<PAGE>
 
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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ----------------
 
                                  FORM 10-K/A
                               (AMENDMENT NO. 1)
(MARK ONE)
[X]ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
   1934
 
  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
 
[_]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
   OF 1934
 
  FOR THE TRANSITION PERIOD FROM         TO
 
                        COMMISSION FILE NUMBER 0-25992
 
                               ----------------
 
                               NETVANTAGE, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                                            <C>
                  DELAWARE                                       95-4324525
        (STATE OR OTHER JURISDICTION                          (I.R.S. EMPLOYER
              OF INCORPORATION)                             IDENTIFICATION NO.)
</TABLE>
 
             201 CONTINENTAL BLVD. SUITE 201, EL SEGUNDO, CA 90245
           (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)      (ZIP CODE)
 
                                (310) 726-4130
             (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
 
                               ----------------
 
        SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
 
                                     NONE
 
        SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
 
                    CLASS A COMMON STOCK, PAR VALUE $0.001
 
                               ----------------
 
  Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
 
  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not 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-K or any
amendment to this Form 10-K. [_]
 
  The closing value of voting stock (estimated solely for the purposes of this
cover page) held by non-affiliates of the Registrant as of April 3, 1998 was
$86,242,140. Included in this estimated amount are $84,664,835 for Class A
Common Stock, $1,577,306 for Class B Common Stock and no value was assigned to
the Class E Common Stock as performance criteria have not been met in order
for these shares to be released from escrow.
 
  The number of shares outstanding of each of the Registrant's classes of
Common Stock as of April 3, 1998: 10,147,753 shares of Class A Common Stock,
245,535 shares of Class B Common Stock, and 540,995 shares of Class E Common
Stock.
 
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<PAGE>
 
                             LIST OF ITEMS AMENDED
 
                                   PART III
 
<TABLE>
<CAPTION>
 ITEM                                                                       PAGE
 ----                                                                       ----
 <C>  <S>                                                                   <C>
 10.  Directors and Executive Officers of the Registrant..................    3
 11.  Executive Compensation..............................................    5
 12.  Security Ownership of Certain Beneficial Owners and Management......   12
 13.  Certain Relationships and Related Transactions......................   13
</TABLE>
 
                               TEXT OF AMENDMENT
 
  Each of the above-listed Items is hereby amended by deleting the Item in its
entirety appearing in the Annual Report on Form 10-K of NetVantage, Inc. (the
"Company") filed with the Securities and Exchange Commission on April 15,
1998, and replacing each such Item with the corresponding Item that appears in
this Amendment No. 1 to Annual Report on Form 10-K.
 
                                       2
<PAGE>
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
 
DIRECTORS AND EXECUTIVE OFFICERS
 
  The following table sets forth the names, ages and titles of the current
directors and executive officers of the Company.
 
<TABLE>
<CAPTION>
          NAME           AGE                             POSITION
          ----           ---                             --------
<S>                      <C> <C>
Stephen R. Rizzone......  49 Chairman of the Board, President and Chief Executive Officer**
George M. Pontiakos.....  39 Senior Vice President of Product Development
Dana R. Nelson..........  49 Senior Vice President of Sales
Thomas G. Iwanski.......  40 Vice President of Finance, Chief Financial Officer and Secretary
Daniel K. Sullivan......  37 Vice President of Operations
Hava V. Zernik..........  36 Vice President of Marketing
Sharam Hakimi...........  37 Vice President and Chief Technical Officer
Carlos A. Tomaszewski...  67 Director*
Richard N. Tinsley......  33 Director**
John E. Marman..........  56 Director*
</TABLE>
--------
 * Member of Audit and Compensation Committees
 
** Member of Mergers and Acquisitions Committee
 
  Stephen R. Rizzone joined the Company and was elected President, Chief
Operating Officer and a director in December 1995. He became the Chairman of
the Board and Chief Executive Officer in March 1996 and served as the acting
Chief Financial Officer from January 1997 until June 1997. From February 1995
to October 1995, he was Senior Vice President, World Wide Field Operations of
Retix, Inc. ("Retix") a publicly traded company involved in the manufacture
and sale of multiprototcol router, Ethernet switches, remote and local
bridges, ISDN access devices and fiber transport products. From April 1990
until February 1995, he was Senior Vice President, Field Operations of MAKE
Systems, Inc., a software developer of computer aided network design and
simulation products for the LAN/WAN communications industry. Under his
employment agreement with the Company, Mr. Rizzone is entitled to retain the
position of Chairman of the Board during the term of such agreement, unless
such employment agreement is earlier terminated in accordance with its
provisions. See "Executive Compensation--Employment and Severance Agreements
and Change in Control Agreements" below.
 
  George M. Pontiakos joined the Company in July 1996 as Vice President of
Operations, and became Senior Vice President of Product Development in
February 1997. Prior to joining the Company, Mr. Pontiakos was Vice
President/General Manager of Wavetek Corporation, a designer, manufacturer and
distributor of electronic test equipment, from January 1995 to July 1996, and
LAN Business Unit Director for Ascom Timeplex, Inc. ("Ascom Timeplex"), a
manufacturer of multiprotocol switching router and WAN bandwidth managers,
from August 1988 to January 1995. He has also held senior management positions
at Rowe International and ITT Avionics. In addition, in 1992 Mr. Pontiakos
served on AT&T's Policy Board for the ISO Business Unit.
 
  Dana R. Nelson joined the Company in June 1997 as Senior Vice President of
Sales. Mr. Nelson served as Vice President, Worldwide Sales and Marketing for
Digi International, Inc., a manufacturer of adapter cards and communication
devices, from May 1995 to June 1997. From June 1992 to February 1995, he was
Vice President, Worldwide Sales at Ascom Timeplex, which he had originally
joined in December 1983.
 
