SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              REPORT ON FORM 10-KSB

            [X] Annual Report pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


                   For the fiscal year ended December 31, 2000
                                             -----------------


                           Commission File No. 0-21931

                                 AMPLIDYNE, INC.
            --------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                                       22-3440510
---------------------------------              ---------------------------------
 (State of or other jurisdiction               (IRS Employer Identification No.)
of incorporation or organization)

      59 LaGrange Street
      Raritan, New Jersey                                     08869
      -------------------                                  -----------
      (Address of Principal                                 (Zip Code)
      Executive Offices)

Registrant's telephone number, including area code: (908) 253-6870

Securities registered pursuant to Section 12(b) of the Act: None.
                                                            -----

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

                    Common Stock, par value $.0001 per share
                    ----------------------------------------
                                (Title of Class)

      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]   No [ ]

      Indicate by check mark if disclosure of  delinquent  filers  pursuant to
Item  405 of  the  Regulation  S-B  is not  contained  in  this  form,  and no
disclosure  will be  contained,  to the  best of  registrant's  knowledge,  in
definitive proxy or information  statements  incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]

      Issuer's revenues for its most recent fiscal year were $2,595,090.

      The aggregate market value of the voting stock held by non-affiliates of
the Registrant, computed by reference to the closing price of such stock as of
March 31, 2001, was approximately $7,100,803

      Number of shares outstanding of the issuer's common stock, as of March 31,
2001 was 7,465,661.

      Documents Incorporated by Reference:  None
<PAGE>

                                     PART I

ITEM 1.   BUSINESS

GENERAL

AMPLIFIER PRODUCTS

      Amplidyne, Inc., a Delaware corporation ("Amplidyne" or the "Company")
designs, manufactures and sells ultra linear power amplifiers and related
subsystems to the worldwide wireless, local loop and satellite uplink
telecommunications market. These power amplifiers, which are a key component in
cellular base stations, increase the power of radio frequency ("RF") and
microwave signals with low distortion, enabling the user to significantly
increase the quality and quantity of calls processed by new and existing
cellular base stations. The Company's wireless telecommunications products
consist of solid-state, RF and microwave, single and multicarrier power
amplifiers that support a broad range of analog and digital transmission
protocols including advanced mobile phone services ("AMPS"), code division
multiple access ("CDMA"), time division multiple access ("TDMA"), total access
communication systems ("TACS"), extended total access communication systems
("ETACS"), nordic mobile telephone ("NMT"), global system for mobile
communications ("GSM") and digital communication service at 1800 MHz
("DCS-1800"). The products are marketed to the cellular, wireless local loop and
personal communication systems ("PCS") segments of the wireless
telecommunications industry.

      In the year 2000, the Company has developed new amplifier products for the
IMT 2000 standard which is expected to be used for deployment of the 3G (Third
Generation) system worldwide within the next few years. The Company has also
developed amplifier products for the 3.5 GHZ digital data transmission systems
that are presently being developed by some major OEM's in North America. The
Company also developed new amplifier products such as the ALC amplifier for its
high-speed wireless Internet products. The Company has had its test site in
Sparta New Jersey under continuous operation for one full year. The Company has
been able to get reliable and successful service under various and severe
weather including rain, snow and floods. Although this was a demonstration site,
some customers have been extremely satisfied with the service and have purchased
equipment from the Company.

      Amplidyne has several products covered by a patent issued by the United
States Patent and Trademark Office for Pre-Distortion and Pre-Distortion
Linearization which, the Company believes, is more effective in reducing
distortion than other currently available technology. In addition to its
presence in the wireless telecommunications industry, the Company designs and
manufactures products for uplink satellite communications and for audio and TV
transmission links.

      In addition to the Company's product line of single channel power
amplifiers which are currently utilized by the wireless communications industry,
the Company also develops, designs and manufactures Multicarrier Linear Power

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<PAGE>

Amplifiers ("MCLPAs"). MCLPAs combine the performance capabilities of many
single carrier amplifiers into one unit, eliminating the need for numerous
single carrier amplifiers and the corresponding unnecessary space occupied by
the cavity filters encasing the amplifiers. Management believes that with its
(i) proprietary technology (which effectively reduces distortion), (ii)
technological expertise and (iii) established product line consisting of ultra
linear single channel power amplifiers, the Company can achieve similar
performance with its MCLPAs. The Company's linear power amplifiers and MCLPAs
utilizes the Company's patented predistortion and proprietary feed forward
technology which amplifies many channels with minimal distortion at the same
time with one product.

      The Company's multi-carrier linear amplifiers were refined for the NMT 450
market with products shipped to Harris Corp. in 2000. The Company expects to
obtain future sales orders for these products during 2001-2002. The IMT 2000
products are based on the Company's proprietary pre-distortion and feed forward
technology.

HIGH SPEED WIRELESS INTERNET PRODUCTS

      In September 1999 the Company announced its entry into the emerging
wireless Internet access market with its new products operating at 2 Mbps, in
the ISM license free operating band (2.4 to 2.4835 GHz). The point to multipoint
equipment operates at 3.2 Mbps, with a throughput of 2.2 Mbps.

      These products include an Access point (AMP 2024AP) and PCMCIA cards
(AMP2024LC and AMP2024LCD). These products are IEEE 802.11 compliant and provide
high speed internet access by connecting the Access Point to a hub, which has a
high speed internet connection via a T1 line (or other means such as DSL). In
the typical example of a corporate customer, leasing a T1 line through an ISP,
the ISP will terminate the line with its own router, which also plugs into the
customer hub. The server is also plugged into the same hub. Internet access is
established by connecting the PCMCIA cards into a laptop computer or desktop
computer with a PCMCIA card and ISA adapter. The raw rate data occurs at a speed
of 2Mbps, with a throughput of about 1.3 to 1.375 Mbps, close to a T1 rate of
1.54 Mbps. The Company installed its own T1 connection during the fourth quarter
of 1999 to provide a customer demonstration system, which has proven to be
successful.

      The Company's outdoor solution for ISP's is a complete turnkey system,
consisting of a point to multipoint system operating at 3.2 Mbps, using a
frequency hopping system. This system allows up to 600 remote receivers to be
connected from a central site (tower), with an aggregate band width of 32Mbps.
Ten sectioned antennas can be located at each tower to provide full coverage
with distances up to 25 miles, with data rates of 3.2, 1.6 to 0.8 Mbps,
depending on distance.

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<PAGE>

      To compliment the above systems, the Company's indoor or outdoor LAN
solution can be deployed at each remote site, thereby increasing the number of
users. Line of site links can be established to cover up to 50 miles by using
repeater sites. Integrated to the Ampwave(TM) solution are AmpDnet(TM) and
AmpDLink(TM) systems, incorporating the Company's bi-directional amplifiers,
antennas of various types, cables and subassemblies, filters and various other
components.

      In the year 2000 the Company developed several new products for its high
speed wireless Internet access systems such as the Microcell, Client Base
Station and ISP Base Station for its outdoor solutions based on its 11 Mbps
radios. The Company continued to sell its 2Mbps product to the outdoor market
during 2000 and introduced its 11 Mbps products during the 3rd quarter of 2000.

      The Company currently has its test site in Sparta New Jersey for the
continuous operation well beyond one full year. The Company has been able to get
reliable and successful service from this system. The Company has three
customers with approximately 20 computers set up on the demonstration site. Two
of the customers have purchased the equipment and a third customer is
considering the same.

NEW PRODUCTS FOR 2001

      The Company introduced its 11 Mbps products during the third quarter of
2000, and will continue to market both the 11 Mbps and its 2 Mbps products. The
Company intends to enhance and refine its amplifier and wireless internet
products during 2001. Management believes that the vast majority of ISP's in the
developing countries throughout the world do not as yet have access to backbone
lines beyond T1 or E1 lines (1.5 to 2.048 Mbps). Therefore, the Company will
continue to market its 2 Mbps systems to the ISP's as long as the demand exists.

      The Company's 11 Mbps products were tested and refined for introduction in
the third quarter of 2000. The Company intends to continue research and
development into faster products and incorporate software features required by
the needs of its customers.

      As discussed above, the Company has designed new products for the high
speed wireless market and will continue to market these products during the year
2001. Some of the new products the Company introduced or began development in
2000 were:

      o     11 MBPS ACCESS POINT (INDOOR)

      o     11 MBPS PCMCIA CARD (INDOOR)

      o     11 MBPS ISP BASE STATION (OUTDOOR)

      o     11 MBPS MICROCELL (OUTDOOR)

      o     ALC AMPLIFIER FOR OUTDOOR USE

      o     LOW POWER AMPLIFIER FOR POWER BOOSTING IN AUTOS AND INDOOR
            APPLICATIONS (UNDER DEVELOPMENT)

      The Company has also been testing non-line of site antennas for its
Ampwave outdoor system.

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<PAGE>

TIME TO MARKET AND DEMAND

      The growth of the internet has created a demand for faster access
requirements; particularly for business users. The increasing use of T1 and DSL
lines by businesses is a case in point. Whilst the new technology is emerging,
not all parts of the U.S. have access to such technology. Therefore, the advent
of "wireless internet access" was an appropriate area to be addressed by the
Company during the latter part of 1999 and accordingly, we have been in
discussions with several ISPs to form strategic relationships and high quality
solutions utilizing our equipment.

      Pent up demand for high speed internet access at a reasonable cost exists
in major geographic areas of the U.S., parts of Europe, Asia, Africa and many
other regions of the world. The primary objective of our business is to provide
a turnkey system for internet service providers (ISP's), the key objective being
the subscriber's end cost to the ISP.

      Another sector that has emerged is the "wireless point to point links", in
many cases requiring a high-speed link between buildings. The cost of such a
link can be as much as $1,200 - 1,400 per month with an installation charge of
up to $2,000. A wireless "point to point" link can be established using the
Company's system at a one-time fixed cost of approximately $4,000. The
customer's return of investment is a few months and they have no monthly DSL
bills to pay.

      The Company's entry into this market was a 2 Mbps system in the third
quarter of 1999, which was aimed to fulfill the immediate need of ISP's. The
Company also introduced its 11 Mbps products in the third quarter of 2000. We
intend to continue to explore the possibility of higher speed radios and
software upgrades with additional antennas.

      During 2000 the Company continued to add to its list of ISP customers
worldwide and believes that it is well positioned for the growth in the
foreseeable future.

      A report from Cahners In-Stat Group deals with the future of the
enterprise wireless market. The report entitled "2000 Enterprise Wireless Lan
Market Update," forecasts that this segment will rise to $3 Billion by 2002. The
report finds that the wireless LAN (WLAN) market became a legitimate enterprise
technology in 2000. The general desire of organizations to give their employees
more mobility has driven sales of the technology introduced during the last two
years following adoption of usable standards. New, improved performance and
lower cost products for the application continue to be introduced. Growth will
be encouraged as existing vendors expand their offerings and new suppliers enter
the field. The Company's entry into the High Speed Wireless Internet market at
the end of 1999 was, in management's belief, well-timed, and has proven to be so
as the Company is now well-positioned with products that were introduced to
several ISP's. Our products are being utilized by ISP's in various areas of the
United States, South America, Eastern Europe and Asia. The Company is also

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<PAGE>

developing strategic partnerships with ISP's to provide high speed wireless
internet access to multi-tenant building owners (without the construction costs
of hardwiring buildings) and expects to start connecting some of these
multi-tenant buildings during 2001. The Company intends to pursue this market
segment aggressively during 2001. There can be no assurance that the Company
will be successful since some of the Company's competitors have vast financial,
technical and marketing resources.

HISTORICAL

      The Company was incorporated on December 14,1995 pursuant to the laws of
the State of Delaware as the successor to Amplidyne, Inc., a New Jersey
corporation ("Amplidyne-NJ"), which was incorporated in October 1988. The
Company was organized to effectuate a reincorporation of Amplidyne-NJ with and
into the Company on December 22, 1995. The Company maintains its executive
offices at 59 LaGrange Street, Raritan, NJ 08869 and its telephone number is
(908) 253-6870. The Company completed its initial public offering of 1,610,000
Units (each Unit consisting of one (1) share of Common Stock and one (1)
Redeemable Common Stock Purchase Warrant ("Warrants")) in January 1997 pursuant
to firm commitment underwritten offering. The offering price was $5.10 per Unit.
The Warrants were redeemed in May 2000. Prior to redemption, 124,871 Warrants
were exercised. The Common Stock trades on the Nasdaq SmallCap Market under the
symbol AMPD.

FORWARD LOOKING STATEMENTS

      Certain information contained in this Annual Report are forward-looking
statements (within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended).
Factors set forth that appear with the forward-looking statements, or in the
Company's other Securities and Exchange Commission filings, could affect the
Company's actual results and could cause the Company's actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company in this Annual Report. Such potential risks and
uncertainties include, but are not limited to: dependence on a limited number of
customers; reductions, delays or cancellations in orders from new or existing
customers; potential deterioration of business and economic conditions in the
Company's customers marketplaces; new product development and product
obsolescence; potential deterioration of the Company's customers credit quality
due to deteriorating economic conditions in the Company's customers
marketplaces; a limited number of potential customers; intensely competitive
industry with increasing price competition; successful development of strategic
partnerships globally; reliance on certain key personnel; new product
development and product obsolescence; variability in gross margins on new
products and resulting impacts on operating results; continued success in the
design of new products and the ability to manufacture in quantity such new
products; continued favorable business conditions and growth in the wireless
communications market; and dependence on certain suppliers for single-sourced
components. In addition, prior financial performance and customer orders are not

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<PAGE>

necessarily indicative of the results that may be expected in the future and the
Company believes that such comparisons cannot be relied upon as indicators of
future performance. Due to the foregoing factors, the Company believes that
period-to-period comparisons of its operating results are not necessarily
meaningful and that such comparisons cannot be relied upon as indicators of
future performance. Additionally, the Company undertakes no obligation to
publicly release the results of any revisions to these forward-looking
statements which may be made to reflect events or circumstances occurring after
the date hereof or to reflect the occurrence of unanticipated events.

      In addition to statements that explicitly describe such risks and
uncertainties, readers are urged to consider statements labeled with the terms
"believes," "belief," "expects," "intends," "anticipates" or "plans" to be
uncertain and forward-looking. The forward-looking statements contained herein
are also subject generally to other risks and uncertainties that are described
from time to time in the Company's reports and registration statements filed
with the Securities and Exchange Commission.

INDUSTRY BACKGROUND

      The market for wireless communication services has grown substantially
during the past decade. Cellular and PCS service has been one of the fastest
growing segments of the wireless telecommunications market. The growth in
cellular and PCS communications has required, and will continue to require,
substantial investment by cellular service providers in wireless infrastructure
equipment. Moreover, management believes that intensified competition among
cellular service providers is resulting in declining costs to end-users as well
as new types of service offerings. This demand, coupled with unprecedented
growth, will, in management's belief, require new infrastructure equipment and
technology that will allow better coverage for higher-density networks. Carriers
also need to have the flexibility to place cell sites anywhere, provide speedier
deployment without regard to frequency allocation or planning with lower
installation, maintenance and operational costs. In order for carriers to meet
their demands, new technologies and base station equipment must be deployed.

      According to a report of Strategy Analytics, by 2003 more than 725 million
people worldwide will subscribe to cellular and personal communications
services. Global Systems for Mobil Communications Technology (GSM) will continue
to dominate the worldwide digital cellular market. However CDMA Systems will
capture a 20% share of the subscribers by 2003. The report also indicates that
Southeast Asia will continue to hold a leadership position through 2003 with
total subscribers reaching 250 million. Western Europe is predicted to grow at a
compound annual rate of 18% until 2003. Worldwide cellular telephone shipments
are predicted to grow by 17% annually, to exceed 330 million units by 2003.
Southeast Asia will remain the largest market for cellular phones, representing
a 34% market share. The Company intends to pursue this market segment
aggressively during 2001. There can be no assurance that the Company will be
successful since some of the Company's competitors have vast financial,
technical and marketing resources.

                                       7
<PAGE>

      Although there has been a slowdown in the deployment of wireless
technology throughout the world, substantial demand still exists for new
products, as well as the upgrade of old products. The Company intends to target
sectors within the market for its amplifier products.

EMERGING TECHNOLOGY AND WIRELESS INTERNET ACCESS

      The Global market for mobile users is forecast to grow from today's
figures of around 200 million users to around 2.4 billion users by 2015, which
means today's market only represents 10% of future demand according to sources
at International Telecommunication Union. With consumers looking for added
features including voice and data and wireless Internet access, new technology
is needed. The evolution of the third generation (3G) of wireless communication
is a fundamental step to the new world. 3G represents the world of multi media
mobile communications where users will have access not just to voice but to
video, image, text, graphics and data communications. The capabilities offered
by 3G will be limitless, offering users services such as video conferencing,
access to the Internet and a host of other applications. The Company intends to
pursue this market segment aggressively during 2001. There can be no assurance
that the Company will be successful since some of the Company's competitors have
vast financial, technical and marketing resources.

      The new technology requires wide band ultra liner amplifiers requiring
predistortion and feed forward technology. Amplidyne's propriety patented
technology and feed forward correction systems are ideally suited for this new
emerging market. The Company expects to provide solutions in the 3.5GHz and
IMT2000 formats using W-CDMA and similar technologies. Although the deployment
of 3G systems is expected to be somewhat delayed, the Company developed
amplifier products for this market and expects to continue to do so in 2001.

      While the Company keeps its research and development efforts focussed on
its core amplifier business, the emergence of "wireless internet access" has
given us the opportunity to vertically integrate our products into this market
sector. We believe that we are in the "knowledge business" and we have gained
considerable know-how of RF amplifiers, filters, RF subsystems, antennas and
digital circuits which are used in our feedforward control circuits. The use of
sophisticated digital circuits in the transmission of high speed data coupled
with the RF transmission media, is a natural area for us to explore.

      A key enabling technology for outdoor wireless internet access is the
tower top bidirectional amplifier. The Company's personnel were able to design
an excellent product for our AmpDLan(TM) system. We have considerable experience
in the role of RF filters and antennas played in RF systems, and this is another
set of components for our AmpDLan(TM) system.

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<PAGE>

      The Company has designed new products for the high speed wireless market
and will continue to market these products during the year 2001. Some of the new
products the Company introduced or began development in 2000 were:

      o     11 MBPS ACCESS POINT (INDOOR)

      o     11 MBPS PCMCIA CARD (INDOOR)

      o     11 MBPS ISP BASE STATION (OUTDOOR)

      o     11 MBPS MICROCELL (OUTDOOR)

      o     ALC AMPLIFIER FOR OUTDOOR USE

      o     LOW POWER AMPLIFIER FOR POWER BOOSTING IN AUTOS AND INDOOR
            APPLICATIONS (UNDER DEVELOPMENT)

      The Company has also been testing non-line of site antennas for its
Ampwave outdoor system.

WIRELESS LOCAL LOOP AMPLIFIER PRODUCTS

      The Company has continued to refine its wireless local loop amplifier
products during 2000. These products operate in the NMT 450 band and 900 MHz
band. The Company designed a prototype amplifier for the 3.5 GHz band for a
major North American OEM customer during 2000 and expects to refine the products
during 2001. The Company expects to obtain future orders for its NMT450 and 900
Mhz amplifiers during 2001 and 2002 as systems get deployed in the South
American and Far East markets by our major OEM customer.

      The PCS amplifier market for South Korean customers has not grown as
expected due to downward pricing pressure and specification changes. The Company
is continuing to work with its OEM customers and during 2000 the Company
obtained a purchase order to develop a prototype IMT 2000 (3-G Third Generation)
amplifier for the South Korean market. However, the Company has limited
resources and management believes that until the situation in the South Korea
market is clear, it will concentrate its resources in the more stable US and
European marketplace.

CELLULAR SYSTEMS

      A cellular system consists of a number of cell sites which are networked
to form a cellular system operator's geographic coverage area. Each cell site
has a base station which houses the equipment that transmits and receives
telephone calls between the cellular subscriber within the cell and the
switching office of the local wireline telephone system. Such base station
equipment includes an antenna and a series of transceivers, power amplifiers and
cavity filters. Large cell sites, which generally cover a geographic area of up
to five miles in radius, are commonly referred to as "macrocells."

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<PAGE>

      The ability of cellular system operators to increase system capacity
through the use of microcells is largely dependent on their ability to broadcast
multiple signals with acceptable levels of interference and distortion. In
cellular systems, the amplifier is generally the greatest source of signal
interference and distortion, particularly with multi carrier high power
amplifiers. Consequently, obtaining amplifiers which can transmit and receive
multiple signals with low distortion or interference from adjacent signals
("high spectral purity") is critical to a cellular system operator's ability to
increase system capacity. Substantial resources and technical expertise are
required to design and manufacture multi carrier power amplifiers with high
spectral purity. To achieve high spectral purity, multi carrier amplifier
systems must have high interference cancellation properties.

      The Company believes that the potential opportunities for wireless
communication services in countries without reliable or extensive wireline
systems may be even greater than in countries with developed telecommunication
systems. The Company has developed and refined its products for this market such
as the 2.4 ghz and 3.5 ghz wireless local loop amplifiers and the NMT-450
products. As a result of these developments, the Company has continued to obtain
orders for these products from its customers, such as Airspan Communications and
Harris Corporation and expects to continue to do so in 2001.

