<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC 20549-1004


                                    FORM 10-Q

                                   (MARK ONE)
 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

                                       OR


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

        FOR THE TRANSITION PERIOD FROM _______________ TO _______________

                         COMMISSION FILE NUMBER 0-21681

                         TRANSCRYPT INTERNATIONAL, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                 DELAWARE                                      47-0801192
        (STATE OR OTHER JURISDICTION OF    (I.R.S. EMPLOYER IDENTIFICATION NO.)
        INCORPORATION OR ORGANIZATION)

                              4800 N.W. 1ST STREET
                             LINCOLN, NEBRASKA 68521
                                 (402) 474-4800
               (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                      INCLUDING AREA CODE, OF REGISTRANT'S
                           PRINCIPAL EXECUTIVE OFFICE)


         Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

                  YES  [X]        NO [ ]


         As of July 30, 1999, 12,946,624 shares of the Registrant's
                       Common Stock were outstanding.

<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

TRANSCRYPT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1999 and December 31, 1998
(in thousands)

                                         ASSETS
<TABLE>
<CAPTION>
                                                                                 (unaudited)
                                                                                    JUNE 30,                DECEMBER 31,
                                                                                      1999                      1998
                                                                             ---------------------     ----------------------
<S>                                                                          <C>                       <C>
Current assets:
       Cash and cash equivalents                                                       $    20,144                $    20,262
       Accounts receivable, net                                                              7,736                      9,287
       Receivables - other                                                                     133                        605
       Cost in excess of billings on uncompleted contracts                                   1,831                      1,216
       Inventory                                                                            12,022                     13,907
       Prepaid expenses                                                                        725                        552
       Deferred tax assets                                                                   2,870                      5,157
                                                                              ---------------------     ----------------------
                       Total current assets                                                 45,461                     50,986

Property, plant and equipment, net                                                           5,924                     11,885
Deferred tax assets                                                                          9,506                      7,219
Intangible assets, net                                                                      16,021                     16,711
Other assets                                                                                   446                        411
                                                                              ---------------------     ----------------------
                                                                                       $    77,358                $    87,212
                                                                              ---------------------     ----------------------
                                                                              ---------------------     ----------------------
</TABLE>


                       LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>

<S>                                                                            <C>                      <C>
Current liabilities:
       Revolving line of credit                                                         $    6,089                 $    7,426
       Current portion of long-term debt                                                        71                      2,732
       Accounts payable                                                                      4,674                      2,620
       Billings in excess of cost on uncompleted contracts                                   3,779                      4,541
       Deferred revenue                                                                        397                      1,140
       Accrued expenses                                                                      6,959                      5,101
       Provision for litigation settlement                                                       -                     10,000
                                                                              ---------------------     ----------------------
                       Total current liabilities                                            21,969                     33,560

Provision for litigation settlement                                                          5,996                          -
Long-term debt, net of current portion                                                          75                          6
Deferred revenue                                                                               515                        550
                                                                              ---------------------     ----------------------
                                                                                            28,555                     34,116
                                                                              ---------------------     ----------------------
Commitments and contingencies
Stockholders' equity:
       Preferred stock                                                                           -                          -
       Common stock                                                                            129                        129
       Additional paid-in capital                                                           90,315                     90,315
       Accumulated deficit                                                                (41,641)                   (37,348)
                                                                              ---------------------     ----------------------

                                                                                            48,803                     53,096
                                                                              ---------------------     ----------------------
                                                                                       $    77,358                $    87,212
                                                                              ---------------------     ----------------------
                                                                              ---------------------     ----------------------
</TABLE>

       See accompanying notes to the consolidated financial statements.

                                      2
<PAGE>

ITEM 1.  FINANCIAL STATEMENTS  (CONTINUED)

TRANSCRYPT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 1999 and 1998
(Unaudited) (in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED            SIX MONTHS ENDED
                                                                     JUNE 30,                      JUNE 30,
                                                          ---------------------------    ---------------------------
                                                             1999            1998           1999           1998
                                                          ------------    -----------    -----------    ------------
<S>                                                        <C>            <C>            <C>            <C>
Revenues                                                  $    12,727     $   13,877     $   22,436      $   35,865
Cost of sales                                                   8,646         10,853         16,380          23,763
                                                          ------------    -----------    -----------    ------------
      Gross profit                                              4,081          3,024          6,056          12,102
                                                          ------------    -----------    -----------    ------------
Operating expenses:
    Research and development                                    1,510          2,703          3,224           4,741
    Sales and marketing                                         2,396          3,355          4,122           6,565
    General and administrative                                  2,460          4,715          5,094           6,828
    Restructuring charge                                          523              -            523               -
    Provision for litigation settlement                        (2,221)             -         (2,221)              -
                                                          ------------    -----------    -----------    ------------
      Total operating expenses                                  4,668         10,773         10,742          18,134
                                                          ------------    -----------    -----------    ------------

      Loss from operations                                       (587)        (7,749)        (4,686)         (6,032)

Other income                                                      181             97            289             113
Interest income                                                   202            174            404             568
Interest expense                                                 (132)          (163)          (300)           (262)
                                                          ------------    -----------    -----------    ------------
      Loss before income taxes                                   (336)        (7,641)        (4,293)         (5,613)
Income tax benefit                                                  -         (2,598)             -          (1,886)
                                                          ------------    -----------    -----------    ------------
           Net loss                                       $      (336)    $   (5,043)    $   (4,293)     $   (3,727)
                                                          ------------    -----------    -----------    ------------
                                                          ------------    -----------    -----------    ------------

Net loss per share - Basic and                            $     (0.03)    $    (0.39)    $    (0.33)     $    (0.29)
Diluted
                                                          ------------    -----------    -----------    ------------
                                                          ------------    -----------    -----------    ------------
Weighted average common shares - Basic and Diluted         12,946,624     12,946,624     12,946,624      12,946,624
                                                          ------------    -----------    -----------    ------------
                                                          ------------    -----------    -----------    ------------
</TABLE>

See accompanying notes to the consolidated financial statements.

