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, 1999


                           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)

                CLASS A REDEEMABLE COMMON STOCK PURCHASE WARRANT
                ------------------------------------------------
                                (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 $2,150,707.

         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, 2000, was approximately $36,917,047.

         Number of shares outstanding of the issuer's common stock, as of March
31, 2000 was 6,989,320.

         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.

         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 has developed a Multicarrier Linear Power Amplifier ("MCLPA"). MCLPA
combines 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.


<PAGE>

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. On December 3, 1999 the Company unveiled its complete product line
with a "show and tell" show at the Helmsley Hotel, in New York City as well as
updating its Web site with the new product line.

         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.

         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.

         The Company set up a test site for a local ISP in Sparta, New Jersey,
during the 4th quarter of 1999. The tests at the site have been successful
proving the system to be always reliable and robust under various weather
conditions, such as rain and snow. The Company intends to continue to work with
its local ISP partner to bring service to other areas of Northern New Jersey,
New York State and Connecticut.


                                       2
<PAGE>

NEW PRODUCTS FOR 2000

         The Company intends to introduce its 11 Mbps products during the second
quarter of 2000, and will continue to market its 2 Mbps products at the same
time. 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 are presently being tested and refined
for introduction in the second 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.

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.

         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 return of
investment is in a few months and there are no monthly bills to pay.

         The Company's entry into this market with a 2 Mbps system in the third
quarter of 1999 was aimed to fulfill the immediate need of ISP's. The Company
intends to introduce its 11 Mbps products in the second quarter of 2000. We
intend to continue to explore the possibility of higher speed radios and
software features required by our customers.

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


                                       3
<PAGE>

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 Common Stock
and Warrants trade on the Nasdaq SmallCap Market under the symbols AMPD and
AMDW, respectively.

         On April 6, 2000 the Company announced that it was redeeming all of its
publicly traded Warrants by paying the holders thereof $.01 for each Warrant.
Holders have until the close of business on May 9, 2000 to exercise the Warrants
at $6.00 per share.

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; 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 amplifier 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 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.


                                       4
<PAGE>

INDUSTRY BACKGROUND

         The market for wireless communication services has grown substantially
during the past decade. Cellular service has been one of the fastest growing
segments of the wireless telecommunications market. The growth in cellular
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.

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 new technology will require 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 PCS
and IMT2000 formats using W-CDMA and similar technologies.


                                       5
<PAGE>

         While the Company keeps its research and development efforts for 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.

WIRELESS LOCAL LOOP AMPLIFIER PRODUCTS

         The Wireless local loop market amplifiers operating in the NMT 450
band, 900 MHz band and the 2.4 to 3.5 GHz frequency bands have shown growth
during 1999 with 2 major customers of the Company. The Company has concentrated
its R&D efforts to develop amplifiers in these bands - both for single and multi
channel deployment. The Company has recently received a prototype order to
develop single channel amplifiers for the NMT-450 band from another major U.S.
OEM.

         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. 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."

         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


                                       6
<PAGE>

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 received purchase
orders for these products from its customers, such as DSC Communications
(Airspan Communications) and Harris Corporation.

         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.

         Since early 1995 the Company has been involved in research, design and
development of linear power amplifiers and MCLPAs for the wireless
communications industry and most recently for the emerging PCS industry. The
Company has received a patent from the United States Patent and Trademark Office
on its predistortion technology which has enabled the Company to provide ultra
linear amplifiers with its proprietary feed forward technology. Since early 1996
the Company has allocated substantial engineering resources to develop linear
power amplifiers and MCLPAs for the emerging PCS market. The Company has focused
on establishing working relationships with major original equipment manufactures
("OEMs") to develop products for the PCS market. The Company's products are
being evaluated for emerging technology at various OEM sites.


                                       7
<PAGE>

         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.

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

         Wireless Internet Products. 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.
Furthermore, the Company started a marketing campaign for these products during
first quarter of 2000.

         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 PCS and
NMT-450 single and multichannel products to major U.S. OEM's.

         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 PCS and cellular segments.
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 1999.

         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
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


                                       8
<PAGE>

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 PCS, NMT-450 and wireless local loop products during 1999,
and has procured some orders for this equipment during 1999.

         Develop Innovative Proprietary Products. To date, the Company has
focused its efforts in the development of amplifier products which are highly
innovative and 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 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.


                                       9
<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 has 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 PCS 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 PCS 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.

         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.


                                       10
<PAGE>

         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 it believes gives it 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,
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.

         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.


                                       11
<PAGE>

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

         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.

         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.


                                       12
<PAGE>

         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.

         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'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


                                       13
<PAGE>

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 have been refined during the first
quarter of 2000 and will be available to our customers in the second quarter of
2000.

         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 is currently
the largest 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.

         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


                                       14
<PAGE>

Company started an advertising campaign in February 2000 to promote products in
this market. The second market segment is the corporate offices which want to
create their own 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 (approximately at $1200-$1,400 per month, and $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.

         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.

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 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 or 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.


                                       15
<PAGE>

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 with the 11 Mbps products to be released in
the second 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.

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        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. Management
believes that this product provides the industry's best performance per dollar.
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.


                                       16
<PAGE>

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

         As of December 31, 1999, the Company had multi-year backlog and open
future orders of approximately $6,000,000 which the Company plans to deliver
during fiscal years 2000-2001 (which may be extended). The Company cannot
predict whether or not all of such backlog or orders will be delivered inasmuch
as purchase orders are subject to changes and/or cancellation particularly since
the wireless communications industry is characterized by rapid 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.

         A substantial majority of these orders is attributable to orders from
customers from the Korean market. Based upon discussions with its Korean
customers, the Company believes that the current downward pricing pressure and
specification changes from its Korean customers will result in either postponed,
rescheduled or possibly canceled orders with the Company's Korean customers.
Such postponements or cancellations will significantly reduce the amount of the
Company's backlog and orders. Product orders are subject to changes in delivery
schedules or to cancellation at the option of the customer. Accordingly, the
Company stresses that backlog or orders as of any particular date may not be a
reliable indicator of sales for any future period.

         The Company's Korean and other international customers, collectively
accounted for approximately 94% of the Company's net sales for fiscal 1998, and
approximately 90% of the Company's net sales for fiscal 1999. These sales were
principally for the supply of equipment for implementation in the digital
cellular and PCS networks in Korea, and wireless local loop systems worldwide in
Canada and the United Kingdom.

         The Company's South Korean customers account for a substantial amount
of the Company's net sales. Although the Company is attempting to expand its
customer base, the Company expects that a limited number of customers will
continue to represent a substantial portion of the Company's net sales for the
foreseeable future. The Company believes that its future success depends upon
its ability to broaden its customer base. During 1999 the Company has had
success in obtaining purchase orders from a key Canadian OEM's particularly for
the NMT-450 multichannel amplifiers.

CUSTOMERS, SALES & MARKETING


                                       17
<PAGE>

         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 1998 and 1999.

