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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                    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, 1999

                                       OR

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

                         Commission file number 0-24360


                              SPECTRIAN CORPORATION
             (Exact name of registrant as specified in its charter)


            Delaware                                            77-0023003
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                             Identification No.)


350 West Java Drive, Sunnyvale, California                       94089
 (Address of principal executive offices)                      (Zip Code)


                                 (408) 745-5400
              (Registrant's telephone number, including area code)


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


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


                                                   Name of each exchange on
    Title of each class                                which registered
    -------------------                                ----------------
         None                                               None


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

                          Common Stock, $.001 par value
             Series A Participating Preferred Stock, $.001 par value


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


                  Yes _X_                      No ___


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

         The aggregate  market value of the voting stock held by  non-affiliates
of the registrant, based upon the closing sale price of the Common Stock on June
1,  1999  as  reported  on  the  Nasdaq  National  Market,   was   approximately
$85,818,107.  Shares of Common Stock held by each executive officer and director
and by each person who owns 5% or more of the outstanding Common Stock have been
excluded in that such persons may be deemed to be affiliates. This determination
of affiliate  status is not  necessarily  a conclusive  determination  for other
purposes.

         As of June 1, 1999,  registrant had  outstanding  10,217,578  shares of
Common Stock.


                       DOCUMENTS INCORPORATED BY REFERENCE

         The  Registrant  has  incorporated  by reference  into Part III of this
Annual Report on Form 10-K  portions of its Proxy  Statement for the 1999 Annual
Meeting of Stockholders to be held July 15, 1999.

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<PAGE>


                                     PART I

ITEM 1. BUSINESS

         This  Annual  Report  on  Form  10-K,  the  exhibits   hereto  and  the
information   incorporated  by  reference   herein  contain   "forward   looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act") and Section 21E of the Securities Exchange Act of
1934,  as amended (the  "Exchange  Act"),  and such forward  looking  statements
involve risks and uncertainties.  When used in this Report, the words "expects,"
"anticipates"  and "estimates" and similar  expressions are intended to identify
forward   looking   statements.   Such  statements  are  subject  to  risks  and
uncertainties  that could cause actual results to differ  materially  from those
projected. These risks and uncertainties include those discussed below and those
discussed in  "Management's  Discussion and Analysis of Financial  Condition and
Results  of  Operations"  or   incorporated  by  reference   herein.   Spectrian
Corporation  undertakes no obligation to publicly release any revisions to these
forward  looking  statements to reflect events or  circumstances  after the date
this Report is filed with the Securities  and Exchange  Commission or to reflect
the occurrence of unanticipated events.

         Spectrian   Corporation   (the  "Company"  or   "Spectrian")   designs,
manufactures  and markets highly linear radio frequency  ("RF") power amplifiers
that   address  the  needs  of  wireless   infrastructure   original   equipment
manufacturers  ("OEMs") and their  service  provider  customers.  The  Company's
amplifiers  have  been  deployed  in  wireless  networks  in over  35  countries
worldwide.    Spectrian's   amplifiers   deliver   high   linearity,    can   be
cost-effectively produced in volume and support multiple transmission standards.
These  attributes  enable  service  providers  to  improve  spectrum  efficiency
resulting in reduced cost per subscriber,  to rapidly deploy new services and to
offer enhanced quality and reliability of service.

Industry Background

         The market for cellular,  personal  communications services ("PCS") and
wireless  local loop  ("WLL")  communications  services  (collectively  known as
"wireless" services) has grown significantly  during the past decade,  fueled by
decreasing   prices  for  wireless   handsets,   a  more  favorable   regulatory
environment,  increasing  competition  among  service  providers  and a  greater
availability  of services  and RF  spectrum.  In  addition,  several  developing
countries  are  installing  wireless  telephone  networks as an  alternative  to
installing,  expanding  or upgrading  traditional  wireline  networks.  Emerging
bidirectional  wireless data  applications  have the potential to further expand
the market for wireless communications by allowing service providers to increase
revenue generating traffic on their networks. The Strategis Group estimates that
the number of wireless subscribers  worldwide will grow from 288 million in 1998
to 720 million in 2003.

         The growth in wireless  communications has required,  and will continue
to  require,  substantial  investment  by service  providers  in  infrastructure
equipment.  The  Yankee  Group  estimates  that  spending  by  wireless  service
providers on infrastructure  equipment was approximately $27 billion in 1998 and
will  rise  to   approximately   $73  billion  in  2003.   A  typical   wireless
communications  system  comprises a  geographic  region  containing  a number of
cells,  each of which  contains  a cell  site (or  "base  station"),  which  are
networked to form a service  provider's  coverage area. Each base station houses
the equipment that receives  incoming  telephone calls from the switching office
of the local wireline  telephone  company and  broadcasts  calls to the wireless
users within the cell. A base station contains a fixed number of RF channels; in
a single carrier system, each separate channel requires a separate  transceiver,
single channel power amplifier and tunable cavity filter,  along with an antenna
to transmit the outgoing  signal to the wireless  telephone  user. Most existing
wireless  systems  use single  channel  power  amplifiers.  The power  amplifier
receives a relatively weak signal from the transceiver and significantly  boosts
the power of that signal so that it can be broadcast  throughout the cell, which
typically  covers a  geographic  area up to five miles in  radius.  The RF power
levels necessary to transmit the signal over the required range must be achieved
without distorting the modulation characteristics of the signal.

         Traditional  cellular systems are capable of carrying only one call per
channel of spectrum and are based on analog technology. This limitation combined
with the continuing growth of the wireless communications market has resulted in
the crowding of transmissions within the available RF spectrum.

                                        1

<PAGE>


Because the radio  frequencies  assigned  to  transmissions  are fixed,  service
providers  are seeking new methods to use the RF spectrum  more  efficiently  to
increase capacity. Analog systems are being supplanted by digital systems, which
convert voice transmissions into bits of electronic  information and thereby use
the finite RF spectrum  allocated  to wireless  transmissions  to serve  growing
demand. Three dominant digital transmission  modulation formats have emerged for
cellular  and PCS  networks  that are  known as Time  Division  Multiple  Access
("TDMA"),  Code Division  Multiple  Access ("CDMA") and Global System for Mobile
Communication  ("GSM").  These  transmission  modulation formats allow a digital
network  to have a call  capacity  of three to eight  times the  number of voice
conversations as an analog network. Existing analog cellular networks are in the
process of upgrading to digital that operate at frequencies  between 800 MHZ and
1000 MHZ, and new digital  cellular  networks are being  constructed  around the
world as new  licenses are being  awarded.  In addition to the growth in digital
cellular  networks,  1998  continued  to be a year of growth for new digital PCS
networks.  PCS networks may be more desirable to wireless service providers than
analog networks,  because such networks also allow a higher volume of calls in a
given RF spectrum than analog  cellular  networks.  PCS networks  operate in the
1800 MHZ to 2000 MHZ frequency range but typically have a smaller  coverage area
per base station than their  digital  cellular  counterparts.  Thus PCS networks
need two to three times as many base stations (and power  amplifiers) as digital
cellular  networks.  The  implementation  of these  digital and PCS networks has
resulted in an increased demand for network infrastructure equipment.

         Wireless  carriers are also increasing  system capacity by implementing
dynamic channel  allocation,  which allows the service provider to automatically
move available unused channels from less active base stations to busier adjacent
base  stations  as the demand load moves,  such as during  commuter  rush hours.
Systems with dynamic channel allocation  require  multicarrier power amplifiers,
which can simultaneously broadcast signals using multiple transmission standards
over a  variable  number of  channels.  The need to  increase  system  capacity,
combined  with  the  development  of  multicarrier  power  amplifiers,  has also
encouraged wireless carriers to transition from "macrocell" base stations, which
typically have a five mile radius, to microcells. When the number of subscribers
within the  macrocell  exceeds the  capacity of its  equipment,  the cell can be
split into several  smaller  microcells to avoid a degradation  in service.  The
geographic range of these microcells is smaller and more microcells are required
in order to increase  the  capacity of the overall  system.  Microcells  require
equipment  that consumes  less power and is less  expensive at each base station
than macrocells.

         Wireless  carriers' ability to more effectively  manage scarce spectrum
resources and  accommodate a larger number of  subscribers is dependent on their
ability to broadcast signals with high  "linearity."  Linearity is the degree to
which amplified signals remain within their prescribed band of the spectrum with
low  distortion or  interference  from adjacent  channels.  In the base station,
network RF power amplification is generally the source of the greatest amount of
signal  distortion.  Consequently,  obtaining  RF  power  amplifiers  with  high
linearity  is critical to a service  provider's  ability to reduce  interference
levels and  thereby  increase  system  capacity.  For  example,  higher  network
linearity  is  required  as the  industry  transitions  from  analog to  digital
technologies to prevent  scrambling of calls among channels when dynamic channel
allocation is used. Multicarrier power amplifiers, which are critical to the use
of dynamic  channel  allocation and  microcells,  require leading edge linearity
technology to function properly.  Substantial investment and technical expertise
are  required  to  design  and  manufacture  single  and  multicarrier  RF power
amplifiers with high linearity,  low cost, high efficiency and high reliability;
all of which are critical to the network and the service.

         Wireless service providers compete in dynamic markets  characterized by
evolving and competing industry standards,  technologies and applications. Those
wireless  service  providers  that are able to increase the efficiency and lower
the cost of new and existing  systems will  compete most  effectively.  Wireless
service  providers must  anticipate  evolving  industry  standards and invest in
infrastructure equipment that both maximizes efficiency in the management of the
limited  spectrum  licensed  to  them  and is  available  in  volume  for  rapid
deployment.

         Service  providers obtain their equipment from a concentrated  group of
large  wireless   infrastructure   OEMs.   The  Company   believes  that  Lucent
Technologies, Inc. ("Lucent"), Ericsson Telephone Company ("Ericsson"), Motorola
Corporation ("Motorola"), Nortel Networks ("Nortel"), and Nokia OY

                                        2

<PAGE>


("Nokia") supplied over 80% of the wireless  infrastructure  equipment installed
worldwide in 1998.  Historically,  most of these OEMs  manufacture  base station
components   internally.   However,  in  response  to  competition  and  as  the
performance requirements of certain components increase, many of these OEMs have
begun to rely on  independent  sources for certain system  components  that must
meet  unique  technical  requirement,  such as power  amplifiers.  To succeed in
capturing  orders from these OEMs,  independent  power amplifier  suppliers must
rapidly  bring to market  products  that are highly  linear,  can be produced in
volume  cost-effectively,  support  multiple  standards  and are reliable in the
field.

The Spectrian Solution

         Spectrian  Corporation designs,  manufactures and markets highly linear
RF power amplifiers that address the needs of wireless  infrastructure  OEMs and
their service provider customers.  The Company's  amplifiers provide significant
advantages to its customers, including:

         High  Linearity.  Spectrian has  developed  the multiple  technological
competencies  and  disciplines   required  to  achieve  high  linearity  in  its
amplifiers.   These  competencies  and  disciplines   include  RF  semiconductor
technology, solid state device physics, thermal and mechanical packaging design,
advanced circuit design,  amplifier  linear  correction  technologies,  advanced
signal  processing  techniques,  control  systems and computer  aided design and
modeling.  The  Company  believes  that its  combined  strengths  in these areas
provide it with an important competitive advantage in maintaining  technological
leadership.  The high degree of linearity of the  Company's  amplifiers  enables
Spectrian's  OEM  customers  to furnish  wireless  service  providers  with high
capacity base station equipment at low capital cost per subscriber.

         Rapid Time to Market and Volume  Manufacturing.  Spectrian's design and
semiconductor  production processes are key elements of the Company's ability to
address wireless infrastructure equipment suppliers' quantity and time to market
requirements for power amplification  products.  The Company's ability to design
and  manufacture  its RF  semiconductors  in-house is  important  in rapidly and
cost-effectively  introducing  new  products  that meet  OEMs'  evolving  needs.
Spectrian also designs its amplifiers to be  manufactured in high volumes at low
cost,  which the Company  believes has been a competitive  advantage in securing
orders from its OEM customers  because power amplifiers have  historically  been
difficult to manufacture in high volumes based upon the labor  intensive  nature
of the  manufacturing  process  and the  complexities  of RF  power  technology.
Finally,  the Company's use of automated  testing reduces overall  manufacturing
cycle times and enables the Company to deliver products in volume more rapidly.

         Standards  Independence.  Spectrian's  technologies support every major
wireless  modulation  standard,  and its multicarrier  power amplifiers  support
several  standards  simultaneously.  Certain  of the  Company's  single  carrier
products  support both analog and digital  standards in a dual mode format.  The
Company  believes  that this  breadth of product  functionality  is important to
wireless  service  providers  as  they  upgrade  their  cellular  infrastructure
equipment and  implement  digital  systems in an  environment  characterized  by
evolving industry standards and the proliferation of spectrum allocation.

         High  Quality and  Reliability.  Spectrian  strives to design its power
amplifiers to be highly reliable in the field. Spectrian's integrated design and
manufacturing  processes are important  factors  contributing  to its ability to
develop  and  produce  highly  reliable  power  amplifiers.  In order to further
address  customer  requirements  for amplifier  quality and  reliability  and to
ensure process quality control,  Spectrian has implemented a continuous  process
improvement program throughout the Company and is ISO 9001 certified.

         Multicarrier    Functionality.    Spectrian   develops   and   supplies
multicarrier  amplifiers that integrate the functions of multiple single carrier
power amplifiers into a single smaller unit while simultaneously eliminating the
need for cavity  filters.  The Company  believes that the  distortion  reduction
performance  of its  multicarrier  amplifiers  will provide it with an important
competitive  advantage.  The ability of the Company's  multicarrier  products to
combine multiple digital and analog channel schemes enables carriers to maintain
backward  compatibility as they add digital  transmission and implement  dynamic
channel allocation  solutions.  In addition,  multicarrier units can potentially
reduce   service   providers'   equipment  and   maintenance   costs  and  space
requirements, thereby facilitating the implementation of microcells.

                                        3

<PAGE>


Spectrian Strategy

         Spectrian's  objective is to achieve and maintain a leadership position
as  a  merchant   supplier  of  highly  linear  power   amplifiers  to  wireless
infrastructure  OEMs and  service  providers  worldwide.  Spectrian  strives  to
achieve product leadership through the following:

         Leadership Position in Amplification Technology. The Company intends to
maintain and expand a technological  leadership position by continuing to invest
significant  resources in research and development of amplification  technology.
The Company  believes  that its RF amplifier  research and  development  team is
among the largest and most  skilled in the merchant  high power RF industry.  To
maintain a technological leadership position, the Company believes that numerous
integrated technical capabilities are required,  including  semiconductor design
and   fabrication,   unique  packaging   concepts  and  components,   customized
linearization  and correction  technologies  and expert RF circuit  design.  The
Company's strategy is to continue to invest significant resources to support the
Company's technology leadership in amplifier linearity, power and efficiency.

         Vertical Integration of Semiconductor and Amplifier Design. The Company
has historically pursued a strategy of vertical integration of its semiconductor
and amplifier  design  process.  The design  process  begins with the design and
development  of the  semiconductor  die  and  culminates  with  the  design  and
development  of the  power  amplifier.  Control  of both the  semiconductor  and
amplifier design process allow for the optimum trade off of semiconductor device
performance  and amplifier  linearity  enhancement  circuitry that minimizes the
overall product cost while achieving the required product specifications.

         Internal   Semiconductor   Manufacturing.    The   performance   of   a
semiconductor  device is closely tied to the wafer fabrication facility in which
the devices are built. Spectrian has chosen to operate its own wafer fabrication
facility to control these critical device-manufacturing processes including gold
metallization, which is largely unavailable in outside foundries. In addition to
tightly controlled device performance,  the wafer fabrication  facility improves
the Company's  access to a supply of RF  semiconductors  even in periods of high
industry demand for semiconductors and intense competition for wafer fabrication
capacity.

         Rapid Time to Market.  The Company provides  customized or "application
specific" amplification products to address the particular technical and time to
market requirements of each of its customers.  The Company leverages its modular
product architecture,  configurable core technologies and product platforms,  as
well as its ability to design products for all RF modulation schemes, to rapidly
and cost effectively develop and deliver  application  specific solutions to its
customers.

         Strategic Relationships with Manufacturing Partners. Since fiscal 1998,
Spectrian has pursued a  manufacturing  strategy of outsourcing  portions of its
product  manufacturing to contract  manufacturers to decrease the  manufacturing
overhead and costs of its products.  Use of contract  manufacturers also results
in increase  flexibility  to respond to  fluctuations  in product demand without
incurring  significant fixed costs from an in-house  manufacturing staff. During
this  period,  the  Company  has moved  from  outsourcing  only a portion of its
printed  circuit boards to outsourcing  all of its circuit board  assemblies and
its higher volume amplifiers on a turnkey basis to contractors solely focused on
manufacturing  excellence.  As the manufacture of a high power RF amplifier is a
complicated process, Spectrian maintains an extremely close working relationship
with its contract  manufacturing  partners and  continues to monitor and control
all critical manufacturing steps.

         Relationships   with  Leading   Worldwide   Manufacturers  of  Wireless
Infrastructure  Equipment.  The Company has developed relationships with certain
large wireless OEMs,  including Nortel Networks  ("Nortel"),  LG Information and
Communications Limited ("LGIC") and QUALCOMM Incorporated ("QUALCOMM"),  as well
as certain emerging  manufacturers  such as Harris Corporation  ("Harris").  The
Company's strategy is to form lasting customer  relationships by working closely
with OEM customers to develop insight into their amplifier  requirements  and to
design specific  products that meet their needs, by rapidly  delivering  product
designs  and  volume  production,  and by  maintaining  the  confidentiality  of
customer technology. In addition to its current customers, the Company continues
to pursue opportunities to establish relationships and provide products to other
large wireless OEMs both domestically and  internationally.  The Company markets
its products worldwide,  and as of March 31, 1999, its power amplifiers had been
installed in over 35 countries.

                                        4

<PAGE>


         Long Term Relationships with Wireless Service Providers Worldwide.  The
Company has also pursued a strategy of establishing  direct  relationships  with
certain wireless service providers offering them product solutions that were not
readily available through the OEM  manufacturers.  The primary product solutions
offered to service  providers  have been  multicarrier  products that enable the
service  providers to address  some of the  challenges  of deploying  high power
digital base stations.  In some cases, these multicarrier  product solutions are
required to address the complexities  involved with adding digital signals to an
existing analog network without decreasing the analog cell site coverage.  Focus
on  direct  sales to  wireless  service  providers  continues  to be a  critical
component of Spectrian's diversification strategy.

         Standards  and  Systems   Independence.   The  Company's  products  are
compatible   with   wireless   communications   systems   provided   by  various
infrastructure   suppliers   and  operate   under  every  major   domestic   and
international standard. By pursuing both standards and systems independence, the
Company believes that Spectrian will benefit from the continuing  growth of both
existing and emerging wireless  communications  systems while reducing the risks
associated with reliance on the success of one or a limited number of systems or
existing or emerging industry  standards.  In addition to supporting every major
cellular  standard,  the Company has  developed,  and is  continuing to develop,
products  that address the needs of the PCS, WLL and emerging  third  generation
markets.

Markets

         Wireless  systems  have  historically   employed  analog   transmission
formats,  certain of which have been adopted as industry standards.  The need to
accommodate a growing wireless  customer base within a finite amount of spectrum
has, however, encouraged a worldwide transition from analog standards to various
digital  technologies  which are  significantly  more efficient.  Current analog
standards  include  Advanced Mobile Phone Services  ("AMPS") in the Americas and
Total Access  Communications System ("TACS") and Nordic Mobile Telephone ("NMT")
in Europe.  Current  digital  standards  include TDMA,  CDMA,  Personal  Digital
Cellular ("PDC") in Japan and GSM.

         The Company  offers  amplifiers  that  support the AMPS and TACS analog
standards and the TDMA, CDMA and GSM digital standards for cellular systems. The
Company has elected not to support the NMT analog standard in Europe, because it
believes  that  NMT  has a lower  potential  for  growth  than  the GSM  digital
standard.  To  date,  the  Company  has  not  invested  significant  development
resources to incorporate  the PDC standard into its product  offerings,  because
such standard has not developed to any great degree outside of Japan.

         In addition to the analog and digital cellular systems discussed above,
the  market  for PCS  systems  is  expanding  rapidly.  The FCC has  reallocated
spectrum in the 1.85 to 1.99  gigahertz  range for the  provision of PCS and has
conducted several rounds of auctions for the PCS spectrum. The success of PCS as
a wireless service will depend in part on whether  infrastructure  manufacturers
and service  providers  can reduce  system  manufacturing  and service costs and
prices sufficiently to increase  significantly the rate of market penetration of
potential subscribers.

