<PAGE>

                         SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549

                              ------------------------

                                      FORM 10K


(Mark One)
[X]  Annual report to Section 13 or 15(d) of the Securities Exchange Act of 1934
     For the fiscal year ended December 31, 1997 or

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
     For the transition period from ______________ to ______________

Commission file number 1-8383



                              MISSION WEST PROPERTIES
               (Exact name of registrant as specified in its charter)

              CALIFORNIA                                 95-2635431
    -------------------------------           -------------------------------
    (STATE OR OTHER JURISDICTION OF           (I.R.S. EMPLOYER IDENTIFICATION
    INCORPORATION OR ORGANIZATION)                        NUMBER)

                                10050 Bandley Drive
                          Cupertino, California 95014-2188
                      (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

        Registrant's telephone number, including area code is (408) 725-0700

                              ------------------------

            Securities registered pursuant to Section 12(b) of the Act:

        Title of Each Class           Name of Each Exchange on Which Registered
       --------------------           -----------------------------------------
       Common, no par value                    American Stock Exchange
                                               Pacific Stock Exchange

            Securities registered pursuant to Section 12(g) of the Act:

                                       None

                              ------------------------

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 proceeding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes  X  No
                                        ---    ---

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

The aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the closing sale price of the Common Stock on October 17,
1997, as reported on the American Stock Exchange, was approximately $4,617,107.
The AMEX halted trading on such date and trading has not yet resumed.  Shares of
Common Stock held by each officer, director and holder of 5% or more of the
outstanding Common Stock have been excluded in that such persons may be deemed
to be affiliates.  This determination of affiliate status is not necessarily a
conclusive determination for other purposes.

As of March 30, 1998, there were 1,698,536 shares of the Registrant's Common
Stock outstanding.

                                                       Exhibit Index on page 19

<PAGE>

PART I

In addition to the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties.  The Company's actual results could differ materially from
those discussed herein.  Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this section
as well as in the sections entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Documents Incorporated by Reference

The following documents are incorporated by reference into this Form 10-K:

       Definitive Proxy Statement filed on October 21, 1997 for the special
       meeting of shareholders held on November 10, 1997.  This proxy statement
       is incorporated by reference into Items 4, 5 and 10.

       Prospectus filed on November 26, 1997 as part of a Form S-3 Registration
       Statement with respect to proposed sales of Common Stock by certain
       selling shareholders. This Prospectus is incorporated by reference into
       Items 1, 2, 5, 7, 12, 13.

       Form 8-K filed March 13, 1998 to report the Company changed accountants.


ITEM 1
BUSINESS

OVERVIEW

Mission West Properties (the "Company"), with corporate offices located in
Cupertino, California, is a California corporation that historically has been
engaged in developing, owning, operating, and selling income-producing
commercial real estate.

The Company was formed in 1969 as Palomar Mortgage Investors, a California
business trust.  It operated as a real estate investment trust ("REIT") (as
defined by the Internal Revenue Code), investing primarily in short- and
intermediate-term construction and development loans secured by first trust
deeds on real property.  In 1974, the Company terminated new loan activity
except to facilitate the sale of property acquired from borrowers through
foreclosure or by deed in lieu of foreclosure and, in 1975, changed its name
to Mission Investment Trust.  In 1979, the Company terminated its status as a
REIT and began to develop and market properties it owned.  Since then, the
Company has acquired, developed, and sold properties in southern California
and Arizona. In 1982, the Company incorporated under its present name.

SALE OF REAL ESTATE PORTFOLIO

In July 1996, the Company entered into an agreement to sell all its real
estate assets.  This agreement was subsequently terminated and replaced, and
the subsequent agreement was also terminated and replaced.  On December 6,
1996, the Company entered into an agreement to sell all the real estate
assets to Spieker Properties, L.P. ("Spieker"), a California limited
partnership, for $50,500,000 in cash, subject to certain conditions customary
in a transaction of this type. A special shareholder

                                     -2-
<PAGE>

meeting was held December 16, 1996, at which time the Company's shareholders
approved the sale of the real estate assets to Spieker.

A majority of the sale transaction was completed on January 22, 1997, at which
time nine of the Company's eleven real estate properties were sold.  The sale
of the remaining two properties was completed May 6, 1997.  The properties
sold consisted of occupied office, light industrial, and R&D buildings in San
Diego and Riverside counties, California, and occupied industrial buildings
and vacant land in Chandler, Arizona.

The Company received $47,500,000 in cash upon completing the sale of the
first portion of the portfolio, from which it repaid all debt encumbering the
properties and paid a majority of the related transaction and closing costs,
including $3,000,000 in "break-up" fees from the terminated sales
transactions. Upon completing the sale of the two remaining properties in May
1997, the Company received $3,000,000 in cash, from which the related
transaction and closing costs were paid.

In February 1997, the Company declared and paid a special dividend of $9.00
per share to all shareholders of record as of February 19, 1997.  The
dividend represented the available portion of the proceeds from the sale of
the real estate assets.  Following the sale of assets and the subsequent
payment of dividend to shareholders, only nominal assets remained in the
Company and the corporate entity has virtually no revenue-generating or
cash-generating capabilities.

On May 27, 1997, the Company entered into a Stock Purchase Agreement (the
"Agreement") with a group of private investors led by Berg & Berg
Enterprises, Inc. (collectively, the "Purchaser" or the "Berg Group") of
Cupertino, California, pursuant to which the Company would sell 6,000,000
shares of newly issued common stock (the "Common Stock") to the Purchaser for
a purchase price of $900,000 in cash, or $0.15 per share.  A special meeting
of shareholders was held August 5, 1997, at which the shareholders approved
the stock sale transaction.

This sale of Common Stock was completed September 2, 1997, at which time all
officers and directors resigned and the Berg Group became the controlling
shareholder with an 80-percent ownership position in the Company.  The Berg
Group comprises individuals and privately held firms that have designed,
developed, and leased office, R&D, and manufacturing buildings and complexes
occupied by Silicon Valley technology companies since 1969.  Currently, the
Berg Group owns and operates more than 3,500,000 square feet of property.
Per terms of the Agreement, the Company paid a cash distribution of $3.30 per
share to shareholders on October 21, 1997 for a total distribution of
$5,059,000 ("October Distribution").  The record date for this distribution
was August 28, 1997.  In November 1997, the Company changed its fiscal year
end from November 30 to December 31.

WHOLLY OWNED SUBSIDIARIES

The Company has three wholly owned subsidiaries, MIT Realty, Inc. and Mission
West Executive Aircraft Center, Inc. ("MWEAC").  MIT Realty, Inc. and MWEAC
are inactive entities; they have no signed contracts or commitments.

EMPLOYEES

The Company had no full-time employees as of December 31, 1997.  As of March
29, 1998, the Company had six employees.

REAL ESTATE INVESTMENTS AND MARKETING

At December 31, 1997, the Company had no real estate investments.  The
Company completed its most recent development projects in 1991 and, since
that time, has principally focused on managing its real estate portfolio.
The Company sold its real estate properties in January and May of 1997 (see
Part I - "Business - Sale of Real Estate Portfolio").

                                    -3-
<PAGE>

GOVERNMENT REGULATIONS / ENVIRONMENTAL ISSUES

The Company's rental properties were subject to various federal, state, and
local regulations such as those addressed by the Americans with Disabilities
Act and local building codes.  The Company believes that the properties were
in substantial compliance with all applicable regulatory requirements through
the date of sale.


ITEM 2
PROPERTIES

The Company's corporate offices are located in Cupertino, California, in a
building owned by Berg & Berg Developers, aggregating approximately 7000
square feet at a total rental cost of approximately $5,625 per month.

ITEM 3
LEGAL PROCEEDINGS

As of March 16, 1998, there was no litigation pending to which the Company
was a party.

ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company's proxy statement filed with the Securities and Exchange
Commission on October 21, 1997 is incorporated herein by reference.  The
Company held a special meeting of shareholders on November 10, 1997 (the
"November Special Meeting").  At the November Special Meeting, the following
matters were voted upon by the holders of the Company's outstanding Common
Stock, and with respect to each matter, the number of votes for and against
and the number of abstentions and broker non-votes are set forth below:

     An amendment and restatement of the Company's Articles of Incorporation
     to effectuate a 1 for 30 reverse stock split, increase the authorized
     shares of Common Stock to 200,000,000, authorization of up to 20,000,000
     shares of preferred stock and authorization for the Company to issue
     convertible debt securities.  There were 5,841,049 votes for the
     proposal, 104,520 votes against the proposal, 46,406 abstentions and no
     broker non-votes.

     Approval of a private placement of 1,250,000 shares of the Company's
     Common Stock (after taking into account the reverse stock split) for
     $4.50 per share.  There were 5,963,773 votes for the proposal, 24,935
     votes against the proposal, 3,267 abstentions and no broker non-votes.

     Approval of the Company's 1997 Stock Option Plan pursuant to which
     5,560,000 shares of the Company's Common Stock were reserved for
     issuance. There were 5,924,033 votes for the proposal, 63,275 votes
     against the proposal, 4,667 abstentions and no broker non-votes.

                                    -4-
<PAGE>

PART II

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

The Common Stock is listed on the American Stock Exchange (the "AMEX") and
the Pacific Exchange, Inc. under the symbol "MSW", but is not currently
trading on either exchange.  The AMEX halted trading in the Common Stock at
the opening of trading on October 20, 1997 and the AMEX has advised the
Company that it will consider a number of factors before making the decision
to resume trading.

The following are the high and low sales prices, by quarter, of the Common
Stock for the two most recent fiscal years as adjusted to give retroactive
effect to the 1 for 30 reverse stock split which was effective as of November
10, 1997:

<TABLE>
<CAPTION>
                                 1997                    1996
                         --------------------    --------------------
                          High         Low        High          Low
                         -------     --------    -------      -------
       <S>               <C>         <C>         <C>          <C>
       1st Quarter(1)    397 1/2     56 1/4(2)   161 1/4      138 3/4
       2nd Quarter       112 1/2     52 1/2        210        138 3/4
       3rd Quarter       153 3/4     93 3/4      247 1/2      187 1/2
       4th Quarter       136 7/8     93 3/4(3)   292 1/2      213 3/4
</TABLE>

----------------------
(1) In 1997, the Company changed its fiscal year end from November 30 to
    December 31.  Thus, the first quarter of 1997 includes December 1996.
(2) During the first fiscal quarter in 1997 (on February 27,1997), the Company
    paid a $9.00 special dividend ($270 adjusted to give retroactive effect to
    the 1 for 30 reverse stock split).
(3) During the fourth fiscal quarter in 1997 (on October 21, 1997), the Company
    paid a $3.30 special dividend ($99 adjusted to give retroactive effect to
    the 1 for 30 reverse stock split).