                        NET REVENUES BY MARKET CATEGORIES
                                 (IN THOUSANDS)

                                                                  Year Ended
                                                                 December 31,
                                                             -------------------
 Markets                                                       1998         1999
 -------                                                     ------       ------
Cellular  Analog .....................................       $   15       $    9
Cellular  Digital ....................................            0            2
Wireless  Telephony ..................................          600        1,458
Satellite  Communications,  Custom and other
Products .............................................          188           53
Digital PCS  Products ................................          983          664
                                                             ------       ------
        Total ........................................       $1,786       $2,151
                                                             ======       ======


         Historically, the Company has derived a substantial percentage of its
net revenues from various customers during certain fiscal periods and until
fiscal 1994 the Company derived substantially all of its net revenues from
cellular analog products. However, since 1995 the Company has focused primarily
on digital cellular and wireless telephony and therefore the sales in those
areas have substantially increased. The Company expects that for future sales
the Company will continue to improve its market share in the cellular digital,
wireless telephony and digital PCS products.

                    *     Wireless Telephony. Sales to the wireless telephone
                    segments of the wireless communications industry have
                    increased from approximately 33% of total revenues for
                    fiscal year end 1998 to 64.7% of total revenue for the
                    fiscal year end 1999.

                    *     Digital PCS. The Company has shipped single channel
                    amplifiers to its OEM customers accounting for 55% of sales
                    in the period ended December 31, 1998. Sales in this sector
                    of the market showed some decrease during fiscal 1999
                    accounting for 31% of total sales, primarily due to the
                    decline in the South Korean marketplace.

                    *     International Sales. Sales of wireless products
                    outside the United States (primarily to Western Europe
                    Canada and the Far East) represented approximately 94% and
                    90% of net sales during, fiscal 1998 and fiscal 1999,
                    respectively. The decrease in percentage of sales of this


                                       18
<PAGE>

                    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.

COMPETITION

         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.

         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.


                                       19
<PAGE>

         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.

         The Company has a few competitors in the internet access products
market. Certain of these competitors have substantially greater technical,
financial, sales and marketing, distribution and other resources than the
Company. Therefore, the Company may not adequately be able to compete against
some of these competitors.

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.

         Manufacturing Process. 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

                                       20
<PAGE>

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.

         Recently, the Company purchased automated surface mount machinery to
enhance its manufacturing ability for amplifiers as well as wireless internet
products, if and when required.

         Apart from the filter, amplifier and antennas, all of the new internet
access products are manufactured at an offshore ISO 9001 certified facility. The
Company ordered production equipment for its SMT line during December 1999 and
had it installed in the first quarter of 2000. This will enhance the Company's
ability to manufacture high volume of product efficiently for its traditional
amplifier business, as well as the new high-speed wireless Internet products, if
and when necessary.

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 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 1998 and 1999 were
approximately $544,200 and $580,281, respectively, and represented approximately
31% and 27%, 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 for the
bidirectional amplifier for its wireless internet systems. The Company has
committed approximately $900,000 during 1999, to develop equipment for the year
2000 for wireless internet products, in order to maintain its competitive edge
in the marketplace.

         The Company uses the latest equipment and computer aided design and
modeling, solid state device physics, advanced digital signal processing ("DSP")
and digital control


                                       21
<PAGE>

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.

         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).


                                       22
<PAGE>

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.

EMPLOYEES

         As of December 31, 1999, the Company had a total of 30 employees,
including 20 in operations, 4 in engineering, 1 in sales and marketing, 1 in
quality assurance and 4 in administration. 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 FORM 10-KSB, 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


                                       23
<PAGE>

company. Other risks and uncertainties that we have not predicted or assessed
may also adversely affect our company.

         Some of the information in this Form 10-KSB 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:

         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 Form 10-KSB, 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 Form
10-KSB 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
$1,916,359 and 3,535,689 for the years ended December 31, 1998 and 1999,
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. 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
$15,104,725 at December 31, 1999.

         WE MAY REQUIRE ADDITIONAL FINANCING. We believe that our current cash
on hand, as well as additional funds from the exercise of 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 officers salaries, commissions and consulting fees, although
we may not be able to continue this


                                       24
<PAGE>

practice. If additional financing is needed, we cannot be sure that such
financing will be available to us on acceptable terms. If adequate 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. Although demand for power amplifiers 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 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 new manufacturing
equipment. 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 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 SUCCESS RELIES ON A SMALL NUMBER OF CUSTOMERS AND OUR SALES ORDERS
HAVE HAD A HIGH DEGREE OF DELAYS AND CANCELLED ORDERS. In 1998, approximately


                                       25
<PAGE>

94% of our net revenues were derived from three customers (two European and one
South Korean). In 1999, approximately 76% of our net revenues were derived from
3 customers (31%, 27% and 18%). 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 2000
revenues. 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 LIMITED MARKETING EXPERIENCE 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 involving ultra linear base station
amplifiers. 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.

         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 33% 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.

         THE LIMITED PUBLIC MARKET AND TRADING MARKET MAY CAUSE VOLATILITY IN
OUR STOCK PRICE. There has only been a public market for our securities since
January 1997 and we are not sure whether an active trading market in our
securities will ever be maintained. In the absence of such a market, you may
find it more difficult to sell our securities. 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 companies. The trading
price of our securities 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 securities.

         OUR SUCCESS DEPENDS ON OUR ABILITY TO MANAGE THE SIZE OF OUR
OPERATIONS. We had substantially increased the scale of our operations over the
past two years. However, due to the down turn in business activity in the
Southeast Asian market, we have had to reassess our business strategy. We
downsized some of our operations in


                                       26
<PAGE>

order to maintain competitiveness and achieve profitability. 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 telecommunications customers come under increasing price pressure from
cellular and PCS 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
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 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
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
amplifier 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


                                       27
<PAGE>

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 94% and 90%
of our net revenues for the years ended December 31, 1998 and 1999,
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.

         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   restrictions on the repatriation of earnings;
         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.


                                       28
<PAGE>

         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 Form 10-KSB 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.

         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. We have entered into a five year employment
agreement with Mr. Bains which terminates April 30, 2001 and contains a covenant
not to compete against our company for a two year period 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


                                       29
<PAGE>

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.

         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


                                       30
<PAGE>

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.

         YEAR 2000 PROBLEMS PRESENT TECHNOLOGICAL RISKS WHICH COULD BE COSTLY TO
CORRECT AND WHICH MAY DISRUPT OUR BUSINESS WHICH COULD IMPAIR RESULTS OF
OPERATIONS.

         Year 2000 issues may adversely affect our business, although to date we
have not had any internal problems or problems with any of our customers or
vendors.

         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 and warrants are 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 and warrants 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 or warrants in the
over-the-counter market were to occur, the liquidity of our common stock and
warrants 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 or warrants. This Annual Report on Form 10-KSB for the period
ended December 31, 1999 indicates net tangible assets of $2,514,365. However, we
cannot be sure whether, and for how long, listing will continue.

         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 and warrants are listed on The
Nasdaq SmallCap Market, it is exempt from the definition of "penny stock." If
our common stock and warrants are removed from listing by The Nasdaq SmallCap
Market, our common stock and warrants 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


                                       31
<PAGE>

$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.