      The Company's satellite amplifier products are used to amplify the signal
which is being transmitted from the ground up to the satellite. The
manufacturers of satellite communications equipment operate in commercial
markets such as television broadcast services and commercial military
communications. Amplidyne has also provided amplifiers for terrestrial radio
systems which are used for television and audio signal transmission.

COMPANY STRATEGY

      Utilizing its proprietary, patented technology and experience in
interference cancellation, the Company is pursuing a strategy, focused on the
need of cellular, wireless local loop and PCS system operators, to develop
technologically advanced amplifier based products. The Company has recently
developed products which address the technical issues faced by such system
operators as a result of the rapid growth in wireless telephone use (cellular,
NMT-450 and wireless local loop) and the resulting need to increase systems
capacity.

      The Company's products have been evaluated and successfully deployed in
the OEM systems. However, due to market conditions, the Company expects the
3.5GHz products to be given priority in the near future by its OEM customers.
The Company intends to pursue sales to the end-users for the multi-carrier
amplifier since many of providers need to upgrade their systems.

      Management believes that with its predistortion technology and the
linearity capability of its core amplifier technology, the Company can achieve
similar performance from a multicarrier amplifier which others achieve by using
dual feed forward loops; this results in much higher component count within the
amplifier unit and may result in poor reliability for such products, compared to
predistortion based feed forward amplifiers which use fewer components and
thereby have a high reliability.

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<PAGE>

      The Company's business strategy focuses primarily on the wireless
communication market and consists of the following elements:

      WIRELESS INTERNET PRODUCTS. The Company's high speed wireless internet
products has been successfully deployed in the year 2000. Our wireless internet
products are aimed at three market sectors: (a) small offices and home offices
(Soho), (b) enterprises and corporate customers and (c) ISP's. The Company
intends to keep refining its products to meet the demands of customers in the
above three categories. The Company has had success in providing products for
the high speed wireless internet access in the ISP market. Our products have
been tested in the hospitality industry, as well as, multi-tenant units and for
SOHO enterprise customers. The Company intends to further pursue these markets
during the first quarter of 2001. Furthermore, the Company started a marketing
campaign for these products during 2000. The Company intends to attend trade
shows during 2001, to further its marketing efforts.

      The Company intends to closely work with its ISP customers to support
their needs, attend trade shows in strategic geographic areas, and provide
technical support for users of its products. The Company intends to provide
technical training for its resellers.

      INCREASE PENETRATION OF WIRELESS EQUIPMENT MANUFACTURERS. Since 1991, the
Company has positioned itself as a supplier of amplifier products to large
wireless telecommunications OEMs. Amplidyne seeks to capitalize on its existing
customer relationships and become a more significant source of its customers'
amplifiers by working closely with OEM customers to offer innovative solutions
to technical requirements and problems. Amplidyne has demonstrated its 3.5 GHz
and NMT-450 single and multichannel products to OEM's during 2000. The Company
intends to pursue this market segment aggressively during 2001. There can be no
assurance that the Company will be successful since some of the Company's
competitors have vast financial, technical and marketing resources.

      DEVELOP RELATIONSHIPS WITH EMERGING WIRELESS EQUIPMENT MANUFACTURERS. The
Company anticipates that emerging wireless equipment manufacturers will make an
increasingly significant contribution to the growth of the wireless
telecommunications industry particularly the 3.5GHz and NMT-450 segments as well
as IMT 2000 system. Management believes that its linear power amplifiers and
MCLPAs will assist these equipment manufacturers in providing high capacity, low
distortion, low cost per channel products and has supplied amplifiers to
wireless equipment manufacturers during 2000.

      DEVELOP PRODUCTS FOR MULTIPLE PROTOCOLS. The Company intends to continue
to invest resources in the research and development of new products for various
protocols. For cellular systems, the Company currently supports the AMPS and
TACS analog protocols, and the CDMA, TDMA, E-TACS, NMT and GSM digital
protocols. For PCS systems, Amplidyne currently supports CDMA, TDMA, DCS-1800

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and PCS-1900 digital protocols. The Company is aware of the emerging 3G
technology and is continuing to provide products for the technology either at
W-CDMA or IMT2000 protocols. Amplidyne is continuing to develop products that
incorporate protocols which it believes will address the needs of established
and emerging wireless systems. Management believes the development of products
for multiple protocols will enable Amplidyne to benefit from the continuing
growth of existing wireless systems and other emerging wireless
telecommunications markets while reducing the risks associated with relying on
the success of one or a limited number of existing or emerging industry
protocols.

      MAINTAIN A TECHNOLOGY LEADERSHIP POSITION. In management's belief the
Company, with its innovative products, has been addressing the needs of its
customers for products that solve significant technical problems. The Company
believes its interference cancellation technologies are among the most advanced
that are commercially available in the industry, both in performance and
diversity of methodology. The Company utilizes proprietary and patented
predistortion technology and proprietary feed forward interference cancellation
technology in its linear power amplifiers and MCLPAs to enable the user to
significantly increase the quality and quantity of calls processed by new and
existing cellular base stations. The Company intends to continue to invest
substantial resources in research and development associated with its
interference cancellation technologies. The Company has continued its research
and development on 3.5GHz, NMT-450, 3G (Third Generation) amplifiers and
wireless local loop products during 2000, and has procured some orders for this
equipment during 2000.

      DEVELOP INNOVATIVE PROPRIETARY PRODUCTS. To date, the Company has focused
its efforts in the development of amplifier products which are highly
innovative, and which are not the standard "commodity" type product. In
addition, the Company believes that it has compiled an extensive design library
in the solid-state, high power amplifier industry utilizing its proprietary and
patented technology and expertise in interference cancellation. The Company has
developed and intends to continue to develop products which combine basic
components in unique and high performance configuration to command higher prices
in the wireless communications market. In addition, the Company has adapted this
expertise for new commercial market applications and product requirements and
develop products for the NMT-450, 3G (Third Generation) and wireless local loop
markets. The Company has continued to develop amplifier products which can be
used in NMT-450 and wireless local loop systems.

      PROVIDE SUPPORT FROM PRODUCT DESIGN THROUGH INSTALLATION AND OPERATION.
The Company works with its customers throughout the design process to assist
them in refining and developing their amplifier specifications. Once the
specifications have been met and the product delivered, Amplidyne continues to
provide technical support to facilitate system integration, start-up and
continued operation. By providing customer support services from the product
design phase through installation and operation, management believes it fosters
increased levels of customer loyalty and satisfaction. In addition, through this
process, the Company believes it will develop new product definitions and
implementations to further enhance the strategic position of the Company in the
wireless market.

                                       12
<PAGE>

      MAINTAIN CONTROL OF THE MANUFACTURING PROCESS. As part of the transition
to becoming a leading amplifier supplier to the wireless telecommunications
market, Amplidyne has consistently analyzed in house automated manufacturing
versus the use of subcontracted manufacturers in order to control its production
schedule. The Company installed automated manufacturing equipment in the first
quarter of 2000, to enhance its manufacturing process for NMT-450 and wireless
local loop amplifiers and other related products. In certain instances,
Amplidyne has made the strategic decisions to select single or limited source
suppliers in order to obtain lower pricing, receive more timely delivery and
maintain quality control.

THE AMPLIDYNE ADVANTAGE

      The Company believes that its products have several features which
differentiate them from those of its competitors, such as:

      THE PREDISTORTION SOLUTION. Utilizing its proprietary technology the
Company can obtain significant distortion reduction in its core amplifiers. This
enables the predistorted amplifier to have feed forward correction (which is
described below, see "Technology") applied to it to achieve distortion
cancellation. The Company believes that its competitors are only able to obtain
this level of distortion cancellation by use of complex and component intensive
"Dual Feed Forward Loops" resulting in the use of more components within the
amplifier unit. In general, the fewer components that an amplifier uses, the
better its reliability. The Company has been a pioneer in its use and
development of predistortion technology and intends to further enhance its
products using such technology.

      SUPERIOR DISTORTION AND SPURIOUS CANCELLATION RESULTING IN ULTRA LINEAR
HIGH POWER AMPLIFIERS. The Company believes the use of MCLPAs is critical in the
implementation of new cellular systems and upgrade of older analog systems.
Cellular systems need to cover large areas with minimum hardware in order to
minimize cost per subscriber. Reduction of the distortion and spurious signals
from the amplifiers is a key enabling technology. Amplidyne has developed
proprietary interference cancellation technology using multiple methods to
achieve high suppression of spurious output and distortion typically associated
with higher power amplifiers. The Company's NMT-450 multicarrier linear power
amplifier has been well received in the industry and, management believes, is
among the leading products available in the wireless industry. The Company's
single channel amplifiers have also been well received in the industry, however,
the Company has experienced more competition in this area. The Company is
seeking to position itself to be a viable source in this area. The Company
constantly monitors such situations and will employ significant resources to
explore such opportunities, as financing permits.

                                       13
<PAGE>

      By utilizing its proprietary and patented predistortion technology and its
proprietary feed forward technology, the MCLPAs amplification capacity of the
Company's amplifiers are, in management's belief, among the best in the
industry.

      LINEARITY, LOW DISTORTION AND HIGH AMPLIFICATION. Wireless service
providers' ability to manage scarce spectrum resources more effectively and
accommodate a larger number of subscribers is largely dependent on their ability
to broadcast signals with high linearity, which pertains to the ability of a
component to amplify a wave form without altering its characteristics in
undesirable ways. Linear amplifiers allow signals to be amplified without
introducing spurious emissions that might interfere with adjacent channels.
Higher linearity increases the capacity of cellular systems by enabling a more
efficient use of digital transmission technologies, microcellular architectures
and adaptive channel allocation. In current cellular systems, the power
amplifier is generally the source of the greatest amount of signal distortion.
Consequently, obtaining power amplifiers with high linearity and low distortion
is critical to wireless service providers' ability to improve spectrum
efficiency.

      The Company has several products covered by a patent issued by the United
States Patent and Trademark Office which we believe gives us a significant
advantage over its competitors. These features for Pre-distortion and
Pre-distortion Linearization designs significantly reduces distortion below that
which is currently available in the marketplace.

      MULTICARRIER DESIGNS. Multicarrier amplification, in which all channels
are amplified together by a MCLPA, rather than each channel using a separate
amplifier, allows for instantaneous electronic channel allocation. Functionally,
it combines many single channel power amplifiers, into a single unit, thereby
eliminating the single channel power amplifiers and the corresponding tunable
cavity filters. MCLPAs require significantly higher linearity compared to single
channel designs.

      By virtue of the Company's high linearity products which incorporates
pre-distortion and feed forward technology achieving, in management's belief,
among the lowest distortion in the industry, the MCLPA amplified signal remains
within their prescribed band and spectrum with low interference of adjacent
channels thus providing flexibility to accommodate any frequency plan.

      WIRELESS INTERNET PRODUCTS. One of the key components in the wireless
internet access system is the bidirectional tower top amplifier. We also have
considerable experience in the design, development and deployment of amplifier
products. The amplifier has to operate reliably in an outdoor application. Our
expertise in this area is an advantage over competitors who are required to
purchase their amplifiers from outside sources.

                                       14
<PAGE>

      We also have considerable know-how of other related products such as
antennas, filters, power supplies and digital control circuits. We are therefore
able to offer a turnkey solution to ISP's, providing indoor networking support
using our existing resources. We have a cost advantage because we manufacture
our own amplifiers which we can, if necessary, rapidly refine and change.

      We intend to refine our products as needed and in a timely fashion in
order to obtain and maintain market share.

      During 2000, the Company developed its ALC bi-directional tower top
amplifier for its high speed wireless Internet products. This amplifier allows
an improved and enhanced system performance and installation time. The Company
also introduced its Microcell, Client Base station and ISP base station. These
products have enhanced the Company's position in the marketplace. The Company
intends to refine and fine- tune its products for its customers needs, thereby
improving its position as compared to its competitors.

      HIGH QUALITY, RELIABILITY AND CUSTOMER SUPPORT. The Company believes that
the power amplifier in cell sites historically has been the single most common
point of equipment failure in wireless telecommunications networks. Increasingly
reliable power amplifiers, therefore, will improve the level of service offered
by wireless service providers, while reducing their operating costs. In
addition, MCLPAs eliminate the need for high-maintenance, tunable cavity filters
which should further reduce costs.

      The Company works closely with its customers throughout the design process
in refining and developing their amplifier specifications. The Company uses the
latest equipment and computer aided design and modeling, solid state device
physics, advanced digital signal processing ("DSP") and digital control systems,
in the development of its products in their specialized engineering and research
departments. The integration of the Company's design and production is a factor
in the Company's ability to provide its customers with high reliability, low
distortion and low maintenance amplifiers.

TECHNOLOGY

      WIRELESS TRANSMIT TECHNOLOGY. A typical cellular communications system
comprises a geographic region containing a number of cells, each with a base
station, which are networked to form a cellular service provider's coverage
area. Each base station or cell site houses the equipment that transmits and
receives telephone calls to and from the cellular subscriber within the cell and
the switching office of the local wireline telephone system. Such equipment
includes a series of transceivers, power amplifiers, tunable cavity filters and
an antenna. In a single channel system, each channel requires a separate
transceiver, power amplifier and tunable cavity filter. The power amplifier
within the base station receives a relatively weak signal from the transceiver
and significantly boosts the power of the outgoing wireless signal so that it
can be broadcast throughout the cell. The radio power levels necessary to
transmit the signal over the required range must be achieved without distorting
the modulation characteristics of the signal. The signal must also be amplified
with linearity in order to remain in the assigned channel with low distortion or
interference with adjacent channels.

                                       15
<PAGE>

      Because cellular operators are allocated a small RF spectrum and certain
channels, it is necessary to make efficient use of the spectrum to enable
optimum system capacity. By amplifying all channels with minimum distortion at
the same time, rather than inefficient use of single channel amplification, one
obtains better system capacity. A MCLPA combines the performance capabilities of
many single carrier amplifiers into one unit, eliminating the need for numerous
single carrier amplifiers and their corresponding tunable cavity filters. These
MCLPAs require less space than multiple single channel amplifiers and their
corresponding tunable cavity filters which reduce the size and cost of a base
station.

      MCLPAs create distortion products which can cause adjacent channel
interference. The minimization of these distortion products requires
sophisticated technology. This is accomplished through interference cancellation
techniques such as "predistortion" and "feed forward" accompanied by highly
advanced control and processing technology. The Company has developed certain
proprietary technology and methods to achieve minimal distortion in its
amplifiers, technically called predistortion and feed forward correction. The
Company uses three distinct technologies (A) Linear class A and AB amplifiers,
(B) Predistorted class A and AB amplifiers and (C) Predistortion feed forward
amplifiers. The Company's proprietary leading edge products contain patented
predistortion and proprietary feed forward technology combined in a proprietary
automatic correction technique.

      All amplifiers create distortion when they are run at a high power level.
In an ideal case the output of the amplifier would faithfully reproduce the
input signal without any distortion. In real life, however, distortion
characteristics are produced. These distortion products can cause interference
with another caller's channel which in turn produces poor call quality. By using
a simple, patented technology, Amplidyne recreates the distortion for the
amplifier in such a manner to cancel the interference signals.

      Feed forward cancellation involves taking the distortion created by the
amplifier and processing it in such a way that when it is added back into the
amplifier having been pre-distorted and combined with the feed forward
technology, distortion cancellation occurs. The Company believes that its
patented technology has the most unique and potent technology for distortion
cancellation. Furthermore, Amplidyne has selected linear class AB technology for
its base amplifier which it believes also has superior distortion
characteristics compared to other competitors because it is easier to
pre-distort. Thus the three key ingredients (a) Linear class A and AB
amplifiers, (b) Predistortion technology and (c) Feed forward technology enables
Amplidyne to produce MCLPAs for its major OEM customers.

                                       16
<PAGE>

      EMERGING TECHNOLOGY AND WIRELESS INTERNET ACCESS. The Global market for
mobile users is forecasted to grow from today's figures of around 200 million
users to around 2.4 billion users by 2015, which means today's market only
represents 10% of future demand according to sources at International
Telecommunication Union. With consumers looking for added features including
voice and data and wireless Internet access, new technology is needed. The new
technology will require wide band ultra linear amplifiers requiring
predistortion and feed forward technology. Amplidyne's propriety patented
technology and feed forward correction systems are ideally suited for this new
emerging market. The Company expects to provide solutions in the PCS and IMT2000
formats using W-CDMA and similar technologies. The Company intends to pursue
this market segment aggressively during 2001. There can be no assurance that the
Company will be successful since some of the Company's competitors have vast
financial, technical and marketing resources.

      The Company's wireless internet access products consist of a point to
multipoint central unit which is housed at a central site. The unit operates at
3.2 Mbps and up to 10 units can be used at each site, providing aggregate
bandwidth of 32 Mbps. Each central unit supports up to sixty remote units
thereby allowing a total of 600 remote units to be connected to a central site.

      At the remote site an indoor or outdoor LAN system can be connected using
the Company's 2 Mbps Access Point and PCMCIA cards with various antennae
combinations. Amplifiers are used for range extension purposes.

      The Company's 11 Mbps products were made available to our customers in the
third quarter of 2000. By aggregating up to 11-14 Base Stations at a central
site, the Company can provide aggregate data rates up to 121 Mbps to 154 Mbps,
depending on the market sector the equipment is deployed (FCC or ETSI).

      WIRELESS RECEIVE TECHNOLOGY. The receiving section of a cellular base
station frequently uses two antennas for efficient spectrum usage. The
deployment of complex circuitry and techniques, including the use of GaAsFET
(Gallium Arsenide Field Effect Transistors) enhances the systems performance,
enabling the weak "noisy" signal to be amplified with a significant reduction in
the level of noise. Amplidyne has been manufacturing low noise amplifiers since
1991, with thousands currently in service.

MARKETS

      The market for wireless communications services has grown substantially
during the past decade as cellular wireless local loop, PCS and other new and
emerging applications (such as W-CDMA) have become increasingly accessible and
affordable to growing numbers of consumers. The growth of these markets has
increased the demand for the Company's products, although the Company cannot
predict trends in these markets.

      CELLULAR MARKET. The market for cellular communications still accounts for
a fairly large portion of the wireless services. Cellular system operators have
expanded the capacity of their existing cellular systems by splitting macrocells
into smaller microcells. The Company believes that the relatively small size,
high power and performance characteristics of its microcell MCLPAs will be
particularly attractive to major OEMs as well as emerging wireless
telecommunications infrastructure equipment providers when providing
infrastructure equipment for such new cell sites.

                                       17
<PAGE>

      WIRELESS LOCAL LOOP. Wireless local loop systems are increasingly being
adopted in developing markets to more quickly implement telephone communication
services. In certain developing countries, such as Indonesia and Brazil,
wireless local loop systems provide an attractive alternative to copper and
fiber optic cable based systems, with the potential to be implemented more
quickly and at lower cost than wireline telephone systems. The Company designs,
manufactures and markets MCLPAs and single channel amplifiers for infrastructure
equipment systems in the wireless local loop market in the 2 and 3.5 GHz.

      WIRELESS INTERNET ACCESS MARKET. The Company's products are aimed at 3
main sectors the first of which is the small office and home office users (SOHO
Market). The Company started an advertising campaign in February 2000 to promote
products in this market. The second market segment is the corporate offices that
require wireless LAN in their offices and buildings. Building to building
connections are often required to be connected wireless, compared to cost of a
leased T1 line (at approximately $1200-$1,400 per month, plus $2,000
installation fee). The wireless equipment return on investment is within months.
The third sector is where the Company provides a complete turnkey solution for
ISP's. The Company introduced its 11Mbps products in the third quarter of 2000
and intends to continue to market these into 2001.

      A report from Pulver.Com ("Telephony Unplugged: Wireless Achieves Price
Parity with Wireline"), predicts that the US wireless networks will realize
revenues exceeding those for wireline in 2003 when wireless call charges will
reach the same price point as those for regular phone lines. The report based
its prediction on comparisons between Nextel's wireless and Verizon's wireline
charges.

      According to the report, ever increasing competitive levels have helped
reduce wireless phone charges and the current 10-cents-a-minute airtime plans
from a number of wireless carriers are attracting 67,000 new wireless users each
day. It notes further that in the 16 years since the Federal Communications
Commission (FCC) issued its first cellular license in the US, the cost of
wireless services has been reduced by 92%. During that same period the cost of
local wireline calling has risen 72% along with inflation.

      The fact that the wireless industry has erased the 20-fold wireline price
advantage that has existed since 1984 has completely changed the business case
for selecting wireless instead of wireline, in addition, if only 25% of
residential customers convert to wireless, 26 million customers will be added to
the wireless rolls. The Company intends to pursue the market segment
aggressively during 2001. There is no guarantee that the Company will be
successful since some of the Company's competitors have vast financial,
technical and marketing resources.