                                        5

<PAGE>


<TABLE>
         The following chart illustrates these existing and developing standards
for wireless  communications,  and the shaded  areas  represent  markets  and/or
regions  served  and  standards  supported  by  the  Company's  current  product
offerings.

<CAPTION>
----------------------------------------------------------------------------------------------------
                       Major Wireless Standards by Region (frequencies in MHZ)
----------------------------------------------------------------------------------------------------
                  Americas               Europe              Asia Pacific               Japan
                    (MHZ)                 (MHZ)                  (MHZ)                  (MHZ)
----------------------------------------------------------------------------------------------------
<S>           <C>                   <C>                   <C>                     <C>
Analog           AMPS (800)          NMT (450, 900)          NMT (450, 900)            NTT (800)
Cellular                               TACS (900)              AMPS (800)            JTACS (800)
                                       AMPS (800)              TACS (900)
----------------------------------------------------------------------------------------------------
Digital          CDMA (800)            GSM (900)            CDMA (800, 900)           PDC (1500)
Cellular         TDMA (800)                                    GSM (900)              JDC (800)
                                                            TDMA (450, 800)          CDMA (800)
----------------------------------------------------------------------------------------------------
PCS              CDMA (1900)           GSM (1800)             CDMA (1900)             PHS (1900)
                 TDMA (1900)                                   GSM (1800)
                  GSM (1900)                                  CDMA (1800)
----------------------------------------------------------------------------------------------------
Broadband     IMT-2000 (2.1 GHz)    IMT-2000 (2.1 GHz)    IMT-2000 (2.1 GHz)      IMT-2000 (2.1 GHz)
                WCS (2.3 GHz)                             Korean WLL (2.4 GHz)
----------------------------------------------------------------------------------------------------
</TABLE>


         The Company believes that the potential for wireless  communications in
countries  without  reliable or extensive  wireline  systems may be even greater
than  in  countries  with  developed  telecommunications  systems.  The  cost of
building and  maintaining a wireless  network is generally less than the cost of
building and  maintaining  a comparable  wireline  network.  Thus,  in many less
developed  countries,  wireless service may provide the primary service platform
for both mobile and fixed  telecommunications.  In  addition,  if  technological
advances and price  decreases  continue to occur,  a market in the United States
and other  developed  countries for wireless  service to be used in  conjunction
with, or in place of, traditional wireline ("local loop") service may emerge for
a variety of  applications.  For example,  WLL networks could provide local loop
service and direct access to the long distance carriers.

Products

         The Company designs highly linear  amplifiers that address the specific
requirements of each of its OEM customers.  The Company's product strategy is to
support multiple wireless systems and standards.  Most existing wireless systems
use single  carrier power  amplifiers.  The following  table  provides a list of
standards for which the Company provides single carrier amplifiers:

----------------------------------------------------------------------
           Spectrian Single Carrier Amplifier Configurations
----------------------------------------------------------------------
   Standard                    Frequency (MHZ)     Power (Watts)
----------------------------------------------------------------------

   Analog Cellular:
     AMPS, CDPD ...............  869-894             45,65
     TACS .....................  917-950              65
----------------------------------------------------------------------
   Digital Cellular:
     TDMA .....................  485-495              50
     TDMA .....................  869-894             25,50
     CDMA .....................  869-894              25
     GSM ......................  925-960              30
----------------------------------------------------------------------
   PCS:
     GSM 1800 ................. 1805-1880             30
     CDMA ..................... 1930-1990            20,25
     GSM 1900 ................. 1930-1990             30
     CDMA ..................... 1805-1870             25
----------------------------------------------------------------------
   WLL:
     Wideband CDMA ............ 2370-2400          10,20,40
----------------------------------------------------------------------
   IMT 2000:
     W-CDMA ................... 2110-2170             25
----------------------------------------------------------------------


                                        6

<PAGE>


         The  Company   also   offers   multicarrier   amplification   products.
Multicarrier power amplifiers require significantly higher linearity than single
carrier designs.  The following table provides a list of the standards for which
the Company provides multicarrier amplifiers:

--------------------------------------------------------------------------------
                 Spectrian Multicarrier Amplifier Configurations
--------------------------------------------------------------------------------
                                     Frequency      Power          Typical
   Standard                            (MHZ)       (Watts)     Linearity (dBc)*
---------------------------            -------     -------     -----------------
   AMPS, TDMA, CDMA, CDPD             869-894       60-350           -65
   CDMA, TDMA                        1805-1990      25-100           -55
--------------------------------------------------------------------------------

----------------
* Carrier to Intermodulation Distortion Ratio.


         The  Company's  amplifiers  can be  configured  as  either  modules  or
pallets,  separate plug-in amplifier units or integrated subsystems and range in
price from  approximately  $500 to $30,000. A pallet represents the lowest level
of amplifier  complexity and consists of RF semiconductors  mounted on a printed
circuit board  without a housing.  A plug-in  amplifier  unit consists of a cast
housing,  which provides thermal management,  and contains a RF amplifier pallet
combined with a digital control  interface  module. A power amplifier  subsystem
consists  of  multiple  cast  housings  and adds  signal  processing  to enhance
linearity.  The  Company's  products are  integrated  into base station  systems
designed  and/or  manufactured  by its  OEM  customers,  and  therefore  must be
engineered  to be  compatible  with  industry  standards,  as well  as  customer
specifications including frequency, power and linearity.

OEM Customers, Sales and Marketing

         The Company sells power amplifiers to a limited number of OEMs in North
America, Europe and Asia principally through its direct sales organization.  The
Company's  customers  include  many  of the  world's  largest  manufacturers  of
wireless infrastructure  equipment,  including Nortel, LGIC and QUALCOMM. During
fiscal  1999,  Nortel  and  LGIC  accounted  for  approximately  76%  and 11% of
revenues,  respectively.  During  fiscal  1998,  Nortel and LGIC  accounted  for
approximately 79% and 14% of revenues, respectively.  During fiscal 1997, Nortel
accounted for  approximately  75% of revenues.  While Nortel continues to be the
Company's dominant customer, the products the Company supplies to Nortel and the
regions in which they are deployed have become more diverse. The Company expects
that sales of its  products  will  continue to be  concentrated  among a limited
number of customers.  Wireless  infrastructure  OEMs have come under  increasing
price pressure from wireless  service  providers,  which in turn has resulted in
downward  pricing  pressure on the Company's  products.  Therefore,  the Company
expects to incur  increasing price pressures from Nortel and its other major OEM
customers in future periods which could result in declining average sales prices
for the Company's  products.  The Company's  business,  financial  condition and
results of operations have been materially adversely affected in the past by the
failure of anticipated  orders to materialize and by deferrals or  cancellations
of orders by its  customers.  If the  Company  were to lose  Nortel or any other
major  customer  as a  customer,  or if orders by Nortel or any other  major OEM
customer were to otherwise decrease, the Company's business, financial condition
and results of operations would be materially adversely affected.

         The  Company  employs a  customer  focused,  team  based  direct  sales
approach to satisfy the power  amplification  needs of its  customers.  Sales to
large OEM customers  require close account  management by Company  personnel and
relationships  at multiple  levels of its  customers'  organizations,  including
management,  engineering and purchasing  personnel.  In addition,  the Company's
application specific  amplification products require experienced sales personnel
to match the  customer's  amplification  requirements  to the Company's  product
capabilities.  The Company believes that close technical  collaboration with the
customer  during the design  phase of new wireless  infrastructure  equipment is
critical  to  the  integration  of  its  amplification  products  into  the  new
equipment. The Company's integrated sales approach involves a team consisting of
a business unit general manager, a senior account manager, a program manager and
members of the Company's engineering department.  This sales approach allows the
Company's  engineering  personnel to work closely with their counterparts at the
OEM customer to assure compliance of the

                                        7

<PAGE>


Spectrian  product to the  customer's  specification.  The  Company's  executive
officers are also  involved in all aspects of the Company's  relationships  with
its major customers and work closely with their senior  management.  As of March
31,  1999,  the  Company had a direct  sales  staff of six  people.  The Company
warrants its new products against defects in design,  materials and workmanship,
typically for periods from 12 to 30 months.

         As part of the effort to diversify its product base,  the Company began
to  sell  multicarrier  amplifier  systems  (including  filters  and  combiners)
directly to service providers in fiscal 1997. The Company  recognizes that these
sales may be in conflict  with  potential or current OEM sales and is willing to
work with its OEM equipment  suppliers so that the service  provider  receives a
Spectrian  power  amplifier  system directly or through the OEM. There can be no
assurance  that the Company's  direct sales to service  providers will not cause
its OEM  equipment  suppliers to reduce orders or terminate  their  relationship
with the  Company.  Any such  reduction  or  termination  could  have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.

         The  Company  also  markets  its  products   with  the   assistance  of
independent sales representatives in various parts of the world. The Company has
one  independent  sales   representative  in  the  United  States,  three  sales
representatives in Europe covering Austria,  Finland,  France,  Germany,  Italy,
Sweden and Switzerland,  one sales representative dedicated to each of Japan and
Israel  and  a  sales  supports   organization  in  South  Korea.   The  Company
continuously  evaluates  whether to establish  direct sales forces or to utilize
independent  representatives  in a  particular  region or for a given  potential
customer  depending  upon  the  scope  of  potential  sales  opportunities.  The
Company's  direct  sales  staff  provides  sales  direction  and  support to its
international  sales  representatives.   Sales  outside  of  the  United  States
represented 84%, 95% and 73% of revenues in fiscal 1999,  fiscal 1998 and fiscal
1997,  respectively.  Sales outside of the United States are denominated in U.S.
dollars in order to reduce the risks associated with the fluctuations of foreign
currency  exchange  rates.  The Company  expects that  international  sales will
continue to account for a significant portion of its revenues.

Manufacturing

         The Company's  internal  manufacturing  facilities  consist of a 4 inch
wafer fabrication and semiconductor  assembly and test facility and a low volume
amplifier assembly and test facility in Sunnyvale,  California. The Company also
utilizes a contract  manufacturer to produce its high volume amplifier  products
on a turnkey basis.

         The Company's strategy of frequently  introducing and rapidly expanding
the  manufacture  of new  products to meet  evolving  OEM  customer  and service
provider  needs  has  caused  the  Company  to  experience  high  materials  and
manufacturing  costs,  including  high  scrap and  material  waste,  significant
material obsolescence,  labor inefficiencies and overtime expenses,  inefficient
material  procurement and an inability to realize economies of scale. These high
manufacturing  costs and production  interruptions have had an adverse effect on
the  Company's  results of  operations.  In  addition,  the Company has made and
expects to continue to make pricing commitments to OEM customers in anticipation
of achieving manufacturing cost reductions.

         The  Company's  operation  of its  manufacturing  facilities  entails a
number  of  risks,  including  a high  level of fixed and  variable  costs,  the
management of complex  processes,  dependence on a single source of supply and a
strict regulatory environment. Fixed costs consist primarily of occupancy costs,
investment in  manufacturing  equipment,  repair,  maintenance and  depreciation
costs related to equipment and fixed labor costs  related to  manufacturing  and
process  engineering.  During  periods of low demand such as evidenced in fiscal
1999, high fixed wafer  fabrication  costs are likely to have a material adverse
effect on the Company's results of operations.

         The Company  expects  that its  customers  will  continue to  establish
demanding  specifications for quality,  performance and reliability that must be
met by the Company's products.  RF semiconductors as complex as those offered by
the  Company  often  encounter  development  delays and may  contain  undetected
defects or failures when first  introduced or after  commencement  of commercial
shipments.  The  Company has from time to time in the past  experienced  product
quality,  performance or reliability problems.  In addition,  multicarrier power
amplifiers  have a higher  probability of  malfunction  because of their greater
complexity.

                                        8

<PAGE>


         Wafer  Fabrication.  The  Company  operates  its own wafer  fabrication
facility for the production of RF semiconductors,  the most important  component
utilized in the Company's  amplifiers.  As of March 31, 1999, the Company has an
eight person semiconductor  process engineering group responsible for continuous
improvement of semiconductor processes. The Company believes that control of the
semiconductor  manufacturing  process  allows it to reduce unit  costs,  control
quality,  improve  time to market  delivery  and most  importantly  increase the
linearity of the RF semiconductors used in its amplifiers.

         The Company's operation of its wafer fabrication  facility subjects the
Company  to a variety  of  local,  state and  federal  governmental  regulations
relating to the storage, discharge, handling, emission, generation,  manufacture
and disposal of toxic or other  hazardous  substances  used to  manufacture  the
Company's  products.  The Company believes that it is currently in compliance in
all  material  respects  with  such  regulations  and that it has  obtained  all
necessary environmental permits to conduct its business.

         Semiconductor  Assembly  and  Test.  Once a wafer is  processed,  it is
tested and diced into chips that are attached to a special ceramic package, wire
bonded and  encapsulated.  The packages  are  designed  for optimal  thermal and
electrical  performance that are critical during high power RF operation.  These
processes  require  precision for performance of the  semiconductor  to meet the
Company's  strict  standards but must also be suited to  manufacturing  in large
volumes.  The Company  utilizes  patented  packaging  techniques  to improve the
performance  of its  semiconductors  and  amplifiers  as well  as the  automated
assembly  techniques for  semiconductors.  In addition,  the Company  utilizes a
specialized  surface  mount  packaging  process to improve  transistor  assembly
volume  that also  enhances  thermal  performance,  lowers  costs  and  improves
reliability.

         Amplifier  Assembly and Test.  The  Company's  amplifier  manufacturing
activities consist of purchasing  components,  assembling and testing components
and subassemblies,  and integrating subassemblies into finished products for its
lower volume  amplifier  products.  The Company's  amplifiers are comprised of a
variety of  subassemblies  and components  designed or specified by the Company,
including housings, harnesses, cables, packaged RF semiconductors, semiconductor
integrated   circuits   and   printed   circuit   boards.   Except  for  the  RF
semiconductors,  these  components and  subassemblies  are manufactured by third
parties.  During  fiscal 1999,  the Company  began  utilizing  the services of a
turnkey contractor to assemble its high volume amplifier products. Regardless of
whether  the  Company  assembles  an  amplifier  in house or relies on a turnkey
contractor,  each of the Company's  products  receives  extensive in process and
final quality inspections and tests.

         The Company  attempts to utilize standard parts and components that are
available  from  multiple  vendors.  However,  certain  components  used  in the
Company's products are currently  available only from single sources,  and other
components  are  available  from only a limited  number of sources.  Despite the
risks  associated  with  purchasing  components  from  single  sources or from a
limited number of sources, the Company has made the strategic decision to select
single  source or limited  source  suppliers in order to obtain  lower  pricing,
receive more timely delivery and maintain quality  control.  If the Company were
unable to obtain  sufficient  quantities of components,  delays or reductions in
product  shipments could occur which would have a material adverse effect on the
Company's business, financial condition and results of operations.

         The Company  continues to initiate actions to reduce its  manufacturing
costs.  The Company  outsources  assembly of its higher  volume  amplifiers on a
turnkey basis. There can be no assurance that these activities will reduce costs
as quickly as anticipated  reductions in average selling prices of the Company's
products.  Any failure to achieve continued  manufacturing cost reductions could
have a material adverse effect on the Company's  business,  financial  condition
and results of operations.

Research and Development

         The mission of the Company's  research and development  organization is
to rapidly  design low cost,  highly  manufacturable  RF power  amplifiers  with
industry leading  performance.  The Company's  research and development staff is
organized into a semiconductor  group and an amplifier group. The  semiconductor
group  focuses on the rapid  design of RF  semiconductors  that are low cost and
highly efficient to provide  improved RF performance.  The  semiconductor  group
also performs advanced research in device

                                        9

<PAGE>


modeling  and  semiconductor   process  development  to  support  the  amplifier
engineering  group's efforts.  The amplifier  engineering group focuses on rapid
development of new RF power amplifiers that are  manufacturable  in high volumes
at low cost and achieve  industry  leading  performance.  This group creates new
product   platforms  and  leverages   existing  ones,  reuses  existing  circuit
topologies  and  introduces  into   production  new   correction,   control  and
amplification  concepts  created by the group.  The  Company  uses an  automated
design  environment  to model RF  semiconductors  and  amplifiers.  This  design
environment,  together  with the  Company's  modular  product  architecture  and
configurable core technologies,  allow it to rapidly define, develop and deliver
on a timely basis the new and enhanced products demanded by its OEM customers.

         The  Company  has  historically  devoted a  significant  portion of its
resources to research and development programs and expects to continue to do so.
As of March 31,  1999,  the  Company  had 131  people  engaged in  research  and
development.  The Company's  research and  development  expenses in fiscal 1999,
fiscal 1998 and fiscal 1997 were $26.7 million, $18.6 million and $17.2 million,
respectively,  and represented 27%, 11% and 19%, respectively, of total revenues
in those periods.

         The  markets  in  which  the  Company  and its  customers  compete  are
characterized by rapidly changing  technology,  evolving industry  standards and
continuous  improvements in products and services.  The Company's future success
depends  upon,  among other  things,  its  ability to develop new  products in a
timely manner that compete effectively on the basis of price and performance and
that  adequately  address the needs of its OEM  customers.  No assurance  can be
given that the Company's product  development  efforts will be successful,  that
its new products will achieve  customer  acceptance or that such OEMs'  products
will achieve  customer  acceptance.  In addition,  as is  characteristic  of the
wireless  communications  equipment  industry,  the average  sales prices of the
Company's products have historically  decreased over the products' lives and are
expected to continue to do so. To offset  declining  average sales  prices,  the
Company  believes  that in the  near  term it must  develop  new  products  that
incorporate advanced features and can be sold at higher average sales prices. To
the extent  that new  products  are not  developed  in a timely  manner,  do not
achieve customer  acceptance or do not generate higher sales prices and margins,
the Company's  business,  financial condition and results of operations would be
materially adversely affected.

Patents and Proprietary Technology

         The  Company's  ability  to compete  successfully  and  achieve  future
revenue growth will depend,  in part, on its ability to protect its  proprietary
technology and operate without  infringing the rights of others. The Company has
a policy of seeking  patents on inventions  resulting from its ongoing  research
and  development  activities.  The  Company  has been  awarded 29 United  States
patents and has 18 United States patent  applications  pending,  including  five
that have been  allowed but not yet formally  issued.  The Company also has been
awarded  four  foreign  patents  and has  fifteen  foreign  patent  applications
pending.   There  can  be  no  assurance  that  the  Company's   pending  patent
applications  will be allowed or that the issued or pending  patents will not be
challenged or circumvented by competitors.  Notwithstanding the Company's active
pursuit of patent  protection,  the  Company  believes  that the  success of its
business  depends more on the collective  value of its patents,  specifications,
computer  aided  design and modeling  tools,  technical  processes  and employee
expertise.  The Company generally enters into  confidentiality and nondisclosure
agreements with its employees, suppliers, OEM customers, and potential customers
and limits access to and  distribution of its proprietary  technology.  However,
there can be no assurance  that such measures will provide  adequate  protection
for the Company's trade secrets or other  proprietary  information,  or that the
Company's  trade secrets or  proprietary  technology  will not otherwise  become
known or be independently  developed by competitors.  The failure of the Company
to protect its proprietary  technology  could have a material  adverse effect on
its business, financial condition and results of operations.

         The  communications  equipment  industry is  characterized  by vigorous
protection and pursuit of intellectual property rights or positions,  which have
resulted in significant and often protracted and expensive litigation.  Although
there is  currently  no pending  intellectual  property  litigation  against the
Company,  the  Company or its  suppliers  may from time to time be  notified  of
claims that the Company

                                       10

<PAGE>


may be infringing patents or other  intellectual  property rights owned by third
parties.  If it is necessary or desirable,  the Company may seek licenses  under
such patents or other  intellectual  property rights.  However,  there can be no
assurance  that  licenses  will be  offered  or that the  terms  of any  offered
licenses will be acceptable to the Company.

Competition

         The wireless communications equipment industry is extremely competitive
and is characterized by rapid technological  change, new product development and
product obsolescence,  evolving industry standards and significant price erosion
over the life of a product.  The ability of the Company to compete  successfully
and  sustain  profitability  depends  in part upon the  rates at which  wireless
equipment  OEMs  incorporate  the Company's  products into their systems and the
Company captures market share from other merchant suppliers. The Company's major
OEM  customers,  including  Nortel,  LGIC and  QUALCOMM,  continuously  evaluate
whether to manufacture  their own  amplification  products or purchase them from
outside  sources such as the Company.  There can be no assurance  that these OEM
customers will incorporate the Company's  products into their systems or that in
general  they will  continue  to rely,  or expand  their  reliance,  on external
sources of supply for their power  amplifiers.  These  customers and other large
manufacturers  of wireless  communications  equipment  could also elect to enter
into the merchant market and compete directly with the Company, and at least one
OEM, NEC  Corporation  ("NEC") has already done so. Such  increased  competition
could materially  adversely affect the Company's  business,  financial condition
and results of operations.

