<PAGE>
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                       SECURITIES AND EXCHANGE COMMISSION
 
                              WASHINGTON, DC 20549
 
                            ------------------------
 
                                  FORM 10-QSB
 
(MARK ONE)
 
<TABLE>
<C>         <S>
   /X/      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934
</TABLE>
 
                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
 
<TABLE>
<C>         <S>
   / /      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
            EXCHANGE ACT
</TABLE>
 
        FOR THE TRANSITION PERIOD FROM ______________ TO ______________
 
                         COMMISSION FILE NUMBER 0-5351
 
                            ------------------------
 
                              EIP MICROWAVE, INC.
 
       (Exact name of small business issuer as specified in its charter)
 
<TABLE>
<S>                                  <C>
             DELAWARE                          95-2148645
   (State or other jurisdiction       (IRS Employer Identification
 of incorporation or organization)                No.)
 
   4500 CAMPUS DRIVE, SUITE 219,                  92660
     NEWPORT BEACH, CALIFORNIA                 (Zip Code)
  (Address of principal executive
             offices)
</TABLE>
 
                                 (949) 851-3177
                          (Issuer's telephone number)
 
   (Former name, former address and former fiscal year, if changed since last
                                    report)
 
                            ------------------------
 
    Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. YES /X/  NO
/ /
 
    OUTSTANDING COMMON STOCK: As of April 30, 1998, Registrant had only one
class of common stock, and had 6,509,152 shares of this $.01 par value common
stock outstanding.
 
    Transitional Small Business Disclosure Format (check one): YES / /  NO /X/
 
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<PAGE>
                              EIP MICROWAVE, INC.
                                  FORM 10-QSB
                          QUARTER ENDED MARCH 31, 1998
 
<TABLE>
<S>        <C>        <C>                                                           <C>        <C>
PART I     FINANCIAL INFORMATION
 
             Item 1.  Condensed Consolidated Financial Statements
 
                      Condensed Consolidated Balance Sheets as of March 31, 1998
                        (unaudited) and September 30, 1997........................  Page               3
 
                      Condensed Consolidated Statements of Operations and Retained
                        Earnings for the three months and six months Ended March
                        31, 1998 and 1997 (unaudited).............................  Page               4
 
                      Condensed Consolidated Statements of Cash Flows for the six
                        months ended March 31, 1998 and 1997 (unaudited)..........  Page               5
 
                      Notes to Unaudited Condensed Consolidated Financial
                        Statements................................................  Page               6
 
             Item 2.  Management's Discussion and Analysis of Results of
                        Operations and Financial Condition........................  Pages         7 - 12
 
PART II    OTHER INFORMATION
 
             Item 2.  Changes in Securities.......................................  Page              13
 
             Item 4.  Submission of Matters to Vote of Security Holders...........  Page              13
 
             Item 6.  Exhibits and Reports on Form 8-K............................  Page              13
 
           Signatures.............................................................  Page              14
</TABLE>
 
                                       2
<PAGE>
                              EIP MICROWAVE, INC.
 
                         PART I--FINANCIAL INFORMATION
 
              ITEM 1--CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
 
                    (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                             ASSETS
                                                                       MARCH 31,   SEPTEMBER 30,
                                                                         1998          1997
                                                                      -----------  -------------
                                                                      (UNAUDITED)
<S>                                                                   <C>          <C>
Current assets:
  Cash and cash equivalents.........................................   $     885     $     250
  Short-term investments............................................          30            30
                                                                      -----------       ------
                                                                             915           280
  Accounts receivable, net..........................................         493           405
  Inventories.......................................................         747         1,023
  Prepaid expenses..................................................          41            62
                                                                      -----------       ------
    Total current assets............................................       2,196         1,770
Property and equipment, net.........................................         459           590
                                                                      -----------       ------
                                                                       $   2,655     $   2,360
                                                                      -----------       ------
                                                                      -----------       ------
 