As of March 30, 1998, the approximate number of holders of record of the
Common Stock was 360.  The Company paid no dividends during fiscal
1996.  The Company declared and paid a special dividend of $9.00 per share on
February 27, 1997.  Another special dividend of $3.30 per share was paid on
October 21, 1997.

See "Item 1 - Business" and "Item 13 - Certain Transactions" for a discussion
of the Company's recent private placements.


                                    -5-
<PAGE>

ITEM 6
SELECTED CONSOLIDATED FINANCIAL DATA

Selected consolidated financial data is derived from the audited financial
statements and notes thereto (see Part II - Item 8 "Consolidated Financial
Statements and Supplementary Data," below) and is as follows:


                             MISSION WEST PROPERTIES
                        SELECTED CONSOLIDATED FINANCIAL DATA
                      (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                       _____

<TABLE>
<CAPTION>
                                        One Month
                                          ending                        Year Ending November 30
                                        December 31,    -------------------------------------------------------
                                           1997            1997        1996       1995       1994        1993
                                        ------------    ----------   --------   --------   --------   ---------
<S>                                     <C>             <C>          <C>        <C>        <C>        <C>
RESULTS OF OPERATIONS:
  Revenues                                   $27           $52,295     $7,526     $7,926     $9,297     $7,142
  Net Income (Loss)                         (74)             3,044         35         52    (1,943)    (1,065)
  Basic Income (Loss) per Share(1)        (0.05)             18.48       0.77       1.12      39.69      21.73
  Diluted Income (Loss) per Share(2)      (0.05)             18.48       0.72       1.06      39.69      21.73

FINANCIAL CONDITION:(2)
  Total Assets                            $5,763                 -    $46,324    $47,570    $50,963    $56,236
  Notes Payable                                -                 -     30,753     31,976     34,382     35,938
  Cash Dividend Declared per share(1)        369                 -       0.00       0.00       0.00       1.58
  Weighted Average Shares Outstanding(1)   1,501                 -         46         46         49         49
</TABLE>

--------------------------
(1)  As adjusted for the 1 for 30 reverse stock split.
(2)  Balance sheet information as of December 31, 1997.

                                    -6-

<PAGE>

ITEM 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

FISCAL 1997 COMPARED WITH FISCAL 1996

In November 1997, the Company changed its fiscal year end from November 30 to
December 31.  Thus, fiscal year 1996 was from December 1, 1995 to November
30, 1996 and fiscal year 1997 was from December 1, 1996 to December 31, 1997.
Fiscal year 1998 will be from January 1, 1998 to December 31, 1998.

During the month ended December 31, 1997, the Company held minimal assets,
primarily cash and cash equivalents obtained from recent sales of Common Stock
and held as temporary investments. Therefore, there was minimal operating
activity. During this period, the Company recognized interest income in the
amount of $27,000 and general and administrative expenses of $139,000,
resulting in a net loss before income tax benefit of $112,000 for the month
ended December 31, 1997. Given the insignificant activity relating to the one
month ended December 31, 1997, the following discussion relating to the
results of operations and changes in financial condition for fiscal year 1997
as compared to fiscal year 1996 is not significantly impacted by the
inclusion of a thirteenth month in the fiscal 1997 results.

The sale of the Company's real estate portfolio in January and May 1997 had a
significant effect on the operations of the Company during fiscal year 1997.
The sale of the real estate portfolio was in accordance with a December 1996
agreement with Spieker Properties, L.P. ("Spieker"), a California limited
partnership, in which Spieker agreed to purchase all the Company's real
estate assets for $50,500,000 in cash, subject to certain customary
conditions.  A special meeting of the Company's shareholders was held on
December 16, 1996, at which time the shareholders approved the sale. Most of
the sale transaction was completed on January 22, 1997, at which time the
Company sold nine of its eleven real estate properties.  The sale of the
remaining two properties was completed on May 6, 1997.  All debt encumbering
the properties and the related transaction and closing costs were paid from
the sales proceeds.  The properties sold consisted of occupied office, light
industrial, and R&D buildings and leaseholds, together with hangar and office
buildings thereon, in San Diego and Riverside Counties, California, and
occupied industrial buildings and vacant land in Chandler, Arizona.  The
total building space sold approximated 815,000 square feet.  Upon completing
the sale of the nine properties during the first quarter of 1997, the Company
received $47,500,000 in cash, from which it repaid all debt encumbering the
properties (thus eliminating future interest expense) and paid related
transaction and closing costs, including $3,000,000 in "break-up" fees from
previously terminated sales transactions.

Upon completing the sale of the remaining two properties in May 1997, the
Company received $3,000,000 cash, from which related transaction and closing
costs also were paid.

During the third quarter of fiscal 1997, the Company's shareholders approved
a change in control of the Company, through a stock sale to a group of
private investors led by Berg & Berg Enterprises, Inc. (the "Berg Group").
The Company completed the sale of 6,000,000 newly issued shares of Common
Stock on September 2, 1997 at $0.15 per share for $900,000 at which time all
current officers and directors of the Company resigned and were replaced by
individuals recommended by the Berg Group's representative.  Upon completion
of the stock sale, the Berg Group owned approximately 79.6 percent of the
outstanding shares of the Company.

The Company declared and paid a special cash distribution of $9.00 per share
to shareholders during February 1997.  Additionally, in August 1997,
the Board of Directors declared a special cash distribution of $3.30 per
share that was paid to shareholders on October  21, 1997 (record date of
August 28, 1997) (the "October Distribution").

In November 1997, the Company completed a private placement of 1,250,000
newly issued shares of Common Stock for $4.50 per share to private investors
with aggregate proceeds to the Company of $5,625,000.  The private placement
occurred after the Company effected a 1 for 30 reverse stock split on
November 10, 1997. In October 1997, the Board of Directors of the Company
determined that the sale of Common Stock would be at a price $4.50 per share
(effectively equivalent to the price that the Berg Group paid in September
1997 prior to the reverse stock split).

The sale of the real estate portfolio resulted in a gain of approximately
$4,676,000 and, coupled with the cash distribution paid to shareholders, left
the Company with no operating assets and minimal cash-generating ability.
Results for fiscal 1997 reflect the effects of the sale of the real estate
assets and the two private placements of Common Stock. The gain on sale of
real estate (net of the "break-up" fees) significantly decreased revenues and
expenses from operations of real estate, decreased interest expense, and
increased general and administrative expenses (primarily due to severance
payments upon downsizing of corporate staff and transaction costs associated
with the sale of Common Stock).

                                    -7-
<PAGE>

During the fourth quarter of 1997, the Company had only cash and interest
income, and operating expenses related to the November private placement.
Results for fiscal 1997 reflect the fact that the Company sold all of its
real estate assets, after which it had no operations, minimal other assets,
and continued to incur overhead expenses to enable completion of the proposed
transactions. Expenses of approximately $650,000 were incurred during the
fourth quarter related to the proposed transactions.  During the preceding
fiscal year, the Company had continued to operate its real estate portfolio
in the normal course, and had entered into an agreement for sale of the
portfolio to a single purchaser (which was completed in fiscal 1997 with a
different purchaser).

FISCAL 1996 COMPARED WITH FISCAL 1995

During fiscal year 1996, the Company continued to focus operating efforts on
managing its real estate portfolio of ten operating projects; no properties
were sold and no development occurred during the year.  In addition to
managing the portfolio, the Company entered into an agreement to sell the
portfolio in July 1996.  The agreement was subsequently replaced, a majority
of the real estate was finally sold in January 1997.

During 1996 occupancy levels remained fairly stable, averaging 86 percent for
the portfolio, compared to 87 percent in fiscal 1995.  Compared to fiscal
1995, the Company's rental revenues from real estate decreased $81,000, or
one percent, in 1996; the related operating expenses of real estate decreased
$140,000, or eight percent.  The decrease in rental revenue primarily
resulted from the decrease in occupancy.  The net decrease in operating
expenses resulted from decreases in building repairs/reconditioning and
property taxes that were offset by general increases in operating costs.

Sales of real estate decreased $287,000 between years, primarily as a result
of an unimproved parcel of land sold in 1995.  The related costs of real
estate sold in fiscal 1995 consist primarily of the land sale, while 1996
costs primarily consist of expenses associated with the agreements to sell
the entire portfolio that were not consummated (costs associated with the
sale completed in January 1997 were recorded as a cost of sale at that time).

Interest expense decreased $390,000 between years as a result of decreases in
outstanding notes payable and in prime lending rates (prime rates averaged
8.3 percent during fiscal 1996 compared to 8.8 percent during fiscal 1995).

CHANGES IN FINANCIAL CONDITION

DECEMBER 31, 1997 COMPARED WITH NOVEMBER 1996

Nearly all changes in the Company's financial position during 1997 resulted
from the sale of the Company's real estate portfolio.  Proceeds from the sale
of the property were used to pay all debt and a substantial portion of all
other liabilities of the Company, as well as the special $9.00 per share
distribution to shareholders in February 1997.  In addition, the Board of
Directors declared a special distribution of $3.30 per share which was paid
on October 21, 1997 to shareholders of record as of August 28, 1997.

In connection with the January 1997 sale of real estate, vesting was
accelerated to permit the exercise of stock options for the purchase of
13,520 shares. During February 1997, all vested stock options, totaling
162,000 shares, also were exercised by option holders.  Total exercise
proceeds to the Company from all such option exercises were $759,000 and were
recognized on a "net exercise" basis.  Certain unvested options were canceled
in March 1997.