         The  Company's  principal   competitors  in  the  market  for  wireless
amplification  products  provided by merchant  suppliers  currently  include AML
Communications,   Amplidyne,   Microwave   Power  Devices,   NEC  and  Powerwave
Technologies.   Certain  of  these   competitors   have,  and  potential  future
competitors could have, substantially greater technical,  financial,  marketing,
distribution  and other  resources  than the  Company  and have,  or could have,
greater  name   recognition   and  market   acceptance  of  their  products  and
technologies.  No assurance can be given that the Company's competitors will not
develop new  technologies or enhancements to existing  products or introduce new
products that will offer superior price or performance  features compared to the
Company's products.  To the extent that OEMs increase their reliance on external
sources for their power amplification needs, more competitors could be attracted
to the market.  The Company  expects its  competitors  to offer new and existing
products at prices  necessary to gain or retain  market  share.  The Company has
experienced significant price competition,  which has in the past affected gross
margins.  Certain  of  the  Company's  competitors  have  substantial  financial
resources  which may enable them to withstand  sustained  price  competition  or
downturns in the power amplification  market. There can be no assurance that the
Company will not be subject to increased  price  competition or that the Company
will be able to compete successfully in the future.

Backlog

         The Company does not believe that its backlog as of any particular date
is  representative  of actual sales for any  succeeding  period.  As part of the
Company's close working  relationships with its major customers,  such customers
expect  the  Company to  respond  quickly to changes in the volume and  delivery
schedule of their  amplifiers,  and if necessary,  to inventory  products at the
Company's  facilities for just in time delivery.  Therefore,  although contracts
with such customers typically specify aggregate dollar volumes of products to be
purchased  over an extended  time  period,  such  contracts  also  provide  that
scheduled  shipment  dates of particular  volumes are generally  released to the
Company only a few days or weeks prior to the actual required delivery dates. In
addition, the Company's customers may cancel or defer orders without significant
penalty.

Employees

         As of March 31, 1999, the Company had a total of 515 regular, temporary
and  contract  employees,  including  313 in  manufacturing  operations,  131 in
research and development,  22 in sales and 49 in  administration.  The Company's
future  success  will  depend,  in part,  on its ability to continue to attract,
retain and motivate highly qualified technical and management personnel. None of
the Company's employees is represented by a collective bargaining agreement, nor
has the  Company  experienced  any work  stoppage.  The  Company  considers  its
relations with its employees to be good.

                                       11

<PAGE>


Management

         The executive officers of the Company are and certain information about
them as of June 1, 1999 is as follows:


             Name              Age                         Position
             ----              ---                         --------
Garrett A. Garrettson ......... 55     President, Chief Executive Officer
                                         and Director
Henry C. Montgomery ........... 63     Acting Chief Financial Officer Executive
Joseph M. Veni ................ 47     Vice President, and General Manager,
                                         Single Carrier Products
Timothy Heyboer ............... 49     Vice President, Advanced Technology
Christopher Menicou ........... 40     Vice President, Quality
John Pelose ................... 44     Vice President and General Manager,
                                         Multicarrier Products
David Piazza .................. 35     Vice President and General Manager,
                                         Semiconductor
William Zucker ................ 41     Vice President, Single Carrier Products


         Garrett A.  Garrettson  joined the Company in April 1996 as  President,
Chief  Executive  Officer and a Director.  Between March 1993 and March 1996, he
served  as  President  and  Chief  Executive  Officer  of  Censtor   Corporation
("Censtor"),  which designs and sells technology  related to magnetic  recording
heads for the disk drive industry.  From 1986 to March 1993, he served as a Vice
President  of Imprimis  Technology  Incorporated  ("Imprimis"),  a wholly  owned
subsidiary of Control Data Corporation,  and subsequently as a Vice President of
Seagate Technology,  Inc.  ("Seagate")  following its acquisition of Imprimis in
1989.  Prior  to  1986,  Mr.   Garrettson  held  a  variety  of  positions  with
Hewlett-Packard  Company and served in the United  States Navy.  Mr.  Garrettson
also serves on the Boards of Directors of RedLake Imaging and Benton Oil and Gas
Company.  He received his B.S. and M.S. in Engineering  Physics and his Ph.D. in
Mechanical Engineering from Stanford University.

         Henry C. Montgomery joined the Company in May 1999 as Interim Executive
Vice  President,  Finance  and  Administration,   Chief  Financial  Officer  and
Secretary. He served as Executive Vice President of SyQuest Technology,  Inc., a
public company engaged in the development, manufacture and sale of computer hard
drives from  November  1996 through July 1997.  He served as president and Chief
Executive Officer of New Media Corporation,  a privately held company engaged in
developing,  manufacturing  and selling PCMCIA cards for the computer  industry,
from March 1995  through  November  1996.  From  March 1994 to March  1995,  Mr.
Montgomery  served  as  President  and Chief  Executive  Officer  of  Industrial
Electric Manufacturing, Inc. Since 1980, Mr. Montgomery has been the Chairman of
the Board of Montgomery Financial Services Corporation,  a management consulting
and financial  services firm.  Mr.  Montgomery has served as a director of Swift
Energy Company, an oil and gas company,  since 1987. Mr. Montgomery received his
B.A. in Economics from Miami University, Oxford, Ohio.

         Joseph M. Veni  joined the Company in April 1992 as Vice  President  of
Sales and in June 1996 was named Senior Vice President,  Sales and Marketing and
in December 1998 became  Executive Vice President and General  Manager of Single
Carrier  Products.  From 1987 to April 1992, he was Vice  President of Sales and
Marketing at  TTI-General  Signal.  Prior to that time, Mr. Veni was employed by
Cushman  Electronics,  Inc., Halcyon  Communications,  Inc., ICS Group, Inc. and
Western Union Telegraph Co. in various  marketing and sales positions.  Mr. Veni
received his Associates  Degree in Electronics  Technology  from Mt. San Antonio
College.

         Timothy  Heyboer  joined the Company in 1986 as Director of Engineering
and  served in a variety of  functions  and  divisions  including  product  line
management  and the now  discontinued  military  division.  In August 1996,  Mr.
Heyboer was named Vice  President of Amplifier  Engineering  of the Company.  In
December  1998,  Mr.  Heyboer was named Vice  President of Advanced  Technology.
Prior  to  joining  Spectrian,   Mr.  Heyboer  was  employed  at  Narda  Western
Operations,  a passive microwave  components  company.  Mr. Heyboer received his
B.S.E.E. degree and his M.S.E.E. degree from University of Michigan, Ann Arbor.

         Christopher  Menicou  joined  the  Company  in  January  1998  as  Vice
President of Quality. Prior to joining Spectrian,  Mr. Menicou held the position
of Vice President of Quality at Credence Systems from

                                       12

<PAGE>


February  1997  until  January  1998.  From  1984 until 1996, Mr. Menicou held a
variety  of  positions  at  LTX  Corporation  including Director of Quality. Mr.
Menicou  earned  his  B.S.  in  Business  Administration  from  San  Jose  State
University.

         John Pelose  joined the Company in 1986 and has held senior  management
positions in Design Engineering, Operations and Technical Corporate Development.
In December 1998,  Mr. Pelose was appointed Vice President & General  Manager of
Multicarrier Products.  Prior to joining Spectrian,  Mr. Pelose held engineering
management  and design  positions at Narda  Microwave  and Ford  Aerospace.  Mr.
Pelose earned his B.S.E.E. degree from the University of California at Davis and
his M.S.E.E. from Santa Clara University.

         David  Piazza  joined  the  Company  in 1990.  He has served in various
management  positions at the Company,  including  Director of  Engineering,  PCS
Amplifier  Products,   Engineering  Manager,   Amplifier  Products  and  Project
Engineer. In September 1996, Mr. Piazza was named Vice President,  Semiconductor
R&D for the Company. Mr. Piazza received his B.S.E.E. degree from the University
of California at Davis.

         William  Zucker joined the Company in October 1995 as Vice President of
Engineering.  In August 1996,  Mr. Zucker became Vice  President of Product Line
Management.  In April 1997, he was named Vice President of Marketing and in June
1998,  became Vice  President of Single Carrier  Products.  Prior to joining the
Company,  Mr. Zucker held several  positions at AT&T/AT&T  Bell Labs,  including
Director of Product  Management  from July 1994 to October  1995 and Director of
Development  from November 1991 to July 1994.  Mr. Zucker  received his B.S.E.E.
degree from Manhattan College and his S.M. in Electrical Engineering from MIT.


ITEM 2. PROPERTIES

         The Company's principal  administrative,  engineering and manufacturing
facilities are located in two buildings of approximately  141,000 square feet in
Sunnyvale,  California.  In November  1996,  the Company  entered  into  several
agreements in connection  with a transaction  with respect to these  properties.
Pursuant to these agreements, the Company sold these properties to SPEC (CA) QRS
12-20,  Inc.  ("SPEC"),  and  pursuant to the terms of a lease  agreement,  SPEC
agreed to lease these properties to the Company for a term of 15 years (with two
options  to extend  the lease for up to an  additional  ten  years).  This lease
agreement  also  provides that the Company shall have the right of first refusal
to purchase the properties from SPEC upon the occurrence of certain  conditions.
During the first  quarter of fiscal 1999,  the Company  entered  into  operating
leases for an ancillary  40,000 square foot  manufacturing  facility in Rocklin,
California  and a  2,750  square  foot  engineering  design  center  in  Quincy,
Illinois.  The Rocklin  facility has a sixty-two  month term and expires in July
2003, and the Quincy facility has been renewed for a twelve month term that will
expire in March  2000.  In March  1997,  through  means of a  limited  liability
company of which the  Company  owns 91.5%,  the Company  purchased a building of
approximately  39,000 square feet in Sunnyvale,  California  located between the
Company's two occupied buildings.


ITEM 3. LEGAL PROCEEDINGS

         Since December 23, 1997, a number of complaints have been filed against
the Company and certain of its  officers in the Federal  Court for the  Northern
District of California that allege  violations of the federal  securities  laws.
Similar  complaints  have been  filed in  California  state  court  that  allege
violations of California  state  securities laws and California  common law. The
complaints have been consolidated in the federal and state courts, respectively.
The  plaintiffs  in both the federal and state  lawsuits  purport to represent a
class of persons who  purchased the  Company's  securities  during the period of
July 17, 1997 through  October 23, 1997. The complaints  allege that the Company
and certain of its officers misled the investing  public regarding the financial
prospects  of the  Company.  The  Company  believes  that  the  allegations  are
completely without merit and will vigorously defend itself.


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

         Not applicable.

                                       13

<PAGE>


                                     PART II


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


                      PRICE RANGE OF SPECTRIAN COMMON STOCK

         The  Company's  Common  Stock has been  traded on the  Nasdaq  National
Market under the symbol "SPCT" since August 4, 1994.  The  following  table sets
forth for the  period  indicated  the high and low sale  prices  for the  Common
Stock, as reported by the Nasdaq National Market.


              Fiscal Year Ended March 31, 1998        High         Low
              --------------------------------        ----         ---
         First Quarter ..........................  $ 37 3/4     $ 10 3/4
         Second Quarter .........................    64 1/4       36 1/4
         Third Quarter ..........................    66 3/8       16 3/4
         Fourth Quarter .........................    20 1/2       14 5/8


              Fiscal Year Ended March 31, 1999
              --------------------------------
         First Quarter ..........................    19           13 1/2
         Second Quarter .........................    18 1/2       12
         Third Quarter ..........................    15 1/4        8
         Fourth Quarter .........................    20 5/8        8 3/4


         On June 1, 1999,  the last reported sale price of the Company's  Common
Stock on the Nasdaq  National  Market was $12 7/8 per share.  As of June 1, 1999
there were approximately 286 holders of record of the Company's Common Stock.


                                 DIVIDEND POLICY

         The Company has never paid any cash  dividends  on its Common Stock and
does not anticipate paying cash dividends in the foreseeable future. The Company
has entered  into a bank line of credit and the  Company's  agreement  with such
lender prohibits the payment of cash dividends without the prior written consent
of the lender.

                                       14

<PAGE>


ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
         The  selected  consolidated  financial  data set forth  below under the
captions  "Statement of Operations Data" and "Balance Sheet Data" for, and as of
the end of, each of the years in the five-year  period ended March 31, 1999, are
derived from the consolidated  financial statements of Spectrian Corporation and
its  subsidiaries,  which  financial  statements  have been audited by KPMG LLP,
independent  auditors.  The results for the fiscal year ended March 31, 1999 are
not  necessarily  indicative of the results for any future period.  The selected
consolidated  financial data set forth below should be read in conjunction  with
the  consolidated  financial  statements as of March 31, 1999 and March 31, 1998
and for each of the years in the three  year  period  ended  March 31,  1999 and
notes thereto set forth on pages F-1 to F-15 and  "Management's  Discussion  and
Analysis of Financial Condition and Results of Operation."

<CAPTION>
                                                                                Fiscal Year Ended March 31
                                                             -----------------------------------------------------------------------
                                                               1999            1998           1997            1996           1995
                                                             ---------       ---------      ---------       ---------      ---------
                                                                              (in thousands, except per share data)
<S>                                                          <C>             <C>            <C>             <C>            <C>
Statement of Operations Data:
Revenues ..............................................      $  99,331       $ 168,798      $  88,252       $  72,113      $  62,478
                                                             ---------       ---------      ---------       ---------      ---------
Costs and expenses:
 Cost of product sales ................................         96,880         132,684         65,322          45,355         39,068
 Research and development .............................         26,735          18,644         17,230          14,548         11,374
 Selling, general and administrative ..................         16,315          13,014          9,299           7,450          6,784
                                                             ---------       ---------      ---------       ---------      ---------
   Total costs and expenses ...........................        139,930         164,342         91,851          67,353         57,226
                                                             ---------       ---------      ---------       ---------      ---------
   Operating income (loss) ............................        (40,599)          4,456         (3,599)          4,760          5,252
Interest income (expense), net ........................          3,687           3,335           (392)            889            391
Other income, net .....................................           --             1,530           --              --             --
                                                             ---------       ---------      ---------       ---------      ---------
   Income (loss) before income taxes ..................        (36,912)          9,321         (3,991)          5,649          5,643
Income tax expense ....................................             59             399           --               169            170
                                                             ---------       ---------      ---------       ---------      ---------
   Net income (loss) ..................................      $ (36,971)      $   8,922      $  (3,991)      $   5,480      $   5,473
                                                             =========       =========      =========       =========      =========
Net income (loss) per share:(1)
   Basic ..............................................      $   (3.50)      $    0.90          (0.49)      $    0.71      $    0.87
   Diluted ............................................      $   (3.50)           0.83          (0.49)           0.66           0.70
Shares used in computing per share amounts:(1)
   Basic ..............................................         10,568           9,881          8,150           7,684          6,300
   Diluted ............................................         10,568          10,701          8,150           8,363          7,764
</TABLE>


<TABLE>
<CAPTION>
                                                                                             March 31
                                                                --------------------------------------------------------------------
                                                                  1999           1998           1997           1996           1995
                                                                --------       --------       --------       --------       --------
                                                                                          (in thousands)
<S>                                                             <C>            <C>            <C>            <C>            <C>
Balance Sheet Data:
Working capital .........................................       $ 72,399       $117,478       $ 24,062       $ 12,710       $ 28,317
Total assets ............................................        128,412        175,051         66,633         55,922         45,070
Debt and capital lease obligations, net of
 current portion(2) .....................................          4,899          5,912          7,057           --             --
Total stockholders' equity ..............................         95,968        144,342         42,466         44,838         37,056

<FN>
------------------
(1)  See Note 1 of Notes to Consolidated Financial Statements contained on pages
     F-1 to F-15 of this  Annual  Report on Form 10-K for the fiscal  year ended
     March 31, 1999 for information concerning the per share computations.

(2)  See Note 4 of Notes  to  Consolidated  Financial  Statements  herein  for a
     description of the Company's debt and lease obligations.
</FN>
</TABLE>

                                       15

<PAGE>


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

         Certain  statements in this  "Management's  Discussion  and Analysis of
Financial  Condition and Results of Operations" are forward looking  statements.
These forward looking statements include, but are not limited to: the statements
in the second  paragraph of "Overview"  regarding the impact on the Company of a
loss of a major OEM customer;  the  statements in the analysis of "--Years ended
March 31, 1999 and 1998" under "--Revenues" regarding anticipated future revenue
levels;  the  statements  in the second  paragraph of  "--Liquidity  and Capital
Resources" concerning renewal of the revolving line of credit; the statements in
the last  paragraph  under  "--Liquidity  and Capital  Resources"  regarding the
anticipated spending for capital additions in fiscal 2000 and the sufficiency of
the  Company's   available   resources  to  meet  working  capital  and  capital
expenditure  requirements;  and the  statements  in  "Factors  Affecting  Future
Operating Results." The forward looking statements contained herein are based on
current expectations and entail various risks and uncertainties that could cause
actual results to differ materially from these expressed in such forward looking
statements.

Overview

         The Company  designs,  manufactures  and markets  highly  linear single
carrier  and  multicarrier  power  amplifiers  that  support  a broad  range  of
worldwide analog and digital wireless transmissions  standards,  including AMPS,
TDMA,  CDMA,  TACS and GSM. The Company,  founded in 1984 to perform  design and
engineering services,  first entered the commercial amplifier market in 1988 and
shipped its first cellular power amplifiers in 1990. The Company's  revenues are
now derived  primarily  from sales to a limited  number of OEMs in the  wireless
infrastructure  equipment market, in particular Nortel.  During fiscal 1999, the
Company  transitioned the assembly of its higher volume amplifier  products to a
contract  manufacturer but continues to operate its own 4 inch wafer fabrication
facility and manufacture certain of its low-volume products.  As a result of its
wafer  fabrication  facility  and other  manufacturing  in  infrastructure,  the
Company  has a high  level of fixed  costs  and is  dependent  upon  substantial
revenue to achieve  profitability.  In fiscal 1999, the fourth quarter of fiscal
1998 and the first quarter of fiscal 1997, product orders fell sharply resulting
in substantial  losses in those fiscal  periods.  There can be no assurance that
the Company will not experience such fluctuation in the future.

         During fiscal 1999,  the Company  utilized a contract  manufacturer  to
produce its high volume  amplifier  products on a turnkey basis but continues to
assemble,  test,  package and ship its lower  volume  amplifier  products at its
manufacturing  facilities  located in  Sunnyvale,  California.  The  reasons for
utilizing a contract  manufacturer were to decrease the Company's  manufacturing
overhead  and  costs  of  its  products,  increase  flexibility  to  respond  to
fluctuations  in product  demand and to leverage the strengths of the contract's
manufacturer focus on high volume, high quality manufacturing. The transitioning
costs of  manufacturing  activities to the contract  manufacturer in fiscal 1999
were higher than the savings from costs of products,  which  adversely  affected
the Company's  gross margin for fiscal 1999. The Company does not expect that it
will achieve  significant cost savings,  if any, from outsourcing certain of its
manufacturing activities until late in fiscal 2000.

         The development and pilot  production of the Company's  latest cellular
multicarrier  product  platform was completed in fiscal 1999. It is  anticipated
that this product family will move into full  production  during fiscal 2000 and
will account for a portion of the Company's revenue stream.

         During fiscal 1999, Nortel and LGIC accounted for approximately 76% and
11% of revenues, respectively. During fiscal 1998, Nortel and LGIC accounted for
approximately 79% and 14% of revenues, respectively.  During fiscal 1997, Nortel
accounted for approximately 75% of revenues.  The Company's business,  financial
condition and results of operations have been materially  adversely  affected in
the past by  anticipated  orders  failing to  materialize  and by  deferrals  or
cancellations  of orders  as a result of  changes  in OEM  requirements.  If the
Company  were to lose  Nortel or any other major OEM  customer,  or if orders by
Nortel or any other major OEM  customer  were to otherwise  materially  decrease
either in unit quantity or in price, the Company's business, financial condition
and results of operations would be materially  adversely affected.  In addition,
the financial market turmoil and economic downturn in Korea

                                       16

<PAGE>


may have a material  adverse  effect on the  Company's  sales of its products to
LGIC,  an OEM  based in Korea,  because a  majority  of the  Company's  products
ordered by LGIC to date relate to the  build-out  of the Korean PCS  system.  In
addition,  because  the  Company's  products  are  priced in U.S.  dollars,  the
currency  instability in the Korean and other Asian  financial  markets may have
the effect of making the Company's products more expensive to LGIC than those of
other  manufacturers  whose  products  are priced in one of the  affected  Asian
currencies,  and,  therefore,  LGIC may reduce future purchases of the Company's
products.

