================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                             ----------------------
                                   FORM 10-Q/A
                                 Amendment No. 1
                             ----------------------

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

                                       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 000-29053

                               YDI WIRELESS, INC.
             (Exact name of registrant as specified in its charter)

               DELAWARE                                  04-2751645
     (State or other jurisdiction           (I.R.S. Employer Identification No.)
   of incorporation or organization)

                                8000 LEE HIGHWAY
                             FALLS CHURCH, VA 22042
                    (Address of principal executive offices)

                                 (703) 205-0600
              (Registrant's telephone number, including area code)

      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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes |_| No |X|

      As of October 31, 2003, there were 13,620,292 shares of the registrant's
common stock outstanding.

================================================================================

<PAGE>

                                EXPLANATORY NOTE

Overview

      This Amendment No. 1 to our Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2003 initially filed with the Securities
and Exchange Commission ("SEC") on November 10, 2003 (the "Originally Filed
10-Q") is being filed to reflect restatements of the following financial
statements, all of which are unaudited except as otherwise noted: consolidated
balance sheets of YDI Wireless, Inc. ("YDI") as of September 30, 2003 and of
Young Design, Inc. ("Young Design") as of December 31, 2002 (audited);
consolidated statements of operations for the three and nine month periods ended
September 30, 2003 (for YDI) and 2002 (for Young Design); consolidated statement
of changes in stockholders' equity for the nine month period ended September 30,
2003 for YDI; and consolidated statement of cash flows for the nine month period
ended September 30, 2003 (for YDI) and 2002 (for Young Design). Corresponding
revisions have been made in this Amendment No. 1 to other portions of the
Originally Filed 10-Q.

Summary of Revisions

      In general, these restatements reflect non-cash revisions in the
accounting for the combination of Young Design, Inc. ("Young Design") and
Telaxis Communications Corporation ("Telaxis") that occurred in April 2003. The
accounting for this transaction is complicated by the different legal and
accounting treatments of the transaction. From a legal perspective, Telaxis was
the acquiring company, Young Design became a wholly-owned subsidiary of Telaxis,
and Telaxis issued shares of its common stock to the former YDI stockholders.
However, from an accounting perspective, the combination was a reverse merger in
which Young Design was the acquiring company due to the former Young Design
stockholders owning approximately 70% of the combined company and other reasons.

      Some changes reflected in this Amendment No. 1 result from the different
treatment of the former Telaxis property and equipment that had been included in
the $2.7 million of property and equipment formerly shown on our September 30,
2003 balance sheet. Upon further consideration, that Telaxis amount has been
split into two categories - assets held for sale and property and equipment. The
estimated fair market value of the assets held for sale is now reflected on our
September 30, 2003 balance sheet as a current asset. The remaining Telaxis
property and equipment has been written off in accordance with SFAS No. 141 and
the negative goodwill associated with the combination reduced by a corresponding
amount. Because the assets were either reclassified as held for sale or written
off, the assets are not being depreciated and previously recorded depreciation
amounts have been reversed. The net change in operating results for the quarter
was an increase of $371,000. The net change in overall net income for the
quarter was an increase of $425,000.

      Other changes result from a change in the calculation of weighted average
shares of common stock outstanding. Previously, that calculation for fiscal year
2003 started with the 4,177,078 shares of stock held by the Telaxis stockholders
on January 1, 2003 and added the 9,375,000 shares issued to the former YDI
stockholders in April 2003. To better reflect the reverse merger of Young Design
and Telaxis, the starting share count has been revised to be the 9,375,000
shares of common stock held by the former Young Design stockholders with the
4,177,078 shares originally held by the Telaxis stockholders being added to the
outstanding share count in April 2003. Given these accounting changes, YDI's
weighted average shares outstanding in 2003 has increased. For the three months
ending September 30, 2003, the effect was insignificant for basic earnings per
share. For the nine months ending September 30, 2003, the effect was an increase
of YDI's weighted average shares outstanding to approximately 12.1 million from
10.4 million with a corresponding decrease in earnings per share.

Amendments Made in this Amendment No. 1 and Other Documents

      This Amendment No. 1 amends and restates Items 1, 2, and 4 of Part I and
Item 6 of Part II of the Originally Filed 10-Q and, except for such items and
Exhibits 31.1, 31.2, and 32.1, no other information in the Originally Filed 10-Q
is amended hereby. The explanatory caption at the beginning of each item of this
Amendment No. 1 sets forth the general nature of the revisions to that item.


                                       2
<PAGE>

      We are concurrently filing Amendment No. 1 to our Quarterly Report on Form
10-Q for the quarter ended June 30, 2003, initially filed with the SEC on August
14, 2003, and Amendment No. 1 to our Annual Report on Form 10-K for the year
ended December 31, 2003, initially filed with the SEC on February 20, 2004.
Amendment No. 1 to the Form 10-Q includes the following restated financial
statements, all of which are unaudited except as otherwise noted: consolidated
balance sheets of YDI as of June 30, 2003 and of Young Design as of December 31,
2002 (audited); consolidated statements of operations for the three and six
month periods ended June 30, 2003 (for YDI) and 2002 (for Young Design);
consolidated statement of changes in stockholders' equity for the six month
period ended June 30, 2003 for YDI; and consolidated statements of cash flows
for the six month period ended June 30, 2003 (for YDI) and 2002 (for Young
Design). Amendment No. 1 to the Form 10-K includes the following (audited)
restated financial statements: consolidated balance sheets as of December 31,
2003 (for YDI) and 2002 (for Young Design) and consolidated statements of
operations, stockholders' equity, and cash flows for the years ended December
31, 2003 (for YDI) and 2002 and 2001 (for Young Design).

      For a discussion of events and developments subsequent to September 30,
2003, see the Amendment No. 1 to our Annual Report on Form 10-K for the year
ended December 31, 2003 described above as well as our other filings with the
SEC subsequent to September 30, 2003.


                                       3
<PAGE>

                               YDI WIRELESS, INC.
                                      INDEX

<TABLE>
<CAPTION>
                                                                                                   PAGE NO.
                                                                                                   --------
<S>                                                                                                   <C>
PART I. FINANCIAL INFORMATION

       Item 1. Financial Statements .........................................................          5

                  Consolidated Balance Sheets as of September 30, 2003
                    (unaudited) and December 31, 2002 .......................................          6

                  Consolidated Statements of Operations for the three months and
                    nine months ended September 30, 2003 and 2002 (unaudited) ...............          7

                  Consolidated Statement of Changes in Stockholders' Equity for
                    the nine months ended September 30, 2003 (unaudited) ....................          8

                  Consolidated Statements of Cash Flows for the nine months
                    ended September 30, 2003 and 2002 (unaudited) ...........................          9

                  Notes to Consolidated Financial Statements (unaudited) ....................         10

       Item 2. Management's Discussion and Analysis of Financial Condition and
               Results of Operations ........................................................         23

       Item 4. Controls and Procedures ......................................................         31

PART II. OTHER INFORMATION

       Item 6. Exhibits and Reports on Form 8-K .............................................         32

       SIGNATURES ...........................................................................         32
</TABLE>


                                       4
<PAGE>

                         PART I - FINANCIAL INFORMATION

      This Quarterly Report on Form 10-Q contains forward-looking statements as
defined by federal securities laws. Forward-looking statements are predictions
that relate to future events or our future performance and are subject to known
and unknown risks, uncertainties, assumptions, and other factors that may cause
actual results, outcomes, levels of activity, performance, developments, or
achievements to be materially different from any future results, outcomes,
levels of activity, performance, developments, or achievements expressed,
anticipated, or implied by these forward-looking statements. Forward-looking
statements should be read in light of the cautionary statements and important
factors described in this Form 10-Q, including Part I, Item 2 -- Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Safe
Harbor for Forward-Looking Statements. We undertake no obligation to update or
revise any forward-looking statement to reflect events, circumstances, or new
information after the date of this Form 10-Q or to reflect the occurrence of
unanticipated or any other subsequent events.

Item 1. Financial Statements.

      The restated consolidated financial statements and supplementary data,
including the notes to the restated consolidated financial statements, set forth
in this Item 1 have been revised to reflect the restatements described in the
Explanatory Note above and, except for these revisions, do not reflect events
and developments subsequent to September 30, 2003.


                                       5
<PAGE>

                       YDI WIRELESS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                                YDI Wireless,     Young Design,
                                                                                                  Inc. and          Inc. and
                                                                                                Subsidiaries       Subsidiaries
                                                                                               (Consolidated)     (Consolidated)
                                                                                                September 30,      December 31,
                                                                                                     2003               2002
                                                                                               --------------     --------------
                                                                                                 (unaudited)
                                                                                               --------------
<S>                                                                                               <C>               <C>
Assets
Current assets:
   Cash and cash equivalents .............................................................        $   6,269         $     939
   Restricted cash .......................................................................              141                --
   Marketable securities .................................................................            1,110                --
   Accounts receivable, net ..............................................................            2,420             1,686
   Refundable income taxes ...............................................................              275                --
   Other receivables .....................................................................              166                --
   Inventory .............................................................................            2,869             2,386
   Investment securities - trading .......................................................              130                 4
   Deferred tax asset ....................................................................               --               142
   Assets held for sale ..................................................................            1,299                --
   Prepaid expenses ......................................................................              173               451
                                                                                                  ---------         ---------
       Total current assets ..............................................................           14,852             5,608

   Property and equipment, net ...........................................................            1,740             1,823

Other Assets:
  Investment in unconsolidated subsidiaries ..............................................               --                36
  Investment securities - available-for-sale .............................................            1,304               841
  Intangible assets, net .................................................................              492                 9
  Deferred tax asset .....................................................................               --               245
  Deposits ...............................................................................               49                10
                                                                                                  ---------         ---------
       Total other assets ................................................................            1,845             1,141
                                                                                                  ---------         ---------
       Total assets ......................................................................        $  18,437         $   8,572
                                                                                                  =========         =========

Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable and accrued expenses .................................................        $   3,411         $   2,158
   Current maturities of notes payable ...................................................              249               495
   Current deposit - non-refundable ......................................................               --                 9
                                                                                                  ---------         ---------
       Total current liabilities .........................................................            3,660             2,662
Notes payable, net of current maturities .................................................            1,333             1,402
                                                                                                  ---------         ---------
       Total liabilities .................................................................            4,993             4,064

Commitments and contingencies ............................................................               --                --