The Company completed the sale of 6,000,000 newly issued shares of Common
Stock subsequent to August 31, 1997.  The $900,000 purchase price was
received on August 5, 1997, and was initially classified as a liability until
completion of the sale, which occurred on September 2, 1997.

The Company completed the sale of 1,250,000 newly issued shares of Common
Stock on November 12, 1997, for an aggregate of $5,625,000.

                                    -8-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

During the first nine months of fiscal 1997, the Company generated cash from
the sale of all of its real estate assets and used the proceeds from such
sales to retire outstanding debt, fund ongoing operations, pay a special
distribution to shareholders and pay tax liabilities.  After payment of the
October Distribution, only nominal assets remained in the Company, which has
minimal or no revenue-generating  or cash-generating capabilities.

The Company has raised capital with a view to maintaining the listing of the
Common Stock on the American Stock Exchange ("AMEX") and the Pacific Exchange
("PSE") and enabling the Company to raise more capital for the direct and
indirect acquisition of revenue-generating real estate and other assets.  The
Company may acquire such properties and other assets through direct purchases
or the issuance of securities of the Company in exchange for such properties
and assets or interests in existing businesses and entities that own such
properties and assets.  The Company may enter into such transactions with
affiliates of Berg & Berg Enterprises, Inc. and Carl E. Berg, the Chief
Executive Officer and a director of the Company, which own and operate more
than 3,500,000 square feet of Santa Clara County, California properties.
There can be no assurance that any such transactions will occur, however.

The Company effected a 1 for 30 reverse split of the Common Stock and sold
1,250,000 shares of Common Stock at $4.50 per share (post-split) in a private
placement to accredited investors.  The Board of Directors determined that
$4.50 was approximately equivalent on a post-reverse split basis to the $0.15
per share paid by the Berg Group for shares of Common Stock in September
1997. Moreover, the Board of Directors has determined that $4.50 is an
appropriate price for all transactions involving Common Stock and Common
Stock equivalents issued by the Company until such time as the Company has
acquired revenue-generating properties and other assets, directly or
indirectly, and has funds from real estate operations.  The ownership
interests in the Company held by existing shareholders will be reduced
substantially  by any of such transactions, any of which may be materially
dilutive to all existing shareholders of the Company.  If the Company does
not raise additional capital or acquire revenue-generating real estate or
other assets, the Company believes that the outstanding shares of Common
Stock will cease to have value.

Forward-looking statements involve a number of risks and uncertainties.  Some
of the important factors that could cause actual results to differ materially
from those in the forward-looking statements include the following:

     Future transactions intended to raise capital for the Company and result
     in the Company's conduct of a new real estate business are subject to
     applicable California and federal laws, the regulations of stock
     exchanges or other markets on which the Common Stock is traded, real
     estate market conditions, stock market conditions, or other factors.

     In connection with the October Distribution, the AMEX halted trading of
     the Common Stock.  Trading has not yet resumed.  In the absence of
     appropriate actions by the Company, there is a risk, therefore, that the
     Common Stock will be de-listed from such exchanges and there may no
     longer exist a trading market for the Common Stock.

     If the Company does raise sufficient capital to maintain the AMEX and
     PSE listings of the Common Stock, but does not re-enter the real estate
     business during the next fiscal year, the Company may become subject to
     the Investment Company Act of 1940, as amended, which would entail
     substantially more regulation of the Company at significant additional
     expense.

     At present, approximately 73.1 percent of the outstanding Common Stock
     is owned by members of the Berg Group.  All such shares are subject to
     Voting Rights Agreements obligating those shareholders to vote their
     shares in the manner recommended by Berg & Berg Enterprises, Inc. and
     Carl E. Berg, who as a result, should be viewed as possessing effective
     control of the Company.  There can be no assurance that such control
     will be exercised to cause the occurrence of any transaction described
     in the forward-looking statements.

If the Company does re-enter the real estate business, there can be no
assurance that the Company's operations will be profitable. There can be no
assurance that the price of a share of Common Stock will increase as a result
of the Company's acquisition of any real estate or other assets or its future
revenue-generating activities, if any.

                                    -9-
<PAGE>

ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's Consolidated Financial Statements and notes thereto appear on
pages F-1 to F-17 of this Form 10-K Annual Report.


ITEM 9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES

The Company changed accountants on March 12, 1998 and filed a report on Form
8-K with the Commission to report such changes on March 13, 1998.

                                    -10-
<PAGE>
PART III

ITEM 10

The directors and executive officers of the Company as of March 30, 1998 are
as follows:

<TABLE>
<CAPTION>

Name                    Age       Position
-------------------     ---       ----------------------------------------------------------------------
<S>                     <C>       <C>
Carl E. Berg(1)          60       Chairman of the Board, Chief Executive Officer, President and Director
Michael Knapp            35       Chief Financial Officer and Secretary and Director(3)
Keith Cocita(1),(2)      53       Director(3)
Roger Kirk(1),(2)        45       Director(3)
Michael O'Rosky          37       Director(3)
Michael J. Anderson      38       Vice President, Chief Operating Officer, and Director
Bradley A. Perkins       40       Vice President, General Counsel and Secretary
Marianne K. Aguiar       31       Vice President of Finance and Controller
John Bolger(1),(2)       51       Director
</TABLE>
----------------------------
(1)  Member of the Audit Committee.
(2)  Member of the Compensation Committee.

(3)  Effective March 30, 1998, Messrs. Knapp, Cocita, Kirk and O'Rosky
     resigned all positions with the Company and Mr. Anderson, Ms. Aguiar and
     Mr. Perkins were appointed to their current offices as set forth above
     and Messrs. Anderson and Bolger were appointed directors.

The following is a biographical summary of the experience of the executive
officers and directors of the Company:

Mr. Berg has served as Chief Executive officer, President and Director of the
Company since September of 1997.  From 1979 to the present, Mr. Berg has been
a general partner of Berg & Berg Developers and a director and officer of
Berg & Berg Enterprises, Inc. since its inception.  Mr. Berg is also a
director of Integrated Device Technologies, Inc., Videonics, Inc., Valence
Technology, Inc. and System Integrated Research, Ltd.

Mr. Anderson joined the Company on January 1, 1998.  On March 30, 1998, Mr.
Anderson was appointed Chief Operating Officer, Vice President and a
Director. After seven years as a real estate attorney and partner at Ware &
Freidenrich, Palo Alto, California, Mr. Anderson has spent the past six years
in private real estate development with Sandhill Homes, LP and Sandhill
Property Company.

Mr. Perkins joined the Company on February 2, 1998.  On March 30, 1998, Mr.
Perkins was appointed Vice President, General Counsel, and Secretary.  Mr.
Perkins will devote a portion of his time to the Company, a portion to
various Berg companies, and a portion of his time to Teledex Corporation (a
non-competitive telephone supplier).  From November 1991 to January 1998, Mr.
Perkins was with Valence Technology, Inc., where he was Vice President,
General Counsel and Secretary for the past five years.  From August 1988 to
November 1991, Mr. Perkins was Assistant General Counsel and Intellectual
Property Counsel with VLSI Technology, Inc., a semiconductor manufacturer.

Ms. Aguiar joined the Company on March 29, 1998.  On March 30, 1998, Ms.
Aguiar was appointed Vice President of Finance and Controller.  From June
1996 to March 1998, Ms. Aguiar was with Oasis Residential, Inc. where she
served as Vice President, Controller and Treasurer from July 1996 to March
1998.  From November 1995 to May 1996, Ms. Aguiar was employed by SBT
Accounting Systems where from April 1996 to June 1996, she served as Acting
Vice President of Finance and Controller and from November 1995 to April 1996
she served as Assistant Controller.  From November 1992 to November 1995, Ms.
Aguiar was employed by Coopers & Lybrand LLP where she served as Audit
Manager.
                                    -11-
<PAGE>

Mr. Bolger became a director of the Company on March 30, 1998.  Mr. Bolger is
a private investor.  He was Vice President of Finance and Administration of
Cisco Systems, Inc., a networking company, from May 1989 through December
1992.  Mr. Bolger is a director of Integrated Device Technology, Inc.,
Integrated Systems Inc., McAfee Associates, Inc. Sanmina Corporation, TCSI
Corporation.

NUMBER, TERMS AND ELECTION OF DIRECTORS

The number of directors is set at five.  Each director will serve for a term
of one year or until the next annual meeting at which directors are elected.
In the election of directors, each shareholder is entitled to one vote for
each share of Common Stock held by such shareholder. There are currently two
vacancies on the board of directors.

CONTRACTUAL ARRANGEMENTS

In January 1998, the Company entered into an employment agreement with Mr.
Anderson, Vice President, Chief Operating Officer and Director, providing
that in the case of voluntary termination for good cause (as defined in the
agreement) or involuntary termination other than for cause, Mr. Anderson will
be entitled to a severance payment of $100,000 and a continuation of medical
and other group insurance benefits for six months. In the event such a
termination occurs more than 12 months from his hire date, the vesting of Mr.
Anderson's stock options will accelerate and options which would have vested
in the six month period following his termination date will be vested as of the
termination date. Additionally, Mr. Anderson acquired 200,000 shares of
Common Stock on March 30, 1998 pursuant to the exercise of an option at
$4.50 per share upon delivery of a full recourse note payable in four years
or upon termination of employment. Mr. Anderson's note is secured by the
shares, which are subject to repurchase by the Company to the extent not
vested upon termination of employment.

COMPENSATION OF DIRECTORS

The Company intends to pay its directors who are not officers of the Company
fees for their services as directors.  Directors will receive annual
compensation of $15,000 plus a fee of $1,000 for attendance (in person or by
telephone) at each meeting of the board of directors, but not for committee
meetings.  Officers of the Company who are also directors will not be paid
any director fees.

