Non-Qualified Stock Options have been granted to officers and all employees of
the Company pursuant to the Plan.  These options will vest either immediately
or over a period of up to seven years, as defined in the agreement.  All
options, if not exercised or terminated, will terminate either on the sixth or
the tenth anniversary of the date of grant as defined in the agreement.

Non-Qualified Stock Options have been granted to the independent directors of
the Company in lieu of compensation as directors and members of committees of
the Board of Directors which, if not exercised or terminated, will terminate on
the sixth anniversary date of grant.

In April 1996, the Company reset the exercise price on the options granted to
officers, all employees, and directors pursuant to the Plan.  The revised
exercise price represented the fair value of the Company's stock as of April
17, 1996, and, accordingly, no compensation expense was recognized.  In October
1997, the Company once again reset the exercise price for all outstanding
options.  The revised exercise price represented the fair value of the
Company's stock as of October 28, 1997, and, accordingly, no compensation
expense was recognized.

Stock option activity, including Non-Qualified Stock Options, activity under
the Plan, and options granted to independent directors, is as follows (in
thousands):

<TABLE>
<CAPTION>
                                      1995                     1996                      1997
                          ------------------------------------------------------------------------------
                                           WEIGHTED-                WEIGHTED-                 WEIGHTED-
                                           AVERAGE                  AVERAGE                   AVERAGE
                                           EXERCISE                 EXERCISE                  EXERCISE
                               OPTIONS      PRICE       OPTIONS       PRICE       OPTIONS      PRICE
                          ------------------------------------------------------------------------------
<S>                       <C>              <C>       <C>            <C>       <C>             <C>
Outstanding at beginning
  of year                      1,399       $4.02        1,734       $6.58         1,858       $5.31
Granted                          770        8.40        1,103        4.84           478        5.02
Exercised                       (427)       1.39         (361)       1.23           (47)       5.73
Canceled                          (8)       8.25         (618)       8.65          (511)       7.72
                          ------------------------------------------------------------------------------
Outstanding at end of year     1,734       $6.58        1,858       $5.31         1,778       $4.56
                          ==============================================================================
Exercisable at end of year       875                      690                       779
Exercise price range       $0.93 - $18.00            $0.93 - $18.00           $0.93 -$13.00
                                                            
</TABLE>

At September 30, 1997, 1,381 options had an exercise price between $4.50 and
$7.00 per share.





                                      40
<PAGE>   41
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                       (In Thousands, Except Share Data)




14.  CAPITAL STOCK AND STOCK OPTIONS (CONTINUED)

A summary of the weighted-average fair value of options granted during 1997 and
1996 is as follows:

<TABLE>
<CAPTION>
                                                      1997                                 1996
                                       ------------------------------------------------------------------------
                                         WEIGHTED-AVERAGE WEIGHTED-AVERAGE  WEIGHTED-AVERAGE  WEIGHTED-AVERAGE
                                             EXERCISE        FAIR VALUE         EXERCISE         FAIR VALUE
                                              PRICE          OF OPTIONS          PRICE           OF OPTIONS
                                       ------------------------------------------------------------------------
<S>                                           <C>               <C>               <C>               <C>
Options with exercise prices equal to
  market price                                $5.19             $2.12             $5.56             $1.73
Options with exercise prices less than                                      
  market price                                 4.91              3.86              4.55              3.79
Options with exercise prices exceeding
  market price                                 5.56              3.73                 -                 -
</TABLE>

At September 30, 1997, the Company has reserved 3,000 shares of the Company's
common stock for issuance in connection with the Plan.

Pro forma information regarding net income and earnings per share is required
by Statement 123, which also requires that the information be determined as if
the Company had accounted for its employee stock options granted subsequent to
October 1, 1995, under the fair value method of that Statement.  The fair value
for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions for 1997
and 1996, risk-free interest rates of 6.5% and 6.3%, respectively, volatility
factor of the expected market price of the Company's common stock of 35%; a
weighted-average expected life of the options of four years; and no dividend
yield.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable.  In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in
management's option, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.