  Thomas G. Iwanski joined the Company in June 1997 as Vice President of
Finance, Chief Financial Officer and Secretary. Mr. Iwanski served as Vice
President of Finance, Chief Financial Officer and Assistant Corporate
Secretary from July 1994 until January 1997, and as a director from July 1994
until April 1997, of Computer Marketplace, Inc., a publicly traded computer
hardware broker and system integrator. From August 1991 to April
 
                                       3
<PAGE>
 
1994, he was Corporate Controller at Wahlco Environmental Systems, Inc. a
manufacturer of air pollution control systems. Mr. Iwanski was also a senior
manager, with approximately ten years of public accounting experience, with
KPMG Peat Marwick.
 
  Daniel K. Sullivan has served as Vice President of Operations of the Company
since June 1997. Mr. Sullivan previously held the position of Director of
Operations from December 1996 to May 1997, after joining the Company in June
1996 as Operations Manager. From October 1995 to June 1996, he served as
Operations Manager at 20th Century Fox. Mr. Sullivan also held management
positions in the production and inventory departments at Retix from March 1989
to October 1995.
 
  Hava V. Zernik joined the Company in September 1996 as Vice President of
Marketing. From November 1994 to August 1996, Ms. Zernik was Assistant Vice
President of Marketing for Ascom Timeplex. From January 1994 to November 1994,
she served as Product Manager of Switching and ATM for Retix. From April 1992
to January 1994, Ms. Zernik was Manager of Marketing Communications for
Tekelec, a manufacturer of LAN and WAN protocol analyzers and SS7 switching
systems.
 
  Sharam Hakimi joined the Company in May 1997 as Vice President and Chief
Technical Officer. Mr. Hakimi previously held the position of Director of
Engineering at Ungerman-Bass Networks, Inc. ("UB") from February 1994 to May
1997. UB is a manufacturer of hub-based network products, where Mr. Hakimi was
responsible for the development of Ethernet, Token Ring and FDDI switching
products. From August 1992 to February 1994, Mr. Hakimi served as Principal
Network Architect at UB.
 
  Carlos A. Tomaszewski was Chairman of the Board of the Company from its
inception in March 1991 until October 1994 and has continued to serve as a
director since October 1994. From 1985 to May 1991, he served as Chairman of
the Board and a Principal Systems Architect of Retix, a publicly traded
company engaged in the manufacturing of internetworking devices.
 
  Richard N. Tinsley has served on the Board of Directors of the Company since
May 1997. Since January 1998, Mr. Tinsley has been Chief Executive Officer and
Director of Turnstone Systems, Inc., a networking equipment start-up which he
founded. From June 1995 through August 1997, Mr. Tinsley served as Vice
President and General Manager of the Video, Voice, Image and Data ("VIVID")
business unit at Newbridge Networks Corporations ("Newbridge"), the parent
company of UB. Under a 1995 stock agreement with the Company, UB had the right
until July 1997 to designate one candidate to the Board of Directors of the
Company and, on May 1, 1997, it designated Mr. Tinsley as such director. Mr.
Tinsley joined Newbridge in September 1993 as Director of Marketing and in
February 1994 became Assistant Vice President of Product Management. Prior to
joining Newbridge, Mr. Tinsley served as Director of Marketing at Transwitch
Corporation, a supplier of high-speed semiconductor solutions for broadband
telecommunications and data communications applications, from June 1992 to
July 1993. Prior to joining Transwitch Corporation, he was Business
Development Manager at Texas Instruments from January 1989 through May 1992.
He was also a director of Kaspia Systems, a manufacturer of network monitoring
software, until August 1997.
 
  John E. Marman has served on the Board of Directors since June 1997. Since
June 1990, Mr. Marman has been the principal owner and President of JEM
Associates, an independent consulting firm which provides marketing and
management assistance to emerging high-technology companies. From January 1992
to April 1993, Mr. Marman also served as Vice President of Marketing for Gain
Technology, Inc., a developer and distributor of an object-based multimedia
application development system for the Unix environment, which was acquired by
the Sybase Corporation in October 1992. From November 1985 to June 1990, he
was Senior Vice President of Sales, Marketing and Services for 3Com
Corporation, a publicly traded company which distributes local area networks
and network access systems.
 
  Directors are elected to serve until the next annual meeting of stockholders
and their successors have been elected and qualified. One director elected at
the last annual meeting of stockholders resigned. Mr. Seiji Uehara resigned as
a director in October 1997. Officers are elected by and serve at the
discretion of the Board of Directors. There are no family relationships among
the directors or executive officers of the Company.
 
                                       4
<PAGE>
 
SIGNIFICANT EMPLOYEES
 
  Robert Baumert has served as one of the Company's Lead ASIC design Engineers
since February 1996 to present. From September 1988 to January 1997, Mr.
Baumert served as Design Engineer designing Local Area Network Circuits for
AT&T.
 
  Ahmad Esmaeili joined the Company in September 1996, as Director of
Engineering. Prior to this, Mr. Esmaeili was a Senior Staff Engineer at Bay
Networks from May 1994 until August 1996. Mr. Esmaeili also worked at Network
Equipment Technologies as Senior Engineer from 1989 to April 1994.
 
  Ihab Jaser joined the Company in September 1996, as Architect. Prior to
this, Mr. Jaser was a Staff Hardware Engineer at Whittaker Communications from
June 1994 to August 1996. Mr. Jaser also worked at Network Equipment
Technologies as Senior Hardware Engineer from January 1990 to May 1994.
 
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
 
  Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's executive officers and directors and persons who own more
than ten percent of the Company's Common Stock timely file initial reports of
ownership of the Company's Common Stock and other equity securities and
reports of changes in such ownership with the Securities and Exchange
Commission and the Nasdaq Stock Market. Based solely upon a review of such
insider reports, the Company believes that all required reports have been
timely filed, except (i) Seiji Uehara, a former director, was late filing a
Form 4 for 1997 (showing one transaction) and (ii) Daniel Sullivan was late in
amending a Form 3 (showing 461 shares of Class A Common Stock directly owned
by him at the time he became an executive officer). These individuals have
made their respective filings.
 
