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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

|    |  |                                                                                     
|--- |  | ------------------------------------------------------------------------------------
|[X] |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended June 30, 2003

Commission File No. 0-23866

VL Dissolution Corporation

(Name of Issuer in its Charter)


|                                                        |  |                                                
|------------------------------------------------------- |  | -----------------------------------------------
|Colorado
(State or other jurisdiction of incorporation) |  | 06-0679347
(I.R.S. Employer Identification No.)

1625 Broadway
Suite 990
Denver, Colorado 80202
(303) 592-5700
(Address and Telephone Number of Principal Executive Offices)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Title of Class




Common Stock, $.01 Par Value


Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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. [X] Yes  [   ] No

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-K contained in this form, and no disclosure will be
contained, to the best of issuer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. [   ]

At September 15, 2003, 7,348,572 shares of Common Stock were outstanding.
The aggregate market value of the Common Stock held by non-affiliates on
September 15, 2003 was $8,156,915 based on the OTCBB closing price of $1.11 per
share on that date.





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TABLE OF CONTENTS



|                          |                                                                                                         |  |  |  |  |  |  | 
|------------------------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                   
|                          | Item 1. Business                                                                                       
|                          | Item 2. Description of Property                                                                        
|                          | Item 3. Legal Proceedings                                                                              
|                          | Item 4. Submission of Matters to a Vote of Security Holders                                            
|                          | Item 4A. Executive Officers of the Registrant                                                          
|PART II                  
|                          | Item 5. Market for Common Equity and Related Stockholder Matters                                       
|                          | Item 6. Selected Financial Data                                                                        
|                          | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations          
|                          | Item 7A. Quantitative and Qualitative Disclosures about Market Risk                                    
|                          | Item 8. Financial Statements                                                                           
|                          | Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure           
|                          | Item 9A. Controls and Procedures                                                                       
|PART III                 
|                          | Item 10. Directors of the Registrant                                                                   
|                          | Item 11. Executive Compensation                                                                        
|                          | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|                          | Item 13. Certain Relationships and Related Transactions                                                
|                          | Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K                               
|SIGNATURES               
|CERTIFICATIONS           
|EX-10.43 Letter Agreement
|EX-23 Consent of KPMG LLP



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PART I




Item 1. Business

Introduction

VL Dissolution Corporation, formerly Vari-L Company, Inc., a Colorado
corporation (the Company), is engaged in the process of orderly liquidation
of its remaining assets, the winding up of its business and operations, and the
dissolution of the Company.

On May 5, 2003, we completed the sale of substantially all of our assets to a
wholly owned subsidiary of Sirenza Microdevices, Inc. (Sirenza). In exchange
for the assets sold, we received cash and shares of Sirenzas common stock. At
the time of the closing, the cash and stock were valued at approximately
$14.469 million, which consisted of $3.835 million in cash, $5.143 million in
Sirenza stock (3.255 million shares valued at $1.53 per share), and assumption
and forgiveness of $5.948 million in debt and accrued interest by Sirenza. We
also adopted a plan of dissolution, which included the change of our corporate
name to VL Dissolution Corporation. All of our officers and employees resigned
or were terminated following the closing of the asset sale. To manage the
Companys wind down and liquidation, we retained Cloyses Partners, LLC
(Cloyses), an independent consulting firm.

The asset sale resulted from a process that began in 2002, when we determined
that an asset sale was in the best interest of our shareholders. That process
involved consideration of various alternatives to finance the Company or sell
our business. On December 2, 2002, we entered into an agreement to sell
substantially all of our assets to Sirenza.

On December 19, 2002, the Board of Directors voted to approve a plan of
dissolution subject to the completion of the asset sale to Sirenza. We held a
special meeting of our shareholders on April 28, 2003, to approve the proposed
asset sale and plan of dissolution. A quorum of shareholders was not present
when the meeting was first convened on April 28, 2003, so we adjourned the
meeting to May 5, 2003.

We reconvened the meeting on May 5, 2003 and at that time a quorum of the
shares of common stock was present. At that meeting, our shareholders approved
the proposals included in the proxy statement, including the asset sale and
plan of dissolution. On that same day, we closed the asset purchase agreement
and our name was changed to VL Dissolution Corporation.

Since that date, we have begun the process of the orderly liquidation of our
remaining assets, the winding up of the business, and the dissolution of the
Company. This process is being managed by Cloyses under the direction of our
Board of Directors. This process involves the sale and disposition of assets
that were not acquired by Sirenza, the payment of or provision for liabilities
and other claims that were not assumed by Sirenza, and the distribution of any
remaining assets to our shareholders.

Today, our primary assets are common stock of Sirenza and cash. We have sold
550,000 shares of Sirenza common stock to satisfy liabilities and wind-up
expenses and to provide a cash reserve for potential future liabilities and
expenses.

Our corporate headquarters are currently located at 1625 Broadway, Suite 990,
Denver, Colorado 80202, and the telephone number is (303) 592-5700. Our
website address is www.vl-dissolution-corp.com. We lease one building in
Denver, Colorado with a total of 13,500 square feet of manufacturing and office
space. We are in the process of attempting to sublease this facility since we
no longer need office or manufacturing space.

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Accounting Restatement and Related Issues

In late 1999, the Securities and Exchange Commission (the SEC) commenced an
investigation into our accounting and reporting practices for the periods prior
to and including 1999. The investigation ultimately led to the withdrawal of
audit reports issued by our previous auditors for the 1997, 1998 and 1999
financial statements. In September 2001 we agreed to a settlement with the SEC
under which a federal district court issued an injunction against future
violations of reporting, proxy and anti-fraud provisions by us, but did not
require us to pay any civil penalties or money damages. See Legal
Proceedings.

As a result of the withdrawal of audit reports for the 1997, 1998 and 1999
financial statements, we no longer met the requirements for listing on NASDAQ.
Beginning September 11, 2000, our securities were quoted on the other OTC
market. In May 2002, an application for listing was filed with the Over the
Counter Bulletin Board system (the OTCBB). On June 26, 2002, the application
was accepted and our common stock began trading on the OTCBB under the stock
symbol VARL.

Business Operations Prior to the Asset Sale

Prior to closing the asset sale to Sirenza, we designed, manufactured, and
marketed a wide variety of radio frequency and microwave components and devices
for use in wireless communications. Our products were used in many different
commercial and military/aerospace applications, including wireless
telecommunications networks, wireless base stations, wireless point-to-point
radio systems, wireless point-to-multi-point radio systems, wireless local area
networks, satellite payload, test equipment (instrumentation) and ground
communications, radar systems, weapons guidance systems and advanced telemetry
systems. We operated as a single business unit and will continue to report as
such during liquidation. While we no longer have active business operations,
the following description of our business operations prior to the asset sale is
provided to aid our readers understanding of our historical financial
statements.