                                      41
<PAGE>   42
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)

                                       


14.  CAPITAL STOCK AND STOCK OPTIONS (CONTINUED)

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period.  The Company's pro
forma information follows:

<TABLE>
<CAPTION>
                                                                                  1997             1996
                                                                             -----------------------------
                        <S>                                                     <C>             <C>
                        Pro forma net loss applicable to common shares
                                                                                $(8,435)        $(27,178)
                        Pro forma loss per common share                            (.27)            (.98)
</TABLE>

15.  RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses for the years ended September 30, 1997, 1996,
and 1995, were approximately $5,698, $4,271, and $5,204, respectively.

16.  MAJOR CUSTOMERS

For the years ended September 30, 1997 and 1996, the Company derived
approximately $21,190 (44%) and $8,600 (32%), of its net sales from one
customer, Motorola, of which approximately $4,690 and $4,100 was included in
accounts receivable at September 30, 1997 and 1996, respectively.  During the
year ended September 30, 1995, no customers made up more than 10% of the
Company's net sales.

17.  EXPORT SALES

Export sales were approximately $39,272, $12,872, and $22,383 for the years
ended September 30, 1997, 1995, and 1995, respectively.  Export sales were
primarily to the Asian and European, Middle Eastern, and African (EMEA) regions
during the years ended September 30, 1997 and 1996, and to the Caribbean and
Latin American (CALA) and EMEA regions during the year ended September 30,
1995.

18.  CONTINGENCIES

The Company is involved in legal proceedings which arise in the ordinary course
of its business.  While any litigation contains an element of uncertainty,
based upon the opinion of the Company's counsel, management believes that the
outcome of such proceedings will not have a material adverse effect on the
Company's consolidated results of operations.





                                      42
<PAGE>   43
                              Telular Corporation

            Notes to Consolidated Financial Statements (continued)
                      (In Thousands, Except Share Data)




19.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the quarterly results of operations for the years
ended September 30, 1997, 1996, and 1996 (in thousand, except share data).

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                           DECEMBER 31      MARCH 31        JUNE 30     SEPTEMBER 30
                                        --------------------------------------------------------------
<S>                                         <C>            <C>              <C>           <C>
FISCAL YEAR ENDED 1997
Net sales                                   $18,380        $11,417          $5,280        $13,340
Gross profit                                  4,583          2,837             530          2,586
Net income (loss)                               740           (732)         (3,973)        (1,337)
Net income (loss) per common share              .02           (.02)           (.19)          (.05)

FISCAL YEAR ENDED 1996
Net sales                                     4,028          4,574           4,750         13,919
Gross profit (loss)                             286         (1,993)          1,178          3,894
Net income (loss)                            (5,230)       (17,399)         (4,495)           531
Net income (loss) per common share             (.22)          (.69)           (.15)           .02

FISCAL YEAR ENDED 1995
Net sales                                     6,820          8,209           8,656          9,346
Gross profit                                  1,395          1,416           1,847            844
Net loss                                     (4,864)        (4,063)         (3,761)        (6,973)
Net loss per common share                      (.21)          (.17)           (.16)          (.30)
</TABLE>

The accumulation of fiscal 1996 quarterly net (loss) income per common share
does not equal the net loss per common share for the year ended September 30,
1996, due to the large number of shares issued in conjunction with the
conversion of debentures during the second and third quarters of fiscal 1996.





                                      43
<PAGE>   44




ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

         Not Applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         Pursuant to General Instruction G(3), reference is made to the
information contained under the caption "Directors of the Company" in the
Company's definitive proxy statement for its 1998 Annual Meeting of
Shareholders filed with the Securities and Exchange Commission on or before
December 29, 1997, which is incorporated herein.

         The executive officers of the Company and their ages as of November
21, 1997 are as follows:

<TABLE>
<CAPTION>
               NAME                       AGE                         POSITION
               ----                       ---                         --------
         <S>                               <C>       <C>
         Kenneth E. Millard . . . . .      50        Chief Executive Officer and President
         Robert C. Montgomery . . . .      56        Executive Vice President and Chief Operating Officer
         Daniel D. Giacopelli . . . .      39        Executive Vice President and Chief Technology Officer
         Jeffrey L. Herrmann  . . . .      32        Senior Vice President, Chief Financial Officer, Secretary
         S.W.R. (Sandy) Moore.  . . .      54        Senior Vice President, Strategic Alliances & OEM Sales
         John F. Mitchell . . . . . .      38        Senior Vice President, Marketing
</TABLE>

         Kenneth E. Millard, age 50, has served as a director, President and
Chief Executive Officer of the Company since April 1996.  Mr. Millard served as
President and Chief Operating Officer of Oncor Communications, based in
Bethesda, Maryland.  He worked for Ameritech from 1982 to 1992 where he served
as President and Chief Executive Officer of Michigan Bell Telephone Company
from 1989 to 1992.  Prior to 1989, he held the positions of Senior
Vice-President of Corporate Strategy for three years and Senior Vice-President
and General Counsel of Ameritech for four years.  From 1972 to 1982, Mr.
Millard worked for AT&T and Wisconsin Bell as an attorney.