         The Company's  semiconductor  vertical  integration  strategy entails a
number  of  risks,  including  a high  level of fixed and  variable  costs,  the
management of complex  processes,  dependence on a single source of supply and a
strict regulatory  environment.  During periods of low demand,  high fixed wafer
fabrication  costs are likely to have a material adverse effect on the Company's
operations.  In addition,  the Company's strategy of frequently  introducing and
rapidly  expanding the manufacture of new products to meet evolving OEM customer
and wireless  service  provider needs has caused the Company to experience  high
materials and  manufacturing  costs,  including  high scrap and material  waste,
significant material  obsolescence,  labor inefficiencies,  high overtime hours,
inefficient material procurement and an inability to realize economies of scale.

         The  market  for  the  Company's  products  is  becoming   increasingly
competitive.  The Company  began selling its power  amplifier  products in South
Korea, as well as directly to cellular  service  providers where its competitors
are already established as suppliers.  In addition, the Company competes with at
least one amplifier  manufacturer for business from Nortel. This competition has
resulted in, and will continue to result in reduced  average  selling prices for
the Company's products, which accordingly will negatively impact gross margins.

Results of Operations

         The  following  table  sets  forth for the  periods  indicated  certain
statement of operations  data of the Company  expressed as a percentage of total
revenues and the gross margin on sales.


                                                    Fiscal Year Ended March 31
                                                  ----------------------------
                                                  1999        1998       1997
                                                  -----       -----      -----
Revenues ....................................     100.0%      100.0%     100.0%
                                                  -----       -----      -----
 Costs and expenses:
  Cost of sales .............................      97.6        78.6       74.0
  Research and development ..................      26.9        11.0       19.6
  Selling, general and administrative .......      16.4         7.8       10.5
                                                  -----       -----      -----
    Total costs and expenses ................     140.9        97.4      104.1
                                                  -----       -----      -----
    Operating income (loss) .................     (40.9)        2.6       (4.1)
 Interest income (expense), net .............       3.7         2.0       (0.4)
 Other income, net ..........................      --           0.9        --
                                                  -----       -----      -----
  Income (loss) before income taxes .........     (37.2)        5.5       (4.5)
 Income tax expense .........................      --           0.2        --
                                                  -----       -----      -----
  Net income (loss) .........................     (37.2)%       5.3%      (4.5)%
                                                  =====       =====      =====
 Gross margin on sales ......................       2.5%       21.4%      26.0%


Years Ended March 31, 1999 and 1998

         Revenues.  The Company's revenues decreased by 41% to $99.3 million for
the fiscal year ending March 31, 1999  ("fiscal  1999") from $168.8  million for
the fiscal year ending March 31, 1998 ("fiscal 1998").  The decrease in revenues
for fiscal 1999 reflects a significant decrease in demand,  primarily by Nortel,
for the Company's TDMA, GSM and PCS CDMA products.

         Cost of Sales.  Cost of Sales consists  primarily of turnkey  amplifier
costs for the Company's higher volume products,  internal amplifier assembly and
test costs for its lower volume products and new

                                       17

<PAGE>
products,  raw  materials,  RF  semiconductor  fabrication  costs,  overhead and
warranty  costs.  The Company's cost of sales  decreased by 27% to $96.9 million
for fiscal 1999 from $132.7  million for fiscal 1998.  Gross margin on sales was
3% for fiscal  1999 as  compared  to 21% for fiscal  1998.  The decline in gross
margin for fiscal 1999 reflects  reduced  average  selling prices on some of the
Company's amplifier products,  transition costs associated with transferring the
Company's higher volume  amplifier  products to a contract  manufacturer,  costs
associated with the underutilization of the Company's wafer fabrication facility
due to reduced shipment volume levels in fiscal 1999,  warranty costs associated
with some of the  Company's  older  products  and costs  associated  with higher
excess and obsolete  inventory  levels due to reduced  shipment  demand.  In the
fourth  quarter of fiscal 1999, the Company had a negative gross margin of 29.6%
as compared to a negative  gross  margin of 3.1% in the third  quarter of fiscal
1999 and  positive  gross  margins  of 23.2% and 9.9%,  in the  second and first
quarters of fiscal  1999,  respectively.  The  significant  decline in the gross
margin  for the  fourth  quarter  of  fiscal  1999  was  attributable  to  costs
associated with eliminating  manufacturing  activities locally for the Company's
high volume amplifier  products,  increased warranty costs and higher excess and
obsolete inventory levels due to lower demand.

         Research and  Development.  Research and development  ("R&D")  expenses
include the cost of designing,  developing or reducing the manufacturing cost of
amplifiers and RF semiconductors.  The Company's R&D expenses increased by 43.5%
to $26.7 million in fiscal 1999 from $18.6 million in fiscal 1998.  The increase
in R&D spending in fiscal 1999 reflects increased spending in both amplifier and
semiconductor R&D for personnel expenses and project development  expenses.  R&D
expenses  as a  percentage  of revenues  increased  to 26.9% in fiscal 1999 from
11.0% in fiscal 1998.

         Selling,    General   and   Administrative.    Selling,   general   and
administrative  ("SG&A")  expenses include  compensation and benefits for sales,
marketing,  senior management and administrative personnel,  commissions paid to
independent sales  representatives,  professional  fees and other expenses.  The
Company's SG&A expenses increased by 25.4% to $16.3 million for fiscal 1999 from
$13.0  million  for fiscal  1998.  SG&A  expenses  as a  percentage  of revenues
increased  to 16.4% for fiscal 1999 from 7.8% for fiscal  1998.  The increase in
SG&A expenses was primarily due to costs associated with the implementation of a
new enterprise resource planning system and a new product data management system
and additional ongoing  infrastructure support and depreciation costs associated
with these new  systems.  These  costs were offset  slightly by reduced  outside
sales commissions due to the decline in revenue in fiscal 1999.

         Interest Income (Expense),  net.  Interest income,  net for fiscal 1999
was $3.7  million  compared to net  interest  income of $3.3  million for fiscal
1998, reflecting slightly higher average cash and short-term investment balances
in fiscal 1999 versus fiscal 1998.

         Other Income, net. In fiscal 1999, no other expense or other income was
recorded.  Other  income of $1.5  million was  recorded in the first  quarter of
fiscal  1998  representing  the net gain  realized  from  the  cash  sale of the
Company's wholly owned subsidiary,  American Microwave Technology, Inc. ("AMT"),
to the management group and employees of AMT.

         Income  Taxes.  The  Company  recorded  minimal  income tax  expense of
$59,000  for fiscal  1999 due to the net loss  incurred  during the  period.  An
income tax expense of $399,000 was recorded in fiscal 1998,  reflecting  the use
of net operating loss carryforwards  ("NOLs").  The Company's ability to use its
NOLs against taxable income may be subject to restrictions and limitations under
Section 382 of the Internal Revenue Code of 1986, as amended,  in the event of a
change in ownership of the Company as defined therein.

Years Ended March 31, 1998 and 1997

         Revenues. The Company's revenues increased by 91% to $168.8 million for
fiscal  1998 from  $88.3  million  for the fiscal  year  ending  March 31,  1997
("fiscal  1997").  The sizable  increase in revenues for fiscal 1998 reflected a
significant  increase  in demand in the first  three  fiscal  quarters  of 1998,
primarily by Nortel,  for the Company's  second  generation GSM and multicarrier
products,  single  carrier TDMA  products and Korean PCS CDMA  products.  In the
fourth quarter of fiscal 1998, the Company's revenues decreased substantially to
$27.6 million from $47.2  million in the  immediately  preceding  quarter due to
reduced  orders  from OEM  customers  stemming  in part  from the  impact of the
financial market and economic turmoil in parts of Asia, particularly Korea.
                                       18
<PAGE>


         Cost of Sales.  The Company's cost of sales increased by 103% to $132.7
million for fiscal 1998 from $65.3 million for fiscal 1997. Included in the cost
of sales were costs associated with the rapid increase in  manufacturing  volume
for new products and costs associated with discontinuing  older products.  Gross
margin on sales was 21% for fiscal 1998 as compared to 26% for fiscal 1997.  The
decline in gross margin for fiscal 1998 primarily reflects costs associated with
steep new product volume  manufacturing  growth including investment in overhead
infrastructure  and automated  test  equipment,  premium costs  associated  with
materials procurement and logistics, excess and obsolete inventories and product
warranty  costs.  In the fourth quarter of fiscal 1998, the Company had negative
gross margin of 17.4% as compared to positive  gross  margins of 28.5% and 27.2%
in the third  quarter  of fiscal  1998 and the fourth  quarter  of fiscal  1997,
respectively.  The decline in the gross margin for the fourth  quarter of fiscal
1998 was  attributable  to  increased  material,  warranty,  excess and obsolete
inventory costs that were not reduced proportionately to revenues.

         Research and Development. The Company's R&D expenses increased by 8% to
$18.6 million in fiscal 1998 from $17.2 million in fiscal 1997.  R&D spending in
fiscal  1997  included   development  costs  for  the  Company's  4  inch  wafer
fabrication  facility.  The  increase in R&D  spending  in fiscal 1998  reflects
increased  spending  in both  amplifier  and  semiconductor  R&D  for  personnel
expenses and project  development  expenses.  R&D  expenses as a  percentage  of
revenues decreased to 11.0% in fiscal 1998 from 19.6% in fiscal 1997, reflecting
the substantially higher revenue levels in fiscal 1998.

         Selling,  General  and  Administrative.  The  Company's  SG&A  expenses
increased by 39.9% to $13.0 million for fiscal 1998 from $9.3 million for fiscal
1997.  SG&A  expenses as a percentage  of revenues  decreased to 7.8% for fiscal
1998 from 10.5% for fiscal 1997. The increase in SG&A expenses was primarily due
to outside  commissions  paid for South  Korean  sales,  MIS  investment  in new
infrastructure, increases in sales and administrative headcount, and to a lesser
extent the maintenance of a South Korean sales support  office.  The decrease of
SG&A expenses as a percentage of sales was a result of the substantially  higher
revenue level in that period.

         Interest Income (Expense),  net.  Interest income,  net for fiscal 1998
was $3.3 million  compared to net interest  expense of $392,000 for fiscal 1997.
The increase in net interest  income was the result of interest income earned on
substantially  higher  cash  balances  and  short-term   investments  reflecting
primarily the  investment  of the proceeds of the  Company's  August 1997 public
offering.

         Other  Income,  net.  Other  income of $1.5 million was recorded in the
first  quarter of fiscal 1998  representing  the net gain realized from the cash
sale of the Company's wholly owned subsidiary,  AMT, to the management group and
employees of AMT. No other  expense or other income was recorded  during  fiscal
1997.

         Income Taxes.  The Company  recorded income tax expense for fiscal 1998
of $399,000.

Liquidity and Capital Resources

         The Company has financed its growth through its initial public offering
in August 1994, a public equity offering in August 1997, private sales of equity
securities,  capital equipment leases,  bank lines of credit and cash flows from
operations.  Cash used by operations was $12.3 million in fiscal 1999 while cash
provided  by  operations  was $16.6  million  in fiscal  1998.  The cash used by
operations in fiscal 1999 is primarily  attributable  to the net losses incurred
in fiscal 1999. The cash provided by operations for fiscal 1998 was  principally
generated by the Company's  profits over the first three  quarters of the fiscal
year. The cash used by operations in fiscal 1997 was  principally for purchasing
inventory to support production growth for increasing product shipment volumes.

         As of March 31, 1999, the Company had working  capital of $72.4 million
including $62.7 million in cash, cash equivalents and short-term investments. In
addition,  the Company has a revolving  line of credit of $10.0  million  with a
bank secured by the  majority of the  Company's  assets.  Under the terms of the
master agreement  governing this credit  instrument,  the Company is required to
maintain certain minimum working  capital,  net worth,  profitability  and other
specific  financial  ratios. As of March 31, 1999, the Company was in compliance
with all of these financial covenants with the exception of the profitability

                                       19

<PAGE>


covenant.  The  lender  granted a waiver to the  Company  with  respect  to such
profitability  covenant.  There were no borrowings outstanding against this line
of credit as of March 31, 1999.

         In April 1998, the Company  announced a repurchase  program pursuant to
which it could  acquire up to one million  shares of Common Stock in open market
purchases.  The Company  repurchased  a total of one million  shares  during the
third and fourth quarters of fiscal 1999 on the open market for a total purchase
price of $14.8 million.

         In January  1997,  the Company  borrowed $6.0 million under a term loan
secured by certain capital  equipment.  The loan, which expires in January 2002,
requires  the  payment  of monthly  principal  plus  interest  and is subject to
certain minimum working capital,  net worth and other specific financial ratios.
The Company was in  compliance  with these  covenants as of March 31,  1999.  In
March 1997,  the Company also  secured a $3.2  million  real estate loan,  which
expires in April 2007, for the purchase of a light  industrial  building for its
future facilities expansion.

         Additions to property and equipment  were $11.3 million for fiscal 1999
and $18.0 million in fiscal 1998. Capital additions for fiscal 1999 included the
purchase of new corporate management information systems software, manufacturing
test  and  production  equipment  required  to  support  new  products  and test
equipment to support various research and development projects.

         The Company  anticipates  spending  approximately  $10 million over the
next 12 months for capital  additions  primarily to support  manufacturing  test
requirements,  development  projects  and  facilities  expansion.  Based  on the
Company's current working capital  position,  the cash flows the Company expects
to generate from fiscal 2000  operations  and the  available  line of credit the
Company expects to renew, the Company believes that sufficient resources will be
available to meet the Company's cash  requirements  for at least the next twelve
months.  Cash  requirements  for future  periods  will  depend on the  Company's
profitability,  timing  and  level  of  capital  expenditures,  working  capital
requirements and rate of growth.

Factors Affecting Future Operating Results

         Customer   Concentration;    Dependence   on   Nortel.   The   wireless
infrastructure  equipment  market is  dominated by a small number of large OEMs,
including  Ericsson,  Lucent,  Motorola,  Nortel and Siemens  AG. The  Company's
revenues are derived  primarily from sales to a limited number of these OEMs, in
particular,   Nortel.   During  fiscal  1999,  Nortel  and  LGIC  accounted  for
approximately 76% and 11% of revenues,  respectively.  During fiscal 1998 Nortel
and LGIC  accounted  for  approximately  79% and 14% of revenues,  respectively.
During  fiscal  1997,  Nortel  accounted  for  approximately  75%  of  revenues.
Furthermore,  a  substantial  portion of revenues  from  Nortel in fiscal  1999,
fiscal  1998 and fiscal  1997  resulted  from  sales of a limited  number of the
Company's products.  The Company's business,  financial condition and results of
operations  have been materially  adversely  affected in the past by anticipated
orders failing to materialize and by deferrals or  cancellations  of orders as a
result of changes in OEM requirements. The Company and Nortel have an agreement,
renegotiated  annually,  pursuant to which Nortel  commits to purchase a certain
volume of its annual power amplifier  requirements for specified prices from the
Company.  There can be no  assurance  that  Nortel  will  continue to enter into
contracts with the Company in the future or otherwise agree to purchase the same
or  similar  levels of its power  amplifier  requirements  from the  Company  or
purchase its power amplifier  requirements at the same or similar  pricing.  Any
reduction in the level of purchases of the Company's  amplifiers  by Nortel,  or
any material  reduction in pricing  without  significant  offsets,  would have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of operations.  Further, if the Company were to lose Nortel or any other
major OEM customer,  or if orders by Nortel or any other major OEM customer were
to otherwise  materially decrease,  the Company's business,  financial condition
and results of operations would be materially  adversely affected.  In addition,
the financial market turmoil and economic  downturn in Korea may have a material
adverse  effect on the Company's  sales of its products to LGIC, an OEM based in
Korea,  because a majority  of the  Company's  products  ordered by LGIC to date
relate to the  build-out  of the Korean PCS  system.  In  addition,  because the
Company's products are priced in U.S. dollars,  the currency  instability in the
Korean  and other  Asian  financial  markets  may have the  effect of making the
Company's  products  more  expensive  to LGIC than those of other  manufacturers
whose products are

                                       20

<PAGE>


priced in one of the affected Asian currencies,  and, therefore, LGIC may reduce
future purchases of the Company's products. In addition, wireless infrastructure
equipment OEMs have come under  increasing  price pressure from wireless service
providers,  which in turn has  resulted  in  downward  pricing  pressure  on the
Company's  products.  The Company expects to incur increasing  pricing pressures
from Nortel and other major OEM customers in future periods,  which could result
in declining average sales prices for the Company's products.

         Fluctuations in Operating Results.  The Company's  quarterly and annual
results have in the past been,  and will continue to be,  subject to significant
fluctuations  due to a number of  factors,  any of which  could  have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.  In  particular,  the Company's  results of operations are likely to
vary due to the timing,  cancellation,  delay or  rescheduling  of OEM  customer
orders  and  shipments;  the timing of  announcements  or  introductions  of new
products by the Company, its competitors or their respective OEM customers;  the
acceptance  of such  products by wireless  equipment  OEMs and their  customers;
relative variations in manufacturing efficiencies, yields and costs; competitive
factors  such  as  the   pricing,   availability,   and  demand  for   competing
amplification  products;  changes  in average  sales  prices  and  product  mix;
variations  in  operating  expenses;   changes  in  manufacturing  capacity  and
variations in the utilization of this capacity;  shortages of key supplies;  the
long sales cycles associated with the Company's customer specific products;  the
timing  and level of product  and  process  development  costs;  and  changes in
inventory  levels;  and most  recently,  the  relative  strength  or weakness of
international  financial  markets.  Anticipated  orders from the  Company's  OEM
customers  have in the past failed to  materialize  and delivery  schedules have
been  deferred or canceled as a result of changes in OEM  customer  requirements
and the Company  expects  this  pattern to  continue  as  customer  requirements
continue to change and industry standards continue to evolve. Reduced demand for
wireless  infrastructure  equipment in fiscal 1999 and the latter part of fiscal
1998, caused significant fluctuations in the Company's product sales during that
period of time as a result  of  softening  demand in the TOMA,  GSM and CDMA PCS
markets.  There can be no assurance  that the Company will not  experience  such
fluctuations in the future,  and, in fact, the Company experienced a significant
reduction in product  revenue in fiscal 1999.  The Company does not believe that
demand for its products will return to fiscal 1998 levels during fiscal 2000, if
at all,  or that the  Company  will  have  the  revenue  levels  and  growth  it
experienced  in  fiscal  1998  during  fiscal  2000,  if  at  all.  The  Company
establishes its expenditure  levels for product  development and other operating
expenses based on its expected  revenues,  and expenses are relatively  fixed in
the  short  term.  As a result,  variations  in  timing  of  revenues  can cause
significant  variations  in  quarterly  results of  operations.  There can be no
assurance  that the Company will be  profitable on a quarter to quarter basis in
the  future.  The Company  believes  that  period to period  comparisons  of its
financial  results are not necessarily  meaningful and should not be relied upon
as an indication of future performance.  Due to all the foregoing factors, it is
likely  that in some  future  quarter or  quarters  the  Company's  revenues  or
operating results will not meet the expectations of public stock market analysts
or  investors.  In such event,  the market price of the  Company's  Common Stock
would be materially adversely affected.

         Internal  Amplifier  Design and  Production  Capabilities  of OEMs. The
Company  believes that a majority of the present  worldwide  production of power
amplifiers is captive within the manufacturing  operations of wireless equipment
OEMs,  many of  which  have  chosen  not to  purchase  amplifiers  from  outside
suppliers.  The Company also  believes  that those OEMs that purchase from third
party  amplifier  vendors are reluctant to switch once committed to a particular
merchant  vendor.  Consequently,  the Company has only limited  opportunities to
increase revenues by replacing  internal OEM amplifier  production or displacing
other merchant amplifier suppliers.  Moreover,  given the limited  opportunities
for merchant RF amplifier  suppliers,  any decision by an OEM to employ a second
source  merchant  supplier  for a product  currently  purchased  from a merchant
supplier may reduce the existing merchant supplier's ability to maintain a given
level of product sales to such OEM or, possibly, to retain the OEM as a customer
due to price competition from the second source merchant supplier.  There can be
no assurance  that the Company's  major OEM customers  will continue to rely, or
increase  their  reliance,  on the Company as an  external  source of supply for
their  power  amplifiers,  or that other  wireless  equipment  OEMs will  become
customers  of  the  Company.  If the  major  wireless  infrastructure  equipment
suppliers do not purchase or continue to purchase  their power  amplifiers  from
merchant suppliers, the Company's

                                       21

<PAGE>


business,  results of  operations  and  financial  condition  will be materially
adversely  affected.  For example,  the Company's  failure to reach an agreement
with Nortel that provides for similar levels of purchases  could have a material
adverse effect on the Company.