Our products were primarily used as parts or components of other manufacturers
wireless communications products or equipment. Wireless communication is the
transmission of voice or data signals through the air, without a physical
connection, such as a metal wire or fiber-optic cable. Information transmitted
through wireless communications equipment is transmitted by electromagnetic
waves, also known as signals. Electromagnetic waves vary in length, frequency,
and intensity. The range of electromagnetic waves is called the spectrum,
which encompasses audio near the low end and light toward the higher end. In
between is the radio spectrum used in most wireless communications. RF refers
to the lower frequencies in the spectrum while microwave refers to higher
frequencies.

For more than 50 years, we supplied wireless communications products to the
military/aerospace industry. In 1993, we expanded our engineering,
manufacturing and sales efforts to address the growing demand for commercial
wireless communications products. In 2002, we expanded our current product line
by introducing wideband voltage-controlled oscillators, and stripline couplers.

Through May 5, 2003, our principal commercial customers were original equipment
manufacturers (OEMs) and contract manufacturers that design and build
electronic products and equipment such as cellular base stations, point to
point radios, pagers and radar systems. These contract manufacturers included
Solectron, Flextronics and Sanmina-SCI. Our commercial product lines were
marketed to OEM customers including Motorola, Ericsson, Lucent, Nokia,
Microwave Data Systems, Hughes Network Systems, GE Medical and Siemens. We sold
our
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military/aerospace product lines to companies such as Raytheon, Lockheed
Martin, Northrup Grumman and Textron.

Our product lines fell into two major categories: products which produce
electromagnetic signals, which we refer to as signal source components, and
products which receive or process electromagnetic signals, or passive
components. Sales of our products were generated through a combination of
manufacturers representatives and our own direct sales force team, and were
supplemented by advertising in trade magazines, participating in trade shows
and on our website. Most of our products were customized according to our
customers specifications, but we also produced some standard products. We
also designed and manufactured custom products in response to specific customer
requirements. The majority of our sales were in parts that are customized to
meet the performance requirements of specific customers.

Products

Prior to the closing of the asset sale to Sirenza, we had three primary product
lines:



| |  |  | Commercial Signal Sources            
| | - |  | -------------------------------------
|
| |  |  | High-Reliability Signal Sources      
|
| |  |  | Military Signal Processing Components

Most of our revenue came from sales of signal source components namely,
voltage-controlled oscillators (VCOs) and phase locked loop synthesizers
(PLLs). These signal source components were designed to produce a high
quality signal that can be used over a range of radio frequencies. We held six
patents related to signal source design and technology. These patents were
included in the assets sold to Sirenza.

Commercial Signal Source Components

Over the last seven years, most of our revenues came from sales of our
commercial narrowband VCOs. However we were beginning to see a shift in the
wireless industry from VCOs to PLLs resulting in increasing sales of our PLLs.
The PLL assemblies consist of our VCOs integrated with other components and
have a higher average selling price than our VCOs. Our VCOs and PLLs are used
in high-performance cellular base stations and other demanding applications
where signal quality is especially important.

High-Reliability Signal Source Components

Our high reliability, or hi-rel, signal source components performed the same
function as the commercial signal source components. Our hi-rel signal source
components, however, were constructed using different assembly techniques
because they are designed to operate in different operating environments. These
components were designed for wideband applications (i.e., applications
involving a wider range of signal frequencies) and were constructed in
hermetically sealed packages for use over extended temperature ranges and in
adverse environments. Hi-rel products are typically specified for both
military/aerospace and high-end industrial applications.

Military Signal Processing Components

Our military signal processing components were primarily used in military and
aerospace applications. These products included power dividers and combiners
used for directing RF and microwave signals, solid state switches used to
change the routing of RF and microwave signals, and transformers used to
convert signals between different impedances. We also produced mixers, which
are used to convert the frequency of RF and microwave signals to baseband
signals.

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Other Products

In March 2002, we introduced a line of 3-dB hybrid couplers. 3-dB hybrid
couplers are critical components used to build high-power amplifiers, vector
modulators and antenna systems.

We also offered other passive components (couplers, transformers and power
dividers) that are used in a variety of niche fiber-optic applications,
including cable television and point-to-point data transmission networks.
However, these products did not account for a significant percentage of total
revenue for the period from July 1, 2002 to May 5, 2003.

Manufacturing

Through the date of the asset sale to Sirenza, we manufactured most of our
products in our own facilities in Denver, Colorado. All of our products were
completed and tested at our manufacturing facilities in Denver, Colorado. Our
3dB hybrid couplers were manufactured by a contract manufacturer who
specializes in the unique production process required by this product. Final
testing and marking was performed at our facilities in Denver, Colorado.

Sales and Marketing

Our original business focus was on the military/aerospace market. In 1993, we
expanded our market focus to include commercial applications, to lessen our
susceptibility to cyclical trends in defense spending and to seek a share of
the growing market for commercial wireless communications products. As a
result of this shift, our business became less dependent on U.S. military
spending and more dependent on the commercial telecommunications market. During
the fiscal year ended June 30, 2002 and the period from July 1, 2002 to May 5,
2003, demand for our core products sold to the telecommunications equipment
providers fell dramatically due to an overall slowdown within the
telecommunications industry, including rapid declines in expenditures for
capital infrastructure equipment by service providers.

Our commercial signal source product line accounted for 76%, 73% and 84% of
revenue for the period from July 1, 2002 to May 5, 2003 and for the years ended
June 30, 2002 and 2001, respectively.

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The following table summarizes our net sales by product line (in thousands of
dollars):

|                                      |  |            |        |          |  |          |        |  |  |  |        | 
|------------------------------------- |  | ---------- | ------ | -------- |  | -------- | ------ |  |  |  | ------ | 
|                                      |  | Period     |        |          |  |          |        |  |  | 
|                                      |  | from July  |        | Year     |  | Year    
|                                      |  | 1, 2002 to |        | Ended    |  | Ended   
|                                      |  | May 5,     |        | June 30, |  | June 30,
|                                      |  | 2003       |        | 2002     |  | 2001    
|                                      |  |            |        |          |  |         
|Commercial Signal Source Components   |  | $          | 10,541 |          |  |          | 15,615 |  |  |  | 34,899 | 
|Hi-Rel Signal Source Components       |  |            | 2,684  |          |  |          | 3,651  |  |  |  | 2,808  | 
|Military Signal Processing Components |  |            | 630    |          |  |          | 1,848  |  |  |  | 1,318  | 
|Other Products                        |  |            | 56     |          |  |          | 234    |  |  |  | 2,352  | 
|                                      |  |            |        |          |  |          |        |  |  |  |        | 
|Net sales                             |  | $          | 13,911 |          |  |          | 21,348 |  |  |  | 41,377 | 
|                                      |  |            |        |          |  |          |        |  |  |  |        | 

We sold our products primarily through manufacturers representatives who
promote and solicit orders for our products on a commission basis in exclusive
marketing territories. We typically engaged 14 to 16 manufacturers
representative firms in the U.S. We also had 20 manufacturers representatives
covering 18 foreign countries. In addition, we had a direct-sales force.