ITEM 11. EXECUTIVE COMPENSATION.
 
SUMMARY COMPENSATION TABLE
 
  The following table sets forth information concerning the compensation paid
to or earned by the Chief Executive Officer and the four other most highly
compensated executive officers of the Company (collectively, the "Named
Executive Officers") serving at December 31, 1997, for services rendered in
all capacities to the Company.
 
                          SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                  LONG-TERM
                                                                 COMPENSATION
                                 ANNUAL COMPENSATION(1)             AWARDS
                           -----------------------------------   ------------
                                                  OTHER ANNUAL    SECURITIES
    NAME AND PRINCIPAL           SALARY   BONUS   COMPENSATION    UNDERLYING
         POSITION          YEAR   ($)      ($)       ($)(2)      OPTIONS (#)
    ------------------     ---- -------- -------- ------------   ------------
<S>                        <C>  <C>      <C>      <C>            <C>
Stephen R. Rizzone(3)..... 1997 $213,021 $150,000   $38,755(4)     650,000(5)
 Chairman of the Board,    1996  147,115              1,798         70,000(5)
  President and            1995                                     60,000(5)
 Chief Executive Officer                                        
George M. Pontiakos(6).... 1997  153,384   10,000    13,512(7)     115,000(8)
 Senior of Vice President  1996   59,538   55,000       291         60,000(8)
  of Product Development                     
Dana R. Nelson(9)......... 1997   81,655   65,000                   85,000(9)
 Senior Vice President of
  Sales
Daniel K. Sullivan(10).... 1997  102,596    1,000     1,221         27,000(11)
 Vice President of         1996   34,586    2,000                    9,000(11)
  Operations              
Hava V. Zernik(12)........ 1997  117,212    5,750     5,827(13)     49,000(14)
 Vice President of         1996   28,750                398         35,000(14)
  Marketing                
</TABLE>
--------
 (1) Excludes perquisites and other personal benefits paid to each Named
     Executive Officer, as such amounts were less than the lesser of (i)
     $50,000 or (ii) 10% of the Named Executive Officer's total reported
     salary and bonus.
 
                                       5
<PAGE>
 
 (2) Amounts reflect the Company's contributions to the NetVantage 401(k) Plan
     on behalf of the Named Executive Officer and, in the case of Mr. Rizzone,
     also includes an amount accrued as additional compensation, see Note 4
     below, and in the case of Mr. Pontiakos and Ms. Zernik, also includes
     amounts received as a result of the exercise of stock options, see Notes
     7 and 13 below, respectively.
 
 (3) Although employment commenced in November 1995, Mr. Rizzone waived his
     right to receive salary until January 1, 1996. Mr. Rizzone's spouse is
     also employed by the Company as Director of Domestic Sales. Mrs. Rizzone
     earned $102,885 in salary, and $80,471 in commissions in 1997. In 1996
     Mrs. Rizzone earned $75,385 in salary, $432,115 in commissions and $2,000
     in bonus. A Company contribution of $2,180 in 1997 and $971 in 1996 to
     the NetVantage 401(k) Plan was made on her behalf. Mrs. Rizzone commenced
     employment on June 5, 1995 and earned $39,039 in salary and $3,927 in
     commissions during 1995. See also "Certain Relationships and Related
     Transactions."
 
 (4) Includes an amount of $36,938 which was accrued by the Company in 1997
     related to additional compensation to be paid under a letter agreement
     dated April 22, 1997. See also "Certain Relationships and Related
     Transactions."
 
 (5) The 1997 amount includes re-priced options to purchase 110,000 shares of
     Class A Common Stock, 13,333 shares of Class B Common Stock and 6,667
     shares of Class E Common Stock, granted on April 22, 1997. In connection
     with the grant of the re-priced options, all options granted to Mr.
     Rizzone in 1995 and 1996 were canceled. Amounts do not include (i) two
     warrants, each to purchase 15,000 shares of Class A Common Stock at an
     exercise price of $7.125 per share granted to Mr. Rizzone in 1996 in
     connection with his then employment agreement; (ii) a warrant to purchase
     11,765 shares of Class A Common Stock at an exercise price of $8.50 per
     share granted to Mr. Rizzone in 1996 in lieu of interest on a short-term
     loan to the Company; (iii) a warrant to purchase 11,110 shares of Class A
     Common Stock at an exercise price of $9.00 per share granted to Mr.
     Rizzone in 1996 in lieu of interest on a short-term loan to the Company;
     and (iv) options to purchase 32,500 shares of Class A Common Stock under
     the Company's 1996 Incentive and Nonstatutory Stock Option Plan (the
     "1996 Plan") and 7,500 shares of Class A Common Stock under the Company's
     1994 Incentive and Nonstatutory Stock Option Plan (the "1994 Plan")
     granted to Mrs. Rizzone. See also "Certain Relationships and Related
     Transactions." On April 22, 1997, the exercise prices of the options and
     warrants listed in (i) and (iv) above (except for an option for 7,500
     shares granted to Mrs. Rizzone which had an exercise price of $3.9375 per
     share) were changed to $5.8125 per share and the warrants listed in (ii)
     and (iii) above were changed to $3.8125 per share.
 
 (6) Employment commenced on July 1, 1996.
 
 (7) Includes compensation on exercise of stock options of $11,469.
 
 (8) The 1997 amount includes re-priced options to purchase 60,000 shares of
     Class A Common Stock granted on April 22, 1997. In connection with the
     grant of the re-priced options, all options granted to Mr. Pontiakos in
     1996 were canceled. See also Notes 6 through 11 in the following table of
     Option Grants In Last Fiscal Year.
 
 (9) Employment commenced on June 23, 1997. See also Note 12 in the following
     table of Option Grants In Last Fiscal Year.
 