         Robert C. Montgomery, age 56, has served as director since October 28,
1997.  He has been the Company's Executive Vice President and Chief Operating
Officer since 1996.  Prior to that, Mr. Montgomery was President (and founder)
of Telular-Adcor Security Products, Inc., a company that was acquired by the
Company in 1993.  Previously, Mr. Montgomery was a partner at McKinsey &
Company.

         Dan Giacopelli, age 39, has served as director, Executive Vice
President and Chief Technology Officer of the Company since October 28, 1997.
Mr. Giacopelli founded and was President and Chief Executive Officer of
Wireless Domain, Incorporated from September 1995 to November 1997.  Prior to
that time, Mr. Giacopelli was Director of Engineering of the Wireless Group of
Telephonics Corporation from 1987 to 1995.  Prior to 1987, Mr. Giacopelli was
President and CEO of Valinor Electronics, Inc.

         Jeffrey L. Herrmann, age 32, has served as Senior Vice President and
CFO, Secretary of the Company and Secretary of the Company's board of directors
since July 22, 1997.  Mr. Herrmann had previously been Corporate Controller of
the Company since April, 1997.  Prior to that Mr. Herrmann held a variety of
financial management positions with Bell & Howell Company (1994-1997) and R.R.
Donnelley & Sons Company (1992-1994).  Mr. Herrmann began his career with
Arthur Andersen & Company in 1987.

         S.W.R. (Sandy) Moore, age 54, has served as Senior Vice President,
Strategic Alliances & OEM Sales since December 1996.  Mr. Moore served from
1991 to 1996 as President and CEO of Spectrix Corporation based in Deerfield,
Illinois.  He worked for NovAtel Communications from 1988 to 1990 where he
served as President and COO during 1990.  Prior to 1988 Mr. Moore spent 16
years with Northern Telecom in Senior Marketing and General Management
positions.

         John F. Mitchell, age 38, has served as Senior Vice President,
Marketing for the Company since November 1997.  Prior to that Mr. Mitchell was
Director of Marketing for the Company since October 1996.  Prior to that Mr.
Mitchell was Product Marketing Manager of the Cellular Subscriber Sector of
Motorola since May 1992.





                                      44
<PAGE>   45




ITEM 11.   EXECUTIVE COMPENSATION.

         Pursuant to General Instruction G(3), reference is made to the
information contained under the caption "Executive Compensation" in the
Company's definitive proxy statement for its 1998 Annual Meeting of
Shareholders filed with the Securities and Exchange Commission on or before
December 29, 1997, which is incorporated herein.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         Pursuant to General Instruction G(3), reference is made to the
information contained under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Company's definitive proxy statement
for its 1998 Annual Meeting of Shareholders filed with the Securities and
Exchange Commission on or before December 29, 1997, which is incorporated
herein.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Pursuant to General Instruction G(3), reference is made to the
information contained under the caption "Certain Relationships and Related
Transactions" in the Company's definitive proxy statement for its 1998 Annual
Meeting of Shareholders filed with the Securities and Exchange Commission on or
before December 29, 1997, which is incorporated herein.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)      1.      THE FOLLOWING FINANCIAL STATEMENTS ARE INCLUDED IN PART II,
                 ITEM 8 OF THIS FORM 10-K.

                 Report of Independent Auditors

                 Consolidated Balance Sheets as of September 30, 1997 and 1996

                 Consolidated Statements of Operations for the years ended
                 September 30, 1997, 1996 and 1995

                 Consolidated Statements of Equity for the years ended
                 September 30, 1997, 1996 and 1995

                 Consolidated Statements of Cash Flows for the years ended
                 September 30, 1997, 1996 and 1995

                 Notes to Consolidated Financial Statements

         2.      THE FOLLOWING SCHEDULE FOR THE YEARS ENDED SEPTEMBER 30, 1997,
                 1996 AND 1995.

                 Schedule VIII    Valuation and Qualifying Accounts

                 All other schedules are omitted because they are not
                 applicable or the required information is shown in the
                 financial statements or notes thereto.

