SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                   FORM 10-QSB

               [ X ] QUARTERLY REPORT UNDER SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT of 1934

                  For the quarterly period ended June 30, 1998


                                       OR


                 [ ] TRANSITION REPORT UNDER SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT of 1934


                        For the Transition Period From to


                           Commission File No. 0-16293


                               LANXIDE CORPORATION
              (Exact name of Small Business Issuer in its charter)


            Delaware                                    51-0270253
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)             

            1300 Marrows Road
              P.O. Box 6077
               Newark, DE                              19714-6077
(Address of principal executive offices)               (Zip Code)

                                 (302) 456-6200
                 Issuer's telephone number, including area code


Check whether the Issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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.
                                [ X ] Yes [ ] No

Transitional Small Business Disclosure Format (check one):
                                [ ] Yes [ X ] No


The number of shares of Common  Stock  outstanding  as of August  11,  1998 was:
1,325,598.
<PAGE>
        THIS FORM 10-QSB CONTAINS CERTAIN FORWARD-LOOKING  STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES  LITIGATION REFORM ACT OF 1995 WITH RESPECT TO
THE  FINANCIAL  CONDITION,   RESULTS  OF  OPERATIONS  AND  BUSINESS  OF  LANXIDE
CORPORATION, INCLUDING STATEMENTS UNDER ITEM 1. FINANCIAL STATEMENTS AND ITEM 2.
MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF RESULTS OF  OPERATIONS  AND  FINANCIAL
CONDITION.   THESE   FORWARD-LOOKING   STATEMENTS   INVOLVE  CERTAIN  RISKS  AND
UNCERTAINTIES. NO ASSURANCE CAN BE GIVEN THAT ANY SUCH MATTERS WILL BE REALIZED.
FACTORS  THAT  MAY  CAUSE  ACTUAL  RESULTS  TO  DIFFER   MATERIALLY  FROM  THOSE
CONTEMPLATED  BY SUCH  FORWARD-LOOKING  STATEMENTS  INCLUDE,  AMONG OTHERS,  THE
FOLLOWING  POSSIBILITIES:  (I) COMPETITIVE CONDITIONS IN THE INDUSTRIES IN WHICH
LANXIDE  OPERATES;  (II)  FAILURE  TO FURTHER  COMMERCIALIZE  ONE OR MORE OF THE
TECHNOLOGIES  OF  LANXIDE;  (III)  GENERAL  ECONOMIC  CONDITIONS  THAT  ARE LESS
FAVORABLE THAN EXPECTED AND (IV) ABILITY TO SECURE ADEQUATE FUNDING.


<PAGE>




                               LANXIDE CORPORATION


                                TABLE OF CONTENTS



                                                                      Page
                                                                      Number
PART I.      FINANCIAL INFORMATION

     Item 1.        Financial Statements:

                    Consolidated Balance Sheet at
                    June 30, 1998 and 1997 (Unaudited)..............    2

                    Consolidated Statement of Operations
                    for the Three Months and Nine Months Ended
                    June 30, 1998 and 1997 (Unaudited)..............    3

                    Consolidated Statement of Cash Flows
                    for the Nine Months Ended
                    June 30, 1998 and 1997 (Unaudited)..............    4

                    Notes to Consolidated Financial
                    Statements (Unaudited)......................        5 - 8

     Item 2.        Management's Discussion and Analysis
                    of Results of Operations and Financial
                    Condition....................................        9-11

PART II.     OTHER INFORMATION


     Item 6.        Exhibits and Reports on Form 8-K............        14-15


<PAGE>
<TABLE>
<CAPTION>
                                                  Lanxide Corporation
                                              Consolidated Balance Sheet
                                     (Amounts in thousands, except per share data)
                                                      (Unaudited)

                                                                                      June 30,          September 30,
Assets                                                                                 1998                 1997
                                                                                     ----------          ------------
<S>                                                                                  <C>                 <C>        
Cash and cash equivalents, including amounts restricted for use
  by majority owned affiliate                                                        $      96           $     3,892
Accounts receivable                                                                        243                 2,738
Inventories                                                                                  0                 3,036
Other current assets                                                                         0                   447
                                                                                     ----------          ------------
  Total current assets                                                                     339                10,113

