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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
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                                    FORM 10-K

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                    For the fiscal year ended March 31, 1998

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from ______ to ______


                         Commission file number 0-12734

                        STANFORD TELECOMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)

         Delaware                                                 94-2207636
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

 1221 Crossman Avenue                                               94089
 Sunnyvale, California                                            (Zip Code)
(Address of principal
 executive offices)

               Registrant's telephone number, including area code:
                                 (408) 745-0818

           Securities registered pursuant to section 12(b) of the Act:
                                      None

           Securities registered pursuant to section 12(g) of the Act:
                                  Common Stock
                          Common Stock Purchase Rights
                                (Title of Class)

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

                                    Yes _X_  No ___


<PAGE>


[X]      Indicate by check mark if disclosure of delinquent  filers  pursuant to
         Item 405 of  Regulation  S-K 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 amendments to this Form 10-K.

As of May  29,  1998,  the  aggregate  market  value  of  voting  stock  held by
non-affiliates of the registrant,  based on the closing sale price of such stock
on the Nasdaq National Market, was $148,382,115.  Shares of Common Stock held by
each officer, director and ten percent stockholder of the registrant, except for
Kopp Investment  Advisors,  Inc., 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.

The number of shares of the  registrant's  Common Stock  outstanding  on May 29,
1998 was 12,975,588.

Documents Incorporated by Reference

Portions of the  registrant's  Annual Report to Stockholders for the fiscal year
ended March 31, 1998 (the "Annual Report to Stockholders"),  are incorporated by
reference in Parts II and IV of this Form 10-K. Portions of the definitive proxy
statement  for the Annual  Meeting of  Stockholders  to be held on June 24, 1998
(the "Proxy Statement"),  are incorporated by reference in Part III of this Form
10-K.



<PAGE>


                                     PART I

ITEM 1.  BUSINESS

         Stanford Telecommunications, Inc. ("Stanford Telecom" or the "Company")
designs,  manufactures, and markets advanced digital communications products and
systems to  establish  or enhance  communications  via  satellites,  terrestrial
wireless and cable. The Company's  technical  strengths include:  system design,
communication waveforms,  modulation and demodulation  techniques,  ASIC design,
Radio  Frequency  (RF)  antennas  and  downconverters,  software  and  firmware,
Asynchronous  Transfer Mode (ATM) design and advanced  manufacturing  techniques
and processes.

         The Company was  incorporated in California in 1973 and  reincorporated
in  Delaware in 1988.  The  Company's  fiscal  year is composed of four  13-week
quarters,  each of  which  ends on the  Thursday  closest  to the  corresponding
calendar quarter end. Fiscal year 1998 ended on March 26, 1998.


BASE BUSINESS DISCUSSION

     The Company's principal base business areas and products include:

     Advanced Communications for Government Agencies and Commercial Applications
     Satellite Earth Terminals
     Air Traffic Control Systems Modernization
     Global  Position  Satellite (GPS) Design and Development
     Commercial Telecommunications Chip and Board Level Products
     Commercial Electronic Contract Manufacturing


Advanced Communications for Government Agencies and Commercial Applications

         DSCS  Operational  Control  System  ("DOCS").  The  Company  developed,
installed and now assists in the operation of an extensive  network of computers
and software  which performs  control and  monitoring  functions for the Defense
Satellite  Communication System ("DSCS").  Control of the DSCS is complex due to
the different  types of multiple  access  techniques  used and the need to react
quickly to communications  requirements and to hostile jamming actions. The task
of  optimizing  and  controlling  the many  thousands of  parameters in the DSCS
network  is  a  sophisticated  computational  problem  requiring  both  advanced
computers and extensive information processing. The DOCS is comprised of network
management and control  subsystems  that are used as tools for managing the DSCS
ground station and space communication payload assets. The DSCS must be operated
and maintained at peak  efficiency and maximum  availability  as it is often the
only means of communication with deployed forces. The DOCS3 contract was awarded
to Stanford  Telecom in December 1996 by the U.S. Army Space  Command.  With the
award of this contract, Stanford Telecom continues to provide on-site operations
and  maintenance  support,  software  support,   integrated  logistics  support,
training,  and depot support  services at twelve  worldwide  sites. The contract
consists of a one-year base and four one-year  options,  with a total base value
if all options are  exercised,  of  approximately  $43.9  million.  Option I was
exercised  during  fiscal year 1998.  Stanford  Telecom  has been the  incumbent
contractor  for these  services  since 1981.  In addition to these basic support
tasks,  the contract  includes  provisions  which would allow the  Government to
increase the existing  scope of the  contract by adding  tasks  associated  with
system  enhancements and system  modifications,  which may be required to extend
the system's life expectancy.

                                      -1-

<PAGE>


         Universal  Modem.  Stanford  Telecom  was  awarded a contract as a team
member on the Rockwell Universal Modem System (UMS) Terminal Production Program.
The UMS will provide Army, Air Force, and Joint  Communications  Support Element
users  with  low  data  rate  and  medium  data  rate  satellite  communications
capability using Super High Frequency (SHF),  Defense  Satellite  Communications
System (DSCS),  NATO, and commercial  satellites to include C and Ku bands.  The
initial contract,  priced at $5.8 million is for the first article qualification
testing and delivery of ten System Planning Computers for field operational test
and  evaluation.  The  UMS  operates  in  the  SHF  band  and  will  provide  an
interoperable digital voice and data satellite  communications  capability under
jamming and scintillation for ground (fixed and  transportable),  airborne,  and
shipboard users.  This system will enable satellite  communications  between the
United States,  United Kingdom,  France,  and other NATO forces.  Deliveries are
expected to commence during fiscal year 2000.

         Replacement BATSON (RBATSON).  During fiscal year 1997, the Company was
awarded the RBATSON  contract by the U.S. Army which has a total value including
options of $14.0  million.  The RBATSON  provides  protection  for the U.S. Army
critical satellite  commanding and data  transmission.  The RBATSON system which
consists  of a Key  Generator/Data  Processing  Assembly  chassis,  a  Frequency
Generator/Radio  Frequency  Transmission chassis, and Maintenance Test Equipment
and provides the  capability  for the Satellite  Configuration  Control  Element
(SCCE)  of the  DOCS to  interface  with  the DSCS  satellites.  Deliveries  are
expected to commence in fiscal 1999.

         Replacement  Satellite  Configuration  Control Element. The Company was
awarded a  contract  in  fiscal  year 1996  from the U.S.  Army to  provide  the
configuration control element in support of network management for the DSCS. The
total value of this contract, including options, is approximately $21.7 million.
Under this  contract,  the  Company  will  provide  the  software  and  hardware
necessary to fully  configure,  test,  and deliver this element of the satellite
system.  The base  contract is  expected to be  completed  during  fiscal  1999.
Production  options are expected to extend the contract's  period of performance
through the year 2001  although  there can be no assurance  that the  Government
will exercise options to procure additional production hardware.