         WE HAVE CALLED FOR THE REDEMPTION OF OUR PUBLICLY TRADED WARRANTS. We
have provided notice to redeem our publicly traded warrants. Such warrants will
be redeemed by us on May 10, 2000 at a redemption price of $.01 per warrant.
Holders have until the close of business on May 9, 2000 to exercise their
warrants at $6.00 per share or receive $.01 for each unexercised warrant held on
such date.

         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.

         ADDITIONAL AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED STOCK
AVAILABLE FOR ISSUANCE MAY ADVERSELY AFFECT THE MARKET. We are authorized to


                                       32
<PAGE>

issue 25,000,000 shares of our common stock. As of March 31, 2000, there were
6,989,320 shares of our common stock issued and outstanding, which amount does
not include:

         o   the exercise of up to 1,585,900 of our publicly traded warrants to
             purchase up to 1,585,900 shares of our common stock;
         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 (and an additional 140,000 shares
             of common stock underlying warrants (which are exercisable at $.15
             per warrant) at an exercise price of $9.00 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   30,000 shares of our common stock issuable upon exercise of
             warrants at $1.00 per share;
         o   90,000 shares of our common stock issuable upon exercise of
             warrants issued to our placement agent (and its designees) of our
             private placement of common stock in March 1999 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   16,000 shares of our common stock issuable upon exercise of
             warrants at $1.75 per share; and
         o   1,430,750 shares of our common stock issuable upon exercise of
             options granted pursuant to our Incentive Option Plan.

         After reserving a total of 3,795,150 shares of our common stock for
issuance upon the exercise of all options and warrants described above, we will
have at least 14,215,530 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


                                       33
<PAGE>

stock. The issuance of any of our preferred stock could have an adverse effect
on the holders of our common stock.

         SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET. As of
March 31, 2000, we had 6,989,320 shares of our common stock issued and
outstanding. Of these 6,989,320 shares of issued and outstanding common stock,
4,084,970 shares are considered "restricted securities". These "restricted
securities" may be sold pursuant to Rule 144 of the Securities Act of 1933 as
follows:

         o   3,247,695 shares of our common stock may currently be sold pursuant
             to Rule 144;
         o   402,682 shares of our common stock may be sold pursuant to Rule 144
             commencing July 2000;
         o   157,702 shares of our common stock may be sold pursuant to Rule 144
             commencing October 2000;
         o   5,000 shares of our common stock may be sold pursuant to Rule 144
             commencing November 2000;
         o   250,000 shares of our common stock may be sold pursuant to Rule 144
             commencing December 1999;
         o   21,891 shares of our common stock may be sold pursuant to Rule 144
             commencing January 2001;

         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, 2000, we had the following
outstanding stock options and warrants to purchase shares of our common stock:

         o   warrants to purchase an aggregate of 90,000 shares of our common
             stock at an exercise price of $1.25 per share;


                                       34
<PAGE>

         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 30,000
             shares of our common stock at an exercise price of $1.00 per share;
         o   publicly traded warrants to purchase an aggregate of 1,585,900
             shares of our common stock at an exercise price of $6.00 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 140,000
             shares of our common stock at an exercise price of $9.00 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 16,000 shares of our common stock at an
             exercise price of $1.75 per share

         In addition, we have reserved 1,430,750 shares of our common stock for
issuance pursuant to outstanding options issued under our incentive stock option
plan. 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 9-14, 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,


                                       35
<PAGE>

1999. We believe that the complaint is without merit and we will vigorously
contest it, although we can give no assurances as to the ultimate outcome of
such complaint.

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.


                                       36
<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

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

         The Company is involved in the following matters:

         1.       AIRNET COMMUNICATIONS CORPORATION V. AMPLIDYNE, INC.

         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 also alleges damages in the amount of $4,322,579.05, plus
interest, costs and attorneys fees. The Company filed an answer to the complaint
denying the allegations therein and a counterclaim on March 10, 1997. The
counterclaim alleges breach of contract, common law fraud, conversion and unjust
enrichment. The Company further asserted damages in the amount of $463,411.36,
plus interest, costs and attorney fees. Management believes that the allegations
in the complaint are without merit. A motion for summary judgment was denied in
February 1999. The case is currently in discovery.

         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. According to the plaintiff's
attorney, the claim against the Company is for $135,000, plus unspecified
compensatory and punitive damages. The Company filed an answer to the complaint
denying the allegations and a counterclaim against the plaintiff on September
12, 1998. The counterclaim alleges breach of contract for unspecified damages.
The Company believes settlement terms have been reached and has accrued the
estimated cost thereof.

         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. 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 orders of the
District Court for the District of New Jersey, the actions were consolidated and
lead plaintiffs were appointed. Recently, the Company was served with a
consolidated and amended class action complaint. The Company will promptly
respond to this consolidated complaint. The Company believes this complaint has
no merit and will vigorously contest it.

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

         On December 28, 1999, 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 6,653,079 shares of the Company's Common
Stock entitled to vote at


                                       37
<PAGE>

the meeting, holders of 6,086,667 shares were present in person or were
represented by proxy at the meeting.

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

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

         Devendar S. Bains                       6,067,725             18,942
         Tarlochan Bains                         6,067,725             18,942
         Charles J. Ritchie                      6,067,725             18,942
         Manish V. Detroja                       6,067,725             18,942

         The above represented all of the directors of the Company on December
28, 1999.

         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:              6,069,140
         Against:             12,795
         Abstain:              4,732


                                       38
<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 Common Stock and Warrants are
regularly quoted and traded on the Nasdaq SmallCap Market under the symbols AMPD
and AMPDW, respectively.

         The following table sets forth the range of high and low closing prices
for the Company's Common Stock and Warrants for the period January 22, 1997 up
to March 31,1997, the last three quarters in 1997, fiscal 1998, fiscal 1999, and
for the period of January 1, 2000 up to March 31, 2000 as reported by the Nasdaq
SmallCap Market. The trading volume of the Company's Common Stock and Warrants
fluctuates and may be limited during certain periods. As a result, the liquidity
of an investment in the Common Stock and Warrants may be adversely affected.

COMMON STOCK

              1997 Calendar Year       Closing Price
              ------------------       -------------
                                       High      Low
                                       ----      ---

            January 22 - March 31      5.625    4.250
            April 1 - June 30          5.375    4.500
            July 1 - September 30      7.625    4.250
            October 1 - December 31    7.375    1.625

            1998 Calendar Year
            ------------------

            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


                                       39
<PAGE>

WARRANTS

             1997 Calendar Year        Closing Price
             ------------------        -------------
                                       High       Low
                                       ----       ---

            January 22 - March 31      .8125     .250
            April 1 - June 30         1.0625     .500
            July 1 - September 30      1.750     .250
            October 1 - December 31   1.0625     .250

            1998 Calendar Year
            ------------------

            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

         On March 31, 2000 the closing prices of the Common Stock and Warrants
as reported on Nasdaq SmallCap Market was $77/8 and $211/16, respectively. On
March 31, 2000 there were 6,989,320 shares of Common Stock and 1,585,900
Warrants outstanding, held of record by approximately 65 record holders (with
over 1,000 beneficial owners).