Property and equipment, net                                                              2,226                 9,681
Investment in affiliate                                                                      0                   377
Other assets                                                                                 0                   346
                                                                                     ==========          ============
                                                                                     $   2,565           $    20,517
                                                                                     ==========          ============
Liabilities and Shareholders' Deficit
Current portion of long term debt                                                          479                 6,789
Accounts payable and accrued expenses                                                    1,304                 4,237
Deferred compensation                                                                    1,400                 1,377
Deferred revenue                                                                           490                   380
                                                                                     ----------          ------------
  Total current liabilities                                                              3,673                12,783

Long-term debt                                                                           8,814                14,079
Deferred credit                                                                              0                   357
                                                                                     ----------          ------------
                                                                                         8,814                14,436

Minority interest in consolidated affiliates                                                 0                 2,006

Redeemable Series E preferred stock (aggregate liquidation value, $261);                   224                   225
                                                                                     ----------          ------------
Shareholders' deficit
   Preferred stock 15,000,000 shares authorized
       Series A preferred stock (aggregate liquidation value,$2,000) $.01 par value;
        1,101,683 shares issued and outstanding                                             11                    11
       Series H preferred stock (aggregate liquidation value,$2,000) $.01 Par value;
        20,000  shares  issued  and  outstanding  Common  stock,$.01  par value,
   25,000,000 shares authorized:
        1,325,598 issued and outstanding                                                    13                    13
   Additional paid-in capital                                                          191,006               191,006
   Accumulated deficit                                                                (201,176)             (200,883)
   Cumulative translation adjustment                                                         0                   920
                                                                                     ==========          ============
                                                                                       (10,146)               (8,933)
                                                                                     ==========          ============
                                                                                     $   2,565           $     20,517
                                                                                     ==========          ============
</TABLE>
See notes to consolidated financial statements.
 
                                    Page   2
<PAGE>
<TABLE>
<CAPTION>
                                                      Lanxide Corporation
                                             Consolidated Statement of Operations
                                             (Amounts in thousands, except per share data)
                                                         (Unaudited)

                                                        Three Months ended June 30,               Nine Months ended June 30,
                                                      -------------------------------          ---------------------------------
                                                         1998                 1997                1998                   1997
                                                      -----------          ----------          ----------            -----------
Revenue:
<S>                                                          <C>               <C>                 <C>                    <C>  
  Sales                                                      314               1,817               4,613                  6,451
  Licensing revenue                                          783               1,550               7,960                  9,070
  Research and development contract revenue                  311               1,167               1,708                  4,151
                                                      -----------          ----------          ----------            -----------
                                                           1,408               4,534              14,281                 19,672
                                                      -----------          ----------          ----------            -----------

Operating costs:
  Cost of sales                                              336               1,581               4,229                  5,829
  Research and development costs                             365                 820               3,601                  3,587
  Product development and engineering                        301               1,983               1,375                  4,986
  Selling, general and administration                        259               1,933               3,576                  6,181
                                                      -----------          ----------          ----------            -----------
                                                           1,261               6,317              12,781                 20,583
                                                      -----------          ----------          ----------            -----------

Income (loss) from operations before
minority allocation                                          147              (1,783)              1,500                   (911)

Minority allocation of operating income                        0                 202                 173                   (944)
                                                      -----------          ----------          ----------            -----------
Income (loss) from operations                                147              (1,581)              1,673                 (1,855)

Write-off of affiliate                                                                              (377)
Income (loss) on sale of affiliates                          798                                  (1,230)
Interest expense                                            (271)               (471)             (1,112)                (1,328)
Other income                                                 (33)                  1                  (6)                   995
                                                      -----------          ----------          ----------            -----------
Income (loss) before income taxes                            641              (2,051)             (1,052)                (2,188)

Income tax expense                                                               (80)               (150)                  (120)
                                                      -----------          ----------          ----------            -----------
Net income (loss)                                            641              (2,131)             (1,202)                (2,308)

Dividends on mandatorily redeemable                           (3)                 (8)                (11)                   (23)
preferred stock

Gain on redemption of of subsidiary's preferred stock                                                                       680
                                                      ===========          ==========          ==========            ===========
Net income (loss) applicable to common shares                638              (2,139)             (1,213)                (1,651)
                                                      ===========          ==========          ==========            ===========