      CUSTOM COMMUNICATIONS AND OTHER MARKETS. The custom communications market
consists of small niche segments within the larger communications market:
long-haul radio communications, land mobile communications, surveillance
communications, ground-to-air communications, microwave communications,
broadband communications and telemetry tracking. The Company sells custom
amplifiers and related products to these segments.

      PCS MARKET. There are industry projections that by 2002, there will be
over 500 million cellular and PCS subscribers worldwide, more than tripling the
end-year 1996 cellular and PCS subscriber base of nearly 140 million. Key
factors in this growth are the continued deployment of digital cellular systems
and the more recent implementation of PCS including PCN, PHS and a number of
U.S.-based standards including PCS 1900 (based on the GSM protocol), CDMA, and
TDMA. As evidenced in markets such as Japan and the U.S., PCS-based operators
are proving formidable competitors to cellular network operators. The Company
has developed products for the PCS market and has shipped production quantities
of single channel PCS amplifiers and received additional purchase orders for PCS
single channel linear amplifiers.

                                       18
<PAGE>

PRODUCTS

      The Company designs and sells multicarrier transmit amplifiers and low
noise receive amplifiers for the cellular communications market, as well as the
PCS and wireless local loop segments of the wireless communications industry.
The Company also provides a large number of catalog and custom amplifiers to
OEMs and to other customers in the communications market in general. In
addition, recently the Company started designing and selling internet access
products.

o MULTICARRIER LINEAR POWER AMPLIFIERS (MCLPAS). When a cellular or PCS user
places a call, the call is processed through a base station, amplified, and then
transmitted on to the person receiving the call. Therefore, all base stations
require amplifiers (MCLPAs) whether they are being used for cellular, PCS and 3G
(Third Generation) local loop applications. Amplidyne designs and manufactures
these amplifiers. The objective is to provide a quality product at a good price
and to have exemplary reliability. Management believes that Amplidyne's products
with its patented predistortion technology, core linear amplifier technology and
proprietary feed forward technology achieve all of the above mentioned
objectives. Amplidyne's MCLPAs are a unique line of ultra linear devices which
utilize a proprietary predistortion and phase locked feed forward architecture.

o WIRELESS INTERNET PRODUCTS. The Company's wireless internet products operate
at data rates of 3.2 Mbps (frequency hopping system). The direct sequence
products operate at 2 Mbps and 11 Mbps (which was released in the third quarter
of year 2000). The Company's bidirectional amplifiers are an integral part of
the system. The Company offers several different antennas, cables and other
components for its systems.

      During 2000, the Company introduced several new products such as ALC
bi-directional amplifier, 11 Mbps Microcell, ISP Base Station and Client Base
Station. The Company also added additional antennas to its product portfolio.

o HIGH POWER LINEAR AMPLIFIERS. Amplidyne's product line of linear amplifiers
have a high third order intercept point which translates to better call quality.
These high power amplifiers are supplied as modules or plug in enclosures. The
communication bands available are NMT-450, AMPS, TACS, ETACS and PCS. The output
power ranges from 1 to 200 Watts. These amplifiers can be used in instances
where service providers only need a single transmit channel.

o 3G (THIRD GENERATION) AMPLIFIER DEVELOPMENT The Company has been reviewing all
OEM specifications for these new products and begun to develop amplifier
products for the market. The Company expects to ship prototypes to its customers
in 2001.

                                       19
<PAGE>

o LOCAL LOOP AND MINI CELL AMPLIFIERS. Local loop and mini cell amplifiers are
designed with a proprietary circuit to achieve a high IMD specification, which
translates to better call quality through the mini cell. These amplifiers can be
supplied by the Company as modules or in a rack configuration.

o LOW NOISE AMPLIFIER, CELLULAR, PCN, PCS, GSM. Amplidyne's low noise amplifiers
are manufactured with a mix of silicon and GaAsFET devices. These amplifiers
offer the user the lowest noise and the highest intercept point, while
maintaining good efficiency. Received calls at a base station are low in level
due to the fact that hand held cellular phones typically operate at half a watt
power level. This weak signal has to be amplified clearly which is done by using
Amplidyne's low noise amplifier. All amplifiers undergo 72 hour burn-in period
to ensure reliable filed operation.

o COMMUNICATION AMPLIFIERS. These amplifiers are designed for cellular and
PCN/PCS applications and use GaAs or Silicon Bipolar FET devices. The transmit
amplifiers are optimized for low distortion products. Custom configurations are
available for all communication amplifiers. This line of products is aimed at
the single channel base station users employing the digital cellular standards
(CDMA and TDMA).

      The Company's wireless telecommunications amplifiers can be configured as
modules separate plug-in amplifier units or integrated subsystems. The Company's
products are integrated into systems by OEM customers, and therefore must be
engineered to be compatible with industry standards and with certain customer
specifications, such as frequency, power, linearity and built-in test (BIT) for
automatic fault diagnostics.

PRODUCT WARRANTY

      The Company warrants new products against defects in materials and
workmanship generally for a period of one (1) year from the date of shipment.
Certain sales to Korean customers provide for a two year warranty. To date, the
Company has not experienced a material amount of warranty claims.

BACKLOG/FUTURE ORDERS

      The Company regularly reviews its backlog (which includes projected future
orders from customers) that it expects to ship over the next 12-24 months. We
have had to change schedules and delay orders depending on customer needs.
Customer schedules or requirements may frequently change and in some cases
result in cancellation of orders, in response to which the Company has to change
its production schedule. Changes and cancellations exist since, among other
matters, the wireless communications industry is characterized by rapid

                                       20
<PAGE>

technological change, new product development, product obsolescence and evolving
industry standards. In addition, as technology changes, corporations are
frequently requested to update and provide new prototypes in accordance with new
specifications if products become obsolete or inferior. Therefore, the Company
has been focussing on strategic partnerships to provide better quality solutions
to our partners with higher margin sales opportunities.

      As of December 31, 2000, the Company had signed orders and contracts
(which include projected future orders from customers) to generate revenues in
excess of $6 million and the Company expects to ship these products over the
next two fiscal years (2001-2002). The Company would like to stress, although
useful for scheduling production, backlog as of any particular date may not be a
reliable indicator of sales for any future period. The Company expects sales to
improve during the second half of 2001 as compared to the first half of 2001.

      Pursuant to our strategy of establishing strategic partnerships, the
Company has also received a purchase contract from a customer in Eastern Europe
which is subject to governmental approvals and financing. The Company has also
received purchase orders from a U.S. customer in the hospitality industry which
is currently on hold pending such customer obtaining financing. If the
customers' financing are not obtained, these purchase orders can be
significantly delayed. These orders are not included in the above-mentioned
backlog.

      The Company's prior backlog with respect to its Korean customers has been
removed from its backlog list since it is unlikely to be fulfilled. The Company
has developed and continues to develop the IMT 2000 amplifier which it hopes to
sell in the South Korean and other Asian markets. In December 1999, the Company
had signed a letter of intent with a local ISP to form a strategic relationship
utilizing our equipment. However, no firm orders had been negotiated. The
Company is pursuing other ISP's, where it feels it can make better use of its
resources.

      The Company expects to continue to ship products to its OEM customers such
as Airspan Communications and Harris Corp during 2001 at the levels or above the
levels of 2000. Many of our ISP customers are going through their own expansion,
which is subject to financing availability that has proven to be difficult in
the recent downturn. However, as conditions improve these customers may be able
to finance and purchase more equipment from the Company. The Company is
exploring revenue sharing models with various ISP's in the U.S,. in order to
continue to develop the market share in the high speed wireless internet market.

CUSTOMERS, SALES & MARKETING

      CUSTOMERS. The Company markets its products worldwide generally to
wireless communications manufacturers (OEMs) and communications system
operators. The table below indicates net revenues derived from customers in the
Company's markets in 2000 and 1999.

                                       21
<PAGE>

                        NET REVENUES BY MARKET CATEGORIES
                                 (IN THOUSANDS)

                                                                  YEAR ENDED
                                                                 DECEMBER 31,
                                                              -----------------
                                                               1999       2000
                                                               ----       ----
AMPLIFIER MARKETS
 Cellular Analog and digital ............................     $   11     $ 19.5

 Wireless Telephony .....................................      1,458      1,944
 Satellite Communications, Custom and other Products.....         53         50
 Digital PCS  Products ..................................        664        116
                                                              ------     ------
AMPWAVE MARKET
 Wireless Internet Products .............................          -      455.5
         Total ..........................................     $2,151     $2,595
                                                              ======     ======

      The Company expects that for future sales the Company will continue to
improve its market share in the cellular digital, wireless telephony, NMT450 and
IMT 2000.

      The Company also marketed its wireless Internet products which accounts
for an increase in revenues for the year 2000 above revenues in 1999.

              * WIRELESS TELEPHONY AND NMT-450. Sales to the wireless telephone
              segments of the wireless communications industry have increased
              from approximately 68% of total revenues for fiscal year end 1999
              to approximately 75% of total revenue for the fiscal year end
              2000. The Company shipped its multi carrier linear power amplifier
              for the NMT 450 band to its major OEM customer accounting for
              $675,000 in sales in the period ending December 31,2000.

              * WIRELESS INTERNET. The Company started shipping products to its
              customers in 2000 with total sales for the year of $455,504 which
              accounts for approximately 18% of total revenues.

              * DIGITAL PCS. The Company has shipped single channel amplifiers
              to its OEM customers accounting for 31% of sales in the period
              ended December 31, 1999. Sales in this sector of the market showed
              a significant decrease during fiscal 2000, primarily due to the
              decline in the South Korean marketplace.

                                       22
<PAGE>

              * INTERNATIONAL SALES. Sales of wireless products outside the
              United States (primarily to Western Europe Canada and the Far
              East) represented approximately 90% and 84% of net sales during,
              fiscal 1999 and fiscal 2000, respectively. The decrease in
              percentage of sales of this sector was primarily due to a slowdown
              of product sales to South Korea. The sales to European and
              Canadian customers increased.

              * SALES AND MARKETING. The Company's executive officers are
              involved in all aspects of the Company's relationships with its
              major OEM and system operator customers. The Company employs a
              direct sales approach focused on providing its wireless industry
              customers with unique solutions to satisfy their transmit and
              receive amplification needs. Sales of the Company's products to
              OEM and system operators requires close technical liaison with
              customer engineers and purchasing managers. The Company began to
              advertise its High Speed Wireless Internet products in various
              magazines during the year 2000 and was able to build up sale of
              approximately 18% of total revenues.

COMPETITION

AMPLIFIER PRODUCTS

      The ability of the Company to compete successfully and operate profitably
depends in part upon the rate of which OEM customers incorporate the Company's
products into their systems. The Company believes that a substantial majority of
the present worldwide production of power amplifiers is captive within the
manufacturing operations of a small number of wireless telecommunications OEMs
and offered for sale as part of their wireless telecommunications systems. The
Company's future success is dependent upon the extent to which these OEMs elect
to purchase from outside sources rather than manufacture their own amplification
products. There can be no assurance that OEM customers will incorporate the
Company's products into their systems or that in general OEM customers will
continue to rely, or expand their reliance, on external sources of supply for
their power amplification products. Since each OEM product involves a separate
proposal by the amplifier supplier, there can be no assurance that the Company's
current OEM customers will not rely upon internal production capabilities or a
non-captive competitor for future amplifier product needs. The Company's OEM
customers continuously evaluate whether to manufacture their own amplification
products or purchase them from outside sources. These OEM customers are large
manufacturers of wireless telecommunications equipment who could elect to enter
the non-captive market and compete directly with the Company. Such increased
competition could materially adversely affect the Company's business, financial
condition and results of operations.

                                       23
<PAGE>

      Certain of the Company's competitors have substantially greater technical,
financial, sales and marketing, distribution and other resources than the
Company and have greater name recognition and market acceptance of their
products and technologies. In addition, certain of these competitors are already
established in the wireless amplification market, but the Company believes it
can compete with them effectively. No assurance can be given that the Company's
competitors will not develop new technologies or enhancements to existing
products or introduce new products that will offer superior price or performance
features. To the extent that OEMs increase their reliance on external sources
for their power amplification needs more competitors could be attracted to the
market.

      The Company expects its competitors to offer new and existing products at
prices necessary to gain or retain market share. The Company expects to
experience significant price competition, which could have a materially adverse
effect on gross margins. Certain of the Company's competitors have substantial
financial resources which may enable them to withstand sustained price
competition or downturns in the power amplification market. Currently, the
Company competes primarily with non-captive suppliers of power amplification
products. The Company believes that its competition, and ultimately the success
of the Company, will be based primarily upon service, pricing, reputation and
the ability to meet the delivery schedules of its customers.

HIGH SPEED WIRELESS INTERNET PRODUCTS

      The Company has targeted its products to three (3) sectors of this market:
(1) small offices and home offices (SOHO); (2) enterprise and corporate
customers; and (3) ISP's. The Company first derived significant revenue from
these products during 2000, and this market accounted for approximately 18% of
the total sales for the year 2000.

      The Company has relied on being able to work strategically with its
partners and consultants, as well as its own engineers to develop and refine its
products. The Company has taken some risks in introducing products to certain
sectors by providing samples and system trials, which in certain cases may not
result in revenues. The vast majority of ISP's are in need of capital to grow
their businesses and in certain cases looked to the Company for vendor
financing. The Company has maintained a minimal stance relative to this matter.
However, the Company has to seriously consider this in the future to maintain
growth. One area the Company has to explore is revenue sharing with these
customers which, has some inherent business risks. One such instance is the
introduction of these products into the hospitality industry. The Company's
competitors, such as Lucent and Cisco, as well as other large, small and midsize
entities, have substantially greater technical, financial, sales and marketing,
distribution and other resources then the Company. Therefore, the Company, may
not adequately be able to compete with such other companies.

MANUFACTURING

      The Company assembles, tests, packages, and ships its products at its
manufacturing facilities located in Raritan, New Jersey. This facility includes
a separate assembly and test facility for various custom products.

                                       24
<PAGE>

      The Company's manufacturing process consists of purchasing components,
assembling and testing components and subassemblies, integrating the
subassemblies into a final product and testing the product. The Company's
amplifiers consist of a variety of subassemblies and components designed or
specified by the Company including housings, harnesses, cables, packaged RF
power transistors, integrated circuits and printed circuit boards. Most of these
components are manufactured by others and are shipped to the Company for final
assembly. Each of the Company's products receives extensive in process and final
quality inspections and tests.

      The Company's devices, components and other electrical and mechanical
subcomponents are generally purchased from multiple suppliers. The Company does
not have any written agreement with any of its suppliers. The Company has
followed a general policy of multiple sourcing for most of its suppliers in
order to assure a continuous flow of such supplies. However, the Company does
purchase certain transistors produced by a single manufacturer because of the
high quality of its components. The Company believes it is unlikely that such
transistors would become unavailable, however, if that were to occur, there are
multiple manufacturers of generally comparable transistors. The Company would
require a period of time to "return" its products to function properly with the
replacement transistors. The Company believes that the distributors of such
transistors maintain adequate inventory levels, which would mitigate any adverse
effect on the Company's production in the event unavailability or shortage of
such transistors. If for any reason the Company could not obtain comparable
replacement transistors or could not return its products to operate with the
replacement transistors, the Company's business, financial condition and results
of operations could be adversely affected.

      The Company currently utilizes discrete circuit technology on printed
circuit boards which are designed by the Company and provided by suppliers to
the Company's specifications. All transistors and other semiconductor devices
are purchased in sealed packages ready for assembly and testing. Other
components such as resistors, capacitors, connectors or mechanical supported
subassemblies are also manufactured by others. Components are ordered from
suppliers under master purchase orders with deliveries timed to meet the
Company's production schedules. As a result, the Company maintains a low
inventory of components, which could result in delay in production in the event
of delays in such deliveries.

      The Company purchased automated surface mount machinery ("SMT") to enhance
its manufacturing ability for amplifiers as well as wireless internet products
which was installed during the first quarter of 2000. The equipment has provided
improved efficiency in production and faster turn around for certain products.
The Company has started to manufacture some of the products for its High Speed
Wireless Internet products.

                                       25
<PAGE>

      The Company manufacturers some of its High Speed Wireless Internet
products (such as filters, amplifiers and antennas) in its New Jersey facility
and the rest in offshore facilities which are ISO 9001 certified.

RESEARCH, ENGINEERING AND DEVELOPMENT

      The Company's research, engineering and development efforts are focused on
the design of amplifiers for new protocols, the improvement of existing product
performance, cost reductions and improvements in the manufacturability of
existing products. The Company developed new high speed wireless products such
as Microcell, ALC amplifier, Client and ISP base station during 2000.

      The Company has historically devoted a significant portion of its
resources to research, engineering and development programs and expects to
continue to allocate significant resources to these efforts. The Company's
research, engineering and development expenses in fiscal 1999 and 2000 were
approximately $580,281 and $590,496, respectively, and represented approximately
27% and 23%, respectively, of net revenues. These efforts were primarily
dedicated to the development of the linear feed forward, high power, low
distortion amplifiers, resulting in the Company's models for AMPS, TACS,
NMT-450, PCS-1900, and PCS Repeater Amplifier (DCS 1800) and bi-directional
amplifier, Client Base Station, ISP Base Station and Microcell for its wireless
internet systems and other high speed wireless internet products.

      The research, engineering and development costs increased in 2000 due to
the development of a diverse products range for the High Speed Wireless Internet
Products requiring more materials.

      The Company was able to maintain its research and development costs by
being able to develop significant products in house, thereby, minimizing
commitments to outside suppliers and consultants. The Company did, however,
incur consulting fees regarding the development of the High Speed Wireless
Internets Products.

      The Company uses the latest equipment and computer aided design and
modeling, solid state device physics, advanced digital signal processing ("DSP")
and digital control systems, in the development of its products in the
specialized engineering and research departments.

      The Company uses a CAD environment employing networked work stations to
model and test new circuits. This design environment, together with the
Company's experience in interference cancellation technology and modular product
architecture, allows the Company to rapidly define, develop and deliver new and
enhanced products and subsystems sought by its customers.

                                       26
<PAGE>

      The markets in which the Company and OEM customers compete are
characterized by rapidly changing technology, evolving industry standards and
continuous improvements in products and services.

PATENTS, PROPRIETARY TECHNOLOGY AND OTHER INTELLECTUAL PROPERTY

      The Company's ability to compete successfully and achieve future revenue
growth will depend, in part, on its ability to protect its proprietary
technology and operate without infringing the rights of others. The Company has
a policy of seeking patents, when appropriate, on inventions resulting from its
ongoing research and development and manufacturing activities.

      Presently, the Company has been granted a patent (No. 5,606,286) by the
United States Patent and Trademark Office with respect to its Pre-Distortion and
Pre-Distortion Linearization technology which, the Company believes, is more
effective in reducing distortion then other currently available technology.
There can be no assurance that the Company's patent will not be challenged or
circumvented by competitors. The Company intends to broaden its patent
protection in other countries for its existing patents and file for additional
patent protection relating to products it is currently developing.

      Notwithstanding the Company's active pursuit of patent protection, the
Company believes that the success of its amplifier business depends more on its
specifications, CAE/CAD design and modeling tools, technical processes and
employee expertise than on patent protection. The Company generally enters into
confidentiality and non-disclosure agreements with its employees and limits
access to and distribution of its proprietary technology. The Company may in the
future be notified that it is infringing certain patent and/or other
intellectual property rights of others. Although there are no such pending
lawsuits against the Company or unresolved notices that the Company is
infringing intellectual property rights of others, there can be no assurance
that litigation or infringement claims will not occur in the future.

      The Company's wireless internet access products are marketed under the
trademark Ampwave(TM) and includes the following trademarked products lines:
AmpDLan(TM), AmpDNet(TM); and AmpAnt(TM).

GOVERNMENTAL REGULATIONS

      The Company's customers must obtain regulatory approval to operate their
base stations. The United States Federal Communications Commission ("FCC") has
regulations that impose more stringent RF and microwave emissions standards on
the telecommunications industry. There can be no assurance that the Company's
customers will comply with such regulations which could materially adversely
affect the Company's business, financial condition and results of operations.
The Company manufactures its products according to specifications provided by
its customers, which specifications are given to comply with applicable
regulations. The Company does not believe that costs involved with manufacturing
to meet specifications will have a material impact on its operations. There can
be no assurances that the adoption of future regulations would not have a
material adverse affect on the Company's business.

                                       27
<PAGE>

EMPLOYEES

      As of December 31, 2000, the Company had a total of 27 employees,
including 17 in operations, 3 in engineering, 2 in sales and marketing, 1 in
quality assurance and 4 in administration. The Company employs two consultants,
one in sales and marketing and one in engineering, and engages other consultants
for its high speed wireless internet products from time to time. The Company
believes its future performance will depend in large part on its ability to
attract and retain highly skilled employees. None of the Company's employees is
represented by a labor union and the Company has not experienced any work
stoppages. The Company considers its employee relations to be good.

ENVIRONMENTAL REGULATIONS

      The Company is subject to Federal, state and local governmental
regulations relating to the storage, discharge, handling, emissions, generation,
manufacture and disposal of toxic or other hazardous substances used to
manufacture the Company's products. The Company believes that it is currently in
compliance in all material respects with such regulations. Failure to comply
with current or future regulations could result in the imposition of substantial
fines on the Company, suspension of production, alteration of its manufacturing
process, cessation of operations or other actions which could materially and
adversely affect the Company's business, financial condition and results of
operations.