         Single Channel Transponder Injection Subsystem (SCTIS). The Company has
employed  its  spread  spectrum   technology  in  the  design,   production  and
installation of high performance  anti-jam uplink  transmission  systems for the
U.S. Air Force.  These systems protect emergency messages being sent through the
DSCS against jamming and interception.  Since the program commenced in 1978, the
Company has  delivered  twelve  SCTIS  systems  plus spare parts to the U.S. Air
Force.  The Company  has  received  numerous  contract  modifications  requiring
delivery of system enhancements, spares and additional support equipment. During
fiscal  year 1998,  the  Company  completed  deliveries  on the twelve  upgraded
systems and an Enhanced Link Simulator. Delivery of the SCTIS upgraded spares is
expected to be completed during fiscal 1999.

         Tracking  and  Data  Relay  Satellite  Systems  (TDRSS).  The  National
Aeronautics and Space  Administration  (NASA) Tracking and Data Relay Satellites
enable NASA to maintain global continuous  communications with the space shuttle
and NASA satellites,  even when they are not in direct line-of-sight to tracking
stations in the continental  United States. The Company has been supporting NASA
on the TDRSS  Program  since  1977.  During  fiscal  year 1996,  the Company was
awarded a  follow-on  contract  consisting  of a one year base plus two one year
options, with a total value including options of $21 million. During fiscal year
1998,  the  Government  exercised an option which  extends the contract  through
February  1999. The Company has several  important  roles in this billion dollar
satellite  system,  including  study and  system  engineering  support,  a major
long-term  subcontract  to support TDRSS  network  control,  prime  contracts to
develop and assess  space/ground

                                      -2-

<PAGE>


segment  architectures for upgrading the TDRSS system, and assisting NASA in the
deployment of a new TDRSS ground terminal in Guam. The Company is in the process
of developing a variety of advanced products for communications via TDRSS. These
advanced products include:  Space Station Early Communication  System;  Software
Programmable  Advanced  Receiver and Third Generation  Beamforming  System.  The
Company believes there may be market  opportunities  for these products or their
derivatives;  however,  revenues  from these  products have not been material to
date and  there  can be no  assurance  that  these  products  will  gain  market
acceptance.

         WorldSpace. The WorldSpace network, is a digital, multi-media satellite
radio  broadcasting  service to the emerging and  under-serviced  regions of the
world. By the end of the decade, WorldSpace is expected to have three satellites
in orbit. The first, AfriStar is scheduled to be launched in late 1998, followed
by AsiaStar and  AmeriStar.  Each satellite will deliver 80+ channels of crystal
clear  audio  programming  directly to portable  receivers.  This unique  global
service  will  transmit  quality   information,   education  and   entertainment
programming  to a service area that includes 4.6 billion  people.  During fiscal
year 1998,  the Company  signed a contract to develop the  business  and network
management software,  the WorldSpace Business System, which is the foundation of
the business operations for the WorldSpace network.  Recently the Company signed
contracts  with  WorldSpace  to  provide   development  and  system  integration
services, including incorporation of terrestrial repeaters, which are a critical
component of the WorldSpace digital audio and multimedia  satellite network. The
total value of the current contracts is approximately $10.9 million.


Satellite Earth Terminals

         Global Broadcast Services (GBS) Satellite Terminal.  During fiscal year
1998,  the Company was awarded a contract  with Hughes  Information  Technology,
Inc.,  valued at $8.4 million,  with options for an  additional  $9.6 million to
support the Government's GBS Program. The GBS system operates at Ka and Ku bands
with a  throughput  of 24 Mbps and  provides  the  means to  broadcast  military
photographs, video from unmanned aerial vehicles, and programming from the Armed
Forces Radio and  Television  Network to our military  forces  overseas.  As the
provider of the GBS uplink  ground  stations,  the Company  will  deliver  three
Primary  Injection  Point (PIP)  terminals.  Contract  options provide for up to
seven dual-band (Ka and Ku)  Transportable  Theater  Injection (TTI)  terminals,
spares,  and  upgrades  to the  existing  Joint-In-Theater  Injection  terminal;
however,  there can be no  assurance  that the  Government  will fund  Hughes to
exercise the options.

         Digital Satellite  Terminals.  During fiscal year 1998, the Company was
awarded  a task  order  contract  to  provide  a  family  of  Defense  Satellite
Communication  System  (DSCS)  and  INTELSAT-type   approved  Digital  Satellite
Terminal earth  stations.  The earth stations will range in size from 1.8 meters
to 7.6 meters and will provide communications over a variety of commercial C and
Ku band satellite networks as well as the DSCS network. The contract will expand
the Company's current offering of complete earth stations,  ranging in size from
1.0 to 11 meters in S, C, X, Ku, Ka, and  military Ka  (MILSTAR)  bands.  During
fiscal year 1998, the Company  received task orders valued at $7.4 million.  The
contract  contains  options  which  could  increase  the  value to $25  million,
however,  there can be no assurance  that the  Government  will  exercise  these
options.

         Milstar  Satellite   Communications  Terminal.  The  Company  has  been
involved since 1981 in development of the U.S.  Government's  Milstar  satellite
communications  program,  designed to support stationary and mobile users in the
joint  military  services  in the 1990's and beyond.  In addition to  performing
system  engineering  tasks, the Company has developed  special test equipment in
support of the Milstar program, including a subcontract for the Milstar EHF Test
System to test the Milstar satellites in orbit. Presently,  the Company is under
contract to upgrade its Milstar  Test

                                      -3-

<PAGE>


Terminals to support the Medium Data Rate communication capabilities being added
to the Milstar Block II satellites.  The Company was selected by Lockheed Martin
Missiles & Space (Sunnyvale,  CA), prime contractor for the Milstar  satellites,
to provide  three of these  transportable  Milstar  terminals for use on special
on-orbit satellite test operations. The Company plans to deliver these terminals
during fiscal year 1999.


Air Traffic Control System Modernization

         Automation  and  Communication  System  Engineering.  Since  1984,  the
Company has been  supporting a FAA program to upgrade and modernize the nation's
air traffic  control (ATC) and air transport  navigation  system.  The Company's
activities  include ATC automation and  communications  system  engineering  and
support to FAA special projects activities such as the relocation of the Chicago
O'Hare  ATC  Tower  Complex.  The  Company  is  also  supporting  the FAA in its
acquisition of the new terminal area ATC automation system. The above activities
are being performed under two separate  Department of Transportation  contracts:
one to the FAA for  support  in the  communications,  navigation,  surveillance,
automation  and weather  areas which was awarded  during fiscal year 1998 with a
potential value of $10 million including options,  and one to the Volpe National
Transportation System for transportation, system engineering and R&D support.