Each member of the Board of Directors who is not an employee of the Company
or any of its subsidiaries or affiliates (a "Non-Employee Director") and who
becomes a member of the Board of Directors after November 10, 1997, the date
on which the 1997 Stock Option Plan was approved by the shareholders of the
Company, will automatically receive a grant of an option to purchase 50,000
shares of Common Stock at an exercise price equal to 100% of the fair market
value of the Common Stock at the date of grant of such option upon joining
the Board of Directors.  Such options will become exercisable cumulatively
with respect to 1/48th of the underlying shares on the first day of each
month following the date of grant.  Generally, the options must be exercised
while the optionee is a director of the Company.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Directors, executive officers and each beneficial owner of more than ten
percent of the Common Stock of the Company are required by Section 16(a) of
the Securities Exchange Act of 1934, as amended, to file reports periodically
disclosing their transactions in the Company's securities.  Based on a review
of such reports, no reporting person failed to file required reports on a
timely basis during fiscal year 1997.

                                    -12-
<PAGE>

ITEM 11
EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

All directors and officers who resigned on March 30, 1998 were elected or
appointed on September 2, 1997 and all former officers and directors resigned
as of the same date.  Therefore, no officer who received compensation during
the fiscal year ended December 31, 1997 will receive compensation during the
fiscal year ending December 31, 1998.

SUMMARY COMPENSATION

Michael M. Early served as Chief Executive Officer, President and Director of
the Company from March 7, 1997 through August 1997.  Mr. Earley received
compensation for such services through the payment by the Company to Triton
Group Ltd. (of which Mr. Earley was concurrently the Chief Executive Officer
and President) for a total amount of $75,390 ($49,640 paid to the Triton
Group Management for general management services, including Mr. Early's
services, and $25,750 paid directly to Mr. Early as director's fees).

                                    -13-
<PAGE>

BENEFIT PLANS

1997 STOCK OPTION PLAN.

No options were granted to any named executive officers during December 1996
or the year ended December 31, 1997.

The Company's 1997 Stock Option Plan (the "Option Plan") was approved by the
Company's shareholders on November 10, 1997.  The Option Plan was adopted so
that the Company may attract and retain the high quality employees,
consultants and directors necessary to build the Company's infrastructure and
to provide ongoing incentives to the Company's employees in the form of
options to purchase the Company's Common Stock by enabling them to
participate in the Company's success.

The Option Plan provides for the granting to employees (including officers
and directors who are employees) of "incentive stock options" within the
meaning of Section 422 of the Code, and for the granting of non-statutory
options to employees, consultants and directors, including directors who are
neither employees of, nor consultants to, the Company ("Non-Employee
Directors"). Options to purchase a maximum of 5,500,000 shares of Common
Stock may be granted under the Option Plan, subject to equitable adjustments
to reflect certain corporate events.

Each option granted under the Option Plan will be evidenced by a written
stock option agreement between the Company and the optionee and generally
become exercisable cumulatively as to 20% of the underlying shares on each
anniversary of the date of grant for so long as the optionee is employed by
or providing service to the Company.

The price per share exercise price of options granted under the Option Plan
may not be less than 100% of the fair market value on the date of grant,
except in certain specific circumstances, in which case the exercise price
may not be less than 110%.  Each option may be exercised only to the extent
that it is vested. Options must generally be exercised during the optionee's
employment or within 30 days following the optionee's termination of status
as an employee, consultant or director, unless termination is due to the
death or disability of an optionee.  If termination of status is due to death
or disability of the optionee, an option may be exercised within no more than
six months of following the termination.

TERMINATED EMPLOYEE BENEFIT PLANS

As of October 9, 1997, and prior to the adoption of the 1997 Stock Option
Plan, the Company terminated all of its employee benefit plans, including a
1990 Director Stock Option Plan, a 1990 Incentive Stock Option Plan, the
Mission West Properties Deferred Compensation Plan, amended and restated as
of January 11, 1991, the Mission West Properties Deferred Compensation Trust,
the Mission West Properties Retirement Plan and the Mission West Properties
Stock Purchase Plan (collectively, the "Terminated Plans").  No employees or
directors were participating under any of the Terminated Plans. The Company's
Board of Directors authorized the Company's officers to take all actions
necessary to terminate the Terminated Plans.


The Company filed a Form 11-K relating to the terminated Mission West
Properties Stock Purchase Plan for the plan year end March 31, 1997.  The
Company does not intend to file a Form 11-K for terminated plan this year.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the last completed fiscal year, no current members of the Compensation
Committee were officers of the Company.  All former officers and directors of
the Company resigned as of September 2, 1997, at which time new officers and
directors of the Company were elected and appointed.  No officer who received
compensation in the last completed fiscal year is now an officer.  The
current member of the Company's Compensation Committee was appointed by the
board of directors effective as of March 30, 1998 and is not an officer or
employee of the Company.

                                    -14-
<PAGE>

COMPARISON OF SHAREHOLDER RETURN ON INVESTMENT

The following graph compares the percentage change in the cumulative total
shareholder return on the Common Stock of the Company for fiscal years 1993
through 1997, as of each fiscal year end, with (i) the cumulative total
return (assuming reinvestment of dividends) of the Russell 2000 Index, a
broad equity market index, and (ii) the cumulative total return (assuming
reinvestment of dividends) of a peer group of real estate companies with
portfolios of income-producing industrial and office properties believed by
the Company's management to be comparable to those of the Company.

                     COMPARATIVE FIVE-YEAR TOTAL RETURNS*
              MISSION WEST PROPERTIES, RUSSELL 2000, PEER GROUP
                   (Performance results through 12/31/97**)

                                  [GRAPH]
<TABLE>
<CAPTION>
                      1992       1993       1994       1995       1996       1997
<S>               <C>        <C>        <C>        <C>        <C>        <C>
MSW***            $100.00     $91.61    $173.41    $137.42    $255.21    $364.33
Russell 2000      $100.00    $118.98    $117.66    $151.17    $176.14    $215.52
Peer Group        $100.00    $140.17    $147.30    $173.06    $233.23    $320.39
</TABLE>

Assumes $100 invested at the close of trading on the last trading day
preceding the first day of the fifth preceding fiscal year in MSW Common
Stock, Russell 2000, and Peer Group.

*    Cumulative total return assumes reinvestment of dividends.
**   Periods prior to 1997 ended November 30.
***  The last trade for MSW was 10/17/97.

ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock by (i) each person who is a
shareholder of the Company holding more than a 5% interest in the Company,
(ii) directors and Named Executives of the Company, and (iii) the directors
and officers of the Company as a group.  Unless otherwise indicated in the
footnotes to the table, all of such interests are owned directly, and the
person or entity has sole voting and investment power.

                                    -15-
<PAGE>

                               BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
                                                                COMMON STOCK
                                            -------------------------------------------------------
                                               NUMBER OF SHARES
NAME                                           BENEFICIALLY OWNED(1)           PERCENT OWNERSHIP(1)
------------------------------------        -------------------------         -----------------------
<S>                                         <C>                                <C>
Carl E. Berg(2)                                     27,333(3)                         *
Chairman of the Board, President and
Chief Executive Officer

Clyde J. Berg(2)                                    27,333(3)                         *
c/o Berg & Berg Enterprises, Inc.
10050 Bandley Drive
Cupertino, CA  95014

Berg & Berg Enterprises, Inc.                       27,333(3)                         *
10050 Bandley Drive
Cupertino, CA  95014

Michael J. Anderson                                200,000(4)                        11.8%
Vice President, Chief Operating Officer
and Director

Bradley A. Perkins                                     -0-(5)                          *
Vice President, General Counsel and
Secretary

Marianne K. Aguiar                                     -0-(6)                          *
Vice President Finance and Controller

John C. Bolger                                      24,305                             *
Director
96 Sutherland Drive
Atherton, CA 94027

Thelmer Aalgaard                                    82,973(7)                         4.9%
c/o Berg & Berg Enterprises, Inc.
10050 Bandley Drive
Cupertino, CA 95014

Carl E. Warden(8)                                  117,333                            6.9%
1516 Country Club Drive
Los Altos, CA 94024

Robert L. & Sharon K. Yoerg(9)                     111,111                            6.5%
98 Melanie Lane
Atherton, CA 94027

All Directors and executive officers as a          253,721                           14.6%
group (5 persons)(10)
</TABLE>

----------------------------------
*   Less than one percent (1%)

(1)  Beneficial ownership is determined in accordance with the rules of the
     Securities and Exchange Commission which generally attribute beneficial
     ownership of securities to persons who possess sole or shared voting
     power and/or investment power with respect to those securities and
     includes securities which such person has the right to acquire
     beneficial ownership within 60 days.  Unless otherwise indicated, the
     persons or entities identified in this table have sole voting and
     investment power with respect to all shares shown as beneficially owned
     by them.  Percentage ownership calculations are based on 1,698,536 shares,
     and for optionholders the number of shares currently exercisable under
     outstanding options.

(2)  Carl E. Berg and Clyde J. Berg disclaim beneficial ownership, except to
     the extent of their pecuniary interest, in the 1,097,959 shares of
     Common Stock held beneficially and of record by Berg & Berg Enterprises,
     Inc. ("BBE") of which Carl Berg is an executive officer, director and
     beneficial owner and Clyde Berg is a director and which, with members of
     their immediate families, they beneficially own, directly and
     indirectly, all of the shares of Capital Stock of BBE. Carl E. Berg
     beneficially owns 53,071 shares of Common Stock as a trustee under
     various pension and profit sharing plans, some of which are subject to
     Voting Rights Agreements.  Mr. Berg has no investment control over such
     shares.

(3)  Does not include shares of Common Stock which are subject to Voting Rights
     Agreements. Berg & Berg Enterprises. Inc. and Messrs. Berg disclaim
     beneficial ownership of such shares because Berg & Berg Enterprises. Inc.
     has no investment control over such shares and no power to vote such
     shares.  However, holders of such shares are obligated, pursuant to Voting
     Rights Agreements, to vote such shares as recommended by Carl E. Berg, as
     agent for Berg & Berg Enterprises, Inc.  Both Clyde J. Berg and Carl E.
     Berg may be deemed the beneficial owner of any shares of Common Stock
     beneficially owned by Berg & Berg Enterprises. Inc.

(4)  Mr. Anderson received a stock option to purchase 400,000 shares of stock,
     which vests over 4 years as follows: 6.25% on the first six-month
     anniversary of Mr. Anderson's date of hire, an additional 12.5% on his
     one-year anniversary, and the remainder in equal amounts on a

                                    -16-
<PAGE>

     monthly basis over the remaining 3 years.  Mr. Anderson received and
     exercised a second stock option to purchase an additional 200,000
     shares, which are subject to repurchase upon termination of employment
     on the same vesting schedule as the underlying option. The Company
     loaned Mr. Anderson the purchase price for this stock.