Stockholders' Equity
   Preferred stock, $0.01 par value; authorized 4,500,000, none
     issued at September 30, 2003; none authorized, none issued at December 31, 2002 .....               --                --
   Common stock, $0.01 par value, authorized 100,000,000, issued 13,592,845 at
     September 30, 2003; issued 9,375,000 at December 31, 2002 ...........................              136                94
   Additional paid-in capital ............................................................            4,094               357
   Retained earnings .....................................................................            8,718             4,066
   Accumulated other comprehensive income:
     Net unrealized gain/(loss) on available-for-sale securities .........................              496                (9)
                                                                                                  ---------         ---------
       Total stockholders' equity ........................................................           13,444             4,508
                                                                                                  ---------         ---------
       Total liabilities and stockholders' equity ........................................        $  18,437         $   8,572
                                                                                                  =========         =========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       6
<PAGE>

                       YDI WIRELESS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except share and per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                               YDI Wireless,     Young Design,        YDI Wireless,    Young Design,
                                                                  Inc. and         Inc. and             Inc. and         Inc. and
                                                                Subsidiaries     Subsidiaries         Subsidiaries     Subsidiaries
                                                               (Consolidated)   (Consolidated)       (Consolidated)   (Consolidated)
                                                               -------------------------------       ------------------------------
                                                                     For the Three Months                  For the Nine Months
                                                                      Ended September 30,                  Ended September 30,
                                                               -------------------------------       ------------------------------
                                                                   2003               2002               2003               2002
                                                               ------------       ------------       ------------      ------------
<S>                                                            <C>                <C>                <C>               <C>
Revenues .................................................     $      8,029       $      5,139       $     21,694      $     15,019

Cost of goods sold .......................................            3,741              3,219             13,140             9,682
                                                               ------------       ------------       ------------      ------------

    Gross profit .........................................            4,288              1,920              8,554             5,337

Operating expenses:
    Selling costs ........................................              698                482              1,701             1,056
    General and administrative ...........................            1,470                928              5,023             3,019
    Research and development .............................              706                277              1,280               472
                                                               ------------       ------------       ------------      ------------
        Total operating expenses .........................            2,874              1,687              8,004             4,547
                                                               ------------       ------------       ------------      ------------
Operating income (loss) ..................................            1,414                233                550               790

Other income (expenses):
    Interest income ......................................               81                  1                112                17
    Interest expense .....................................              (32)               (39)               (94)             (100)
    Other income (expenses) ..............................               --                 (8)                10                (5)
                                                               ------------       ------------       ------------      ------------
        Total other income (expenses) ....................               49                (46)                28               (88)
                                                               ------------       ------------       ------------      ------------
Income (loss) before income taxes and extraordinary gain .            1,463                187                578               702

    Provision for income taxes ...........................              410                191                233               191
                                                               ------------       ------------       ------------      ------------
Income (loss) before extraordinary gain ..................            1,053                 (4)               345               511

     Extraordinary gain ..................................               --                 --              4,347                --
                                                               ------------       ------------       ------------      ------------
Net income (loss) ........................................     $      1,053       $         (4)      $      4,692      $        511
                                                               ============       ============       ============      ============
Weighted average shares - basic ..........................       13,575,775          9,375,000         12,168,311         9,375,000
                                                               ============       ============       ============      ============
    EPS, basic ...........................................     $       0.08       $       0.00       $       0.39      $       0.05
                                                               ============       ============       ============      ============
Weighted average shares - diluted ........................       14,071,049          9,375,000         12,288,163         9,375,000
                                                               ============       ============       ============      ============
    EPS, diluted .........................................     $       0.07       $       0.00       $       0.38      $       0.05
                                                               ============       ============       ============      ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       7
<PAGE>

                       YDI WIRELESS, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
                        (in thousands, except share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                 Common Stock (A)          Additional                       Other
                                             -------------------------      Paid-in         Retained    Comprehensive
                                               Shares          Amount       Capital         Earnings    (Loss) Income      Total
                                             ----------     ----------     ----------      ----------   -------------    ----------
<S>                                           <C>           <C>            <C>             <C>            <C>            <C>
Balances, January 1, 2003 ..............      9,375,000     $       94     $      357      $    4,066     $       (9)    $    4,508

Merger with Telaxis ....................      4,177,078             42          3,697              --             --          3,739
Exercise of stock options and warrants .         40,767             --             40              --             --             40
 Distribution to Merry Fields members ..             --             --             --             (40)            --            (40)
 Comprehensive income
   Net income ..........................             --             --             --           4,692             --          4,692
   Unrealized gain on investments ......             --             --             --              --            505            505
                                             ----------     ----------     ----------      ----------     ----------     ----------
    Total comprehensive income .........             --                                         4,692            505          5,197

                                             ----------     ----------     ----------      ----------     ----------     ----------
Balances, September 30, 2003 ...........     13,592,845     $      136     $    4,094      $    8,718     $      496     $   13,444
                                             ==========     ==========     ==========      ==========     ==========     ==========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       8
<PAGE>

                       YDI WIRELESS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                             Young
                                                                                     YDI Wireless,           Design,
                                                                                       Inc. and             Inc. and
                                                                                     Subsidiaries         Subsidiaries
                                                                                    (Consolidated)       (Consolidated)
                                                                                    --------------       --------------
                                                                                          For the Nine Months Ended
                                                                                                September 30,
                                                                                    -----------------------------------
                                                                                         2003                  2002
                                                                                      ----------            ----------
<S>                                                                                   <C>                   <C>
Cash flows from operating activities:
   Net income .............................................................           $    4,692            $      511
     Gain on disposal of securities .......................................                  (40)                   --
     Loss on disposal of property and equipment ...........................                   34                    --
     Loss on write-down of investment in unconsolidated subsidiary ........                   36                    --
     Depreciation and amortization ........................................                  115                    89
     Extraordinary gain ...................................................               (4,347)                   --
     Deferred tax asset ...................................................                  387                   606
     Changes in assets and liabilities affecting operations:
       Restricted cash ....................................................                 (141)                   --
       Accounts receivable, net ...........................................                 (734)                 (578)
       Other receivables ..................................................                 (166)                   --
       Inventory ..........................................................                 (483)                 (563)
       Deposits ...........................................................                  (21)                  (17)
       Prepaid expenses ...................................................                  686                   (38)
       Refundable income taxes ............................................                 (275)                   --
       Accounts payable and accrued expenses ..............................                  317                   592
       Income taxes payable ...............................................                   --                    52
       Customer order deposits ............................................                   (9)                   --
       Other ..............................................................                   --                    45
                                                                                      ----------            ----------
            Net cash provided by (used in) operating activities ...........                   51                   699
                                                                                      ----------            ----------

Cash flows from investing activities:
   Purchase of securities .................................................               (1,641)                 (310)
   Sale of securities .....................................................                  487                    --
   Purchase of intangible asset ...........................................                 (544)                   20
   Purchase of property and equipment .....................................                   (5)                  (42)
   Sale of assets held for sale ...........................................                  106                    --
   Cash received with purchase of Telaxis .................................                7,421                    --
                                                                                      ----------            ----------
       Net cash provided by (used in) investing activities ................                5,824                  (332)
                                                                                      ----------            ----------

Cash flows from financing activities:
   Distributions to Merry Fields members ..................................                  (40)                   --
   Exercise of stock options ..............................................                   40                    --
   Issuance of notes payable ..............................................                  500                   900
   Repayment of notes payable .............................................               (1,045)                 (360)
                                                                                      ----------            ----------
       Net cash provided by (used in) financing activities ................                 (545)                  540
                                                                                      ----------            ----------
Net increase in cash ......................................................                5,330                   907
Cash, beginning of period .................................................                  939                 1,113
                                                                                      ----------            ----------
Cash, end of period .......................................................           $    6,269            $    2,020
                                                                                      ==========            ==========

Supplemental disclosure of cash flow information:
   Cash paid for interest .................................................           $       94            $      100
                                                                                      ==========            ==========
   Income taxes paid ......................................................           $       84            $      191
                                                                                      ==========            ==========
   Stock issued in Telaxis combination ....................................           $    3,739            $       --
                                                                                      ==========            ==========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       9
<PAGE>

                       YDI WIRELESS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Organization

      Young Design, Inc. ("Young Design") was incorporated under the laws of the
Commonwealth of Virginia on February 28, 1986 to engage in the business of
manufacturing and sale of equipment for use in transmission of data access on a
wireless basis. Young Design operates its business in Falls Church, Virginia.

      Zeus Wireless, Inc. ("Zeus") was formed under the laws of the State of
California. Zeus was a developer and manufacturer of 2.4 GHz transceivers
providing mission critical wireless data connectivity. Zeus' offices are located
in Columbia, Maryland.

      Merry Fields, LLC ("Merry Fields") was formed by certain shareholders of
Young Design under the laws of the State of Delaware on August 11, 2000. Merry
Fields owns the property and land leased to YDI for its principal operations.

      On April 1, 2003, Young Design completed a strategic combination
transaction (the "combination") with Telaxis Communications Corporation
("Telaxis"), pursuant to a definitive strategic combination agreement dated as
of March 17, 2003. Pursuant to the terms of that agreement, Telaxis formed a
subsidiary, WFWL Acquisition Subsidiary, that merged with and into Young Design
and Telaxis issued new shares of its common stock to the stockholders of Young
Design. As of the date of the combination, Telaxis was a Massachusetts
corporation. On July 9, 2003, Telaxis reincorporated into Delaware and changed
its name to YDI Wireless, Inc. ("YDI Wireless" or the "Company"). For financial
reporting purposes, the combination has been treated as a purchase of Telaxis by
Young Design (see note 15).

2.    Summary of Significant Accounting Policies

      Interim Financial Information

      In our opinion, the interim financial information as of September 30, 2003
and for the three and nine months ended September 30, 2002 and 2003 contains all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the results for such periods. Results for interim periods
are not necessarily indicative of results to be expected for an entire year.

      The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Certain information and footnote disclosures normally included in the
consolidated financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations.

      Use of Estimates

      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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

      Principles of Consolidation

      The consolidated financial statements include the accounts of YDI Wireless
and its wholly owned subsidiaries and also Merry Fields, a consolidated
affiliate. Merry Fields is a Variable Interest Entity and is


                                       10
<PAGE>

consolidated with YDI Wireless, Inc. All significant inter-company balances and
transactions have been eliminated in consolidation. The operating results of
Telaxis are included in the financial statements beginning April 1, 2003.

      Asset Impairment

      We periodically evaluate the carrying value of long-lived assets when
events and circumstances warrant such a review. The carrying value of a
long-lived asset is considered impaired when the anticipated undiscounted cash
flow from such asset is separately identifiable and is less than the carrying
value. In that event, a loss is recognized based on the amount by which the
carrying value exceeds the fair market value of the long-lived asset. Fair
market value is determined primarily using the anticipated cash flows discounted
at a rate commensurate with the risk involved.