         Satellite Based Air Traffic  Control System.  The Company was awarded a
contract during fiscal year 1997 to support the FAA's implementation of a Global
Positioning  System (GPS) Wide Area  Augmentation  System  (WAAS).  The contract
consists  of a  one-year  base  and two  six-month  options  with a value  after
exercise of all options of $23 million.  Through  fiscal year 1998,  the FAA had
funded  tasks  totaling   approximately  $1.5  million.  The  Company  has  been
supporting  the WAAS  Program  since 1990.  The FAA's WAAS  Program is a central
element of the FAA's  plans to move toward a  satellite  based ATC  System.  The
Company's support of WAAS has also included  development of testbeds for related
programs in Italy and Australia. As part of this work, the Company has supported
an   international   flight  between  the  U.S.  and  Italy  that   demonstrated
international  interoperability  capabilities of WAAS. The Company believes that
an international  need exists for WAAS  capabilities and it plans to pursue such
opportunities as they arise.


Global Positioning Satellite (GPS) Design and Development

         GPS L-Band  Test  System.  During  fiscal  year 1998,  the  Company was
awarded a contract  with a value of $5.6  million by Boeing  North  American  to
design and deliver  factory test sets for the next  generation  Block IIF Global
Positioning System Satellites. Each of the deliverable systems will be housed in
equipment  racks and consist of a combination  of commercial  test equipment and
Company-designed  equipment.  The  system  will be used in  Boeing's  Seal Beach
facility to provide  extremely  accurate  measurements of critical L-Band signal
parameters  and satellite  delays.  Deliveries  are expected to commence  during
fiscal year 1999.


Commercial Telecommunications Chip and Board Level Products

         Commercial  Telecommunications  Chip  and  Board  Level  Products.  The
Company designs,  manufactures and markets a wide range of Application  Specific
Integrated  Circuits  (ASIC)  and  board  level  assemblies  for  a  variety  of
commercial  telecommunication  applications.  These products provide the digital
signal  processing  required to transmit  and receive  information.  The Company
offers products for Phase Shift Key (PSK) modulation and  demodulation,  digital
down conversion,  the reception and transmission of spread spectrum information,
forward error  correction,  adaptive  equalization and direct digital  frequency
synthesis. Key market areas addressed by the Company

                                      -4-

<PAGE>


include:

     -   Cable/Internet  Communications.  Stanford  Telecom  has  developed  and
         patented  the  modulation/  demodulation  technology  required  for the
         "upstream"  (from the  subscriber  set-top box to the cable  "headend")
         transmission of data over hybrid  fiber/coax  (HFC) networks.  Products
         offered  include  the  STEL-1109,   a  single-chip  complete  BPSK/QPSK
         (Bi-Phase   Shift   Key/Quadra-Phase   Shift   Key)   modulator   ASIC,
         specifically  designed for the transmission of data from the subscriber
         to the  headend  and the  STEL-9257,  a Burst  Demodulator  board level
         assembly  that  provides  demodulation  of burst  QPSK  signals  in the
         upstream  environment.  The Company is working with certain cable modem
         manufacturers which have incorporated the Company's products into their
         designs.  In addition,  during fiscal year 1998, the Company  announced
         the STEL-2176  Cable Modem  subscriber  ASIC which is the world's first
         integrated upstream and downstream single chip solution for the primary
         cable modem standards MCNS and DAVIC. The Company believes it to be the
         highest performance, competitively priced solution in the market. It is
         designed  specifically  for reception and transmission of data over HFC
         cable  communications  networks--  receiving  16/64/256 QAM signals and
         sending QPSK & 16QAM modulated  signals.  Although  revenues from these
         products  have not been  material to date,  the Company  believes  that
         future revenues may increase if production orders are forthcoming.

     -   Very Small Aperture  Terminal (VSAT) Receiver  Assemblies.  The Company
         offers  board  level  receiver  assemblies  for use in  VSAT  satellite
         systems. These digital demodulator assembly products are used for rural
         telephony,  background music services and business data  transmissions.
         The  STEL-9258  Variable  Bit Rate  product can provide  signal  timing
         recovery,  demodulation,  down conversion, carrier tracking and forward
         error  correction  functions.  During  fiscal  year 1998,  the  Company
         introduced  the  STEL-9260   which  is  the  Company's  first  complete
         BPSK/QPSK   modem.  It  is  intended  for  use  in  systems  where  the
         combination of modulator and demodulator  functions in a single package
         is  important.  Although  revenues  from  the  STEL-9260  has not  been
         material to date, the Company  believes  revenues may be significant if
         production orders are forthcoming.

     -   Catalog  Products.  The  Company  offers a wide range of ASIC and board
         level products providing various digital communications  functions such
         as ASICs for spread spectrum wireless data links, a family of ASICs for
         forward  error  correction  in  communication  links,  and a series  of
         numerically  controlled oscillators and direct digital synthesizers for
         precise signal generation and control.


Commercial Electronic Contract Manufacturing

         During fiscal year 1993, the Company began to pursue  opportunities  in
commercial  contract  manufacturing.  In addition to producing its own products,
the Company offers its contract  manufacturing services to commercial customers.
Revenues  for  the  Company's  contract   manufacturing   business  amounted  to
approximately  17% of  total  revenues  for  fiscal  year  1998.  The  Company's
Sunnyvale,  California  manufacturing facilities received ISO-9001 certification
during  fiscal  year 1996.  During  fiscal year 1998,  approximately  17% of the
Company's  manufacturing  activities  were  associated  with the  Company's  own
products. The Company expects to increase the amount of manufacturing of its own
products,  if orders for wireless broadband equipment are realized.  The Company
believes  that  sufficient  capacity  currently  exists to meet  future  demands
associated with the potential increase in manufacturing levels over the next two
fiscal years.

                                      -5-

<PAGE>


COMMERCIAL STRATEGIC PRODUCT DEVELOPMENT

         Stanford   Telecom  has   initiated  a  number  of  strategic   product
developments  and business  arrangements,  including those  addressed  below, to
address a growing  worldwide market for digital  telecommunication  products and
services.  Revenues from these  initiates have not been  significant to date and
there is no assurance  that the Company will be successful  in the  development,
marketing,  distribution  and  sales  of these  products;  however  the  Company
believes that the market for these product and services is substantial.