Income (loss) per share
  Basic                                                    $0.48              ($1.61)             ($0.92)                ($1.25)
  Diluted                                                  $0.35              ($1.61)             ($0.92)                ($1.25)
</TABLE>
                 See notes to consolidated financial statements
                                     Page 3
<PAGE>
<TABLE>
<CAPTION>
                                                  Lanxide Corporation
                                         Consolidated Statement of Cash Flows
                                                (Amounts in thousands)
                                                      (Unaudited)

                                                                                         Nine Months ended June 30,
                                                                                         --------------------------
                                                                                          1998                  1997
                                                                                          ----                  ----
<S>                                                                                    <C>                   <C>     
Cash flows from operating activities:
Net loss                                                                               ($1,202)              ($2,308)
Adjustments to reconcile net loss to net cash provided by
   operating activities:
Depreciation and amortization                                                              480                 1,420
Loss on sale of affiliates                                                               1,230
Write-off of affiliate investment                                                          377
Minority allocation of operating income                                                                          944
Loss (Gain) on the sale of equipment                                                        53                   (81)
 Change in assets and liabilities:
   Decrease in receivables                                                               1,861                   646
   Decrease (increase) in inventories                                                      306                  (749)
   Decrease in other assets                                                                392                   361
   (Decrease) increase in accounts payable and accrued expenses                         (1,170)                  688
   (Decrease) increase in deferred revenue and deferred credit                            (226)                  960
   Increase in other liabilities                                                                                 108
                                                                                     ----------          ------------
Net cash provided by operating activities                                                2,101                 1,989
                                                                                     ==========          ============

Cash flows from investing activities
 Capital additions                                                                          (4)                 (434)
 Proceeds from the sale of equipment                                                       396                   115
                                                                                     ----------          ------------
    Net cash provided by (used in) investing activities                                    392                  (319)
                                                                                     ==========          ============

Cash flows from financing activities
  Redemption of a subsidiary's preferred stock                                                                (4,000)
  Proceeds from issuance of debt obligations                                                                   4,141
  Repayment of debt obligations                                                         (4,721)                 (371)
                                                                                     ----------          ------------
    Net cash used in financing activities                                               (4,721)                 (230)
                                                                                     ==========          ============

Effect of exchange rate translations                                                       920                  (197)
                                                                                     ----------          ------------

Net (decrease) increase                                                                 (1,308)                1,243

Cash and cash equivalents, beginning of period                                           1,404                 3,458
                                                                                     ----------          ------------
Cash and cash equivalents, end of period                                                   $96                $4,701
                                                                                     ==========          ============

Cash paid for interest                                                                    $653                $1,173
                                                                                     ==========          ============
</TABLE>
<PAGE>
Supplemental Schedule of Noncash investing and Financing Activities

The  Company  sold it's  ownership  in the capital  stock of Lanxide  Electronic
Components,  Inc., Lanxide Armor Products, Inc, Lanxide KK (by transfer) and DLC
for the  cancellation  of debt of  $8,654.  In  conjunction  with  the  sale and
transfer, debt was satisfied as follows:

                                                   LAP/LEC    KK/DLC     Total
                                                   -------    ------     -----

         Net book value of assets disposed of       $7,831    $3,596    11,427
         Cancellation of debt                       (5,740)   (2,914)   (8,654)
         Minority interest                             (63)   (1,480)   (1,543)
                                                 ---------    ------    ------
         (Gain) Loss on disposal                    $2,028     ($798)   $1,230
                                                 =========    =======   ====== 


                See notes to consolidated financial statements

                                     Page 4
<PAGE>
              (Dollar amounts in thousands, except per share data)
                                   (Unaudited)

4. PER SHARE DATA (continued)
<TABLE>
<CAPTION>
                                                        Three Months ended June 30,                Nine Months ended June 30,
                                                      ------------------------------           --------------------------------
                                                          1998                1997                1998                   1997
                                                      -----------          ----------          ----------            -----------
<S>                                                   <C>                  <C>                 <C>                   <C>    
Net income (loss)                                            641              (2,131)             (1,202)                (2,308)
Dividends on mandatorily redeemable
  preferred stock                                             (3)                 (8)                (11)                   (23)
Gain on redemption of
  subsidiary's preferred stock                                                                                              680

Net income (loss) applicable
                                                      -----------          ----------          ----------            -----------
  to common shareholders                                     638              (2,139)             (1,213)                (1,651)
                                                      -----------          ----------          ----------            -----------