      Cash and Cash Equivalents

      We consider cash on hand, deposits in banks, money market accounts and
investments with an original maturity of three months or less to be cash or cash
equivalents. We also separately report any restricted cash balances that are
encumbered.

      Investments

      In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 115, "Accounting for Certain Debt and Equity Securities", securities are
classified into three categories: held-to-maturity, available-for-sale, and
trading. Because we hold certain securities principally for the purpose of
selling them in the near future, they are classified on the balance sheet as
trading securities. As a result, the securities are carried at fair value and
realized and unrealized gains and losses are included in the consolidated
statements of operations. Securities available-for-sale are reported at fair
value. Any unrealized gain or loss, net of applicable income taxes, is reported
as a separate addition to or reduction from stockholders' equity as other
comprehensive income. Investment income includes realized and unrealized gains
and loss on investments, interest and dividends.

      Investments - Equity Method

      Investments in private companies are accounted for under the equity or
cost method based on our voting interest and degree of control or influence we
may have over the operations.

      Accounts Receivable

      We provide an allowance to account for amounts, if any, of our accounts
receivable, which are considered uncollectible. We base our assessment of the
allowance for doubtful accounts on historical losses and current economic
conditions. Accounts receivable are determined to be past due based on a
contractual term of 30 days. We grant unsecured credit to our United States
customers. The allowance for doubtful accounts was approximately $300,000 and
$185,000 as of September 30, 2003 (unaudited) and December 31, 2002,
respectively.

      Inventory

      Inventory consists of electronic components and finished goods and is
stated at the lower of cost or market. Cost is determined by the first-in,
first-out method.

      Property and Equipment

      Property and equipment is recorded at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the respective
assets, which range from two to seven years for personal property and 39 years
for real property.


                                       11
<PAGE>

      Intangible Assets

      Intangible assets subject to amortization include intellectual property
and a non-compete agreement. Amortization is computed using the straight-line
method over three years, which is the estimated useful life of the respective
assets. Amortization expense for the nine months ending September 30, 2003 and
2002 (unaudited) totaled approximately $65,000 and $0, respectively.

      Income Taxes

      We account for income taxes under SFAS No. 109, "Accounting for Income
Taxes." Under this method, deferred tax assets and liabilities are determined
based on differences between the financial reporting and tax basis of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. The principal differences are net operating loss carry forwards,
start-up costs, property and equipment, nonrefundable contract deposits,
allowance for doubtful accounts, inventory reserves, and negative goodwill
related to acquisitions.

      Merry Fields is a limited liability company and is taxed as a partnership.
Accordingly, for Merry Fields, items of income, deductions, expenses and credits
pass through directly to its members and are reported on their tax returns.

      Revenue Recognition

      We recognize revenue when a purchase commitment has been received,
shipment has been made to the customer, collection is probable and, if
contractually required, a customer's acceptance has been received.

      Excess of Acquired Net Assets Over Cost

      Young Design's excess of acquired net assets over cost resulted from the
acquisition of Telaxis in 2003. The acquisition was accounted for using the
purchase method of accounting and the purchase price was allocated to the assets
purchased and the liabilities assumed based on the estimated fair values at the
date of the acquisition. We recognized the entire $4.3 million of excess
acquired net assets over cost as extraordinary gain in the second quarter 2003
in accordance with SFAS No. 141, "Business Combinations" because the combination
was consummated in that quarter.

      Research and Development

      Research and development costs are expensed as incurred.

      Shipping and Handling Costs

      Shipping and handling are charged to customers and included in both
revenue and costs of goods sold on the Consolidated Statements of Operations.

      Comprehensive Income

      We report comprehensive income in accordance with SFAS No. 130, "Reporting
Comprehensive Income." As of September 30, 2003 (unaudited) and December 31,
2002, we had approximately $496,000 and $38,000, respectively, of unrealized
gains on available-for-sale investments, net of income taxes of $0 and $26,000,
respectively.

      Recent Accounting Pronouncements

      In April 2003, the Financial Accounting Standards Board ("FASB") issued
Statement No. 149, "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities." The Statement amends


                                       12
<PAGE>

Statement 133 for decisions made by the Derivatives Implementation Group, in
particular the meaning of an initial net investment, the meaning of underlying
and the characteristics of a derivative that contains financing components.
Presently, we have no derivative financial instruments and, therefore, believe
that adoption of the Statement will have no effect on our financial statements.

      In May 2003, the FASB issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." The
Statement requires that the issuer classify certain instruments as liabilities,
rather than equity, or so-called mezzanine equity. Presently, we have no
financial instruments that come under the scope of the Statement and, therefore,
believe that adoption of the new Statement will have no impact on our financial
statements.

3.    Inventory

<TABLE>
<CAPTION>
                                                                                      September 30,
                                                                                          2003         December 31, 2002
                                                                                     --------------    -----------------
                                                                                       (unaudited)
                                                                                     --------------
<S>                                                                                  <C>                 <C>
            Raw Materials ......................................................     $          614      $          502
            Work in process ....................................................                 50                   9
            Finished goods .....................................................              2,405               2,051
                                                                                     --------------      --------------
                                                                                              3,069               2,562
            Allowance for excess and obsolescence ..............................               (200)               (176)
                                                                                     --------------      --------------
            Net Inventory ......................................................     $        2,869      $        2,386
                                                                                     ==============      ==============
</TABLE>

4.    Marketable Securities

<TABLE>
<CAPTION>
                                                                                     September 30,
                                                                                          2003         December 31, 2002
                                                                                     --------------    -----------------
                                                                                       (unaudited)
                                                                                     --------------

<S>                                                                                  <C>                 <C>
            Fixed income .......................................................     $        1,110      $           --
                                                                                     ==============      ==============
</TABLE>

5.    Investment Securities - Trading

      We hold the following investments classified as trading with a fair market
value as follows:

<TABLE>
<CAPTION>
                                                                                     September 30,
                                                                                          2003         December 31, 2002
                                                                                     --------------    -----------------
                                                                                       (unaudited)
                                                                                     --------------
<S>                                                                                  <C>                 <C>
            Equity securities ..................................................     $          130      $            4
                                                                                     ==============      ==============
</TABLE>

      The mark-to-market adjustments were insignificant for both the quarter and
nine months ending September 30, 2003 (unaudited).

6.    Investment Securities - Available For Sale

      We owned 199,618 and 184,618, respectively, unregistered shares and
270,632 and 238,893, respectively, registered shares as of September 30, 2003
(unaudited) and December 31, 2002. In addition, we owned 0 and 72,800 registered
shares of RF Industries as of September 30, 2003 (unaudited) and December 31,
2002, respectively. During the third quarter of 2003, we recognized
approximately $40,000 in gain from the sale of the RF Industries investment that
is included in other income (expenses).


                                       13
<PAGE>

      In September 2000, we purchased 2,000,000 shares of common stock in
Spectrum Access, Inc. ("Spectrum"). In exchange for the shares, we granted the
use of our broadcasting space in the Falls Church tower, as well as providing
selected equipment and training to Spectrum. As of September 30, 2003
(unaudited) and December 31, 2002, our ownership interest of approximately 11
percent has been valued at $10,500.

<TABLE>
<CAPTION>
                                                                   September 30, 2003
                                                                       (unaudited)                    December 31, 2002
                                                               ----------------------------     -----------------------------
                                                               Cost Basis    Carrying Value     Cost Basis     Carrying Value
                                                               ----------    --------------     ----------     --------------
<S>                                                           <C>              <C>              <C>              <C>
         Spectrum .....................................       $       10       $       10       $       10       $       10
         RF Industries ................................               --               --              145              153
         Phazar .......................................              794            1,294              700              678
                                                              ----------       ----------       ----------       ----------
                                                              $      804       $    1,304       $      855       $      841
                                                              ==========       ==========       ==========       ==========
</TABLE>

7.       Property and Equipment

         Property and equipment consisted of the following:

<TABLE>
<CAPTION>
                                                                                            September 30,
                                                                                                2003        December 31, 2002
                                                                                            ------------    -----------------
                                                                                             (unaudited)
                                                                                            ------------
<S>                                                                                         <C>               <C>
         Land ...............................................................               $        522      $        522
         Building ...........................................................                      1,377             1,377
         Automobiles ........................................................                         37                37
         Furniture and equipment ............................................                         --                96
         Lab equipment ......................................................                        107               132
                                                                                            ------------      ------------
                                                                                                   2,043             2,164
                Less:  accumulated depreciation .............................                       (303)             (341)
                                                                                            ------------      ------------
         Property and equipment, net ........................................               $      1,740      $      1,823
                                                                                            ============      ============
</TABLE>

      Depreciation expense totaled approximately $54,000 and $54,000,
respectively for the periods ended September 30, 2003 and 2002 (unaudited).

8.    Income Taxes

      We estimate our annual effective tax rate for the nine months ended
September 30, 2003 (unaudited) at 0% based on our estimate of current year
projected tax loss. Accordingly, we expect to file amended tax returns for
calendar year 2002 and receive refunds of approximately $175,000 and refunds of
2003 estimated tax payments of $83,000. The income tax expense for the nine
month period ended September 30, 2003 primarily relates to the increase in the
valuation allowance associated with the deferred tax assets since we cannot
predict when we will generate taxable income to utilize these assets. During the
nine month period ended September 30, 2002, our effective annual tax rate was
42%.


                                       14
<PAGE>

9.    Notes Payable

      Notes payable consisted of the following:

<TABLE>
<CAPTION>
                                                                                              September 30,
                                                                                                  2003        December 31, 2002
                                                                                              -------------   -----------------
                                                                                               (unaudited)
                                                                                              -------------
<S>                                                                                             <C>             <C>
         In May 2002, Young Design executed a $750,000 note
         payable with a financial institution related to the bulk
         purchase of inventory.  The note was non-interest bearing
         and requires four (4) calendar quarter payments of
         $187,500 through September 30, 2003 (unaudited) ..................................     $       --      $      375

         In May 2002, Merry Fields executed a loan consolidation and
         refinance agreement with a financial institution for a term loan of
         $1,565,374 collateralized by the building and land in Falls Church,
         Virginia. The loan requires monthly payments of $18,781 consisting
         of principal and interest. The loan bears interest at 7.34% per
         annum and matures on May 31, 2012 ................................................          1,435           1,522

         Other ............................................................................            147              --
                                                                                                ----------      ----------
                                                                                                     1,582           1,897
                  Current portion .........................................................           (249)           (495)
                                                                                                ----------      ----------
                                                                                                $    1,333      $    1,402
                                                                                                ==========      ==========
</TABLE>

10.   Commitments and Contingencies

      Leases

      We have various operating leases for equipment, office and production
space. These leases generally provide for renewal or extension at market prices.