Wireless Broadband Communications

         Wireless  broadband   communications,   also  called  Local  Multipoint
Distribution System (LMDS),  Multichannel/Multipoint  Distribution System (MMDS)
or "wireless cable",  is a new technique for two-way  transmission of high speed
digital data using terrestrial microwave links to homes and offices. The Company
has had an MMDS  demonstration  system operating in Sunnyvale,  California since
October 1996, and has performed demonstrations for a wide range of international
and domestic customers.  In addition, the Company received orders for two market
trials for MMDS  equipment  and at fiscal  year end  deployment  of these  trial
systems was underway. The Company believes that there is sizable interest in the
telephony potential in offshore markets and a growing interest in providing both
telephony  and data services in the domestic  market.  The U.S.  Wireless  Cable
Association  has  applied for  authorization  to use MMDS  spectrum  for two-way
digital multimedia  services,  which will greatly enhance the business prospects
for  this  technology.  Recently,  the  Company  installed  10  MMDS  subscriber
terminals  as part of a technical  trial system on the West Coast which is being
used to test high speed data  services.  This trial uses 16 QAM  downstream  and
QPSK upstream.  Testing is expected to continue through the Summer of 1998, when
telephony  services are expected to be implemented at the test site. The Company
is under contract to expand the number of subscriber  terminals to approximately
150 in market tests of the services being offered.

         The Company's LMDS development  continued  throughout fiscal year 1998,
with the pace accelerating as the fiscal year ended. The FCC auction was delayed
until late in the fiscal year,  but has now been  completed.  The Company is now
conducting LMDS technology  demonstrations and building field trial systems. The
Company  expects to deploy market trial systems in  mid-fiscal  year 1999,  with
production  volumes  expected  to be ordered  later in fiscal  year 1999.  These
systems operate in the 28-31 GHz microwave  frequency  spectrum.  At fiscal year
end, two trial systems were  deployed,  one in Asia, and the other in the United
States.  Additional  trial  systems  are on order for  deployment  in the second
quarter of fiscal  year 1999.  The  Company has  entered  into  development  and
supplier  agreements with two major  communication  systems integrators for LMDS
equipment.


Satellite Personal Communications

         In recent years a number of worldwide  satellite-based cellular systems
have been  proposed,  and in some  cases  implementation  has  begun,  including
Inmarsat's ICO, Motorola's Iridium and Loral/Qualcomm's  Globalstar. The Company
had been carrying out research and  development on the medium  altitude  Odyssey
system being proposed by TRW/Teleglobe.  During fiscal year 1998,  TRW/Teleglobe
announced that they would not proceed with the Odyssey Program. Notwithstanding,
the Company believes that its proprietary  version of the OCDMA (Orthogonal Code
Division Multiple Access) waveform in transmission of voice data  communications
is  applicable  to other  programs  and is  pursuing  opportunities  with  other
companies for the use of the

                                      -6-

<PAGE>


waveform as well as  development  support.  There can be no  assurance  that the
Company will successfully produce revenues from satellite personal communication
systems during fiscal year 1999, or at all.


OTHER BUSINESS

         Manufacturing

         Stanford  Telecom's  products are generally  manufactured from standard
components, its proprietary ASICs and other components or subsystems produced to
the Company's  specifications.  Most of the Company's  current  products contain
microprocessors  for which  proprietary  software is designed  and tested by the
Company's  engineers.  The  Company  does not have a  semiconductor  foundry  or
fabrication  facility.  For the production of ASICs, the Company  contracts with
companies that have foundry  capability,  including Lucent  Technology Inc., and
Amercian Microsystems Inc.

         In  many  cases  only  a  single   source  is  available  for  specific
components,  and thus there is a risk of delay in  delivering  finished  systems
within  contractual  schedules.  The Company  attempts to minimize  this risk by
securing  second  sources,  finding  alternate  technologies to perform the same
function and maintaining  adequate  inventories of single source components.  To
date, the Company has  experienced  no material  adverse impact due to component
unavailability,   product  returns  or  contract  renegotiations.  Many  of  the
Company's  products are covered by a 90-day to one-year warranty under which the
Company will repair or replace  defective  parts. To date,  warranty expense has
not been significant.

         Marketing and Customers

         The Company  markets its  products and services to agencies of the U.S.
Government,  prime  contractors  to these  agencies and an increasing  number of
commercial customers. The Company's marketing is conducted by its management and
technical  staff,  and in the  case of its  commercial  business,  domestic  and
international sales  representatives are also utilized.  The Company's marketing
efforts for its  government  business  consist of  responding  to  requests  for
proposals  and  solicitations  for bids from U.S.  Government  agencies or prime
contractors  to  these  agencies  and  direct  marketing  of its  off-the-shelf,
standardized  products.  The Company  markets its ASICs and commercial  products
primarily  through  its  direct  sales  personnel   consisting  of  9  full-time
employees,  18 independent sales representative  locations covering the U.S. and
Canada and 27 other  independent  sales  representative  offices  covering other
international territories. The Company also places advertisements for commercial
products,  particularly its Wireless Broadband (LMDS/MMDS) and ASIC products, in
a number  of trade  magazines  and  participates  in trade  shows  and  industry
symposiums.  In some cases, the major  communication  system integrators who are
pursuing  wireless  broadband   opportunities  market  the  Company's'  products
directly to the service providers. The Company may be requested to support these
marketing activities from time to time.

         During fiscal years 1998, 1997 and 1996 approximately 62%, 59% and 54%,
respectively,  of the Company's  revenues were  attributable  to contracts  with
numerous agencies of the U.S. Government.  No single contract accounted for more
than 10% of  revenues  during  fiscal  years  1998,  1997 or  1996.  Some of the
Company's  U.S.  Government  sales are made under letter  contracts in which the
final contract  price is agreed upon after work has begun.  To date, the Company
has had a small amount of revenue from international  customers.  Such sales are
often subject to U.S. State Department approval and export license requirements.

                                      -7-

<PAGE>


         Competition

         Competition  is intense among  providers of digital  telecommunications
equipment,   products  and  services.  In  the  Company's  government  business,
competitors include major defense contractors,  telecommunications equipment and
electronics  firms, and systems  integrators,  most of which have  significantly
greater financial,  marketing and operating  resources than the Company, as well
as broader product lines and technological capabilities.  As a result of reduced
defense spending by the U.S. and other governments,  competition has become more
intense in the  Company's  government  business.  Although no single  competitor
competes with the Company in all of its product  lines,  a number of competitors
such as Harris Corporation, Loral-Space, Lockheed-Martin, TRW, BDM, Hughes, CSC,
Broadcom  Corporation,  Hitachi,  and  Rockwell  International  compete with the
Company in various  market  segments.  Certain of the Company's  customers  have
technological  capabilities  in the Company's  product areas and could choose to
develop and manufacture  certain products  themselves  rather than purchase from
suppliers  such as the Company.  As the Company  continues to transition to more
commercial  business,  it expects to face new and  increasing  competition  with
respect to its commercially oriented products and services. The Company believes
that,  in its highly  specialized  technical  environment,  price,  performance,
reputation,  reliability,  on-time delivery and customer support are the primary
competitive factors among companies having similar technical capabilities.