Weighted average common
  shares outstanding (basic)                           1,325,598           1,325,598           1,325,598              1,325,598

Employe stock options                                     96,341                 (a)                 (a)                    (a)
Warrants to purchase common shares                         3,712                 (a)                 (a)                    (a)
Convertible preferred stock                              409,767                 (a)                 (a)                    (a)
                                                      -----------          ----------          ----------            -----------

Weighted average common
  shares outstanding (diluted)                         1,835,418           1,325,598           1,325,598              1,325,598
                                                      ===========          ==========          ==========            ===========

Earnings (loss) per share-basic                            $0.48              ($1.61)             ($0.92)                ($1.25)
                                                      ===========          ==========          ==========            ===========

Earnings (loss) per share-diluted                          $0.35              ($1.61)             ($0.92)                ($1.25)
                                                      ===========          ==========          ==========            ===========

</TABLE>
(a) Due to the Company's net loss during these periods,  a dilutive  calculation
in accordance with SFAS 128 is not required.


As of June 30,  1998,  the  following  employee  stock  options and  warrants to
purchase shares of common stock were outstanding:

                                                                      Exercise
                                                      Number            Price
                                                      ------            -----
        Employee stock options                        667,956       $1 - $320


        Warrants to purchase common stock             359,513       $1.00-$7.50


                                     Page 6
<PAGE>
                               LANXIDE CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


1.   CONSOLIDATED FINANCIAL STATEMENTS

     The  consolidated   balance  sheet  at  June  30,  1998,  the  consolidated
     statements of  operations  and of cash flows for the nine months ended June
     30, 1998 and 1997 have been prepared by Lanxide  Corporation  (the Company)
     and have not been audited by the  Company's  Independent  Auditors.  In the
     opinion of management, all adjustments (which include only normal recurring
     adjustments) necessary to present fairly the financial position, results of
     operations  and cash flows at June 30, 1998 and for all  periods  presented
     have been made.

     These consolidated  financial statements should be read in conjunction with
     the financial statements and notes thereto included in the Company's Annual
     Report on Form 10-KSB for the fiscal year ended  September 30, 1997,  filed
     with the Securities and Exchange Commission.  The results of operations for
     the period ended June 30, 1998 are not necessarily  indicative of operating
     results for the full year.

2.   CASH AND CASH EQUIVALENTS

     All highly liquid  investments with a maturity of three months or less when
     purchased are considered to be cash equivalents.

3.   INVENTORIES

     Inventories  are valued at the lower of cost  (primarily  average  cost) or
     market  and  consists  of raw  materials  and  supplies  and are  held by a
     subsidiary  company  which  amounts  are  not  generally  available  to the
     Company.

4.   PER SHARE DATA

     Net income (loss) per share is computed  using the weighted  average number
     of common shares and potentially dilutive securities outstanding during the
     period. The Company adopted the Financial Accounting Standards Board (FASB)
     statement No. 128 "Earnings Per Share" for the periods presented below:

5.   SIGNIFICANT EVENTS

     Loan from Lanxide K.K.

     On December 29, 1997, Lanxide K.K., a 65% owned Japanese subsidiary, agreed
     to loan $1.8 million to the Company (the  Lanxide K.K.  Loan).  The Company
     received $1.3 million on December 29, 1997 and an  additional  $0.5 million
     was  received on January 12, 1998.  The Lanxide K.K.  Loan was to mature on
     January  31, 1998 and bore  interest  at the rate of 6% per annum.  Upon an
     event of default under the Lanxide K.K.  Loan,  the Company was required to
     transfer to Lanxide K.K. its 10%  ownership in DuPont  Lanxide  Composites,
     Inc. (the DLC  interest).  The loan came due on February 10, 1998,  and the
     Company negotiated an assignment and transfer with Lanxide K.K. on April 1,
     1998 to settle the outstanding balance. As a result of the settlement,  the
     Company's  interest in DLC was  transferred to Lanxide KK on June 23, 1998,
     the  loan has  been  satisfied  in full,  and the  Company  realized  a net
     consolidated gain of $630,000 on the disposition.
<PAGE>
     Restructure of Lanxide K.K.