      In August 2000, Merry Fields executed a lease agreement with Young Design
for the lease of the building in Falls Church, Virginia. The lease commenced on
January 1, 2001 and terminates on December 31, 2010. The lease provides for base
monthly rent payments of $20,625 with a 3% fixed annual increase after the base
year. All intercompany rental income and expense under the lease agreement have
been eliminated in consolidation.

      Rent expense, excluding rent paid to Merry Fields, for the nine months
ended September 30, 2003 and 2002 (unaudited) was approximately $197,000 and
$191,000, respectively.

11.   401(k) - Retirement Plan

      We have a 401(k) retirement plan covering all employees who meet certain
minimum eligibility requirements. Each year employees can elect to defer the
lesser of 15% of earned compensation or the maximum amount permitted by the
Internal Revenue Code. We may make contributions to the plan at our discretion.
We made no contribution to the plan for the periods ended September 30, 2003 and
2002 (unaudited). (NOTE: Prior to the effective date of the combination
transaction in April 2003, Telaxis had made matching contributions to the 401(k)
plan for its employees).


                                       15
<PAGE>

12.   Warrants and Stock Option Plans

      The warrant and option numbers shown in this footnote reflect the
adjustments to those warrants and options due to the April 1, 2003 combination
of Young Design and Telaxis and the reverse/forward stock splits effected on
July 9, 2003.

Stock Warrants

      The Company has issued warrants for its common stock as follows:

<TABLE>
<CAPTION>
                                                                                               Warrants Outstanding
                                                                                  --------------------------------------------
                                                                                  Number of Shares     Per Unit Exercise Right
                                                                                  ----------------     -----------------------
<S>                                                                                    <C>                  <C>
         Outstanding December 31, 2002 .................................                    --
              Warrants assumed in Telaxis combination ..................               432,338              $   2.08 - 8.64
              Warrants granted .........................................                    --              $            --
              Warrants exercised .......................................               (28,635)             $          2.08
              Warrants expired/canceled ................................                (3,500)             $          8.64
                                                                                   -----------              ---------------
         Outstanding September 30, 2003 (unaudited) ....................               400,203              $          2.08
                                                                                   ===========              ===============
</TABLE>

                                                         Number of
                           Expiration Date                Warrants
                        -----------------------        -------------
                        September 2006 ........           300,897
                        July 2007 .............            99,306

Stock Options Issued

      The Company has stock option plans that provide for the granting of
options to employees, directors, and consultants. The plans permit the granting
of options to purchase a maximum of 1,491,507 shares of common stock at various
prices and require that the options be exercisable at the prices and at the
times as determined by the Board of Directors, not to exceed ten years from date
of issuance. As of September 30, 2003, 619,580 options are available for
issuance under these plans.

      A summary of the option activity is as follows:

<TABLE>
<CAPTION>
                                                                                                Options Outstanding
                                                                                  ---------------------------------------------
                                                                                  Number of Shares     Per Share Exercise Price
                                                                                  ----------------     ------------------------
<S>                                                                                    <C>                  <C>
         Outstanding December 31, 2002 .................................               444,688              $          1.60
              Options assumed in Telaxis combination....................               695,976              $ 1.60 - 161.00
              Options granted ..........................................                53,750              $   0.92 - 4.00
              Options exercised ........................................               (36,773)             $   1.52 - 3.24
              Options expired/canceled .................................              (285,714)             $ 1.60 - 161.00
                                                                                   -----------              ---------------
         Outstanding September 30, 2003 (unaudited) ....................               871,927              $ 0.92 - 161.00
                                                                                   ===========              ===============
</TABLE>

      We have adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock Based Compensation" ("SFAS
123"), but apply the intrinsic value method set forth in Accounting Principles
Board Opinion No. 25. For stock options granted during 2003, we have estimated
the fair value of each option granted using the Black-Scholes option-pricing
model with the following assumptions: risk-free interest rate of 2.37% for the
options granted during 2003, expected volatility of 284%, expected option life
of 4 years and no dividend payment expected for 2003. Using these assumptions,
the fair value of the stock options granted in 2003 is $3.68 per stock option.


                                       16
<PAGE>

      If we had elected to recognize compensation expense based on the fair
value at the grant dates, consistent with the method prescribed by SFAS No. 123,
net income per share would have been changed to the pro forma amount indicated
below:

<TABLE>
<CAPTION>
                                                                                                           Nine Months Ended
                                                                                                       September 30, (unaudited)
                                                                                                 -----------------------------------
                                                                                                      2003                 2002
                                                                                                 -------------         -------------
<S>                                                                                              <C>                   <C>
      Net Income (unaudited) attributable to common stockholders, as reported: .........         $       4,692         $         511
          Less: Total stock based employee compensation expense determined
          under the fair value based method for all awards .............................                 1,008                    --
                                                                                                 -------------         -------------
      Pro forma net income attributable to common stockholders .........................         $       3,684         $         511
                                                                                                 =============         =============
      Basic net income per common share, as reported ...................................         $        0.39         $        0.05
                                                                                                 =============         =============
      Basic net income per common share, pro forma .....................................         $        0.30         $        0.05
                                                                                                 =============         =============
      Diluted net income per common share, as reported .................................         $        0.38         $        0.05
                                                                                                 =============         =============
      Diluted net income per common share, pro forma ...................................         $        0.30         $        0.05
                                                                                                 =============         =============
</TABLE>


                                       17
<PAGE>

13.   Earnings per share (unaudited):

<TABLE>
<CAPTION>
                                                          Three Months Ended                       Nine Months Ended
                                                          September 30, 2002                          June 30, 2002
                                                    -------------------------------         -------------------------------
                                                        2003               2002                 2003              2002
                                                    -------------     -------------         -------------     -------------
<S>                                                 <C>               <C>                   <C>               <C>
Numerator
     Income (loss) before extraordinary gain ..     $       1,053     $          (4)        $         345     $         511
                                                    =============     =============         =============     =============
     Extraordinary gain .......................                --                --                 4,347                --
                                                    =============     =============         =============     =============
     Net income (loss) ........................     $       1,053     $          (4)        $       4,692     $         511
                                                    =============     =============         =============     =============

Denominator - weighted average shares
     Denominator for basic earnings per share .        13,575,775         9,375,000            12,168,311         9,375,000
                                                    =============     =============         =============     =============
     Dilutive effect of stock options .........           495,274                --               119,852                --
                                                    -------------     -------------         -------------     -------------
     Denominator for diluted earnings per share        14,071,049         9,375,000            12,288,163         9,375,000
                                                    =============     =============         =============     =============

     Basic earnings per share before
     extraordinary gain .......................     $        0.07     $        0.00         $        0.03     $        0.05
                                                    =============     =============         =============     =============
     Extraordinary gain - basic ...............                --                --                  0.36                --
                                                    =============     =============         =============     =============
     Basic earnings per share .................     $        0.07     $        0.00  0      $        0.39     $        0.05
                                                    =============     =============         =============     =============

     Dilutive earnings per share before
     extraordinary gain .......................     $        0.07     $        0.00         $        0.03     $        0.05
                                                    =============     =============         =============     =============
     Extraordinary gain - diluted .............                --                --                  0.35                --
                                                    =============     =============         =============     =============
     Diluted earnings per share ...............     $        0.07     $        0.00  0      $        0.38     $        0.05
                                                    =============     =============         =============     =============
</TABLE>

14.   Concentrations

      We maintain our cash, cash equivalent, and restricted cash balances in
several banks. The balances are insured by the Federal Deposit Insurance
Corporation up to $100,000 per bank. At September 30, 2003 (unaudited) and
December 31, 2002, the uninsured portion totaled approximately $6.1 million and
$976,000, respectively.

      As of September 30, 2003 (unaudited) and December 31, 2002, accounts
receivable from none and two major customers, respectively, totaled
approximately $0 and $477,000, respectively, which represented 0% and 28%,
respectively, of total accounts receivable.

      One customer accounted for 10% of sales for the nine months ended
September 30, 2003 (unaudited). One customer accounted for 17% of sales for the
quarter ended September 30, 2003 (unaudited). No customer exceeded 10% of sales
for the three or nine month periods ended September 30, 2002 (unaudited).

      For the three months ending September 30, 2002, two vendors accounted for
36% of cost of goods sold. For the same period ended September 30, 2003, two
vendors accounted for 48% of cost of goods sold. For the nine months ended
September 30, 2003 (unaudited), one vendor accounted for 28% of cost of goods
sold and for the same period ended September 30, 2002 (unaudited), two vendors
accounted for 37% of cost of goods sold.


                                       18
<PAGE>

15.   Acquisition

      The following describes the acquisition of Telaxis by Young Design
completed on April 1, 2003.

      On April 1, 2003, Young Design merged with Telaxis. For financial
reporting purposes, Young Design was treated as the acquiring company and the
transaction was accounted for as a reverse merger. Young Design had voting
control and majority representation on the Board of Directors after the merger
with Telaxis. In addition, Young Design had substantially more operating assets
and revenue (Telaxis had virtually no operating revenue). Young Design merged
with Telaxis for various strategic reasons including the fact that Telaxis was a
publicly traded vehicle providing a potential source of capital and liquidity.
For accounting purposes, Young Design is treated as the acquirer since it was
the larger of the two entities and had significantly greater operating revenue.

      The cost of the April 1, 2003 acquisition consisted of 4,177,078 shares of
common stock and 695,976 options valued at $3.7 million and acquisition costs of
approximately $0.1 million. On April 1, 2003, Telaxis had net assets with a fair
market value of $8.1 million. Accounting for the transaction as a reverse merger
resulted in an excess of net assets over book value of $4.3 million. The assets
and liabilities of Telaxis were recorded at fair value under the purchase method
of accounting. As the fair value of the assets acquired exceeded the purchase
price, the long -lived assets were reduced to zero and negative goodwill was
recorded. The valuation of the stock was based on the average closing price for
the five days preceding the announcement of the acquisition.

      Unaudited pro forma results of operations for the three and nine months
ended September 30, 2003 and 2002 are included below. Such pro forma information
assumes that the above acquisition had occurred as of January 1, 2003 and 2002,
respectively, and revenue is presented in accordance with our accounting
policies. This summary is not necessarily indicative of what our results of
operations would have been had if we had been a combined entity during such
periods, nor does it purport to represent results of operations for any future
periods.