         Backlog and Bookings

         Funded  backlog  includes:  (i) projects  and orders  covered by signed
contracts for which the government has specifically  allocated funding; and (ii)
purchase  orders from  commercial  customers.  The Company's  backlog is largely
attributable  to  agencies  of the  U.S.  Government.  In the  case  of  certain
long-term  contract  awards,  the U.S.  Government  typically  makes  the  funds
available  over the life of the  contract as opposed to the time of the contract
award.  In such cases the Company  reports as funded bookings only the amount of
the funds  specifically  allocated and the resultant  backlog as funded backlog.
The Company  does not include  unexercised  options in  backlog.  The  Company's
funded bookings for fiscal 1998 and 1997 were $163.0 million and $168.5 million,
respectively,  and the Company's  backlog at the end of fiscal 1998 and 1997 was
$93.6 million and $83.9  million,  respectively.  At March 31, 1998 backlog from
the Company's  government and commercial  businesses  were  approximately  $59.3
million and $34.3 million,  respectively.  There can be no assurance that funded
backlog  will be  completed  and  booked as  revenue.  The  Company's  contracts
typically contain contingency  provisions permitting termination by the customer
at any time.  Cancellation of pending  contracts or termination or reductions of
contracts  in  progress  may have a  material  adverse  effect on the  Company's
results of operations.

         Research and Development

         The telecommunications industry is characterized by rapid technological
change,  requiring a continuous  effort to enhance existing products and develop
new products.  The Company believes that its continued  success depends in large
part on its  ability  to develop  new and  enhanced  digital  telecommunications
products.  The Company conducts extensive research,  development and engineering
activities  with the objective of  developing  products and systems that provide
for  cost-effective,   digital  wireless   telecommunications  and  high-quality
satellite  communications.  Since its  inception,  the Company  has  developed a
number of innovative and  proprietary  digital  telecommunications  technologies
through  a  combination   of  customer  and  internally   funded   research  and
development.  Company-funded expenditures for research and development including
bid and  proposal  activities  for  fiscal  years  1998,  1997,  and  1996  were
approximately $13.6 million, $11.9

                                      -8-

<PAGE>


million and $8.4 million,  respectively,  which represented 8.9%, 7.1%, and 5.8%
of total revenues, respectively.

         The Company's  revenues have  historically  been derived primarily from
performing  contract research and development and engaging in limited production
contracts with agencies of the U.S. Government and their prime contractors. As a
result,  a substantial  portion of the digital  telecommunications  research and
development  performed by the Company since its inception has been funded by its
customers  and  recorded as revenues by the  Company.  Accordingly,  the cost of
performing this  customer-funded  research and development is included in "Costs
of Revenues" in the Company's financial statements.

         The Company  continually  seeks to develop new products for  commercial
applications  to leverage its leading  digital  telecommunications  technologies
that  have been  funded  through  many  military  and  government  research  and
development  contracts  since the early  1970's.  Over the last two  years,  the
Company  has  significantly  increased  its level of  independent  research  and
development  expenditures.  This increase is necessary to  successfully  develop
competitive products for the commercial telecommunications market. During fiscal
year 1998 approximately  $10.0 million, or 72% of the Company's R&D was invested
in these strategic commercial  initiatives.  The Company has applied much of its
research and development  expenditures to commercial products and initiatives in
the areas of wireless and cable broadband communications.

         Employees

         As of March  31,  1998,  the  Company  employed  969  full-time  and 24
part-time employees and 13 professional consultants. Of the full-time employees,
564  are in  technical  operations,  124  in  manufacturing  operations,  120 in
management,  99 professional  non-technical,  and 62 in support  positions.  The
majority of the Company's  employees  are highly  skilled  technical  personnel.
Several are nationally known leaders in the field of digital telecommunications.
Over 612  employees  hold  advanced  degrees,  including  approximately  39 with
doctoral degrees. None of the employees are represented by a labor union and the
Company  has  never had a work  stoppage.  The  Company  believes  its  employee
relations  to be good.  Due to the  nature of the  Company's  business,  a large
number of its technical  employees must obtain security clearances from the U.S.
Government,  which limits the  available  pool of eligible  candidates  for such
positions to those who can satisfy prerequisites for such clearances.

         Patents and Proprietary Rights

         The success of the Company's  business depends in part upon its ability
to  protect  trade  secrets,  obtain or  license  patents  and  operate  without
infringing  on the rights of others.  Although the Company has obtained  patents
covering certain of its technologies,  it believes that the ownership of patents
has not generally been a significant factor in its government  business and that
its success depends primarily on innovative skills,  technical  competence,  and
the marketing and managerial abilities of its personnel. The Company relies on a
combination of trade secrets, copyrights,  patents, nondisclosure agreements and
technical  measures  to  protect  its  proprietary  rights in its  products  and
technology.  Such  protection  may  not  preclude  competitors  from  developing
products with features similar to the Company's  products.  The Company believes
that patents will play an increasingly important role in its commercial business
and  during  the  past  two  years  the  Company  has   received  or  filed  for
approximately 70 patents with the U.S. Patent and Trademark Office.  The Company
expects it will continue to aggressively  pursue  additional  patents to protect
its  intellectual  property.

                                      -9-

<PAGE>


The  Company   requires  its  employees  to  execute   proprietary   rights  and
nondisclosure  agreements and to maintain the  confidentiality  of the Company's
proprietary information.

         Government Regulation

         The  Company's  operations  are subject to compliance  with  regulatory
requirements  of federal,  state and local  authorities,  including  regulations
concerning employment  obligations and affirmative action,  workplace safety and
protection of the environment.  In addition,  many of the Company's products and
proposed  products  are or will be  subject  to  various  regulations  including
regulations  promulgated by the Federal Communications  Commission,  the FAA and
the DoD. While compliance with applicable regulations has not adversely affected
the Company's operations in the past, there can be no assurance that the Company
will continue to be in compliance in the future or that these  regulations  will
not change.

         In  addition,   the  Company  must  comply  with  detailed   government
procurement  and  contracting  regulations  and with  U.S.  Government  security
regulations, including those necessary to maintain required facility clearances.
Certain  of  these  regulations  carry   substantial   penalty   provisions  for
nonperformance or  misrepresentation  in the course of negotiations.  Failure of
the Company to comply with its government  procurement,  contracting or security
obligations  could  result  in  penalties  or  suspension  of the  Company  from
government  contracting,  which  would  have a  material  adverse  effect on the
Company's results of operations.