                                       3

<PAGE>

ITEM 1.  FINANCIAL STATEMENTS (CONTINUED)

TRANSCRYPT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1999 and 1998
(Unaudited) (in thousands)



<TABLE>
<CAPTION>
                                                                                     SIX MONTHS ENDED JUNE 30,
                                                                        ---------------------------------------------------
                                                                                  1999                      1998
                                                                        ------------------------- -------------------------
<S>                                                                     <C>                       <C>
Net cash flow used in operating activities                                 $               (156)     $             (9,396)
                                                                        ------------------------- -------------------------
Cash flow from investing activities:
  Proceeds from sale of fixed assets                                                      5,261                         -
  Purchase of fixed assets                                                                 (303)                   (2,281)
  Increase in intangible assets                                                            (144)                        -
  Increase in other assets                                                                  (35)                        -
  Payments on restructuring reserve                                                        (666)                     (278)
  Sale of investments                                                                         -                    12,900
                                                                        ------------------------- -------------------------
           Net cash provided by investing activities                                      4,113                    10,341
                                                                        ------------------------- -------------------------

Cash flow from financing activities:
  Borrowings (payments) on revolving lines of credit, net                                (1,338)                    9,117
  Payment on term loans and capitalized leases                                           (2,737)                   (2,551)
                                                                        ------------------------- -------------------------
           Net cash provided by (used in) financing activities                           (4,075)                    6,566
Net increase (decrease) in cash and cash equivalents                                       (118)                    7,511
Cash and cash equivalents, beginning of period                                           20,262                    15,384
                                                                        ------------------------- -------------------------
Cash and cash equivalents, end of period                                   $             20,144   $                22,895
                                                                        ------------------------- -------------------------
                                                                        ------------------------- -------------------------
</TABLE>

See accompanying notes to the consolidated financial statements.

                                     4


<PAGE>



                 TRANSCRYPT INTERNATIONAL, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                 (in thousands, except share and per share data)

1. GENERAL

         The condensed consolidated balance sheet of Transcrypt International,
Inc. ("Transcrypt" or the "Company") at December 31, 1998 has been taken from
audited consolidated financial statements at that date and condensed. The
condensed consolidated financial statements for the three and six months ended
June 30, 1999 and for the three and six months ended June 30, 1998 are unaudited
and reflect all normal and recurring accruals and adjustments which are, in the
opinion of management, necessary for a fair presentation of the financial
position, operating results and cash flows for the interim periods presented in
this quarterly report. The condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto, together with management's discussion and analysis of financial
condition and results of operations, contained in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998. The results of operations and
cash flows for the six months ended June 30, 1999 are not necessarily indicative
of the results for the entire fiscal year ending December 31, 1999. Where
appropriate, items within the condensed consolidated financial statements have
been reclassified from the previous periods' presentation.

2. ORGANIZATION AND CONSOLIDATION

         The Company is a manufacturer of information security products and
wireless communications products and systems. The Company designs and
manufactures information security products, which prevent unauthorized access to
sensitive voice communications. These products are based on a wide range of
analog scrambling and digital encryption technologies and are sold mainly to the
land mobile radio ("LMR") and telephony security markets. Through its E.F.
Johnson subsidiary, the Company designs, develops, manufactures and markets (1)
trunked and conventional radio systems, (2) stationary land mobile radio
transmitters/receivers and (3) mobile and portable radios. The Company sells its
LMR products and systems mainly to two broad markets: (1) business and
industrial ("B&I") users and (2) public safety and other governmental users.

         The condensed consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant inter-company
accounts and transactions have been eliminated in the consolidation.

3. LOSS PER SHARE

         Basic earnings per share (EPS) is calculated based upon the weighted
average number of common shares outstanding during the period. The diluted EPS
calculation reflects the potential dilution from common stock equivalents such
as stock options. For the three and six months ended June 30, 1999 a net loss
was incurred and the impact of outstanding stock options on diluted EPS is
anti-dilutive.

4. INVENTORY

         The following is a summary of inventory at June 30, 1999 and December
31, 1998:


<TABLE>
<CAPTION>

                                                June 30, 1999      December 31, 1998
                                                -------------      -----------------
<S>                                             <C>                <C>
Raw materials and supplies                      $       5,166      $       6,267
Work in progress                                        1,522              1,337
Finished goods                                          5,334              6,303
                                                       ------             ------
                                                $      12,022      $      13,907
                                                       ------             ------
                                                       ------             ------

</TABLE>

                                      5

<PAGE>



5. REVOLVING LINES OF CREDIT

         The Company has a line of credit with a regional bank. It is a secured
line of credit not to exceed $10,000. The variable interest rate is 1.25% over
the interest rate earned on the $10,000 cash collateral used as security on the
bank line of credit. This line of credit is due on August 31, 1999. The working
capital line is collateralized by substantially all the Company's assets
including $10,000 in certificate of deposits with the bank.

         At June 30, 1999, the Company had $6,089, outstanding on the
revolving line of credit. At December 31, 1998, the Company had $7,230
outstanding on this line of credit and $196 outstanding on an additional line
of credit.

6. COMMITMENTS AND CONTINGENCIES

         The Company has been named as a defendant in class action lawsuits
that were filed subsequent to the Company's announcement on March 27, 1998
that the filing of its Annual Report on Form 10-K for year ended December 31,
1997 would be delayed and that adjustments would be made to the Company's
previously announced financial results. Between March 31, 1998 and May 27,
1998, twelve purported class action lawsuits were filed against the Company
in the United States District Court for the District of Nebraska, and one
complaint was filed in the District Court of Scotts Bluff County, Nebraska.
Certain of the complaints, as amended, also name one or more officers of the
Company and PriceWaterhouseCoopers, LLP as additional defendants. The longest
class period alleged in any of the class complaints is the period from
January 22, 1997 through April 24, 1998.

         The federal class actions generally allege claims under Sections 11 and
15 of the Securities Act of 1933 and Sections 10 and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and relate primarily
to allegations of false and misleading financial statements and representations
and material omissions by the Company. The Nebraska action alleges violations of
Nebraska securities laws.