Customers

Our principal customers were OEMs and contract manufacturers of communications
equipment in either the commercial or military/aerospace marketplace. Many of
our customers are large international and domestic companies with worldwide
operations or prime contractors for military/aerospace work.

Through May 5, 2003, our key customers included ACAL Electronics, Hughes
Network Systems, Ericsson, Motorola, Nokia, Microwave Data Systems, Siemens and
Solectron in the commercial market, and Boeing (formerly Hughes), Lockheed
Martin, Textron, Northrop Grumman, Raytheon and in the military/aerospace
market.

The following represents the sales revenues from our largest customers as a
percentage of our total sales:

|                                    |  |              |    |            |  |            |    |   |  |  |    |  
|----------------------------------- |  | ------------ | -- | ---------- |  | ---------- | -- | - |  |  | -- | -
|                                    |  | Period from  |    |            |  |            |    |   |  | 
|                                    |  | July 1, 2002 |    | Year ended |  | Year ended
|                                    |  | to May 5,    |    | June 30,   |  | June 30,  
|                                    |  | 2003         |    | 2002       |  | 2001      
|                                    |  |              |    |            |  |           
|Nokia                               |  |              | 23 | %          |  |            | 18 | % |  |  | 25 | %
|Motorola                            |  |              | 13 | %          |  |            | 17 | % |  |  | 15 | %
|ACAL Electronics (includes Siemens) |  |              | 11 | %          |  |            | 13 | % |  |  | 13 | %

Our customers historically purchased products from us as needed, rather than
through long-term supply contracts. We did, however, enter into long-term
purchase agreements with some of our larger customers that established
preferred vendor status for us and, in most cases, indicated estimated purchase
quantities over the term of the agreement.

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Competition

We considered Mini-Circuits, M/A-COM, Matsushita, ALPs, Temex and Z-Com to be
our largest competitors in the commercial signal source components market.
Additionally, we believed Merrimac Industries was our largest competitor in the
military signal processing components market. Remec/Magnum was our primary
competitor in the Hi-Rel signal source components market and Anaren Microwave
was our primary competitor in the coupler market.

Research and Development

Prior to the asset sale to Sirenza, we focused our research and development
efforts in the following areas:



| |  |  | Application engineering,                                     
| | - |  | -------------------------------------------------------------
|
| |  |  | Improvement of the Commercial Signal Source product line, and
|
| |  |  | Development of new product lines.                            

Our research and development team focused on developing both new base
technologies and design methodologies for existing base technologies. The
application and design engineering team used these efforts and modified and/or
extended them to meet specific customer needs. We also had an ongoing product
improvement program.

Our research and development expenses for the period from July 1, 2002 to May
5, 2003 were $2.4 million compared to $2.7 million for the year ended June 30,
2002 and $4.0 million for the year ended June 30, 2001.

Patents

We do not have any patents at this time. On May 5, 2003 we assigned nine active
U.S. Patents to Sirenza, six of which related to signal source products.

Employees

We had no employees as of June 30, 2003.

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Financial Information about Geographic Regions

We attributed sales to customers based on the country to which the products are
shipped. Net sales by country are as follows (in thousands of dollars):

|              |  |              |        |            |  |            |        |  |  |  |        | 
|------------- |  | ------------ | ------ | ---------- |  | ---------- | ------ |  |  |  | ------ | 
|              |  | Period from  |        |            |  |            |        |  |  | 
|              |  | July 1, 2002 |        | Year ended |  | Year ended
|              |  | to           |        | June 30,   |  | June 30,  
|              |  | May 5, 2003  |        | 2002       |  | 2001      
|              |  |              |        |            |  |           
|United States |  | $            | 5,954  |            |  |            | 8,985  |  |  |  | 15,596 | 
|China         |  |              | 2,506  |            |  |            | 3,800  |  |  |  | 1,532  | 
|Finland       |  |              | 2,217  |            |  |            | 2,995  |  |  |  | 4,110  | 
|Germany       |  |              | 647    |            |  |            | 1,147  |  |  |  | 4,731  | 
|Sweden        |  |              | 623    |            |  |            | 1,321  |  |  |  | 1,527  | 
|Italy         |  |              | 404    |            |  |            | 462    |  |  |  | 4,788  | 
|England       |  |              | 232    |            |  |            | 1,349  |  |  |  | 5,393  | 
|Canada        |  |              | 201    |            |  |            | 109    |  |  |  | 1,540  | 
|Other         |  |              | 1,127  |            |  |            | 1,180  |  |  |  | 2,160  | 
|              |  |              |        |            |  |            |        |  |  |  |        | 
|Net sales     |  | $            | 13,911 |            |  |            | 21,348 |  |  |  | 41,377 | 
|              |  |              |        |            |  |            |        |  |  |  |        | 




Item 2. Description of Property

We currently lease one building, a 13,500 square foot building in Denver,
Colorado that was our main commercial products manufacturing facility. We lease
this facility from a partnership that includes our former Chief Scientific
Officer as the general partner. This lease expires on October 31, 2005 and the
current lease rate is $10,801 per month. We believe that the lease rate for
this facility is in excess of the current fair market value lease rates for
comparable facilities within the area. We are in the process of attempting to
sublease this facility since we no longer need office or manufacturing space.
We have listed this property for sublease with a broker; however there can be
no assurance that we will be successful in subleasing this property prior to
the expiration of the existing lease agreement. Even if we are successful in
subleasing this property, there can be no assurance that the sublease agreement
will be at prevailing market rates.




Item 3. Legal Proceedings

Securities and Exchange Commission Investigation

In December 1999, the Company learned that the SEC was conducting an
investigation to determine whether there were violations of the federal
securities laws by the Company or any of its officers, directors or employees.
The SECs investigation was focused primarily on the Companys financial
reporting and accounting practices and procedures during the fiscal years 1996
through 1999.