         Rapid Technological Change; Evolving Industry Standards;  Dependence on
New Products. The markets in which the Company and its OEM customers compete are
characterized by rapidly changing  technology,  evolving industry  standards and
continuous  improvements  in products and services.  In particular,  because the
Company's  strategy  of  rapidly  bringing  to market  products  customized  for
numerous and evolving RF modulation  standards requires developing and achieving
volume production of a large number of distinct products,  the Company's ability
to rapidly design and produce individual products for which there is significant
OEM  customer  demand will be a critical  determinant  of the  Company's  future
success.  For example,  continued  softening  of demand in the TDMA,  GSM or PCS
markets or  failure of another  modulation  standard  in which the  Company  has
invested substantial development resources may have a material adverse effect on
the  Company's  business,  financial  condition  and results of  operations.  No
assurance can be given that the Company's  product  development  efforts will be
successful,  that  its new  products  will  meet  customer  requirements  and be
accepted or that its OEM  customers'  product  offerings  will achieve  customer
acceptance.  If a  significant  number of  development  projects,  including the
Company's  new  multicarrier  products,  do not  result  in  substantial  volume
production  or if  technologies  or standards  supported by the Company's or its
customers'  products  become  obsolete  or fail to  gain  widespread  commercial
acceptance, the Company's business may be materially adversely affected.

         Risks  Associated  with  Internal  Wafer and  Device  Fabrication.  The
Company's  operation of its wafer and device  fabrication  facilities  entails a
number  of  risks,  including  a high  level of fixed and  variable  costs,  the
management of complex  processes,  dependence on a single source of supply and a
strict regulatory  environment.  During periods of low demand,  high fixed wafer
fabrication  costs are likely to have a material adverse effect on the Company's
business,  financial  condition  and  results  of  operations.  The  design  and
fabrication  of  RF  semiconductors  is a  complex  and  precise  process.  Such
manufacturing  is sensitive to a wide variety of factors,  including  variations
and  impurities  in  the  raw  materials,   quality  control  of  the  packages,
difficulties  in the  fabrication  process,  performance  of  the  manufacturing
equipment,  defects in the masks used to print circuits on a wafer and the level
of contaminants in the manufacturing environment. As a result of these and other
factors,  semiconductor  manufacturing yields from time to time in the past have
suffered, and there can be no assurance that the Company will be able to achieve
acceptable production yields in the future. In addition, the Company's wafer and
device  fabrication  facility  represents  a  single  point  of  failure  in its
manufacturing  process that would be costly and time consuming to replace if its
operation were interrupted.  The interruption of wafer fabrication operations or
the loss of employees  dedicated to the wafer and device fabrication  facilities
could  have a  material  adverse  effect on the  Company's  business,  financial
condition and results of operations.  Any failure to maintain  acceptable  wafer
and  device  production  levels,  will  have a  material  adverse  effect on the
Company's business, financial condition and results of operations.

         Product Quality,  Performance and Reliability. The Company expects that
its customers will continue to establish  demanding  specifications for quality,
performance  and  reliability  that must be met by the  Company's  products.  RF
semiconductors  as  complex  as those  offered by the  Company  often  encounter
development  delays and may contain  undetected  defects or failures  when first
introduced or after commencement of commercial  shipments.  The Company has from
time to time in the past experienced product quality, performance or reliability
problems.  In addition,  multicarrier power amplifiers have a higher probability
of  malfunction  than single carrier power  amplifiers  because of their greater
complexity. There can be no assurance that defects or failures will not occur in
the  future  relating  to  the  Company's   product  quality,   performance  and
reliability that may have a material  adverse effect on the Company's  business,
financial condition and results of operations.

         Sole  or  Limited  Sources  of  Materials  and  Services.  The  Company
currently  procures from single sources certain  components and services for its
products including turnkey amplifier assemblies,  subassemblies,  cast housings,
printed  circuit boards and  specialized RF  components.  The Company  purchases
these  products,  components  and services on a purchase  order basis,  does not
carry  significant  inventories  of  these  components  and  does  not  have any
long-term supply contracts with its sole source vendors.

                                       22

<PAGE>


Furthermore, the Company began outsourcing assembly of some of its higher volume
power amplifiers to a contract manufacturer during the third quarterly of fiscal
1999.  The  Company's  reliance  units  sole  sources  and its  migration  to an
outsourced,  turnkey  manufacturing  strategy  entail  certain  risks  including
reduced control over the price, timely delivery,  reliability and quality of the
components.  If the  Company  were to change any of its sole  source  vendors or
contract  manufacturers,   the  Company  would  be  required  to  requalify  the
components  with each new vendor or  contract  manufacturer,  respectively.  Any
inability of the Company to obtain timely  deliveries of components or assembled
amplifiers  of  acceptable  quality  in  required  quantities  or a  significant
increase  in the  prices  of  components  for which  the  Company  does not have
alternative   sources  could  materially  and  adversely  affect  the  Company's
business,  financial  condition  and  results of  operations.  The  Company  has
occasionally  experienced  difficulties  in obtaining  some  components,  and no
assurance can be given that shortages will not occur in the future.

         Declining  Average  Sales  Prices.  The  Company has  experienced,  and
expects to  continue  to  experience,  declining  average  sales  prices for its
products.  Wireless  infrastructure  equipment  manufacturers  have  come  under
increasing  price pressure from wireless  service  providers,  which in turn has
resulted in downward  pricing pressure on the Company's  products.  In addition,
competition among merchant suppliers has increased the downward pricing pressure
on the Company's products. Since wireless infrastructure equipment manufacturers
frequently  negotiate supply  arrangements far in advance of delivery dates, the
Company  often must commit to price  reductions  for its  products  before it is
aware of how,  or if,  cost  reductions  can be  obtained.  To offset  declining
average sales prices,  the Company  believes that it must achieve  manufacturing
cost reductions.  If the Company is unable to achieve such cost reductions,  the
Company's  gross  margins  will  decline,  and such decline will have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.

         Risks of  International  Sales.  Sales  outside  of the  United  States
represented 84%, 95% and 73% of revenues in fiscal 1999,  fiscal 1998 and fiscal
1997,  respectively.  The Company expects that international sales will continue
to account for a significant  percentage of the Company's total revenues for the
foreseeable  future.  These sales involve a number of inherent risks,  including
imposition of government  controls,  currency exchange  fluctuations,  potential
insolvency  of  international  distributors  and  representatives  or customers,
reduced  protection for  intellectual  property  rights in some  countries,  the
impact of  recessionary  environments  in economies  outside the United  States,
political  instability and generally longer receivables  collection  periods, as
well as tariffs and other trade barriers. In addition, because substantially all
of the Company's foreign sales are denominated in U.S. dollars, increases in the
value of the dollar  relative to the local  currency would increase the price of
the  Company's  products  in foreign  markets  and make the  Company's  products
relatively more expensive and less price competitive than competitors'  products
that are  priced in local  currencies.  There  can be no  assurance  that  these
factors  will  not  have a  material  adverse  effect  on the  Company's  future
international  sales and,  consequently,  on the Company's  business,  financial
condition and results of operations.  The Company  anticipates  that the current
turmoil in Asian  financial  markets  and the  deterioration  of the  underlying
economic  conditions in certain Asian  countries may have an impact on its sales
to customers  located in or whose  projects are based in those  countries due to
the impact of  currency  fluctuations  on the  relative  price of the  Company's
products and restrictions on government  spending  imposed by the  International
Monetary Fund (the "IMF") on those countries receiving the IMF's assistance.  In
addition,  customers  in those  countries  may face  reduced  access to  working
capital to fund  component  purchases,  such as the Company's  products,  due to
higher  interest  rates,  reduced bank lending due to  contractions in the money
supply or the deterioration in the customer's or its bank's financial  condition
or the inability to access local equity financing. A substantial majority of the
Company's  products are sold to OEMs who incorporate the Company's products into
systems sold and installed to end-user customers. These OEMs are not required by
contract and do not typically provide the Company with information regarding the
location and identity of their end-user customers,  and, therefore,  the Company
is not able to determine  what portion of its product  sales have been or future
orders will be incorporated into OEM sales to end-users in those Asian countries
currently experiencing financial market turmoil and/or deterioration of economic
conditions. Furthermore, a large portion of the Company's existing customers and
potential new customers are servicing new markets in developing  countries  that
the Company's customers expect will deploy wireless

                                       23

<PAGE>


communication  networks  as an  alternative  to the  construction  of a wireline
infrastructure.  If such countries decline to construct  wireless  communication
systems,  or construction  of such systems is delayed for any reason,  including
business  and  economic  conditions  and  changes in economic  stability  due to
factors such as increased  inflation  and political  turmoil,  such delays could
have a material adverse effect on the Company's business,  results of operations
and financial condition.

         Reliance upon Growth of Wireless Services. Sales of power amplifiers to
wireless infrastructure  equipment suppliers have in the past accounted, and are
expected  in the  future to  account,  for  substantially  all of the  Company's
product sales. Demand for wireless infrastructure  equipment is driven by demand
for wireless  service.  Although demand for power amplifiers has grown in recent
years,  if demand for  wireless  services  fails to increase or  increases  more
slowly than the Company or its OEM customers currently anticipate, the Company's
business,  financial condition and results of operations would be materially and
adversely affected.

         Market for the Company's Products Is Highly  Competitive.  The wireless
communications  equipment industry is extremely competitive and is characterized
by rapid technological change, new product development and product obsolescence,
evolving  industry  standards and  significant  price erosion over the life of a
product.  The  ability  of the  Company  to  compete  successfully  and  sustain
profitability  depends in part upon the rates at which  wireless  equipment OEMs
incorporate the Company's  products into their systems and the Company  captures
market share from other merchant  suppliers.  The Company's major OEM customers,
including  Nortel,   LGIC  and  QUALCOMM,   continuously   evaluate  whether  to
manufacture  their own  amplification  products  or purchase  them from  outside
sources. There can be no assurance that these OEM customers will incorporate the
Company's  products  into their systems or that in general they will continue to
rely, or expand their  reliance,  on external  sources of supply for their power
amplifiers.   These  customers  and  other  large   manufacturers   of  wireless
communications  equipment  could  also  elect to enter the  merchant  market and
compete  directly with the Company,  and at least one OEM, NEC, has already done
so. Such increased  competition could materially  adversely affect the Company's
business, financial condition and results of operations.

         The  Company's  principal   competitors  in  the  market  for  wireless
amplification  products  provided by merchant  suppliers  currently  include AML
Communications,   Amplidyne,   Microwave   Power  Devices,   NEC  and  Powerwave
Technologies.  No assurance can be given that the Company's competitors will not
develop new  technologies or enhancements to existing  products or introduce new
products that will offer superior price or performance  features compared to the
Company's products.

         Uncertain Protection of Intellectual Property. The Company's ability to
compete  successfully and achieve future revenue growth will depend, in part, on
its ability to protect its proprietary technology and operate without infringing
the rights of others.  The Company has a policy of seeking patents on inventions
resulting from its ongoing research and development activities.  The Company has
been  awarded  29  United  States  patents,  and  has 18  United  States  patent
applications pending, including five that have been allowed but not yet formally
issued.  The Company also has been awarded four foreign  patents and has fifteen
foreign  patent  applications  pending.  There  can  be no  assurance  that  the
Company's  pending  patent  applications  will be  allowed or that the issued or
pending   patents  will  not  be  challenged  or  circumvented  by  competitors.
Notwithstanding  the Company's active pursuit of patent protection,  the Company
believes that the success of its business  depends more on the collective  value
of its  patents,  specifications,  computer  aided  design and  modeling  tools,
technical  processes and employee  expertise.  The Company generally enters into
confidentiality and nondisclosure agreements with its employees,  suppliers, OEM
customers,  and potential customers and limits access to and distribution of its
proprietary  technology.  However,  there can be no assurance that such measures
will  provide  adequate  protection  for the  Company's  trade  secrets or other
proprietary  information,  or that the Company's  trade  secrets or  proprietary
technology  will not  otherwise  become known or be  independently  developed by
competitors.  The failure of the Company to protect its  proprietary  technology
could have a material  adverse effect on its business,  financial  condition and
results of operations.

         Risk  of  Third  Party  Claims  of  Infringement.   The  communications
equipment  industry  is  characterized  by  vigorous  protection  and pursuit of
intellectual property rights or positions, which have resulted in

                                       24

<PAGE>


significant  and often  protracted and expensive  litigation.  Although there is
currently no pending  intellectual  property litigation against the Company, the
Company or its  suppliers  may from time to time be  notified of claims that the
Company may be infringing patents or other intellectual property rights owned by
third  parties.  If it is necessary or desirable,  the Company may seek licenses
under such patents or other intellectual property rights.  However, there can be
no  assurance  that  licenses  will be offered or that the terms of any  offered
licenses will be acceptable to the Company. The failure to obtain a license from
a third party for technology  used by the Company or otherwise  secure rights to
use such technology could cause the Company to incur substantial liabilities, to
suspend the manufacture of products or expend  significant  resources to develop
noninfringing  technology.  There can be no assurance  that the Company would be
successful  in such  development  or that such  licenses  would be  available on
reasonable  terms,  if at  all.  In the  event  that  any  third  party  makes a
successful  claim  against the Company or its  customers and either a license is
not made available to the Company on commercially  reasonable terms or a "design
around" is not  practicable,  the Company's  business,  financial  condition and
results of operations would be materially adversely affected.  Furthermore,  the
Company may initiate claims or litigation against third parties for infringement
of  the  Company's  proprietary  rights  or to  establish  the  validity  of the
Company's proprietary rights.  Litigation by or against the Company could result
in  significant  expense to the Company and divert the efforts of the  Company's
technical and management personnel,  whether or not such litigation results in a
favorable  determination  for the Company.  In the event of an adverse result in
any such litigation,  the Company could be required to pay substantial  damages,
indemnify  its  customers,  cease the  manufacture,  use and sale of  infringing
products,  expend  significant  resources to develop  noninfringing  technology,
discontinue  the use of certain  processes or obtain  licenses to the infringing
technology.

         Government  Regulation  of  Communications  Industry.  Radio  frequency
transmissions and emissions, and certain equipment used in connection therewith,
are regulated in the United States, Canada and throughout the rest of the world.
Regulatory  approvals  generally  must be obtained by the Company in  connection
with the manufacture and sale of its products, and by wireless service providers
to operate the  Company's  products.  The United States  Federal  Communications
Commission (the "FCC") and regulatory  authorities  abroad  constantly review RF
emission  issues  and  promulgate  standards  based  on  such  reviews.  If more
stringent RF emission regulations are adopted, the Company and its OEM customers
may be required to alter the manner in which radio  signals are  transmitted  or
otherwise alter the equipment  transmitting such signals, which could materially
adversely affect the Company's  products and markets.  The enactment by federal,
state, local or international governments of new laws or regulations or a change
in the  interpretation of existing  regulations could also materially  adversely
affect  the  market  for  the  Company's  products.   Although  deregulation  of
international  communications  industries  along with radio  frequency  spectrum
allocations  made  by the  FCC  have  increased  the  potential  demand  for the
Company's  products by providing users of those products with  opportunities  to
establish  new  wireless  personal  communications  services,  there  can  be no
assurance that the trend toward deregulation and current regulatory developments
favorable to the promotion of new and expanded personal  communications services
will  continue  or that other  future  regulatory  changes  will have a positive
impact on the Company.  The increasing  demand for wireless  communications  has
exerted pressure on regulatory  bodies worldwide to adopt new standards for such
products,  generally following extensive  investigation of and deliberation over
competing  technologies.  The  delays  inherent  in this  governmental  approval
process have in the past caused,  and may in the future cause, the cancellation,
postponement or rescheduling of the  installation of  communications  systems by
the  Company's  OEM  customers.  These  delays have had in the past,  and in the
future  may have,  a  material  adverse  effect on the sale of  products  by the
Company to such OEM customers.

         Environmental  Regulations.  The  Company  is  subject  to a variety of
local,  state and federal  governmental  regulations  relating  to the  storage,
discharge, handling, emission, generation,  manufacture and disposal of toxic or
other  hazardous  substances  used to manufacture  the Company's  products.  The
Company  believes that it is currently in  compliance  in all material  respects
with such  regulations  and that it has  obtained  all  necessary  environmental
permits  to conduct  its  business.  Nevertheless,  the  failure to comply  with
current or future  regulations  could result in the  imposition  of  substantial
fines on the Company, suspension of production,  alteration of its manufacturing
processes or cessation of operations.

                                       25

<PAGE>


Compliance with such regulations  could require the Company to acquire expensive
remediation  equipment  or to incur  substantial  expenses.  Any  failure by the
Company to control the use,  disposal,  removal or storage of, or to  adequately
restrict  the  discharge  of, or assist in the  cleanup of,  hazardous  or toxic
substances,  could  subject the Company to  significant  liabilities,  including
joint and several  liability  under  certain  statutes.  The  imposition of such
liabilities could materially adversely affect the Company's business,  financial
condition and results of operations.

         Management  of  Growth;  Dependence  on Key  Personnel.  The  Company's
business has placed,  and is expected to continue to place, a significant strain
on the  Company's  personnel,  management  and other  resources.  The  Company's
ability to manage any future  growth  effectively  will  require it to  attract,
train, motivate, manage and retain new employees successfully,  to integrate new
employees  into its  overall  operations  and in  particular  its  manufacturing
operations, to retain the continued service of its key technical,  marketing and
management personnel, and to continue to improve its operational,  financial and
management  information  systems.  Although the Company has employment contracts
with several of its executive  officers,  these  agreements do not obligate such
individuals  to  remain in the  employment  of the  Company.  For  example,  the
Company's  Executive Vice President of Operations  and Chief  Operating  Officer
resigned in late fiscal  1999.  The Company  does not  maintain  key person life
insurance  on any of its key  technical  personnel.  The  competition  for  such
personnel is intense. The Company has experienced loss of key employees and such
losses could have a material adverse effect on the Company.

         Volatility  of Stock  Price.  The market  price of the shares of Common
Stock has been and is likely to continue to be highly volatile,  and is affected
significantly  by  factors  such  as  fluctuations  in the  Company's  operating
results,  announcements of technological innovations,  new customer contracts or
new products by the Company or its  competitors,  announcements by the Company's
customers   regarding   their  business  or  prospects,   changes  in  analysts'
expectations,  governmental  regulatory  action,  developments  with  respect to
patents or proprietary  rights,  general market conditions and other factors. In
addition,  the stock market has from time to time experienced  significant price
and volume  fluctuations  that are  unrelated to the  operating  performance  of
particular  companies.  The  market  price of the  Company's  Common  Stock  has
fluctuated  significantly  in the past.  During  fiscal  1998,  the market price
fluctuated  from a low of $10.75 to a high of $66.375.  During fiscal 1999,  the
market price of the Company's Common Stock fluctuated from a low of $8 to a high
of $20.675. On June 1, 1999, the last reported sale price of the Common Stock as
reported on the Nasdaq National Market was $12.875.

         Pending  Litigation.  Since  December 23, 1997, a number of  complaints
have been filed  against the Company and certain of its  officers in the Federal
Court for the Northern  District of  California  that allege  violations  of the
federal  securities laws. Similar complaints have been filed in California state
court that allege  violations of California state securities laws and California
common  law.  The  complaints  have been  consolidated  in the federal and state
courts,  respectively.  The  plaintiffs  in both the federal and state  lawsuits
purport to represent a class of persons who purchased  the Company's  securities
during the period of July 17, 1997  through  October 23,  1997.  The  complaints
allege that the Company and certain of its officers misled the investing  public
regarding the financial prospects of the Company.  The Company believes that the
allegations  are  completely  without merit and will  vigorously  defend itself.
Certain   provisions  of  the  Company's   Certificate  of   Incorporation   and
indemnification  agreements  between the Company  and its  officers  require the
Company to advance to such  officers  ongoing  legal  expenses of defending  the
suits and may require the Company to indemnify them against  judgments  rendered
on certain claims.  The Company expects to incur  significant  legal expenses on
its behalf and on behalf of such officers in connection with this litigation. In
addition,  defending this  litigation  has resulted and will likely  continue to
result in the diversion of management's attention from the day to day operations
of the Company's business.  Although the Company does not believe that it or any
of its officers has engaged in any  wrongdoing,  there can be no assurance  that
this stockholder  litigation will be resolved in the Company's favor. An adverse
result,  settlement or prolonged litigation could have a material adverse effect
on the Company's business, financial condition or results of operations.