         In July 1999, the Company announced that a memorandum of understanding
has been signed with lead plaintiffs' counsel to settle the pending stockholder
class action suits against the Company and certain of its current and former
officers in the United States District Court of Nebraska and the District Court
for Scotts Bluff County, Nebraska. The principal terms of the memorandum of
understanding require the establishment of a settlement fund consisting of (a)
4,460,000 shares of Transcrypt common stock and (b) at least $3,850,000 and up
to $8,850,000 to be paid by Transcrypt's insurance carriers (depending on the
outcome of an arbitration between plaintiffs and one of the insurance carriers).
Transcrypt would also pay $2,000,000 to the class if there is a purchase of
Transcrypt by acquisition or merger that occurs within 18 months of the signing
of the memorandum of understanding. The proposed settlement is subject to a
number of contingencies, including the court approval of a definitive agreement.

         On November 4, 1998, Physician's Mutual Insurance Company filed an
action in the District Court of Douglas County, Nebraska against the Company,
PriceWaterhouseCoopers, LLP and two former officers of the Company. The
complaint contains common law causes of action for fraudulent misrepresentation,
fraudulent concealment and negligent misrepresentation against the defendants
arising from the same facts and circumstances underlying the class actions. The
complaint seeks damages in an amount to be proved at trial, but which is
currently alleged to be approximately $850,000.

         In the quarter ended December 31, 1998, the Company recorded a
special provision of $10 million related to actions pending against the
Company. Upon entering the memorandum of understanding, the Company revised
its estimated costs related to the settlement of actions against the Company.
This lowered the Company's operating expenses by $2.2 million in the second
quarter as the settlement was for an amount less than previously provided.
The remaining reserves for litigation settlement and related costs include
$1,783 included in accrued expenses and $5,996 included in the provision for
litigation settlement. The remaining reserves for litigation settlement have
been classified as long term to the extent that they will be extinguished
through the issuance of common stock of the Company. The Company can provide
no assurances that the outcomes of pending litigation will not have a
material adverse effect on the Company's business, financial condition,
results of operations and cash flows.

         The Company may in the future be the subject of additional lawsuits or
claims in connection with the events or facts surrounding its restatement of
previously announced financial results. The Company is unable to predict when or
whether such additional lawsuits or claims may be initiated or the likelihood of
the outcome or range or amount of potential liability that may arise therefrom.

                                     6

<PAGE>

6. COMMITMENTS AND CONTINGENCIES (CONTINUED)

         In April 1998, the Securities and Exchange Commission ("SEC") issued a
formal order of investigation to determine whether violations of certain aspects
of the Federal securities laws had occurred in connection with the Company. At
the present time, the Company is unable to predict whether the SEC is likely to
initiate enforcement action against the Company or its affiliated parties
relating to these events.

         The Company is involved in certain other legal proceedings incidental
to the normal conduct of its business. The Company does not believe that any
liabilities relating to such other legal proceedings are likely to be,
individually or in the aggregate, material to the Company's business, financial
condition, results of operations or cash flows.

7. SEGMENT AND RELATED INFORMATION

         The Company's reporting segments are strategic business units that
offer different products and services. Management considers its operations to
comprise two industry segments. One segment consists of business conducted in
the information security industry, which comprises the design, manufacture and
sale of devices that prevent the unauthorized interception of sensitive voice
and data communication. The second business segment competes in the wireless
communication industry where the Company designs, develops, manufactures and
markets stationary land mobile radio transmitters/receivers, mobile and portable
radios and trunked and conventional radio communication systems.

         The following table is a summary of unaudited quarterly results for the
three and six months ended June 30, 1999 and 1998.

<TABLE>
<CAPTION>

                                             THREE MONTHS ENDED               SIX MONTHS ENDED
                                                 JUNE 30,                          JUNE 30,
        -----------------------------------------------------------------------------------------
        IN THOUSANDS                       1999           1998           1999             1998
        -----------------------------------------------------------------------------------------
        <S>                           <C>           <C>            <C>              <C>
        SALES
        Information Security             $ 1,606        $  2,600      $   3,562        $   6,390
        Wireless Communication            11,122          11,277         18,875           29,475
                                      -----------   -------------  -------------    -------------
        TOTAL SALES                       12,727          13,877         22,436           35,865
                                      -----------   -------------  -------------    -------------
        COST OF GOODS SOLD
        Information Security                 603           1,276          1,678            2,153
        Wireless Communication             8,044           9,577         14,702           21,610
                                      -----------   -------------  -------------    -------------
        TOTAL COST OF GOODS SOLD           8,646          10,853         16,380           23,763
                                      -----------   -------------  -------------    -------------
        GROSS MARGIN
        Information Security               1,003           1,324          1,884            4,237
        Wireless Communication             3,078           1,700          4,173            7,865
                                      -----------   -------------  -------------    -------------
        TOTAL GROSS MARGIN               $ 4,081        $  3,024      $   6,056        $  12,102
        =========================================================================================

        -----------------------------------------------------------------------------------------
        GROSS MARGIN PERCENTAGE
        Information Security               62.5%           50.9%          52.9%            66.3%
        Wireless Communication             27.7%           15.1%          22.1%            26.7%
        TOTAL GM PERCENTAGE                32.1%           21.8%          27.0%            33.7%
        -----------------------------------------------------------------------------------------
</TABLE>

                                        7

<PAGE>

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

         The following table sets forth certain consolidated statements of
operations (in thousands) information as a percentage of revenues during the
periods indicated:

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED JUNE 30,
                                               -----------------------------------------------------
                                                   1999                        1998
                                               -----------------------------------------------------
         <S>                                   <C>           <C>           <C>          <C>
         Revenues                                $ 12,727        100.0%       $ 13,877       100.0%
         Cost of sales                              8,646         67.9%         10,853        78.2%
                                               -----------   -----------   ------------  -----------
         Gross profit                               4,081         32.1%          3,024        21.8%
                                               -----------   -----------   ------------  -----------
         Operating expenses:
              Research and development              1,510         11.9%          2,703        19.5%
              Sales and marketing                   2,396         18.8%          3,355        24.2%
              General and administrative            2,460         19.3%          4,715        34.0%
              Restructuring charge                    523          4.1%              -         0.0%
              Provision for litigation
               settlement                          (2,221)       (17.5)%             -         0.0%
                                               -----------   -----------   ------------  -----------
                   Total operating expenses         4,668         36.7%         10,773        77.6%
                                               -----------   -----------   ------------  -----------
         Loss from operations                       (587)         (4.6)%        (7,749)      (55.8)%
         Other income                                181           1.4%             97         0.7%
         Interest income                             202           1.6%            174         1.3%
         Interest                                   (132)         (1.0)%          (163)       (1.2)%
         expense                               -----------   -----------   ------------  -----------
         Loss before income taxes                   (336)         (2.6)%        (7,641)      (55.1)%
         Income tax benefit                            -           0.0%         (2,598)      (18.7)%
                                               -----------   -----------   ------------  -----------
                   Net loss                      $  (336)         (2.6)%      $ (5,043)      (36.3)%
                                               -----------   -----------   ------------  -----------
                                               -----------   -----------   ------------  -----------
</TABLE>

<TABLE>
<CAPTION>
                                                           SIX MONTHS ENDED JUNE 30,
                                               -----------------------------------------------------
                                                  1999                        1998
                                               -----------------------------------------------------
<S>                                            <C>           <C>           <C>           <C>
         Revenues                                $ 22,436        100.0%       $ 35,865       100.0%
         Cost of sales                             16,380         73.0%         23,763        66.3%
                                               -----------   -----------   ------------  -----------
         Gross profit                               6,056         27.0%         12,102        33.7%
                                               -----------   -----------   ------------  -----------
         Operating expenses:
              Research and development              3,224         14.4%          4,741        13.2%
              Sales and marketing                   4,122         18.4%          6,565        18.3%
              General and administrative            5,094         22.7%          6,828        19.0%
              Restructuring charge                    523          2.3%              -         0.0%
              Provision for litigation
               settlement                          (2,221)        (9.9)%             -         0.0%
                                               -----------   -----------   ------------  -----------
                   Total operating expenses        10,742         47.9%         18,134        50.6%
                                               -----------   -----------   ------------  -----------
         Loss from operations                      (4,686)       (20.9)%        (6,032)       (16.8)%
         Other income                                 289          1.3%            113         0.3%
         Interest income                              404          1.8%            568         1.6%
         Interest expense                            (300)        (1.3)%          (262)       (0.7)%
         Loss before income taxes                  (4,293)       (19.1)%        (5,613)      (15.7)%
         Income tax benefit                             -          0.0%          (1,88)       (5.3)%
                                               -----------   -----------   ------------  ------------
                   Net loss                      $ (4,293)       (19.1)%      $ (3,727)      (10.4)%
                                               -----------   -----------   ------------  ------------
                                               -----------   -----------   ------------  ------------
</TABLE>

                                      8
<PAGE>

Discussions of certain matters contained in this Quarterly Report on Form
10-Q may constitute forward-looking statements under Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). These
statements may involve risks and uncertainties. These forward-looking
statements relate to, among other things, the court approved and finalization
of the proposed settlement of the pending class action litigation involving
the Company, the outcome of the pending investigation by the SEC, the results
of the Company's product development efforts, future sales levels, the
Company's future financial condition, liquidity and business prospects
generally, perceived opportunities in the marketplace for the Company's
products and its products under development, expectations regarding the
Company's efforts to resolve Year 2000 issues and the effects of a failure to
resolve such issues and the Company's other business plans for the future.
The actual outcomes of these matters may differ significantly from the
outcomes expressed or implied in these forward-looking statements and other
risks detailed in "ITEM 1. BUSINESS--Summary of Business Considerations and
Certain Factors That May Affect Future Results of Operations and/or Stock
Price" contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.

         The following discussion is intended to provide a better understanding
of the significant changes in trends relating to the Company's financial
condition and results of operations. Management's Discussion and Analysis should
be read in conjunction with the accompanying Consolidated Financial Statements
and Notes thereto.

Restatement and Other Developments

         In 1998, the Company restated its previously released results for the
year ended December 31, 1997, the Company's financial statements for the year
ended December 31, 1996 and the financial statements as of and for each of the
quarterly periods ended March 31, June 30, September 30 and December 31 during
1997 and 1996. The restatement of the Company's financial statements and other
events relating to the restatement, including the class action lawsuits and the
SEC investigation which occurred subsequent to March 31, 1998, have had an
adverse impact on the Company's business, financial condition, results of
operations, liquidity and cash flows. These events have had, to varying degrees,
an adverse impact on the Company's relationships with its customers and vendors.
Because of these events, the Company is also evaluating all of its product
lines, and has implemented and is continuing to look at various initiatives to
reduce operating expenses in order to keep them in line with revenues.
Implementation of any plan resulting from these initiatives in the future may
result in substantial up front costs and cash expenditures. The Company can
provide no assurance that the restatement of the financial statements and the
ongoing securities lawsuits and SEC investigation, regardless of their outcomes,
will not continue to have a material adverse effect on the Company's business,
financial condition, results of operations, liquidity and cash flows.

         In connection with the bidding requirements on domestic systems
contracts with governmental agencies, the bidding procedures often require
suppliers of systems to supply a bond from an approved surety company at the
time the contract is awarded. A number of factors can limit the availability of
such bonds. These include the applicant's financial condition and operating
results, the applicant's record for completing similar systems contracts and the
extent to which the applicant has bonds in place for other projects.

         The Company has identified a surety company to issue bonds for the
Company on a case by case basis subject to terms and conditions negotiated for
each such bond. The surety company has advised the Company that it will require
some amount of collateral on any bonds it may issue.