<TABLE>
<CAPTION>
                                                                                   (unaudited)
                                                                -----------------------------------------------
                                                                Three Months
                                                                    Ended               Nine Months Ended
                                                                September 30,              September 30,
                                                                -------------      ----------------------------
                                                                      2003            2003              2002
                                                                 ----------        ----------        ----------
<S>                                                              <C>               <C>               <C>
         Net operating revenue ..........................        $    8,029        $   21,699        $    9,893
         Net income (loss) ..............................        $    1,053        $    2,372        $   (5,463)
         Net earnings (loss) per share - basic ..........        $     0.08        $     0.19        $    (0.58)
         Net earnings (loss) per common share -
            diluted .....................................        $     0.07        $     0.19        $    (0.58)
</TABLE>

      Telaxis condensed Balance Sheet at fair market value.

<TABLE>
<CAPTION>
              (in thousands)                                                      April 1, 2003
                                                                                  --------------
<S>                                                                               <C>
              Cash and cash equivalents ........................                  $        7,421
              Property and equipment (held for sale) ...........                           1,405
              Other assets .....................................                             426
              Liabilities ......................................                          (1,166)
                                                                                  --------------
              Net assets acquired ..............................                  $        8,086
                                                                                  ==============
</TABLE>


                                       19
<PAGE>

16.  Schedule of Commercial Commitments

<TABLE>
<CAPTION>
                                                                              Payments due by period (numbers in thousands)
                                                              ----------------------------------------------------------------------
                                                                              Less than         1 -3         4 - 5         After 5
                                                                 Total         1 year          years          years          years
                                                              ----------     ----------     ----------     ----------     ----------
<S>                                                           <C>            <C>            <C>            <C>            <C>
Operating leases - Buildings ............................     $    2,989     $      785     $    1,262     $      609     $      333
Operating leases - equipment ............................            147            129             18             --             --
Employment Contracts ....................................            980            980             --             --             --
                                                              ----------     ----------     ----------     ----------     ----------
Total contractual cash obligations ......................     $    4,116     $    1,894     $    1,280     $      609     $      333
                                                              ==========     ==========     ==========     ==========     ==========
</TABLE>

17.   Contingencies

      During the period from June 12 to September 13, 2001, four purported
securities class action lawsuits were filed against Telaxis in the U.S. District
Court for the Southern District of New York, Katz v. Telaxis Communications
Corporation et al., Kucera v. Telaxis Communications Corporation et al.,
Paquette v. Telaxis Communications Corporation et al., and Inglis v. Telaxis
Communications Corporation et al. The lawsuits also named one or more of the
underwriters in the Telaxis initial public offering and certain of its officers
and directors. On April 19, 2002, the plaintiffs filed a single consolidated
amended complaint which supersedes the individual complaints originally filed.
The amended complaint alleges, among other things, violations of the
registration and antifraud provisions of the federal securities laws due to
alleged statements in and omissions from the Telaxis initial public offering
registration statement concerning the underwriters' alleged activities in
connection with the underwriting of Telaxis' shares to the public. The amended
complaint seeks, among other things, unspecified damages and costs associated
with the litigation. These lawsuits have been assigned along with, we
understand, approximately 1,000 other lawsuits making substantially similar
allegations against approximately 300 other publicly-traded companies and their
public offering underwriters to a single federal judge in the U.S. District
Court for the Southern District of New York for consolidated pre-trial purposes.
We believe the claims against us are without merit and have defended the
litigation vigorously. The litigation process is inherently uncertain, however,
and there can be no assurance that the outcome of these claims will be favorable
for us.

      On July 15, 2002, together with the other issuer defendants, Telaxis filed
a collective motion to dismiss the consolidated, amended complaints against the
issuers on various legal grounds common to all or most of the issuer defendants.
The underwriters also filed separate motions to dismiss the claims against them.
In October 2002, the court approved a stipulation dismissing without prejudice
all claims against the Telaxis directors and officers who had been defendants in
the litigation. On February 19, 2003, the court issued its ruling on the
separate motions to dismiss filed by the issuer defendants and the underwriter
defendants. The court granted in part and denied in part the issuer defendants'
motions. The court dismissed, with prejudice, all claims brought against Telaxis
under the anti-fraud provisions of the securities laws. The court denied the
motion to dismiss the claims brought under the registration provisions of the
securities laws (which do not require that intent to defraud be pleaded) as to
Telaxis and as to substantially all of the other issuer defendants. The court
denied the underwriter defendants' motion to dismiss in all respects.

      In June 2003, we elected to participate in a proposed settlement agreement
with the plaintiffs in this litigation. This decision was made by a special
independent committee of our board of directors. We understand that a large
majority of the other issuer defendants have also elected to participate in this
settlement. If ultimately approved by the court, this proposed settlement would
result in a dismissal, with prejudice, of all claims in the litigation against
us and against the other issuer defendants who elect to participate in the
proposed settlement, together with the current or former officers and directors
of participating issuers who were named as individual defendants. The proposed
settlement does not provide for the resolution of any claims against the
underwriter defendants. The proposed settlement provides that the insurers of
the participating issuer defendants will guarantee that the plaintiffs in the
cases brought against the participating issuer defendants will recover at least
$1 billion. This means there will be no monetary obligation to the plaintiffs if
they recover $1 billion or more from the


                                       20
<PAGE>

underwriter defendants. In addition, we and the other participating issuer
defendants will be required to assign to the plaintiffs certain claims that the
participating issuer defendants may have against the underwriters of their IPOs.

      The proposed settlement contemplates that any amounts necessary to fund
the guarantee contained in the settlement or settlement-related expenses would
come from participating issuers' directors and officers liability insurance
policy proceeds as opposed to funds of the participating issuer defendants
themselves. A participating issuer defendant could be required to contribute to
the costs of the settlement if that issuer's insurance coverage were
insufficient to pay that issuer's allocable share of the settlement costs.
Therefore, the potential exposure of each participating issuer defendant should
decrease as the number of participating issuer defendants increases. We
currently expect that our insurance proceeds will be sufficient for these
purposes and that we will not otherwise be required to contribute to the
proposed settlement.

      Consummation of the proposed settlement is conditioned upon, among other
things, negotiating, executing, and filing with the court final settlement
documents and final approval by the court. If the proposed settlement described
above is not consummated, we intend to continue to defend the litigation
vigorously. Moreover, if the proposed settlement is not consummated, we believe
that the underwriters may have an obligation to indemnify us for the legal fees
and other costs of defending these suits. While there can be no assurance as to
the ultimate outcome of these proceedings, we currently believe that the final
result of these actions will have no material effect on our consolidated
financial condition, results of operations, or cash flows.

18.   Corporate Structural Changes

      On July 9, 2003, Telaxis effected a reverse 1-for-100 split of its
outstanding common stock, a forward 25-for-1 split of its common stock
outstanding after the reverse stock split, the reincorporation of Telaxis from
Massachusetts to Delaware, and the change of its corporate name to "YDI
Wireless, Inc."

      No fractional shares were issued as a result of the reverse stock split.
Fractional shares held by any stockholder with less than 100 shares in its
account were cashed out at a price of $0.954 for each share outstanding before
the reverse stock split, which is based on the average trading prices of our
common stock on the Over-the-Counter Bulletin Board for the 20 trading days
ended on July 9, 2003. Due to this fractional share treatment, 39,976 pre-split
shares were cancelled for approximately $38,000. The effect of the stock splits
has been reflected for all periods presented.

      No fractional shares were issued as a result of the forward stock split.
Any stockholder who was entitled to a fractional share after the forward stock
split had that stockholder's holdings rounded up to the next whole share. The
Company issued 96 shares to these shareholders in the aggregate.

      Both the reincorporation into Delaware and the corporate name change were
effected through a merger of Telaxis, a Massachusetts corporation, and YDI
Wireless, a Delaware corporation formed as a wholly owned subsidiary of Telaxis
for the purpose of effecting the reincorporation and name change. YDI Wireless
was the surviving corporation in the merger. The merger was effected pursuant to
the Agreement and Plan of Merger and Reincorporation, dated as of June 23, 2003,
by and between Telaxis and YDI Wireless, which merger agreement was duly
approved by the stockholders of Telaxis at their 2003 annual meeting.

      In connection with the merger and pursuant to the merger agreement, each
share of Telaxis' common stock, par value $0.01 per share, outstanding
immediately prior to the effective time of the merger was automatically
converted into the right to receive one share of YDI Wireless common stock, par
value $0.01 per share, with the result that YDI Wireless is now the publicly
held corporation and Telaxis has been merged out of existence by operation of
law. The stockholders of Telaxis immediately prior to the merger were the
stockholders of YDI Wireless immediately after the merger, subject to the
effects of the reverse stock split described above. YDI Wireless' common stock
will continue to trade on the Over-the-Counter Bulletin Board, but the ticker
symbol has been changed to "YDIW."


                                       21
<PAGE>

19.   Subsequent Event

      On October 31, 2003 YDI signed a definitive merger agreement to acquire
Phazar Corp. (Nasdaq:ANTP). Under the terms of the agreement, Phazar
stockholders will receive 1.2 shares of YDI common stock for each share of
Phazar common stock. This exchange ratio will not be adjusted for changes in the
price of either YDI common stock or Phazar common stock. Based on shares
currently outstanding, YDI stockholders would own approximately 87% of the
combined entity and Phazar stockholders would own approximately 13%. One member
of Phazar's board of directors will join YDI's board of directors. The agreement
is subject to the approval of Phazar shareholders and any unforeseen
circumstances. YDI expects to complete the acquisition prior to March 31, 2004.

20.   Revision to the financial statements

      The Company previously depreciated certain assets, acquired in the reverse
merger with Telaxis, as held for sale and did not considered the selling costs
in the determination of the fair market value of the assets held for sale. The
financial statements have been adjusted to decrease the fair market value for
the $400,000 estimated costs to sell as of April 1, 2003, the date of the
reverse merger, and to reverse the depreciation expense of $758,000 for the nine
months ended September 30, 2003 related to those assets. The impact of these
adjustments was to increase income from operations by $758,000, to decrease
other income by $15,000 (representing the reversal of the gain on the sale of
certain of these assets) and to decrease the extra-ordinary gain by $400,000 for
the nine months ended September 30, 2003.


                                       22
<PAGE>

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

      The Management's Discussion and Analysis of Financial Condition and
Results of Operations, or MD&A, set forth in this Item 2 has been revised to
reflect the restatements described in the Explanatory Note above, as well as to
incorporate certain conforming changes. Apart from these revisions, this MD&A
(including the safe harbor for forward-looking statements) does not reflect
events and developments subsequent to September 30, 2003.