(5)  Mr. Perkins received a stock option to purchase 80,000 shares of stock,
     which vests over 4 years as follows: 6.25% on the first six-month
     anniversary of Mr. Perkins' date of hire, an additional 12.5% on his
     one-year anniversary, and the remainder in equal amounts on a monthly basis
     over the remaining 3 years.

(6)  Ms. Aguiar received a stock option to purchase 75,000 shares of stock,
     which vests over 4 years as follows: 6.25% on the first six-month
     anniversary of Ms. Aguiar's date of hire, an additional 12.5% on her
     one-year anniversary, and the remainder in equal amounts on a monthly basis
     over the remaining 3 years.

(7)  Mr. Aalgaard is a director of Berg & Berg Enterprises, Inc.  Includes (i)
     33,400 shares held of record by Carl E. Berg, Trustee, Berg & Berg Profit
     Sharing Plan FBO Thelmer G. Aalgaard Dated 1/1/84, (ii) 4,160 shares held
     of record by Carl E. Berg, Trustee, Berg & Berg Profit Sharing Plan FBO
     Thelmer G. Aalgaard Dated 1/1/84, 1997 Contribution, and (iii) 2,220 shares
     held of record by Thelmer G. Aalgaard, Custodian, Rachel Michaels, Under
     the California Uniform Gifts to Minor Act.

(8)  Includes 9,333 shares held of record by Carl E. Warden SEP/IRA.

(9)  Includes (i) 55,556 shares held of record by Robert L. Yoerg M.D. Trustee,
     Robert L. Yoerg Professional Corporation Pension Plan and (ii) 11,111
     shares held of record by Sharon K. Yoerg, Custodian, Elizabeth A. Yoerg,
     Under the Uniform Gifts to Minors Act.

(10) Current officers and directors include Carl E. Berg, Michael J. Anderson,
     Bradley A. Perkins, Marianne K. Aguiar and John C. Bolger.


ITEM 13
CERTAIN TRANSACTIONS

PRIVATE PLACEMENT TRANSACTIONS - COMMON STOCK

In September and November of 1997, the Company sold Common Stock in two
private placement transactions.  On September 2, 1997, the Company sold
6,000,000 shares of Common Stock at $0.15 per share prior to a 1 for 30
reverse split on the Common Stock (the "Reverse Split").  On November 12,
1997, the Company sold 1,250,000 shares of Common Stock at $4.50 per share
after giving effect to the Reverse Split.  The purchasers of record of the
Common Stock included, among others, the following 5% shareholders, executive
officers, directors and affiliates of 5% shareholders, executive officers and
directors:

<TABLE>
<CAPTION>
                                                Common Stock
                            ---------------------------------------------------
          Name                September Private           November Private
                                  Placement(1)                Placement
                            ----------------------      -----------------------
<S>                         <C>                         <C>
Berg & Berg
Enterprises, Inc.(2)                27,333                        -

Thelmer Aalgaard(3)                 12,333                     70,640

Carl E. Warden                      12,333                    105,000

John C. Bolger                      12,333                      9,889

Robert L. And Sharon K. Yoerg                                 111,111
</TABLE>
--------------------------
(1)   Reflects post-Reverse Split shares of Common Stock.
(2)   Carl E. Berg, President, Chief Executive Officer and Director of the
      Company, is also an officer and director of BBE. Clyde Berg is a director
      of BBE. Carl E. Berg, Clyde J. Berg and members of their immediate
      families are, directly and indirectly, the beneficial owners of all
      shares of the capital stock of BBE.
(3)   Mr. Aalgard is a director of BBE.

                                    -17-
<PAGE>

In addition, members of Mr. Aalgaard's immediate family purchased or received
as a gift from Mr. Aalgaard an aggregate of 17,772 shares of Common Stock in
connection the November Private Placement.

In connection with the September and November private placements, certain
purchasers of Common Stock, including Mr. Aalgaard, and Mr. Warden, entered
into Voting Rights Agreements with BBE pursuant to which the purchasers
agreed to vote their shares of Common Stock as directed by Carl E. Berg on
behalf of BBE, on any matter submitted to a vote of the Company's
shareholders.

The Voting Rights Agreements terminate at the earliest of the following
dates: (i) upon any sale of the purchaser's shares of Common Stock pursuant
to a registration statement declared effective under the Securities Act, but
only as to the purchaser's shares of Common Stock so sold; (ii) upon the sale
of the purchaser's shares of Common Stock pursuant to Rule 144 promulgated
under the Securities Act, but only as to the purchaser's shares of Common
Stock so sold; or (iii) two years after the effective date of the Voting
Rights Agreements.


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


    (a)  (1)  FINANCIAL STATEMENTS -- See Index to Consolidated Financial
              Statements on page F-1 of this Form 10-K Annual Report.

         (2)  REPORT OF INDEPENDENT ACCOUNTANTS -- See Index to Consolidated
              Financial Statements on F-1 of this Form 10-K Annual Report.

         (3)  EXHIBITS -- See Exhibit Index on page 18 of this Form 10-K
              Annual Report.

    (b)       During the last quarter of fiscal 1997, the Company filed a Form
              8-K to report under Item 1 thereof that there had been a change
              in control of the Company.  The Form 8-K was filed on September
              17, 1997.

    (c)       See Exhibit Index on page 19 of this Form 10-K Annual Report.

                                    -18-
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>

EXHIBIT NO.
<S>       <C>
 3.1*     Amended and Restated Articles of Incorporation of the Registrant
 3.2*     Bylaws of the Registrant, as amended
 4.1      Reference is made to Exhibits 3.1 and 3.2
 4.2*     Form of Common Stock Certificate
13.1*     Annual Report to Shareholders (in lieu of an Annual Report to
          Shareholders, the Registrant will provide a copy of its Report on
          Form 10-K to each of its shareholders)
21.1      Subsidiaries of the Registrant
23.1      Consent of Coopers and Lybrand LLP
23.2      Consent of Price Waterhouse LLP
24.1      Power of Attorney.  Reference is made to page 20 of this report
27.1      Financial Data Schedule
</TABLE>
--------------------------
*  INCORPORATED BY REFERENCE.

                                    -19-
<PAGE>

SIGNATURES

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

                                 MISSION WEST PROPERTIES


March 31, 1998                   By:/s/ Carl E. Berg
                                    ------------------------------------------
                                    Carl E. Berg
                                    Chairman of the Board, President and
                                    Chief Executive Officer
                                    (Principal Executive Officer)


March 31, 1998                   By: /s/ Marianne K. Aguiar
                                    -------------------------------------------
                                    Marianne K. Aguiar
                                    Vice President of Finance and Controller
                                    (Principal Financial and Accounting Officer)

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Carl E. Berg and Bradley A. Perkins or either
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and re-substitution, for him and in his name, place and stead,
in any and all capacities to sign any and all amendments to this Report on
Form 10-K, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitutes or substitute, may lawfully do or cause to be done
by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report on Form 10-K has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

SIGNATURE                  TITLE                                 DATE
<S>                        <C>                                   <C>

/s/ Carl E. Berg           Director, Chairman of the Board,      March 31, 1998
-----------------------    President and Chief Executive
Carl E. Berg               Officer (Principal Executive
                           Officer)

/s/ Marianne K. Aguiar     Vice President of Finance and         March 31, 1998
-----------------------    Controller (Principal Financial and
Marianne K. Aguiar         Accounting Officer)

/s/ Michael J. Anderson    Director, Vice President, Chief       March 31, 1998
-----------------------    Operating Officer
Michael J. Anderson

/s/ John Bolger            Director                              March 31, 1998
-----------------------
John Bolger

</TABLE>

                                    -20-
<PAGE>

                                  MISSION WEST
                     INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



<TABLE>
<CAPTION>



                                                                           Pages
                                                                           -----
<S>                                                                        <C>
CONSOLIDATED FINANCIAL STATEMENTS:
  Report of Independent Accountants. . . . . . . . . . . . . . . . . . . . F-2
  Report of Independent Accountants. . . . . . . . . . . . . . . . . . . . F-3
  Consolidated Balance Sheets as of December 31, 1997 and November
    30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
  Consolidated Statements of Operations for the one month period
    ended December 31, 1997 and the three years in the period ended
    November 30, 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
  Consolidated Statements of Changes in Shareholders' Equity for the
    one month period ended December 31, 1997 and the three years in
    the period ended November 30, 1997 . . . . . . . . . . . . . . . . . . F-5
  Consolidated Statements of Cash Flows for the one month period ended
    December 31, 1997 and the three years in the period ended November
    30, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
  Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . F-8
</TABLE>


                                    F-1
<PAGE>


                       REPORT OF INDEPENDENT ACCOUNTANTS




To the Board of Directors and
Shareholders of Mission West Properties

We have audited the consolidated balance sheet of Mission West Properties as
described in Note 1 as of December 31, 1997, and the related consolidated
statements of operations, changes in shareholders' equity and cash flows for
the year ended November 30, 1997 and the one month period ended December 31,
1997. These financial statements are the responsibility of the management of
Mission West Properties.  Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Mission West Properties as of December 31, 1997 and the consolidated
results of their operations and their cash flows for the year ended November
30, 1997 and the one month period ended December 31, 1997, in conformity with
generally accepted accounting principles.


                                           COOPERS & LYBRAND L.L.P.


San Francisco, California
March 20, 1998

                                     F-2

<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and
Shareholders of Mission West Properties

In our opinion, the consolidated balance sheets and the related consolidated
statements of operations, of shareholders' equity and of cash flows as of and
for each of the two years in the period ended November 30, 1996 (appearing on
pages F3 through F6 of Mission West Properties' Annual Report on Form 10-K)
present fairly, in all material respects, the financial position, results of
operations and cash flows of Mission West Properties and its subsidiaries as
of and for each of the two years in the period ended November 30, 1996, in
conformity with generally accepted accounting principles.  These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits.  We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for the opinion expressed above.  We have not audited the
consolidated financial statements of Mission West Properties for any period
subsequent to November 30, 1996.