In September 2001, the Company agreed to a settlement with the SEC under which
the Company, without admitting or denying that it violated any laws, consented
to the entry of an injunction prohibiting future violations by the Company of
certain periodic reporting, record keeping, internal controls, proxy
solicitation and antifraud provisions of the Exchange Act. On November 9, 2001,
the Companys settlement with the SEC was approved by the United States
District Court for the District of Colorado pursuant to its judgment order
Final Judgment as to Vari-L, Civil Action No. 01-WM-1903, Securities and Exchange Commission v. Vari-L,
David

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G.Sherman, Jon L. Clark and Sarah E. Hume, United States District Court,
District of Colorado.

Private Securities Class Action

A number of private shareholder class actions alleging violations of federal
securities laws were filed against the Company and certain of its former
officers in the United States District Court for the District of Colorado
beginning in June 2000.

On January 22, 2003, the Company, the class action representatives and the
individual defendants executed and filed a stipulation of settlement (the
Stipulation) with the United States District Court for the District of
Colorado (the Court). The terms under the Stipulation provided that the
Company pay $250,000 in cash and issue 2.0 million shares of its common stock
to settle that action. On March 28, 2003, the Court approved the settlement of
the private securities class action as fair and reasonable to the members of
the class. Following the hearing, the Court entered its final judgment and
order of dismissal of the actions with prejudice. On May 7, 2003, the Company
paid $250,000 in cash to the class. On September 12, 2003, the Company received
from the class action representatives claims administrator the names of the
shareholders in the plaintiff class and the amount of shares to be issued to
each shareholder pursuant to the settlement. On September 15, 2003, the
Companys Board of Directors approved the issuance of the 2.0 million
settlement shares to the class members, which issuance is anticipated to be
completed by Computershare, the transfer agent for the Companys capital stock,
within 10 to 14 days from the approval of the issuance.

Shareholder Derivative Suit

On August 21, 2002, the District Court, City and County of Denver dismissed the
shareholder derivative action filed, purportedly on behalf of the Company
against Joseph Kiser, David Sherman, Jon Clark, Derek Bailey, Sarah Booher,
David Lisowski, Anthony Petrelli, Jae Shim and the Company. The derivative
plaintiff appealed the Courts ruling to the Colorado Court of Appeals. On
November 12, 2002, the parties filed a stipulated voluntary dismissal of the
appeal. On November 14, 2002, the Colorado Court of Appeals granted the
stipulated dismissal and issued its mandate ordering that the appeal be
dismissed.

Declaratory Judgment Action by Excess Insurer

On June 5, 2001, Agricultural Excess and Surplus Insurance Company (AESIC),
which had issued to the Company a $2.5 million excess directors and officers
liability insurance policy for the period of time covered by the shareholder
and class action litigation referenced above, filed suit in United States
District Court for the District of Colorado asking the court to find that it is
not obligated to provide coverage, or in the alternative, seeking permission to
rescind its policy. In connection with the execution of the Stipulation, the
Company executed a settlement agreement with AESIC in which the Company and
AESIC executed mutual releases. On April 21, 2003, AESIC filed a Motion to
Dismiss its action with prejudice. On August 24, 2003, the Court dismissed the
action with prejudice.

Company Action against Former Officers

On March 19, 2002, the Company filed a lawsuit in the District Court, City and
County of Denver, against Mr. David Sherman, Mr. Joseph Kiser, individuals, and
J.C. Enterprises, a Colorado general partnership. Mr. Sherman is the former
President of the Company and Mr. Kiser is the former Chairman of the Companys
Board of Directors and Chief Scientific Officer. Additionally, Mr. Kiser is
the General Partner of J.C. Enterprises. The Company subsequently amended the
complaint to add Ms. Joan Sherman and the Kaythern Sherman Trust as defendants.

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In its lawsuit, the Company sought to rescind certain employment and consulting
agreements between the Company and Messrs. Kiser and Sherman, and to rescind
certain stock and stock option grants made to them, on the basis that such
agreements were entered into, and such stock option grants were made, based
upon mistaken or misrepresented information regarding the Companys true
financial performance. The Company also sought to recover the compensation and
bonuses paid to them as a result of such mistaken or misrepresented
information. In addition, the Company sought to recover excessive rent it paid
pursuant to a lease agreement between the Company and J.C. Enterprises in
reliance on misrepresented information provided by Messrs. Kiser and Sherman.
The Company added Ms. Sherman and the Kaythern Sherman Trust to this action
because they may have received assets from Mr. Sherman that the Company may
have been entitled to recover.

On May 30, 2002, David Sherman filed a counter-claim against the Company
alleging that the Company breached its obligation to him by suspending payment
of consulting fees under the termination and consulting agreement between him
and the Company.

On July 8, 2002, Joseph Kiser filed counter-claims against the Company, Charles
R. Bland, Richard P. Dutkiewicz, Gil J. Van Lunsen and David M. Risley alleging
a variety of claims. Mr. Bland was the Companys President and Chief Executive
Officer. Mr. Dutkiewicz was the Companys Vice President of Finance and Chief
Financial Officer. Messrs. Risley and Van Lunsen are on the Companys Board of
Directors and were members of the Special Litigation Committee of the Board of
Directors.

During the latter half of calendar 2002, the Company executed settlement
agreements and/or mutual releases with all parties to the Company action
against the former officers. Under the terms of the settlement agreement with
Mr. Kiser and J.C. Enterprises, the Company paid $245,000 in total
consideration; $230,000 to Mr. Kiser as well as $15,000 to his former attorneys
to cover certain legal expenses. In return, Mr. Kiser agreed to a mutual
general release including, but not limited to, releasing the Company, Messrs.
Bland, Dutkiewicz, Risley and Van Lunsen from all claims related to his
employment agreement and the advancement or indemnification of attorneys fees
and other costs of defense, subject to the settlement of the private securities
class action. Under the terms of this settlement agreement, the Company agreed
to pay the current required rental amount under the existing lease with J.C.
Enterprises, but the Company has the option to terminate the lease, after
sufficient notice, in the event J.C. Enterprises contracts to sell the property
during the remaining lease term.

Additionally, the Company signed a mutual general release with Mr. Sherman,
which, among other things, released the Company from all claims related to his
employment and separation agreements and any rights he may have had regarding
advancement or indemnification of attorneys fees and other costs of defense.
In consideration of the mutual release with Mr. Sherman, Mr. Sherman
transferred 100,813 shares of the Companys common stock to the Company and the
Company repaid Mr. Shermans promissory note to Carolyn Kiser in the principal
amount of $55,030. The Company also executed mutual releases relating to
litigation with Joan Sherman and the Kaythern Sherman Trust on December 17,
2002.