         Shareholder  Rights  Plan;  Issuance of Preferred  Stock.  The Board of
Directors of the Company adopted a Shareholder  Rights Plan in October 1996 (the
"Rights  Plan").  Pursuant to the Rights Plan,  the Board declared a dividend of
one Preferred Stock Purchase Right per share of Common Stock (the

                                       26

<PAGE>


"Rights")  and each such  Right has an  exercise  price of  $126.00.  The Rights
become  exercisable  upon  the  occurrence  of  certain  events,  including  the
announcement of a tender offer or exchange offer for the Company's  Common Stock
or the acquisition of a specified  percentage of the Company's Common Stock by a
third  party.  The  exercise  of the Rights  could have the effect of  delaying,
deferring or preventing a change in control of the Company,  including,  without
limitation,   discouraging   a  proxy  contest  or  making  more  difficult  the
acquisition  of a  substantial  block  of  the  Company's  Common  Stock.  These
provisions  could also limit the price that investors might be willing to pay in
the future for shares of the Company's  Common Stock. The Board of Directors has
the authority to issue up to 5,000,000  shares of  undesignated  Preferred Stock
and to  determine  the powers,  preferences  and rights and the  qualifications,
limitations  or  restrictions  granted  to or imposed  upon any wholly  unissued
shares  of  undesignated  Preferred  Stock  and  to fix  the  number  of  shares
constituting any series and the designation of such series,  without any further
vote or action by the Company's  stockholders.  For example,  in connection with
the Company's  Shareholder Rights Plan, the Board of Directors designated 20,000
shares of Preferred  Stock as Series A  Participating  Preferred  Stock although
none of such shares have been issued.  The Preferred  Stock could be issued with
voting, liquidation,  dividend and other rights superior to those of the holders
of Common Stock.  The issuance of Preferred  Stock under  certain  circumstances
could have the effect of delaying,  deferring or  preventing a change in control
of the Company.

Year 2000 Readiness

         Many  installed  computer  programs were written using a two digit date
field rather than four digit fields to define the applicable year. Such computer
programs  utilizing a two digit date  fields may  recognize a date using "00" as
the year 1900 rather than the year 2000 (the "Year 2000  Issue").  The Year 2000
Issue could potentially result in a system failure or in miscalculations causing
disruptions of operations,  including among other things, a temporary  inability
to  process  transactions,  send  invoices  or  engage in other  similar  normal
business activities.

         The  Company  has taken  steps to  address  the Year 2000  Issue in the
following  three areas:  1) the  Company's  internal  systems,  2) the Company's
products and 3) the Company's  suppliers.  All networks,  desktops,  application
servers and operating  systems have been found compliant  and/or  remediation is
complete.  With respect to business applications software, the Company installed
a new enterprise wide computer software system in July 1998 that has been tested
and is Year 2000  compliant.  The Company also  initiated a project in September
1998 to  assess  the  extent of the Year 2000  Issue in the  remaining  business
systems  and  in  the  embedded   systems  used  its  product   development  and
manufacturing operations.  The remaining business systems have been assessed and
remediation is ninety-nine  percent complete.  Until very recently the Company's
products did not contain embedded systems to which Year 2000 compliance would be
necessary.  The Company's  latest  multicarrier  product does include date stamp
functionality and has been determined to be Year 2000 compliant.  All of the new
products are being manufactured using only hardware,  software, or firmware that
is currently  Year 2000  compliant.  In addition,  certain of the  materials and
supplies  critical to  production  and  delivery of the  Company's  products are
furnished by a limited  number of suppliers,  and in some cases a sole supplier.
Surveys have been sent to all  suppliers.  Key  suppliers to the Company and its
contract manufacturer,  GSS/Array Technology, have been identified and are being
targeted  for  follow-up   audit  and   development  of  contingency   plans  as
appropriate. At this time, the Company estimates that the costs of the Year 2000
Issue assessment and required remedial work will be less than $350,000 in total.
Any  necessary  remedial work is planned to be completed by the end of September
1999.

         The Company  believes that failure to adequately  complete all remedial
work  necessary  to resolve the Year 2000 Issue could have a material  impact on
operating expenses,  but that the effect on revenues would not be material.  The
most likely effect of failures related to the Year 2000 Issue would be:

                  1)  Business   systems--Overtime   work  required  of  Company
         employees and the temporary use of outside resources,  to repair failed
         software and process transactions manually until repairs are completed.

                                       27

<PAGE>


                  2)  Embedded   systems--Overtime   work  required  of  Company
         employees to shift work from  machines and  processes  with failures to
         machines  that continue to operate  properly,  and the temporary use of
         outside resources to repair failed machines and processes.  Also, there
         could be delays in product  delivery  where a product is dependent on a
         single production line.

                  3)  Company   products--Overtime   work  required  of  Company
         employees to deliver corrections to any new or existing products.

                  4)  Contract   Manufacturer--Spectrian   will  reactivate  its
         Sunnyvale production facility to bridge the short-fall in the event the
         contract manufacturer cannot produce and deliver products. A predefined
         quantity of buffer stock will offset the Sunnyvale  facility's  ramp up
         period.

         The Company  believes these failures to be unlikely.  Periodic  updates
regarding  the Year 2000  status are  provided to both the  Company's  executive
staff and the  Audit  Committee  of the Board of  Directors.  The  Company  also
recognizes the need for contingency planning,  and expects to have such plans in
place by September 1999. These plans could include  stockpiling of components or
semi-finished products to avoid product shipment delays.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We develop  products  in the United  States and market our  products in
North America,  Europe and the Asia-Pacific  region. As a result,  our financial
results  could be  affected  by factors  such as  changes  in  foreign  currency
exchange rates or weak economic  conditions in foreign markets. As all sales are
currently made in U.S.  dollars,  a  strengthening  of the dollar could make our
products less competitive in foreign markets.

<TABLE>
         Our exposure to market rate risk for changes in interest  rates relates
primarily  to our  investment  portfolio.  We do not hold  derivative  financial
instruments  in our investment  portfolio.  We place our  investments  with high
quality  institutions and limit the amount of credit exposure to any one issuer.
We are averse to principal  loss and ensure the safety and  preservation  of our
invested funds by limiting  default,  market and reinvestment  risk. We classify
our  short-term  investments  as  "fixed-rate"  if the  rate of  return  on such
instruments  remains  fixed  over their  term.  These  "fixed-rate"  investments
include  fixed-rate U.S.  government  securities and corporate  obligations with
contractual  maturity dates ranging from 1 to 40 years. The table below presents
the amounts and related weighted interest rates of our short-term investments at
March 31, 1999:

<CAPTION>
                                                   Average        Amortized      Fair
                                                interest rate       cost         value
                                                ---------------   -----------   ---------
<S>                                                 <C>           <C>           <C>
Fixed rate                                          6.60%         $36,280       $36,417
                                                                                ========
   Contractual maturity dates 1 to 5 years                                      $28,117
   Contractual maturity dates 5 to 10 years                                          --
   Contractual maturity dates over 10 years                                       8,300
                                                                                --------
                                                                                $36,417
                                                                                ========
</TABLE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Company's  consolidated  financial  statements and the  independent
auditors' report appear on pages F-1 through F-15 of this Report.


ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

         Not applicable.

                                       28

<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The  information   required  by  this  item  concerning  the  Company's
directors is  incorporated by reference to the sections  captioned  "Election of
Directors"  and  "Section  16(a)  Beneficial  Ownership  Reporting   Compliance"
contained in the Company's Proxy Statement related to the 1999 Annual Meeting of
Stockholders,  to be  filed by the  Company  with the  Securities  and  Exchange
Commission  within 120 days of the end of the Company's  fiscal year pursuant to
General  Instruction  G(3)  of  Form  10-K  (the  "Proxy  Statement").   Certain
information  required by this item concerning executive officers is set forth in
Part I of this Report in  "Business--Management"  and certain other  information
required by this item is  incorporated  by reference from the section  captioned
"Section 16(a) Beneficial Ownership Reporting Compliance" contained in the Proxy
Statement.


ITEM 11. EXECUTIVE COMPENSATION

         The  information  required by this item is incorporated by reference to
the section captioned  "Executive  Compensation and Other Matters"  contained in
the Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  information  required by this item is incorporated by reference to
the sections  captioned  "Security  Ownership of Certain  Beneficial  Owners and
Management"  and  "Record  Date;  Outstanding  Shares"  contained  in the  Proxy
Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  information  required by this item is incorporated by reference to
the  sections   captioned   "Compensation   Committee   Interlocks  and  Insider
Participation" and "Certain Transactions" contained in the Proxy Statement.

                                       29

<PAGE>


                                     PART IV

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

         (a)(1) Financial Statements

         The following  consolidated  financial  statements are  incorporated by
reference in Item 8 of this Report:

                  Independent Auditors' Report

                  Consolidated Balance Sheets, March 31, 1999 and 1998

                  Consolidated  Statements  of  Operations  for the years  ended
         March 31, 1999, 1998 and 1997

                  Consolidated  Statements of Stockholders' Equity for the years
         ended March 31, 1999, 1998 and 1997

                  Consolidated  Statements  of Cash  Flows for the  years  ended
         March 31, 1999, 1998 and 1997

                  Notes to Consolidated Financial Statements

         (a)(2) Financial Statement Schedules

                  Schedule  II--Valuation  and Qualifying  Accounts and Reserves
         (see page S-1) Independent Auditors' Report (see page F-2)

         Schedules  not listed above have been omitted  because the  information
required to be set forth therein is not  applicable or is shown in the financial
statements or notes thereto.

         (a)(3) Exhibits


   3.5(14)     Certificate of Incorporation of Registrant.
   3.6(15)     Bylaws of Registrant.
   4.1(11)     Amended and Restated Preferred Shares Rights Agreement of January
               15, 1997,  between the  Registrant  and  ChaseMellon  Shareholder
               Services,  L.L.C.,  as  amended,  including  the  form of  Rights
               Certificate and the Certificate of Determination,  the Summary of
               Rights attached thereto as Exhibits A, B and C, respectively.
   4.1.1(11)   Letter Agreement to amend Preferred Shares Rights Agreement dated
               as of January 15, 1997 between the Registrant and Kopp Investment
               Advisors, Inc.
  10.2(8)      1992 Stock Plan, as amended.
  10.4(8)      1994 Director Option Plan and form of agreement thereunder.
  10.7(14)     Amended and Restated Business Loan Agreement  between  Registrant
               and Silicon  Valley Bank dated  February  11, 1997 and  ancillary
               documents thereto.
  10.13+(4)    Hardware Supply  Agreement  dated April 6, 1995 between  Northern
               Telecom Limited and Registrant
  10.16(5)     Purchase and Sale Agreement  between  Metropolitan Life Insurance
               Company and Registrant.
  10.17+(6)    Development and Supply Agreement  between  QUALCOMM  Incorporated
               and Registrant.
  10.18+(7)    Purchasing  Agreement between Airnet  Communications  Corporation
               and Registrant.
  10.19(8)     Employment   Agreement   between   Garrett  A.   Garrettson   and
               Registrant.
  10.21(9)     Term Loan Agreement between Silicon Valley Bank and Registrant
  10.22(10)    Lease  Agreement  dated  November 19, 1996 between the Registrant
               and SPEC (CA) QRS 12-20, Inc.
  10.23(10)    Bill of Sale dated  November 19, 1996 by the  Registrant  to SPEC
               (CA) QRS 12-20, Inc.
  10.26(13)    Stock Option Agreement dated November 26, 1997 between Registrant
               and Garrett A. Garrettson.
  10.27(13)    Stock Option Agreement dated November 26, 1997 between Registrant
               and Garrett A. Garrettson.

                                       30

<PAGE>


  10.28(13)    Stock Option Agreement dated November 26, 1997 between Registrant
               and Garrett A. Garrettson.
  10.30(13)    Stock Option  Agreement  dated March 20, 1997 between  Registrant
               and Michael Morrione.
  10.32(15)    Form of Indemnification Agreement with directors and officers.
  10.33(16)    1998 Nonstatutory Stock Option Plan.
  10.34(17)    1998 Employee Stock Purchase Plan.
  10.35(18)    Lease Agreement between Registrant and Ellington Development Inc.
               dated April 13, 1998.
  10.36        Separation  Agreement dated March 23, 1999 between the Registrant
               and Stephen B. Greenspan.
  10.37        Separation Agreement dated May 7, 1999 between the Registrant and
               Bruce R. Wright. Henry C. Montgomery.
  23.1         Consent of KPMG LLP.
  24.1         Power of Attorney (included on page 32).
  27.1         Financial Data Schedule.

------------
 +    Confidential  treatment  has been  requested  or granted  with  respect to
      certain  portions  of this  exhibit.  Omitted  portions  have  been  filed
      separately with the Securities and Exchange Commission.
 4    Incorporated by reference to the  Registrant's  Annual Report on Form 10-K
      for the fiscal year ended March 31, 1995.
 5    Incorporated  by reference to the  Registrant's  Quarterly  Report on Form
      10-Q for the quarter ended July 1, 1995.
 6    Incorporated  by reference to the  Registrant's  Quarterly  Report on Form
      10-Q for the quarter ended September 30, 1995.
 7    Incorporated  by reference to the  Registrant's  Quarterly  Report on Form
      10-Q for the quarter ended December 30, 1995.
 8    Incorporated  by  reference  to  exhibits  filed  with  the   Registrant's
      Registration Statement on Form S-8 (File No. 333--38561) as filed with the
      Securities and Exchange Commission on October 23, 1997.
 9    Incorporated  by reference to the  Registrant's  Quarterly  Report on Form
      10-Q for the quarter ended June 29, 1996.
10    Incorporated by reference to the Registrant's  Form 8-K dated November 19,
      1996.
11    Incorporated by reference to exhibits filed with Registrant's Registration
      Statement on Form 8-A (File No.  000-24360)  as filed with the  Securities
      and Exchange Commission on January 17, 1997.
13    Incorporated   by   reference   to   exhibits   filed  with   Registrant's
      Post-Effective  Amendment No. 1 to the Registration  Statement on Form S-8
      (File No. 333-25435) as filed with the Securities and Exchange  Commission
      on October 21, 1997.
14    Incorporated  by reference to exhibits filed with  Registrant's  Quarterly
      Report on Form 10-Q for the quarter ended June 28, 1997.
15    Incorporated  by reference  to exhibits  filed with  Registrant's  Current
      Report on Form 8-K dated October 10, 1997.
16    Incorporated by reference to exhibits filed with Registrant's Registration
      Statement on Form S-8 (File No.  333-49081)  as filed with the  Securities
      and Exchange Commission on April 1, 1998.
17    Incorporated  by  reference  to exhibits  filed with  Registrant's  Annual
      Report on Form 10-K for the year  ended  March 31,  1998 as filed with the
      Securities and Exchange Commission on May 27, 1998.
18    Incorporated  by reference to exhibits filed with  Registrant's  Quarterly
      Report on Form 10-Q for the quarter ended June 28, 1998.


         (b)  Reports on Form 8-K.  The Company did not file any reports on Form
8-K during the three months ended March 31, 1999.

         (c) Exhibits. See Item 14(a)(3) above.

         (d) Financial Statement Schedules. See Item 14(a)(2) above.

                                       31

<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.


                                            SPECTRIAN CORPORATION

                                            By: /s/ Garrett A. Garrettson
                                                --------------------------------
                                                Garrett A. Garrettson
                                                President, Chief Executive
                                                Officer and Director

Date: June 11, 1999


                                POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE  PRESENTS,  that each person whose  signature
appears  below  constitutes  and  appoints  Garrett A.  Garrettson  and Henry C.
Montgomery,  his true and lawful  attorney-in-fact and agent, with full power of
substitution  and  resubstitution,  to sign  any and all  amendments  (including
post-effective  amendments)  to this Annual  Report on Form 10-K and to file the
same,  with all exhibits  thereto and other  documents in connection  therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent,  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 or she  might or could do in  person,  hereby
ratifying  and  confirming  all that said  attorney-in-fact  and  agent,  or his
substitute  or  substitutes,  or any of  them,  shall  do or cause to be done by
virtue hereof.

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


         Signature                             Title                    Date
         ---------                             -----                    ----


   /s/ Garrett A. Garrettson       President, Chief Executive      June 11, 1999
------------------------------       Officer and Director
       Garrett A. Garrettson         (Principal Executive Officer)


    /s/ Henry C. Montgomery        Executive Vice President,       June 11, 1999
------------------------------       Finance and Administration,
       Henry C. Montgomery           Chief Financial Officer and
                                     Secretary (Principal
                                     Accounting Officer)


    /s/ James A. Cole
------------------------------     Director                        June 11, 1999
       James A. Cole


    /s/ Martin Cooper
------------------------------     Director                        June 11, 1999
       Martin Cooper


    /s/ Charles D. Kissner
------------------------------     Director                        June 11, 1999
       Charles D. Kissner


    /s/ Robert A. Shaner
------------------------------     Director                        June 11, 1999
      Robert W. Shaner


   /s/ Robert C. Wilson
------------------------------     Director                        June 11, 1999
      Robert C. Wilson


    /s/ Eric A. Young
------------------------------     Director                        June 11, 1999
      Eric A Young


                                       32

<PAGE>


                          INDEX TO FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----
Independent Auditors' Report .............................................   F-2
Consolidated Balance Sheets ..............................................   F-3
Consolidated Statements of Operations and Other
  Comprehensive Income (Loss) ............................................   F-4
Consolidated Statements of Stockholders' Equity ..........................   F-5
Consolidated Statements of Cash Flows ....................................   F-6
Notes to Consolidated Financial Statements ...............................   F-7

                                       F-1

<PAGE>


                          Independent Auditors' Report


The Board of Directors and Stockholders
Spectrian Corporation:


         We  have  audited  the  accompanying  consolidated  balance  sheets  of
Spectrian  Corporation  and  subsidiaries as of March 31, 1999 and 1998, and the
related  consolidated  statements of operations and other  comprehensive  income
(loss),  stockholders'  equity  and  cash  flows  for  each of the  years in the
three-year  period ended March 31, 1999.  In  connection  with our audits of the
consolidated financial statements,  we also have audited the financial statement
schedule as listed in Item 14(a)(2). These consolidated financial statements and
the  financial  statement  schedule  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements and financial statement schedule based on our audits.

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

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material  respects,  the financial  position of Spectrian
Corporation  and  subsidiaries as of March 31, 1999 and 1998, and the results of
their  operations  and their cash flows for each of the years in the  three-year
period ended March 31, 1999, in conformity  with generally  accepted  accounting
principles.  Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole,  presents  fairly in all material  respects,  the  information  set forth
therein.