                       LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
 
Current liabilities:
  Accounts payable..................................................   $     707     $     401
  Accrued liabilities...............................................         906           629
  Bank borrowings...................................................      --               296
  Notes payable to affiliates.......................................      --               400
  Current portion of obligations under capital leases...............          34            34
                                                                      -----------       ------
    Total current liabilities.......................................       1,647         1,760
Long term notes payable to affiliates...............................           0           600
Long term obligations under capital leases..........................          46            63
                                                                      -----------       ------
    Total liabilities...............................................       1,693         2,423
                                                                      -----------       ------
 
Commitments and contingencies
 
Stockholders' equity (deficiency):
  Common stock, $.01 par value; authorized--10,000,000 shares;
    6,509,131 issued and outstanding................................          65             5
  Additional paid-in capital........................................       3,830           848
  Retained earnings (accumulated deficit)...........................      (2,933)         (916)
                                                                      -----------       ------
    Total stockholders' equity (deficiency).........................         962           (63)
                                                                      -----------       ------
                                                                       $   2,655     $   2,360
                                                                      -----------       ------
                                                                      -----------       ------
</TABLE>
 
                                       3
<PAGE>
                              EIP MICROWAVE, INC.
 
     PART I/ITEM 1--CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND RETAINED EARNINGS
 
            (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA, UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                               THREE MONTHS           SIX MONTHS
                                                                             ENDED MARCH 31,       ENDED MARCH 31,
                                                                             1998       1997       1998       1997
                                                                           ---------  ---------  ---------  ---------
<S>                                                                        <C>        <C>        <C>        <C>
Net sales................................................................  $     887  $   1,289  $   1,885  $   2,547
                                                                           ---------  ---------  ---------  ---------
Costs and expenses:
  Cost of sales..........................................................        739        802      2,049      1,595
  Research, development and engineering..................................        272        278        513        494
  Selling, general and administrative....................................        548        497      1,088        963
  Interest and other, net................................................        132          5        252         10
                                                                           ---------  ---------  ---------  ---------
    Total costs and expenses.............................................      1,691      1,582      3,902      3,062
                                                                           ---------  ---------  ---------  ---------
Net (loss)...............................................................       (804)      (293)    (2,017)      (515)
Accumulated retained earnings (deficit) at beginning of period...........     (2,129)       152       (916)       374
                                                                           ---------  ---------  ---------  ---------
Accumulated deficit at end of period.....................................  $  (2,933) $    (141) $  (2,933) $    (141)
                                                                           ---------  ---------  ---------  ---------
                                                                           ---------  ---------  ---------  ---------
Net (loss) per share.....................................................  $    (.68) $    (.69) $   (2.54) $   (1.21)
                                                                           ---------  ---------  ---------  ---------
                                                                           ---------  ---------  ---------  ---------
Weighted average common shares outstanding...............................      1,177        425        795        425
                                                                           ---------  ---------  ---------  ---------
                                                                           ---------  ---------  ---------  ---------
</TABLE>
 
                                       4
<PAGE>
                              EIP MICROWAVE, INC.
 