Overview

      On April 1, 2003, Telaxis Communications Corporation ("Telaxis") closed a
strategic combination transaction with Young Design, Inc., a privately-held
Virginia corporation ("Young Design"). In that transaction, Telaxis formed a
subsidiary that merged with and into Young Design and each outstanding share of
Young Design common stock was converted into the right to receive 2.5 shares of
Telaxis common stock. Telaxis was the continuing corporation, Telaxis
stockholders continued to hold Telaxis common stock following the transaction,
and Young Design became a wholly owned subsidiary of Telaxis. In the
transaction, Telaxis issued 9,375,000 shares of its common stock to the two
former stockholders of Young Design. Immediately after the closing of the
transaction, Telaxis had 13,552,078 shares of common stock outstanding. Telaxis
also started doing business as "YDI Wireless" following that combination.

      The results of operations of Telaxis are included in the consolidated
financial statements from April 1, 2003, the closing date of the acquisition.
Financial information provided for prior periods is historical financial
information of Young Design only, unless otherwise noted to the contrary. The
acquisition was accounted for as a purchase, and the excess of net assets over
the purchase price was recorded as negative goodwill and immediately recognized
into income as required by generally accepted accounting principles.

      At the annual stockholders meeting on June 24, 2003, the Telaxis
stockholders approved a reverse 1-for-100 split of its outstanding common stock,
a forward 25-for-1 split of its common stock outstanding after the reverse stock
split, the reincorporation of Telaxis from Massachusetts to Delaware, and the
change of its name from "Telaxis Communications Corporation" to "YDI Wireless,
Inc." These changes became effective July 9, 2003.

      We are a world leader in providing extended range, license free wireless
data equipment. The recent combination brought together Young Design's
license-free products that extend the range of IEEE 802.11 wireless local area
network systems, point-to-point wireless backhaul products, diverse and broad
customer base, and deep market and industry experience with Telaxis'
high-frequency millimeter-wave expertise and FiberLeap(TM) and EtherLeap(TM)
products. In addition, we are a leading designer of turnkey long distance
wireless systems for applications such as wireless Internet, wireless video,
wireless local area networks (LANs), wireless wide area networks (WANs),
wireless metropolitan area networks (MANs), and wireless virtual private
networks. We supply products and systems capable of transmitting data at rates
ranging from 19.9 kilobits per second (kbps) to 1 gigabit per second (Gbps).

Critical Accounting Policies

      The preparation of our condensed financial statements in accordance with
accounting principles generally accepted in the United States of America
requires us to make estimates and assumptions that affect: the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements; and the reported amounts of revenues and
expenses during the reporting periods. We are required to make judgments and
estimates about the effect of matters that are inherently uncertain. Actual
results could differ from our estimates. The most significant areas involving
our judgments and estimates are described below.

      Inventory Valuation

      Inventory is stated at the lower of cost or market, cost being determined
on a first-in, first-out basis. Provisions are made to reduce excess or obsolete
inventory to its estimated net realizable value. The process for evaluating the
value of excess and obsolete inventory often requires us to make subjective
judgments and estimates concerning future sales levels, quantities and prices at
which such inventory will be able to be sold in the normal


                                       23
<PAGE>

course of business. Accelerating the disposal process or incorrect estimates of
future sales potential may necessitate future adjustments to these provisions.

      Accounts Receivable Valuation

      We maintain an allowance for doubtful accounts for estimated losses
resulting from the inability of our customers to make required payments. If the
financial condition of our customers were to deteriorate resulting in an
impairment of their ability to make payments, additional allowances may be
required.

Result of Operations

      The following table provides statements of operations data as a percentage
of sales for the periods presented.

<TABLE>
<CAPTION>
                                                                        Three Months Ended          Nine Months Ended
                                                                            September 30,             September 30,
                                                                        ------------------        ---------------------
                                                                        2003         2002         2003             2002
                                                                        ----         ----         ----             ----
<S>                                                                     <C>           <C>         <C>              <C>
          Sales ..............................................          100%          100%        100%             100%
          Cost of sales ......................................           47            63          61               64
                                                                        ---           ---         ---              ---
          Gross margin (loss) ................................           53            37          39               36
          Operating expenses
              Selling ........................................            9             9           8                7
              General and administrative .....................           18            18          23               20
              Research and development, net ..................            9             5           6                3
                                                                        ---           ---         ---              ---
                 Total operating expenses ....................           36            32          37               30
                                                                        ---           ---         ---              ---
          Operating income (loss) ............................           17             5           2                5
              Other income (expense) .........................           --            (1)         --               (1)
                                                                        ---           ---         ---              ---
          Income before income taxes and extraordinary gain ..           17             4           2                4
              Income taxes ...................................           (5)           (4)         (1)              (1)
                                                                        ---           ---         ---              ---
          Income before extraordinary gain ...................           12            --           1                3
              Extraordinary gain .............................           --            --          20               --
                                                                        ---           ---         ---              ---
          Net Income .........................................           12            --          21                3
                                                                        ===           ===         ===              ===
</TABLE>

Three Months Ended September 30, 2003 and 2002

      Sales

      Sales for the three months ended September 30, 2003 were $8.0 million as
compared to $5.1 million for the same period in 2002 for an increase of $2.9
million or 57%. The increase in sales is attributed to the addition of sales and
marketing resources, introduction of new products, and the receipt of a
relatively large order from one customer during the third quarter of 2003 for
one of these new products.

      Costs of goods sold and gross profit

      Costs of goods sold and gross profit for the three months ended September
30, 2003 were $3.7 million and $4.3 million, respectively. For the same period
in 2002, costs of goods sold and gross profit were $3.2 million and $1.9
million, respectively. Gross margin for the three-month periods ending September
30, 2003 and 2002 were 53% and 37%, respectively. During the third quarter 2003,
we introduced several new products to the market place and realized higher than
usual margins. As competitive products are introduced to the market (which we
expect will happen), we believe that these margins will stabilize closer to
historical levels. We also implemented several manufacturing efficiencies and
strategies that reduced our costs and increased our gross profit. In addition,
we were able to utilize significant component inventory that was valued at below
current replacement cost which resulted in a


                                       24
<PAGE>

non-recurring improvement in gross margin. In summary, we expect our weighted
average cost of goods sold to return to our historical levels despite continued
efforts to introduce less costly manufacturing alternative and introduce new
products.

      Sales and marketing

      Selling and marketing expenses consist primarily of employee salaries and
associated costs for selling, marketing, and customer support. Selling and
marketing expenses increased to $0.7 million for the three months ended
September 30, 2003 from $0.5 million for the three months ended September 30,
2002. The increase in sales and marketing expenses is primarily a result of
added personnel to address the growing market for the Company's expanded product
line.

      General and Administrative Expenses

      General and administrative expenses consist primarily of employee salaries
and associated costs for information systems, finance, legal, and
administration. General and administrative expenses increased to $1.5 million
for the three months ended September 30, 2003 from $0.9 million for the three
months ended September 30, 2002. The increase in general and administrative
expenses primarily consists of costs associated with a public company as well as
the costs of combining Young Design and Telaxis.

      Research and Development Expenses

      Research and development expenses consist primarily of personnel and
related costs associated with our product development efforts. These include
costs for development of products and components, test equipment and related
facilities. Gross research and development expenses increased to $0.7 million
for the three months ended September 30, 2003 from $0.3 million for the three
months ended September 30, 2002. The research and development cost increase is
attributable to an increase in engineering personnel and the support of the
expanded product line that resulted from the Telaxis combination.

      Income Taxes

      Provision for income taxes for the quarter ended September 30, 2003 of
$0.4 million relates to an increase in the valuation allowance associated with
the deferred tax assets that had been recorded as of December 31, 2002. As of
September 30, 2003, we cannot predict when sufficient taxable income will be
generated to justify carrying deferred tax assets on our balance sheet without a
valuation allowance. Therefore, we have written off these assets. Had it not
been for the write off of the deferred tax assets, we would have had no income
tax expense for the quarter ended September 30, 2003. Provision for income taxes
for the quarter ending September 30, 2002 in the amount of $0.2 million relates
to an estimated effective tax rate of 42%.

Nine Months Ended September 30, 2003 and 2002

      Sales

      Sales for the nine-month period ended September 30, 2003 were $21.7
million as compared to $15.0 million for the same period in 2002 for an increase
of $6.7 million or 45%. The increase in sales is attributed to the addition of
sales and marketing resources, introduction of new products, and the receipt of
relatively large orders from one customer during the first nine months of 2003
for one of these new products.

      Costs of goods sold and gross profit

      Cost of goods sold and gross profit for the nine months ended September
30, 2003 were $13.1 million and $8.6 million, respectively. For the same period
in 2002, costs of goods sold and gross profit were $9.7 million and $5.3
million, respectively. Gross margin for the nine-month periods ending September
30, 2003 and 2002 were 39% and 36%, respectively. During the third quarter 2003,
we introduced several new products to the market place and realized higher than
usual margins. As competitive products are introduced to the market (which we
expect will


                                       25
<PAGE>

happen), we believe that these margins will stabilize closer to historical
levels. We also implemented several manufacturing efficiencies and strategies
that reduced our costs and increased our gross profit. In addition, we were able
to utilize significant component inventory that was valued at below current
replacement cost which resulted in a non-recurring improvement in gross margin.
In summary, we expect our weighted average cost of goods sold to return to our
historical levels despite continued efforts to introduce less costly
manufacturing alternatives and introduce new products.

      Sales and marketing

      Selling and marketing expenses consist primarily of employee salaries and
associated costs for selling, marketing, and customer support. Selling and
marketing expenses increased to $1.7 million for the nine months ended September
30, 2003 from $1.1 million for the nine months ended September 30, 2002. The
increase in sales and marketing expenses is primarily a result of added
personnel to address the growing market for the Company's expanded product line.

      General and Administrative Expenses

      General and administrative expenses consist primarily of employee salaries
and associated costs for information systems, finance, legal, and
administration. General and administrative expenses increased to $5.0 million
for the nine months ended September 30, 2003 from $3.0 million for the nine
months ended September 30, 2002. The increase was due primarily to the increase
in sales volume, costs associated with a public company, and the costs
associated with combining Young Design and Telaxis.