(10) Employment commenced on June 27, 1996.
 
(11) The 1997 amount includes re-priced options to purchase 9,000 shares of
     Class A Common Stock granted on April 22, 1997. In connection with the
     grant of the re-priced options, all options granted to Mr. Sullivan in
     1996 were canceled.
 
(12) Employment commenced on September 23, 1996.
 
(13) Includes compensation on exercise of stock options of $4,875.
 
(14) The 1997 amount includes re-priced options to purchase 35,000 shares of
     Class A Common Stock granted on April 22, 1997. In connection with the
     grant of the re-priced options, all options granted to Ms. Zernik in 1996
     were canceled.
 
                                       6
<PAGE>
 
STOCK OPTION GRANTS DURING 1997
 
  The following table sets forth specified information concerning grants of
options to purchase Class A, Class B and Class E Common Stock of the Company
made during 1997 to each of the Named Executive Officers. The Company granted
no stock appreciation rights to the Named Executive Officers in 1997.
 
                       OPTION GRANTS IN LAST FISCAL YEAR
 
<TABLE>
<CAPTION>
                                                                              POTENTIAL
                                                                           REALIZABLE VALUE
                                                                              AT ASSUMED
                                                                           ANNUAL RATES OF
                                                                             STOCK PRICE
                                                                           APPRECIATION FOR
                                                                           OPTION TERM (19)
                                         INDIVIDUAL GRANTS                       (20)
                         ------------------------------------------------- ----------------
                           NUMBER OF    %OF TOTAL
                          SECURITIES     OPTIONS
                          UNDERLYING    GRANTED TO  EXERCISE OR
                            OPTIONS    EMPLOYEES IN BASE PRICE  EXPIRATION
NAME                     GRANTED(#)(2) FISCAL YEAR    ($/SH)    DATE (21)  5% ($)  10% ($)
----                     ------------- ------------ ----------- ---------- ------- --------
<S>                      <C>           <C>          <C>         <C>        <C>     <C>
Stephen R. Rizzone(1)
  1992 Plan(3)(5).......     20,000        0.84%      $4.6500    11/29/01  $62,786 $112,944
  1992 Plan(5)..........    127,900        5.38%       4.6500     4/22/03  401,517  722,277
  1994 Plan(4)(5).......     40,000        1.68%       5.8125    11/29/01   79,072  179,388
  1994 Plan(4)(5).......     70,000        2.94%       5.8125     5/24/02  138,376  313,929
  1994 Plan(5)..........    119,500        5.03%       5.8125     4/22/03  236,228  535,921
  1996 Plan(5)..........    139,000        5.85%       5.8125     4/22/03  274,776  623,373
  1997 Plan(5)..........    133,600        5.62%       7.3750     5/01/03  335,096  760,219
George M. Pontiakos
  1996 Plan(6)..........     31,250        1.31%       5.8125     7/25/02   61,775  147,147
  1996 Plan(7)..........      3,125        0.13%       5.8125     9/19/02    6,178   14,015
  1996 Plan(8)..........      3,125        0.13%       5.8125    11/21/02    6,178   14,015
  1996 Plan(9)..........     22,500        0.95%       5.8125     1/30/03   44,478  100,906
  1996 Plan(11).........     45,000        1.89%       6.8750    12/18/03  104,525  237,132
  1997 Plan(10).........      5,000        0.21%       7.3125     7/29/03   12,435   28,210
  1997 Plan(10).........      5,000        0.21%       6.8750    12/18/03   11,691   26,522
Dana R. Nelson
  1997 Plan(12).........     42,500        1.79%       7.8750     6/23/03  113,826  258,232
  1997 Plan(12).........     42,500        1.79%       6.8750    12/18/03   99,372  225,440
Daniel K. Sullivan
  1996 Plan(13).........      5,000        0.21%       5.8125     7/25/02    9,884   22,423
  1996 Plan(13).........      4,000        0.17%       5.8125     9/19/02    7,907   17,939
  1996 Plan(14).........      8,000        0.34%       5.8125     1/30/03   15,814   35,878
  1997 Plan(15).........     10,000        0.42%       7.3125     7/29/03   24,869   56,420
Hava V. Zernik
  1996 Plan(17).........      4,000        0.17%       5.8125     1/30/03    7,907   17,939
  1996 Plan(16).........     35,000        1.47%       5.8125     9/24/02   69,188  156,964
  1997 Plan(18).........     10,000        0.42%       7.3125     7/29/03   24,869   56,420
</TABLE>
--------
(1) Amounts do not include certain warrants granted to Mr. Rizzone and options
    granted to Mrs. Rizzone. See Note 5 to Summary Compensation Table and
    "Certain Relationships and Related Transactions."
 
(2) Options granted under the Company's 1992 Incentive and Nonstatutory Stock
    Option Plan (the "1992 Plan") are exercisable two-thirds for Class B
    Common Stock and one-third for Class E Common Stock of the Company.
    Options granted under the 1994 Plan, the 1996 Plan and the Company's
    Equity Incentive Plan (the "1997 Plan") are exercisable for Class A Common
    Stock of the Company.
 
 (3) Option for 20,000 shares of Class B Common Stock and Class E Common Stock
     granted in 1995, was canceled as of April 22, 1997, in exchange for a new
     option with similar terms, other than new exercise price and immediate
     exercisability.
 
                                       7
<PAGE>
 
 (4) Options for 40,000 shares granted in 1995, and 70,000 shares granted in
     1996, of Class A Common Stock, were canceled as of April 22, 1997, in
     exchange for new options with similar terms, other than new exercise
     price and immediate exercisability.
 
 (5) Options are exercisable immediately and are subject to earlier
     termination in the event the employee is no longer employed by the
     Company. See also "Employment and Severance Agreements and Change in
     Control Agreements."
 