     The operations of Lanxide K.K. have been  discontinued.  By an agreement on
     April 1, 1998, between the Company and Kanematsu  Corporation (KG), the net
     assets of Lanxide K.K. have been distributed to the owners,  65% to Lanxide
     and 35% to KG. The Company  distribution from Lanxide K.K. has in turn been
     paid over to KG as a  payment  against  the  Company's  loan  from KG.  The
     Company  incurred a loss of $1.0 million as a result of the  disposition of
     Lanxide K.K. The distribution rights to sell electronic components in Japan
     using  Lanxide  Technology(TM)  have been sold by Lanxide  K.K.  to Lanxide
     Electronic  Components,  Inc.,  a  subsidiary  of DHB  Capital  Group.  The
     proceeds from that sale have also been  distributed  proportionately  to KG
     and the  Company,  again  with the  Company's  distribution  being  further
     applied to its  balance on the KG loan.  While there is the  potential  for
     some further  economic  benefit to the Company under certain  circumstances
     from the further sale of the former  distribution  rights of Lanxide  K.K.,
     that  former  subsidiary  is  inactive,  and the Company no longer owns any
     stock in Lanxide K.K. In that connection, the Company has taken back all of
     the rights to its  technology  in Japan,  with the  exception of previously
     licensed  rights to Nihon Cement Co.,  LTD; AKN  Corporation;  Celanx K.K.;
     Lanxide  Electronic  Components,  Inc.;  Lanxide Armor  Products,  Inc. and
     DuPont Lanxide  Composites,  Inc.  Royalties from the AKN license agreement
     for Japan will be  distributed,  pursuant  to  agreements,  after a certain
     amount  of  royalties  are  paid to KG from  AKN,  48% to KG and 52% to the
     Company.

     Restructure of Loan with Kanematsu Corporation

     The Company and KG have agreed to restructure  the $10 million loan from KG
     (capital loan) to the Company that had been scheduled to mature in December
     1998.  Under the new  agreement,  payments  have been  applied  to the loan
     balance from the sale of surplus  equipment,  the conversion of part of the
     loan to an equipment  installment loan dated June 18, 1998 and amended July
     10, 1998, and the disposition of Lanxide K.K.  described above. As a result
     of such transactions, the Capital loan balance as of June 30, 1998 was $7.0
     million and the balance of the Installment  Note was $1.9 million as of the
     same date.  The new payment  schedule for the loan  requires  principal and
     interest payments over a seven-year period commencing April 1, 1999. During
     the moratorium of principal payments in effect until that date, the Company
     is  required to make nine  payments  of $5,000 each toward  interest on the
     loan.  The  interest  rate on the loan was  reduced as of July 1, 1998 from
     LIBOR plus 2% to the  Japanese  Yen Long Term Prime Rate of the  Industrial
     Bank of Japan plus 1%. As noted above and as part of the restructure of the
     KG loan, the Company has agreed to sell its surplus equipment and apply the
     proceeds from such sales to reduce the loan principal.  In that connection,
     the  Company  incurred  a loss of  approximately  $335,000  on the  sale of
     surplus  equipment  and the  write-down  of obsolete  equipment  during the
     quarter.  The book  value of all  equipment  kept by the  Company  that was
     collateral  for the loan has also been offset  against the loan in exchange
     for  the  execution  of the new  Installment  Note  in the  amount  of $1.9
     million.  The  Installment  Note  will  mature  over an  eight-year  period
     commencing May 10, 1998. The interest rate on the Installment Note is LIBOR
     plus 2%.

     Subsequent event: License issuance

     On August 11, 1998, the Company issued two licenses to  AlliedSignal,  Inc.
     (AlliedSignal)  in the field of  friction  materials.  One license is for a
     worldwide  territory,  outside  Japan,  and the  other  license  is for the
<PAGE>
     territory  of Japan.  Simultaneous  with the  issuance  of the  licenses to
     AlliedSignal,  Lanxide K.K.  sold its 10% interest in DLC to  AlliedSignal,
     whereby by prior  agreement  65% of the proceeds were applied to reduce the
     Capital Loan from Kanematsu.  The combination of these related transactions
     realized revenues of $1.1 million.