      IN ADDITION TO OTHER INFORMATION IN THIS ANNUAL REPORT, THE FOLLOWING
IMPORTANT FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING THE COMPANY AND
ITS BUSINESS BECAUSE SUCH FACTORS CURRENTLY HAVE A SIGNIFICANT IMPACT ON THE
COMPANY'S BUSINESS, PROSPECTS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

                                  RISK FACTORS

      You should carefully consider the risks described below before investing
in our company. The risks and uncertainties described below are not the only
ones facing our company. Other risks and uncertainties that we have not
predicted or assessed may also adversely affect our company.

      Some of the information in this Annual Report contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe,' "intend," "estimate," and "continue" or other similar
words. You should read statements that contain these words carefully for the
following reasons:

                                       28
<PAGE>

      o     the statements may discuss our future expectations;

      o     the statements may contain projections of our future earnings or of
            our financial condition; and

      o     the statements may state other "forward-looking" information.

      We believe it is important to communicate our expectations to our
investors. There may be events in the future, however, that we are not
accurately able to predict or over which we have no control. The risk factors
listed below, as well as any cautionary language in or incorporated by reference
into this Annual Report, provide examples of risks, uncertainties and events
that may cause our actual results to differ materially from the expectations we
describe in our forward-looking statements. Before you invest in our company,
you should be aware that the occurrence of any of the events described in the
risk factors below, elsewhere in or incorporated by reference into this Annual
Report and other events that we have not predicted or assessed could have a
material adverse effect on our earnings, financial condition or business. In
such case, the trading price of our securities could decline and you may lose or
all or part of your investment.

      WE HAVE A RECENT HISTORY OF LOSSES. We have incurred net losses of
$3,535,689 and $2,440,045 for the years ended December 31, 1999 and 2000,
respectively. These losses were due, in large part, to the research, engineering
and development costs associated with the creation of our line of multicarrier
linear power amplifiers and high speed wireless internet products and stock
compensation costs for the use of stock or stock options to obtain services or
to obtain financing. We have made commitments to vendors to purchase hardware
for use in our wireless internet systems. We expect to have increased sales in
this area to compensate for the expenses, however, there is no guarantee that
this will happen. The need for high band width products may lead to rapid
product obsolescence. Therefore, we expect to increase our research and
development efforts for more products which could result in higher operating
losses. Further, we have not generated sufficient sales volume to cover our
overhead costs and generate profits. We expect that our losses will increase and
continue until such time, if ever, as we are able to successfully manufacture
and market our products on a larger scale and therefore generate higher profit
margins. We will need to generate a substantial increase in revenues to become
profitable. Accordingly, we cannot assure you that we will ever become or remain
profitable. In addition, we had an accumulated deficit of $17,544,770 at
December 31, 2000.

      WE MAY REQUIRE ADDITIONAL FINANCING. We believe that our current cash on
hand, as well as additional funds from the possible exercise of outstanding
options and warrants, together with cash flow from our operations, will be
adequate to fund our operations for at least twelve months. However, we may
require additional financing prior to or after such time. We have issued our
common stock, when available to us, in lieu of cash payment of officer's
salaries, commissions and consulting fees, although we may not be able to
continue this practice. If additional financing is needed, we cannot be sure
that such financing will be available to us on acceptable terms. If adequate

                                       29
<PAGE>

funds are not available, we may be required to delay, scale back or eliminate
our research, engineering and development or manufacturing programs or obtain
funds through arrangements with partners or others that may require us to
relinquish rights to certain of our technologies, potential products or other
assets. Thus, our inability to obtain such financing could have a material
adverse effect on our business, financial condition and operations.

      OUR SUCCESS RELIES UPON THE GROWTH OF WIRELESS TELECOMMUNICATIONS
SERVICES. The demand for our products will depend in large part upon continued
and growing demand within the wireless telecommunications industry for power
amplifiers and our high speed wireless internet access products. Although demand
for such products has grown in recent years, we are not sure whether the
quantity and variety of wireless telecommunication services will continue to
grow, or that such services will create a demand for our products.

      OUR LIMITED LACK OF AUTOMATED MANUFACTURING PROCESSES AND OUR DEPENDENCE
ON THIRD PARTY MANUFACTURERS COULD ADVERSELY AFFECT OUR BUSINESS. We have
consistently reviewed our automated manufacturing needs in order to control our
production schedule. To date, we have not established a fully automated
manufacturing facility although we have recently purchased a new automated
surface mount machine. Our wireless internet products are manufactured at
offshore facilities which are our sole suppliers. Until such time as we are able
to establish such facilities, we expect to be dependent on third party
manufacturers. We cannot be sure that these third party manufacturers will be
able to fulfill our production commitment. Furthermore, we do not have written
agreements with these manufacturers. Our inability to obtain timely deliveries
of acceptable assemblies could delay our ability to deliver products to our
customers, and would have a material adverse effect on our business, financial
condition and results of operations. In addition, if these manufacturers
increase their production costs, we may not be able to recover such cost
increases under the fixed price commitments with our customers.

      OUR LIMITED NUMBER OF SUPPLIERS COULD ADVERSELY AFFECT OUR BUSINESS. Power
transistors and certain other key components used in our products for our
amplifiers, as well as our wireless internet business are currently available
from only a limited number of suppliers. Certain of our suppliers have limited
operating histories and limited financial and other resources. Our suppliers may
prove to be unreliable sources of certain components. Furthermore, we have no
written agreements with our suppliers. In the past, we have not purchased key
components in large volumes but anticipate that our need for component parts
will increase. If we are unable to obtain sufficient quantities of components,
particularly power transistors, we could experience delays or reductions in
product shipments. Such delays or reductions could have a material adverse
effect on our business, financial condition and results of operations.
Additionally, such delays or reductions may have a material adverse effect on
our relationships with customers and result in the termination of existing
orders and/or a permanent loss in our future sales. Our wireless internet
products are manufactured at offshore facilities. The lack of supply from this
source due to any reason could adversely impact our business.

                                       30
<PAGE>

      OUR SUCCESS WILL RELY ON OUR ABILITY TO ENTER INTO STRATEGIC PARTNERSHIPS.
We are currently developing and expect to continue to develop strategic
partnerships and other relationships in order to expand our business,
particularly relationships with ISPs. The failure to successfully develop such
relationships could have a material adverse effect on our business, financial
condition and result of operations.

      OUR SUCCESS RELIES ON A SMALL NUMBER OF CUSTOMERS AND OUR SALES ORDERS
HAVE HAD A HIGH DEGREE OF DELAYS AND CANCELLED ORDERS. In 1999, approximately
76% of our net revenues were derived from three customers (31%, 27% and 18%). In
2000, approximately 75% of our net revenues were derived from two customers (49%
and 26%). In the past few years we have experienced reductions, delays and
cancellations in orders from our new and existing customers, particularly in the
Korean marketplace. We anticipate that sales of our products to relatively few
customers will account for a majority of our 2001 revenues and that sales to
Korea during this period are not expected to be significant. The probability of
a more diverse customer base is higher with the addition of our high speed
wireless internet products, but no assurance can be given that this will happen.
The reduction, delay or cancellation of orders from one or more of our
significant customers would materially and adversely affect our financial
condition and results of operation. Moreover, we may experience significant
fluctuations in net sales, gross margins and operating results in the future as
a result of the uncertainty of such sales. Our wireless internet product sales
are expected to increase through contracts we have with ISPs. If these sales do
not materialize due to any reason, this would have a significant negative impact
on our projected revenues.

      OUR LIMITED MARKETING EXPERIENCE (PARTICULARLY FOR OUR HIGH SPEED WIRELESS
INTERNET PRODUCTS), MAY ADVERSELY AFFECT OUR BUSINESS. We have developed a sales
and marketing network, including outside sales agents, which has demonstrated
the advantages of our products over competing products. In order to be
successful, we have to maintain a leading edge position regarding emerging
wireless communication technologies. To this end, we continue to upgrade our
sales and marketing efforts, while maintaining product cost. We may not be able
to recruit effective sales and marketing personnel or agents. We are not sure
whether our marketing efforts will be successful or that we will be able to
maintain competitive sales and distribution capabilities. In addition, we have
limited experience in the marketing and sales of our wireless internet products,
and cannot be certain that this sector will grow in revenue as expected.

      WE ARE CONTROLLED BY MANAGEMENT OF OUR COMPANY. Our officers, directors
and persons who may be deemed our affiliates beneficially own, in the aggregate,
and have the right to vote approximately 31% of our issued and outstanding
common stock, not including common stock options they may own. Accordingly, such
holders will be in a position to elect all of our directors and control our
company.

                                       31
<PAGE>

      THE LIMITED PUBLIC MARKET AND TRADING MARKET MAY CAUSE VOLATILITY IN OUR
STOCK PRICE. There has only been a public market for our common stock since
January 1997 and we are not sure whether an active trading market in our common
stock will ever be maintained. In the absence of such a market, you may find it
more difficult to sell our common stock. In addition, the stock market in recent
years has experienced extreme price and volume fluctuations that have
particularly affected the market prices of many smaller and technology based
companies. The trading price of our common stock is expected to be subject to
significant fluctuations in response to variations in our quarterly operating
results; changes in analysts' earnings estimates regarding our Company;
announcements of technological innovations by us or our competitors; and general
conditions in the wireless communications industry and other factors. These
fluctuations, as well as general economic and market conditions, may have a
material adverse effect on the market price of our common stock.

      OUR SUCCESS DEPENDS ON OUR ABILITY TO MANAGE THE SIZE OF OUR Operations.
We downsized some of our operations in order to maintain competitiveness and
reduce our operating losses. We have also explored joint ventures and mergers in
order to achieve these results, but have not consummated any such transaction.
If we do not increase our sales, decrease overhead expenditure or do not
adequately manage the size of our operations, our results of operations will be
materially adversely affected.

      DECLINING AVERAGE SALES PRICES COULD ADVERSELY AFFECT OUR BUSINESS. If
wireless internet and telecommunications customers come under increasing price
pressure from service providers, we could expect to experience downward pricing
pressure on our products. In addition, competition among non-captive amplifier
suppliers could increase the downward pricing pressure on our amplifier
products. To date, we have not experienced such pressure. As our customers
frequently negotiate supply arrangements with us far in advance of product
delivery dates, we often must commit to price reductions before we can determine
whether cost reductions can be obtained. If we are unable to achieve cost
reductions, our gross margins will decline and our business, financial condition
and results of operations could be materially and adversely affected.

      RAPID TECHNOLOGICAL CHANGE AND INTENSE COMPETITION COULD ADVERSELY AFFECT
OUR BUSINESS. The wireless internet and telecommunications equipment industry is
extremely competitive and is characterized by rapid technological change, new
product development, product obsolescence and evolving industry standards. In
addition, price competition in this market is intense and characterized by
significant price erosion over the life of a product. Currently, we compete
primarily with non-captive suppliers of power amplification products. We believe
that our success will be based primarily upon service, pricing, reputation, and
our ability to meet product delivery schedules. Our existing and potential
customers continuously evaluate whether to manufacture their own amplification
products or to purchase such products from outside sources. These customers and
other large manufacturers of wireless telecommunications equipment could elect
to enter the market and compete directly with us. Many of our competitors have
significantly greater financial, technical, manufacturing, sales and marketing

                                       32
<PAGE>

capabilities and research and development personnel and other resources than us
and have achieved greater name recognition of their existing products and
technologies. In order for us to successfully compete, we must continue to
develop new products, keep pace with advancing technologies and competitive
innovations and successfully market our products. Our inability to successfully
compete against our larger competitors will have a materially adverse affect on
our business, financial condition and operations.

      In addition, we are not sure whether new products or alternative
technology will render our current or planned products obsolete or inferior.
Rapid technological development by others may result in our products becoming
obsolete before we recover a significant portion of the research, development
and commercialization expenses we incurred with respect to those products.

      OUR BUSINESS WILL BE ADVERSELY AFFECTED IF WE DO NOT KEEP UP WITH THE
INTERNET'S RAPID TECHNOLOGICAL CHANGE, EVOLVING INDUSTRY STANDARDS AND CHANGING
USER REQUIREMENTS. We are currently developing new products for high speed
internet access. To be successful, we must adapt to our rapidly changing market
by continually enhancing the technologies used for Internet access. If we are
unable, for technical, legal, financial or other reasons, to adapt in a timely
manner in response to changing market conditions or user requirements, our
business could be materially adversely affected. Significant issues concerning
the commercial use of Internet technologies, including security, reliability,
cost, ease of use and quality of service, remain unresolved and may inhibit the
growth of businesses relying on the Internet. Our future success will depend, in
part, on our ability to meet these challenges. Among the most important
challenges facing us are the need to:

      o     effectively use established technologies;

      o     continue to develop our technical expertise; and

      o     respond to emerging industry standards and other technical changes.

      All of these changes must be met in a timely and cost-effective manner. We
cannot assure you that we will succeed in effectively meeting these challenges
and our failure to do so could materially and adversely affect our business.

      RISKS ASSOCIATED WITH SALES OUTSIDE OF THE UNITED STATES MAY ADVERSELY
AFFECT OUR BUSINESS. International sales represented approximately 90% and 83%
of our net revenues for the years ended December 31, 1999 and 2000,
respectively. We expect that international sales will continue to account for a
significant portion of our net revenues in the future. To the extent that we do
not achieve and maintain substantial international sales, our business, results
of operations and financial condition could be materially and adversely
affected.

                                       33
<PAGE>

      Sales of our products outside of the United States are denominated in US
dollars. An increase in the value of the U.S. dollar relative to foreign
currencies would make our products more expensive and, therefore, potentially
less competitive outside the United States. Additional risks inherent in our
sales abroad include:

      o     the impact of recessionary environments in economies outside the
            United States;

      o     generally longer receivables collection periods;

      o     unexpected changes in regulatory requirements;

      o     tariffs and other trade barriers;

      o     potentially adverse tax consequences;

      o     reduced protection for intellectual property rights in some
            countries;

      o     the burdens of complying with a wide variety of foreign laws.

      These factors may have an adverse effect on our future international sales
and, consequently, on our business, financial condition and results of
operations.

      OUR OPERATING RESULTS MAY VARY FROM QUARTER TO QUARTER IN FUTURE PERIODS,
AND AS A RESULT, OUR STOCK PRICE MAY FLUCTUATE OR DECLINE. Our quarterly
operating results may fluctuate significantly in the future due to a variety of
factors that could affect our revenues or our expenses in any particular
quarter. Factors that may affect our quarterly results include:

      o     our ability to attract and retain customers;

      o     development of competitive products;

      o     the short term nature of manufacturing and engineering orders to
            date;

      o     unforeseen changes in operating expenses;

      o     the loss of key employees; and

      o     unexpected revenue shortfalls.

      A substantial portion of our operating expenses is related to personnel
costs and overhead, which we cannot adjust quickly and are therefore relatively
fixed in the short term. Our operating expense levels are based, in significant
part, on our expectations of future revenues on a quarterly basis. If actual
revenues are below our expectations, our results of operations and financial
condition would be materially and adversely affected because a relatively small
amount of our costs and expenses are proportionate with revenues in the short
term.

      Due to all of the foregoing factors and the other risks discussed in this
Annual Report, it is possible that in some future periods our results of
operations may be below the expectations of investors and public market analysts
which may cause our stock price to fluctuate or decline.

                                       34
<PAGE>

      WE ARE DEPENDENT UPON MANAGEMENT AND TECHNICAL PERSONNEL. Our success is
highly dependent upon the continued services of Devendar Bains, our President
and Chief Executive Officer. The employment agreement with Mr. Bains terminates
April 30, 2002 and contains a covenant not to compete against our company
following his termination of employment with our company. We have obtained key
man insurance on the life of Mr. Bains in the amount of $1,000,000. We cannot be
sure whether we will be able to replace Mr. Bains in the event his services
become unavailable or whether the proceeds of such insurance would be adequate
to compensate us for the loss of his services.

      Due to the specialized nature of our business, we are highly dependent on
the continued service of, and on our ability to attract and retain, qualified
technical and marketing personnel, particularly those involved in the
development of new products and processes and the manufacture and enhancement of
our existing products. In addition, as part of our team-based sales approach, we
dedicate specific design engineers to service the requirements of individual
customers. The loss of any such engineer could adversely affect our ability to
obtain future purchase orders from the customers to which such engineer was
dedicated. We have employment or non-competition agreements with most of our
current design engineers and test technicians. The competition for such
personnel is intense, and the loss of any such persons, as well as the failure
to recruit additional key technical personnel in a timely manner, could have a
material adverse effect on our business, financial condition and results of
operations.

      WE RELY ON THE ABILITY TO PROTECT PROPRIETARY TECHNOLOGY; RISK OF THIRD
PARTY CLAIMS OF INFRINGEMENT MAY AFFECT OUR BUSINESS. Our ability to compete
successfully and achieve future revenue growth will depend, in part, on our
ability to protect proprietary technology and operate without infringing upon
the rights of others. Although there are no pending lawsuits regarding our
technology or notices that we are infringing upon intellectual property rights
of others, litigation or infringement claims may occur in the future. Such
litigation or claims could result in substantial costs, and diversion of
resources and could have a material adverse effect on our business, financial
condition, and results of operations. We generally enter into confidentiality
and non-disclosure agreements with our employees and limit access to and
distribution of proprietary information. However, we cannot be sure whether such
measures will provide adequate protection for our trade secrets or other
proprietary information, or whether our trade secrets or proprietary technology
will otherwise become known or independently developed by our competitors. Our
failure to protect proprietary technology could have a material adverse effect
on our business, financial condition and results of operations.

      WE DO NOT PLAN TO PAY DIVIDENDS ON OUR COMMON STOCK. We have never paid
any dividends on our common stock and do not intend to pay dividends on our
common stock in the foreseeable future. Any earnings which we may realize in the
foreseeable future will be retained to finance our growth.

                                       35
<PAGE>

      GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL REGULATIONS CAN HAVE A LARGE
IMPACT ON OUR BUSINESS. Our customers must obtain regulatory approval to operate
their base stations. The United States Federal Communications Commission has
regulations that impose stringent radio frequency and microwave emissions
standards on the telecommunications industry. Our customers are required to
comply with such regulations. The failure of our customers to comply with these
regulation could materially adversely affect our business, financial condition
and results of operations. We manufacture products according to specifications
provided by our customers, which specifications are required to comply with
applicable regulations. We do not believe that costs involved with manufacturing
to meet specifications will have a material impact on our operations. We cannot
be sure whether the adoption of future regulations would have a material adverse
affect on our business.

      We are subject to Federal, state and local governmental regulations
relating to the storage, discharge, handling, emissions, generation, manufacture
and disposal of toxic or other hazardous substances used to manufacture our
products. We believe that we are currently in compliance in all material
respects with such regulations. Failure to comply with current or future
regulations could result in the imposition of substantial fines on our company,
suspension of our production, alteration of our manufacturing process, cessation
of our operations or other actions which could materially and adversely affect
our business, financial condition and results of operations.

      WE MAY NOT BE ABLE TO COMPLY WITH NASDAQ CONTINUED LISTING Requirements.
For continued listing on The Nasdaq SmallCap Market, a company must have, among
other things:

      o     $2,000,000 in net tangible assets;

      o     $1,000,000 in market value of public float; and

      o     a minimum bid price of $1.00 per share.

Our common stock is currently listed on The Nasdaq SmallCap Market. If we were
unable to satisfy the requirements for continued listing on The Nasdaq Small Cap
Market, trading of our common stock would be conducted in the over-the-counter
market. Transactions in the over-the-counter market are commonly referred to as
"pink sheet" or NASD OTC Electronic Bulletin Board transactions. If trading of
our common stock in the over-the-counter market were to occur, the liquidity of
our common stock would be materially adversely affected. Additionally, you may
find it more difficult to dispose of, or obtain accurate quotations as to the
price of, our common stock. Our Annual Report on Form 10-KSB for the period
ended December 31, 2000 indicates net tangible assets of $2,668,131. However, we
cannot be sure whether, and for how long, listing will continue.

                                       36
<PAGE>

      PENNY STOCK REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY
OF OUR SECURITIES. The SEC has adopted regulations which generally define a
"penny stock" to be any equity security that has a market price of less than
$5.00 per share or an exercise price of less than $5.00 per share, subject to
certain exceptions. Since our common stock is listed on The Nasdaq SmallCap
Market, it is exempt from the definition of "penny stock." If our common stock
is removed from listing by The Nasdaq SmallCap Market, our common stock may
become subject to the "penny stock" rules. These rules would impose additional
sales practice requirements on broker-dealers who sell such securities to
persons other than established customers and accredited investors (generally
those with assets in excess of $1,000,000 or annual income exceeding $200,000,
or $300,000 together with their spouse). For transactions covered by these
rules, the broker-dealer must:

      o     make a special suitability determination with respect to each
            purchaser of securities;

      o     receive the purchaser's written consent to the transaction prior to
            the purchase;

      o     deliver, prior to the purchase, a risk disclosure document mandated
            by the SEC relating to the penny stock market;

      o     disclose the commission payable to both the broker-dealer and the
            registered representative;

      o     disclose current quotations for such securities;

      o     disclose whether the broker-dealer has control over the particular
            market; and

      o     deliver monthly statements disclosing recent price information for
            the securities and information on the limited market in penny
            stocks.