     PART I/ITEM 1--CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                       (DOLLARS IN THOUSANDS, UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                               SIX MONTHS ENDED
                                                                           ------------------------
                                                                            MARCH 31,    MARCH 31,
                                                                              1998         1997
                                                                           -----------  -----------
<S>                                                                        <C>          <C>
Cash flows from operating activities:
  Net loss...............................................................   $  (2,017)   $    (515)
  Adjustments to reconcile net loss to net cash provided by (used in)
    operating activities:
    Depreciation and amortization........................................         101          133
    Write down of inventory..............................................         600       --
    (Gain) loss on sale of capital equipment.............................          (6)         (93)
    Change in assets and liabilities:
      Accounts receivable................................................         (88)        (106)
      Inventories........................................................        (324)          48
      Prepaid expenses...................................................          21           11
      Accounts payable...................................................         306         (152)
      Accrued liabilities................................................         277          (64)
      Advanced payments from customers...................................      --             (190)
                                                                           -----------       -----
Cash used in operating activities........................................      (1,130)        (928)
                                                                           -----------       -----
Cash flows from investing activities:
  Purchase of short-term investments.....................................      --           --
  Sale of short-term investments.........................................      --              298
  Capital expenditures...................................................      --             (113)
  Proceeds from the sale of capital equipment............................          36           93
                                                                           -----------       -----
Cash provided by investing activities....................................          36          278
                                                                           -----------       -----
Cash flows from financing activities:
  Proceeds from notes payable to affiliates..............................       1,150       --
  Repayment of notes payable to affiliates...............................      (2,150)         600
  Repayment of bank borrowings...........................................        (296)         (34)
  Repayment of obligations under capital leases..........................         (17)         (17)
  Proceeds from issuance of common stock.................................       3,042       --
                                                                           -----------       -----
Cash provided by financing activities....................................       1,729          549
                                                                           -----------       -----
Increase (decrease) in cash and cash equivalents.........................         635         (101)
Cash and cash equivalents at beginning of period.........................         250          216
                                                                           -----------       -----
Cash and cash equivalents at end of period...............................   $     885    $     115
                                                                           -----------       -----
                                                                           -----------       -----
</TABLE>
 
                                       5
<PAGE>
                              EIP MICROWAVE, INC.
 
     PART I/ITEM 1--CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                   NOTES TO UNAUDITED CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS
 
(a) The condensed consolidated financial statements presented in this Form
    10-QSB have been prepared from the accounting records without audit on a
    basis consistent with the financial statements included in the Company's
    annual report filed with the Securities and Exchange Commission for the
    preceding fiscal year. Certain information and footnote disclosures normally
    included in financial statements prepared in accordance with generally
    accepted accounting principles have been condensed or omitted pursuant to
    the rules and regulations of the Securities and Exchange Commission. The
    information furnished reflects all adjustments and disclosures which are, in
    the opinion of management, of a normal, recurring nature, and necessary for
    a fair statement of the results for the interim periods. This report should
    be read in conjunction with the Company's 1997 Annual Report on Form 10-KSB.
    The results of operations for the interim periods presented are not
    necessarily indicative of the results expected for the entire year.
 
(b) Composition of certain balance sheet captions (Dollars in thousands):
 
<TABLE>
<CAPTION>
                                                                     SEPTEMBER
                                                        MARCH 31,       30,
                                                          1998         1997
                                                       -----------  -----------
                                                       (UNAUDITED)
<S>                                                    <C>          <C>
Accounts receivable:
  Trade..............................................   $     543    $     455
  Less allowance for doubtful accounts...............         (50)         (50)
                                                       -----------  -----------
                                                        $     493    $     405
                                                       -----------  -----------
Inventories:
  Raw materials......................................   $     224    $     531
  Work-in-process....................................         523          452
  Finished goods.....................................           0           40
                                                       -----------  -----------
                                                        $     747    $   1,023
                                                       -----------  -----------
Property and equipment:
  Cost...............................................   $   5,279    $   5,311
  Accumulated depreciation...........................      (4,820)      (4,721)
                                                       -----------  -----------
                                                        $     459    $     590
                                                       -----------  -----------
</TABLE>
 
(c) The calculation of net income (loss) per share is based upon the weighted
    average number of common and common equivalent shares outstanding during the
    year. As a result of the losses incurred during the three months and six
    months ended March 31, 1998 and 1997, the common and common equivalent
    shares were antidilutive and, accordingly, were excluded from the
    computation of loss per share for those periods.
 