PRICE WATERHOUSE LLP

San Diego, California
February 11, 1997, except as to the 1 for 30 reverse stock
split discussed in Note 1, which is as of November 10, 1997

                                      F-3
<PAGE>

                            MISSION WEST PROPERTIES

                          CONSOLIDATED BALANCE SHEETS

                                   ----------

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                                                                  1997         NOVEMBER 30,
                     ASSETS                                                     (NOTE 2)          1996
                                                                              -------------  -------------
<S>                                                                          <C>            <C>
Cash and cash equivalents                                                     $  5,569,000   $  3,111,000
Real estate investments (held-for-sale):
Rental properties, less accumulated depreciation of $  Nil in 1997 and
$10,422,000 in 1996 ($  Nil pledged in 1997 and $44,455,000 pledged in 1996)             -     45,824,000
Unimproved land ($  Nil pledged in 1997 and $461,000 pledged in 1996)                    -        461,000
                                                                              ------------   ------------
                                                                                               46,285,000
Less allowance for estimated losses                                                      -     (4,413,000)
                                                                              ------------   ------------
Net real estate investments                                                              -     41,872,000
Other assets, less allowances of $  nil in 1997 and $360,000 in 1996 and
accumulated depreciation $  nil in 1997 and $321,000 in 1996                       194,000      1,341,000
                                                                              ------------   ------------
                                                                              $  5,763,000  $  46,324,000
                                                                              ------------   ------------
                                                                              ------------   ------------
        LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable                                                                 $          -  $  30,753,000
Accounts payable and accrued expenses                                              552,000      1,389,000
                                                                              ------------   ------------
Total liabilities                                                                  552,000     32,142,000
                                                                              ------------   ------------
Shareholders' equity:
 Preferred stock, no par value, 20,000,000 shares authorized, none
  issued and outstanding
 Common stock, no par value, 200,000,000 shares authorized, 1,501,104 shares
  issued and  outstanding at December 31, 1997
  and 45,704 (as adjusted) at November 30, 1996                                 26,707,000     19,456,000
 Less, amounts receivable on private placement                                    (334,000)             -
                                                                              ------------   ------------
                                                                                26,373,000     19,456,000
 Accumulated deficit                                                           (21,162,000)    (5,274,000)
                                                                              ------------   ------------
Total shareholders' equity                                                       5,211,000     14,182,000
                                                                              ------------   ------------
                                                                              $  5,763,000  $  46,324,000
                                                                              ------------   ------------
                                                                              ------------   ------------
</TABLE>

See accompanying notes to consolidated financial statements.


                                    F-4


<PAGE>

                            MISSION WEST PROPERTIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                 ------------

<TABLE>
<CAPTION>
                                                    One Month
                                                      Ended
                                                   December 31,               Years Ended November 30,
                                                  -------------    -------------------------------------------
                                                       1997             1997           1996          1995
                                                  --------------   -------------  -------------  -------------
<S>                                                <C>            <C>            <C>             <C>
REVENUES:
 Rental revenues from real estate                              -    $ 1,376,000     $7,065,000     $7,146,000
 Sales of real estate                                          -     50,560,000        113,000        400,000
 Other, including interest                            $   27,000        359,000        348,000        380,000
                                                      ----------   ------------     ----------     ----------
                                                          27,000     52,295,000      7,526,000      7,926,000
                                                      ----------   ------------     ----------     ----------
EXPENSES:
 Operating expenses of real estate                             -        246,000      1,643,000      1,783,000
 Depreciation of real estate                                   -        246,000      1,369,000      1,352,000
 Costs of real estate sold                                     -     45,824,000        419,000        324,000
 General and administrative                              139,000      1,467,000        991,000        945,000
 Interest                                                      -        425,000      3,045,000      3,435,000
                                                      ----------   ------------     ----------     ----------
                                                         139,000     48,208,000      7,467,000      7,839,000
                                                      ----------   ------------     ----------     ----------
(Loss) income before income taxes                       (112,000)     4,087,000         59,000         87,000
Benefit/(Provision) for income taxes                      38,000     (1,043,000)       (24,000)       (35,000)
                                                      ----------   ------------     ----------     ----------
Net (loss) income                                      $ (74,000)  $  3,044,000     $   35,000     $   52,000
                                                      ----------   ------------     ----------     ----------
                                                      ----------   ------------     ----------     ----------
Basic net (loss) income per share                      $   (0.05)   $     18.48     $     0.77     $     1.12
                                                      ----------   ------------     ----------     ----------
                                                      ----------   ------------     ----------     ----------
Diluted net (loss) income per share                    $   (0.05)   $     18.48     $     0.72     $     1.06
                                                      ----------   ------------     ----------     ----------
                                                      ----------   ------------     ----------     ----------
</TABLE>

See accompanying notes to consolidated financial statements.


                                    F-5

<PAGE>

                            MISSION WEST PROPERTIES

          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                --------------


<TABLE>
<CAPTION>

                                                                  COMMON      ACCUMULATED
                                                                   STOCK        DEFICIT          TOTAL
                                                                -----------   -----------     -----------
<S>                                                            <C>           <C>             <C>
           Balance at November 30, 1994                         $20,081,000   $(5,361,000)    $14,720,000
           Redemption and retirement of 3,333 shares               (635,000)            -        (635,000)
           Net income for 1995                                            -        52,000          52,000
                                                                -----------   -----------     -----------
           Balance at November 30, 1995                          19,446,000    (5,309,000)     14,137,000
           Issuance of Common Stock upon option exercise             10,000             -          10,000
           Net income for 1996                                            -        35,000          35,000
                                                                -----------   -----------     -----------
           Balance at November 30, 1996                          19,456,000    (5,274,000)     14,182,000
           Issuance of Common Stock upon private placement after
            reverse stock split                                   5,625,000             -       5,625,000
           Issuance of Common Stock upon option exercise            726,000             -         726,000
           Issuance of Common Stock upon private placement          900,000             -         900,000
           Amounts receivable on private placement                 (334,000)            -        (334,000)
           Dividends paid                                                 -   (18,858,000)    (18,858,000)
           Net income for 1997                                            -     3,044,000       3,044,000
                                                                -----------   -----------     -----------
           Balance at November 30, 1997                                       (21,088,000)      5,285,000
           Net (Loss) for December 1997                                   -       (74,000)        (74,000)
                                                                -----------   -----------     -----------
           Balance at December 31, 1997                         $26,373,000  $(21,162,000)     $5,211,000
                                                                -----------   -----------     -----------
                                                                -----------   -----------     -----------



</TABLE>

See accompanying notes to consolidated financial statements.


                                    F-6
<PAGE>

                            MISSION WEST PROPERTIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 ------------

<TABLE>
<CAPTION>
                                                                      ONE
                                                                      MONTH
                                                                      ENDED                 YEARS ENDED NOVEMBER 30,
                                                                   DECEMBER 31,   -------------------------------------------
                                                                      1997            1997            1996           1995
                                                                   ------------   ------------     ----------     -----------
<S>                                                               <C>           <C>               <C>            <C>
Cash flows from operating activities:
 Net (loss) income                                                 $  (74,000)   $ 3,082,000     $   35,000      $  52,000
 Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
  Depreciation                                                               -        246,000      1,379,000      1,360,000
  Deferred income taxes                                                      -              -         35,000        102,000
  Gain on sale of real estate                                                -      4,736,000              -              -
  Changes in assets and liabilities:
  Decrease (increase) in net real estate investments                         -              -        (57,000)        28,000
  Decrease (increase) in other assets                                        -      1,295,000        (94,000)      (549,000)
  Increase (decrease) in accounts payable and accrued expenses          28,000       (849,000)       (77,000)      (395,000)
                                                                     ---------     ----------    -----------     ----------
  Net cash (used in) provided by operating activities                  (46,000)     8,510,000      1,221,000        598,000
                                                                     ---------     ----------    -----------     ----------
Cash flows from investing activities:
 Proceeds from sale of real estate                                           -     36,688,000              -              -
 Net maturities of short-term investments                                    -              -      2,528,000        191,000
                                                                     ---------     ----------    -----------     ----------
                                                                             -     36,688,000      2,528,000        191,000
                                                                     ---------     ----------    -----------     ----------
Cash flows from financing activities:
           Repayments on notes payable                                       -    (30,753,000)    (1,214,000)    (2,415,000)
 Proceeds from issuance of Common Stock upon option exercise                 -        726,000         10,000              -
 Proceeds from issuance of Common Stock upon private placement         150,000      6,041,000              -              -
 Payment of dividends                                                        -    (18,858,000)             -              -
                                                                     ---------     ----------    -----------     ----------
  Net cash provided by (used for) financing activities                 150,000    (42,844,000)    (1,204,000)    (2,415,000)
                                                                     ---------     ----------    -----------     ----------
  Net increase (decrease) in cash and cash equivalents                 104,000      2,354,000      2,545,000     (1,626,000)

Cash and cash equivalents at beginning of period                     5,465,000      3,111,000        566,000      2,192,000
                                                                     ---------     ----------    -----------     ----------
Cash and cash equivalents at end of period                         $ 5,569,000   $  5,465,000   $  3,111,000     $  566,000
                                                                     ---------     ----------    -----------     ----------
                                                                     ---------     ----------    -----------     ----------
</TABLE>

See accompanying notes to consolidated financial statements.


                                    F-7

<PAGE>

                             MISSION WEST PROPERTIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 --------------

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     GENERAL POLICIES:

     Mission West Properties (the Company) was engaged in developing,
     owning, operating, and selling income-producing real estate located
     principally in southern California.  As discussed in Note 2 SALE OF REAL
     ESTATE INVESTMENTS below, the Company entered into an agreement to sell
     its entire real estate portfolio and a majority of that sale was
     completed in January 1997, the remainder being completed in May 1997.

     The accompanying financial statements consolidate the accounts of
     the Company and its wholly owned subsidiaries.  All transactions between
     the Company and its subsidiaries have been eliminated.

     The preparation of financial statements in conformity with
     generally accepted accounting principles requires management to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities, the disclosure of contingent assets and liabilities at
     financial statement date, and the reported amounts of revenues and
     expenses during the reporting period.  Actual results could differ from
     those estimates.