     Elimination of Deferred Credit

     As a result of the  restructure of Lanxide K.K. and the  restructure of the
     KG loan, various potential contingencies related to the Company's interests
     in Japan no longer exist.  Consequently,  the Company released  $720,000 of
     its deferred  credit to licensing  revenue.  This portion of the  Company's
     deferred credit was generated in a prior period related to a license it had
     issued to Celanx K.K. for which it had received  cash. In addition,  during
     the quarter the Company released $330,000 of the deferred credit to gain on
     the sale of assets that resulted in a lease-back of the sold property.  The
     Company  renegotiated  the lease rent  resulting in present value  benefits
     that greatly  exceeded the deferred gain. The gain had been amortizing over
     the life of the lease, but has now been fully realized.

     The Company  continues to pursue  additional  technology  license  sales to
     further  resolve its financial  situation.  No assurances can be given that
     additional  technology  licenses can be sold at a rate  sufficient to allow
     the Company to continue any of its operations.


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

The  following is a  discussion  of the  consolidated  financial  condition  and
results  of  operations  of  the  Lanxide  Corporation  and  its  majority-owned
affiliates  (the  Company) for the nine months ended June 30, 1998 and 1997,  as
well as certain  factors  that may affect the  Company's  prospective  financial
condition.  This section  should be read in  conjunction  with the  Consolidated
Financial Statements and the Notes thereto included elsewhere in this 10-QSB.

Overview

The Company's revenues consist mainly of technology licensing revenue,  sales to
outside customers and contract funding.  The Company operates principally in the
United States.

Commencing in 1995, the Company  embarked on a program to license its technology
in certain specific market sectors by product and geography in order to generate
immediate cash for the Company.  Since  implementing this strategy,  the Company
has  consummated  license  agreements  with A.P. Green  Industries,  Inc. ("A.P.
Green"), Waupaca Foundry, Inc. ("Waupaca"),  Sturm Ruger & Company, Inc. ("Sturm
Ruger"),  Brembo S.p.A.  ("Brembo"),  AKN Corporation ("AKN"), Nihon Cement Co.,
Ltd. ("Nihon Cement") and Commodore  Polymer  Technologies,  Inc.  ("Commodore")
which have generated  license fees, as well as, in some cases future  royalties.
In addition,  the Company  entered into two license  agreements  pursuant to the
sale of two wholly-owned subsidiaries and converted its joint venture with Nihon
Cement into a license arrangement.

Results of Operations

Results  of  operations  may vary from  period to period  depending  on  several
factors including licensing transactions. Revenues from license agreements often
do not occur  evenly in each  reporting  period,  which can cause the results to
fluctuate.

"Licensing and other related  revenues"  represent amounts earned by the Company
from licensing its technology by product and geographic  area and are recognized
as revenue when the Company fulfills its obligation under the applicable license
agreement.  Also included in this revenue  category are ancillary  product sales
that are produced solely in support of existing or potential license agreements.
Costs  incurred by the Company from  licensing  its  technology  are included in
"Product  development and  engineering"  (PD&E) costs.  PD&E also includes costs
incurred for projects sponsored by the Company and/or its joint venture partners
through  the  Company's  consolidated  affiliates.  Operating  income and losses
allocated to commercial  venture  partners  through the  Company's  consolidated
affiliates are reported under "Minority allocation of operating (income) loss."

Revenues from research and  development  contracts  and  commercial  development
agreements   (other  than  the  Company's   agreements  with  its   consolidated
affiliates) are reported under "Research and  development  contract  revenue" in
the Company's  Consolidated  Statement of Operations.  Expenses related to these
contracts and  agreements are reported  under  operating  costs as "Research and
development contract costs."

The Company's  significant revenue sources in the first half of fiscal year 1998
consist primarily of (i) technology  licensing revenues;  (ii) sales revenues of
consolidated  subsidiaries  of the  Company;  and  (iii)  revenues  from a brake
component development program between the Company and AKN;
<PAGE>
Percentage Relationship to Net Revenues

The following  table sets forth the percentage  relationship  to net revenues of
certain items in the  Company's  Consolidated  Statement of  Operations  for the
periods presented:
<TABLE>
<CAPTION>

                                                                     Nine months ended June 30,
                                                                     --------------------------
                                                                      1998                1997
                                                                      ----                ----
<S>                                                                  <C>                  <C> 
      Revenues                                                       100%                 100%
      Operating costs:
         Cost of sales                                                (29)                 (30)
         Research and development contract costs                      (25)                 (18)
         Product development and engineering                          (10)                 (25)
         Selling, general, and administrative                         (25)                 (31)
      Minority allocation of operating loss (income)                    1                   (5)
      Interest expense                                                 (8)                  (7)
      Other income                                                                           5
      Net (loss) income                                                (8)                  (8)
</TABLE>

Nine  months ended June 30, 1998 compared to nine months ended June 30, 1997

The Company recorded a net loss of $1,213,000 for the nine months ended June 30,
1998,  as compared to a  $1,651,000  net loss for the nine months ended June 30,
1997. The reduction in the loss incurred was due to a release of a deferred real
estate  property  gain of  $320,000  and the  release of  $720,000  of a license
revenue that was previously deferred.