         The  Company  is  required  to  maintain  a  U.S.  Government  facility
clearance at most of its locations. This clearance could be suspended or revoked
if the  Company  is  found  not to be in  compliance  with  applicable  security
regulations.  Any such  revocation  or  suspension  would  delay  the  Company's
delivery of its products to customers. Although the Company has adopted policies
designed to assure its compliance  with  applicable  regulations  and there have
been no suspensions or  revocations  of any of its  facilities,  there can be no
assurance  that the approved  status of the Company's  facilities  will continue
without interruption.

         Forward Looking and Cautionary Statements

         In the interest of providing the Company's  shareholders  and potential
investors with certain Company information, including management's assessment of
the Company's future potential,  certain statements set forth herein (a) contain
or are based on  projections  of revenue,  income,  earnings per share and other
financial  items or (b)  relate  to  management's  future  plans,  expectations,
objectives or to the Company's future economic performance.  Such statements are
"forward-looking  statements"  within  the  meaning  of  Section  27A(i)  of the
Securities  Act of 1933,  as amended,  and in Section  21E(i) of the  Securities
Exchange Act of 1934, as amended.

         Although any forward-looking  statements  contained herein or otherwise
expressed  by or on  behalf  of the  Company  are to  the  knowledge  and in the
judgment of the  officers and  directors of the Company,  expected to prove true
and to come to pass,  management is not able to predict the future with absolute
certainty.   Accordingly,   shareholders  and  potential  investors  are  hereby
cautioned  that certain  events or  circumstances  could cause actual results to
differ   materially   from  those   projected   or   predicted.   In   addition,
forward-looking  statements are based on management's  knowledge and judgment as
of the date such  statements are made, and the Company does not intend to update
any  forward-looking  statements to reflect  events  occurring or  circumstances
existing thereafter.

                                      -10-

<PAGE>


         In particular,  the Company  believes that the following  factors could
impact  forward-looking  statements  made  herein  or in other  written  or oral
releases and by hindsight,  prove such  statements to be overly  optimistic  and
unachievable:

       1. Future  revenues  on  government  contracts,  including  contracts  in
progress,  are subject to reduction or cancellation  without prior notice at the
convenience  of the  U.S.  Government.  Budgetary  constraints  and  changes  in
spending  priorities in government  agencies such as the  Department of Defense,
NASA,  and  the  FAA in the  past  have  resulted  in  sudden  program  changes,
reductions or cancellations and such conditions are expected to continue.

       2.  The  Company  has  in  the  past  accepted  fixed  price  development
commitments for both government and commercial  contracts.  Although the Company
attempts  to bid  fixed  price  development  contracts  at an  amount  above the
expected costs of development and production,  the Company has from time to time
experienced  significant  cost  overruns  which  cannot  be  recovered  from the
customer.  The Company may in the future experience material cost overruns which
could adversely affect operating results over the life of the program.

       3. The Company's  basic  strategy is to employ its technology in wireless
telecommunications and digital signal processing in the commercial  environment,
generally as components  or  subsystems in the product or service  offerings for
large  telecommunications  companies. The transition from a government contracts
focus to  commercial  development  will expose the  Company to certain  business
risks not previously  encountered.  Of greatest significance will be the success
of the  Company's  customers in marketing the products or services for which the
Company provides key technology components,  or subsystems. A successful product
development effort will not produce meaningful long-term revenues or profits for
the Company unless its customer obtains market  acceptance of its end product or
service.  Factors such as system price,  competitive pressures,  consumer demand
and the like will impact the  customer's  and the Company's  level of commercial
success. In addition,  even if a product or service achieves commercial success,
the Company will experience the continued risk that the customer will develop or
obtain lower cost alternatives to the Company's products or technical solutions.

       4. Most of the  Company's  material  contracts are awarded to the Company
with options to extend the contracts.  A contracting  party's decision regarding
the options  particularly in the case of government  contracts,  can be based on
numerous factors,  events and circumstances  which may be outside the control of
the contracting  party and which are difficult to predict.  For example a change
in government priorities, budgets and or technologies. The Company has little or
no control over whether these options are exercised.

       5.  The   Company's   Commercial   Manufacturing   Division   has   grown
significantly   since  being   established  in  1993.   The  Division   provides
manufacturing  services to  producers  of  electronics  and medical  products on
either an inventory  consignment  or turnkey basis.  The contract  manufacturing
business is subject to wide swings in demand,  is price  sensitive and extremely
competitive.  In addition,  to the extent inventory is purchased in anticipation
of  future  contracts,  the  failure  to  obtain  such  contracts  can lead to a
reduction in the value of such inventory. The Company's Commercial Manufacturing
Division  does not  generally  operate  with  long-term  contracts  and is often
required to bid each new job even for major customers.

       6.  Many  of the  components  incorporated  in the  Company's  commercial
products, including all semiconductor components, are purchased from third party
vendors. Certain key components are sole sourced. From time to time, the Company
may  experience   significant  delays  in  component

                                      -11-

<PAGE>


availability  which could adversely impact its ability to make timely deliveries
to its customers.  Such events could cause  expected  revenues to be delayed and
the possible loss of future orders.


ITEM 2.  PROPERTIES

         The Company's  headquarters and principal engineering and manufacturing
facilities  are  currently  located in four  adjacent  buildings  in  Sunnyvale,
California  where it leases  approximately  172,000  square feet.  The Company's
Sunnyvale  facility  leases  will  expire in the year 2000.  The leases  contain
options for renewal  under terms and  conditions to be negotiated at the time of
expiration.  The  Company  also leases  approximately  84,000,  46,400,  39,900,
30,900,  15,300,  11,300,  and  8,000  square  feet of office  space in  Reston,
Virginia,  Colorado Springs, Colorado,  Ashburn,  Virginia,  Annapolis Junction,
Maryland,  Lowell,  Massachusetts,  Seabrook,  Maryland,  and Tinton Falls,  New
Jersey,  respectively,  which space is used  primarily  for the  performance  of
study, system engineering and hardware contracts. The Ashburn, Reston, Annapolis
Junction,  Colorado Springs, Tinton Falls, Lowell, and Seabrook leases expire in
2008, 2006, 2003, 2002, 2002, 2001 and 2001, respectively.  The Company believes
its current  facilities  are suitable and adequate for the Company's  operations
over the next fiscal year.


ITEM 3.  LEGAL PROCEEDINGS

         The Company is involved from time to time in  litigation  incidental to
its business.  Management  believes that the outcome of current  litigation will
not have a  material  adverse  effect on its  financial  position  or results of
operations.