                                       40
<PAGE>



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

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 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.

         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. Management intends to reduce overhead during 2000
and continue to focus its sales and marketing efforts in the US, European and
Canadian markets.

         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 93.3% during the year ended
December 31, 1999, compared to 98.4% during the same period for 1998. This
decrease can be attributed to greater volume of sales and improved margins of
NMT-450 business. The Company is continuing to assess cost reduction of its
products to improve gross margins in 2000. 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.


                                       41
<PAGE>

         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.

         Interest expense was higher in 1999 because of the closing out of some
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.

Results of operations - Fiscal year ended December 31, 1998 compared to Fiscal
Year ended December 31, 1997.

         Revenues for the fiscal year ended December 31, 1998 decreased 26%
compared to the fiscal year ended December 31, 1997. The primary reason for the
decrease was due to the economic crisis experienced by South Korea during 1998
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.

         Sales for the first 3 quarters of 1998 were weak due to the economic
crises in the South East Asian markets, as planned shipments under purchase
orders were never completed due to delay and cancellations by certain customers.
The Company refocused


                                       42
<PAGE>

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
Europe. The sales in the fourth quarter of 1998 accounted for 35% of the overall
sales for 1998. Management intends to reduce overhead during 1999 and continue
to focus its sales and marketing efforts in the US and European markets.

         The Company's sales to international markets representing 94% of the
Company's sales in 1998, were primarily to Korea and Europe. Korea has suffered
significant currency fluctuations during 1998. The Company believes that its
ability to generate sales during the first half of 1999 will be adversely
impacted by, among other things, economic conditions in Korea.

         Cost of sales as a percentage of sales was 98% during the year ended
December 31, 1998, compared to 79% during the same period for 1997. This
increase can be attributed to the economic conditions in South Korea resulting
in slow build-out of the PCS networks in that country, which caused the
Company's ramp-up in manufacturing personnel and shop overhead to be severely
underutilized during 1998. The cost of new product development is a prolonged
and an expensive process, causing the cost of certain prototypes to be greater
than targeted profit margins. Further, certain sales to a distributor in Korea
yield a lower sales price (as compared to a commission expense separately paid
and included in selling general and administrative expenses) and extended
warranty terms. The Company is continuing to assess cost reduction of its
products to improve gross margins in 1999.

         Selling, general and administrative expenses decreased in 1998 by
$337,300 to $1,278,256 from $1,615,556, in 1997. Expressed as a percentage of
sales, the selling, general and administrative expenses were 71% in 1998 and
66% in 1997. The principal factors contributing to the decrease in selling,
general and administrative expenses were related to the reduction in staffing
levels, and cost containment efforts.

         Research, engineering and development expenses decreased to 30% of
net sales in 1998 compared to 36% in 1997. In 1998, the principal activity of
the business related to the design and production of product for OEM
manufacturers, particularly for the PCS single and 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 1998. 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 in 1998 of $79,159 due to earnings on
initial public offering proceeds, and reflect lower interest-earning balances.

         Interest expense was lower in 1998 because of the closing out of some
capitalized leases on test equipment.


                                       43
<PAGE>

         Stock compensation and financing expenses of $607,179 in 1997 and
$186,249 in 1998, relating to the 1996 and 1997 issuances of stock, options and
warrants at prices substantially lower than the fair market values. The decrease
in 1998 expense reflects that some of these discounts have been fully amortized
over the respective vesting periods.

         As a result of the foregoing, the Company incurred net losses of
$1,916,359 or ($.43) per share for the year ended December 31, 1998 compared
with net losses of ($2,493,611) or ($.57) per share for the same period in 1997.


LIQUIDITY AND CAPITAL RESOURCES

         As of December 31, 1999, the Company had cash and cash equivalents of
$1,445,055.

         The Company believes that the net proceeds of the Company's private
placements in 1999, 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,
the officers of the Company have deferred a portion of their salaries or
provided loans to the Company to meet short-term liquidity requirements. There
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.

         During 1999 and through March 31, 2000, the Company raised $2.8 million
and $305,000, respectively, 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 $1,500 through 2002. The
Company has converted certain of its obligations to officers through the
issuance of Common Stock (at an equivalent fair value) and may continue to do so
in 2000.

YEAR 2000

         The Company's internal computers systems consist of individualized PCs.
The Company replaced all of these PCs with the latest hardware. The Company's
technical software has been upgraded for the Y2K compliance. Presently the
Company is exploring the purchase of a new MRP system, which will be Y2K
compliant, and will be


                                       44
<PAGE>

installed by the second or third quarter of 2000. All other software for day to
day office work is Y2K compliant.

         Overall the Company has not seen any material effect upon its business
and operations due to the Y2K problem.

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.


                                       45
<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 are set forth below:

<TABLE>
<CAPTION>
NAME                                AGE              POSITION(S) WITH THE COMPANY
<S>                                <C>              <C>
Devendar S. Bains*                  49               Chairman of the Board, President,  Chief
                                                     Executive Officer,  Treasurer and Director
Tarlochan Bains                     50               Vice President-Sales & Marketing and Director
Nirmal Bains                        43               Secretary
Charles J. Ritchie*                 58               Director
Manish V. Detroja*                  34               Director
</TABLE>

*  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.

TARLOCHAN BAINS has been Vice President of Sales and Marketing and a director
since 1991. 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


                                       46
<PAGE>

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.

         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,
including the Amplidyne, Inc. 1996 Incentive Stock Option Plan, 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 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 consists
of Devendar S. Bains, Charles J. Ritchie and Manish J. Detroja.

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.


                                       47
<PAGE>

         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,
1999, all Section 16(a) filing requirements applicable to its officers and
directors and greater than ten percent beneficial owners were satisfied.

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, 1997, 1998 and 1999 for its Chief
Executive Officer. 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 but are not compensated for services provided in their capacities
as directors.

<TABLE>
<CAPTION>
                                                                                                     Long Term Compensation
                                                                                                     ----------------------
                                                                 Annual Compensation     Awards   Securities Payouts
                                                                 -------------------   -----------------------------
Name of Individual                                                           Other     Restricted Underlying   All
And Principal Position                   Year        Salary      Bonus       Annual       Stock     LTIP      Other
----------------------                                                                    -----
                                                                          Compensation    Awards Options/SAR  Payout       Comp
                                                                               on         ------      S(#)      s           .
                                      ------------------------------------------------           --------------------------------
<S>                                    <C>         <C>         <C>       <C>          <C>       <C>          <C>       <C>
Davendar S. Bains,                        1999       $85,000       --       $20,000(1)       --       --        --             --
Chairman                                                                                                                $ 77,000(2)
Chief Executive Officer,                  1998       $85,000       --       $20,000(1)       --       --        --             --
                                                                                                                        $167,000(3)
President and Treasurer                   1997       $85,000       --       $20,000(1)       --       --        --             --
</TABLE>

(1)   Represents payment for health insurance and automobile insurance lease
payments on behalf of such individual but does not include deferred compensation
(See note H-3 to the financial statements).
(2)   Represents the fair value of shares of Common Stock in lieu of cash
payment of the amount owed for deferred compensation - 27,787 shares in the
aggregate.
(3)   Represents the fair value of shares of Common Stock in lieu of cash
payment of the amount owed for deferred compensation - 144,000 shares in the
aggregate.