 (6) Original option for 50,000 shares granted in 1996 was canceled in
     exchange for a re-priced option on April 22, 1997. In November 1997,
     5,000 shares were exercised and sold. On December 18, 1997, a portion of
     the re-priced option covering 18,750 shares was canceled in exchange for
     a new option for 18,750 shares which was immediately exercisable with an
     expiration date of December 18, 2003. Of the remaining portion of the re-
     priced option, 7,500 shares were fully vested and the balance is
     exercisable in 6,250 share increments on each of July 25, 1998, 1999 and
     2000.
 
 (7) Original option for 5,000 shares granted in 1996 was canceled in exchange
     for a re-priced option on April 22, 1997. On December 18, 1997, a portion
     of the re-priced option covering 1,875 shares was canceled in exchange
     for a new option for 1,875 shares which was immediately exercisable with
     an expiration date of December 18, 2003. Of the remaining portion of the
     re-priced option, 1,250 shares were fully vested and the balance is
     exercisable in 625 share increments on each of September 19, 1998, 1999
     and 2000.
 
 (8) Original option for 5,000 shares granted in 1996 was canceled in exchange
     for a re-priced option on April 22, 1997. On December 18, 1997, a portion
     of the re-priced option covering 1,875 shares was canceled in exchange
     for a new option for 1,875 shares which was immediately exercisable with
     an expiration date of December 18, 2003. Of the remaining portion of the
     re-priced option, 1,250 shares were fully vested and the balance is
     exercisable in 625 share increments on each of October 21, 1998, 1999 and
     2000.
 
 (9) Original option for 45,000 shares granted in 1997 was canceled in
     exchange for a re-priced option on April 22, 1997. On December 18, 1997,
     a portion of the re-priced option covering 22,500 shares was canceled in
     exchange for a new option for 22,500 shares which was immediately
     exercisable with an expiration date of December 18, 2003. The remaining
     portion of the re-priced option is exercisable in 25% increments annually
     commencing on January 30, 1998.
 
(10) Original option for 10,000 shares was granted in 1997. On December 18,
     1997, a portion of the option covering 5,000 shares was canceled in
     exchange for a new option for 5,000 shares which was immediately
     exercisable with an expiration date of December 18, 2003. The remaining
     portion of the original grant is exercisable in 25% increments annually
     commencing July 29, 1998.
 
(11) Consists of new options granted on December 18, 1997, such new options
     were immediately exercisable. See Notes 6, 7, 8 and 9 above.
 
(12) Original option for 85,000 shares of Class A Common Stock was granted in
     June 1997. On December 18, 1997, a portion of the option covering 42,500
     shares was canceled in exchange for a new option which was immediately
     exercisable with an expiration date of December 18, 2003. The remaining
     portion of the original grant is exercisable in 25% increments annually
     commencing on June 23, 1998.
 
(13) Options for 5,000 shares and 4,000 shares of Class A Common Stock granted
     in 1996, were canceled in exchange for re-priced options on April 22,
     1997. Options are exercisable in 25% increments annually commencing on
     July 25, 1997 and September 19, 1997, respectively.
 
(14) Option for 8,000 shares of Class A Common Stock granted in 1997, was
     canceled in exchange for a re-priced option on April 22, 1997. Option is
     exercisable in 25% increments annually commencing on January 30, 1998.
 
(15) Option for 10,000 shares of Class A Common Stock exercisable in 25%
     increments annually commencing on July 29, 1998.
 
(16) Option for 35,000 shares of Class A Common Stock granted in 1996, was
     canceled in exchange for a re-priced option on April 22, 1997. Option is
     exercisable in 25% increments annually commencing on September 24, 1997.
 
(17) Option for 4,000 shares of Class A Common Stock granted in 1997, was
     canceled in exchange for a re-priced option on April 22, 1997. Option is
     exercisable in 25% increments annually commencing on January 30, 1998.
 
                                       8
<PAGE>
 
(18) Option for 10,000 shares of Class A Common Stock exercisable in 25%
     increments annually commencing on July 29, 1998.
 
(19) The market price for options to purchase Class A Common Stock was set at
     the average of the high and low sales prices of the Class A Common Stock
     on the applicable date as reported by Nasdaq. Due to certain restrictions
     on the transferability of the underlying shares, the market price for
     options to purchase Class B and Class E Common Stock was set at 80% of
     the average of the high and low sales prices of the Class A Common Stock
     on the applicable date as reported by Nasdaq.
 
(20) Potential gains are net of the exercise price but before taxes associated
     with the exercise. Amounts represent hypothetical gains that could be
     achieved for the respective options if exercised at the end of the option
     term. The assumed 5% and 10% rates of stock price appreciation are
     provided in accordance with the rules of the Securities and Exchange
     Commission and do not represent the Company's estimate or projection of
     the future market price of the Common Stock. Actual gains, if any, on
     stock option exercises are dependent, among other things, on the future
     financial performance of the Company, overall market conditions and the
     option holders' continued employment through the vesting period.
 
(21) Options are subject to earlier termination in the event employee is no
     longer employed by the Company.
 
OPTION EXERCISES AND VALUES IN 1997
 
  The following table summarizes options exercises during 1997, and the number
of all options and the value of all in-the-money options held at the end of
1997, by each of the Named Executive Officers.
 
                AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
                       AND FISCAL YEAR-END OPTION VALUES
 
<TABLE>
<CAPTION>
                                             NUMBER OF SECURITIES
                          SHARES            UNDERLYING UNEXERCISED     VALUE OF UNEXERCISED
                         ACQUIRED           OPTIONS AT FISCAL YEAR-   IN-THE-MONEY OPTIONS AT
                            ON     VALUE          END (#)(2)          FISCAL YEAR-END ($)(3)
                         EXERCISE REALIZED ------------------------- -------------------------
NAME                      (#)(2)    ($)    EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----                     -------- -------- ----------- ------------- ----------- -------------
<S>                      <C>      <C>      <C>         <C>           <C>         <C>
Stephen R. Rizzone(1)
 1992 Plan..............                     147,900                    51,765
 1994 Plan..............                     229,500                   100,406
 1996 Plan..............                     139,000                    60,813
 1997 Plan..............                     133,600
George M. Pontiakos
 1996 Plan..............  5,000    11,469     55,000      45,000         4,504      19,687
 1997 Plan..............                       5,000       5,000
Dana R. Nelson
 1997 Plan..............                      42,500      42,500
Daniel K. Sullivan
 1996 Plan..............                       2,250      14,750           985       6,454
 1997 Plan..............                                  10,000
Hava V. Zernik
 1996 Plan..............  3,000     4,875      5,750      30,250         2,516      13,234
 1997 Plan..............                                  10,000
</TABLE>
--------
(1) Amounts do not include certain warrants to purchase Class A Common Stock
    granted to Mr. Rizzone or options granted to Mrs. Rizzone. See Note 5 to
    Summary Compensation Table and "Certain Relationships and Related
    Transactions."
 
(2) Options granted under the 1992 Plan are exercisable two-thirds for Class B
    Common Stock and one-third for Class E Common Stock of the Company.
    Options granted under the 1994 Plan, the 1996 Plan and the 1997 Plan are
    exercisable for Class A Common Stock of the Company.
 
                                       9
<PAGE>
 
(3) Valuation based on the difference between the option exercise price and
    the market value of the Company's Common Stock on December 31, 1997. The
    market price for options to purchase Class A Common Stock was set at the
    average of the high and low sales prices of the Class A Common Stock on
    that date ($6.25 per share) as reported by Nasdaq. Due to certain
    restrictions on transferability of the underlying shares, the market price
    for options to purchase Class B and Class E Common Stock was set at 80%
    ($5.00 per share) of the average of the high and low sales prices of the
    Class A Common Stock on that date as reported by Nasdaq.
 
EMPLOYMENT AND SEVERANCE AGREEMENTS AND CHANGE IN CONTROL AGREEMENTS
 
  The Company has an employment agreement with Stephen Rizzone effective as of
January 1, 1998, as amended, providing for his employment as Chairman of the
Board, President and Chief Executive Officer through December 31, 2002 (with
annual one year automatic extensions, unless the agreement is otherwise
terminated), at an initial base salary of $250,000 per year commencing January
1, 1998, and certain other incentive compensation, subject to review annually
by the Board. In addition to the base salary, Mr. Rizzone has the opportunity
to earn an additional $125,000 (as adjusted) based on performance against the
Company's revenue and profitability goals. Fifty percent of the bonus will be
earned against the "top line" revenue number for the year and fifty percent
will be earned against the "bottom line" pre-tax profit during 1998. In both
cases, bonuses start to accrue once fifty percent of the respective 1998 goal
is achieved, with each percentage point attained earning two percentage points
of bonus base. If these goals are exceeded, the bonus will continue to pay out
at the same two percent earned for each one percent attained until one hundred
and fifty percent of each goal is achieved. The agreement also provides for
the use of a leased automobile with the Company paying all upkeep, maintenance
and insurance. Mr. Rizzone has the option to purchase the automobile at 40% of
its then wholesale value in certain events, and if he exercises this option he
is then entitled to receive a $2,000 per month automobile allowance through
the Termination Benefit Period (as defined in the agreement). The agreement
may be terminated by either party with or without cause on 30 days written
notice. In the event the Company terminates Mr. Rizzone's employment, either
with or without cause at any time, for any reason, or Mr. Rizzone terminates
his employment due to (i) a change in duties, title or responsibility of his
position, (ii) a removal from or non-election to the Board or from the
position of Chairman of the Board, (iii) a change affecting Mr. Rizzone's
position in organizational structure of the Company, (iv) a reduction in
compensation, (v) an increase in travel required to the principal offices of
the Company greater than fifty miles or (vi) an acquisition or merger of the
Company, Mr. Rizzone will be entitled to certain termination benefits. Such
benefits will include the following: (a) his salary and benefits will continue
for a period of forty-eight months from the date of termination, (b) any
outstanding loans, plus any accrued interest, granted to him, shall be
forgiven by the Company and the Company will release any liens that may have
been placed on his stock options or any other personal or real property, (c)
payment will be made for accrued and unused vacation time vested as of the
date of termination, and (d) the cash bonus discussed below will be paid,
effective for 48 months after termination. Stock options granted to Mr.
Rizzone are to be exercisable for a two year period in the event of his
voluntary termination, for any of the reasons specified above, or if
applicable until the end of the Termination Benefit Period. In the event of a
"Reorganization" (as defined in the agreement), Mr. Rizzone is entitled to a
cash bonus based on the total consideration to be paid in the Reorganization
(assuming the full achievement of any performance criteria) divided by the
number of shares of Class A Common Stock outstanding at the time of the
Reorganization, such that if the resulting price per share is $14.99 or less,
he will receive a bonus equal to 3% of the total consideration and if the
resulting price per share is greater than $15 or more, the bonus will equal 4%
of the total consideration. He is also entitled to receive the Reorganization
bonus up to 12 months after his voluntary resignation for any of the reasons
specified above. The Company will reimburse and gross-up any extraordinary tax
assessments or tax penalties that may be applied by the IRS or any other tax
authority on the Reorganization cash bonus and stock option exercise at the
time of Reorganization and the severance and other bonus payments under the
agreement. The foregoing description is qualified in its entirety by the full
text of the employment agreement which was filed as exhibit no. 10.15 in the
initial filing of the Company's Form 10-K filed on April 15, 1998.
 