                                       6
<PAGE>
                              EIP MICROWAVE, INC.
             PART I/ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
    THE FOLLOWING DISCUSSION CONTAINS TREND INFORMATION AND OTHER
FORWARD-LOOKING STATEMENTS THAT INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. THE
COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE COMPANY'S HISTORICAL
RESULTS OF OPERATIONS AND THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY INCLUDE, BUT ARE
NOT LIMITED TO, THOSE IDENTIFIED UNDER THE HEADING "CERTAIN FACTORS" BELOW. DUE
TO SUCH RISK FACTORS AND OTHER FACTORS, PAST RESULTS ARE NOT A RELIABLE
PREDICTOR OF FUTURE RESULTS.
 
    IN ADDITION, THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN
CONJUNCTION WITH THE FINANCIAL STATEMENTS AND THE ACCOMPANYING NOTES HEREIN, AND
IS QUALIFIED ENTIRELY BY THE FOREGOING AND BY OTHER MORE DETAILED FINANCIAL
INFORMATION APPEARING ELSEWHERE.
 
                             RESULTS OF OPERATIONS
 
    Net sales for the three months ended March 31, 1998, were $887,000, a 31%
decrease from sales of $1,289,000 in the same period last year. Net sales for
the six months ended March 31, 1998, were $1,885,000, a 26% decrease from sales
of $2,547,000 in the same period last year. The decrease in sales for both
periods was primarily attributable to lower sales of VXI products and reduced
export sales.
 
    Gross margin decreased to 17% in the second fiscal quarter of 1998, from 38%
in the second fiscal quarter of 1997. Gross margin was (9)% for the six months
ended March 31, 1998, as compared to 37% for the same period last year. The
decrease in gross margin percentage for both periods was largely due to lower
sales levels without corresponding reductions in fixed manufacturing overhead.
In addition, the decrease in gross margin for the six months ended March 31,
1998, was due to a write-down of inventory by $600,000 to reserve for potential
obsolescence related to discontinuance of selected products.
 
    Incoming orders for the second fiscal quarter were $856,000, a 44% decrease
from orders of $1,528,000 for the same period a year ago. Incoming orders for
the six months ended March 31, 1998, were $1,802,000 a 25% decrease from orders
of $2,404,000 for the same period a year ago. Backlog at March 31, 1998, was
$351,000, a 38% decrease from a backlog of $566,000 at the end of the second
fiscal quarter last year. The decrease in orders for both periods and backlog
resulted primarily from a decrease in large orders and export orders.
 
    Research, development and engineering expenses decreased 2% to $272,000 in
the second fiscal quarter of 1998, compared to $278,000 for the same quarter
last year. Research, development and engineering expenses increased 4% to
$513,000 for the six months ended March 31, 1998, compared to $494,000 for the
same period last year. The relatively small change in research, development and
engineering expenses for both periods was primarily attributable to changes in
new product development expenditures.
 
    Selling, general and administrative expenses increased 10% to $548,000
during the second fiscal quarter of 1998, compared to $497,000 for the same
quarter last year. Selling, general and administrative expenses increased 13% to
$1,088,000 for the six months ended March 31, 1998, compared to $963,000 for the
same period last year. The increase in selling, general and administrative
expenses for both periods was due primarily to expenses related to the Rights
Offering.
 
    Interest and other expense was $132,000 during the second quarter of 1998,
compared to $5,000 for the same quarter last year. Interest and other expense
was $252,000 during the six months ended March 31, 1998, compared to $10,000 for
the same period last year The increases were primarily due to a higher level of
outstanding debt and a higher effective interest rate on such debt.
 
                                       7
<PAGE>
    The Company recorded a net loss of $804,000 for the second fiscal quarter of
1998, as compared to a net loss of $293,000 during the same period last year. A
net loss of $2,017,000 was recorded for the six months ended March 31, 1998, as
compared to a net loss of $515,000 for the same period last year. Gains on sale
of capital equipment of $6,000 are included in interest and other in the net
losses for the six months ended March 31, 1998. The increased loss for the
second fiscal quarter of 1998 is primarily due to lower sales levels without
corresponding reduction in fixed manufacturing overhead. The increase in the
loss for the six months ended March 31, 1998, compared to the same period last
year, is primarily attributable to the inventory write-off, lower sales and
increased operating expenses.
 