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

EMPLOYMENT AGREEMENTS

         The Company has 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). 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 for a
two year period following termination of employment.


                                       48
<PAGE>

         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).

         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).


                                       49
<PAGE>

STOCK OPTION PLANS AND AGREEMENTS

         Incentive 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 Incentive Stock Option Plan ("Incentive Option Plan"). The
purpose of the Incentive 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").

         The Incentive 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 or a combination thereof, and the
number of shares to be subject to such options.

         The Incentive Option Plan provides for the granting of ISOs 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 Incentive Option Plan is 1,500,000. ISOs may not be granted to an
individual to the extent that in the calendar year in which such ISOs first
become exercisable the shares subject to such ISOs have a fair market value on
the date of grant in excess of $100,000. No option may be granted under the
Incentive 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.

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

         As of December 31, 1999, 1,471,000 options to purchase Common Stock
under the Incentive 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. 30,000 options to purchase Common Stock were granted to
each of Messrs. Detroja and Ritchie, Directors


                                       50
<PAGE>

of the Company, under the Incentive Option Plan. These options are exercisable
at $1.25 and are fully vested. The 1,471,000 options granted under the Incentive
Option Plan are referred to collectively as the "Employee Options". 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.

         In February and March 2000, 40,250 of such options were exercised by
employees at $4.00 per share, resulting in proceeds of $161,000.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                  OWNERS AND MANAGEMENT

         The following table sets forth certain information, as of March 31,
2000 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                40.71
Tarlochan Bains(3)                                 177,456                 2.50
Nirmal Bains(2)                                  3,272,985                40.71
Charles J. Ritchie(4)                               30,000                  .43
Manish V. Detroja(5)                                30,000                  .43

All Officers and
  Directors as a group
  (5 persons)(6)                                 3,511,441                44.07

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

* 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."


                                       51
<PAGE>

(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. See "Executive Compensation - Stock Option Plans and
      Agreements."

(4)   The address for such person is 92 Parker Road, Long Valley, NJ 07853.
      Includes 30,000 Employee Options. See "Executive Compensation - Stock
      Option Plans and Agreements."

(5)   The address for such person is 925 Schwal Road, Hatfield, PA 19440.
      Includes 30,000 Employee Options. See "Executive Compensation - Stock
      Option Plans and Agreements."

(6)   Includes 1,000,000 options held by Devendar Bains, 50,000 options held by
      Nirmal Bains, 100,000 options held by Tarlochan Bains, 30,000 options held
      by Mr. Detroja and 30,000 options held by Mr. Ritchie. See Notes 2, 3, 4
      and 5.

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.

         See "Management - Employment Agreement" for recent 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


                                       52
<PAGE>

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.


                                       53
<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 Sheet                                                       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- 20

(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
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.


                                       54
<PAGE>

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 1999.


                                       55
<PAGE>

                                 Amplidyne, Inc.

                          INDEX TO FINANCIAL STATEMENTS


                                                                      Page
                                                                      ----


Report of Independent Certified Public Accountants                     F-2


Financial Statements

        Balance Sheets                                                 F-3

        Statements of Operations                                       F-5

        Statement of Stockholders' Equity                              F-6

        Statements of Cash Flows                                       F-7

        Notes to Financial Statements                              F-8 - F-21


                                      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, 1999 and 1998, 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 generally accepted auditing standards
applicable in the United States. 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, 1999 and 1998, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles
applicable in the United States.



GRANT THORNTON LLP


Edison, New Jersey
March 30, 2000



                                      F-2
<PAGE>



                                 Amplidyne, Inc.

                                 BALANCE SHEETS

                                  December 31,

<TABLE>
<CAPTION>
                           ASSETS                           1999                1998
                                                        ------------       ------------
CURRENT ASSETS
<S>                                                    <C>                <C>
    Cash and cash equivalents                           $  1,445,055       $    427,510
    Accounts receivable, net of allowance
      for doubtful accounts of $349,000 and
      $86,000 in 1999 and 1998, respectively                 443,585            440,516
    Inventories                                              917,450            558,685

    Prepaid expenses and other                                23,373             14,206
                                                        ------------       ------------

         Total current assets                              2,829,463          1,440,917


PROPERTY AND EQUIPMENT - AT COST
    Machinery and equipment                                  683,609            540,116
    Furniture and fixtures                                    43,750             43,750
    Autos and trucks                                          61,183             61,183
    Leasehold improvements                                     8,141              4,162
                                                        ------------       ------------

                                                             796,683            649,211
    Less accumulated depreciation and amortization           463,123            342,052
                                                        ------------       ------------

                                                             333,560            307,159


SECURITY DEPOSITS                                             35,625             35,000
                                                        ------------       ------------

                                                        $  3,198,648       $  1,783,076
                                                        ============       ============
</TABLE>

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                      1999              1998
                                                        --------------     ------------
<S>                                                    <C>                <C>
CURRENT LIABILITIES
    Current maturities of lease obligations             $     16,202       $     70,311
    Accounts payable                                         446,005            220,991
    Accrued expenses                                         116,756            255,439
    Settlement of litigation                                  85,000
    Deferred compensation and stockholders'
      loans payable                                                -             32,151
                                                        ------------       ------------

         Total current liabilities                           663,963            578,892


LONG-TERM LIABILITIES
    Lease obligations, less current maturities                20,320             36,933


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 6,924,970 and
       4,703,333 shares issued and outstanding at
       December 31, 1999 and 1998, respectively                  692                470
    Additional paid-in capital                            17,618,398         12,735,817
    Accumulated deficit                                  (15,104,725)       (11,569,036)
                                                        ------------       ------------

                                                           2,514,365          1,167,251
                                                        ------------       ------------

                                                        $  3,198,648       $  1,783,076
                                                        ============       ============
</TABLE>

The accompanying notes are an integral part of these statements.


                                      F-4
<PAGE>


                                 Amplidyne, Inc.