The Company also signed mutual general releases with Messrs. Bailey and Clark,
which, among other things, release the Company from all claims related to their
employment and separation agreements and any rights they may have had regarding
advancement or indemnification of attorneys fees and other costs of defense.

The parties to the Company action against former officers executed a
stipulation of dismissal. On May 5, 2003, the Court dismissed the action and
all counterclaims with prejudice.

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Patent Litigation

On August 8, 2002, Anaren Microwave, Inc. (Anaren) filed suit against the
Company for infringement of U.S. Patent No. 4,821,007. On November 19, 2002,
the Company was served with the complaint. Anaren has requested damages in an
unspecified amount and attorneys fees, costs and expenses. The Company and its
counsel are investigating Anarens allegations. The complaint does not specify
which of the Companys products is alleged to infringe the intellectual
property of Anaren, nor the exact nature of the alleged infringement. However,
the Company believes that Anarens claim is directed at its coupler product
line. The coupler line is a recently introduced product line which accounted
for less than $10,000 of gross sales from its inception through May 5, 2003.
The Company has sold substantially all of its assets to Sirenza, including the
products to which the company believes that Anarens claim is directed. Under
the Companys agreement with Sirenza, Sirenza has assumed responsibility for
this claim.




Item 4. Submission of Matters to a Vote of Security Holders

A special meeting of the shareholders was held on April 28, 2003. Because a
quorum was not present when the meeting was originally convened, the special
meeting was adjourned until May 5, 2003. When the special meeting reconvened
on May 5, 2003, a quorum was present and the shareholders voted on and approved
the following:

Proposal I- To approve the sale by the Company of substantially all of its
tangible and intangible assets to Sirenza pursuant to the terms of the Purchase
Agreement.

The results were as follows:

|          |  |         |  |         |  |          
|--------- |  | ------- |  | ------- |  | ---------
|For       |  | Against |  | Abstain |  | Non-Vote 
|3,699,284 |  | 91,662  |  | 5,680   |  | 3,581,946

Proposal II- To approve the dissolution of the Company and adopt the Plan of
Dissolution of the Company, including the change of the Companys name to VL
Dissolution Corp.

The results were as follows:

|          |  |         |  |         |  |          
|--------- |  | ------- |  | ------- |  | ---------
|For       |  | Against |  | Abstain |  | Non-Vote 
|3,694,906 |  | 94,270  |  | 7,450   |  | 3,551,946

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Item 4A. Executive Officers of the Registrant

Concurrent with the closing of the asset sale with Sirenza on May 5, 2003, all
employees of the Company resigned or were terminated. Effective May 6, 2003,
the process of liquidating our remaining assets, winding up the business, and
dissolving the Company is being managed by Cloyses under the direction of our
Board of Directors. Following is a list of our executive officers that served
through May 5, 2003, their respective ages as of May 5, 2003 and their former
positions within the Company:

|                       |  |     |    |          |  |                                                                
|---------------------- |  | --- | -- | -------- |  | ---------------------------------------------------------------
|Name                   |  | Age |    | Position
|                       |  |     |    |         
|Charles R. Bland       |  |     | 55 |          |  | President, Chief Executive Officer and Director                
|Richard P. Dutkiewicz  |  |     | 48 |          |  | Vice President  Finance, Chief Financial Officer and Secretary
|Timothy G. Schamberger |  |     | 42 |          |  | Vice President  Sales and Marketing                           
|Daniel J. Wilmot       |  |     | 37 |          |  | Vice President  Research and Development                      

Charles R. Bland  President, Chief Executive Officer and Director. Mr.
Bland, age 55, joined us in May 2001 as our President and Chief Executive
Officer. On December 26, 2001, he was appointed to the Board of Directors. From
June 1, 2000 until he joined us, he served as the President of Growzone, Inc.,
a software company focused on the horticultural industry, and from June 1999
until June 2000, he was the President of AmericasDoctors.com, an Internet
health care content site. From 1998 to 1999, Mr. Bland was the Chief Operating
Officer at Quark Incorporated, provider of shrink wrap and client server
software for the publishing industry. For the previous 24 years, Mr. Bland
worked in positions of increasing responsibility with Owens Corning Fiberglas,
a world leader in high performance glass composites and building materials,
with his final assignment being President, Africa/Latin American Operations.
Mr. Bland received his B.S., Accounting and Finance, from Ohio State University
and his MBA from the Sloan School, Massachusetts Institute of Technology.

Richard P. Dutkiewicz  Vice President of Finance, Chief Financial Officer and
Secretary. Mr. Dutkiewicz, age 48, joined us in January 2001 as our Vice
President of Finance, Chief Financial Officer and Assistant Secretary. On
December 31, 2001, he was appointed Secretary of the Corporation. From 1995 to
2001, Mr. Dutkiewicz was Vice President  Finance, Chief Financial Officer,
Secretary and Treasurer of Coleman Natural Products, Inc., located in Denver,
Colorado, a leading supplier of branded natural beef in the United States. Mr.
Dutkiewicz previous experience includes senior financial management positions
at Tetrad Corporation, MicroLithics Corporation and various divisions of United
Technologies Corporation. Mr. Dutkiewicz was an Audit Manager at KPMG LLP. Mr.
Dutkiewicz also serves on the Board of Directors of CareerLab.com. He received
his BBA degree from Loyola University of Chicago in 1977. He is a member of the
American Institute of Certified Public Accountants, Financial Executives
International and the Association for Corporate Growth.

Timothy G. Schamberger  Vice President, Sales and Marketing. Mr. Schamberger,
age 42, became our Vice President of Sales and Marketing in May 2002. Prior to
joining us, he served in various capacities including Strategic Account Manager
with M/A-COM Inc., a leading wireless RF components manufacturer since 1993.
Mr. Schambergers previous experience also includes sales management and
engineering positions with Allied Signal Aerospace Corp., a manufacturer of
non-nuclear systems for nuclear weapons, and Wilcox Electric, a manufacturer of
ground-based navigation aid equipment. Mr. Schamberger received his BSEE from
Kansas State University in 1983.

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Daniel J. Wilmot  Vice President of Research and Development. Mr. Wilmot, age
37, joined us in August 1992. He served as Product Development PLL Design
Engineer and Director of Advanced Product/Development Engineer in 1993 before
he was appointed Vice President of Research and Development in November 1993.
Prior to joining us, Mr. Wilmot was an RF Lead Engineer with Rockwell
International where he worked in management, design, development, cost
management and containment for PLLs and VCOs among other hybrid RF devices.
Before Rockwell International, he worked at Interstate Electronics Corp. in
Anaheim, California as a Radio subsystem designer for GPS applications. Mr.
Wilmot received his BSEE from University of California at Santa Barbara in June
1986 and an MSEE from the California State University at Fullerton in December
1991. Mr. Wilmot also completed the AEA/Stanford Executive Institute for
Management of High-Technology Companies at Stanford University, California in
August 1999.