      Consequently, the "penny stock" rules may restrict the ability of
broker-dealers to sell our securities and adversely affect your ability to sell
our securities in the secondary market and the price of our securities in the
secondary market.

      ANTI-TAKEOVER PROVISIONS MAY ADVERSELY AFFECT THE VALUE OF OUR OUTSTANDING
SECURITIES. Pursuant to our Certificate of Incorporation, our Board of Directors
may issue up to 1,000,000 shares of preferred stock in the future with such
preferences, limitations and relative rights as they may determine without
stockholder approval. Currently, there are no shares of our preferred stock
outstanding. The rights of the holders of our common stock will be subject to,
and may be adversely affected by, the rights of the holders of any preferred
stock outstanding or that may we may issue in the future. The issuance of
preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of delaying or
preventing a change in control of our company without further action by the
stockholders. In addition, we are subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law. Section 203 prohibits us
from engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the persons
became an interested stockholder, unless the business combination is approved in
a prescribed manner. The application of Section 203 also could have the effect
of delaying or preventing a change of control of our company.

                                       37
<PAGE>

      ADDITIONAL AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED STOCK AVAILABLE
FOR ISSUANCE MAY ADVERSELY AFFECT THE MARKET. We are authorized to issue
25,000,000 shares of our common stock. As of March 31, 2001, there were
7,465,661 shares of our common stock issued and outstanding, which amount does
not include:

      o     the option to purchase up to 140,000 shares of our common stock
            granted to the underwriter of our initial public offering at an
            exercise price of $7.50 per share;

      o     67,500 shares of our common stock issuable upon exercise of warrants
            at $2.50 per share;

      o     195,000 shares of our common stock issuable upon exercise of
            warrants at $4.00 per share;

      o     20,000 shares of our common stock issuable upon exercise of warrants
            at $1.00 per share;

      o     47,750 shares of our common stock issuable upon exercise of warrants
            at $1.25 per share;

      o     30,000 shares of our common stock issuable upon exercise of warrants
            at $6.00 per share;

      o     50,000 shares of our common stock issuable upon exercise of warrants
            at $2.00 per share;

      o     20,000 shares of our common stock issuable upon exercise of warrants
            at $7.00 per share;

      o     141,000 shares of our common stock issuable upon exercise of
            warrants at $1.75 per share; and

      o     1,536,000 shares of our common stock issuable upon exercise of
            options granted to our employees and Directors at exercise prices
            ranging between $1.25 and $4.00 per share.

      After reserving a total of 2,247,250 shares of our common stock for
issuance upon the exercise of all options and warrants described above, we will
have at least 15,287,089 shares of authorized but unissued common stock
available for issuance without further shareholder approval. Any issuance of
additional shares of our common stock may cause our current shareholders to
suffer significant dilution which may adversely affect the market for our
securities.

      In addition, we have 1,000,000 shares of authorized preferred stock. There
are no shares of preferred stock currently issued or outstanding. While we have
no present plans to issue any additional shares of preferred stock, our Board of
Directors has the authority, without shareholder approval, to create and issue
one or more series of such preferred stock and to determine the voting, dividend
and other rights of holders of such preferred stock. The issuance of any of our
preferred stock could have an adverse effect on the holders of our common stock.

                                       38
<PAGE>

      SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET. As of
March 31, 2001, we had 7,465,661 shares of our common stock issued and
outstanding. Of these 7,465,661 shares of issued and outstanding common stock,
approximately 4,405,790 shares are considered "restricted securities". These
"restricted securities" may be sold pursuant to Rule 144 of the Securities Act
of 1933 as follows:

      o     4,403,970 shares of our common stock may currently be sold pursuant
            to Rule 144; and

      o     1,820 shares of our common stock may currently be sold pursuant to
            Rule 144 commencing January 2002.

      Rule 144 provides, in essence, that a person holding "restricted
securities" for a period of one year may sell only an amount every three months
equal to the greater of:

      (a)   one percent of the Company's issued and outstanding shares; or

      (b)   the average weekly volume of sales during the four calendar weeks
            preceding the sale.

      The amount of "restricted securities" which a person who is not an
affiliate of our company may sell is not so limited. Non-affiliates may sell
without volume limitation their shares held for two years if there is adequate
current public information available concerning our company.

      The sale in the public market of our common stock may adversely affect
prevailing market prices of our common stock.

      THE EXERCISE OF OUTSTANDING OPTIONS AND WARRANTS MAY ADVERSELY AFFECT THE
MARKET FOR OUR COMMON STOCK. As of March 31, 2001, we had the following
outstanding stock options and warrants to purchase shares of our common stock:

      o     warrants to purchase an aggregate of 47,750 shares of our common
            stock at an exercise price of $1.25 per share;

      o     warrants to purchase 67,500 shares of our common stock at an
            exercise price of $2.50 per share;

      o     warrants to purchase 195,000 shares of our common stock at an
            exercise price of $4.00 per share;

      o     warrants to purchase 20,000 shares of our common stock at an
            exercise price of $1.00 per share;

      o     warrants to purchase 140,000 shares of our common stock at an
            exercise price of $7.50 per share;

      o     warrants to purchase 30,000 shares of our common stock at an
            exercise price of $6.00 per share;

      o     warrants to purchase 20,000 shares of our common stock at an
            exercise price of $7.00 per share;

      o     warrants to purchase 50,000 shares of our common stock at an
            exercise price of $2.00 per share; and

      o     warrants to purchase 141,000 shares of our common stock at an
            exercise price of $1.75 per share.

                                       39
<PAGE>

      In addition, we have reserved 1,536,000 shares of our common stock for
issuance pursuant to outstanding employee stock options. The exercise of our
outstanding options and warrants will dilute the percentage ownership of our
stockholders. Sales in the public market of our common stock underlying such
options or warrants may adversely affect prevailing market prices for our common
stock. Moreover, the terms upon which we will be able to obtain additional
equity capital may be adversely affected since the holders of such outstanding
securities can be expected to exercise their respective rights therein at a time
when we would, in all likelihood, be able to obtain any needed capital on terms
more favorable to us those provided in such securities.

      LIMITATION ON DIRECTOR LIABILITY MAY ADVERSELY AFFECT THE VALUE OF OUR
COMMON STOCK. As permitted by Delaware law, our Certificate of Incorporation
limits the liability of our directors for monetary damages for breach of their
fiduciary duty except for liability in certain instances. As a result of our
charter provision and Delaware law, you may have limited rights to recover
against our directors for breach of their fiduciary duty.

      WE ARE THE SUBJECT OF A CLASS ACTION COMPLAINT. We are the subject of a
class action complaint on behalf of all purchasers of our common stock and
warrants between September 9-17, 1999. The complaint alleges that we and others
violated the federal securities law by, among other things, the issuance of a
press release on September 9, 1999. Although the Company believes that the
complaint has no merit and has vigorously contested it, the Company and the
other parties to the class action are discussing a settlement and are
negotiating the precise terms thereof. Despite these negotiations, there is no
guarantee that an agreement will be reached. If an agreement is reached, all
members of the class will receive notice of the proposed settlement and the
settlement must be approved by the court.

ITEM 2.  PROPERTIES.

      The Company leases (from an unaffiliated party) approximately 11,000
square feet, at 59 LaGrange Street, Raritan, NJ 08869, which serves as the
Company's executive offices and manufacturing facility. The lease term expires
on July 13, 2004. The annual rental is $71,250 plus the Company's share of real
estate taxes and other occupancy costs.

ITEM 3.  LEGAL PROCEEDINGS

      Other than as set forth below, the Company is not a party to any material
pending litigation or governmental proceedings that, management believes, would
result in judgments or fines that would have a material adverse effect on the
Company. However, the Company is involved in the following matters:

      1. AirNet Communications Corporation v. Amplidyne, Inc.

                                       40
<PAGE>

      Plaintiff filed a complaint in the Circuit Court of the Eighteenth
Judicial District of the State of Florida on January 23, 1997 alleging breach of
contract. Plaintiff alleged damages in the amount of $4,322,579.05, plus
interest, costs and attorneys fees. In December 2000, this action was settled
whereby the Company has agreed to pay the Plaintiff a total of $175,000, in
seven equal installments of $25,000. The first installment was paid in December
2000.

      2. The Company is also a defendant in a complaint filed in the United
States District Court for the District of New Jersey on May 13, 1998. The
complaint alleges breach of contract of a representative agreement between the
Company and ENS Engineering of South Korea. The Company reached oral settlement
terms and based upon such oral settlement, the court dismissed the case in the
first quarter of 2000. The terms of the oral settlement called for the Company
to pay $85,000 in 12 equal monthly installments, none of which has been paid as
of December 31, 2000. The Company has not received any required documents and
releases from ENS.

      3. In the fall of 1999, the Company was served with several class action
complaints on behalf of all purchasers of the Company's common stock and
warrants between September 9 and 14, 1999. By order of the District Court for
the District of New Jersey, the actions were consolidated and lead plaintiffs
were appointed. In March 2000, the Company was served with a consolidated and
amended class action complaint on behalf of all purchasers of the Company's
common stock and warrants between September 9-17, 1999. The complaint alleges
that the Company and certain others violated the federal securities laws by,
among other things, the issuance of a press release on September 9, 1999.
Although the Company believes that the complaint has no merit and has vigorously
contested it, the Company and the other parties to the class action are
discussing a settlement and are negotiating the precise terms thereof. Despite
these negotiations, there is no guarantee that an agreement will be reached. If
an agreement is reached, all members of the class will receive notice of the
proposed settlement and the settlement must be approved by the court.

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

      On December 28, 2000, the Company held an annual meeting of stockholders
to vote on the election of directors and the ratification of the Company's
independent auditors. Of the 7,463,841 shares of the Company's Common Stock
entitled to vote at the meeting, holders of 5,755,082 shares were present in
person or were represented by proxy at the meeting.

                                       41
<PAGE>

      The directors elected at the meeting and the results of the voting were as
follows:

                                    For              Withheld
                                    ---              --------

      Devendar S. Bains          5,682,039            73,043
      Tarlochan Bains            5,682,039            73,043
      Charles J. Ritchie         5,682,039            73,043
      Manish V. Detroja          5,682,039            73,043

      The above represented all of the directors of the Company on December 28,
2000.

      The shares voted regarding the Board of Directors' proposal to amend the
Company's 1996 Stock Option Plan, were as follows:

      For:        5,541,559
      Against:      205,500
      Abstain:        8,023

      The shares voted regarding the Board of Directors' proposal to select the
accounting firm of Grant Thornton LLP, to serve as independent auditors of the
Company, were as follows:

      For:        5,739,434
      Against:        8,475
      Abstain:        7,173

                                       42
<PAGE>

                                     PART II

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

      The Company's Common Stock and Warrants commenced trading on the Nasdaq
Small Cap Market on January 22, 1997. The Warrants were redeemed in May 2000.
The Common Stock is regularly quoted and traded on the Nasdaq SmallCap Market
under the symbol AMPD.

      The following table sets forth the range of high and low closing prices
for the Company's Common Stock and Warrants for fiscal 1998, fiscal 1999, fiscal
2000 (through May 16, 2000 for the Warrants) and for the period of January 1,
2001 up to March 31, 2001 as reported by the Nasdaq SmallCap Market. The trading
volume of the Company's securities fluctuates and may be limited during certain
periods. As a result, the liquidity of an investment in the Common Stock may be
adversely affected.

Common Stock

            1998 Calendar Year                  Closing Price
            ------------------                  -------------
                                               High        Low
                                               ----        ---

            January 1 - March 31             $ 2.375    $  .875
            April 1 - June 30                  1.813       .906
            July 1 - September 30              1.750       .750
            October 1 - December 31            1.844       .469

            1999 Calendar Year
            ------------------

            January 1 - March 31               2.625      1.094
            April 1 - June 30                  4.500      1.844
            July 1 - September 30             12.250      1.344
            October 1 - December 31           10.125      5.375

            2000 Calendar Year
            ------------------

            January 1 - March 31              11.500      5.313
            April 1 - June 30                  7.250      3.063
            July 1 - September 30              4.563      2.438
            October 1 - December 31            4.000      1.031

            2001 Calendar Year
            ------------------

            January 1 - March 31               2.7813     1.250

                                       43
<PAGE>

Warrants
--------

            1998 Calendar Year                  Closing Price
            ------------------                  -------------
                                               High        Low
                                               ----        ---

            January 1 - March 31                .625       .125
            April 1 - June 30                   .625       .125
            July 1 - September 30               .531       .125
            October 1 - December 31             .250       .063

            1999 Calendar Year

            January 1 - March 31                .406       .031
            April 1 - June 30                   .906       .281
            July 31 - September 30             6.000       .313
            October 31 - December 31           4.500      1.500

            2000 Calendar Year

            January 1 - March 31               5.500      1.500
            April 1 - May 16                   2.125      .0312

      On March 31, 2001 the closing price of the Common Stock as reported on the
Nasdaq SmallCap Market was $1.375. On March 31, 2001 there were 7,465,661 shares
of Common Stock outstanding, held of record by approximately 85 record holders
(with over 2,000 beneficial owners).

                                       44
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

RESULTS OF OPERATIONS - FISCAL YEAR ENDED DECEMBER 31, 2000 COMPARED TO FISCAL
YEAR ENDED DECEMBER 31, 1999.

      Revenues for the fiscal year ended December 31, 2000 increased from
$2,150,707 to $2,595,090, or 20% compared to the fiscal year ended December 31,
1999. The primary reason for the increase was greater sales to existing
customers of the NMT-450 multicarrier amplifier for the wireless local loop
amplifiers and the initial sales of our recently introduced High Speed Wireless
Internet Access Products. This was offset by a decrease in 1999 sales of our
Digital PCS Products to a Korean customer which did not occur in 2000.

      The majority of the sales for the year 2000 were obtained from the
Wireless Local Loop amplifier products and filter diplexer products to a major
European customer. The NMT 450 amplifiers were shipped primarily to a major
North American customer. The Company has also supplied 900 MHz cellular multi
carrier linear amplifiers to its major North American customer, as well as
prototypes of its 3.5GHZ amplifier for the wireless local loop products.

      The Company received a purchase order to develop an IMT 2000 amplifier for
the South Korean market. The product is under development and is expected to be
shipped sometime in 2001. The Company has focused its sales and marketing
efforts in the more stable United States, European and Canadian markets. It is
maintaining a more cautious approach towards the South Korean market due to the
significant currency fluctuations and purchase order cancellations during the
past few years in South Korea.

      Cost of sales as a percentage of sales was 95% during the year ended
December 31, 2000, compared to 93% during the same period for 1999. This
increase can be attributed to a larger diverse product range which was
introduced in 2000, requiring smaller production runs and higher set up costs.
Our fixed overhead costs are relatively high for our current sales volume. A
decrease in inventory held at year end for production orders is consistent with
the smaller scale production runs. The Company is continuing to assess cost
reduction of its products and sales volume increases to improve gross margins in
2001.

      Selling, general and administrative expenses increased in 2000 by $382,683
to $1,986,170 from $1,603,487, in 1999. Expressed as a percentage of sales, the
selling, general and administrative expenses were 77% in 2000 and 75% in 1999.
The principal factors contributing to the increase in selling, general and
administrative expenses were related to the increase in advertising and
marketing costs related to new amplifiers and High Speed Wireless products, and
higher professional fees associated with litigation against the Company.

                                       45
<PAGE>

      Research, engineering and development expenses were 23% of net sales in
2000 compared to 27% in 1999. In 2000, the principal activity of the business
related to the design and production of product for OEM manufacturers,
particularly for the NMT-450 multichannel products. The research, engineering
and development expenses consist principally of salary cost for engineers and
the expenses of equipment purchases specifically for the design and testing of
the prototype products. The increase in 2000 by $10,215 to $590,496 from
$580,281 in 1999 in research, engineering and development expenses, was
principally attributed to the extra cost of components required and to the
testing of the more diverse products related to the High Speed Wireless Internet
Access products. The Company's research and development efforts are influenced
by available funds and the level of effort required by the engineering staff on
customer specific projects.

      The Company had interest income and other income in 2000 of $116,870 due
to influx of new capital during 1999 and 2000 from our private placements and
exercise of warrants and options. Interest and other income is greater than the
1999 amount due to the consistency of amounts in interest bearing accounts in
2000 compared to 1999. The Company also sold New Jersey Net operating loss
carryforwards pursuant to the New Jersey Technology Certificate Transfer
Program, in both 1999 and 2000.

      Interest expense decreased in 2000 because of the repayment of certain
capitalized leases on test equipment.

      Estimated litigation settlement costs have been provided in both 1999 and
2000, to reflect our estimated or known exposure in litigation against the
Company.

      Stock compensation and financing expenses of $114,546 for the year ended
December 31, 2000 compared to $1,721,450 for the comparable 1999 period is due
to fewer below market issuances of stock options in 2000 and fewer issuances of
stock options or warrants to non-employees.

      As a result of the foregoing, the Company incurred net losses of
$2,440,045 or($.34) per share for the year ended December 31, 2000 compared with
net losses of ($3,535.689) or ($.62) per share for the same period in 1999.

RESULTS OF OPERATIONS - FISCAL YEAR ENDED DECEMBER 31, 1999 COMPARED TO FISCAL
YEAR ENDED DECEMBER 31, 1998.

      Revenues for the fiscal year ended December 31, 1999 increased from
$1,786,936 to $2,150,707 (or 20%) compared to the fiscal year ended December 31,
1998. The primary reason for the increase was the new business on the NMT-450
multicarrier amplifier for the wireless local loop amplifiers. Shipments in the
fourth quarter accounted for the majority of the increase in sales. The
Company's principal business strategy since 1995 has been devoted to the
engineering production of the linear power amplifiers and Multicarrier Linear
Power Amplifiers (MCLPA) prototypes for major international OEM manufactures.
During 1998 the Company continued to refine its PCS single and multichannel
amplifier products, and several products were shipped to major OEM's in the U.S.
and overseas for prototype evaluations.

                                       46
<PAGE>

      Sales for the first 3 quarters of 1999 were weak due to the uncertainly of
the South East Asian markets, as planned shipments under purchase orders were
never completed due to delay and cancellations by a certain customer. The
Company refocused its strategy to obtain more US and European business. As a
result of its efforts, the Company was able to obtain a substantial order from a
major OEM in Canada. The sales in the fourth quarter of 1999 accounted for 39%
of the overall sales for 1999.

      The Company's sales to international markets representing 90% of the
Company's sales in 1999, were primarily to Korea, Europe and Canada. Korea has
suffered significant currency fluctuations during the past few years seriously
damaging the Company's ability to complete Korean sales orders.

      Cost of sales as a percentage of sales was 93% during the year ended
December 31, 1999, compared to 98% during the same period for 1998. This
decrease can be attributed to greater volume of sales and improved margins of
NMT-450 business. Also, the Company moved into a smaller facility in July 1999
reducing its annual rental cost.

      Selling, general and administrative expenses increased in 1999 by $325,231
to $1,603,487 from $1,278,256, in 1998. Expressed as a percentage of sales, the
selling, general and administrative expenses were 75% in 1999 and 71% in 1998.
The principal factors contributing to the increase in selling, general and
administrative expenses were related to the staffing levels, bad debt expenses
relating principally to our Korean customers and professional fees associated
with litigation, new product marketing and investor relations.

      Research, engineering and development expenses decreased to 27% of net
sales in 1999 compared to 30% in 1998. In 1999, the principal activity of the
business related to the design and production of product for OEM manufacturers,
particularly for the NMT-450 multichannel products. The research, engineering
and development expenses consist principally of salary cost for engineers and
the expenses of equipment purchases specifically for the design and testing of
the prototype products, which decreased during 1999. The Company's research and
development efforts are influenced by available funds and the level of effort
required by the engineering staff on customer specific projects. The Company's
wireless internet amplifier was developed in 1999 and the Company committed up
to $900,000 of expenses to maintain its market position for these products
during 2000.

      The Company had interest income and other income in 1999 of $337,926 due
to earnings on initial public offering proceeds, and reflect lower
interest-earning balances. The Company also sold New Jersey Net operating loss
carryforwards pursuant to the New Jersey Technology Certificate Transfer
Program.

                                       47
<PAGE>

      Interest expense was higher in 1999 because of new capitalized leases on
test equipment.

      Stock compensation and financing expenses of $1,721,450 and $186,249 in
1999 and 1998, respectively, reflecting issuances of stock, options and warrants
at prices substantially lower than the fair market values. The increase in 1999
expense reflects that the Company issued a significant amount of warrants to
consultants during 1999.

      As a result of the foregoing, the Company incurred net losses of
$3,535,689 or ($.62) per share for the year ended December 31, 1999 compared
with net losses of ($1,916,354) or ($.43) per share for the same period in 1998.