                            STATEMENTS OF OPERATIONS

                             Year ended December 31,

<TABLE>
<CAPTION>
                                                             1999              1998
                                                       --------------      ------------
<S>                                                    <C>                <C>
Net sales                                               $  2,150,707       $  1,786,936
Cost of goods sold                                         2,007,378          1,758,915
                                                        ------------       ------------

         Gross profit                                        143,329             28,021

Operating expenses
    Selling, general and administrative                    1,603,487          1,278,256
    Research, engineering and development                    580,281            544,220
    Stock compensation and financing cost                  1,721,450            186,249
                                                        ------------       ------------

         Operating loss                                   (3,761,889)        (1,980,704)

Nonoperating income (expenses)
    Interest income                                           25,558             79,159
    Interest expense                                         (24,726)           (14,064)
    Estimated settlement of litigation                       (85,000)                 -
    Sale of New Jersey net operating loss
        carryforwards                                        252,368                  -
    Forgiveness of accrued consulting fees                    60,000                  -
                                                        ------------       ------------

         Loss before income taxes                         (3,533,689)        (1,915,609)

Provision for income taxes                                     2,000                750
                                                        ------------       ------------

         NET LOSS                                       $ (3,535,689)      $ (1,916,359)
                                                        ============       ============

Net loss per share - basic and diluted                  $       (.62)      $       (.43)
                                                        ============       ============

Weighted average number of shares
    outstanding                                            5,753,988          4,485,132
                                                        ============       ============

</TABLE>

The accompanying notes are an integral part of these statements.


                                      F-5
<PAGE>



                                 Amplidyne, Inc.

                        STATEMENT OF STOCKHOLDERS' EQUITY

                     Years ended December 31, 1998 and 1999

<TABLE>
<CAPTION>

                                                               Preferred stock               Common stock           Additional
                                                           ---------------------      -------------------------      paid-in
                                                           Shares      Par value       Shares         Par value       capital
                                                           -------     ---------      ---------      ----------    -------------

<S>                                                      <C>          <C>            <C>             <C>           <C>
Balance at December 31, 1997                                                          4,460,000         $446        $12,304,592

Net loss
Financing and compensation costs related to
  options and warrants issued                                                                                           156,249
Exercise of warrants                                                                     30,000            3             29,997
Conversion of amounts owed for deferred compensation
   to officers into shares of common stock                                              213,333           21            244,979
                                                                                     ----------         ----        ------------


Balance at December 31, 1998                                                          4,703,333          470         12,735,817

Net loss
Issuance of Preferred Stock, net of costs                  50,000          $ 5                                          464,995
Issuance of Common Stock, net of costs                                                  900,000           90            910,594
Exercise of warrants                                                                    819,000           82          1,444,423
Conversion of Preferred Stock into Common Stock           (50,000)          (5)         370,370           37
Financing and compensation costs related to
  options and warrants issued                                                                                         1,721,450
Conversion of amounts owed for deferred
  compensation and accrued commissions to
  officers and others into shares of common
  stock                                                                                 132,267           13            341,119
                                                      -----------          ---       ----------         ----        ------------



BALANCE AT DECEMBER 31, 1999                                   -           $ -         6,924,970         $692        $17,618,398
                                                      ===========          ===        =========          ===         ==========

<CAPTION>
                                                                 Accumulated
                                                                   Deficit         Total
                                                              -------------     -----------
<S>                                                          <C>               <C>
Balance at December 31, 1997                                    $(9,652,677)    $ 2,652,361

Net loss                                                         (1,916,359)     (1,916,359)
Financing and compensation costs related to
  options and warrants issued                                                       156,249
Exercise of warrants                                                                 30,000
Conversion of amounts owed for deferred compensation
   to officers into shares of common stock                                         245,000
                                                              -------------     -----------

Balance at December 31, 1998                                    (11,569,036)      1,167,251

Net loss                                                         (3,535,689)     (3,535,689)
Issuance of Preferred Stock, net of costs                                           465,000
Issuance of Common Stock, net of costs                                              910,684
Exercise of warrants                                                              1,444,505
Conversion of Preferred Stock into Common Stock                                          32
Financing and compensation costs related to
  options and warrants issued                                                     1,721,450
Conversion of amounts owed for deferred
  compensation and accrued commissions to
  officers and others into shares of common
  stock                                                                             341,132
                                                              -------------     -----------

BALANCE AT DECEMBER 31, 1999                                   $(15,104,725)    $ 2,514,365
                                                              =============     ===========
</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>
                                                                           1999              1998
                                                                       -----------       -----------
<S>                                                                   <C>               <C>
Cash flows from operating activities
    Net loss                                                           $(3,535,689)      $(1,916,359)
                                                                       -----------       -----------
    Adjustments to reconcile net loss to net cash used in
       operating activities
         Depreciation and amortization                                     121,071           104,558
         Bad debt expense                                                  263,000            45,510
         Write-off of obsolete inventory                                    20,000            20,000
         Deferred compensation                                                   -           132,100
         Stock compensation and finance cost                             1,721,450           186,249
         Changes in assets and liabilities
           Accounts receivable                                            (266,069)          220,867
           Inventories                                                    (378,765)         (254,063)
           Prepaid expenses and other                                       (9,792)           (4,908)
           Accounts payable and accrued expenses                           480,344            92,733
                                                                       -----------       -----------

         Total adjustments                                               1,951,239           543,046
                                                                       -----------       -----------
         Net cash used in operating activities                          (1,584,450)       (1,373,313)
                                                                       -----------       -----------
Cash flows from investing activities
    Purchase of property and equipment                                    (147,472)           (1,900)
                                                                       -----------       -----------
Cash flows from financing activities
    Payment of lease obligations                                           (70,722)         (138,289)
    Repayments of stockholder loans, net                                         -           (98,000)
    Proceeds from sale of Preferred Stock, net of costs                    465,000                 -
    Proceeds from sale of Common Stock, net of costs                       910,684                 -
    Proceed from exercise of options and warrants                        1,444,505                 -
                                                                       -----------       -----------
         Net cash provided by (used in) financing activities             2,749,467          (236,289)
                                                                       -----------       -----------
         NET INCREASE (DECREASE) IN CASH AND
             CASH EQUIVALENTS                                            1,017,545        (1,611,502)
Cash and cash equivalents at beginning of year                             427,510         2,039,012
                                                                       -----------       -----------
Cash and cash equivalents at end of year                               $ 1,445,055       $   427,510
                                                                       ===========       ===========
Supplemental disclosures of cash flow information:
    Cash paid during the year for
      Interest                                                         $    20,000       $    49,000
      Income taxes                                                     $     9,000       $     1,000
See Notes 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, 1999 and 1998


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.

     The Company has incurred losses of $3,535,689 and $1,916,359 in 1999 and
     1998, 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 continued to issue its stock in lieu of cash payments for
     compensation, sales commissions and consulting fees, wherever possible.

     A significant portion (approximately 90% and 94% of the Company's sales in
     1999 and 1998, respectively) of the Company's sales has been to
     international markets. The primary international market through March 1999
     has been Korea, which has suffered significant currency fluctuations and
     economic turmoil which affected the Company's sales. Several of these
     Korean customers have reduced, delayed or cancelled purchase orders,
     thereby affecting the timing of when (or if) sales will be made.

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

     o    Increasing sales of its high speed internet connectivity products,
          which are expected to yield higher profit margins;

     o    Decreasing the dependency on these Korean 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    In February and March 2000, 40,250 of employee stock options were
          exercised resulting in proceeds of $161,000, to be used for working
          capital purposes. Further 24,100 of the public offering warrants were
          exercised resulting in proceeds of $144,600.