      Research and Development Expenses

      Research and development expenses consist primarily of personnel and
related costs associated with our product development efforts. These include
costs for development of products and components, test equipment and related
facilities. Gross research and development expenses increased to $1.3 million
for the nine months ended September 30, 2003 from $0.5 million for the nine
months ended September 30, 2002. The research and development cost increase is
attributable to an increase in engineering personnel and the support of the
expanded product line that resulted from the Telaxis combination.

      Income Taxes

      Provision for income taxes for the nine months ending September 30, 2003
in the amount of $0.2 million relates to (1) an increase in the valuation
allowance associated with the deferred tax assets of $0.4 million that had been
recorded as of December 31, 2002 offset by (2) the tax benefit from carrying
back of existing net operating losses to recover taxes previously paid. As of
September 30, 2003, we cannot predict when sufficient taxable income will be
generated to justify carrying deferred tax assets on our balance sheet without a
valuation allowance. Provision for income taxes for the nine months ending
September 30, 2002 in the amount of $0.2 million relates to an estimated
effective tax rate of 42%.

      Extraordinary Gain

      The extraordinary gain was due to a one-time gain from the Telaxis
combination. The amount of net assets over costs associated with the Telaxis
combination created a $4.3 million gain that was immediately recognized in
accordance with SFAS No. 141 at the time of the combination.

Liquidity and Capital Resources

      At September 30, 2003, we had cash and cash equivalents of $6.4 million
(including restricted cash of $0.1 million) and marketable securities of $1.1
million.

         The increase in accounts receivable to $2.4 million at September 30,
2003 from $1.7 million at December 31, 2002 reflects the increase in sales as a
result of an expanded customer base and new product introduction while


                                       26
<PAGE>

maintaining a consistent DSO (Days Sales Outstanding) of approximately 30 days
for both reporting periods. The increase in accounts payable and accrued
expenses to $3.4 million at September 30, 2003 from $2.1 million at December 31,
2002 reflects increased payables due to the increase in sales volumes, but
primarily was caused by Telaxis' accruals for severances, accrued vacation,
reserves for discontinued operations, and related costs of the combination
transaction.

      Cash provided by the operating activities in the nine months ended
September 30, 2003 was $0.1 million compared to $0.7 million for the same period
in 2002. For the nine months ended September 30, 2003 and 2002, cash provided by
operating activities primarily represented our net income.

      Cash provided by investing activities for the nine months ended September
30, 2003 was $5.8 million compared to cash utilized by investing activities of
$0.4 million for the same period in 2002. In the nine months ended September 30,
2003, these amounts related primarily to the purchase of Telaxis by Young
Design. As for the nine month period ending September 30, 2002, these amounts
related primarily to the purchase of securities for investment and capital
expenditures required in support of business growth.

      Cash used by financing activities in the nine months ended September 30,
2003 was $0.5 million compared to cash provided of $0.5 million for the same
period in 2002. The financing activities for the nine months ended September 30,
2003 consisted primarily of payments on capital lease obligations and long-term
debt offset by the issuance of notes payable for new product acquisitions and
related intellectual property for these products. The financing activities for
the nine months ended September 30, 2002 consisted primarily of the issuance of
notes payable for the acquisition of a new product line to complement our
existing product offerings.

      Our 2003 and future cash requirements will depend upon a number of
factors, including the impact of the Young Design - Telaxis combination, the
timing and extent of growth in our product lines, the timing and level of
research and development activities and sales and marketing campaigns, and our
ability to generate sales orders while controlling manufacturing and overhead
costs. We believe that our cash and marketable securities at September 30, 2003
will provide sufficient capital to fund our operations for at least 12 months.
However, our capital needs may be higher or lower depending on a number of
factors, primary among them being the results we achieve as a combined company.
We may require additional capital to fund our operations. In addition, from time
to time we evaluate opportunities to acquire complementary technologies or
companies. Should we identify any of these opportunities, we may need to raise
additional capital to fund our operations as well as the costs associated with
the acquisitions. There can be no assurance that additional financing will be
available to us on favorable terms or at all.

      Debt, Covenant Compliance and Liquidity

      YDI Wireless has a $2 million line of credit with Bank of America. We have
not used this line of credit as of September 30, 2003.

      We have the following contractual obligations and commercial commitments
as of September 30, 2003:

<TABLE>
<CAPTION>
                                                                                        Payments due by period
                                                              ----------------------------------------------------------------------
                                                                             Less than        1 -3            4 - 5         After 5
                                                                 Total         1 year         years           years          years
                                                              ----------     ----------     ----------     ----------     ----------
<S>                                                           <C>            <C>            <C>            <C>            <C>
Line of credit ..........................................     $       --     $       --     $       --     $       --     $       --
                                                              ==========     ==========     ==========     ==========     ==========

<CAPTION>
                                                                                Payments due by period (numbers in thousands)
                                                              ----------------------------------------------------------------------
                                                                             Less than        1 -3            4 - 5         After 5
                                                                 Total         1 year         years           years          years
                                                              ----------     ----------     ----------     ----------     ----------
<S>                                                           <C>            <C>            <C>            <C>            <C>
Operating leases - Buildings ............................     $    2,989     $      785     $    1,262     $      609     $      333
Operating leases - equipment ............................            147            129             18             --             --
Employment Contracts ....................................            980            980             --             --             --
                                                              ----------     ----------     ----------     ----------     ----------
Total contractual cash obligations ......................     $    4,116     $    1,894     $    1,280     $      609     $      333
                                                              ==========     ==========     ==========     ==========     ==========
</TABLE>


                                       27
<PAGE>

Subsequent Event

      On October 31, 2003 YDI signed a definitive merger agreement to acquire
Phazar Corp. (Nasdaq:ANTP). Under the terms of the agreement, Phazar
stockholders will receive 1.2 shares of YDI common stock for each share of
Phazar common stock. This exchange ratio will not be adjusted for changes in the
price of either YDI common stock or Phazar common stock. Based on shares
currently outstanding, YDI stockholders would own approximately 87% of the
combined entity and Phazar stockholders would own approximately 13%. One member
of Phazar's board of directors will join YDI's board of directors. The agreement
is subject to the approval of Phazar shareholders and any unforeseen
circumstances. YDI expects to complete the acquisition prior to March 31, 2004.

Disclosures about Market Risk

      The following discusses our exposure to market risk related to changes in
interest rates, equity prices and foreign currency exchange rates. This
discussion contains forward-looking statements that are exposed to risks and
uncertainties, many of which are out of our control. Actual results could vary
materially as a result of a number of factors, including those discussed above
under "Part I - Financial Information" and below under "Safe Harbor for
Forward-Looking Statements."

      As of September 30, 2003, we had cash and cash equivalents of $6.4
million. Substantially all of these amounts consisted of highly liquid
investments with remaining maturities at the date of purchase of less than 90
days. As of September 30, 2003, we had marketable securities of $1.1 million
which consisted of short-term, interest bearing, investment grade securities or
direct or guaranteed obligations of the U.S. government with maturities through
March 2004. These investments are exposed to interest rate risk and will
decrease in value to the extent that market interest rates increase. We believe
a hypothetical increase in market interest rates of up to as much as 10 percent
from the September 30, 2003 rates would not cause the fair value of these
investments to decline significantly, since our investments mature within twelve
months. Although an immediate increase in interest rates would not have a
material effect on our financial condition or results of operations, declines in
interest rates over time will reduce our interest income.

      The vast majority of our current sales are made to customers in the United
States and any international sales are negotiated and paid-for in United States
Dollars, therefore we have minimal foreign currency exchange rate risk.

Safe Harbor for Forward-Looking Statements

      General Overview

      This Quarterly Report on Form 10-Q contains forward-looking statements as
defined by federal securities laws that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, expectations, intentions, projections, developments, future
events, performance or products, underlying assumptions, and other statements,
which are other than statements of historical facts. In some cases, you can
identify forward-looking statements by terminology such as "may," "will,"
"should," "expects," "intends," "plans," "anticipates," "contemplates,"
"believes," "estimates," "predicts," "projects," "potential," "continue," and
other similar terminology or the negative of these terms. From time to time, we
may publish or otherwise make available forward-looking statements of this
nature. All such forward-looking statements, whether written or oral, and
whether made by us or on our behalf, are expressly qualified by the cautionary
statements described in this Form 10-Q, including those set forth below, and any
other cautionary statements which may accompany the forward-looking statements.
In addition, we undertake no obligation to update or revise any forward-looking
statement to reflect events, circumstances, or new information after the date of
this Form 10-Q or to reflect the occurrence of unanticipated or any other
subsequent events, and we disclaim any such obligation.


                                       28
<PAGE>

      Forward-looking statements are only predictions that relate to future
events or our future performance and are subject to known and unknown risks,
uncertainties, assumptions, and other factors that may cause actual results,
outcomes, levels of activity, performance, developments, or achievements to be
materially different from any future results, outcomes, levels of activity,
performance, developments, or achievements expressed, anticipated, or implied by
these forward-looking statements. As a result, we cannot guarantee future
results, outcomes, levels of activity, performance, developments, or
achievements, and there can be no assurance that our expectations, intentions,
anticipations, beliefs, or projections will result or be achieved or
accomplished.