  In December 1997, the Board of Directors adopted the NetVantage, Inc.
Management Incentive Compensation Plan (the "Plan") to provide selected
officers and senior management of the Company with certain incentive
compensation in the event of a change of control (as defined in the Plan) of
the Company. The
 
                                      10
<PAGE>
 
Plan has two classes of participants, Tier 1 and Tier 2 participants. Tier 1
participants in the Plan include George Pontiakos, Dana Nelson, Daniel
Sullivan and Hava Zernik. Under the Plan, each of the above individuals is
entitled to receive an incentive bonus award equal to (i) 200% of that
individual's salary and bonus for the year prior to the change in control, if
the price of the Company's Class A Common Stock (as determined by the Plan)
immediately prior to the change of control is at least $10.00 but less than
$15.00 per share, or (ii) 300% of that individual's salary and bonus for the
year prior to the change in control, if the price is at least $15.00 per
share. No award is payable if the price is less than $10.00 per share. If an
award is payable, it is payable one-half after the change of control is
approved by the Company's Board of Directors and stockholders (provided the
participant is an employee of the Company in good standing at the time of the
change in control) and one-half on the earlier of the first anniversary of the
change of control or the termination of the participant's employment for any
reason other than cause (provided that a voluntary resignation by the
participant will forfeit the remaining payment). In connection with the Plan,
each of the above individuals also entered into a change of control agreement
with the Company, which provides for an additional lump sum severance payment
equal to the individual's base salary (excluding bonus), if the individual's
employment with the Company is terminated by the Company without cause (as
defined in the agreement) within one year of a change of control.
 
DIRECTOR COMPENSATION
 
  Effective July 1, 1997 the Company began paying each director, who is not an
employee of the Company, an annual fee of $6,000 plus an additional annual fee
of $1,500 for each committee on which such director served. Directors are also
reimbursed for their reasonable expenses in attending Board and committee
meetings. Directors are not precluded from serving the Company in any other
capacity and receiving compensation therefor.
 
  In June 1997, Carlos A. Tomaszewski and John E. Marman were each granted
non-statutory options to purchase 20,000 shares of Class A Common Stock, at an
exercise price of $7.875 per share. Such options become exercisable on the
earlier of June 4, 1998 or a reorganization of the Company and expire on June
4, 2003. In July 1997 Richard N. Tinsley was granted non-statutory options to
purchase 20,000 shares of Class A Common Stock, at an exercise price $7.3125
per share. Such options become exercisable on the earlier of July 29, 1998 or
a reorganization of the Company and expire on July 29, 2003. All options are
subject to early termination in the event that the option holder ceases to be
a director. The exercise price of the options was the fair market value of the
Class A Common Stock at the date of grant.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
  Carlos Tomaszewski and John Marman are the only members of the Company's
Compensation Committee, and neither has been an officer or employee of the
Company, except Mr. Tomaszewski who served as Chairman of the Board from 1991
to 1994. During 1997, no executive officer of the Company served on the board
of directors or compensation committee of another company that had an
executive officer serve on the Company's Board of Directors or Compensation
Committee.
 
                                      11
<PAGE>
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
  The following table sets forth certain information regarding ownership of
shares of Common Stock as of April 29, 1998 for (i) each director of the
Company, (ii) each individual named in the "Summary Compensation Table" above,
(iii) each person known to the Company to be the beneficial owner of more than
5% of the outstanding shares, and (iv) all directors and executive officers as
a group. Except as otherwise indicated, each stockholder has sole voting and
investment power with respect to the shares beneficially owned, subject to
community property rights where applicable. Each outstanding share of Class A
Common Stock is entitled to one vote and each share of Class B Common Stock or
Class E Common Stock is entitled to five votes.
 
<TABLE>
<CAPTION>
                                                                      PERCENTAGE
                                              NUMBER OF    PERCENTAGE OF VOTING
NAME OF BENEFICIAL OWNER                       SHARES       OF CLASS    POWER
------------------------                      ---------    ---------- ----------
<S>                                           <C>          <C>        <C>
Stephen R. Rizzone..........................    722,631(1)    6.20%      8.95%
 201 Continental Boulevard, Suite 201
 El Segundo, California 90245-4427
George M. Pontiakos.........................     65,625(2)      *          *
Dana R. Nelson..............................     53,125(3)      *          *
Daniel K. Sullivan..........................      4,711(4)      *          *
Hava V. Zernik..............................      6,750(5)      *          *
Carlos A. Tomaszewski.......................    167,658(6)    1.53%      4.43%
John E. Marman..............................     21,000(7)      *          *
Richard N. Tinsley..........................      1,000         *          *
All directors and executive officers as a
 group (10 persons)(1)(2)(3)(4)(5)(6)(7)(8).  1,086,500       9.15%     14.07%
Seiji Uehara................................    854,993(9)    7.82%      6.07%
 Telecom Device K.K.--4F Miyanaga Bldg.
 1-5-12 Motoakasaka Minato-Ku, Tokyo 107
  Japan
</TABLE>
--------
 * Holds less than 1%.
 
(1) Represents 1,300 shares of Class A Common Stock, and 556,100 shares of
    Class A Common Stock, 110,154 shares of Class B Common Stock and 55,077
    shares of Class E Common Stock which such person or his spouse has the
    right to purchase within 60 days of April 29, 1998, pursuant to the
    exercise of outstanding options and warrants.
 
(2) Represents 65,625 shares of Class A Common Stock which such person has the
    right to purchase within 60 days of April 29, 1998, pursuant to the
    exercise of outstanding options.
 
(3) Represents 53,125 shares of Class A Common Stock which such person has the
    right to purchase within 60 days of April 29, 1998, pursuant to the
    exercise of outstanding options.
 
(4) Represents 461 shares of Class A Common Stock, and 4,250 shares of Class A
    Common Stock which such person has the right to purchase within 60 days of
    April 29, 1998, pursuant to the exercise of outstanding options.
 
(5) Represents 6,750 shares of Class A Common Stock which such person has the
    right to purchase within 60 days of April 29, 1998, pursuant to the
    exercise of outstanding options.
 