                              FINANCIAL CONDITION
 
    On March 20, 1998 the Company issued approximately 5,802,000 shares of
common stock pursuant to a rights offering (the "Rights Offering") to its
stockholders. Gross proceeds from the Rights Offering were approximately
$742,000 paid in cash and approximately $2,159,000 paid in cancellation of
Company indebtedness.
 
    At March 31, 1998, the Company's cash, cash equivalents and short-term
investment balance was $915,000, compared to $280,000 at September 30, 1997,
primarily due to cash generated from the Rights Offering noted above. At March
31, 1998, the Company had no material commitments for capital expenditures. At
March 31, 1998, working capital increased $530,000 from September 30, 1997, and
the Company's current ratio increased to 1.33:1 from 1.01:1 over the same time
period, primarily due to cash generated from the Rights Offering noted above.
 
    The Company had a $500,000 working capital facility with a bank that expired
on January 31, 1998 and the Company repaid all amounts outstanding thereunder in
the amount of $179,000 on January 22, 1998.
 
    At March 20, 1998 the Company had outstanding borrowings in the aggregate
principal amount of $1,250,000 under a loan and security agreement (the "Loan
Facility") with John F. Bishop and Ann R. Bishop, trustees of the Bishop Family
Trust (the "Bishop Family Trust"), $600,000 of which was assigned to J. Bradford
Bishop. Under the terms of the Loan Facility, a facility fee of $141,000 (the
"Facility Fee") became payable by the Company to the Bishop Family Trust on
January 22, 1998. At March 20, 1998, the Company had outstanding borrowings in
the aggregate principal amount of $900,000 under demand loans (the "Demand
Loans") from J. Bradford Bishop.
 
    In return for shares of Common Stock issued pursuant to the terms of the
Rights Offering, on March 20, 1998, the Company repaid in full the principal
amount of its indebtedness to J. Bradford Bishop and the Bishop Family Trust in
the amount of $1,500,000 and $650,000 respectively.
 
    In addition to cash on hand and funds generated from operations, the Company
believes that borrowings under future debt facilities in an aggregate amount
equal to approximately $1,000,000 will be necessary to satisfy the Company's
cash requirements for implementing its business plan during the remainder of the
fiscal year ending September 30, 1998. See "Certain Factors--Future Cash
Requirements" below.
 
                                CERTAIN FACTORS
 
    IN ADDITION TO THE FACTORS DISCUSSED ELSEWHERE IN THIS QUARTERLY REPORT ON
FORM 10-QSB, THE FOLLOWING ARE IMPORTANT FACTORS WHICH COULD CAUSE ACTUAL
RESULTS OR EVENTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY
FORWARD-LOOKING STATEMENT MADE BY OR ON BEHALF OF THE COMPANY.
 
RECURRING MATERIAL LOSSES AND ACCUMULATED DEFICIT
 
    The Company made a profit of $125,000 in the fiscal year ended September 30,
1995, operated at a loss of $493,000 in the fiscal year ended September 30,
1996, operated at a loss of $1,290,000 in the fiscal year ended September 30,
1997 and operated at a loss of $2,017, 000 for the six months ended March 31,
 
                                       8
<PAGE>
1998. Net cash used in operations and investing activities by the Company in the
fiscal years ended September 30, 1995, 1996 and 1997, and in the six months
ending March 31, 1998, was $85,000, $89,000, $1,045,000 and $1,094,000,
respectively. At the end of fiscal year 1996, the Company's retained earnings
were $374,000, and stockholders' equity was $1,227,000. At the end of fiscal
year 1997, the Company's accumulated deficit was $916,000, and stockholders'
deficiency was $63,000. At March 31, 1998, the Company's accumulated deficit was
$2,933,000, and stockholders' equity was $962,000. At September 30, 1996,
September 30, 1997, and March 31, 1998, the Company's ratio of interest-bearing
indebtedness to total interest-bearing indebtedness and stockholders' equity was
20%, 105%, and 8%, respectively. There can be, and is, no assurance that
profitable operations and positive cash flow can be achieved or maintained or
that the funds obtained from the Rights Offering and any funds obtained from
future debt facilities will be sufficient to carry the Company to a time when
profitable operations and positive cash flow would sustain the Company.
Continued losses would negatively impact the Company's working capital and the
extension of credit by any future lenders. See "Future Cash Requirements."
 