                                                          KPMG LLP

Mountain View, California
April 29, 1999

                                       F-2

<PAGE>


<TABLE>
                                               SPECTRIAN CORPORATION AND SUBSIDIARIES

                                                     CONSOLIDATED BALANCE SHEETS
                                                  (In thousands, except share data)

<CAPTION>
                                                                                                              March 31,
                                                                                                    -------------------------------
                                                                                                      1999                  1998
                                                                                                    ---------             ---------
<S>                                                                                                 <C>                   <C>
Assets
Current assets:
   Cash and cash equivalents ...........................................................            $  26,254             $  31,460
   Short-term investments ..............................................................               36,417                68,128
   Accounts receivable, less allowance for doubtful accounts of
    $388 and $376, respectively ........................................................               12,983                21,123
   Inventories .........................................................................               20,826                15,362
   Prepaid expenses and other current assets ...........................................                3,464                 6,202
                                                                                                    ---------             ---------
      Total current assets .............................................................               99,944               142,275
Property and equipment, net ............................................................               28,468                32,776
                                                                                                    ---------             ---------
                                                                                                    $ 128,412             $ 175,051
                                                                                                    =========             =========
Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable ....................................................................            $   8,058             $  10,456
   Accrued liabilities .................................................................               17,884                12,981
   Current portion of debt obligations .................................................                1,603                 1,360
                                                                                                    ---------             ---------
      Total current liabilities ........................................................               27,545                24,797
Debt obligations, net of current portion ...............................................                4,899                 5,912
                                                                                                    ---------             ---------
      Total liabilities ................................................................               32,444                30,709
                                                                                                    ---------             ---------
Stockholders' equity:
   Common stock, $0.001 par value, 20,000,000 shares authorized;
    11,102,333 and 10,904,077 shares issued, respectively;
    10,102,333 and 10,904,077 shares outstanding, respectively .........................                   10                    10
   Additional paid-in capital ..........................................................              149,588               146,827
   Treasury stock, 1,000,000 shares of common stock held ...............................              (14,789)                 --
   Deferred stock-based compensation ...................................................                 --                    (609)
   Accumulated other comprehensive income ..............................................                  137                   121
   Accumulated deficit .................................................................              (38,978)               (2,007)
                                                                                                    ---------             ---------
      Total stockholders' equity .......................................................               95,968               144,342
                                                                                                    ---------             ---------
                                                                                                    $ 128,412             $ 175,051
                                                                                                    =========             =========

<FN>
See accompanying notes to consolidated financial statements
</FN>
</TABLE>

                                                                 F-3

<PAGE>


<TABLE>
                                               SPECTRIAN CORPORATION AND SUBSIDIARIES

                                                CONSOLIDATED STATEMENTS OF OPERATIONS
                                                AND OTHER COMPREHENSIVE INCOME (LOSS)
                                                (In thousands, except per share data)

<CAPTION>
                                                                                             Year ended March 31,
                                                                               ----------------------------------------------------
                                                                                 1999                  1998                 1997
                                                                               ---------             ---------            ---------
<S>                                                                            <C>                   <C>                  <C>
Revenues ..........................................................            $  99,331             $ 168,798            $  88,252
                                                                               ---------             ---------            ---------
Costs and expenses:
   Cost of product sales ..........................................               96,880               132,684               65,322
   Research and development .......................................               26,735                18,644               17,230
   Selling, general and administrative ............................               16,315                13,014                9,299
                                                                               ---------             ---------            ---------
                                                                                 139,930               164,342               91,851
                                                                               ---------             ---------            ---------
      Operating income (loss) .....................................              (40,599)                4,456               (3,599)
Interest income (expense), net ....................................                3,687                 3,335                 (392)
Other income, net .................................................                 --                   1,530                 --
                                                                               ---------             ---------            ---------
      Income (loss) before income taxes ...........................              (36,912)                9,321               (3,991)
Income tax expense ................................................                   59                   399                 --
                                                                               ---------             ---------            ---------
      Net income (loss) ...........................................              (36,971)                8,922               (3,991)
                                                                               ---------             ---------            ---------
Other comprehensive income (loss):
      Unrealized gain (loss) on
       short-term investments .....................................                   16                   121                   (2)
                                                                               ---------             ---------            ---------
Comprehensive income (loss) .......................................            $ (36,955)            $   9,043            $  (3,993)
                                                                               =========             =========            =========
Net income (loss) per share:
   Basic ..........................................................            $   (3.50)            $    0.90            $   (0.49)
   Diluted ........................................................            $   (3.50)            $    0.83            $   (0.49)
Shares used in computing per share amounts:
   Basic ..........................................................               10,568                 9,881                8,150
   Diluted ........................................................               10,568                10,701                8,150

<FN>
See accompanying notes to consolidated financial statements
</FN>
</TABLE>

                                                                 F-4

<PAGE>


<TABLE>
                                               SPECTRIAN CORPORATION AND SUBSIDIARIES

                                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                  (In thousands, except share data)

<CAPTION>
                                                           Common Stock                                                   Deferred
                                                   ----------------------------       Paid-In           Treasury        Compensation
                                                     Shares           Amount          Capital            Stock            Expense
                                                   -----------      -----------      -----------      -----------       -----------
<S>                                              <C>              <C>               <C>               <C>                <C>
Balances as of March 31, 1996 ...............        8,014,525      $         8      $    51,948      $      --         $      (182)
Exercise of stock options ...................          114,671             --                276             --                --
Employee stock purchase plan ................          136,034             --              1,163             --                --
Stock-based compensation ....................             --               --               --               --                 182
Unrealized losses on investments ............             --               --               --               --                --
Net loss ....................................             --               --               --               --                --
                                                   -----------      -----------      -----------      -----------       -----------
Balances as of March 31, 1997 ...............        8,265,230                8           53,387             --                --
Exercise of stock options ...................          431,470             --              5,589             --                --
Employee stock purchase plan ................          207,377             --              1,604             --                --
Public offering, net of
  $4,969 expenses ...........................        2,000,000                2           85,029             --                --
Deferred stock-based compensation ...........             --               --              1,218             --              (1,218)
Stock-based compensation expense ............             --               --               --               --                 609
Unrealized gains on investments .............             --               --               --               --                --
Net income ..................................             --               --               --               --                --
                                                   -----------      -----------      -----------      -----------       -----------
Balances as of March 31, 1998 ...............       10,904,077               10          146,827             --                (609)
Exercise of stock options ...................          136,981             --              1,223             --                --
Employee stock purchase plan ................           61,275             --                541             --                --
Purchase of treasury stock ..................             --               --               --            (14,789)             --
Deferred stock-based compensation ...........             --               --                997             --                (997)
Stock-based compensation expense ............             --               --               --               --               1,606
Unrealized gains on investments .............             --               --               --               --                --
Net loss ....................................             --               --               --               --                --
                                                   -----------      -----------      -----------      -----------       -----------
Balances as of March 31, 1999 ...............       11,102,333      $        10      $   149,588      $   (14,789)      $      --


                                                 Accumulated
                                                     Other                             Total
                                                 Comprehensive      Accumulated     Stockholders'
                                                     Income           Deficit          Equity
                                                   -----------      -----------      -----------

Balances as of March 31, 1996 ...............      $         2      $    (6,938)     $    44,838
Exercise of stock options ...................             --               --                276
Employee stock purchase plan ................             --               --              1,163
Stock-based compensation ....................             --               --                182
Unrealized losses on investments ............               (2)            --                 (2)
Net loss ....................................             --             (3,991)          (3,991)
                                                   -----------      -----------      -----------
Balances as of March 31, 1997 ...............             --            (10,929)          42,466
Exercise of stock options ...................             --               --              5,589
Employee stock purchase plan ................             --               --              1,604
Public offering, net of
  $4,969 expenses ...........................             --               --             85,031
Deferred stock-based compensation ...........             --               --               --
Stock-based compensation expense ............             --               --                609
Unrealized gains on investments .............              121             --                121
Net income ..................................             --              8,922            8,922
                                                   -----------      -----------      -----------
Balances as of March 31, 1998 ...............              121           (2,007)         144,342
Exercise of stock options ...................             --               --              1,223
Employee stock purchase plan ................             --               --                541
Purchase of treasury stock ..................             --               --            (14,789)
Deferred stock-based compensation ...........             --               --               --
Stock-based compensation expense ............             --               --              1,606
Unrealized gains on investments .............               16             --                 16
Net loss ....................................             --            (36,971)         (36,971)
                                                   -----------      -----------      -----------
Balances as of March 31, 1999 ...............      $       137      $   (38,978)     $    95,968


<FN>
See accompanying notes to consolidated financial statements
</FN>
</TABLE>

                                                                 F-5

<PAGE>


<TABLE>
                                               SPECTRIAN CORPORATION AND SUBSIDIARIES

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                           (In thousands)

<CAPTION>
                                                                                              Year ended March 31,
                                                                                     ----------------------------------------------
                                                                                      1999               1998               1997
                                                                                     --------           --------           --------
<S>                                                                                  <C>                <C>                <C>
Cash flows from operating activities:
 Net income (loss) ........................................................          $(36,971)          $  8,922           $ (3,991)
 Adjustments to reconcile net income (loss) to net cash
   provided by (used for) operating activities:
   Gain on sale of subsidiary .............................................              --               (1,530)              --
   Depreciation and amortization ..........................................            13,715              9,761              6,574
   Equipment retirements, net .............................................             1,409               --                 --
   Stock compensation expense .............................................             1,606                609                182
   Changes in operating assets and liabilities:
    Accounts receivable ...................................................             8,140            (10,051)            (3,845)
    Inventories ...........................................................            (5,464)               362            (10,072)
    Prepaid expenses and other assets .....................................             2,738               (412)            (1,386)
    Accounts payable ......................................................            (2,398)             3,141              1,137
    Accrued liabilities ...................................................             4,903              5,811              3,301
                                                                                     --------           --------           --------
      Net cash provided by (used for)
       operating activities ...............................................           (12,322)            16,613             (8,100)
                                                                                     --------           --------           --------
Cash flows from investing activities:
 Proceeds (purchases) of short-term investments, net ......................            31,727            (68,008)             3,000
 Proceeds from sale of subsidiary .........................................              --                4,016               --
 Proceeds from sale of property and equipment .............................               468               --               16,414
 Purchase of property and equipment .......................................           (11,284)           (17,953)           (16,321)
                                                                                     --------           --------           --------
      Net cash provided by (used for)
       investing activities ...............................................            20,911            (81,945)             3,093
                                                                                     --------           --------           --------
Cash flows from financing activities:
 Proceeds from real estate loan ...........................................              --                 --                2,917
 Proceeds from bank debt and equipment financing ..........................              --                 --               18,000
 Repayments of debt and capital lease obligations .........................              (770)            (1,672)           (12,272)
 Purchase of treasury stock ...............................................           (14,789)              --                 --
 Proceeds from sales of common stock, net .................................             1,764             92,224              1,439
                                                                                     --------           --------           --------
      Net cash provided by (used for)
       financing activities ...............................................           (13,795)            90,552             10,084
                                                                                     --------           --------           --------
      Net increase (decrease) in cash and
       cash equivalents ...................................................            (5,206)            25,220              5,077
      Cash and cash equivalents, beginning of year ........................            31,460              6,240              1,163
                                                                                     --------           --------           --------
      Cash and cash equivalents, end of year ..............................          $ 26,254           $ 31,460           $  6,240
                                                                                     ========           ========           ========
Supplemental disclosures of cash flow information:
 Cash paid during the year for interest ...................................          $    853           $    457           $    660
 Taxes paid during the year ...............................................          $     59           $    952           $   --
 Noncash investing and financing activities:
   Equipment recorded under capital lease obligations .....................          $   --             $    307           $   --
   Deferred stock option compensation .....................................          $    997           $  1,218           $   --
   Unrealized gains on investments ........................................          $     16           $    121           $   --

<FN>
See accompanying notes to consolidated financial statements
</FN>
</TABLE>

                                                                 F-6

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Principles of Consolidation

         The accompanying consolidated financial statements include the accounts
of the Company and its wholly and majority owned  subsidiaries.  All significant
intercompany accounts and transactions have been eliminated in consolidation.

         Revenue Recognition

         The Company recognizes  revenue upon shipment and concurrently  accrues
for expected warranty expenses.  Repair and service revenues are recognized when
the service is performed.

         Concentration of Credit Risk and Fair Value of Financial Instruments

         The carrying value of the Company's  financial  instruments,  including
cash and cash  equivalents,  short-term  investments,  accounts  receivable  and
long-term  debt  approximates  fair market  value.  Financial  instruments  that
subject the Company to  concentrations  of credit risk consist primarily of cash
and cash  equivalents,  short-term  investments  and trade accounts  receivable.
Management   believes  the  financial  risks  associated  with  these  financial
instruments are minimal. The Company maintains its cash and cash equivalents and
short-term investments with high quality financial institutions.

         The Company  performs  ongoing  credit  evaluations  of its  customers'
financial  condition  and  generally  does not  require  collateral  on accounts
receivable.  When required,  the Company maintains  allowances for credit losses
and such losses have been within management's expectations.

         Cash Equivalents and Short-Term Investments

         The Company considers all liquid  investments with an original maturity
of three months or less to be cash equivalents.  The cash equivalents  consisted
of commercial paper and U.S. government securities as of March 31, 1999.

         The Company has classified its  investments in certain debt  securities
as "available-for-sale," and records such investments at fair market value, with
unrealized  gains and losses reported as a separate  component of  stockholders'
equity.   Realized   gains  and  losses  are   determined   using  the  specific
identification  method.  Interest income is recorded using an effective interest
rate, with the associated  premium or discount  amortized to interest income. At
March  31,  1999  and  1998,  the  fair  value  of  the  Company's   investments
approximated cost.

         Inventories

         Inventories  are  stated at the lower of  first-in,  first-out  cost or
market. The company periodically reviews inventory for potential slow moving and
obsolete  items  and  writes  down  specific  items to net  realizable  value as
appropriate.

         Property and Equipment

         Property  and   equipment   are  stated  at  cost.   Depreciation   and
amortization  are computed  using the  straight-line  method over the  estimated
useful lives of the respective  assets,  generally  three to five years.  Assets
recorded  under  capital  leases and leasehold  improvements  are amortized on a
straight-line  basis over the shorter of the lease terms or the estimated useful
lives of the respective assets.

         Income Taxes

         Income  taxes  are  recorded  using the  asset  and  liability  method.
Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases and operating loss and tax credit  carryforwards.  Deferred tax assets and
liabilities  are measured  using enacted tax rates  expected to apply to taxable
income in the years in which  those  temporary  differences  are  expected to be
recovered

                                       F-7

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

or settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment  date. A
valuation allowance is recorded to reduce deferred tax assets to an amount whose
realization is more likely than not.

         Per Share Computations

         Basic net income per share is computed by dividing net income available
to  common  stockholders  by  the  weighted-average   number  of  common  shares
outstanding  for the period.  Diluted net income per share is computed using the
weighted  average  number  of  common  and  dilutive  common  equivalent  shares
outstanding  during the period.  Common  equivalent shares include the effect of
stock options.  For the years ended March 31, 1999 and March 31, 1997, 2,317,642
and 1,737,789 common  equivalent shares with weighted average exercise prices of
$16.75 and $13.18,  respectively were not included in the calculation of diluted
net income per share as they were considered antidilutive.

<TABLE>
         A  reconciliation  of the basic  and  diluted  per  share  calculations
follows:

<CAPTION>
                                                                Year ended                                Year ended
                                                               March 31, 1999                           March 31, 1998
                                                    ------------------------------------       -------------------------------------
                                                                                   Per                                        Per
                                                      Net                         Share          Net                         Share
                                                      Loss          Shares       Amount         Income         Shares       Amount
                                                    --------       --------      -------       --------       --------      --------
<S>                                                 <C>              <C>         <C>           <C>               <C>        <C>
Basic .......................................       $(36,971)        10,568      $ (3.50)      $  8,922          9,881      $  0.90
Effect of dilutive securities ...............           --             --          --              --              820        (0.07)
                                                    --------       --------      -------       --------       --------      --------
Diluted .....................................       $(36,971)        10,568      $ (3.50)      $  8,922         10,701      $  0.83


                                                              Year ended
                                                             March 31, 1997
                                                    ------------------------------------
                                                                                   Per
                                                      Net                         Share
                                                      Loss          Shares       Amount
                                                    --------       --------      -------
Basic ...................................           $(3,991)          8,150      $ (0.49)
Effect of dilutive securities ...........               --             --          --
                                                    --------       --------      -------
Diluted .................................           $(3,991)          8,150      $ (0.49)
</TABLE>


         Use of Estimates in the Preparation of Financial Statements

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the  reported  amounts of assets and  liabilities,  the
disclosure of contingent  assets and  liabilities,  revenues and expenses during
the  reporting  period.  The most  significant  of these relate to the extent of
inventory  obsolescence,  the allowance  for doubtful  accounts and the warranty
accrual. Actual results could differ from those estimates.

         Accounting for Stock-Based Compensation

         The Company  accounts for its stock  option  plans using the  intrinsic
value method.

         Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of

         The  Company  reviews   long-lived  assets  and  certain   identifiable
intangibles for impairment whenever events or changes in circumstances  indicate
that the carrying amount of an asset may not be recoverable.  If such assets are
considered  to be impaired,  the  impairment to be recognized is measured by the
amount by which the carrying amount of the asset exceeds its fair value.

         Recent Accounting Pronouncements

         In June  1997,  the  FASB  issued  Statement  of  Financial  Accounting
Standards  (SFAS)  No.  130,  Reporting   Comprehensive  Income.  SFAS  No.  130
establishes  standards of reporting and display of comprehensive  income and its
components  of net  income  and  "Other  Comprehensive  Income" in a full set of
general purpose financial  statements.  "Other  Comprehensive  Income" refers to
revenues,  expenses,  gains and losses  that are not  included in net income but
rather are  recorded  directly  in  stockholders'  equity.  SFAS 130 was adopted
during the year ended March 31, 1999.

         The  Financial   Accounting  Standards  Boards  issued  SFAS  No.  131,
"Disclosures about Segments of an Enterprise and Related Information".  SFAS 131
requires the Company to report segment financial information consistent with the
presentation made to the Company's management for decision-making  purposes. The
Company adopted SFAS 131 in fiscal 1999.

                                       F-8

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

2. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

<TABLE>
         Available-for-sale  securities  at March  31,  1999  and  1998  were as
follows (in thousands):

<CAPTION>
                                                                                     Amortized         Unrealized            Fair
               As of March 31, 1999                                                     Cost           Gain (Loss)           Value
               --------------------                                                    -------         ----------            -------
<S>                                                                                    <C>                     <C>           <C>
Government bonds & notes ..................................................            $ 8,973                 81            $ 9,054
Corporate bonds & notes ...................................................             48,936                 56             48,992
                                                                                       -------            -------            -------
                                                                                        57,909                137             58,046
Less amounts classified as cash equivalents ...............................             21,629               --               21,629
                                                                                       -------            -------            -------
Securities available for sale .............................................            $36,280                137            $36,417
                                                                                       =======            =======            =======
   Contractual maturity dates, 1 to 5 years ...............................                                                  $28,117
   Contractual maturity dates, 5 to 10 years ..............................                                                     --
   Contractual maturity dates, 10 years and over ..........................                                                    8,300
                                                                                                                             -------
                                                                                                                             $36,417
                                                                                                                             =======


                                                                                     Amortized         Unrealized            Fair
               As of March 31, 1998                                                     Cost           Gain (Loss)           Value
               --------------------                                                    -------         ----------            -------
Government bonds & notes ..................................................            $23,149                 48            $23,197
Corporate bonds & notes ...................................................             68,229                 73             68,302
                                                                                       -------            -------            -------
                                                                                        91,378                121             91,499
Less amounts classified as cash equivalents ...............................             23,371               --               23,371
                                                                                       -------            -------            -------
Securities available for sale .............................................            $68,007                121            $68,128
</TABLE>

                                                                 F-9

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

3. BALANCE SHEET COMPONENTS

         Balance sheet  components at March 31, 1999 and 1998 are as follows (in
thousands):


                                                                March 31,
                                                          ----------------------
                                                           1999           1998
                                                          -------        -------
Inventories:
  Raw materials ..................................        $ 9,100        $ 7,395
  Work in progress ...............................          5,701          5,538
  Finished goods .................................          6,025          2,429
                                                          -------        -------
                                                          $20,826        $15,362
                                                          =======        =======
Property and equipment:
  Machinery and equipment ........................        $58,322        $52,473
  Land, building and improvements ................          2,736          2,829
  Leasehold improvements .........................          1,957          1,633
                                                          -------        -------
                                                           63,015         56,935
  Less accumulated depreciation
    and amortization .............................         34,547         24,159
                                                          -------        -------
                                                          $28,468        $32,776
                                                          =======        =======
Accrued liabilities:
  Employee compensation and benefits .............        $ 4,672        $ 2,958
  Warranty .......................................          9,473          7,326
  Other accrued liabilities ......................          3,739          2,697
                                                          -------        -------
                                                          $17,884        $12,981
                                                          =======        =======


4. DEBT AND LEASE COMMITMENTS

         Lines of Credit

         The Company  maintains a revolving line of credit under a master credit
agreement with a bank. The master credit agreement  contains  certain  financial
covenants  and  certain  restrictions  on  other  indebtedness  and  payment  of
dividends.  The line of credit,  secured by a majority of the Company's  assets,
expires on  December 1, 1999,  bears  interest  at the bank's  prime  rate,  and
provides for  borrowings  and letters of credit  aggregating  up to  $10,000,000
based on a specified percentage of eligible accounts receivable. As of March 31,
1999,  the Company was in compliance  with all but its  quarterly  profitability
financial covenant for which the Company has received a waiver from its bank. As
of March 31,  1999,  the Company had  $10,000,000  available  under this line of
credit with no borrowings outstanding.

         Equipment and Real Estate Loans

         In January 1997,  the Company  borrowed  $6,000,000  secured by certain
capital equipment.  Under the terms of the agreement, the Company is required to
make a series of uneven monthly principal  payments through January 2002 ranging
from $42,000 to  $136,000,  plus  interest at a rate equal to the Treasury  Rate
plus 2.75%,  and must maintain  certain minimum working  capital,  net worth and
other  specific  ratios for which the Company was in  compliance as of March 31,
1999.

         In March 1997,  through means of a limited  liability  company in which
the  Company is a majority  owner,  the Company  purchased a 39,000  square foot
building  and  secured a real estate  loan with an  institutional  lender in the
amount of $3,200,000 of which  $2,917,000  was received by the Company in fiscal
1997.  The loan has an initial  maturity date of April 2002 with an option to be
extended to April 2007. The

                                      F-10

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Company makes monthly  payments of principal and interest in equal amounts which
are amortized over two hundred forty months with the remaining principal balance
due on the maturity date.  The interest rate is a variable  interest rate set at
the LIBOR rate plus 3.25%.

         Future  minimum debt  principal  payments under these loans as of March
31, 1999  aggregated  $6,502,000  including  $1,603,000,  $876,000,  $1,466,000,
$177,000,  and $146,000 for the fiscal years 2000,  2001,  2002,  2003 and 2004,
respectively, and $2,234,000, thereafter.