         3.      EXHIBITS.

<TABLE>
<CAPTION>
        Number                    Description                                   Reference
        -------                   -----------                                   ---------
        <S>                       <C>                                           <C>
        3.1                       Certificate of Incorporation                  Filed as Exhibit 3.1 to
                                                                                Registration
                                                                                Statement
                                                                                No. 33-72096
                                                                                (the "Registration
                                                                                Statement")

        3.2                       Amendment No. 1 to Certificate                Filed as
                                  of Incorporation                              Exhibit 3.2 to
                                                                                the Registration
                                                                                Statement
</TABLE>




                                      45
<PAGE>   46




<TABLE>
        <S>                       <C>                                           <C>
        3.3                       Amendment No. 2 to Certificate                File as
                                  of Incorporation                              Exhibit 3.3 to
                                                                                the Registration
                                                                                Statement

        3.4                       By-Laws                                       Filed as
                                                                                Exhibit 3.4 to
                                                                                the Registration
                                                                                Statement

        4.1                       Loan Agreement with LaSalle                   Filed as Exhibit
                                  National Bank and Amendment                   4.1 to Form 10-K
                                  thereto                                       filed December 27, 1995

        4.2                       Debenture Agreements dated                    Filed as Exhibit
                                  December 11, 1995                             4.2 to Form 10-K
                                                                                filed December
                                                                                27, 1995

        4.3                       Certificate of Designations, Preferences,     Filed as Exhibit 99.2
                                  and Rights of Series A Convertible Preferred  Form 8-K filed
                                  Stock                                          April 25, 1997

        4.4                       Loan and Security Agreement with              Filed as Exhibit 4.2 to
                                  Sanwa Business Credit Corporation             Form 10-Q filed
                                                                                August 14, 1997

        10.1                      Consulting Agreement with                     Filed as Exhibit
                                  William L. De Nicolo                          10.1 to the
                                                                                Registration
                                                                                Statement

        10.2                      Employment Agreement with                     Filed as Exhibit
                                  Kenneth E. Millard                            10.1 to Form 10-Q
                                                                                filed August 14, 1996

        10.3                      Stock Option Agreement with                   Filed as Exhibit
                                  Kenneth E. Millard                            10.2 to Form 10-Q
                                                                                filed August 14, 1996

        10.4                      Stock Purchase Agreement By                   Filed as Exhibit
                                  and Among Telular Corporation                 10.3 to Form 10-Q
                                  and TelePath Corporation (which               filed August 14, 1996
                                  had changed its name to Wireless
                                  Domain, Incorporated)

        10.5                      Appointment of Larry J. Ford                  Filed as Exhibit 10.2
                                                                                to Form 10-Q filed
                                                                                May 1, 1995

        10.6                      Option Agreement with Motorola                Filed as Exhibit 10.6
                                  dated November 10, 1995                       to Form 10-K filed
                                                                                December 26, 1996(1)

        10.7                      Stock Purchase Agreement                      Filed as Exhibit 10.11
                                  between Motorola, Inc. and                    to the Registration
                                  Telular Corporation dated                     Statement
                                  September 20, 1993
</TABLE>





                                      46
<PAGE>   47




<TABLE>
        <S>                       <C>                                           <C>
        10.8                      Patent Cross License Agreement                Filed as Exhibit 10.12
                                  between Motorola, Inc. and the                to the Registration
                                  Company, dated March 23, 1990                 Statement(1)
                                  and Amendments No. 1, 2 and
                                  3 thereto

        10.9                      Exclusive Distribution and                    Filed as Exhibit 10.14
                                  Trademark License Agreement                   the Registration
                                  between Telular Canada Inc.                   Statement(1)
                                  and the Company, dated April 1,
                                  1989, and Amendments thereto

        10.10                     Amended and Restated Shareholders             Filed as Exhibit 10.15
                                  Agreement dated November 2, 1993              to the Registration
                                                                                Statement(1)