    The report of Meredith, Cardozo, Lanz & Chiu LLP on the Company's financial
statements for the year ended September 30, 1997, and issued as of November 20,
1997, includes an explanatory paragraph to express substantial doubt regarding
the Company's ability to continue as a going concern. The report of Price
Waterhouse LLP on the Company's financial statements for the year ended
September 30, 1996 has been reissued with dual dates of December 23, 1996 and
October 23, 1997. The reissued report includes an explanatory paragraph to
express substantial doubt regarding the Company's ability to continue as a going
concern. There can be no assurance that the Company will not continue to incur
significant operating losses or that required additional financing will be
available to meet the Company's business plan in fiscal 1998 and beyond.
 
FUTURE CASH REQUIREMENTS
 
    The Company believes that borrowings under future debt facilities in an
aggregate amount equal to approximately $1,000,000 will be necessary to satisfy
the Company's cash requirements for implementing its business plan during the
remainder of the fiscal year ending September 30, 1998. The actual cash
resources required will depend upon numerous factors, including those described
under "Certain Factors--Dependence on New OEM Relationship," "--Dependence on
Government Contractors," "--Uncertainty of Product Development and
Introduction," and "--Uncertainty of External Strategic Opportunities" and the
cash requirements could be materially greater than $1,000,000.
 
    With the net proceeds from the Rights Offering, the Company repaid all
outstanding amounts under its existing debt facilities. The Company plans to
enter into one or more new debt facilities with third party lenders (the "Future
Debt Facilities") to provide for the remaining cash required to implement its
business plan for the remainder of fiscal 1998.
 
    The Company is continuing to pursue discussions with other lenders
concerning the Future Debt Facilities; however, there can be no assurance that
the Company will be able to obtain the Future Debt Facilities. Even if the
Company is able to obtain Future Debt Facilities, there can be no assurance as
to the terms thereof. If the Company is unable to obtain Future Debt Facilities,
the Company and its business will likely be materially adversely affected.
 
    There is no assurance that the Company will be successful in obtaining all
such capital from the Future Debt Facilities. If the Company is unable to obtain
such capital on a timely basis, the Company will be required to consider, among
other actions, a substantial reduction in its research and development expenses
which will impact the introduction of new products, a substantial reduction in
other operating expenses and the sale of one or more product lines of the
Company. Such actions to significantly curtail its planned operations will
likely have a materially adverse affect on the Company's business, financial
condition and results of operations.
 
                                       9
<PAGE>
    Assuming that the Company is able to obtain the Future Debt Facilities, the
Company expects that the Future Debt Facilities will impose various covenants
relating to the Company's performance and financial condition. If the Company
does not maintain compliance with such covenants, the lender will have the right
to declare all outstanding amounts immediately due and payable. There can be no
assurance that the Company will be able to maintain compliance with the
covenants under the Future Debt Facilities.
 
INVENTORY RESERVE
 
    The Company recorded a write-down of inventory by $600,000 in the first
fiscal quarter of 1998 to reserve for potential obsolescence related to
discontinuance of selected products. While management believes the amount of the
inventory reserve is appropriate under current circumstances, there can be no
assurance that the amount of the reserves will be sufficient to account for the
discontinuance of such products. See "Results of Operations."
 