         To the extent that the Company is a successful bidder on any domestic
systems contracts and depending on the Company's overall need for bonds, the
requirement that any additional bonds be collateralized could adversely affect
the Company's ability to bid on or be awarded new domestic systems contracts.
This, in turn, could have a material adverse affect on the Company's business,
financial condition, results of operations and liquidity.

         On July 29, 1999, the Company announced that it has retained ING
Barings LLC as its financial advisor to assist Transcrypt in its review of
strategic and financial alternatives.

                                      9

<PAGE>



Revenues

         Revenues are recognized when product is shipped, less an estimate for
an allowance for returns, if applicable, if collection is reasonably assured.
For shipments where collection is not reasonably assured, the Company recognizes
revenue as cash is received. If collection is contingent on a future event, such
as a reseller of product selling the product to the end user, the Company
recognizes revenue when the contingency lapses, generally upon cash collection.

         System sales under long-term contracts are accounted for under the
percentage-of-completion method. Under this method, revenues are recognized as
work on a contract progresses. The recognized revenue is that percentage of
estimated total revenue that incurred costs to date bear to estimated total
costs to complete the contract. Revisions in cost and profit estimates are made
when conditions requiring such revisions become known. Anticipated losses on
contracts are recognized in operations as soon as such losses are determined to
be probable and reasonably estimable.

         Deferred revenue includes unearned warranty fees on extended product
warranty contracts sold to customers. The Company recognizes the fees based on
the expected warranty repairs to be incurred over the life of the contract.
Deferred revenue also includes an advanced payment received for products to be
sold to a former division of EFJ. The advance payment was negotiated as part of
the sale agreement of the division by EFJ. The advanced payment is recognized as
revenue is earned.

         Revenues decreased 8.3% to $12.7 million in the second quarter of 1999
and 37.4% to $22.4 million during the first six months of 1999, compared to
$13.9 million and $35.9 million respectively during the same periods of 1998. Of
total revenues in the second quarter, the information security segment comprised
12.6% and the wireless communication segment comprised 87.4%. For the first six
months of 1999, the information security segment comprised 15.9% and the
wireless communication segment comprised 84.1% of total revenues.

         The decrease in revenues in the second quarter of 1999 when compared
to the second quarter of 1998 was primarily attributable to a decrease in
sales in the information security segment due to weaker international sales.
The decrease in revenues for the first six months of 1999 was partially
attributable to the uncertainty raised by the restatement discussed above,
which has adversely impacted sales of LMR systems to governmental agencies.
The Company was not awarded any domestic system contracts in 1998. For the
first six months of 1999, the Company has been awarded multiple contracts in
the domestic public safety market for approximately $14.0 million. Revenues
on these contracts are expected to be recognized over the next 12 months.

         Revenues from international sales decreased to $4.6 million for the
three months ended June 30, 1999, compared to $5.3 million for the same period
in 1998. For the first six months of 1999, international sales decreased to $7.9
million compared to $13.2 million for the same period in 1998. The decrease is
primarily due to a decline in sales in Central and Latin America. The Company's
revenue for the first six months of 1999 for Central and Latin America decreased
approximately 46.6% compared to the first six months of 1998. The decline in
revenues to Central and Latin America is attributable to economic uncertainty,
which resulted in recent currency fluctuations in the region. Middle East and
Asian revenues for the first six months of 1999 were down approximately 24%
compared to the first six months of 1998 and this decrease was due to continued
economic weakness in that region of the world. As a result of the continued
weakness in Asia, the Company closed its sales office in Hong Kong and will
continue to manage its sales in the region through its dealer network and a
sales representative in Thailand. Revenues in Europe, while a small percentage
of overall sales, decreased approximately 18.1% for the first six months of 1999
compared to the same period in 1998. The Company's international sales may
continue to be depressed for the rest of 1999 as compared to 1998 due to world
economic conditions.

         In an effort to improve sales, the Company has introduced and plans
to continue the introduction of new products in 1999. Land mobile radio
secure products introduced in the first six months of 1999 include new
encryption modules for deployment in a wide range of mobile radios, including
the latest Motorola models. The Company also introduced new voice security
modules for Nokia and Qualcomm cellular phones. The EFJohnson subsidiary
released on March 31, 1999 the Company's LTR-Net-TM- trunked radio system.
The Company's EFJohnson subsidiary will introduce new models of our hand-held
land mobile radios and a new line of digital mobile radios, which are APCO-25
compliant. The timing of the Company's introduction of proposed new products
and the acceptance of any new products introduced by the Company are subject
to certain risks and uncertainties that could cause the actual results,
performance or achievements to differ materially from those expressed,
suggested or implied.

                                     10

<PAGE>

Gross Profit

         Cost of sales includes materials, labor, depreciation and overhead
costs associated with the production of the Company's products, as well as
shipping, royalty and warranty product costs. Gross profit was $4.1 million
(32.1% gross margin) for the second quarter of 1999, compared to $3.0 million
(21.8% gross margin) for the same period in 1998. For the first six months of
1999, gross profit was $6.1 million (27% gross margin) compared to $12.1 million
(33.7% gross margin) for the same period in 1998. Gross margin for the
information security segment for the three and six months ended June 30, was
62.5% and 52.9%, respectively, compared to 50.9% and 66.3% for the same periods
in 1998. Gross margin for the wireless communications segment for the three and
six months ended June 30, was 27.7% and 22.1%, respectively, compared to 15.1%
and 26.7% for the same periods in 1998.

         On a quarterly comparison basis, the increase in gross margin
percentage in the second quarter of 1999 compared to the same period in 1998
is due to several factors. These include (1) the Company selling new products
with better margins in the second quarter of 1999; (2) the upgrading of
certain domestic public safety systems which have a higher margin than
initial system sales; and (3) the Company not incurring the level of product
costs to fix troubled system contracts as it did in 1998. For the first six
months of 1999 compared to the same period in 1998, the overall decline in
gross margin percentage was due to a number of factors primarily experienced
in the first quarter of 1999. These include (1) the decline in sales of
domestic system contracts to the public safety market which provides a higher
margin than the business and industrial portion of E.F. Johnson's wireless
segment; (2) product mix and the level of sales not being sufficient to fully
absorb the Company's manufacturing overhead; and (3) a shift in the Company's
information security product segment from primarily add-on products to more
radios and cellular phones incorporating the Company's encryption products,
which tends to have a lower gross margin. Gross margins are likely to vary in
the future based primarily upon the mix of products and the amount of
revenues for that period.