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PART II




Item 5. Market for Common Equity and Related Stockholder Matters.

Market

In May 2002, an application for listing was filed with the Over the Counter
Bulletin Board system (the OTCBB). The application was accepted and we began
trading on the OTCBB under the stock symbol VARL. Formerly, our common stock
was traded on the Nasdaq National Market until July 7, 2000 when it was
suspended by Nasdaq. During the period from July 7, 2000 through September 9,
2000 when the stock was delisted by Nasdaq, there was no active public trading
market for our stock. Beginning September 11, 2000, our stock was quoted on the
other OTC market until our subsequent listing with the OTCBB on June 26, 2002.

The following table sets forth the high and low prices for the common stock for
the periods indicated:

|                                     |  |      |      |     |  |   |      | 
|------------------------------------ |  | ---- | ---- | --- |  | - | ---- | 
|                                     |  | High |      | Low
|                                     |  |      |      |    
|As quoted on other OTC Market:       |  |      |      |     |  |   |      | 
|Quarter ended June 30, 2001          |  | $    | 3.00 |     |  | $ | 1.25 | 
|Quarter ended September 30, 2001     |  | $    | 3.50 |     |  | $ | 1.00 | 
|Quarter ended December 31, 2001      |  | $    | 2.50 |     |  | $ | 1.00 | 
|Quarter ended March 31, 2002         |  | $    | 1.75 |     |  | $ | 1.00 | 
|Period from April 1 to June 25, 2002 |  | $    | 1.40 |     |  | $ | 0.55 | 
|OTCBB:                               |  |      |      |     |  |   |      | 
|Period from June 26 to June 30, 2002 |  | $    | 1.15 |     |  | $ | 0.60 | 
|Quarter ended September 30, 2002     |  | $    | 1.05 |     |  | $ | 0.45 | 
|Quarter ended December 31, 2002      |  | $    | 0.90 |     |  | $ | 0.21 | 
|Quarter ended March 31, 2003         |  | $    | 0.77 |     |  | $ | 0.40 | 
|Quarter ended June 30, 2003          |  | $    | 0.67 |     |  | $ | 0.41 | 

Holders

As of September 15, 2003, there were approximately 400 holders of record of our
common stock.

Dividends/Distributions

We have never declared or paid a cash dividend on our common stock. Our Board
of Directors presently intends to use our assets and any future earnings first
to satisfy or provide for the satisfaction of our liabilities, with the balance
to be distributed to our shareholders in one or more distributions. Any
distributions may be in the form of cash or shares of Sirenza common stock, or
a combination of the two. The declaration of any such distributions in the
future would be subject to the discretion of the Board of Directors, which may
consider such factors as our financial condition, contingent liabilities and
expenses, and any contractual or other legal restrictions.

Equity Compensation Plan Information

See Equity Compensation Plan Information in Item 12.

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Sales of Unregistered Securities

Stock Grant Plan.During the period from July 1, 2002 to May 5, 2003, we issued
3,600 shares of our common stock with an approximate fair market value of
$1,000 to non-management members of our Board of Directors under our Stock
Grant Plan. Although we have filed a registration statement on Form S-8
covering the shares issuable under the Stock Grant Plan, due to the fact that
certain of our financial statements for the periods prior to June 30, 2000 are
unaudited, we have issued such shares in reliance on Section 4(2) under the
Securities Act of 1933, as amended.

Employee Stock Purchase Plan.During the period from July 1, 2002 to May 5,
2003, we sold 96,079 shares of our common stock for a weighted average price of
$0.24 per share to employees pursuant to our Employee Stock Purchase Plan.
Although we have filed a registration statement on Form S-8 covering the shares
issuable under the Employee Stock Purchase Plan, due to the fact that certain
of our financial statements for the periods prior to June 30, 2000 are
unaudited, we have issued such shares in reliance on Section 4(2) under the
Securities Act of 1933, as amended.

Issuance of Class Action Settlement Shares.Pursuant to the settlement of the
private securities class action, we authorized the issuance of 2.0 million
shares of our common stock to the members of the plaintiff class on or about
September 15, 2003. Based on the closing price of our common stock on
September 15, 2003, the aggregate fair market value of the common stock was
approximately $2,220,000. Since the terms and conditions of the issuance of
the shares was approved by the United States District Court for the District of
Colorado as fair and reasonable to the members of the class, the shares are to
be issued in reliance upon Section 3(a)(10) of the Securities Act of 1933, as
amended.

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Item 6. Selected Financial Data

The selected historical financial information presented below (in thousands of
dollars, except share and per share data) should be read in conjunction with
Managements Discussion and Analysis of Financial Condition and Results of
Operations and our financial statements and related notes thereto. Certain
fiscal year 2002 amounts have been reclassified to conform to the fiscal year
2003 presentation. Information prior to January 1, 1999 cannot be prepared
without unreasonable effort and expense. The financial statements for periods
prior to June 30, 2000 have not been audited.

Upon the sale of substantially all of our operating assets to Sirenza on May 5,
2003, we terminated our employees and ceased operations. Accordingly, a
comparison of the selected financial data for the period from July 1, 2002 to
May 5, 2003 with that of the prior fiscal years should take into account the
fact that the Company ceased its operations just over ten months after the
beginning of the fiscal year ended June 30, 2003.