DEPENDENCE ON NEW OEM RELATIONSHIP
 
    The Company recently introduced a new line of microwave frequency counters,
which it began distributing in October 1997, on a private label basis worldwide
through an OEM relationship with Hewlett-Packard Company ("Hewlett-Packard").
The Company expects that this OEM relationship will account for approximately
35% of its revenues in fiscal year 1998. However, Hewlett-Packard is not
obligated to purchase a minimum quantity of products, and the failure of
Hewlett-Packard to purchase the product quantity expected by the Company would
have a material, negative impact upon the Company's business. There can be no
assurance that the Company will be able to maintain a successful relationship
with Hewlett-Packard and generate revenues or profits from the relationship.
 
DEPENDENCE ON GOVERNMENT CONTRACTORS
 
    Approximately 37% of the Company's revenues in the last two fiscal years
have been derived from the sale of products to government contractors. The
Company recently received a five-year indefinite quantity, fixed price supply
subcontract from ManTech Systems Engineering Corporation, a government
contractor ("ManTech"), for the supply of RF synthesized signal generators and
RF down converters, with total sales value to the Company that could range from
approximately $3.5 to $20 million. The Company has received an initial purchase
order under the subcontract in the amount of $227,000. Further production
purchase order releases under the subcontract are subject to satisfactory
completion of field testing of the U.S. Marine Corps' Third Echelon Test Set
(TETS) systems and the Company's components. The Company will incur substantial
expenses in preparing to satisfy its obligations under this subcontract.
However, despite the incurrence of such expenses, this and other subcontracts
with government contractors are subject to cancellation provisions in favor of
the government contractor. The subcontract with ManTech is subject to
termination by ManTech in the event that the government terminates its contract
with ManTech. Further, this subcontract can be terminated if the Company's
components do not satisfy field testing requirements or the Company otherwise
defaults under the subcontract. There can be no assurance that the Company will
receive additional subcontracts from government contractors.
 
DEPENDENCE ON KEY SUPPLIERS
 
    A number of the Company's products require specialized components currently
available only through single sources of supply. The loss of any of these
sources, or the inability of any such source to meet the Company's production
and quality control requirements, could be detrimental to the Company with
respect to the specific products involved. If any of the Company's single source
suppliers is not able to deliver these specialized components, the Company would
be required to implement alternative supply strategies (such as changing to one
or more other suppliers, which could require product design or specification
changes and would likely cause delays in shipment of the Company's products) or
discontinue sales of the affected products.
 
                                       10
<PAGE>
UNCERTAINTY OF PRODUCT DEVELOPMENT AND INTRODUCTION
 
    The Company's success depends to a large degree on its ability to develop
and introduce in a timely manner new or updated products which are affordable,
functional in purpose, distinctive in quality and design and tailored to the
purchasing patterns of the Company's customers and potential customers.
 
    Misjudgments as to customer interest in new or updated products could lead
to excess inventories and markdowns and could have a material adverse effect on
the Company's financial condition and results of operations. There can be no
assurance that new products under development will be successfully developed and
introduced. Further, due to the uncertainty associated with any product
development and introduction (such as delays in development and lack of market
acceptance of a new product), there can be no assurances that the Company's
development and introduction efforts will be successful. If products under
development are not successfully introduced, the Company's business, financial
condition and results of operations would be materially adversely effected.
 
UNCERTAINTY OF EXTERNAL STRATEGIC OPPORTUNITIES
 
    The Company is pursuing strategic opportunities to acquire other companies
or their technology or products. The Company believes that opportunities are
available that will have strategic benefit to the Company; however, there can be
no assurance that the Company will be able to successfully identify, negotiate
and consummate such acquisition opportunities. Such acquisitions could enable
the Company to generate additional revenues and to increase its gross profit by
an amount that exceeds any increase in operating expenses; however, there can be
no assurance that the Company would be able to obtain such financial benefits.
Further, the Company's current financial condition does not enable it to make
such acquisitions without incurring debt or issuing equity to finance such
acquisitions.
 