        10.11                     Amendment No. 1 to Amended and                Filed as Exhibit 10.24
                                  Restated Shareholders                         the Registration
                                  Agreement, dated January 24,                  Statement
                                  1994


        10.12                     Amendment No. 2 to Amended and                Filed as Exhibit 10.5
                                  Restated Shareholders Agreement,              to the Form 10-Q filed
                                  dated June 29, 1995                           July 28, 1995

        10.13                     Amended and Restated Registration             Filed as Exhibit 10.16
                                  Rights Agreement dated November               to the Registration
                                  2, 1993                                       Statement

        10.14                     Amendment No. 1 to Amended and                Filed as Exhibit 10.25
                                  Restated Registration Rights                  to the Registration
                                  Agreement, dated January 24,                  Statement
                                  1994

        10.15                     Amended and Restated Employee                 Filed as Exhibit 10.17
                                  Stock Option Plan                             to Form 10-K filed
                                                                                December 26, 1996

        10.16                     Stock Option Grant to                         File as Exhibit 10.7
                                  Independent Directors                         to Form 10-Q filed
                                                                                July 28, 1995

        10.17                     Securities Purchase Agreement dated           Filed as Exhibit 99.1 to
                                  April 16, 1997, by and between Telular        Form 8-K filed
                                  Corporation and purchasers of the Series      April 25, 1997
                                  A Convertible Preferred Stock

        10.18                     Registration Rights Agreement dated           Filed as Exhibit 99.3 to
                                  April 16, 1997, by and between Telular        Form 8-K filed
                                  Corporation and purchasers of the Series      April 25, 1997
                                  A Convertible Preferred Stock

        10.19                     Securities Purchase Agreement dated           Filed as Exhibit 99.3 to
                                  June 6, 1997, by and between Telular          Registration Statement on
                                  Corporation and purchasers of the Series      Form S-3, Registration
                                  A Convertible Preferred Stock                 No. 333-27915, as amended
                                                                                by Amendment No. 1 filed
                                                                                June 13, 1997, and further
                                                                                Amended by Amendment
                                                                                No. 2 filed July 8, 1997
                                                                                ("Form S-3")

        10.20                     Registration Rights Agreement dated           Filed as Exhibit 99.4 to
                                  June 6, 1997, by and between Telular          Form S-3
                                  Corporation and purchasers of the Series
                                  A Convertible Preferred Stock
</TABLE>





                                      47
<PAGE>   48





<TABLE>
        <S>                       <C>                                           <C>
        10.21                     Agreement and Plan of Merger by and           Attached hereto as
                                  among Wireless Domain Incorporated            Exhibit 10.21
                                  (formerly TelePath), Telular-WD (a
                                  wholly-owned subsidiary of Telular) and
                                  certain stockholder of Wireless Domain
                                  Incorporated

        11                        Statement regarding computation               Filed herewith
                                  of per share earnings

        21                        Subsidiaries of registrant                    Filed herewith

        99                        Cautionary Statements Pursuant to the         Filed herewith
                                  Securities Litigation Act of 1995
</TABLE>

        (1)     Confidential treatment granted with respect to redacted portions
                of documents.


(b)     REPORTS ON FORM 8-K

        The Company filed (1) report on Form 8-K during the three months ended
        September 30, 1997:

            (i) On July 1, 1997, the Company reported a slowdown of shipments
                to the Hungary project and the appointment of Jeffrey Herrmann
                to Chief Financial Officer, and filed related documents.

(c)     SEE EXHIBIT INDEX AND EXHIBITS ATTACHED TO THIS REPORT AND LISTED
        UNDER ITEM 14(a)(3).

(d)     FINANCIAL STATEMENTS SCHEDULES REQUIRED BY THIS ITEM ARE LISTED UNDER
        ITEM 14(a)(2).