     REAL ESTATE:

     The Company's real estate investments are carried at cost; an
     allowance for estimated losses is provided for other than temporary
     declines in value based on the Directors' and management's periodic
     evaluation of those investments.  This evaluation considers recent
     appraised values, market conditions, and the Company's investment
     strategies.

     Revenues from sales of real estate are reported at the time of sale
     or when certain financial criteria are met.

     DEPRECIATION:

     Depreciation on rental properties is computed using the straight-
     line method over the estimated useful lives of the assets, generally ten
     to 30 years.

     INCOME TAXES:

     Income taxes are accounted for in accordance with SFAS No. 109,
     ACCOUNTING FOR INCOME TAXES.  Deferred income taxes are provided for all
     temporary differences and operating loss and tax credit carryforwards.
     Deferred tax assets are reduced by a valuation allowance when, in the
     opinion of management, it is more likely than not that some portion or
     all of the deferred tax assets will not be realized.  Deferred tax
     assets and liabilities are adjusted for the effects of changes in tax
     laws and rates on the date of enactment.


                                 Continued

                                    F-8

<PAGE>

                             MISSION WEST PROPERTIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 --------------

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL POLICIES, continued:

     CASH AND CASH EQUIVALENTS:

     Cash and cash equivalents includes cash on hand, money market
     funds, U.S. Treasury Bills, and certificates of deposit with an original
     maturity of 90 days or less.

     FAIR VALUE OF FINANCIAL INSTRUMENTS:

     The carrying amounts of the Company's financial instruments as
     presented are reasonable estimates of those instruments' fair values.

     CONCENTRATIONS OF CREDIT RISK:

     Credit risk is primarily concentrated in cash equivalents, and rent
     receivables.  Cash in excess of operating requirements is invested in
     U.S. Treasury securities or with federally insured institutions in
     short-term certificates of deposit.

     FISCAL YEAR CHANGE:

     In November 1997, the Board of Directors approved a change in the
     Company's fiscal year end from November 30 to December 31, effective the
     calendar year beginning January 1, 1997.  As the transition period is
     less than one month no separate transition period statements have been
     prepared.  The results for the year ended November 30, 1997 and the one
     month ended December 31, 1997 are presented.

     REVERSE STOCK SPLIT:

     All share and per share amounts have been adjusted to reflect the 1
     for 30 reverse stock split (Note 2).

     ADOPTION OF STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS:

     In February 1997, the Financial Accounting Standards Board (FASB)
     issued Statement of Financial Accounting Standards No. 128, EARNINGS PER
     SHARE (SFAS 128).  SFAS 128 establishes standards for computing and
     presenting earnings per share (EPS).  It amends the standards in
     Accounting Principles Board Opinion (APB) No. 15 (Earnings per Share)
     for computing EPS by replacing primary earnings per share with basic
     earnings per share and by altering the calculation of diluted EPS, which
     replaces fully diluted EPS.  Basic EPS excludes potential dilution and
     is calculated by dividing income available to common stockholders by the
     weighted average number of outstanding common shares.


                                 Continued

                                    F-9

<PAGE>

                             MISSION WEST PROPERTIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 --------------

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL POLICIES, continued:

     ADOPTION OF STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS, continued:

     Basic and diluted EPS figures are required on the face of the
     income statement for all entities with complex capital structures.  In
     addition, required disclosures include a reconciliation of the numerator
     and denominator used to calculate basic EPS to the numerator and
     denominator used to calculate diluted EPS.

     SFAS 128 is effective for fiscal years ending after December 15,
     1997, with earlier adoption not permitted.  The Company has adopted
     SFAS 128 effective for its fiscal year ending December 31, 1997.

     The shares for 1996 and 1995 include the weighted average shares
     outstanding for the year as well as the dilutive effect of Common Stock
     equivalents, which consist of shares subject to stock options.  The
     computation for weighted average shares is detailed below:

<TABLE>
<CAPTION>

                                           MONTH
                                           ENDED               YEARS ENDED NOVEMBER 30,
                                        DECEMBER 31,       ----------------------------------
                                            1997            1997          1996          1995
                                        ------------       -------      ---------      ------
<S>                                        <C>              <C>          <C>           <C>
     Weighted average shares
       outstanding                         1,501,104        164,692         45,684     46,437
     Incremental shares from
       assumed option exercise                     -              -          2,901      2,468
                                           ---------        -------        -------     ------
     Adjusted weighted average shares      1,501,104        164,692         48,585     48,905
                                           ---------        -------        -------     ------
                                           ---------        -------        -------     ------
</TABLE>

     In June 1997, the FASB issued Statement of Financial Accounting
     Standards No. 130, REPORTING COMPREHENSIVE INCOME (SFAS 130), which is
     effective for fiscal years beginning after December 15, 1997.  SFAS 130
     requires that certain items that qualify as part of comprehensive income
     be presented in the financial statements.  The Company does not expect
     the impact on its financial statements, if any, to be material.


                                 Continued

                                    F-10

<PAGE>

                             MISSION WEST PROPERTIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 --------------

2.   SALE OF REAL ESTATE INVESTMENTS AND DISCONTINUED OPERATIONS:

     During July 1996 the Company entered into an agreement to sell all its real
     estate assets; this agreement was subsequently terminated and replaced, and
     the subsequent agreement was also terminated and replaced.  On December 6,
     1996, the Company entered into an agreement to sell all its real estate
     assets to Spieker Properties, L.P. (Spieker), a California limited
     partnership, for $50,500,000 in cash, subject to certain conditions
     customary in a transaction of this type. A special shareholder meeting was
     held December 16, 1996, at which time the Company's shareholders approved
     the sale of the real estate assets to Spieker.

     A majority of the sale transaction was completed January 22, 1997, at which
     time nine of the Company's 11 real estate properties were sold.  The nine
     properties sold consisted of occupied office, light industrial, and R&D
     buildings in San Diego and Riverside counties, California, and occupied
     industrial buildings and vacant land in Chandler, Arizona.  The total
     building space sold approximated 685,000 square feet.  The two remaining
     properties consisted of leaseholds, together with hangar and office
     buildings thereon, comprising approximately 25 percent of the land at
     Palomar-McClellan Airport in San Diego county, California and the sale was
     completed May 6, 1997.

     Upon completion of sale of the nine properties, the Company received
     $47,500,000 in cash, from which it repaid all debt encumbering the
     properties and paid a majority of the related transaction and closing
     costs, including $3,000,000 in "break-up" fees from the terminated sales
     transactions.  In accordance with the sales agreement, $300,000 was
     withheld from the proceeds to allow for satisfaction of any post-closing
     breaches of representations and warranties made by the Seller and
     released to the Company after 90 days.  Also in accordance with the
     sales agreement, upon completion of sale of the two leasehold
     properties, the Company received $3,000,000 in cash, from which it
     paid related transaction costs.

     The sale of the real estate results in a substantial gain for the Company.
     The significance of the sale of assets and the subsequent payment of
     dividends to shareholders is that only nominal assets remain in the
     Company and, therefore, the resulting corporate entity has virtually no
     revenue-generating or cash-generating capabilities.

     On February 4, 1997, the Company declared a special dividend of $270.00 per
     share which was paid on February 27, 1997 to all shareholders of record
     as of February 19, 1997.  This dividend represented the currently
     available portion of the proceeds from the sale of the real estate
     assets.

     On May 27, 1997, the Company entered into a Stock Purchase Agreement (the
     Agreement) with a group of private investors led by Berg & Berg
     Enterprises, Inc. (collectively, the Purchaser or the Berg Group) of
     Cupertino, California, pursuant to which the Company would sell 200,000
     shares of newly issued Common Stock to the Purchaser for a purchase
     price of $900,000 in cash, or $4.50 per share.  A special meeting of
     shareholders was held August 5, 1997, at which the shareholders approved
     the stock sale transaction.


                                 Continued

                                    F-11
<PAGE>

                             MISSION WEST PROPERTIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 --------------

2.   SALE OF REAL ESTATE INVESTMENTS AND DISCONTINUED OPERATIONS, continued:

     This sale of Common Stock was completed September 2, 1997 (the Initial
     Investment), at which time all officers and Directors resigned and the
     Berg Group became the controlling shareholder with an 80-percent
     ownership position in the Company.  The Berg Group comprises individuals
     and privately held firms that have designed, developed, and leased
     office, R&D, and manufacturing buildings and complexes occupied by
     Silicon Valley technology companies since 1969.  Currently, the Berg
     Group owns and operates more than 3,500,000 square feet of property.
     Per terms of the Agreement, the Company paid a cash distribution of
     $99.00 per share to shareholders on October 21, 1997 for a total
     distribution of $5,059,000.  The record date for this distribution was
     August 28, 1997.

     Subsequent to the Initial Investment, a series of transactions were
     approved by the Company's shareholders that included the 1 for 30 reverse
     stock split, a private placement of 1,250,000 shares of the Company's
     Common Stock at $4.50 per share and the adoption of the Company's 1997
     Stock Option Plan.


                                 Continued

                                    F-12

<PAGE>

3.   NOTES PAYABLE:

                             MISSION WEST PROPERTIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 --------------

     Notes payable comprise the following:

<TABLE>
<CAPTION>
                                                            DECEMBER 31,          NOVEMBER 30,
                                                               1997                  1996
                                                            ------------          ------------
<S>                                                         <C>                   <C>
   Collateralized notes payable to banks,
   due 1998 through 2001, interest rates
   ranging from 9% (fixed) to 9.75% (prime
   plus 1.5%), principal and interest due
   in monthly installments of $290,000, balance
   of principal due at maturity                                  -                 $29,365,000

   Collateralized note payable to insurance company,
   due 1997, interest rate of 10%, principal and
   interest due in monthly installments of $21,000               -                   1,388,000
                                                            ------------          ------------
                                                                 -                 $30,753,000
                                                            ------------          ------------
                                                            ------------          ------------
</TABLE>


                                 Continued

                                    F-13

<PAGE>

                             MISSION WEST PROPERTIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 --------------

3.   NOTES PAYABLE, continued:

     All notes payable were repaid in full upon the sale of a majority of the
     Company's real estate assets in January 1997 (see Note 2  SALE OF REAL
     ESTATE INVESTMENTS above).