Net Sales and Cost of Sales

Sales for the nine  months  ended June 30,  1998 were  $14,282,000  compared  to
$19,672,000  for the nine months ended June 30,  1997.The cost of goods sold for
the most recent six month period was $4,229,000 yielding a gross profit on sales
of $384,000, consistent with the gross profit margins earned for the nine months
ended June 30, 1997.

Licensing and Other Related Revenues

Licensing and other related revenues were $7,960,000 and $9,070,000 for the nine
months ended June 30, 1998 and 1997, respectively.  During the second quarter of
this fiscal year the Company  executed a license with Commodore,  for $5,300,000
in cash and debt  cancellation  and  royalties on future  sales.  Total  license
income  reduced due to the receipt of $7,800,00 from AKN in the third quarter of
1997, which did not recur.

Product Development and Engineering

There  were  no  significant   fluctuations  in  the   expenditures  on  product
development and engineering activities.
<PAGE>
Research and Development Contract Revenue and Contract Costs

Due to the lay-off of the employees in early  February  1998, the Company booked
significantly less research and development  contract revenue during the quarter
ended March 31, 1998. In addition, The Company did not work on government funded
projects during the last six months. For the nine months ended June 30, 1998 and
1997, revenue from research and development  contract revenue was $1,708,000 and
$4,151,000  respectively,  representing  a gross revenue  reduction for the most
recent nine months of $2,443,000.

Selling, General and Administrative Expenses

Selling,  general and  administrative  expenses were reduced  during the quarter
ended June 30, 1998 due to the reduced number of administrative  staff, the sale
of two of the Company's wholly-owned subsidiaries, Lanxide Electronic Components
Inc. and Lanxide Armor Products Inc. and the transfer of the Company's  interest
in Lanxide  KK. For the nine  months  ended June 30,  1998  selling  general and
administrative  expenses of $3,576,000 were  approximately  $2,605,000 less than
the nine months ended June 30, 1997.

Interest Expense

As a result  of the  cancellation  of  $5,740,000  bank  debt by the sale of two
affiliates  and the reduction of  $4,500,000 of debt to Commodore  Environmental
Services,  Inc. and accrued  interest  through a licensing  agreement,  interest
expense was reduced by 16% in the nine months ended June 30, 1998.

Income Tax Expense

Income tax expense  reflects  taxes  withheld on foreign  source  income for the
quarters presented.

Liquidity and Capital Resources

Since its  inception,  the Company has financed its working  capital and capital
expenditure  requirements with the proceeds from the sale of stock,  borrowings,
product sales, research and development contracts and, more recently, technology
licensing  revenues.  The Company's working capital was a deficit  $3,334,000 at
June 30, 1998, as compared to a deficit  $2,670,000  at September 30, 1997.  The
cash balance at June 30, 1998 was $96,000.  At June 30, 1998, the Company had no
significant  commitments  to purchase  capital  equipment  and continues to sell
surplus equipment to generate cash.

The  Company is  dependent  on  licensing  its  technology  in order to generate
sufficient  cash flows to fund its  operations.  No assurances can be given that
any  additional  licenses  will be concluded  at a sufficient  rate to allow the
Company to continue its operations.
<PAGE>


PART II.  OTHER INFORMATION


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K


           (a)  27   Financial Data Schedule




<PAGE>


                                   SIGNATURES

In accordance with the requirements of the Securities  Exchange Act of 1934, the
registrant  caused  this  report to be signed on its  behalf by the  undersigned
thereunto duly authorized.



LANXIDE CORPORATION



Date:  August 11, 1998              By:  /s/Marc S. Newkirk
                                         ------------------
                                         Marc S. Newkirk
                                         President and Chief Executive Officer