      Cautionary Statements of General Applicability

      In addition to other factors and matters discussed elsewhere in this Form
10-Q, in our other periodic reports and filings made from time to time with the
Securities and Exchange Commission, and in our other public statements from time
to time (including, without limitation, our press releases), some of the
important factors that, in our view, could cause actual results to differ
materially from those expressed, anticipated, or implied in the forward-looking
statements include, without limitation, a severe worldwide slowdown in the
telecommunications equipment market; the downturn and ongoing uncertainty in the
telecommunications industry and larger economy; developments in our relatively
new industry and in the larger economy; the intense competition in the
telecommunications equipment industry and resulting pressures on our pricing,
gross margins, and general financial performance; the impact, availability,
pricing, and success of competing technologies and products; difficulties in
distinguishing our products from competing technologies and products;
difficulties or delays in obtaining customers; dependence on a limited number of
significant customers; lack of or delay in market acceptance and demand for our
current and contemplated products; difficulties or delays in obtaining raw
materials, subassemblies, or other components for our products at the times, in
the quantities, and at the prices we desire or expect; our having limited
capital; working capital constraints; the expense of defending and the outcome
of pending and future stockholder litigation, including without limitation, our
possible exposure under the contemplated settlement of that litigation; our
recent focus on certain aspects of our current business; difficulties or delays
inherent in entering new markets and business areas; difficulties or delays in
developing and establishing new products, product lines, and business lines;
difficulties or delays in developing, manufacturing, and supplying products with
the contemplated or desired features, performance, price, cost, and other
characteristics; difficulties in estimating costs of developing and supplying
products; difficulties in developing, manufacturing, and supplying products in a
timely and cost-effective manner; difficulties or delays in developing improved
products when expected or desired and with the additional features contemplated
or desired; our limited ability to predict our future financial performance; our
inability to predict the date of our profitability; the expected fluctuation in
our quarterly results; the expected fluctuation in customer demand and
commitments; the expected volatility in our stock price, particularly now that
our common stock is traded on the Over-The-Counter Bulletin Board; issues
associated with continued listing on the Over-The-Counter Bulletin Board;
difficulties in attracting and retaining qualified personnel, particularly in
light of our business uncertainty, previous workforce restructurings, and lower
stock price; our dependence on key personnel; inability to protect our
proprietary technology; the potential for intellectual property infringement,
warranty, product liability, and other claims; failure of our customers to sell
broadband connectivity solutions that include our products; difficulties in our
customers or ultimate end users of our products obtaining sufficient funding;
cancellation of orders without penalties; difficulties in complying with
existing governmental regulations and developments or changes in governmental
regulation; difficulties or delays in obtaining any necessary governmental or
regulatory permits, waivers, or approvals; our dependence on third-party
suppliers and manufacturers; difficulties in obtaining satisfactory performance
from third-party manufacturers and suppliers; risks associated with foreign
sales such as collection, currency and political risk; investment risk resulting
in the decrease in value of our investments; difficulties in collecting our
accounts receivable; future stock sales by our current stockholders, including
our directors and management; the effect of our anti-takeover defenses; and
risks associated with any acquisitions or investments in which we may be
involved. Many of these and other risks and uncertainties are described in more
detail in our annual report on Form 10-K for the year ended December 31, 2002
filed with the Securities and Exchange Commission.

      Specific Cautionary Statements Relating to the Contemplated Acquisition of
Phazar Corp.

      On October 30, 2003, YDI Wireless announced a definitive merger agreement
to acquire Phazar Corp. There can be no assurance whatsoever that this
acquisition or any other combination transaction between YDI and Phazar will be
consummated. Risks associated with or arising from this contemplated transaction
include risks


                                       29
<PAGE>

relating to the companies' ability and desire to satisfy the conditions to
closing the transaction set forth in the definitive transaction documentation
(including, without limitation, the need to obtain the approval of Phazar's
stockholders); the substantial time and costs each company will be expending and
incurring relating to a contemplated transaction; the ability to obtain any
necessary regulatory approvals and clearances, including federal and state
securities registrations, qualifications, approvals, clearances, and/or
exemptions, needed to consummate a transaction; the ability of the companies to
integrate in a cost-effective, timely manner without material loss of employees,
customers, or suppliers; the risk that the expected synergies and other benefits
of the transaction will not be realized at all or to the extent expected; the
risk that cost savings from the transaction may not be fully realized or may
take longer to realize than expected; reactions, either positive or negative, of
investors, competitors, customers, suppliers, employees, and others to the
transaction; the time and costs required to complete the contemplated
transaction and then integrate the companies; management and board interest in
and distraction due to the contemplated transaction; the uncertain impact on the
trading market, volume, and price of each company's stock; difficulties in
predicting the combined company's future business and financial performance;
costs and delays in implementing common systems and procedures, including
financial accounting systems; and the fact that the registration, issuance,
and/or future sale of a large number of shares of our common stock may cause a
stagnation or decline in the market price of our common stock.

    Specific Cautionary Statements Relating to the Strategic Combination of
Young Design and Telaxis

      On April 1, 2003, Young Design and Telaxis closed a strategic combination
transaction. There can be no assurance whatsoever that this combination will
ultimately be successful or beneficial to our stockholders. Risks associated
with or arising from this recent transaction include risks relating to the
ability of the companies to integrate in a cost-effective, timely manner without
material loss of employees, customers, or suppliers; the time and costs required
to integrate the companies; the distraction caused by this integration process;
the risk that the expected synergies and other benefits of the combination will
not be realized at all or to the extent expected; the risk that the contemplated
cost savings from the combination may not be fully realized or may take longer
to realize than expected; reactions, either negative or positive, of investors,
competitors, customers, suppliers, employees, and others to the combination;
management and board interest in and distraction due to this transaction; risks
arising from personnel changes since the combination; costs and delays in
implementing common systems and procedures, including financial accounting
systems; risks associated with Young Design's lack of experience operating as a
public company, including the process of periodic financial reporting; risks
associated with Young Design's need to adopt and implement in a short period of
time a number of additional accounting controls, procedures, policies, and
systems to facilitate timely and accurate periodic financial reporting; the
possible need for the combined company to hire additional accounting staff,
including individuals familiar with periodic financial reporting; and the fact
that the issuance and/or future sale of a very large number of shares of common
stock may cause a stagnation or decline in the market price of our common stock.

      Possible Implications of Cautionary Statements

      The items described above, either individually or in some combination,
could have a material adverse impact on our reputation, business, need for
additional capital, ability to obtain additional debt or equity financing,
current and contemplated products gaining market acceptance, development of new
products and new areas of business, cash flow, results of operations, financial
condition, stock price, viability as an ongoing company, results, outcomes,
levels of activity, performance, developments, or achievements. Given these
uncertainties, investors are cautioned not to place undue reliance on any
forward-looking statements.

      Impact of Recently Issued Accounting Standards

      In April, 2003, the FASB issued Statement No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." The Statement amends
Statement 133 for decisions made by the Derivatives Implementation Group, in
particular the meaning of an initial net investment, the meaning of underlying
and the characteristics of a derivative that contains financing components.
Presently, we have no derivative financial instruments and, therefore, believe
that adoption of the Statement will have no effect on our financial statements.

      In May 2003, the FASB issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." The
Statement requires that the issuer classify certain instruments as


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<PAGE>

liabilities, rather than equity, or so-called mezzanine equity. Presently, we
have no financial instruments that come under the scope of the Statement and,
therefore, believe that adoption of the new Statement will have no impact on our
financial statements.

Item 4. Controls and Procedures.

      The information set forth in this Item 4 has been revised to reflect the
restatements described in the Explanatory Note above. Apart from these
revisions, this information does not reflect events and developments subsequent
to September 30, 2003.

      Disclosure controls and procedures

      Our Chief Executive Officer and Chief Financial Officer, after evaluating
the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of
September 30, 2003, have concluded that as of such date our disclosure controls
and procedures were adequate and effective.

       The restatements reflected in this Amendment No. 1 to Form 10-Q result
from revised guidance received from YDI's independant accountants BDO Seidman
LLP. As such, the restatements do not change the conclusion of our Chief
Executive Office and Chief Financial Officer concerning our disclosure controls
and procedures set forth above.

      Internal controls

      There has not been any change in our internal controls over financial
reporting that occurred during the fiscal quarter covered by this Quarterly
Report on Form 10-Q that has materially affected, or is reasonably likely to
materially affect, our internal controls over financial reporting.


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<PAGE>

                           PART II - OTHER INFORMATION

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

      The information set forth in this Item 6 has not been revised to reflect
events and developments subsequent to September 30, 2003 except for Exhibits
31.1, 31.2, and 32.1.

      (a)   Exhibits

            See Exhibit Index.

      (b)   Reports on Form 8-K

      On July 16, 2003, we filed a report on Form 8-K to report that, on July 9,
2003, we effected a reverse 1-for-100 split of our outstanding common stock, a
forward 25-for-1 split of our common stock outstanding after the reverse stock
split, the reincorporation of the company from Massachusetts to Delaware, and
the change of our corporate name to "YDI Wireless, Inc."

      On July 21, 2003, we filed a report on Form 8-K to report that YDI
Wireless had assumed the Telaxis stock option plans and stock options and was
adopting the registration statements relating to those stock option plans and
stock options..

      On August 1, 2003, we filed a report on Form 8-K to report a press release
relating to the earnings announcement for the second quarter ending June 30,
2003.

                                    SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                 YDI Wireless, Inc.


Date:  March 25, 2004           By:  /s/ Patrick L. Milton
                                    --------------------------------------------
                                    Patrick L. Milton,
                                    Chief Financial Officer and Treasurer
                                    (principal financial and accounting officer)


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<PAGE>

                                  EXHIBIT INDEX

 Exhibit
  Number                              Description

   2.1      Agreement and Plan of Merger and Reincorporation by and between
            Telaxis Communications Corporation and YDI Wireless, Inc. dated as
            of June 23, 2003.*

   3.1      Certificate of Incorporation of YDI Wireless, Inc. as filed with the
            Delaware Secretary of State on May 5, 2003.**

   3.2      Certificate of Merger of YDI Wireless, Inc. and Telaxis
            Communications Corporation as filed with the Delaware Secretary of
            State on May 7, 2003.**

   3.3      By-laws of YDI Wireless, Inc.**

   3.4      Articles of Amendment to Restated Articles of Organization of
            Telaxis Communications Corporation, as filed with the Massachusetts
            Secretary of State on July 8, 2003 effecting a reverse stock
            split.**

   3.5      Articles of Amendment to Restated Articles of Organization of
            Telaxis Communications Corporation, as filed with the Massachusetts
            Secretary of State on July 8, 2003 effecting a forward stock
            split.**

   3.6      Articles of Merger of YDI Wireless, Inc. and Telaxis Communications
            Corporation, as filed with the Massachusetts Secretary of State on
            July 8, 2003.**

   4.1      Form of certificate evidencing ownership of Common Stock of YDI
            Wireless, Inc.**

   4.2      Amendment No. 3 to Rights Agreement by and between Telaxis
            Communications Corporation and Registrar and Transfer Company, as
            Rights Agent dated as of May 15, 2003.**

   10.1     Separation Agreement and General Release by and between YDI
            Wireless, Inc. and Dennis C. Stempel dated September 15, 2003.

   10.2     Separation Agreement and General Release by and between YDI
            Wireless, Inc. and John L. Youngblood dated October 1, 2003.

   31.1     Certification of Chief Executive Officer Pursuant to Rule
            13a-14(a).***

   31.2     Certification of Chief Financial Officer Pursuant to Rule
            13a-14(a).***

   32.1     Certification Pursuant to Rule 13a-14(b) and Section 906 of the
            Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350
            of Chapter 63 of Title 18 of the United States Code).***

----------
All non-marked exhibits listed above were filed with the Form 10-Q filed with
the SEC on November 10, 2003.

        *   Incorporated herein by reference to the exhibits to Form 8-K filed
            with the SEC on July 16, 2003.

       **   Incorporated herein by reference to the same-numbered exhibit to
            Form 10-Q filed with the SEC on August 14, 2003.

      ***   Filed herewith.


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