                                      F-8
<PAGE>


                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


NOTE A (CONTINUED)

     o    Reducing costs through a more streamlined operation in the new
          facility established in July 1999;

     o    Funding operations in 2000 with the remaining cash that was received
          from the 1999 private placements, planned 2000 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.


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, 1999
          and 1998, inventories consisted of the following:

                                                    1999                  1998
                                                  --------              --------

               Component parts                    $377,463              $ 99,473
               Work-in-progress                    539,987               459,212
                                                  --------              --------

                                                  $917,450              $558,685
                                                  ========              ========

     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


                                      F-9
<PAGE>


                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


NOTE B (CONTINUED)

          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.   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.

     5.   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. Net sales during 1998 were primarily to Korean
          customers. The Korean marketplace has suffered significant currency
          fluctuations and economic turmoil which might affect the Company's
          future sales. Net sales during 1999 to the Korean marketplace was
          approximately 18% of total sales.

          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, accounted for approximately 90 % of net sales and were
          primarily to the United Kingdom, Canada and Korea.


                                      F-10
<PAGE>

                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


NOTE B (CONTINUED)

          During 1998, two customers accounted for 85% of net sales (52% and
          33%) and 77% of accounts receivable at December 31, 1998. Export sales
          in 1998, including through a sales agent for international markets,
          accounted for approximately 94% of net sales and were primarily to
          Korea. Sales through the sales agent carry an extended (two years)
          warranty, for which management has provided an estimated cost to
          fulfill.

          The Company has expended a considerable effort in developing and
          marketing its wireless high-speed internet connectivity device. There
          can be no assurance that the device will yield marketplace acceptance
          and profitable shipments.

          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 stockholder's loan payable, approximate fair value,
          principally because of the short maturity of these items.

     6.   Use of Estimates

          In preparing financial statements in conformity with generally
          accepted accounting principles, 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.

     7.   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."
          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, 1999 and 1998


NOTE B (CONTINUED)

     8.   Cash and Cash Equivalents

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

          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.

     9.   Advertising Expenses

          The Company expenses advertising costs as incurred. Advertising
          expenses were approximately $33,000 for both years ended December 31,
          1999 and 1998.

     10.  Reclassifications

          Certain reclassifications were made to the 1998 amounts to conform to
          the current presentation.

     11.  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, 1999 and 1998 were 5,453,500 shares and
          5,649,500 shares, respectively.

     12.  Segment Information

          The Company commenced its wireless internet connectivity business in
          the summer of 1999. Revenues, expenses and assets of this segment were
          not significant in 1999.


                                      F-12
<PAGE>


                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


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 22, 1997. Each unit consisted of one share of common
     stock, par value $.0001 per share and one redeemable common stock purchase
     warrant. Each warrant entitles the holder to purchase one share for $6.00
     during the four-year period ending January 21, 2001. The Company has
     provided notice to redeem the warrants on May 10, 2000 unless the warrants
     are previously exercised.

     In January 1997 and March 1997, the Company received net proceeds 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.

     The underwriter received an option to purchase up to 140,000 shares of
     common stock and 140,000 warrants under the same terms.

     Private Placements

     From 1995 to 1997, the Company offered its common stock units (which
     included common stock and warrants) and issued promissory notes pursuant to
     a series of private placements. The Company also issued warrants to certain
     consultants during this time period. The Company had recorded charges to
     operations of approximately $3.5 million from 1996 to 1997 relating to such
     private placements reflecting the difference between the exercise prices
     and the fair market values of private placements, the revision of the terms
     of certain warrants and costs recognized for warrants issued to consultants
     of the Company. For the year ended December 31, 1998, the Company recorded
     a charge to operations of $186,249, relating to such transactions.

     All promissory notes were paid prior to December 31, 1997. There were no
     private placements entered into during 1998.


                                      F-13
<PAGE>


                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


NOTE C (CONTINUED)

     At December 31, 1998, the following warrants remained outstanding: (1)
     212,500 exercisable at the lower of $2.50 or 20% below market price on
     exercise date through until January 20, 2001, (2) 214,000 exercisable at
     $4.00 through until January 20, 2001, and (3) warrants granted to the
     officers in 1995 whereby they have the option to purchase up to 350,000
     shares of stock (see Note D) at $2.50 per share. In January 1999, the
     expiration date of these 350,000 warrants was extended to 2001 and the
     exercise price was reduced to $1.25 per share.

     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 $915,745.

     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 819,000 shares of common stock were exercised,
          resulting in proceeds of $1,444,505.

     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
          a former employee of the Company. 255,000 of such warrants were
          exercised in 1999.

     At December 31, 1999, the following 482,500 warrants remain outstanding:
     (1) 67,500 exercisable at the lower of $2.50 or 20% below market value on
     exercise date through January 20, 2001, (2) 145,000 exercisable at $4.00
     through January 20, 2001, (3) 90,000 exercisable at $1.25 through March
     2001, (4) 30,000 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.

     For the year ended December 31, 1999, the Company recorded a charge to
     operations of $1,721,450 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).


                                      F-14
<PAGE>


                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


NOTE D - STOCK OPTION PLANS

     An incentive 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. 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).

     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:

                                               1999                     1998
                                           -------------             -----------

      Net loss                             $4,141,789                $2,352,555

      Loss per share                             $.72                      $.52

     There were no options granted, exercised or forfeited in 1998. 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. The fair values were determined using a Black-Scholes option-pricing
     model. During 1999, the following assumptions were used:

            Dividend          6.265%
      Risk-free rate
      Volatility            205.346%
      Expected life          5 years


                                      F-15
<PAGE>


                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


NOTE D (CONTINUED)

     Stock options, including 350,000 warrants issued to officers, activity
     during 1998 and 1999 is summarized below:

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

Unexercised at December 31, 1997 and 1998       1,723,000       $   3.67

Exercise of warrants                             (350,000)          1.25

Forfeiture                                        (12,000)          4.00

Issuance to employees and directors               110,000           2.50
                                               ----------

Unexercised at December 31, 1998 and 1999       1,471,000       $   3.83
                                               ==========        =======

The following table summarizes information concerning outstanding and
exercisable options, including warrants issued to officers, at December 31,
1999:

<TABLE>
<CAPTION>
                                                     Options Outstanding                          Options Exercisable
                                         -------------------------------------------         ---------------------------
                                                          Weighted-
                                           Number          Average          Weighted-          Number          Weighted-
                                         Outstanding      Remaining          Average         Exercisable        Average
          Range of                       At Period-       Contractual       Exercise         At Period -       Exercise
      Exercise Prices                        End             Life             Price              End             Price
      ---------------                    ---------        ---------        ---------         -----------      ----------
     <S>                                <C>              <C>              <C>               <C>              <C>
      $1.25 to $4.00                       60,000            2 yrs.          $ 1.25              60,000         $  $1.25
                                        1,411,000                            $ 4.00                                 4.00
                                        ---------
                                        1,471,000
</TABLE>


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, 1999, the Federal net
     operating loss carryforwards are approximately $7,900,000. The net
     operating loss carryforwards expire at various dates through 2014, and
     because of the uncertainty in the Company's ability to utilize the net
     operating loss carryforwards, a full valuation allowance has been provided.