Research and Development

         Research and development expenses consist primarily of the costs
associated with research and development personnel, materials and the
depreciation of research and development equipment and facilities. Research and
development expenses decreased to $1.5 million and $3.2 million for the three
and six months ended June 30, 1999, respectively, from $2.7 million and $4.7
million for the same periods in 1998. This decrease was primarily due to a
reduced engineering staff. The Company anticipates research and development
expenses to remain at a level similar to the second quarter of 1999.

         The information security and wireless communications product markets in
which the Company competes are rapidly evolving and can be expected to further
evolve in the future as a result of changing technology, industry standards and
customer requirements. The Company's ability to compete effectively will depend
upon its ability to anticipate and react to these changes in a timely manner.
The Company may not have, either currently or in the future, adequate capital
resources or funds to respond to these changes.

Sales and Marketing

         Sales and marketing expenses consist primarily of salaries and related
costs of sales personnel, including sales commissions and travel expenses, and
costs of advertising, public relations and trade show participation. Sales and
marketing expenses decreased to $2.4 million and $4.1 million for the three and
six month periods ended June 30, 1999, respectively, from $3.4 million and $6.6
million for the same periods in 1998. This was primarily due to a decrease in
sales commissions and fewer sales personnel. Sales and marketing expenses
decreased as a percentage of sales to 18.8% for the three months ended June 30,
1999 from 24.2% for the same period in 1998 and remained relatively flat as a
percentage of revenue for the first six months of 1999, 18.4%, compared to the
first six months of 1998, 18.3%.


                                      11

<PAGE>

General and Administrative

         General and administrative expenses consist primarily of salaries
and other expenses associated with the Company's management, accounting,
finance and administrative functions and amortization of intangible assets.
General and administrative expenses decreased to $2.5 million in the second
quarter of 1999 from $4.7 million in the second quarter of 1998. For the six
months ended June 30, 1999, general and administrative expenses decreased to
$5.1 million from $6.8 million for the first six months of 1998. The decrease
is due primarily to legal, accounting and severance costs, which were
incurred, in the first six months of 1998 associated with the Company's
financial restatement in 1998.

Restructuring Charge

         The Company incurred a restructuring charge in the second quarter of
1999 of approximately $523,000 in connection primarily with the closure of
EFJohnson's sales office in Hong Kong.

Provision for Litigation Settlement

         In the quarter ended December 31, 1998, the Company recorded a special
provision of $10 million related to actions pending against the Company. Upon
entering the memorandum of understanding, the Company revised its estimated
costs related to the settlement of actions against the Company. This lowered the
Company's operating expenses by $2.2 million in the second quarter as the
settlement was for an amount less than previously provided.

Other Income, net

         Other income, net for the second quarter of 1999 increased primarily as
a result of the sale of Company's corporate headquarters in Lincoln, Nebraska.

Net Interest Income (Expense)

         Net interest income consists of interest income earned on cash and
investable funds, net of interest expense related to amounts payable on the
Company's term and installment loans and bank lines of credit. Net interest
income was $70,000 in the second quarter of 1999, as compared to $11,000 in the
second quarter of 1998. The increase was due to the Company carrying a lower
average balance on its revolving line of credit in the second quarter of 1999.
For the first six months of 1999, net interest income was $104,000 compared to
$306,000 for the same period in 1998. This decrease was due to the Company
having a higher cash balance and lower average balance on its bank line of
credit in the first quarter of 1998.

Benefit for Income Taxes

         The Company did not record a tax benefit in the second quarter of 1999,
compared to a tax benefit of $2.6 million in the second quarter of 1998. For the
first six months of 1999 the Company did not record a tax benefit compared to a
tax benefit of $1.9 million for the same period in 1998. The Company's decision
not to record a benefit for income taxes in 1999 is based on its analysis of the
need for a valuation allowance under Statement of Financial Accounting Standards
No. 109 "Accounting for Income Taxes". Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment.

Liquidity and Capital Resources

         Since January 1, 1997, the Company has financed its operations and met
its capital requirements primarily through short-term borrowings, long-term debt
and stock offerings completed on January 22, 1997 and October 15, 1997.

         The Company's operating activities used cash of $156,000 in the first
six months of 1999 compared to $9.4 million in the first six months of 1998.
Cash used in operating activities in the first six months of 1999 consisted


                                     12
<PAGE>

primarily of a net loss plus a gain on a sale of assets, offset in part by
depreciation and amortization, a decrease in inventory, an increase in accounts
payable, an increase in accrued liabilities and a decrease in accounts
receivable.

         The deferred tax assets totaling $12.4 million were 16% and 25.4% of
total assets and stockholders' equity, respectively, at June 30, 1999. As
mentioned above, the Company did not book a provision for income taxes in 1999.
Management believes that it is more likely than not that future taxable income
will be sufficient to fully utilize all deferred tax assets recorded, net of
existing valuation allowances.

         Cash provided by investing activities was $4.1 million for the first
six months of 1999 as compared to cash provided by investing activities of $10.3
million in the first six months of 1998. The Company sold its Lincoln facility
in the second quarter of 1999 generating $5.3 million in cash. In the second
quarter of 1998, $12.9 million in cash was generated from the sale of
investments. Capital expenditures of $303,000 for the first six months of 1999
consisted primarily of manufacturing equipment, computer equipment and software.
Capital expenditures of $2.3 million for the first six months of 1998 consisted
primarily of computer and networking equipment, office furniture and
manufacturing equipment and phase III construction cost at the Company's Lincoln
facility.

         Financing activities used cash of $4.1 million in the first six months
of 1999. Financing activities consisted of a $1.3 million decrease in borrowings
on the Company's line of credit and the elimination of $2.7 million in long term
debt on the Company's Lincoln facility. Cash provided by financing activities
for the first six months of 1998 consisted of $9.1 million in borrowings on the
Company's revolving line of credit less a $2.6 million payment on long-term
debt.