         In  December  1996,  the  Company  filed  an  action  against  Broadcom
Corporation alleging that certain Broadcom product(s) infringe a patent owned by
the Company. The complaint seeks an injunction against Broadcom Corporation,  as
well as the recovery of monetary  damages.  Broadcom  Corporation has asserted a
counterclaim  requesting  relief and has asserted  that they do not infringe the
patent.  The Company and Broadcom  Corporation  are  currently in  discovery.  A
claims  construction  hearing was completed in April 1998 and an order regarding
claims  construction  was filed by the Court on June 10,  1998. A trial date has
not yet been set.


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

Inapplicable.


CORPORATE OFFICERS OF THE COMPANY

         Set forth below are the names and ages of the executive officers of the
Company,  their  principal  occupations  at present and for the past five years,
certain directorships held by each, and the term of office with the Company.

Dr. James J. Spilker,  Jr. (age 64), a founder of the Company, has been Chairman
of the Board since 1983. He served as President and Chief  Executive  Officer of
the Company from August 1981 to June 1995. Since June 1995, Dr. Spilker also has
been serving as Principal Scientist for the Company.

Dr. Val P.  Peline  (age 67) was elected as a Director of the Company in October
1985. Dr. Peline joined the Company as its President and Chief Executive Officer
effective June 5, 1995. Dr. Peline served as President of the Electronic Systems
Group,  a division  of  Lockheed  Corp.,  from 1987  until

                                      -12-

<PAGE>


he retired from such position in March 1995.  Dr.  Peline had been  President of
the Lockheed Space Division from 1984 to March 1987.

Mr. Leonard Schuchman (age 61) was elected as a Director of the Company in April
1985. Mr. Schuchman joined the Company in January 1976 and became Vice President
in February 1977. He is responsible  for directing the Company's  Communications
and Navigation Systems Operation.

Mr.  Ernest L. Dickens,  Jr. (age 51) joined the Company in October  1981.  From
April 1990 to October 1995 he directed the Company's Government Systems Services
operation. Mr. Dickens was elected Vice President in November 1995 and currently
directs the Company's Satcom Ground Systems operation.

Mr. Bronic C. Knarr (age 52) joined the Company in November 1988.  From November
1988 to April 1992 Mr. Knarr held various management positions at the Company in
support of key programs.  From April 1992 to September  1995 Mr. Knarr  directed
the Company's Satellite Communications  operations.  In September 1995 Mr. Knarr
was appointed  director of the  Company's  Manufacturing  and Quality  Assurance
operation and was elected Vice President in November 1995.

Dr.  John E.  Ohlson  (age 58) joined the  Company in March 1981 as  Director of
Telecommunications  Programs  Operations  and became Vice  President  in January
1982. In February 1991 he was named Director of Military Ground  Terminals.  Dr.
Ohlson  directed the Satellite  Communications  Group from June 1992 to November
1994. Dr. Ohlson was named as the Company's Chief Technical  Officer in November
1994 and  currently  directs the  Company's  Satellite  Personal  Communications
Operation.

Mr. Gary S. Wolf (age 47) joined the  Company in May 1978 and was  elected  Vice
President, Chief Financial Officer, Secretary and Treasurer in December 1984. In
January 1997 he was promoted to Executive Vice President.

Mr. Jerome F. Klajbor (age 42) joined the Company in February  1989. Mr. Klajbor
served as a Contracts  Manager for the Company  from 1989 to 1991.  From 1991 to
1996,  Mr.  Klajbor  served as  Director  and  subsequently  Vice  President  of
Administration  and Finance for the Company's  Communication  Navigation Systems
Operation.  He was appointed Vice President and Chief  Financial  Officer of the
Company in January 1997.

                                      -13-

<PAGE>


                                     PART II

ITEM 5. - MARKET FOR THE  REGISTRANT'S  COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS

Incorporated  by reference  from page 36 of the Company's  1998 Annual Report to
Stockholders.


ITEM 6.  SELECTED FINANCIAL DATA

Incorporated  by reference  from page 35 of the Company's  1998 Annual Report to
Stockholders.


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

Incorporated  by  reference  from pages 22  through  25 of the Annual  Report to
Stockholders.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Financial statements of Stanford  Telecommunications,  Inc. as of March
31, 1998 and March 31, 1997 and for each of the three years in the period  ended
March 31,  1998 and the report of  independent  public  accountants  thereon are
incorporated  by  reference  from pages 26  through  34 of the Annual  Report to
Stockholders. See Part IV, Item 14(a).


ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Inapplicable.

                                      -14-

<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The   information   set  forth   under   the   caption   "Election   of
Directors-Information  with Respect to Nominees and Directors" beginning on page
2 of the  Company's  Proxy  Statement  relating  to the 1998  Annual  Meeting of
Stockholders  (the "Proxy  Statement") is  incorporated  herein by reference and
made a part  hereof in  response to the  information  required by this item.  In
addition, certain information pertaining to executive officers of the Company is
set forth on pages 12-13 hereof.


ITEM 11. EXECUTIVE COMPENSATION

         The  information set forth under the caption  "Executive  Compensation"
beginning on page 5 of the Proxy Statement is  incorporated  herein by reference
and made a part hereof in response to the information required by this item.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information set forth under the caption "Stock Ownership" beginning
on page 12 of the Company's Proxy Statement is incorporated  herein by reference
and made a part hereof in response to the information required by this item.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Inapplicable.

                                      -15-

<PAGE>


                                     PART IV

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

(a) The  following  report,  financial  statements  and  other  information  are
incorporated by reference from the Annual Report to stockholders and form a part
of this report:

                                                                Reference Page
                                                              ------------------
                                                              1998
                                                              Annual
                                                              Report   Form 10-K
                                                              ------   ---------
1.    Financial Statements.

      Report of Independent Public
      Accountants                                              26

      Statements of income for each
      of the three years in the period
      ended March 31, 1998                                     26

      Balance sheets at March 31, 1998 and
      March 31, 1997                                           27

      Statements of shareholders' equity for
      each of the three years in the period
      ended March 31, 1998                                     28

      Statements of cash flow for each of
      the three years in the period ended
      March 31, 1998                                           29

      Notes to financial statements                            30

2.    Financial Statement Schedules

      Report of Independent Public Accountants on Schedules                21
      Schedule II - Valuation and Qualifying Accounts                      22

         All other schedules have been omitted because the required  information
is not present or not present in amounts sufficient to require submission of the
schedule or because  the  information  required  is  included  in the  financial
statements or notes thereto.

         With the  exception of such  information  in the 1998 Annual  Report to
Stockholders  specifically  incorporated  herein by  reference,  the 1998 Annual
Report to Stockholders is not deemed "filed" as part of this report.

                                      -16-

<PAGE>


3.       Exhibits.

Exhibit Number                    Description
--------------                    -----------
3.1(2)         Certificate of Incorporation, as amended.