(6) Represents 33,258 shares of Class A Common Stock, 57,200 shares of Class B
    Common Stock and 57,200 shares of Class E Common Stock, most of which are
    held by Microprocessor Associates, which is 90% owned by Mr. Tomaszewski,
    and 20,000 shares of Class A Common Stock which such person has the right
    to purchase within 60 days of April 29, 1998, pursuant to the exercise of
    outstanding options.
 
(7) Represents 1,000 shares of Class A Common Stock and 20,000 shares of Class
    A Common Stock which such person has the right to purchase within 60 days
    of April 29, 1998, pursuant to the exercise of outstanding options.
 
(8) Includes 1,500 shares of Class A Common Stock, and 42,500 shares of Class
    A Common Stock which executive officers who are not listed in this table
    have the right to purchase within 60 days of April 29, 1998, pursuant to
    the exercise of outstanding options.
 
(9) All information with respect to Mr. Uehara is based solely on an Amendment
    No. 1 to Schedule 13D dated January 30, 1998, filed by him.
 
                                      12
<PAGE>
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
  On April 22, 1997, the exercise prices of two warrants, issued to Mr.
Rizzone in lieu of interest owed to him for certain short term loans to the
Company, for 11,765 and 11,110 shares of Class A Common Stock, at an exercise
price of $8.50 and $9.00 per share respectively, were changed to $3.8125. Both
warrants are currently exercisable and terminate in October 2001. On the same
date, the exercise prices of two warrants issued to Mr. Rizzone under the
terms of his 1996 Employment Agreement, each at an exercise price of $7.125,
were changed to $5.8125 per share. One such warrant is currently exercisable
and the other warrant is exercisable when the outstanding shares of Class E
Common Stock are converted to Class B Common Stock. The warrants terminate on
January 1, 1999.
 
  Mr. Rizzone, the Company's Chairman of the Board, President and Chief
Executive Officer is married to the Company's Director of Domestic Sales, who
is separately compensated by the Company. See Notes 3 and 5 to "Executive
Compensation--Summary Compensation Table" and "Executive Compensation--
Employment and Severance Agreements and Change in Control Agreements". In
early 1997, the Company made an advance against future commissions to Ms.
Rizzone of approximately $255,000, and an advance against future compensation
to Mr. Rizzone of $100,000. Since the beginning of 1997, the Company has
loaned Mr. Rizzone an additional $395,000. Such amounts were reflected by Mr.
Rizzone's promissory note to the Company dated as of April 22, 1997 in the
initial principal amount of $750,000. Interest on the note accrues at a rate
of 6.23% per annum and is payable annually in arrears. The unpaid principal
and any unpaid accrued interest shall be due and payable upon the earlier of
(i) April 22, 2000 or (ii) 180 days following the date Mr. Rizzone ceases to
be employed by the Company. The loan is secured by a pledge of options granted
to Mr. Rizzone for the purchase of 170,000 shares of Class A Common Stock.
Under a separate letter agreement dated April 22, 1997 in the event Mr.
Rizzone's employment at the Company terminated, $421,667 of the loan will be
forgiven. Each year, when Mr. Rizzone pays interest to the Company on the
loan, the Company will pay a cash bonus in the amount of $49,250 to Mr.
Rizzone, subject to withholding as required by law. Under Mr. Rizzone's
amended Employment Agreement effective January 1, 1998, if his employment or
his positions as Chairman of the Board is terminated by either the Board of
Directors or the Company's Stockholders for any reason or he terminates his
employment due to certain defined events, as stated in his employment
agreement, then the remaining unpaid portion of the loan and accrued interest
will be forgiven by the Company.
 
  In connection with a stock purchase agreement, UB had the right, until July
1997, to designate one candidate to the Board of Directors of the Company. On
May 1, 1997, Newbridge Networks Corporation ("Newbridge"), the parent company
of UB, designated Richard Tinsley as such candidate. On the same day, the
Company's Board of Directors appointed Mr. Tinsley to fill a vacancy on the
Board. Mr. Tinsley terminated his employment with an affiliate of Newbridge in
August 1997. Sales to UB and Newbridge combined amounted to $2,330,710 (15% of
total revenue) for 1997. Amounts due the Company from UB and Newbridge were
$66,240 (1% of total accounts receivable) at December 31, 1997.
 
                                      13
<PAGE>
 
                                  SIGNATURES
 
  PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT CAUSED THIS AMENDMENT NO. 1 TO THIS
ANNUAL REPORT ON FORM 10-K TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED.
 
Date: April 30, 1998                      NetVantage, Inc.
 
                                                 /s/ Stephen R. Rizzone
                                          By: _________________________________
                                                    STEPHEN R. RIZZONE,
                                              Chairman of the Board, President
                                                             and
                                                  Chief Executive Officer
 
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT 1934, THIS
AMENDMENT NO. 1 TO THIS ANNUAL REPORT ON FORM 10-K HAS BEEN SIGNED BELOW BY
THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITY AND ON
THE DATES INDICATED.
 
<TABLE>
<CAPTION>
             SIGNATURE                           TITLE                  DATE
             ---------                           -----                  ----
<S>                                  <C>                           <C>
    /s/ Stephen R. Rizzone           Chairman of the Board,        April 30, 1998
____________________________________  President and Chief
         STEPHEN R. RIZZONE           Executive Officer
 
     /s/ Thomas G. Iwanski           Vice President of Finance,    April 30, 1998
____________________________________  Secretary and Chief
         THOMAS G. IWANSKI            Financial Officer
 
 
   /s/ Carlos A. Tomaszewski         Director                      April 30, 1998
____________________________________
       CARLOS A. TOMASZEWSKI
 
    /s/ Richard N. Tinsley           Director                      April 30, 1998
____________________________________
         RICHARD N. TINSLEY
 
      /s/ John E. Marman             Director                      April 30, 1998
____________________________________
           JOHN E. MARMAN
</TABLE>
 
                                      14