                                      F-16
<PAGE>


                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


NOTE E (CONTINUED)

     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 1999, the Company
     received $252,368 from the sale of such net operating losses. The Company
     expects to sell additional New Jersey net operating losses in 2000,
     although there can be no assurance a suitable transaction will be
     consummated. The New Jersey net operating loss carryforwards are
     approximately $2,500,000 at December 31, 1999.

     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 1999 and 1998 is principally due to the
     impact of state income and minimum taxes.


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,
           2000                                                   $18,986
           2001                                                    12,730
           2002                                                    10,170
                                                                  -------

                                                                   41,886
            Less amount representing interest                       5,364
                                                                  -------

       Present value of minimum lease payments                    $36,522
                                                                  =======

       Short-term portion                                         $16,202
       Long-term portion                                           20,320
                                                                  -------

                                                                  $36,522
                                                                  =======

                                      F-17
<PAGE>


                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


NOTE F (CONTINUED)

     The cost of assets under capital leases was approximately $24,104 and
     $159,000 at December 31, 1999 and 1998, respectively, and is included in
     property and equipment. Accumulated amortization at December 31, 1999 and
     1998 was approximately $16,873 and $61,000, respectively.


NOTE G - COMMITMENTS

     1.   Operating Leases

          The Company leases office and manufacturing space and various
          equipment under operating leases expiring through 2000.

          During July 1999, the Company entered into a lease agreement for
          approximately 11,000 square feet of office and manufacturing space.
          The lease term commenced July 14,1999 and is for a five-year period
          ending July 13, 2004. The annual rental is $71,250 plus the Company's
          share of real estate taxes, utilities and other occupancy costs.

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

                 Year ending December 31,
                   2000                                          $ 72,000
                   2001                                            71,000
                   2002                                            71,000
                   2003                                            71,000
                   2004                                            38,000
                                                                 --------

                                                                 $323,000
                                                                 ========

          Rent expense, including the Company's share of real estate taxes,
          utilities and other occupancy costs, was $176,000 and $217,500 for the
          years ended December 31, 1999 and 1998, respectively.


                                      F-18
<PAGE>


                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


NOTE G (CONTINUED)

     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"). The agreements call
          for aggregate annual base salaries of $312,000, plus certain employee
          benefits.

          The Officers have agreed to defer a portion of their compensation. At
          December 31, 1997, such deferral amounted to $140,000. During 1998,
          these officers deferred an additional $126,000. In 1998, the Officers
          converted $245,000 of such deferral into 213,333 shares of common
          stock of the Company, representing the estimated fair value of the
          common stock of the Company at that time. At December 31, 1998, these
          officers were owed approximately $27,000 relating to such salary
          deferrals. 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.

          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. Under the terms of each
          agreement, the officers were to be paid $60,000 per year (paid
          monthly) each for thirty-six months beginning in January 1996. At the
          end of 1998, these officers resigned. At December 31, 1998 the Company
          had accrued expenses aggregating $120,000 for these individuals. In
          January 1999, 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-19
<PAGE>


                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


NOTE H - RELATED PARTY TRANSACTIONS

     1.   Stockholder Loan

          During 1994, through 1997, the Company's president and principal
          shareholder advanced funds to the Company for operating needs. Amounts
          so advanced were without interest and were repaid from proceeds of the
          initial public offering or working capital of the Company or were
          forgiven and contributed to capital.

          During 1998, the Company repaid approximately $98,000. Substantially
          all amounts have been repaid, recorded against salary deferrals or
          written off through December 31, 1999.

     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 1999, the Company made purchases
          of approximately $91,000 from this vendor.


NOTE I - LITIGATION

     The Company is involved in the following matters:

     1.   AIRNET COMMUNICATIONS CORPORATION V. AMPLIDYNE, INC.

              Plaintiff filed a compliant in the Circuit Court of the Eighteenth
     Judicial District of the State of Florida on January 23, 1997 alleging
     breach of contract. Plaintiff also alleges damages in the amount of
     $4,322,579, plus interest, costs and attorneys fees. The Company filed an
     answer to the complaint denying the allegations therein and a counterclaim
     on March 10, 1997. The counterclaim alleges breach of contract, common law
     fraud, conversion and unjust enrichment. The Company further asserted
     damages in the amount of $463,411, plus interest, costs and attorney fees.
     Management believes that the allegations in the complaint are without
     merit. A motion for summary judgment was denied in February 1999. The case
     is currently in discovery.


                                      F-20
<PAGE>


                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


NOTE I (CONTINUED)

     2.   ENS ENGINEERING V. AMPLIDYNE, INC.

             The Company is also a defendant in a complaint filed in the United
     Stated 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. According to the
     plaintiff's attorney, the claim against the Company is for $135,000, plus
     unspecified compensatory and punitive damages. The Company filed an answer
     to the complaint denying the allegations and a counterclaim against the
     plaintiff on September 12, 1998. The counterclaim alleges breach of
     contract for unspecified damages, which in the opinion of management
     exceeds $1,000,000. The Company believes settlement terms have been
     reached, and has accrued the estimated cost thereof.

     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 orders of the District Court for the District of New Jersey, the actions
     were consolidated and lead plaintiffs were appointed. Recently, the Company
     was served with a consolidated and amended class action complaint. The
     Company will promptly respond to this consolidated complaint. The Company
     believes this complaint has no merit and will vigorously contest it.

     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 above, the Company
     is not aware of any current or pending litigation or proceedings that could
     have a material effect on the Company's results of operations or financial
     condition.


NOTE J - 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.


                                      F-21
<PAGE>


                                 Amplidyne, Inc.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1999 and 1998


NOTE K - SIGNIFICANT FOURTH QUARTER ADJUSTMENTS

     In the fourth quarter of 1999 and 1998, the Company recorded the following:

<TABLE>
<CAPTION>
                                                                       1999                     1998
                                                                   ------------             ------------
     <S>                                                            <C>                      <C>
      Stock compensation cost                                        $722,250                 $156,000
      Compensation expense                                                                      25,000
      Write-off of obsolete inventory/warranty provision                                        45,000
      Reduction to sales                                                                       117,800
      Increase to bad debt expense                                    138,000                   45,000
      Consulting expense                                              100,000
</TABLE>



                                      F-22
<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.

<TABLE>
<CAPTION>

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

<S>                                <C>                                         <C>
/s/ Devendar S. Bains               Chief Executive Officer,                    April 14, 2000
-------------------------------     President, Treasurer,
Devendar S. Bains                   Principal Accounting Officer
                                    and Director



/s/ Tarlochan Bains                 Vice President and Director                 April 14, 2000
--------------------------------
Tarlochan Bains


/s/ Nirmal Bains                    Secretary                                   April 14, 2000
---------------------------------
Nirmal Bains

/s/ Charles J. Ritchie               Director                                   April 14, 2000
--------------------------------
Charles J. Ritchie

/s/ Manish V. Detroja                Director                                   April 14, 2000
-----------------------------
Manish V. Detroja
</TABLE>