|                                    |                                                                                    |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |       |        |        |  
|----------------------------------- | ---------------------------------------------------------------------------------- | ------------------------ | ----------------------------- | ----- | ------------ | ------ | --------- | ----- | -------- | ------ | --------- | ------ | ------ | ------ | --------- | ----- | ------ | ------ | -
|                                    |                                                                                    |                          |                               |       | Period       |        |           |       |          |        |           |        |        |        | Twelve   
|                                    |                                                                                    |                          |                               |       | from         |        | Year      |       | Year     |        | Months   
|                                    |                                                                                    |                          |                               |       | July 1, 2002 |        | Ended     |       | Ended    |        | Ended    
|                                    |                                                                                    |                          |                               |       | to May 5,    |        | June 30,  |       | June 30, |        | June 30, 
|                                    |                                                                                    |                          |                               |       | 2003         |        | 2002      |       | 2001     |        | 2000     
|                                    |                                                                                    |                          |                               |       |              |        |           |       |          |        |          
|Statement of Operations Data:       |                                                                                    |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |      
|Net sales                           |                                                                                    | $                        | 13,911                        |       |              |        | 21,348    |       |          |        | 41,377    |        |        |        | 30,597    |      
|Cost of goods sold                  |                                                                                    |                          | 10,148                        |       |              |        | 13,582    |       |          |        | 21,747    |        |        |        | 17,540    |      
|                                    |                                                                                    |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |      
|                                    |                                                                                    | Gross profit             |                               |       | 3,763        |        |           |       | 7,766    |        |           |        | 19,630 |        |           |       | 13,057 |       
|                                    |                                                                                    |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |      
|Operating expenses:                 |                                                                                    |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |      
|                                    | Selling                                                                            |                          |                               | 2,299 |              |        |           | 2,925 |          |        |           | 4,268  |        |        |           | 3,636 |       
|                                    | General and administrative                                                         |                          |                               | 5,040 |              |        |           | 6,398 |          |        |           | 9,664  |        |        |           | 4,436 |       
|                                    | Research and development                                                           |                          |                               | 2,444 |              |        |           | 2,653 |          |        |           | 4,021  |        |        |           | 5,646 |       
|                                    | Expenses related to workforce
reductions and the asset sale to
Sirenza             |                          |                               | 3,636 |              |        |           | 101   |          |        |           |       |        |        |           |      |       
|                                    | Expenses related to accounting
restatements and the related
shareholder litigation |                          |                               | 82    |              |        |           | 1,805 |          |        |           | 2,387  |        |        |           | 469   |       
|                                    |                                                                                    |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |      
|                                    |                                                                                    | Total operating expenses |                               |       | 13,501       |        |           |       | 13,882   |        |           |        | 20,340 |        |           |       | 14,187 |       
|                                    |                                                                                    |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |      
|                                    |                                                                                    | Operating loss           |                               |       | (9,738       | )      |           |       | (6,116   | )      |           |        | (710   | )      |           |       | (1,130 | )     
|                                    | Other income (expense):                                                            |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |       |       
|                                    | Interest income                                                                    |                          |                               | 18    |              |        |           | 48    |          |        |           | 416    |        |        |           | 460   |       
|                                    | Interest expense                                                                   |                          |                               | (866  | )            |        |           | (199  | )        |        |           | (1,062 | )      |        |           | (873  | )     
|                                    | Gain on disposition of assets                                                      |                          |                               | 6,284 |              |        |           |      |          |        |           |       |        |        |           |      |       
|                                    | Other, net                                                                         |                          |                               | 375   |              |        |           | 12    |          |        |           | (43    | )      |        |           | (35   | )     
|                                    |                                                                                    |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |      
|                                    |                                                                                    |                          | Total other income (expenses) |       |              | 5,811  |           |       |          | (139   | )         |        |        | (689   | )         |       |        | (448   | )
|                                    |                                                                                    |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |      
|                                    |                                                                                    |                          | Net loss                      |       | $            | (3,927 | )         |       |          | (6,255 | )         |        |        | (1,399 | )         |       |        | (1,578 | )
|                                    |                                                                                    |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |      
|Loss per share                      |                                                                                    | $                        | (0.54                         | )     |              |        | (0.87     | )     |          |        | (0.20     | )      |        |        | (0.25     | )    
|                                    |                                                                                    |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |      
|Weighted average shares outstanding |                                                                                    |                          | 7,258,853                     |       |              |        | 7,152,342 |       |          |        | 7,083,866 |        |        |        | 6,232,964 |      
|                                    |                                                                                    |                          |                               |       |              |        |           |       |          |        |           |        |        |        |           |      

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|                                                                |  |          |        |          |  |          |        |  |  |  |        | 
|--------------------------------------------------------------- |  | -------- | ------ | -------- |  | -------- | ------ |  |  |  | ------ | 
|                                                                |  | June 30, |        | June 30, |  | June 30,
|                                                                |  | 2002     |        | 2001     |  | 2000    
|Balance Sheet Data at Period End:                               |  |          |        |          |  |          |        |  |  |  |        | 
|Cash and cash equivalents                                       |  | $        | 553    |          |  |          | 2,013  |  |  |  | 11,030 | 
|Working capital                                                 |  |          | 1,999  |          |  |          | 7,093  |  |  |  | 6,742  | 
|Total assets                                                    |  |          | 13,394 |          |  |          | 20,454 |  |  |  | 32,571 | 
|Notes payable and current
installments of long-term obligations |  |          | 1,611  |          |  |          | 1,764  |  |  |  | 11,566 | 
|Long-term obligations                                           |  |          | 55     |          |  |          | 1,321  |  |  |  | 92     | 
|Total stockholders equity                                      |  |          | 7,739  |          |  |          | 13,829 |  |  |  | 14,685 | 

On May 5, 2003, we completed the sale of all of our operating assets to Sirenza
and ceased preparing our financial statements on a going concern basis in
accordance with accounting principles generally accepted in the United States
of America. Changes in our net assets in liquidation since May 5, 2003 are as
follows:

|                                                                   |  |                |       | 
|------------------------------------------------------------------ |  | -------------- | ----- | 
|                                                                   |  | Period from   
|                                                                   |  | May 6, 2003 to
|                                                                   |  | June 30, 2003 
|                                                                   |  |               
|Net increase in net assets in liquidation:                         |  |                |       | 
|Mark-to-market adjustment on investment in common stock of Sirenza |  | $              | 1,920 | 
|                                                                   |  |                |       | 
|Net increase in net assets in liquidation                          |  |                | 1,920 | 
|                                                                   |  |                |       | 
|Net assets in liquidation, May 5, 2003                             |  |                | 2,588 | 
|                                                                   |  |                |       | 
|Net assets in liquidation, June 30, 2003                           |  | $              | 4,508 | 
|                                                                   |  |                |       | 




Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations

Forward Looking Statements

The Managements Discussion and Analysis of Financial Condition and Results of
Operations contains forward looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are based on a number of assumptions by us about the future, usually
based on current conditions. These assumptions may or may not prove to be
correct and, as a result, our own forward-looking statements may also be
inaccurate. On the other hand, based on what we know today and what we expect
in the future, we believe that the forward-looking statements we make in this
report are reasonable. In most cases, when we use words like believe,
expect, estimate, anticipate, project, plan, or predict to describe
something which has not yet occurred, we are making a forward-looking
statement.