4.   INCOME TAXES:

     Deferred tax assets (liabilities) comprise the following:

<TABLE>
<CAPTION>
                                             DECEMBER 31,     NOVEMBER 30,
                                                1997              1996
                                             ------------     ------------
<S>                                          <C>              <C>
   Basis of depreciable assets                 $   -          $ 497,000
   Other                                           -            283,000
                                             ------------     ------------
   Deferred tax assets                             -            780,000
                                             ------------     ------------
   Deferred rental revenue                         -            (39,000)
   Other                                           -            (86,000)
                                             ------------     ------------
   Deferred tax liabilities                        -           (125,000)
                                             ------------     ------------
                                                   -            655,000
   Deferred tax asset valuation allowance          -           (188,000)
                                             ------------     ------------
                                                $  -           $467,000
                                             ------------     ------------
                                             ------------     ------------
</TABLE>

     The provision for (benefit from) income taxes reconciles to the statutory
     rate as follows:

<TABLE>
<CAPTION>
                                                                                  NOVEMBER 30,
                                                              DECEMBER 31,   -----------------------
                                                                 1997          1996           1995
                                                              ------------   --------       --------
<S>                                                           <C>            <C>            <C>
    Statutory federal tax rate                                   34.0%          34.0%          34.0%
    Increase (decrease) in taxes resulting from:
    Change in deferred tax asset valuation allowance              1.6          (64.2)          (7.1)


    Alternative minimum taxes                                     -             60.9            -
    State income tax, net of federal tax benefit                 (1.4)           6.1           10.6
    Reconciliation of previous tax estimates                     (8.9)           -              -
    Other                                                         -              3.9            2.7
                                                                 -----          -----          -----
                                                                 25.3%          40.7%          40.2%
                                                                 -----          -----          -----
                                                                 -----          -----          -----
</TABLE>


                                 Continued

                                    F-14

<PAGE>

                             MISSION WEST PROPERTIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 --------------

4.   INCOME TAXES, continued:

     The provision for (benefit from) income taxes comprises the following:

<TABLE>
<CAPTION>
                                                        NOVEMBER 30,
                                 DECEMBER 31,    -----------------------
                                    1997            1996          1995
                                 -----------     ---------      --------
<S>                              <C>             <C>            <C>
Current:
  Federal                        $  453,000      $(21,000)      $(81,000)
  State                              85,000        10,000         14,000
                                 -----------     ---------      --------
                                    538,000       (11,000)       (67,000)
                                 -----------     ---------      --------
Deferred:
  Federal                           467,000         35,000       102,000
  State                                   -              -             -
                                 -----------     ---------      --------
                                    467,000         35,000       102,000
                                 ----------       --------      --------
                                 $1,005,000       $ 24,000      $ 35,000
                                 ----------       --------      --------
                                 ----------       --------      --------
</TABLE>

     As of December 31, 1997, the Company had no deferred tax asset or
     liability. The provision for (benefit from) income taxes reflects
     temporary differences in the recognition of revenue and expense for tax
     and financial reporting purposes. These temporary differences primarily
     arise from the recognition of rental revenue from real estate,
     recognition of accrued expenses, capitalized interest, and a different
     depreciable basis for tax than for financial reporting purposes. The
     Company carried back federal net operating losses to prior years for
     refunds and carried forward state net operating losses to be applied
     against future operating income, if any.

     Due to the uncertainty of realizing the benefit of certain deferred tax
     assets, including state loss carryforwards, a valuation allowance was
     established in fiscal year 1994.  The net decrease in the valuation
     allowance during fiscal year 1997 was due to changes in the state loss
     carryforward amount.

5.   SUPPLEMENTAL CASH FLOW INFORMATION:

   Cash paid during the fiscal year for interest was $410,000, $3,106,000 and
   $3,566,000 in 1997, 1996 and 1995, respectively.  The Company received an
   income tax refund, net of payments, of


                                 Continued

                                    F-15

<PAGE>

                             MISSION WEST PROPERTIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 --------------

5.   SUPPLEMENTAL CASH FLOW INFORMATION, continued:

     $17,000 in fiscal year 1996 and paid income taxes, net of refunds, of
     $546,000 and $258,000 in fiscal years 1997 and 1995, respectively.

     During the first quarter of fiscal year 1995, in a noncash transaction, the
     Company reacquired and retired 3,333 shares of its Common Stock.  This
     transaction was effected by a transfer of 3,333 shares of the Company's
     stock from its former majority shareholder to an affiliated tenant, at
     which point the shareholder's investment in the Company decreased to 49
     percent, and an exchange of the 3,333 shares from the affiliated tenant
     to the Company for real estate assets, consisting of certain tenant
     improvements, and a modification of lease terms, consisting of an
     extension of maturity and a reduction in rent.

6.   STOCK OPTIONS AND STOCK PURCHASE PLAN:

     Prior to sale of real estate, the Company had a Director Stock Option Plan
     and an Incentive Stock Option Plan under which non-salaried directors
     and officers, respectively, could purchase shares of the Company's stock
     at a minimum option price based on market value at the date of grant.
     Options granted under the plans became exercisable ratably over five
     years and expired after a period not to exceed ten years.   At November
     30, 1996, 5,000 and 6,667 shares were authorized under each plan, of
     which 4,387 and 5,453 were available for grant and 880 and 1,636 were
     exercisable under the Director Stock Option Plan and the Incentive Stock
     Option Plan, respectively.  Upon the sale of the majority of the
     Company's real estate assets (see Note 2) the provisions of the Plan
     accelerated.  Such unvested shares at the sale of real estate totaled
     451.  All the options described above were exercised or cancelled in
     February 1997.

     Activity in these plans comprises the following:

<TABLE>
<CAPTION>

                                                                NOVEMBER 30,
                                             DECEMBER 31,    -------------------
                                             1997            1996           1995
                                             -----           -----          -----
<S>                                          <C>             <C>            <C>
   Beginning share balance                    2,967          3,333          3,547
   Exercised (Between $90 and $292.5
   per share)                                (2,747)           (80)             -
   Canceled ($274 per share)                   (220)          (286)          (214)
                                             ------          -----          -----
   Ending share balance                           -          2,967          3,333
                                             ------          -----          -----
                                             ------          -----          -----
</TABLE>

     Effective July 1, 1994, the Company granted nonqualified options to
     purchase 4,167 shares of its Common stock to a key executive.  The exercise
     price of the options is $90.00 per share and the options expire ten years
     from the date of grant.  Options to purchase 2,433 shares of the grant


                                 Continued

                                    F-16

<PAGE>

                             MISSION WEST PROPERTIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 --------------

6.   STOCK OPTIONS AND STOCK PURCHASE PLAN, continued:

     vested immediately; the remainder of the options become exercisable if
     specific financial milestones occur.  Upon the sale of the real estate
     assets 2,433 shares were exercised at the $90.00 price.  The remaining
     options were canceled.

     The Company had a Stock Purchase Plan for which all directors and employees
     are eligible.  Under terms of the plan, each eligible participant could
     contribute up to $3,000 per month, to be invested in shares of the
     Company's stock purchased on the open market.  The Company contributed
     $0.50 to the plan for each $1.00 contributed by a participant.  The
     total amounts expended by the Company for such contributions during the
     years ended November 30, 1997, 1996 and 1995 were $3,000, $37,000 and
     $31,000, respectively.

     No options were granted under the aforementioned plans subsequent to 1994.

     The Company's 1997 Stock Option Plan (the Option Plan) was approved by the
     Company's shareholders on November 10, 1997.  The Option Plan was
     adopted so that the Company may attract and retain the high quality
     employees, consultants and directors necessary to build the Company's
     infrastructure and to provide ongoing incentives to the Company's
     employees in the form of options to purchase the Company's Common Stock
     by enabling them to participate in the Company's success.

     The Option Plan provides for the granting to employees (including officers
     and directors who are employees) of "incentive stock options" within the
     meaning of Section 422 of the Code, and for the granting of
     non-statutory options to employees, consultants and directors, including
     directors who are neither employees of, nor consultants to, the Company
     ("Non-Employee Directors").  Options to purchase a maximum of 5,500,000
     shares of Common Stock may be granted under the Option Plan, subject to
     equitable adjustments to reflect certain corporate events.

     Each option granted under the Option Plan will be evidenced by a written
     stock option agreement between the Company and the optionee and
     unless otherwise provided by the Compensation Committee generally becomes
     exercisable cumulatively as to 20% of the underlying shares on
     each anniversary of the date of grant for so long as the optionee
     is employed by or providing service to the Company.

     The price per share exercise price of options granted under the Option Plan
     may not be less than 100% of the fair market value on the date of grant,
     except in certain specific circumstances, in which case the exercise
     price may not be less than 110%.  Each option may be exercised only to
     the extent that it is vested.  Options must generally be exercised
     during the optionee's employment or within 30 days following the
     optionee's termination of status as an employee, consultant or director,
     unless termination is due to the death or disability of an optionee.  If
     termination of status is due to death or disability of the optionee, an
     option may be exercised within no more than six months of following the
     termination.


                                 Continued

                                    F-17

<PAGE>

                             MISSION WEST PROPERTIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 --------------

6.   STOCK OPTIONS AND STOCK PURCHASE PLAN, continued:

     Each member of the Board of Directors who is not an employee of the Company
     or any of its subsidiaries or affiliates (a Non-Employee Director) and
     who becomes a member of the Board of Directors after November 10, 1997,
     the date on which the 1997 Stock Option Plan was approved by the
     shareholders of the Company, will automatically receive a grant of an
     option to purchase 50,000 shares of Common Stock at an exercise price
     equal to 100% of the fair market value of the Common Stock at the date
     of grant of such option upon joining the Board of Directors.  Such
     options will become exercisable cumulatively with respect to 1/48th of
     the underlying shares on the first day of each month following the date
     of grant.  Generally, the options must be exercised while the optionee
     is a director of the Company.

     No options were issued under this plan in 1997.



                                    F-18