         As of June 30, 1999, the Company had $6.1 million in outstanding
indebtedness under its line of credit with its bank. It is a secured line of
credit not to exceed $10.0 million. Interest is at a variable rate of 1.25% over
the interest rate earned on the $10.0 million on certificates of deposits
pledged as security on the bank line of credit. This line of credit is due on
August 31, 1999. The working capital line is collateralized by substantially all
the Company's assets including $10.0 million in certificate of deposits with the
bank.

         The Company paid off its outstanding IDR Bonds totaling $2.7 million
during the second quarter of 1999 as a result of the sale of its Lincoln
facility.

         The Company does not anticipate paying cash dividends in the
foreseeable future.

         As of June 30, 1999, the Company had approximately $20.1 million in
cash and cash equivalents, which includes $10.0 million of certificates of
deposit pledged as security on its bank line of credit and $1.2 million pledged
as security for bonding on domestic system contracts with the Company's surety
company. $750,000 of the bank line of credit secures a letter of credit issued
to the Company's surety company for bonding on system contracts. There was
approximately $2.0 million available under the Company's bank line of credit at
June 30, 1999. The Company's bank line of credit expires on August 31, 1999 and
the Company is currently seeking to refinance its bank line of credit. The
Company believes it can either renew its current banking relationship or enter
into a new bank line of credit. The Company can provide no assurance that it
will be able to secure new financing and if successful, what would be the terms
of such financing. The requirement of the Company's surety company that the
Company provide collateral on bonds issued in the future could put a further
strain on the Company's liquidity and working capital. To improve its cash
position, the Company sold its facility in Lincoln and is actively marketing its
facility in Waseca. The Company believes that its cash, cash equivalents, and
lines of credit will be sufficient to meet anticipated cash needs for working
capital and for Year 2000 capital expenditures for the next 12 months. However,
if sales do not continue to increase and operating losses do not decline, or the
Company is not able to furnish collateral for bonds on new domestic systems, or
the Company incurs unanticipated substantial costs, the Company may be required
to seek additional financing or funding sources, including possible sale of
securities. Further, the Company has retained ING Barings as its financial
advisor to assist the Company in its review of strategic and financial
alternatives. No assurance can be given that the Company will be able to obtain
such additional funding or financing, or a renewal of its line of credit or be
able to obtain financing on satisfactory terms. Additionally, see "Note 6.
COMMITMENTS AND CONTINGENCIES" above for a discussion regarding certain pending
litigation, the resolution of which could materially adversely affect the
Company's liquidity, operating results and financial condition

                                     13


<PAGE>

Impact of the Year 2000 Issue

State of Readiness

         The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions or
engage in similar normal business activities.

         All products currently being shipped by the Company are Year 2000
compliant. Should a customer use the Company's software with a personal computer
that is not compliant with the year 2000, at that time, the customer may
experience erroneous dates on usage reports, but should not experience any
operational issues. Customers inquiring about previously shipped products are
forwarded to the Year 2000 Compliance Manager in Engineering Product
Development. The Year 2000 Compliance Manager researches the customer's product
and responds in writing as to whether the product is compliant. One obsolete
software product has been identified which will incorrectly report the date
after December 31, 1999. A solution for this issue has been developed to correct
this problem and has been offered to customers identified as having purchased
systems, which include this application software. Written test instructions are
also published for the customer to check their equipment.

         In February 1999, Transcrypt completed the first phase of identifying
and thoroughly researching non-compliant hardware and software. In addition, the
Company has completed the process of seeking quotes and delivery estimates for
the equipment and software that must be replaced or upgraded to be Year 2000
compliant.

Transcrypt has identified and prioritized the following non-compliant items:

         -    The current version of our Enterprise Resource Planning ("ERP")
              software is non-compliant. Our ERP system consists of our
              manufacturing and accounting software systems. A software upgrade
              has been scheduled with the vendor. The manufacturing and
              accounting system software will be converted as is, with very few
              customizations. In addition to vendor support, three contractors
              have been engaged to support the conversion process. The Company
              has been advised that the software upgrade is Year 2000 compliant
              and is scheduled for completion in the third quarter 1999.

         -    Four wide area network file servers, which run our software
              applications and interconnects the Company's various locations,
              must be replaced with compliant servers. Three of the servers were
              installed or upgraded in June 1999 with the remaining one to be
              completed in October 1999. The remaining servers have already been
              upgraded with Year 2000 compliant operating software.

         -    The payroll system also must be upgraded to be Year 2000
              compliant. The upgrade of the payroll system is currently in its
              testing stage with completion scheduled by October 15, 1999.

         -    Approximately 98 workstations used by various Company personnel
              must be replaced due to compliance issues. The upgrading and
              replacement of these workstations has begun and is scheduled for
              completion by the end of September 1999.

         -    The voicemail systems in Waseca and Lincoln are not Year 2000
              compliant and must be upgraded. The necessary software to upgrade
              the Waseca system has been received. The Lincoln voicemail system
              software is on order with delivery expected by the end of August
              1999. Both location installations are to be completed by the end
              of the third quarter 1999.

     Management believes that all projects relating to Year 2000 compliance will
be completed by the end of the third quarter of 1999.

         The upgrade to the Company's ERP software discussed above only
addresses the information technology part of the Company's state of readiness
with Year 2000 issues. There are other computerized systems involved in
manufacturing and engineering systems of the Company that may contain
embedded technology such as microcontrollers. A preliminary assessment was
made as to what effect, if any, the Year 2000 issue will have on these
systems and whether or not there will be a material effect on future
financial results. As of July 30, 1999, no

                                  14

<PAGE>

definitive conclusions have been drawn. The Company anticipates finalizing
its assessment of manufacturing and engineering systems by September 30,
1999. Furthermore, the Company has initiated formal communications with all
of its significant suppliers to determine the extent to which the Company is
vulnerable to those third parties' failure to remediate their own Year 2000
issues. The Company has received reasonable verification and written
assurances from these suppliers as to their Year 2000 readiness as of July
30, 1999.