         Lease Commitments

         During  fiscal  1997,  the Company  sold its  principal  facilities  in
Sunnyvale for $16,414,000, and leased the facilities back under a lease that has
been  classified as an operating  lease.  The lease expires in November 2011 and
the quarterly rent payments are subject to Consumer Price Index adjustments on a
tri-annual basis beginning in November 1999.

         In 1998,  the Company  entered into  operating  leases for an ancillary
40,000 square foot  manufacturing  facility in Rocklin,  California  and a 2,750
square foot engineering design center in Quincy,  Illinois. The Rocklin facility
has a sixty-two month lease term that commenced in June 1998 and expires in July
2003. The Quincy lease has been renewed for another twelve-month lease term that
expires in March 2000.

         The  Company  leases  these  facilities  and  certain  equipment  under
noncancelable  operating  leases.  Future  minimum  lease  payments  under these
noncancelable  operating  leases as of March  31,  1999  aggregated  $24,600,000
including $2,404,000,  $2,400,000, $2,406,000, $2,414,000 and $2,046,000 for the
fiscal years 2000,  2001,  2002, 2003 and 2004,  respectively  and  $12,930,000,
thereafter.  Rent expense was approximately $3,323,000,  $2,530,000 and $819,000
for the years ended March 31, 1999, 1998 and 1997, respectively.


5. STOCKHOLDERS' EQUITY

         Preferred Stock

         The  Board of  Directors  has the  authority  to issue up to  5,000,000
shares of undesignated preferred stock and to determine the powers,  preferences
and rights and the  qualifications,  limitations or  restrictions  granted to or
imposed upon any wholly unissued  shares of undesignated  preferred stock and to
fix the number of shares  constituting  any series and the  designation  of such
series,  without any further vote or action by the Company's  stockholders.  The
Board of Directors has designated  20,000 shares of preferred  stock as Series A
Participating Preferred Stock, although none of such shares have been issued.

         Stock Option Plans

         The Company has adopted stock option plans, (the "Plans"),  pursuant to
which the  Company's  Board of  Directors  may grant  stock  options to selected
employees, directors, officers and consultants of the Company. Stock options are
generally  granted with an exercise  price equal to the fair market value of the
Company's stock at the date of grant.  The options  generally have 10-year terms
and vest 25%  after one year from the  grant  date  with the  remaining  options
vesting pro rata over the following 36 months.

         A total of  184,695  shares of Common  Stock  have  been  reserved  for
issuance under the 1992 Stock Plan as of March 31, 1999. Under the 1994 Director
Option Plan, 25,000 shares were granted during fiscal 1999, and 10,000 shares of
Common Stock were reserved for issuance as of March 31, 1999.

         Outside of the 1992 Stock Plan and the 1994 Director  Option Plan,  two
officers  and one  employee  of the  Company  were  granted a combined  total of
390,000  options  during fiscal 1997, at exercise  prices  ranging from $9.50 to
$14.50,  which are subject to the same vesting schedule as that of the Company's
1992 Stock Plan. In fiscal 1998,  one officer and two  employees  were granted a
combined total of 90,000 options outside of the Plans at exercise prices ranging
from $16.88 to $56.38, which are subject to the same vesting schedule as that of
the 1992 Stock Plan.

                                      F-11

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

         In January 1998 the Company adopted the 1998 Nonstatutory  Stock Option
Plan under  which  400,000  shares  were  reserved.  Under  this  plan,  certain
employees were granted stock options with exercise  prices ranging from $6.59 to
$16.36 that were below the $17.25  fair market  value of the stock on the day of
grant and were subject to a six-month  vesting schedule.  Stock  compensation of
$609,000 and  $1,606,000 was recorded for these options in the fourth quarter of
fiscal  1998 and the first  half of fiscal  1999,  respectively.  In the  second
quarter of fiscal 1999, an  additional  500,000  shares were reserved  under the
1998 Nonstatutory Stock Option Plan. A total of 230,712 shares were reserved for
issuance as of March 31, 1999.

         The following  table  summarizes  option  activity  under the Company's
various plans:


                                                                        Weighted
                                                                        Average
                                              Available                 Exercise
                                              for Grant     Options      Price
                                              ---------    ----------   --------
Outstanding as of March 31, 1996 ..........   1,191,291       936,588    $16.03
   Additional shares reserved .............     390,000          --        --
   Granted at fair market value ...........  (1,790,746)    1,790,746     14.91
   Granted in excess of fair market value .    (250,000)      250,000     14.50
   Exercised ..............................        --        (114,671)     2.50
   Canceled ...............................   1,124,874    (1,124,874)    19.69
                                              ---------    ----------
Outstanding as of March 31, 1997 ..........     665,419     1,737,789     13.18
   Additional shares reserved .............     500,000          --        --
   Granted ................................    (855,755)      855,755     25.91
   Exercised ..............................        --        (431,511)    12.87
   Canceled ...............................     138,028      (138,028)    17.45
                                              ---------    ----------
Outstanding as of March 31, 1998 ..........     447,692     2,024,005     18.34
   Additional shares reserved .............     500,000          --        --
   Granted ................................    (964,921)      964,921     13.38
   Exercised ..............................        --        (136,981)     8.93
   Canceled ...............................     534,303      (534,303)    18.64
                                              ---------    ----------
Outstanding as of March 31, 1999 ..........     517,074     2,317,642    $16.75
                                              =========    ==========


<TABLE>
         The  following  tables  summarize   information   about  stock  options
outstanding at March 31, 1999:

<CAPTION>
                                               Weighted
                                                Average        Weighted                               Weighted
                             Number            Remaining        Average           Number              Average
   Range of               Outstanding         Contractual       Exercise        Exercisable          Exercise
Exercise Prices             Options               Life            Price           Options              Price
---------------             -------               ----            -----           -------              -----
<S>                          <C>                   <C>          <C>                 <C>                <C>
$ 0.20- 9.50                 399,878               7.85         $    7.85           292,045            $  7.28
 10.00-12.94                 408,615               9.40             12.73            15,615              11.38
 13.13-14.38                 274,047               8.45             13.96           118,854              14.02
 14.50-14.50                 508,566               6.86             14.50           345,665              14.50
 14.56-21.25                 386,365               8.96             18.14            95,696              18.25
 21.38-64.13                 340,171               7.98             36.10           169,180              33.79
                           ---------                                              ---------
                           2,317,642               8.18         $   16.75         1,037,055            $ 15.86
                           =========                                              =========
</TABLE>


         Using the  Black-Scholes  Option-Pricing  Model, the per share weighted
average fair market value of stock options  granted  during fiscal 1999,  fiscal
1998 and fiscal 1997 were $10.86, $18.34 and $9.41, respectively, on the date of
grant. Assumptions used with the Black-Scholes Option-Pricing Model were as

                                      F-12

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

follows: fiscal 1999, a stock price volatility of 81%, no expected dividends, an
average  risk-free  interest rate of 5.4% and an average expected option term of
4.4 years;  for fiscal  1998,  a stock  price  volatility  of 83%,  no  expected
dividends,  an average  risk-free  interest rate of 5.6% and an average expected
option term of 4.5 years;  and for fiscal 1997, a stock price volatility of 80%,
no expected dividends, an average risk-free interest rate of 6.0% and an average
expected option term of 4.3 years.

         Employee Stock Purchase Plan

         In June 1998,  the  Company's  stockholders  approved the 1998 Employee
Stock Purchase Plan (the "Purchase Plan") which permitted  eligible employees to
purchase the Company's  Common Stock through  payroll  deductions.  The Purchase
Plan consisted of consecutive and overlapping  12-month offering  periods,  each
divided into two 6-month purchase  periods.  The purchase price of the shares in
the  Purchase  Plan is 85% of the lower of the fair  market  value of the Common
Stock  at the  beginning  of the  offering  period  or the end of each  purchase
period.  The  Company  reserved  a total of 250,000  shares of common  stock for
issuance under this plan. The Purchase Plan has a feature  whereby the number of
shares reserved under the Purchase Plan are increased automatically on an annual
basis by the  lesser of  300,000  shares or 2% of  outstanding  shares of Common
Stock.  There were 188,725  shares of Common Stock  available for issuance as of
March 31, 1999.  During the year ended March 31, 1999,  shares  totaling  61,275
were acquired under the Purchase Plan at a per share price of $9.08.

         Under SFAS No. 123, Accounting for Stock-Based Compensation,  pro forma
compensation  cost is  calculated  for the fair market  value of the  employees'
purchase  rights.  The per share  weighted  average  fair market  value of those
purchase   rights  granted  in  fiscal  1999,   fiscal  1998  and  fiscal  1997,
respectively, was $3.87, $4.32 and $5.14, using the Black-Scholes Option-Pricing
Model with the following assumptions:  for fiscal 1999, a stock price volatility
of 81%, no expected  dividends,  risk free interest rate of 5.4% and an expected
term of 0.4 years; for fiscal 1998, a stock price volatility of 83%, no expected
dividends,  a risk free interest rate of 5.6% and an expected term of 0.5 years;
and for fiscal 1997, a stock price volatility of 80%, no expected  dividends,  a
risk free interest rate of 6.0% and an expected term of 0.9 years.

         Pro Forma Fair Value Information

<TABLE>
         The Company  accounts for its stock options  using the intrinsic  value
method. Had the Company determined  compensation cost based on the fair value at
the grant date for its stock  options  under SFAS No.  123,  the  Company's  net
income  (loss) and related per share amounts would have been as indicated in the
pro forma amounts indicated below:

<CAPTION>
                                                    1999                1998                 1997
                                              ------------------   -----------------   ------------------
<S>                                            <C>                  <C>                  <C>
Net income (loss)             As reported      $  (36,971,000)      $   8,922,000        $  (3,991,000)
                              Pro forma        $  (40,972,163)      $  (1,870,000)       $  (8,018,000)
Earnings (loss) per share:
Basic                         As reported      $        (3.50)      $        0.90        $       (0.49)
                              Pro forma        $        (3.88)      $       (0.19)       $       (0.98)
Diluted                       As reported      $        (3.50)      $        0.83        $       (0.49)
                              Pro forma        $        (3.88)      $       (0.19)       $       (0.98)
</TABLE>


         Pro forma net income  (loss)  reflects  only the options  granted since
April 1, 1995. Therefore,  the full impact of calculating  compensation cost for
stock  options  under SFAS No. 123 is not  reflected in the pro forma net income
(loss) amounts  presented above because  compensation cost is reflected over the
options' vesting period of four years and compensation  cost for options granted
prior to April 1, 1995 is not considered.

                                      F-13

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

6. INCOME TAXES

         Income tax expense for the years  ended March 31,  1999,  1998 and 1997
differs from the amount  computed by applying the federal income tax rate of 34%
to  pretax  income  (loss)  from  operations  as a result of the  following  (in
thousands):


                                                      Year ended March 31,
                                               --------------------------------
                                                 1999        1998        1997
                                               --------    --------    --------
Federal tax (benefit) at statutory rate ....   $(12,550)   $  3,189    $ (1,357)
State tax ..................................         59        --          --
Utilization of net operating loss
 carryforwards .............................       --        (3,314)       --
Alternative minimum tax ....................       --           183        --
FSC tax expense ............................       --           215        --
Unrealized benefit from LLC loss ...........       --            44        --
Unutilized net operating losses and
 temporary differences .....................     12,093        --         1,337
Other ......................................        457          82          20
                                               --------    --------    --------
Income tax expense .........................   $     59    $    399    $   --
                                               ========    ========    ========


         The tax effects of temporary  differences that give rise to significant
portions of the  deferred tax assets and  liabilities  are  presented  below (in
thousands):

                                                                March 31,
                                                          ---------------------
                                                            1999         1998
                                                          --------     --------
Deferred tax assets:
 Various accruals and reserves .......................    $  6,349     $  6,999
 Net operating loss carryforwards ....................      21,259        7,986
 Credit carryforwards ................................       6,982        6,604
                                                          --------     --------
   Total gross deferred tax assets ...................      34,590       21,589
   Less valuation allowance ..........................     (32,661)     (20,642)
                                                          --------     --------
   Total deferred tax assets .........................    $  1,929     $    947
                                                          --------     --------
Deferred tax liabilities:
 Property and equipment depreciation differences .....    $ (1,929)    $   (947)
                                                          --------     --------
   Total gross deferred tax liabilities ..............      (1,929)        (947)
                                                          --------     --------
   Net deferred tax assets ...........................    $   --       $   --
                                                          ========     ========


         As of March 31, 1999, the Company has a net operating loss carryforward
of approximately  $60 million and $16 million for federal and California  income
tax purposes,  respectively. If not utilized, these carryforwards will expire in
various amounts beginning in 2008 and 2004, respectively.

         The Company has research credit  carryforwards  of  approximately  $3.1
million  and $2.9  million  for  federal  and  California  income tax  purposes,
respectively.  If not  utilized,  these  carryforwards  will  expire in  various
amounts beginning in 1999. The California research credit can be carried forward
indefinitely.

         The Company also has  California  manufacturing  investment  tax credit
carryforwards of approximately  $2.6 million for California  income tax purposes
which, if not utilized, will expire in 2005 through 2007.

         Included in the deferred tax assets is  approximately  $10.2 million of
assets  relating  to the stock  option  compensation  which will be  credited to
equity when realized.

                                      F-14

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

7. MAJOR PRODUCT GROUPS AND RELATED REVENUE DATA

         The Company  operated  and reported its  financial  information  as one
vertical integrated unit in fiscal 1999, 1998 and 1997.

         The following table  summarizes the annual  percentage  contribution to
revenues by customers when sales to such customers exceeded 10% of such revenues
in fiscal  1999,  1998 and 1997,  and the amounts due from these  customers as a
percentage of total accounts receivable as of March 31, 1999 and 1998, follows:


                                             Percentage of Total Accounts
                               Revenues           Receivable as of
                               --------           ----------------
                          Year Ended March 31,        March 31,
                        ----------------------     -------------
                        1999     1998     1997     1999     1998
                        ----     ----     ----     ----     ----
         Customer A      76%      79%      75%      74%       74%
         Customer B      11%      14%      --       11%       8%


         Customers A and B are major  companies in the  wireless  infrastructure
equipment industry.

         Revenues from major product  categories for the three years ended March
31, 1999 were as follows:


                                    Year ended March 31,
                                 ---------------------------
                                 1999     1998      1997
                                 ------   ------   ---------
         TDMA                     34%      34%         48%
         CDMA                     38%      27%         37%
         GSM                      18%      29%         8%
         Other                    10%      10%         7%
                                 ----     ----       ----
         Total Revenue           100%     100%        100%
                                 ====     ====       ====

         Revenues  from  unaffiliated  customers  by  geographic  region were as
follows:


                                    Year ended March 31,
                                 ---------------------------
                                 1999     1998      1997
                                 ------   ------   ---------
         Canada                   57%      49%         57%
         United States            16%      5%          27%
         Europe                   13%      20%         13%
         Korea                    14%      26%         2%
         Other                    --       --           1%
                                 ----     ----       ----
         Total Exports           100%     100%        100%
                                 ====     ====       ====


8. LITIGATION

         Since December 23, 1997, a number of complaints have been filed against
the Company and certain of its  officers in the Federal  Court for the  Northern
District of California that allege  violations of the federal  securities  laws.
Similar  complaints  have been  filed in  California  state  court  that  allege
violations of California  state  securities laws and California  common law. The
complaints have been consolidated in the federal and state courts, respectively.
The  plaintiffs  in both the federal and state  lawsuits  purport to represent a
class of persons who  purchased the  Company's  securities  during the period of
July 17, 1997 through  October 23, 1997. The complaints  allege that the Company
and certain of its officers misled the investing  public regarding the financial
prospects  of the  Company.  The  Company  believes  that  the  allegations  are
completely without merit and will vigorously defend itself.

                                      F-15

<PAGE>


                                   SCHEDULE II

                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                                 (in thousands)


     Allowance for     Balance at     Additions                    Balance at
   Doubtful Accounts   Beginning      Charged to                      End of
   and Sales Returns   of Period       Income       Deductions       Period
  ------------------- ------------   ------------   ------------   ------------
         1999            $376            $12            $--            $388
         1998            $365            $24            $13            $376
         1997            $339            $36            $10            $365

                                       S-1

<PAGE>


                                INDEX TO EXHIBITS


                                                                  Sequentially
 Exhibits                                                         Numbered Page
----------                                                       ---------------

 3.5(14)   Certificate of Incorporation of Registrant.
 3.6(15)   Bylaws of Registrant.
 4.1(11)   Amended and Restated Preferred Shares Rights Agreement
           of  January  15,  1997,  between  the  Registrant  and
           ChaseMellon Shareholder Services,  L.L.C., as amended,
           including  the  form  of  Rights  Certificate  and the
           Certificate  of  Determination,  the Summary of Rights
           attached thereto as Exhibits A, B and C, respectively.
 4.1.1(11) Letter  Agreement  to amend  Preferred  Shares  Rights
           Agreement  dated as of January  15,  1997  between the
           Registrant and Kopp Investment Advisors, Inc.
10.2(8)    1992 Stock Plan, as amended.
10.4(8)    1994  Director  Option  Plan  and  form  of  agreement
           thereunder.
10.7(14)   Amended and Restated  Business Loan Agreement  between
           Registrant  and Silicon Valley Bank dated February 11,
           1997 and ancillary documents thereto.
10.13+(4)  Supply  Agreement  between   Registrant  and  Northern
           Telecom Limited dated April 16, 1995.
10.16(5)   Purchase and Sale Agreement between  Metropolitan Life
           Insurance Company and Registrant.
10.17+(6)  Development  and  Supply  Agreement  between  QUALCOMM
           Incorporated and Registrant.
10.18+(7)  Purchasing  Agreement  between  Airnet  Communications
           Corporation and Registrant.
10.19(8)   Employment Agreement between Garrett A. Garrettson and
           Registrant.
10.21(9)   Term Loan  Agreement  between  Silicon Valley Bank and
           Registrant
10.22(10)  Lease  Agreement  dated  November 19, 1996 between the
           Registrant and SPEC (CA) QRS 12-20, Inc.
10.23(10)  Bill of Sale dated November 19, 1996 by the Registrant
           to SPEC (CA) QRS 12-20, Inc.
10.26(13)  Stock Option Agreement dated November 26, 1997 between
           Registrant and Garrett A. Garrettson.
10.28(13)  Stock Option Agreement dated November 26, 1997 between
           Registrant and Garrett A. Garrettson.
10.30(13)  Stock  Option  Agreement  dated March 20, 1997 between
           Registrant and Michael Morrione.
10.32(15)  Form of  Indemnification  Agreement with directors and
           officers.
10.33(16)  1998 Nonstatutory Stock Option Plan.
10.34(17)  1998 Employee Stock Purchase Plan.
10.35(18)  Lease  Agreement  between   Registrant  and  Ellington
           Development Inc. dated April 13, 1998.
10.36      Separation  Agreement dated March 23, 1999 between the
           Registrant and Stephen B. Greenspan.
10.37      Separation  Agreement  dated May 7, 1999  between  the
           Registrant and Bruce R. Wright.
23.1       Consent of KPMG LLP.
24.1       Power of Attorney (included on page 32).
27.1       Financial Data Schedule.


-----------------
+    Confidential  treatment  has been  requested  or  granted  with  respect to
     certain  portions  of  this  exhibit.  Omitted  portions  have  been  filed
     separately with the Securities and Exchange Commission.

                                        1

<PAGE>


 4   Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the fiscal year ended March 31, 1995.
 5   Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended July 1, 1995.
 6   Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended September 30, 1995.
 7   Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended December 30, 1995.
 8   Incorporated   by  reference  to  exhibits  filed  with  the   Registrant's
     Registration  Statement on Form S-8 (File No. 333--38561) as filed with the
     Securities and Exchange Commission on October 23, 1997.
 9   Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended June 29, 1996.
10   Incorporated by reference to the  Registrant's  Form 8-K dated November 19,
     1996.
11   Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on Form 8-A (File No. 000-24360) as filed with the Securities and
     Exchange Commission on January 17, 1997.
13   Incorporated   by   reference   to   exhibits   filed   with   Registrant's
     Post-Effective  Amendment No. 1 to the  Registration  Statement on Form S-8
     (File No.  333-25435) as filed with the Securities and Exchange  Commission
     on October 21, 1997.
14   Incorporated  by reference to exhibits  filed with  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended June 28, 1997.
15   Incorporated  by  reference  to exhibits  filed with  Registrant's  Current
     Report on Form 8-K dated October 10, 1997.
16   Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on Form S-8 (File No. 333-49081) as filed with the Securities and
     Exchange Commission on April 1, 1998.
17   Incorporated by reference to exhibits filed with Registrant's Annual Report
     on Form 10-K for the year ended March 31, 1998 as filed with the Securities
     and Exchange Commission on May 27, 1998.
18   Incorporated  by reference to exhibits  filed with  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended June 28, 1998.

                                        2