                                      48

<PAGE>   49





                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                          Telular Corporation

Date:  December 19, 1997                  By: /s/      KENNETH E. MILLARD
                                          -------------------------------
                                          Kenneth E. Millard
                                          President, Chief Executive Officer and
                                          Director 

         Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
           SIGNATURE                                 TITLE                                  DATE
           ---------                                 -----                                  ----
<S>                                         <C>                                    <C>
/s/   WILLIAM L. DE NICOLO                  Chairman of the Board                   December 19, 1997
------------------------------------                                                                 
       William L. De Nicolo

/s/   KENNETH E. MILLARD                    President, Chief Executive              December 19, 1997
------------------------------------        Officer and Director
        Kenneth E. Millard                  

/s/   ROBERT C. MONTGOMERY                  Chief Operating Officer, Executive      December 19, 1997
--------------------------------------      Vice President and Director                                                          
      Robert C. Montgomery                 

/s/   DANIEL D. GIACOPELLI                  Chief Technology Officer, Executive     December 19, 1997
------------------------------------        Vice President and Director                                                          
           Daniel D. Giacopelli           

/s/   JEFFREY L. HERRMANN                   Chief Financial Officer, Secretary      December 19, 1997
------------------------------------        and Senior Vice President                                                          
      Jeffrey L. Herrmann                  

/s/   S.W.R. (SANDY) MOORE                  Senior Vice President,                  December 19, 1997
------------------------------------        Strategic Alliances and OEM Sales
      S.W.R. (Sandy) Moore                  

/s/   JOHN F. MITCHELL                      Senior Vice President, Marketing        December 19, 1997
------------------------------------                                                                
      John F. Mitchell

/s/   JOHN E. BERNDT                        Director                                December 19, 1997
------------------------------------                                                                 
      John E. Berndt

/s/   LARRY J. FORD                         Director                                December 19, 1997
------------------------------------                                                                 
      Larry J. Ford

/s/   RICHARD D. HANING                     Director                                December 19, 1997
------------------------------------                                                                 
         Richard D. Haning

/s/   DAVID P. MIXER                        Director                                December 19, 1997
------------------------------------                                                                 
      David P. Mixer
</TABLE>








                                      49
<PAGE>   50
                                                                   SCHEDULE VIII

                              TELULAR CORPORATION

                       VALUATION AND QUALIFYING ACCOUNTS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                     CHARGED
                                                 BALANCE AT      CHARGED TO        TO OTHER                            BALANCE
                                                  BEGINNING       COSTS AND       ACCOUNTS----     DEDUCTIONS--         AT END
                DESCRIPTION                       OF PERIOD        EXPENSES         DESCRIBE         DESCRIBE          OF PERIOD 
                                               ---------------  --------------   -------------    ---------------    ------------
<S>                                               <C>             <C>              <C>            <C>                <C>
PERIOD ENDED SEPTEMBER 30, 1997............                                      
                                                                                 
Accumulated Amortization of Intangible Assets     $       140     $   531          $     -        $     -            $     671
Valuation Allowance of Deferred Tax Asset              32,288       1,050   (3)          -              -               33,338
Allowance for Doubtful Accounts                           900           -                -           (474)  (5)            426
Inventory Reserve                                       1,199        (259)               -           (417)  (6)            523
                                                                                 
PERIOD ENDED SEPTEMBER 30, 1996............                                      
                                                                                 
Accumulated Amortization of Intangible Assets           1,909       7,926   (1)          -         (9,695)  (2)            140
Valuation Allowance of Deferred Tax Asset              21,888      10,400   (3)          -              -               32,288
Allowance for Doubtful Accounts                           218         974                -           (292)  (4)            900
Inventory Reserve                                       1,312       4,304                -         (4,417)  (6)          1,199
                                                                                 
PERIOD ENDED SEPTEMBER 30, 1995............                                      
                                                                                 
Accumulated Amortization of Intangible Assets             952         956                -              -                1,908
Valuation Allowance of Deferred Tax Asset              12,096       9,792   (3)          -              -               21,888
Allowance for Doubtful Accounts                           216         319                -           (317)  (4)            218
Inventory Reserve                                         576       1,375                -           (639)  (6)          1,312
</TABLE>


(1)      Approximately $7,341 represents assets written off as restructuring or
         impairment charges.

(2)      Amount represents assets fully amortized and netted against the
         reserve during the period.

(3)      Amount represents the valuation amount for deferred tax assets, which
         reflect the net tax effects of temporary differences between the
         carrying amounts of assets and liabilities for financial reporting
         purposes and the amounts used for income tax purposes.

(4)      Bad debts written-off.

(5)      Bad debts written-off $(242) and the release of a prior reserve due to
         the collection of such reserved account $(231).

(6)      Inventory disposed.


                                      50