         Certifications have been received from the security system, elevators,
fire alarm systems, air conditioning and heating systems at the Lincoln
facility. The same checks are being performed in Waseca, and remote offices.

Costs to Address the Year 2000 Issue.

         The Company has budgeted expenditures of approximately $550,000 to
$750,000 to ensure that its systems are ready for processing information in the
Year 2000. The majority of these expenditures relate to the cost of purchasing
hardware and hardware installation. The Company estimates that it has incurred
approximately $176,000 in Year 2000 expenditures through June 30, 1999 with the
balance of the budgeted expenditures to be incurred by the end of 1999. In
addition, the Company has incurred, and will continue to incur, certain costs
relating to the temporary reallocation of its internal resources to address Year
2000 issues. The Company does not separately account for the internal costs
incurred for the Year 2000 issue. The Company anticipates funding year 2000
expenditures from current cash reserves and capital leases for certain portions
of the project. All costs specifically allotted to Year 2000 remediation are
expensed as incurred.

Risks Presented by the Year 2000 Issue

         If the other internal computerized systems are found not to be Year
2000 compliant and significant suppliers were to become unable to process
shipments to the Company as a result of Year 2000 issues, the issues may have a
material adverse effect on the Company's business, results of operations, and
financial condition. There can be no guarantee that the systems of other
companies on which the Company relies upon will be timely converted. Any adverse
impact may include the requirement to pay significant overtime to manually
process certain transactions as a result of a systems failure resulting in the
inability to process transactions or engage in normal business activities. At
this time, the Company is unable to predict with any certainty the estimated
lost revenue it may experience as a result of such failure or disruption.

Contingency Plans

         The Company does not currently have any contingency plans to address
the event of the Company or a major supplier not becoming Year 2000 compliant.
The contingency plan is in the process of being completed while at the same time
we continue to research all available information on products and vendors. The
project schedules will be closely monitored and additional resources will be
added early in the project. All systems are scheduled for completion by the end
of the third quarter. This allows the three months for final testing and
adjustments if necessary. During the last week of December 1999, all users will
be instructed to backup critical information, or to print paper copies of
critical data. Paper copy reports of production schedules, shipments, and forms
will be printed in advance. A team of information systems staff, department
representatives, and contractors will be scheduled for the weekend of January 1,
2000 to monitor the date change.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         The Company does a significant amount of business in foreign countries.
The Company sales in these foreign countries are denominated in United States
dollars. Certain sales in foreign countries may be secured with irrevocable
letters of credit. The Company also carries foreign credit insurance to cover
receivables in a majority of the foreign countries where it does business.


PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         For a description of pending litigation, see NOTE 6. COMMITMENTS AND
CONTINGENCIES above.

                                     15

<PAGE>

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

         On July 26, 1999, the Company filed a Certificate of Admendment of its
Second Amended and Restated Certificate of Incorporation.

         The amendment increased the number of authorized shares of voting
common stock, par value $0.01 per share, from 19,4000,000 to 25,000,000.


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

         (a)      The Annual Meeting of Stockholders was held on May 20, 1999.

         (b)      At the meeting, management's nominees as set forth in the
                  proxy statement for the meeting, Thomas E. Henning and Michael
                  E. Jalbert were elected. The election of Mr. Henning was
                  approved by a vote of 11,118,131 shares in favor and 84,630
                  shares withheld, and Mr. Jalbert was approved by a vote of
                  11,114,963 shares in favor and 87,798 shares withheld.

         (c)      The proposal to amend the Second Amended and Restated
                  Certificate of Incorporation to increase the number of shares
                  of voting common stock was approved by a vote of 11,050,575
                  shares in favor, 113,564 shares against and 38,622 shares
                  abstaining. There were no broker nonvotes.

         (d)      The proposal to approve the 1999 Non-Employee Director Stock
                  Purchase Plan was approved by a vote of 10,846,175 shares in
                  favor, 303,514 shares against and 53,072 shares abstaining.
                  There were no broker nonvotes.

         (e)      The proposal to approve the 1999 Executive Officer Stock
                  Purchase Plan was approved by a vote of 10,856,284 shares in
                  favor, 290,920 shares against and 55,557 shares abstaining.
                  There were no broker nonvotes.

         (f)      The proposal to ratify the appointment of KPMG Peat Marwick
                  LLP, as independent public accountants for 1999 was approved
                  by a vote of 11,150,059 shares in favor, 23,752 shares against
                  and 28,950 shares abstaining.



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

         The following exhibits are being filed herewith:
<TABLE>
<CAPTION>
           Exhibit No.                 Description
           -----------                 -----------
<S>                        <C>
               3.1         Second Amended and Restated Certificate of
                           Incorporation, as amended
               10.44       Employment Agreement between the Company and George
                           Spiczak dated April 1, 1999
               11          Computation of net income per share.
               27          Financial Data Schedule
</TABLE>
         (b) Reports on Form 8-K

         The Company filed a report on Form 8-K on July 8, 1999, under Item 5.
         "Other Events" to report a press release announcing that a memorandum
         of understanding has been signed with lead plaintiffs' counsel to
         settle the pending stockholder class action suits against the Company
         and certain of its current and former officers in the United States
         District Court of Nebraska and the District Court for Scotts Bluff
         County, Nebraska.

                                        16

<PAGE>

                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

                                       TRANSCRYPT INTERNATIONAL, INC.


<TABLE>

<S>                            <C>
Date:    August 16, 1999       By: /s/ Michael E. Jalbert
                                   ----------------------
                               Michael E. Jalbert
                               Chairman of the Board of Directors
                               and Chief Executive Officer
                               (Principal Executive Officer)



Date:    August 16, 1999       By: /s/ Craig J. Huffaker
                                   ---------------------
                               Craig J. Huffaker
                               Chief Financial Officer
                               (Principal Financial and
                               Accounting Officer)

</TABLE>

                                      17