LIQUIDITY AND CAPITAL RESOURCES

      As of December 31, 2000, the Company had cash and cash equivalents of
$1,966,142. The Company used $1,866,951 of cash and cash equilavalents during
2000 to fund our operating loss. This was partially offset by a decrease in
inventory held at December 31, 2000, as we have sought to reduce our investment
in inventories to match smaller customer purchase orders.

      During 2000, the Company raised $2,479,266 from the privately placed sale
of securities and from the exercise of warrants and options which were used for
working capital purposes. The Company has several lease obligations for certain
equipment and an automobile requiring minimum monthly payments of approximately
$5,900 through 2004. Although the Company did not convert salaries to officers
through the issuance of Common Stock in 2000, it may to do so in 2001.

      The Company continues to explore strategic relationships with ISP's,
customers and others, which could involve jointly developed products,
revenue-sharing models, investments in or by the Company, or other arrangements.
There can be no assurance that a strategic relationship can be consummated.

      The Company is a defendant in a class action lawsuit and recently settled
another litigation matter. The settled matter will require a $25,000 payment per
quarter through June 2002.

      The Company believes that the net proceeds of the Company's private
placements in 1999 and 2000, option and warrant exercises and cash generated
from revenues will permit it to continue to meet its working capital obligations
and fund the further development of its business for the next 12 months.
Further, in the past, the officers of the Company have deferred a portion of
their salaries or provided loans to the Company to meet short-term liquidity
requirements. Where possible, the Company has issued stock or granted warrants
to certain venders in lieu of cash payments, and may do so in the future. There

                                       48
<PAGE>

can be no assurance that any additional financing will be available to the
Company on acceptable terms, or at all. If adequate funds are not available, the
Company may be required to delay, scale back or eliminate its research,
engineering and development or manufacturing programs or obtain funds through
arrangements with partners or others that may require the Company to relinquish
rights to certain of its technologies or potential products or other assets.
Accordingly, the inability to obtain such financing could have a material
adverse effect on the Company's business, financial condition and results of
operations.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

      See financial statements following Item 13 of this Annual Report on Form
10-KSB.

ITEM 8.  CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

            None.

                                       49
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT OF THE REGISTRANT

      The names and ages of the directors and executive officers of the Company
as of the date of this filing are set forth below:

NAME                       AGE      POSITION(S) WITH THE COMPANY
----                       ---      ----------------------------

Devendar S. Bains*         50       Chairman of the Board, President, Chief
                                    Executive Officer, Treasurer and Director

Tarlochan Bains            51       Vice President-Operations and Director

Nirmal Bains               44       Secretary

Charles J. Ritchie*        58       Director

Manish V. Detroja*         34       Director

Amarjit S. ("AJ") Momi     57       Vice President - Marketing

*  Member of the Compensation Committee and Audit Committee.

BACKGROUND OF EXECUTIVE OFFICERS AND DIRECTORS

DEVENDAR S. BAINS has been Chairman of the Board, President, Chief Executive
Officer, Treasurer and a director of the Company since its inception in 1988.
From 1983 to 1988 Mr. Bains was Group Project Leader of Amplifier division of
Microwave Semiconductor Corporation. Previously, Mr. Bains was employed at
G.E.C. in Coventry, England. Mr. Bains received a Bachelors Degree in Electronic
Engineering from Sheffield University, England, and a Masters Degree from the
University of Leeds and Sheffield, England. Mr. Bains is the brother of
Tarlochan Bains and the husband of Nirmal Bains.

                                       50
<PAGE>

TARLOCHAN BAINS has been Vice President of Sales and Marketing and a director
since 1991. Presently, Mr. Bains holds the position of Vice Present-Operations
(Amplifier Division). Previously, Mr. Bains was Technical Manager at Land Rover
in Solihull, England. He has a Higher National Diploma in Mechanical Engineering
from Hatfield Polytechnic, England and a Masters Degree in Automotive
Engineering from Cranfield Institute of Technology, England. Mr. Bains is the
brother of Devendar S. Bains and the brother-in-law of Nirmal Bains.

NIRMAL BAINS has been Secretary of the Company since 1989. She has a degree in
Computer Programming from Cittone Institute in New Jersey. Mrs. Bains is the
wife of Devendar S. Bains and the sister-in-law of Tarlochan Bains.

CHARLES J. RITCHIE was elected to the Board of Directors of the Company in
February 1998. Mr. Ritchie has had a 32 year career with Lucent Technologies,
formerly AT&T, with assignments that included Product Management, Account
Management, AT&T Divestiture Planning, National Cellular Sales Manager for
non-Wireline Companies, International Wireless Product Support, and many others.
Since 1992, Mr. Ritchie has been an International Business Development director
for Europe, Middle Ease and Africa for the Network Wireless Division at Lucent
Technologies. Marketing, Sales and Business Development education and experience
were accrued over his business career. Mr. Ritchie received a Bachelors Degree
in Electrical Engineering at Youngstown University and continued with graduate
work in Electrical Engineering at Ohio State University.

MANISH V. DETROJA was elected to the Board of Directors of the Company in
February 1998. Mr. Detroja has been with Current Circuits Inc. ("CCI"), a
private company engaged in the manufacturing of printed circuit boards for the
electric industry, since its inception in May of 1989. From 1989-1993 Mr.
Detroja was the production manager for CCI and from 1993-1996 he was its sales
manager for the entire United States. He currently is President and Chief
Executive Officer. Mr. Detroja is a graduate of Temple University and has a B.S.
in Electrical Engineering Technology.

AMARJIT S. ("AJ") MOMI joined the Company in 2001 as its Vice
President-Marketing. Mr. Momi has more than 25 years of experience in the
telecommunications and data communications industry. He was with AT&T (from
1977-1990) and then Lucent Technologies (from 1995-2000), totally more than 18
years, with assignments in National Account Management, Product Management,
Product Marketing - Enterprise Networks and then Director of Wireless Data
Networks Enterprise Networks Group, responsible for worldwide activities. From
1990-1995 he was an Assistant Director of Information Technology for IPC
Information Systems, a leading systems integrator for financial institutions in
New York City.

                                       51
<PAGE>

      The Company has established a compensation committee and an audit
committee. The compensation committee reviews executive salaries, administers
any bonus, incentive compensation and stock option plans of the Company, and
approves the salaries and other benefits of the executive officers of the
Company. In addition, the compensation committee consults with the Company's
management regarding pension and other benefit plans, and compensation policies
and practices of the Company. The compensation committee consists of Devendar S.
Bains, Charles J. Ritchie and Manish J. Detroja.

      The audit committee reviews, among other matters, the professional
services provided by the Company's independent auditors, the independence of
such auditors from management of the Company, the annual financial statements of
the Company and the Company's system of internal accounting controls. The audit
committee also reviews such other matters with respect to the accounting,
auditing and financial reporting practices and procedures of the Company as it
may find appropriate or as may be brought to its attention.

      The audit committee has reviewed and discussed the audited financial
statements included in the Company's Form 10-KSB for the fiscal year ended
December 31, 2000 with management. The audit committee has received the written
disclosures and the letter from the independent accountants reviewed by
Independence Standards Board Standard No. 1, as may be modified or supplemented,
and discussed with the auditors the auditors' independence.

      Based on the review and discussions noted above, the audit committee
recommended to the Board of Directors that the audited financial statements be
included in the Company 2000 Form 10-KSB.

      The audit committee consists of three members, two of whom (Messrs.
Ritchie and Detroja) are "independent" (as defined in the listing standards
maintained by the Nasdaq Stock Market). Mr. Devendar Bains is the third member
of the committee.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

      Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company. Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.

      To the Company's knowledge, based solely upon its review of the copies of
such reports furnished to the Company during the year ended December 31, 2000,
all Section 16(a) filing requirements applicable to its officers and directors
and greater than ten percent beneficial owners were satisfied.

                                       52
<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

SUMMARY COMPENSATION TABLE

      The following table sets forth the aggregate compensation paid by the
Company for the years ended December 31, 1998, 1999 and 2000 for its Chief
Executive Officer and Vice President, respectively. No other employee received
compensation in excess of $100,000. Each director of the Company is entitled to
receive reasonable out-of-pocket expenses incurred in attending meetings of the
Board of Directors of the Company.

<TABLE>
<CAPTION>
                                                                                         Long Term Compensation
                                                                                   ---------------------------------
                                              Annual Compensation                     Securities   Payouts
                                              -------------------        Awards    ------------------------
                                                                       Restricted    Underlying      All
Name of Individual                                      Other Annual      Stock         LTIP         Other
and Principal Position      Year     Salary     Bonus   Compensation     Awards    Options/SARS(#)  Payouts    Comp.
----------------------      ----------------------------------------------------------------------------------------
<S>                         <C>     <C>         <C>     <C>            <C>         <C>              <C>        <C>
Davendar S. Bains,          2000    $162,000     ---    $ 20,000(1)         ---          ---          ---       ---
Chairman
Chief Executive Officer,    1999    $ 85,000     ---    $ 20,000(1)         ---          ---          ---       ---
                                                        $ 77,000(2)
President and Treasurer     1998    $ 85,000     ---    $ 20,000(1)         ---          ---          ---       ---
                                                        $117,000(2)

Tarlochan Bains,            2000    $105,000     ---         ---            ---          ---          ---       ---
Vice President              1999    $ 62,000     ---      74,000(2)         ---          ---          ---       ---
and Director                1998    $ 62,000     ---      54,000(2)         ---          ---          ---       ---
</TABLE>

(1) Represents payment for health insurance and automobile insurance lease
payments on behalf of such individual but does not include deferred
compensation.

(2) Represents the fair value of shares of Common Stock in lieu of cash payment
of the amount owed for deferred compensation.

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

EMPLOYMENT AGREEMENTS

      The Company entered into five-year employment agreements commencing May 1,
1996 with each of Devendar Bains (Chairman, Chief Executive Officer, President
and Treasurer), Tarlochan Bains (Vice President - Sales & Marketing), and Nirmal
Bains (Secretary), which, as extended, now expire on April 30, 2002. The
employment agreements provide for annual base salaries of $162,000, $100,000 and
$50,000 with respect to Devendar Bains, Tarlochan Bains and Nirmal Bains,
respectively. The employment agreements provide for discretionary bonuses to be
determined in the sole discretion of the Board of Directors and contain
covenants not to compete with the Company following termination of employment.

                                       53
<PAGE>

      The Company has entered into a one-year employment agreement, commencing
April 2, 2001 and expiring March 31, 2002, with Mr. Momi, its Vice
President-Marketing. The agreement provides for an annual base salary of
$150,000. The agreement contains covenants not to compete with the Company
following termination of employment. Pursuant to the agreement, the Company
issued to Mr. Momi 100,000 options to purchase common stock with an exercise
price of $3 1/8 per share, which vest on September 30, 2001. If the agreement is
renewed for successive one-year periods, Mr. Momi will also be entitled to an
additional 200,000 options, exercisable at $4.00 per share, which vest over time
between September 2002 and March 2004. All of such options expire on December
31, 2005.

      In June 1998, the Company issued 40,000 shares of Common Stock to Devendar
S. Bains, the Company's President and Chief Executive Officer, in consideration
of the forgiveness by Mr. Bains of $50,000 of accrued salary owed to him.

      On December 31, 1998, accrued and unpaid salary in the aggregate amount of
$195,000 owed as of September 30, 1998 to Devendar S. Bains ($117,000),
Tarlochan Bains ($54,600) and Nirmal Bains ($23,400), were forgiven. In
consideration of such forgiveness of accrued salary, the Company issued 104,000,
48,533 and 20,800 shares, respectively to such persons (based upon the closing
sales price of the Common Stock as of September 30, 1998).

      On March 31, 1999, accrued and unpaid salary in the aggregate amount of
$20,717 owed as of December 31, 1998 to Devendar S. Bains ($10,566), Tarlochan
Bains ($6,629) and Nirmal Bains ($3,522) were forgiven. In consideration of such
forgiveness of accrued salary, the Company issued 4,025, 2,526 and 1,342 shares,
respectively, to such persons (based upon the closing sales price of the Common
Stock as of March 31, 1999).

      On March 31, 1999, accrued and unpaid salary in the aggregate amount of
$41,920 owed as of March 31, 1999 to Devendar S. Bains ($14,346), Tarlochan
Bains ($25,474) and Nirmal Bains ($2,100) were forgiven. In consideration of
such forgiveness of accrued salary, the Company issued 5,465, 9,704 and 800
shares, respectively, to such persons (based upon the closing sales price of the
Common Stock as of March 31, 1999).

      On June 30, 1999, accrued and unpaid salary in the aggregate amount of
$57,546 owed as of June 30, 1999 to Devendar S. Bains ($27,424), Tarlochan Bains
($22,822) and Nirmal Bains ($7,300) were forgiven. In consideration of such
forgiveness of accrued salary, the Company issued 15,398, 12,815 and 4,099
shares, respectively, to such persons (based upon the closing sales price of the
Common Stock as of June 30, 1999).

                                       54
<PAGE>

      On September 30, 1999, accrued and unpaid salary in the aggregate amount
of $38,541 owed as of September 30, 1999 to Devendar S. Bains ($20,885),
Tarlochan Bains ($12,986) and Nirmal Bains ($4,700), were forgiven. In
consideration of such forgiveness of accrued salary, the Company issued 3,358,
2,088 and 756 shares, respectively, to such persons (based upon the closing
sales price of the Common Stock on September 29, 1999).

      On December 31, 1999, accrued and unpaid salary in the aggregate amount of
$22,369 owed as of December 31, 1999 to Devendar S. Bains ($14,346), Tarlochan
Bains ($5,923) and Nirmal Bains ($2,100), were forgiven. In consideration of
such forgiveness of accrued salary, the Company issued 3,566, 1,060 and 376
shares, respectively, to such persons (based upon the closing sales price of the
Common Stock on December 31, 1999).

      There were no conversions of unpaid salary into equity during 2000.

STOCK OPTION PLANS AND AGREEMENTS

      Option Plan - In May 1996, the Directors of the Company adopted and the
stockholders of the Company approved the adoption of the Company's 1996 Stock
Option Plan (as amended, the "Option Plan"). The purpose of the Option Plan is
to enable the Company to encourage key employees and Directors to contribute to
the success of the Company by granting such employees and Directors incentive
stock options ("ISOs") or non-qualified stock options ("NQOs").

      The Option Plan will be administered by the Board of Directors or a
committee appointed by the Board of Directors (the "Committee") which will
determine, in its discretion, among other things, the recipients of grants,
whether a grant will consist of ISOs, NQOs or a combination thereof, and the
number of shares to be subject to such options.

      The Option Plan provides for the granting of ISOs or NQOs to purchase
Common Stock at an exercise price to be determined by the Board of Directors or
the Committee not less than the fair market value of the Common Stock on the
date the option is granted.

      The total number of shares with respect to which options may be granted
under the Option Plan is 1,850,000. Options may not be granted to an individual
to the extent that in the calendar year in which such options first become
exercisable the shares subject to such options have a fair market value on the
date of grant in excess of $100,000. No option may be granted under the Option
Plan after May 2006 and no option may be outstanding for more than ten years
after its grant. Additionally, no option can be granted for more than five (5)
years to a stockholder owning 10% or more of the Company's outstanding Common
Stock and such options must have an exercise price of not less than 110% of the
fair market value on the date of grant.

                                       55
<PAGE>

      Upon the exercise of an option, the holder must make payment of the full
exercise price. Such payment may be made in cash or in shares of Common Stock,
or in a combination of both. The Company may lend to the holder of an option
funds sufficient to pay the exercise price, subject to certain limitations.

      The Option Plan may be terminated or amended at any time by the Board of
Directors, except that, without stockholder approval, the Option Plan may not be
amended to increase the number of shares subject to the Option Plan, change the
class of persons eligible to receive options under the Option Plan or materially
increase the benefits of participants.

      As of March 31, 2001, 1,491,000 options to purchase Common Stock under the
Option Plan were granted to certain employees, including Devendar Bains
(1,000,000 options), Tarlochan Bains (100,000 options) and Nirmal Bains (50,000
options), the Company's Chief Executive Officer, Vice President-Sales and
Marketing and Secretary, respectively. The options are exercisable at $4.00 and
expire on May 31, 2004. 30,000 options to purchase Common Stock were granted to
each of Messrs. Detroja and Ritchie, Directors of the Company. These options are
exercisable at $1.25, are fully vested and expire on December 31, 2001. In
addition, 85,000 options are exercisable at $3.25 per share, which vest over a
period of time through December 31, 2002. Such options expire between November
1, 2003 and December 31, 2004. No determinations have been made regarding the
persons to whom options will be granted in the future, the number of shares
which will be subject to such options or the exercise prices to be fixed with
respect to any option.

OTHER OPTIONS

As of March 31, 2001, each of Messrs. Detroja and Ritchie also own 22,500
options to purchase Common Stock. These options are exercisable at $1.25 per
share, are fully vested and expire on May 31, 2004.

                                       56
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth certain information, as of March 31, 2001
with respect to the beneficial ownership of the outstanding Common Stock by (i)
any holder of more than five percent (5%); (ii) each of the Company's officers
and directors; and (iii) the directors and officers of the company as a group:

Name of Beneficial        Number of Shares        Percentage %
Owner*                    of Common Stock(1)      Ownership
--------------------      ------------------      ------------

Devendar S. Bains(2)          3,272,985              37.99

Tarlochan Bains(3)              178,456               2.36

Nirmal Bains(2)               3,272,985              37.99

Charles J. Ritchie(4)            52,500                .70

Manish V. Detroja(5)             52,500                .70

Harris Freedman(6)              442,389               5.93

Joseph Giamano(7)               565,224               7.57

All Officers and
  Directors as a group
  (5 persons)(8)              3,556,441              40.78


* Unless otherwise indicated, the address of all persons listed in this section
is c/o Amplidyne, Inc., 59 LaGrange Street, Raritan, NJ 08869.

(1) Beneficially ownership as reported in the table above has been determined in
    accordance with Instruction (4) to Item 403 of Regulation S-B of the
    Securities Exchange Act.

(2) Mr. Devendar Bains is the husband of Mrs. Nirmal Bains and the brother of
    Mr. Tarlochan Bains. Mr. Devendar Bains is the record holder of 2,194,812 of
    such shares and Mrs. Nirmal Bains is the record holder of 28,173 of such
    shares. Includes 1,000,000 employee options which were granted to Mr.
    Devendar Bains. Includes 50,000 employee options which were granted to Ms.
    Nirmal Bains. See "Executive Compensation-Stock Option Plans and
    Agreements."

(3) Mr. Tarlochan Bains is the brother of Mr. Devendar Bains. Mr. Tarlochan
    Bains is the record holder of 78,456 of such shares. Includes 100,000
    employee options. Does not include 10,000 employees options held by Mr.
    Bains' wife, which are exercisable at $4.00 per share. See "Executive
    Compensation - Stock Option Plans and Agreements."

(4) The address for such person is 92 Parker Road, Long Valley, NJ 07853.
    Includes 52,500 options. See "Executive Compensation - Stock Option Plans
    and Agreements."

(5) The address for such person is 925 Schwal Road, Hatfield, PA 19440. Includes
    52,500 options. See "Executive Compensation - Stock Option Plans and
    Agreements."

(6) The address for this holder is 1241 Gulf of Mexico Drive, Longboat Key,
    Florida 34228. Includes shares owned by entities controlled by such
    shareholder.

(7) The address for this holder is c/o G.H.M., Inc., 74 Trinity Place, New York,
    NY 10006

(8) Includes 1,000,000 options held by Devendar Bains, 50,000 options held by
    Nirmal Bains, 100,000 options held by Tarlochan Bains, 52,500 options held
    by Mr. Detroja and 52,500 options held by Mr. Ritchie. See Notes 2, 3, 4
    and 5.

                                       57
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Between January 1994 and December 1996, Devendar S. Bains, the Company's
President and Chief Executive Officer, loaned the Company an aggregate of
$442,745 without interest, payable on demand. $339,694 was repaid during 1997
and an additional $98,000 was repaid during 1998. In connection with the
Company's settlement of a litigation, Devendar S. Bains, the Company's President
and Chief Executive Officer, loaned the Company $41,000 (in October 1997)
without interest, payable on demand. Through December 31, 1999, substantially
all amounts were settled either by payment or issuance of stock.

      As of December 31, 2000, approximately $34,000 was owed to the Company by
Devendar S. Bains, the Company's Chief Executive Officer. No repayment terms
have been set, although it is expected to be paid in 2001.

      Mr. Detroja, a director of the Company, is the president and chief
executive officer of one of the Company's vendors. During fiscal year 2000 and
1999, respectively, the Company made purchases of approximately $70,000 and
$91,000, respectively, from such vendor.

      See "Management - Employment Agreement" for issuances to officers and
directors.

      The Company intends to indemnify its officers and directors to the full
extent permitted by Delaware law. Under Delaware law, a corporation may
indemnify its agents for expenses and amounts paid in third party actions and,
upon court approval in derivative actions, if the agents acted in good faith and
with reasonable care. A majority vote of the Board of Directors, approval of the
stockholder or court approval is required to effectuate indemnification.

      Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to officers, directors or persons
controlling the Company, the Company has been advised that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in such Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by an officer, director or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such officer, director or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in such Act and will
be governed by the final adjudication of such issue.

      Transactions between the Company and its officers, directors, employees
and affiliates will be on terms no less favorable to the Company than can be
obtained from unaffiliated parties. Any such transactions will be subject to the
approval of a majority of the disinterested members of the Board of Directors.

                                       58
<PAGE>

                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(A)(1)  FINANCIAL STATEMENTS.

      The following financial statements are included in Part II, Item 7:


Index to Financial Statements                               F-1

Report of Independent Certified Public Accountants          F-2

Balance Sheets                                              F-3

Statement of Operations                                     F-5

Statement of  Stockholders' Equity                          F-6

Statement of Cash Flows                                     F-7

Notes to Financial Statements                               F-8 - F-24

(A) (2) EXHIBITS

  1.1*      Form of Underwriting Agreement

  1.2*      Form of Selected Dealer Agreement

  1.3*      Form of Agreement Among Underwriters

  3.1*      Certificate of Incorporation of the Company

  3.2*      Certificate of Merger (Delaware)

  3.3*      Certificate of Merger (New Jersey)

  3.4*      Agreement and Plan of Merger

  3.5*      By-Laws of the Company

  3.6**     Certificate of Designation of Series A Preferred Stock

  4.1*      Specimen Certificate for shares of Common Stock

  4.2*      Specimen Certificate for Warrants

  4.3*      Form of Underwriter's Purchase Option

  4.4*      Form of Warrant Agreement

                                       59
<PAGE>

 10.1*      1996 Incentive Stock Option Plan

 10.2*      Employment Agreement between the Company and Devendar S. Bains

 10.3*      Employment Agreement between the Company and Tarlochan Bains

 10.4*      Employment Agreement between the Company and Nirmal Bains

 10.5       Intentionally Omitted

 10.6       Intentionally Omitted

 10.7*      Agreement between the Company and Electronic Marketing
            Associates, Inc.

 10.8*      Agreement between the Company and Link Microtek Limited.

 10.9*      Agreement between the Company and ENS Engineering.

 10.10      Intentionally Omitted

 10.11      Intentionally Omitted

 10.12*     Form of Lockup Agreement with Officers, Directors and 5% or
            Greater Shareholders.

 10.13*     Form of Lockup Agreement with Selling Securityholders.

 23.2       Consent of Grant Thornton LLP, Independent Certified Public
            Accountants.

 27         Financial Data Schedule

*  Incorporated by Reference to the Company's Registration Statement on
   Form SB-2, No. 333-11015.

** Incorporated by Reference to the Company's Form 8-K filed on August 3, 1999.

      (b)   REPORTS ON FORM 8-K

            The Company did not file any reports on Form 8-K during the fourth
quarter of fiscal 2000.

                                       60
<PAGE>

                                 Amplidyne, Inc.

                          INDEX TO FINANCIAL STATEMENTS




                                                                    Page
                                                                    ----

Report of Independent Certified Public Accountants                   F-2


Financial Statements

        Balance Sheets                                            F-3 - F-4

        Statements of Operations                                     F-5

        Statement of Stockholders' Equity                            F-6

        Statements of Cash Flows                                     F-7

        Notes to Financial Statements                            F-8 - F-24


                                      F-1
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors and Stockholders
    AMPLIDYNE, INC.


We have audited the accompanying balance sheets of Amplidyne, Inc. as of
December 31, 2000 and 1999, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Amplidyne, Inc., as of December
31, 2000 and 1999, and the results of its operations and its cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.



GRANT THORNTON LLP

Edison, New Jersey
March 21, 2001


                                      F-2
<PAGE>

                                 Amplidyne, Inc.

                                 BALANCE SHEETS

                                  December 31,


                           ASSETS                        2000           1999
                                                      ----------     ----------

CURRENT ASSETS
    Cash and cash equivalents                         $1,966,142     $1,445,055
    Accounts receivable, net of allowance
      for doubtful accounts of $291,000 and
      $349,000 in 2000 and 1999, respectively            318,345        443,585
    Inventories                                          597,953        917,450
    Loan receivable - officer                             33,667            -
    Prepaid expenses and other                           101,957         23,373
                                                      ----------     ----------

         Total current assets                          3,018,064      2,829,463


PROPERTY AND EQUIPMENT - AT COST
    Machinery and equipment                              720,818        683,609
    Furniture and fixtures                                43,750         43,750
    Autos and trucks                                      66,183         61,183
    Leasehold improvements                                 8,141          8,141
                                                      ----------     ----------

                                                         838,892        796,683
    Less accumulated depreciation and amortization       588,845        463,123
                                                      ----------     ----------

                                                         250,047        333,560


SECURITY DEPOSITS AND OTHER NON-
    CURRENT ASSETS                                        72,354         35,625
                                                      ----------     ----------

                                                      $3,340,465     $3,198,648
                                                      ==========     ==========


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                      F-3
<PAGE>

                                 Amplidyne, Inc.

                                 BALANCE SHEETS

                                  December 31,


<TABLE>
<CAPTION>
                       LIABILITIES AND
                    STOCKHOLDERS' EQUITY                   2000              1999
                                                       ------------      ------------
<S>                                                    <C>               <C>
CURRENT LIABILITIES
    Current maturities of lease obligations            $     11,385      $     16,202
    Accounts payable                                        242,289           446,005
    Accrued expenses                                        258,875           201,756
    Accrued settlement of litigation                        150,000               -
                                                       ------------      ------------

         Total current liabilities                          662,549           663,963


LONG-TERM LIABILITIES
    Lease obligations, less current maturities                9,785            20,320


COMMITMENTS AND CONTINGENCIES


STOCKHOLDERS' EQUITY
    Preferred stock - authorized, 1,000,000 shares
       of no stated value; no shares issued and
       outstanding                                              -                 -
    Common stock - authorized, 25,000,000 shares
       of $.0001 par value; shares 7,463,841 and
       6,924,970 shares issued and outstanding at
       December 31, 2000 and 1999, respectively                 747               692
    Additional paid-in capital                           20,212,154        17,618,398
    Accumulated deficit                                 (17,544,770)      (15,104,725)
                                                       ------------      ------------

                                                          2,668,131         2,514,365
                                                       ------------      ------------

                                                       $  3,340,465      $  3,198,648
                                                       ============      ============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                      F-4
<PAGE>

                                 Amplidyne, Inc.

                            STATEMENTS OF OPERATIONS

                             Year ended December 31,


                                                  2000             1999
                                               -----------      -----------

Net sales                                      $ 2,595,090      $ 2,150,707
Cost of goods sold                               2,465,072        2,007,378
                                               -----------      -----------

         Gross profit                              130,018          143,329

Operating expenses
    Selling, general and administrative          1,986,170        1,603,487
    Research, engineering and development          590,496          580,281
    Stock compensation and financing costs         114,545        1,721,450
                                               -----------      -----------

         Operating loss                         (2,561,193)      (3,761,889)

Nonoperating income (expenses)
    Interest income and other income               116,870           25,558
    Interest expense                                (2,169)         (24,726)
    Litigation settlement costs                   (175,000)         (85,000)
    Sale of New Jersey net operating loss
       carryforwards                               191,816          252,368
    Forgiveness of accrued consulting fees             -             60,000
                                               -----------      -----------

         Loss before income taxes               (2,429,676)      (3,533,689)

Provision for income taxes                          10,369            2,000
                                               -----------      -----------

         NET LOSS                              $(2,440,045)     $(3,535,689)
                                               ===========      ===========

Net loss per share - basic and diluted         $      (.34)     $      (.62)
                                               ===========      ===========

Weighted average number of shares
    outstanding                                  7,276,237        5,753,988
                                               ===========      ===========


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                      F-5
<PAGE>

                                 Amplidyne, Inc.

                        STATEMENT OF STOCKHOLDERS' EQUITY

                     Years ended December 31, 1999 and 2000

<TABLE>
<CAPTION>
                                                             Preferred stock                 Common stock
                                                          ----------------------      -------------------------
                                                           Shares      Par value       Shares         Par value
                                                          -------      ---------       ------         ---------
<S>                                                       <C>          <C>            <C>             <C>
Balance at December 31, 1998                                                          4,703,333         $470

Net loss for the year ended December 31, 1999
Issuance of preferred stock, net of costs                  50,000          $ 5            -              -
Issuance of common stock, net of costs                                                  900,000           90
Exercise of warrants                                                                    819,000           82
Conversion of preferred stock into common stock           (50,000)          (5)         370,370           37
Financing and compensation costs related to
  options and warrants issued                                                             -              -
Conversion of amounts owed for deferred
  compensation and accrued commissions to
  officers and others into shares of common
  stock                                                                                 132,267           13
                                                        ---------         ------     ----------       ------

Balance at December 31, 1999                                -               -         6,924,970          692

Net loss for the year ended December 31, 2000                                             -              -
Issuance of common stock, net of costs                                                  319,000           32
Exercise of warrants                                                                    177,121           19
Financing and compensation costs related to
  options and warrants issued                                                             -              -
Exercise of stock options into shares of
  common stock
                                                                                         42,750            4
                                                        ---------         ------     ----------       ------

BALANCE AT DECEMBER 31, 2000                                -             $ -         7,463,841         $747
                                                        =========         ======     ==========       ======

<CAPTION>
                                                         Additional
                                                          paid-in      Accumulated
                                                          capital        deficit          Total
                                                        -----------    ------------    -----------
<S>                                                     <C>            <C>             <C>
Balance at December 31, 1998                            $12,735,817    $(11,569,036)   $ 1,167,251

Net loss for the year ended December 31, 1999                            (3,535,689)    (3,535,689)
Issuance of preferred stock, net of costs                   464,995           -            465,000
Issuance of common stock, net of costs                      910,594           -            910,684
Exercise of warrants                                      1,444,423           -          1,444,505
Conversion of preferred stock into common stock             -                 -                 32
Financing and compensation costs related to
  options and warrants issued                             1,721,450           -          1,721,450
Conversion of amounts owed for deferred
  compensation and accrued commissions to
  officers and others into shares of common
  stock                                                     341,119           -            341,132
                                                        -----------    ------------     ----------

Balance at December 31, 1999                             17,618,398     (15,104,725)     2,514,365

Net loss for the year ended December 31, 2000               -            (2,440,045)    (2,440,045)
Issuance of common stock, net of costs                    1,594,968           -          1,595,000
Exercise of warrants                                        713,248           -            713,267
Financing and compensation costs related to
  options and warrants issued                               114,545           -            114,545
Exercise of stock options into shares of
  common stock
                                                            170,995           -            170,999
                                                        -----------    ------------    -----------

BALANCE AT DECEMBER 31, 2000                            $20,212,154    $(17,544,770)   $ 2,668,131
                                                        ===========    ============    ===========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.

                                      F-6
<PAGE>

                                 Amplidyne, Inc.

                            STATEMENTS OF CASH FLOWS

                             Year ended December 31,

<TABLE>
<CAPTION>
                                                                            2000             1999
                                                                         -----------      -----------
<S>                                                                      <C>              <C>
Cash flows from operating activities
    Net loss                                                             $(2,440,045)     $(3,535,689)
                                                                         -----------      -----------
    Adjustments to reconcile net loss to net cash used in
       operating activities
         Depreciation and amortization                                       125,722          121,071
         Bad debt expense                                                     98,520          263,000
         Write-off of obsolete inventory                                      10,291           20,000
         Settlement of litigation                                            150,000           85,000
         Stock compensation and finance cost                                 114,545        1,721,450
         Changes in assets and liabilities
           Accounts receivable                                                26,719         (266,069)
           Inventories                                                       309,206         (378,765)
           Prepaid expenses and other                                       (115,312)          (9,792)
           Accounts payable and accrued expenses                            (146,597)         395,344
                                                                         -----------      -----------

         Total adjustments                                                   573,094        1,951,239
                                                                         -----------      -----------

         Net cash used in operating activities                            (1,866,951)      (1,584,450)
                                                                         -----------      -----------

Cash flows from investing activities
    Loan receivable - officer                                                (33,667)             -
    Purchase of property and equipment                                       (42,209)        (147,472)
                                                                         -----------      -----------
                                                                             (75,876)        (147,472)
Cash flows from financing activities
    Payment of lease obligations                                             (15,352)         (70,722)
    Proceeds from sale of preferred stock, net of costs                          -            465,000
    Proceeds from sale of common stock, net of costs                       1,595,000          910,684
    Proceeds from exercise of options and warrants                           884,266        1,444,505
                                                                         -----------      -----------

         Net cash provided by financing activities                         2,463,913        2,749,467
                                                                         -----------      -----------

         NET INCREASE IN CASH AND
             CASH EQUIVALENTS                                                521,087        1,017,545

Cash and cash equivalents at beginning of year                             1,445,055          427,510
                                                                         -----------      -----------

Cash and cash equivalents at end of year                                 $ 1,966,142      $ 1,445,055
                                                                         ===========      ===========

Supplemental disclosures of cash flow information:
    Cash paid during the year for
      Interest                                                           $     2,000      $    20,000
      Income taxes                                                       $     3,000      $     9,000
See Notes C, F and G-2 for noncash investing and financing activity
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                      F-7
<PAGE>

                                 Amplidyne, Inc.

                          NOTES TO FINANCIAL STATEMENTS

                           December 31, 2000 and 1999


NOTE A - NATURE OF OPERATIONS AND LIQUIDITY

     Amplidyne, Inc. (the "Company") has historically operated in one segment,
     which is the design, manufacture and selling of ultra linear power
     amplifiers and related subsystems to the worldwide wireless, local loop and
     satellite uplink telecommunications market. The Company has recently
     introduced products which offer high-speed wireless internet connectivity
     to residential and business clients of internet service providers. These
     products are sold under the AmpWave(TM) name.

     The Company has incurred losses of $2,440,045 and $3,535,689 in 2000 and
     1999, respectively. The Company funded operations during this period
     primarily from the proceeds from privately placed common and preferred
     stock and exercise of warrants and options. The Company has also funded
     certain operating expenses through borrowings (in the form of deferring
     salaries and cash advances) from officers and principal shareholders. The
     Company has in the past issued its stock in lieu of cash payments for
     compensation, sales commissions and consulting fees, wherever possible.

     Management's plans for dealing with the foregoing matters include:

     o    Increasing sales of its high speed internet connectivity products
          through both individual customers and strategic alliances, which are
          expected to yield higher profit margins;

     o    Decreasing the dependency on certain major customers by aggressively
          seeking other customers in the multicarrier amplifier markets;

     o    Partnering with significant companies to jointly develop innovative
          products, which has yielded orders with multinational companies to
          date, and which are expected to further expand such relationships;

     o    Reducing costs through a more streamlined operation by using automated
          machinery to produce components for our products;

     o    Funding operations in 2001 with the remaining cash that was received
          from the 2000 private placements, possible 2001 private placements,
          and the deferral of payments of officers' salaries, as needed;

     o    Selling remaining net operating losses applicable to the State of New
          Jersey, pursuant to a special government high-technology incentive
          program in order to provide working capital, if possible;

     o    Reducing overhead costs and general expenditures if necessary.

                                      F-8
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999



NOTE B - SUMMARY OF ACCOUNTING POLICIES

     A summary of the significant accounting policies consistently applied in
     the preparation of the accompanying financial statements follows.

     1.  REVENUE RECOGNITION

         Revenue is recognized upon shipment of products to customers.

     2.  INVENTORIES

         Inventories are stated at the lower of cost or market; cost is
         determined using the first-in, first-out method. At December 31, 2000
         and 1999, inventories consisted of the following:

                                                 2000                 1999
                                               --------             --------

             Component parts                   $507,199             $377,463
             Work-in-progress                    90,754              539,987
                                               --------             --------

                                               $597,953             $917,450
                                               ========             ========

     3.  PROPERTY, PLANT AND EQUIPMENT

         Depreciation and amortization are provided for in amounts sufficient to
         relate the cost of depreciable assets to operations over their
         estimated service lives which range from three to seven years.
         Leasehold improvements are amortized over the lives of the respective
         leases or the service lives of the improvements, whichever is shorter.
         The straight-line method of depreciation is followed for substantially
         all assets for financial reporting purposes, but accelerated methods
         are used for tax purposes.

     4.  VALUATION OF LONG-LIVED ASSETS

         The Company reviews long-lived assets held and used for possible
         impairment whenever events or changes in circumstances indicate that
         the carrying amount of an asset may not be recoverable. The Company has
         not recorded any provision for the impairment of long-lived assets at
         December 31, 2000.

                                      F-9
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE B (CONTINUED)

     5.  INCOME TAXES

         The Company accounts for income taxes under the provisions of Statement
         of Financial Accounting Standards No. 109, "Accounting for Income
         Taxes." This statement requires, among other things, an asset and
         liability approach for financial accounting and reporting of deferred
         income taxes. In addition, the deferred tax liabilities and assets are
         required to be adjusted for the effect of any future changes in the tax
         law or rates. Deferred income taxes arise from temporary differences
         resulting in the basis of assets and liabilities for financial
         reporting and income tax purposes. A valuation allowance is provided if
         the Company is uncertain as to the realization of deferred tax assets.

     6.  RISKS, UNCERTAINTIES AND CERTAIN CONCENTRATIONS OF CREDIT RISK AND
         ECONOMIC DEPENDENCY

         The Company's future results of operations involve a number of
         significant risks and uncertainties. Factors that could affect the
         Company's future operating results and cause actual results to vary
         materially from expectations include, but are not limited to,
         dependence on key personnel, dependence on a limited number of
         customers, ability to design new products and product obsolescence,
         ability to generate consistent sales, ability to finance research and
         development, government regulation, technological innovations and
         acceptance, competition, reliance on certain vendors, credit and other
         risks.

         Financial instruments, which potentially subject the Company to
         concentrations of credit risk, consist principally of cash and accounts
         receivable.

         The Company maintains cash and cash equivalents in bank deposit and
         money market accounts in one bank which, at times, may exceed federally
         insured limits or not be insured. The Company has not experienced any
         losses in such accounts and does not believe it is exposed to any
         significant credit risk on cash and cash equivalents.

         During 2000, two customers accounted for 75% of net sales (49% and 26%)
         and 38% of accounts receivable at December 31, 2000. Export sales in
         2000 accounted for approximately 83% of net sales and were primarily to
         the United Kingdom (47%), Canada (25%), and Europe.

                                      F-10
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE B (CONTINUED)

         During 1999, three customers accounted for 76% of net sales (31%, 27%
         and 18%) and 70% of accounts receivable at December 31, 1999. Export
         sales in 1999, including through a sales agent for international
         markets, accounted for approximately 90% of net sales and were
         primarily to the United Kingdom (40%), Canada (27%) and Korea (18%).
         Sales through the sales agent carry an extended (two years) warranty,
         for which management has provided an estimated cost to fulfill. Net
         sales during 1999 to the Korean marketplace, which has been subject to
         significant order cancellation and credit risks, was approximately 18%
         of total sales. There were no sales during 2000 to the Korean
         marketplace.

         In addition, the Company is dependent on a limited number of suppliers
         for key components used in the Company's products (primarily power
         transistors) and subcontracted manufacturing processes. Management
         believes that other suppliers could provide similar components and
         processes on comparable terms. A change in suppliers, however, could
         disrupt manufacturing.

         The carrying values of financial instruments potentially subject to
         valuation risk, consisting of cash and cash equivalents, accounts
         receivable, and officer's loan receivable, approximate fair value,
         principally because of the short maturity of these items.

     7.  USE OF ESTIMATES

         In preparing financial statements in conformity with accounting
         principles generally accepted in the United States of America,
         management is required to make estimates and assumptions that affect
         the reported amounts of assets and liabilities and the disclosure of
         contingent assets and liabilities at the date of the financial
         statements and revenues and expenses during the reporting period.
         Actual results could differ from those estimates.

     8.  STOCK-BASED EMPLOYEE COMPENSATION

         Stock-based employee compensation is accounted for under the intrinsic
         value based method as prescribed by Accounting Principles Board ("APB")
         Opinion No. 25, "Accounting for Stock Issued to Employees," and related
         interpretations as clarified by Financial Interpretation No. 44 ("FIN
         44"), "Accounting for Certain Transactions Involving Stock
         Compensation." Included in these notes to the financial statements are
         the pro forma disclosures required by Statement of Financial Accounting
         Standards No. 123 ("SFAS No. 123"), "Accounting for Stock-Based
         Compensation."

                                      F-11
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE B (CONTINUED)

     9.  CASH AND CASH EQUIVALENTS

         The Company considers all highly liquid investments purchased with
         original maturities of three months or less to be cash equivalents.

    10.  ADVERTISING EXPENSES

         The Company expenses advertising costs as incurred. Advertising
         expenses were approximately $175,000 and $33,000 for the years ended
         December 31, 2000 and 1999, respectively.

    11.  RECLASSIFICATIONS

         Certain reclassifications were made to the 1999 amounts to conform to
         the current presentation.

    12.  LOSS PER SHARE

         Statement of Financial Accounting Standards No. 128 ("SFAS No. 128"),
         "Earnings per Share," specifies the computation, presentation and
         disclosure requirements for earnings per share for entities with
         publicly held common stock or potential common stock.