COMPETITION
 
    The markets in which the Company's products are sold have become
increasingly competitive. Most of the Company's principal competitors have
substantially greater financial resources. The Company's results of operations
can be significantly affected by pricing pressures arising from customer demand
and pricing strategies by the Company's competitors, and the timing and market
acceptance of new product introductions by competitors of the Company. There can
be no assurance that pricing pressures will not have a material adverse effect
on the Company, or that the Company's competitors will not succeed in developing
products that would render the Company's technology and products obsolete and
noncompetitive.
 
    Due to the foregoing and other factors, past results are not reliable
predictors of future results. In addition, the securities of many technology and
developmental companies, such as the Company, have historically been subject to
extensive price and volume fluctuations that may adversely affect the market
price of their common stock.
 
                                       11
<PAGE>
                              EIP MICROWAVE, INC.
                           PART II--OTHER INFORMATION
 
ITEM 2. CHANGES IN SECURITIES
 
    On March 20, 1998, the Company issued 282,000 shares of Common Stock to the
Bishop Family Trust as full payment of the facility fees of $141,000 incurred by
the Company under the Loan Facility with the Bishop Family Trust. These
securities were issued in reliance on the exemption from registration in Section
4(2) of the Securities Act of 1933. See Part I/Item 2--Financial Condition.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    The Company held its Annual Meeting of Stockholders on February 11, 1998.
Two items were voted on by the stockholders.
 
    (1) Mr. Robert D. Johnson was re-elected and Mr. James N. Cutler, Jr. was
       elected as Class III members of the Board of Directors with terms
       expiring at the 2001 Annual Meeting of Stockholders. The votes cast for
       or withheld from the nominees were as follows: For Robert D.
       Johnson--357,594; Withheld--6,310, for James N. Cutler, Jr.--357,614;
       Withheld--6,290. John F. Bishop and J. Bradford Bishop, each a Class I
       director, and Michael E. Johnson and J. Sidney Webb, each a Class II
       director, were not up for re-election and continue in office.
 
    (2) The stockholders approved the Company's 1998 Stock Plan, as adopted by
       the Board of Directors, and the reservation and authorization of
       1,500,000 shares of Common Stock, reserved for issuance under the terms
       of the Plan. Vote to approve as follows: For--229,196; Against-- 9,186;
       Abstain--108; Broker Non-Votes--125,414.
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
    (a) Exhibits.
 
       27 Financial Data Schedule.
 
    (b) Reports on Form 8-K.
 
       The Company did not file with the Commission any reports on Form 8-K in
       the quarter ended March 31, 1998.
 
                                       12
<PAGE>
                              EIP MICROWAVE, INC.
                                   SIGNATURES
 
    Pursuant to the requirements 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.
 
<TABLE>
<CAPTION>
<S>                                                   <C>        <C>
DATE: May 5, 1998                                     BY:                       /s/ J. BRADFORD BISHOP
                                                                        --------------------------------------
                                                                                  J. Bradford Bishop
                                                                                CHAIRMAN OF THE BOARD,
                                                                         CHIEF EXECUTIVE OFFICER AND DIRECTOR
                                                                            (PRINCIPAL EXECUTIVE OFFICER)
 
DATE: May 5, 1998                                     BY:                         /s/ JOHN F. BISHOP
                                                                        --------------------------------------
                                                                                    John F. Bishop
                                                                         VICE CHAIRMAN, TREASURER, SECRETARY
                                                                      AND DIRECTOR (PRINCIPAL FINANCIAL OFFICER)
</TABLE>
 
                                       13
<PAGE>
                              EIP MICROWAVE, INC.
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
                                                                                                     SEQUENTIALLY
EXHIBIT NO.                                       DESCRIPTION                                       NUMBERED PAGE
-----------  -------------------------------------------------------------------------------------  --------------
<S>          <C>                                                                                    <C>
    27                                      Financial Data Schedule                                       --
</TABLE>
 
                                       14