3.2(2)         Bylaws, as amended.

4.1(6)         Rights  Agreement dated as of May 9, 1995 between the Company and
               The First National Bank of Boston.

4.2            Agreement re. Rights of Holders of Long-Term Debt.

10.1(5)        Consolidated, Amended and Restated Deed of Lease for the premises
               located at 1761 Business  Center Drive,  Reston,  Virginia  dated
               October 1, 1993 between the Company and the Variable Annuity Life
               Insurance Company.

10.2*(1)       1982 Stock Option Plan, as amended, and form of Agreements.

10.3*(3)       1992 Employee Stock Purchase Plan.

10.4(4)        Lease dated  November  19,  1992 for 480 Java  Drive,  Sunnyvale,
               California,  440 Moffett Park Drive, Sunnyvale,  California,  and
               1221 Crossman Avenue, Sunnyvale, California.

10.5(5)        Office  Lease  Agreement  for  141  National   Business  Parkway,
               Annapolis  Junction,  Maryland  dated  March 1, 1993  between the
               Company and Constellation Real Estate, Inc.

10.6*(8)       1991 Stock Option Plan and form of Agreements.

10.7*(8)       Management Incentive Plan.

10.8(8)        Credit  Agreement  dated December 5, 1996 between the Company and
               Bank of  America  National  Trust and  Savings  Association  (the
               "Credit Agreement").

10.9           Second  Amendment to the "Credit  Agreement"  dated  December 12,
               1997.

10.10          Office  lease  Agreement  for  45145  Research  Place,   Ashburn,
               Virginia  dated June 17, 1997  between the Company and Opus East,
               LLC a Delware limited liability company.

10.11          Rider No. three (3) to consolidated, amended and restated deed of
               lease agreement  dated May 15, 1998,  between the Company and A&A
               Fairfax Four L.L.C.

13.1(7)        Annual Report to Stockholders for the fiscal year ended March 31,
               1998.

23.1           Consent of Arthur Andersen LLP, independent public accountants.

24.1           Power of Attorney (included on the signature pages hereof).

27.1           Financial Data Schedule

---------------------------
*Compensatory Plan

                                      -17-

<PAGE>


(1)      Incorporated by reference from the Company's Annual Report on Form l0-K
         for the fiscal year ended March 31, 1987.

(2)      Incorporated by reference from the Company's Annual Report on Form l0-K
         for the fiscal year ended March 31, 1989.

(3)      Incorporated by reference from the Company's Annual Report on Form l0-K
         for the fiscal year ended March 31, 1992.

(4)      Incorporated by reference from the Company's Annual Report on Form l0-K
         for the fiscal year ended March 31, 1993.

(5)      Incorporated by reference from the Company's  Registration Statement on
         Form S-1, No. 33-72720.

(6)      Incorporated by reference from the Company's  Registration Statement on
         Form 8-A, dated May 24, 1995.

(7)      Only those  portions  of the  Annual  Report to  Stockholders  that are
         specifically  incorporated  by reference in this form 10-K are included
         in this exhibit.

(8)      Incorporated by reference from the Company's  Annual Report on Form 10K
         for the fiscal year ended March 31, 1996.

Reports of Form 8-K

No current Reports on Form 8-K were filed by the Company with the Securities and
Exchange  Commission  during the last quarter of the period covered by this Form
10-K.

                                      -18-

<PAGE>


                                   SIGNATURES

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


                                             STANFORD TELECOMMUNICATIONS, INC.


Dated: June 24, 1998                         /s/ James J. Spilker, Jr.
                                             ------------------------------
                                             James J. Spilker, Jr.
                                             Chairman of the Board


POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE  PRESENTS,  that each person whose  signature
appears  below  constitutes  and appoints  James J.  Spilker,  Jr. and Jerome F.
Klajbor  and each of them,  as his true and lawful  attorney-in-fact  and agent,
with full power of  substitution  and  resubstitution,  for him and in his name,
place and stead,  in any and all  capacities,  to sign any and all amendments to
this  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
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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

<CAPTION>
      Signature                                           Title                                    Date
      ---------                                           -----                                    ----
<S>                                         <C>                                              <C>
/s/ James J. Spilker, Jr.                   Chairman of the Board                            June 19, 1998
-------------------------
James J. Spilker, Jr.



/s/ Val P. Peline                           President (Principal Executive                   June 20, 1998
-----------------                           Officer) and Director
Val P. Peline    



/s/ Jerome F. Klajbor                       Vice President and Secretary,                    June 19, 1998
---------------------                       (Principal Financial
Jerome F. Klajbor                           and Accounting Officer)

                                                   -19-

<PAGE>


/s/ Michael Berberian                       Director                                         June 19, 1998
---------------------
Michael Berberian



/s/ John W. Brownie                         Director                                         June 22, 1998
-------------------
John W. Brownie



/s/ Leonard Schuchman                       Vice President and Director                      June 22, 1998
---------------------
Leonard Schuchman



/s/ C.J. Waylan                             Director                                         June 22, 1998
---------------
C. J. Waylan
</TABLE>

                                                   -20-

<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                                  ON SCHEDULES

To Stanford Telecommunications, Inc.:

We have audited in accordance with generally  accepted auditing  standards,  the
financial  statements  included in Stanford  Telecommunications,  Inc.'s  annual
report to  stockholders  incorporated  by reference in this Form l0-K,  and have
issued our  report  thereon  dated  April 22,  1998.  Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The schedule
listed at Item 14(a)(2) is the responsibility of the Company's management and is
presented  for  purposes  of  complying   with  the   Securities   and  Exchange
Commission's  rules  and is not part of the  basic  financial  statements.  This
schedule has been subjected to the auditing  procedures  applied in the audit of
the  basic  financial  statements  and,  in our  opinion,  fairly  states in all
material  respects  the  financial  data  required  to be set forth  therein  in
relation to the basic financial statements taken as a whole.


                                                     /s/ Arthur Andersen LLP
                                                     -----------------------
                                                     ARTHUR ANDERSEN LLP


San Jose, California
April 22, 1998

                                      -21-

<PAGE>


                                   SCHEDULE II

                        STANFORD TELECOMMUNICATIONS, INC.
                        Valuation and Qualifying Accounts
                        Three years ended March 31, 1998
                                 (In Thousands)



Allowance for doubtful accounts


                        Bal. at Beg.    Charged to      Bad Debts    Bal. at End
               Year      of Period       Expense       Written Off    of Period
               ----     -----------     ----------     -----------   -----------
               1996        $  650        $  468         $ (198)        $  920
               1997        $  920        $  135         $  (32)        $1,023
               1998        $1,023        $ (290)        $  (22)        $  711

                                      -22-