         Net loss per common share - basic and diluted is determined by dividing
         the net loss by the weighted average number of shares of common stock
         outstanding. Net loss per common share - diluted does not include
         potential common shares derived from stock options and warrants because
         they are antidilutive. The number of antidilutive securities excluded
         from the dilutable loss per share calculation for the years ended
         December 31, 2000 and 1999 were 2,062,250 shares and 5,453,500 shares,
         respectively.

                                      F-12
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE B (CONTINUED)

    13.  SEGMENT INFORMATION

         The Company commenced its wireless internet connectivity business in
         the summer of 1999. The Company does not measure its operating results,
         assets or liabilities by segment. However, the following limited
         segment information is available:

           Sales - external for the year ended December 31, 2000
               Amplifier segment                                    $2,139,590
               Ampwave segment                                         455,500
                                                                    ----------

                                                                    $2,595,090
                                                                    ==========

           Inventory at December 31, 2000
               Amplifier segment                                       439,953
               Ampwave segment                                         158,000
                                                                    ----------

                                                                    $  597,953
                                                                    ==========

    14.  NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued Statement
         of Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting
         for Derivative Instruments." SFAS No. 133, as amended, is effective for
         fiscal years beginning after June 15, 2000. SFAS No. 133 established
         accounting and reporting standards for derivative instruments and for
         hedging activities. SFAS No. 133 requires that an entity recognize all
         derivatives as either assets or liabilities and measure those
         instruments at fair market value. Under certain circumstances, a
         portion of the derivative's gain or loss is initially reported as a
         component of income when the transaction affects earnings. For a
         derivative not designated as a hedging instrument, the gain or loss is
         recognized in the period of change. We believe that the adoption of
         SFAS No. 133 will not have an impact on our financial position or
         results of operations.

         In December 1999, the staff of the Securities and Exchange Commission
         issued Staff Accounting Bulletin 101, "Revenue Recognition." to provide
         guidance on the recognition, presentation, and disclosure of revenue in
         financial statements. Our policies on revenue recognition are
         consistent with this bulletin.

                                      F-13
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE B (CONTINUED)

         In March 2000, the Financial Accounting Standards Board issued
         Financial Interpretation No. 44 ("FIN 44"), "Accounting for Certain
         Transactions Involving Stock Compensations - and Interpretation of APB
         No. 25." FIN 44 clarifies the application of APB No. 25 for certain
         issues including: (a) the definition of an employee for purposes of
         applying APB No. 25, (b) the criteria for determining whether a plan
         qualifies as a noncompensatory plan, (c) the definition of the date of
         granting employee stock options, and (d) the accounting consequences of
         various modifications to the terms of a previously fixed stock option
         or award. FIN 44 became effective July 1, 2000, except for the
         provisions that relate to modifications that directly or indirectly
         reduce the exercise price of an award and the definition of an
         employee, which became effective after December 15, 1998. The adoption
         of FIN 44 had no material impact on the accompanying financial
         statements.


NOTE C - PUBLIC OFFERING AND PRIVATE PLACEMENTS

     PUBLIC OFFERING

     A registration statement covering an underwritten public offering of
     1,610,000 units at a price of $5.10 per unit, prior to underwriters'
     commissions, was declared effective by the Securities and Exchange
     Commission on January 21, 1997. Each unit consisted of one share of common
     stock, par value $.0001 per share and one redeemable common stock purchase
     warrant. In 1997, the Company received net proceeds from the public
     offering of approximately $6,782,000, which included the overallotment of
     210,000 units. The proceeds are net of legal fees, underwriters' fees and
     other expenses of the offering totalling approximately $1,429,000. Each
     warrant originally entitled the holder to purchase one share for $6.00
     during the four-year period ending January 21, 2001. The Company provided
     notice in April 2000 to redeem the warrants on May 17, 2000 unless the
     warrants were previously exercised.

     On May 1, 2000, the Company reduced the exercise price of the warrants to
     $5.00 per share. Through May 16, 2000, 124,871 warrants were exercised,
     yielding proceeds of $650,454. The remaining unexercised warrants of
     1,485,129 were redeemed at $0.01 per warrant on May 17, 2000, resulting in
     an aggregate expenditure of $14,851.

     The underwriter received an option to purchase up to 140,000 shares of
     common stock and 140,000 warrants under the same terms. All the options
     remained outstanding at December 31, 2000 and the warrants were redeemed in
     May 2000.

                                      F-14
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE C (CONTINUED)

     PRIVATE PLACEMENTS

     In 1999, the Company entered into the following private placements and
     issuances of warrants:

         o   Sale of 900,000 shares of common stock at $1.125 per share,
             resulting in net proceeds of $910,684.

         o   Sale of 50,000 shares of Series A Preferred Stock at $10.00 per
             share, resulting in net proceeds of $465,000. In August 1999, these
             shares were converted into 370,370 shares of common stock.

         o   Warrants to purchase 525,000 shares of common stock at prices
             ranging from $1.00 - $7.00 per share were issued to investment
             banks arranging the above-mentioned private placements and to
             several consultants and former employees of the Company. Of such
             warrants, 255,000 were exercised in 1999.

     In 2000, the Company entered into the following private placements and
     issuance of warrants:

         o   Sale of 319,000 shares of common stock at $5.00 per share,
             resulting in net proceeds of $1,595,000.

         o   Warrants to purchase 141,000 shares of common stock at $1.75 per
             share were issued to an investment bank assisting in a prior
             private placement and to a consultant. None of these warrants were
             exercised in 2000.

         o   Agreed to issue 1,820 shares of restricted stock to a media
             consultant for services rendered which were issued in January 2001.

     At December 31, 2000, the following 571,250 warrants, remained outstanding:
     (1) 67,500 exercisable $2.50 originally dated through January 20, 2001 and
     extended to December 31, 2001; (2) 145,000 exercisable at $4.00 originally
     dated through January 20, 2001, and extended to December 31, 2001; (3)
     47,750 exercisable at $1.25 through March 2001; (4) 20,000 exercisable at
     $1.00 through May 2010, (5) 20,000 exercisable at $7.00 through December
     2004, (6) 30,000 exercisable at $6.00 through December 2004, (7) 50,000
     exercisable at $2.00 through December 2004 and (8) 50,000 exercisable at
     $4.00 through December 2004 and (9) 141,000 exercisable at $1.75 (125,000
     exercisable through December 2002 and 16,000 exercisable through December
     2004).

                                      F-15
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE C (CONTINUED)

     For the year ended December 31, 2000 and 1999, the Company recorded a
     charge to operations of $114,000 and $1,721,000, respectively, reflecting
     the costs recognized for warrants issued to consultants of the Company, and
     employee stock options granted with a strike price below quoted market
     value (see Note D).

     Under the accounting guidance of FIN 44, a reduction of a warrant's
     exercise price or an extension of the exercise date is treated as a
     variable option, and therefore requires that a portion of the difference
     between the market values at the date of the modification be charged to
     operations. The extension of the exercise date of the warrants mentioned
     above did not result in a charge to operations because the extension
     occurred prior to the effective date of FIN 44 and because the exercise
     price exceeded the market value of the underlying common stock at the date
     of the extension.


NOTE D - STOCK OPTION PLANS

     An option and stock appreciation rights ("SARs") plan was authorized prior
     to the public offering whereby options could be granted to purchase no more
     than 1,500,000 shares of common stock at exercise prices no less than fair
     market value as of date of grant. At the 2000 Annual Shareholders' Meeting,
     the maximum number of shares set aside for this plan was increased to
     1,850,000. Under the plan, employees and directors may be granted options
     to purchase shares of common stock at the fair market value at the time of
     grant. Options generally vest in three years and expire in four years from
     the date of grant. In May 1996, 267,000 options were granted to
     approximately forty employees of the Company exercisable at $4.00 per share
     (estimated fair market value) through May 1, 2000. In June 1996, 1,150,000
     options were granted to the principal shareholder and two other officers of
     the Company exercisable at $4.00 per share (estimated fair market value)
     through May 1, 2000. 1,346,000 options remained outstanding at December 31,
     2000, as the exercise date was extended to May 31, 2004. The extension of
     the exercise date of the warrants mentioned above did not result in a
     charge to operations because the extension occurred prior to the effective
     date of FIN 44 and because the exercise price exceeded the market value of
     the underlying common stock at the date of the extension.

                                      F-16
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE D (CONTINUED)

     The Company has elected to follow Accounting Principles Board Opinion
     ("APB") No. 25, "Accounting for Stock Issued to Employees," and related
     Interpretations in accounting for its stock options. Under APB No. 25, if
     the exercise price of the Company's employee stock options equals the
     market price of the underlying stock on the date of grant, no compensation
     expense is recognized. SFAS No. 123, "Accounting for Stock-Based
     Compensation," requires presentation of pro forma net loss and loss per
     share as if the Company had accounted for its employee stock options
     granted under the fair value method of that statement. For purposes of pro
     forma disclosure, the estimated fair value of the options is amortized to
     expense over the vesting period. Under the fair value method, the Company's
     net loss and loss per share would have been as follows:

                                                        2000           1999
                                                     -----------    -----------

      Net loss                                       $(2,476,812)   $(4,141,787)

      Loss per share                                 $      (.34)   $      (.72)

      During 1999, 19,000 options were granted at a strike price above quoted
      market value at the date of grant, and 91,000 options were granted at a
      below market value price. During 2000, 91,000 options were granted at a
      price equal to the quoted market value at the date of grant. The fair
      values were determined using a Black-Scholes option-pricing model using
      the following assumptions:

                                                        2000           1999
                                                     -----------    -----------

      Dividend                                               -              -
      Risk-free rate                                         6.0%         6.265%
      Volatility                                          157.07%       205.346%
      Expected life                                       4 YEARS        5 years
      Calculated weighted-average fair value
          of options issued during the year          $      2.83    $      5.51

                                      F-17
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE D (CONTINUED)

     Stock option activity during 2000 and 1999, including 350,000 warrants
     issued to officers, is summarized below:

                                                   Shares of        Weighted-
                                                 common stock        average
                                                 attributable    exercise price
                                                  to options       of options
                                                 ------------     ------------

      Unexercised at December 31, 1998             1,723,000         $3.67
      Exercise of options                           (350,000)         1.25
      Forfeiture                                     (12,000)         4.00
      Issuance to employees and directors            110,000          2.50
                                                  ----------

      Unexercised at December 31, 1999             1,471,000          3.83
      Exercise of options                            (42,750)         4.00
      Forfeiture                                     (28,250)         4.00
      Issuance to employees and directors             91,000          3.25
                                                  ----------

      Unexercised at December 31, 2000             1,491,000          3.85
                                                  ==========

     The following table summarizes information concerning outstanding and
     exercisable options, including warrants issued to officers, at December 31,
     2000:

<TABLE>
<CAPTION>
                                                     Options outstanding                          Options exercisable
                                         -------------------------------------------         ------------------------
                                                          Weighted-
                                           Number          average          Weighted-          Number          Weighted-
                                         outstanding      remaining          average         exercisable        average
                                         at period-       contractual       exercise         at period-        exercise
      Exercise prices                        end             life             price              end             price
      ---------------                    ---------        ---------        ---------         ---------         -------
<S>                                     <C>               <C>              <C>               <C>               <C>
          $1.25                            60,000           1 year           $1.25              60,000           $1.25
           3.25                            85,000           3 years           3.25              28,334            3.25
           4.00                         1,346,000           3.4 years (1)     4.00           1,346,000            4.00
                                        ---------                                            ---------

                                        1,491,000                                            1,434,334
                                        =========                                            =========

<FN>
(1)      Expiration date extended from May 1, 2000 to May 31, 2004.
</FN>
</TABLE>

                                      F-18
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE E - INCOME TAXES

     Temporary differences and carryforwards give rise to deferred tax assets
     and liabilities. The principal components of the deferred tax assets relate
     to net operating loss carryforwards. At December 31, 2000, the Federal net
     operating loss carryforwards are approximately $10,000,000. The net
     operating loss carryforwards expire at various dates through 2020, and
     because of the uncertainty in the Company's ability to utilize the net
     operating loss carryforwards, a full valuation allowance of approximately
     $3,688,000 and $2,305,000 has been provided on the deferred tax asset at
     December 31, 2000 and 1999, respectively.

     The Company participated in the New Jersey Technology Tax Certificate
     Transfer Program, whereby net operating loss carryforwards generated in New
     Jersey can be sold to other qualified companies. During 2000 and 1999, the
     Company received approximately $191,000 and $252,000, respectively, from
     the sale of such net operating losses. The Company expects to sell
     additional New Jersey net operating losses in 2001, although there can be
     no assurance a suitable transaction will be consummated. The New Jersey net
     operating loss carryforwards are approximately $3,850,000 at December 31,
     2000.

     Internal Revenue Code Section 382 places a limitation on the utilization of
     Federal net operating loss and other credit carryforwards when an ownership
     change, as defined by the tax law, occurs. Generally, this occurs when a
     greater than 50 percentage point change in ownership occurs. Accordingly,
     the actual utilization of the net operating loss carryforwards and other
     deferred tax assets for tax purposes may be limited annually under Code
     Section 382 to a percentage (about 5%) of the fair market value of the
     Company at the time of any such ownership change.

     The Company's tax provision for 2000 and 1999 is principally due to the
     impact of state income and minimum taxes.

                                      F-19
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE F - CAPITAL LEASE OBLIGATIONS

     The Company has capital leases (at interest rates ranging from 8.5% to
     14.2%) for certain equipment for use in its manufacturing and research,
     engineering and development activities and a vehicle.

     Future minimum lease payments on these leases are as follows:

      Year ending December 31,
           2001                                                    $12,730
           2002                                                     10,170
                                                                   -------

                                                                    22,900

           Less amount representing interest                         1,730
                                                                   -------

      Present value of minimum lease payments                      $21,170
                                                                   =======

      Short-term portion                                           $11,385
      Long-term portion                                              9,785
                                                                   -------

                                                                   $21,170
                                                                   =======

     The cost of assets under capital leases was approximately $24,000 at
     December 31, 2000 and 1999, and is included in property and equipment.
     Accumulated amortization at December 31, 2000 and 1999 was approximately
     $24,000 and $17,000, respectively.


NOTE G - COMMITMENTS

     1.  OPERATING LEASES

         During July 2000, the Company entered into a lease agreement for
         approximately 11,000 square feet of office and manufacturing space, for
         a five-year period ending July 13, 2004. The annual rental is $71,000
         plus the Company's share of real estate taxes, utilities and other
         occupancy costs.

                                      F-20
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE G (CONTINUED)

         Future minimum lease payments on noncancellable operating leases are as
         follows:

                      Year ending December 31,
                          2001                             $ 71,000
                          2002                               71,000
                          2003                               71,000
                          2004                               38,000
                          2005                                 -
                                                           --------

                                                           $251,000
                                                           ========

         Rent expense, including the Company's share of real estate taxes,
         utilities and other occupancy costs, was $85,000 and $176,000 for the
         years ended December 31, 2000 and 1999, respectively.

     2.  EMPLOYMENT AGREEMENTS

         Commencing May 1, 1996, the Company entered into three five-year
         employment agreements with its Chairman, its Vice President of Sales
         and Marketing and its Secretary (the "Officers"). These agreements were
         extended to expire April 30, 2002. The agreements call for aggregate
         annual base salaries of $312,000, plus certain employee benefits.

         The Officers have deferred a portion of their compensation from 1997
         through 1999. In 1999 the Officers converted an aggregate of $181,131
         of such deferrals, principally arising in 1999, into 66,378 shares of
         common stock of the Company, representing the estimated fair value of
         the common stock of the Company at that time. During 2000, no shares
         were converted in lieu of officers' deferred compensation and no
         compensation was deferred.

         In December 1995, the Company entered into employment agreements with
         its Vice-President of Corporate Communications and Investor Relations
         and its Vice-President of Strategic Alliances. At December 31, 1998,
         the Company had accrued expenses aggregating $120,000 for these
         individuals who had since resigned. In January 2000, these individuals
         converted an aggregate of $60,000 of such amounts due into 48,000
         shares of common stock of the Company, representing the estimated fair
         value of the common stock of the Company at that time. The remaining
         balance was forgiven and resulted in $60,000 of income recorded in the
         1999 statement of operations. During 1999, such individuals entered
         into new outside consulting arrangements with the Company whereby they
         received warrants (see Note C) and cash consideration. During 1999,
         $100,000 of cash consideration, to be required over the entire term of
         the agreement was converted into 17,889 shares of common stock of the
         Company.

                                      F-21
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE G (CONTINUED)

     3.  401(K) PLAN

         During 1996, the Company established a defined contribution plan, the
         "Amplidyne, Inc. 401(k) Plan." No contributions are made by the
         Company. All employees with greater than six months' service with the
         Company are eligible to join the plan. The plan is administered by
         American Funds Service Company.


NOTE H - RELATED PARTY TRANSACTIONS

     1.  STOCKHOLDER LOAN

         At December 31, 2000, approximately $34,000 was owed to the Company by
         the Company's president and principal shareholder. No repayment terms
         have been set, although it is expected to be paid back during 2001.

     2.  PURCHASES FROM RELATED PARTY

         A member of the Company's Board of Directors is President and CEO of
         one of the Company's vendors. During 2000 and 1999, the Company made
         purchases of approximately $70,000 and $91,000, respectively, from this
         vendor.


NOTE I - LITIGATION

         From time to time, the Company is party to what it believes are routine
         litigation and proceedings that may be considered as part of the
         ordinary course of its business. Except for the proceedings noted
         below, the Company is not aware of any pending litigation or
         proceedings that could have a material effect on the Company's results
         of operations or financial condition.

     1.  AIRNET COMMUNICATIONS CORPORATION VS AMPLIDYNE, INC.

         AirNet filed a complaint in the Circuit Court of the Eighteenth
         Judicial District of the State of Florida on January 23, 1997 alleging
         breach of contract. During 2000, the Company settled with AirNet at a
         cost of $175,000; $25,000 is to be paid quarterly over the next two
         years. At December 31, 2000, $150,000 remained unpaid.

                                      F-22
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE I (CONTINUED)

     2.  ENS ENGINEERING VS AMPLIDYNE, INC.

         The Company is also a defendant in a complaint filed in the United
         States District Court for the District of New Jersey on May 13, 1998.
         The complaint alleges breach of contract of a representative agreement
         between the Company and ENS Engineering of South Korea. The Company
         reached oral settlement terms and, based upon such oral settlement, the
         court dismissed the case in the first quarter of 2000. The terms of the
         oral settlement called for the Company to pay $85,000 in twelve equal
         monthly installments, none of which has been paid as of December 31,
         2000. The Company has not received any required documents and releases
         from ENS.
3.       CLASS ACTION LITIGATION

         In the fall of 1999, the Company was served with several class action
         complaints on behalf of all purchasers of the Company's common stock
         and warrants between September 9 and 14, 1999. The complaints allege
         that the Company and certain others violated the Federal securities
         laws by, among other things, the issuance of a press release on
         September 9, 1999. By order of the District Court for the District of
         New Jersey, the actions were consolidated and lead plaintiffs were
         appointed. In March 2000, the Company was served with a consolidated
         and amended class action complaint on behalf of all purchasers of the
         Company's common stock and warrants between September 9 and 17, 1999.
         The complaint alleges that the Company and certain others violated the
         Federal securities laws by, among other things, the issuance of a press
         release on September 9, 1999. Although the Company believes that the
         complaint has no merit and has vigorously contested it, the Company and
         the other parties to the class action are discussing a settlement and
         are negotiating the precise terms thereof. Despite these negotiations,
         there is no guarantee that an agreement will be reached. If an
         agreement is reached, all members of the class will receive notice of
         the proposed settlement and the settlement must be approved by the
         court.

                                      F-23
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 2000 and 1999


NOTE J - SIGNIFICANT FOURTH QUARTER ADJUSTMENTS

     In the fourth quarter of 1999, the Company recorded the following:

                                                                     1999
                                                                   --------
      Stock compensation cost, principally arising in
        1999 from December transactions                            $722,250
      Increase to bad debt expense                                  138,000
      Consulting expense                                            100,000


                                      F-24

<PAGE>

                                   SIGNATURES

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

                                          AMPLIDYNE, INC.


                                          By: /s/ DEVENDAR S. BAINS
                                              ---------------------------------
                                              Name:  Devendar S. Bains
                                              Title: Chief Executive Officer,
                                              President, Treasurer, Principal
                                              Accounting Officer and Director


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

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


/s/ Devendar S. Bains        Chief Executive Officer,            April 12, 2001
-----------------------      President, Treasurer,
Devendar S. Bains            Principal Accounting Officer
                             and Director


/s/ Tarlochan Bains          Vice President and Director         April 12, 2001
-----------------------
Tarlochan Bains


/s/ Nirmal Bains             Secretary                           April 12, 2001
-----------------------
Nirmal Bains

/s/Charles J. Ritchie        Director                            April 12, 2001
-----------------------
Charles J. Ritchie

/s/Manish V. Detroja         Director                            April 12, 2001
-----------------------
Manish V. Detroja