We cannot list here all of the risks and uncertainties that could cause our
actual future financial and operating results to differ materially from our
historical experience and our present expectations or projections but we can
identify many of them. For example, our future results could be affected by
the cost of satisfying currently known liabilities, the need to satisfy
unanticipated liabilities that might arise in the future, the expenses of
dissolving and winding up the Company, and the price at which Sirenza stock may
be held or sold. It is important to remember that forward-looking statements
speak only as of the date when they are made and we do not promise that we will
publicly update or revise those statements whenever conditions

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change or future events occur. Accordingly, we do not recommend that any
person seeking to evaluate our Company should place undue reliance on any
forward-looking statement in this report.

The following discussion and analysis should be read in conjunction with the
selected financial data in Item 6 and our financial statements and the notes
thereto beginning on page F-1. The financial statements for periods prior to
June 30, 2000 have not been audited. Our fiscal year end was changed to June 30
effective in 2000. Previously, our fiscal year ended on December 31. Prior to
May 5, 2003, our operations consisted of a single business segment  the
design, manufacture and sale of a wide variety of radio frequency and microwave
components and devices mainly used in the wireless communications industry.

Critical Accounting Policies and Estimates

Our discussion and analysis of our historical and liquidation based financial
condition and results of operations are based upon our financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses. On an on-going basis, we
evaluated our estimates, including those related to revenue recognition,
allowances for doubtful accounts, inventory valuation and commitments and
contingencies. We based our estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different
assumptions or conditions.

We believe the following critical accounting policies impacted our more
significant judgments and estimates used in the preparation of our historical
and liquidation based financial statements.

Revenue Recognition and Allowances for Doubtful Accounts

Revenues were recognized at the time of shipment to, or acceptance by, the
customer, provided title and risk of loss transferred to the customer.

We maintained allowances for doubtful accounts for estimated losses
resulting from the inability of our customers to make required payments. The
allowance for doubtful accounts was determined based on review of the
overall condition of accounts receivable balances and review of significant
past due accounts. Additionally, we maintained credit insurance on certain
of our foreign accounts receivable. If the financial condition of our
customers deteriorated, resulting in an impairment of their ability to make
payments, additional allowances were provided.

Inventory Valuation

We valued our inventories at lower of cost or market on a part-by-part
basis. Additionally, we made estimates regarding the market value of our
inventory, including an assessment of excess or obsolete inventory. We
determined excess and obsolete inventory based on an estimate of the future
demand within a specified time horizon, generally twelve months. The
estimates we used for demand were also used for near-term capacity planning
and inventory purchasing and were consistent with our revenue forecasts. If
our actual forecast was less than our demand forecast, we provided
additional excess inventory charges, which decreased future gross margin and
net operating results.

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Commitments and Contingencies

We were party to various legal proceedings and claims, as well as various
other commitments and contingencies. We recorded a liability if it was (1)
probable that an obligation was incurred because of a transaction or event
happening on or before the date of the financial statements and (2) the
amount of the obligation could be reasonably estimated.

Accrued Costs of Liquidation and Effects of Change to Liquidation Basis

Pursuant to the amended plan of dissolution, which was approved by the
shareholders at the special meeting on May 5, 2003, we filed articles of
dissolution with the Secretary of State of the State of Colorado. Upon
filing of the articles of dissolution, our operations were limited to
winding-up our business and affairs, selling our remaining assets,
discharging our known liabilities, establishing a contingency reserve for
payment of expenses and contingent liabilities, and distributing any
remaining assets to our shareholders, all in accordance with the amended
plan of dissolution. As a result, we changed our basis of accounting to the
liquidation basis as of May 5, 2003. The accompanying statements of
operations, stockholders equity and cash flows for the period from July 1,
2002 to May 5, 2003 and for each of the years in the two year period ended
June 30, 2002 have been presented on a going concern basis comparable to
prior periods, which assumes the realization of assets and the liquidation
of liabilities in the normal course of business. Upon changing to the
liquidation basis of accounting, which assumes that assets and liabilities
are reflected at the estimated amounts to be paid or received, we recorded
$1.317 million of accrued costs of liquidation representing an estimate of
the costs to be incurred during dissolution; however, actual costs could
differ from those estimates. Distributions ultimately made to stockholders
upon liquidation will differ from the net assets in liquidation recorded
in the accompanying Statement of Net Assets in Liquidation as a result of
future operations, the sale proceeds ultimately received by us and
adjustments, if any, to estimated costs of liquidation.

At June 30, 2003, the following represents the estimated costs of
liquidation (in thousands of dollars):

|                                     |       |   |     |       | 
|------------------------------------ | ----- | - | --- | ----- | 
|Insurance premiums                   |       | $ | 407 |      
|Officer stay payments                |       |   | 383 |      
|Legal, audit and tax services        |       |   | 349 |      
|Other estimated costs of liquidation |       |   | 178 |      
|                                     |       |   |     |      
|                                     | Total |   | $   | 1,317 | 
|                                     |       |   |     |      

Upon closing of the asset sale on May 5, 2003, we received shares in the
common stock of Sirenza. Those shares increased in value by $1.9 million
during the period from May 6, 2003 to June 30, 2003, which increase has
been recorded as a mark-to-market adjustment in the accompanying Statement
of Changes in Net Assets in Liquidation for the period from May 6, 2003 to
June 30, 2003.

Results of Operations for the period from July 1, 2002 to May 5, 2003 compared
with the Fiscal Year Ended June 30, 2002

On May 5, 2003, we completed the sale of all of our operating assets to Sirenza
and ceased preparing our financial statements on a going concern basis under
generally accepted accounting principles. Accordingly,

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results of operations are not comparable to the year ended June 30, 2002.
Results of operations do not reflect adjustments recorded upon the change to
the liquidation basis of accounting.

Net Sales

Net sales for the period from July 1, 2002 to May 5, 2003 decreased 34.8% to
$13.9 million compared with $21.3 million for the year ended June 30, 2002.
While our unit volume for its commercial signal source products increased
slightly, we maintained our pattern of the last few quarters of lowering prices
of our commercial signal source products to several key customers to maintain
market share. The sale of all of our operating assets on May 5, 2003 also
contributed to the decline in revenue. Overall, the wireless telecommunications
industry has been negatively impacted by the severe market downturn and more
specifically by a rapid decline in expenditures for capital infrastructure
equipment by service providers.

Gross Profit

Gross profit for the period from July 1, 2002 to May 5, 2003 decreased 51.5% to
$3.8 million, or 27.1% of net sales, compared with $7.8 million, or 36.4% of
net sales, for the year ended June 30, 2002. The gross profit percent in any
period can be affected significantly by volume and price concessions. Fixed
manufacturing overhead adversely affects gross profit at lower sales levels.
Accordingly, reduced sales levels combined with fixed manufacturing overhead
levels comparable to prior periods has the effect of lowering gross profit as a
percentage of sales. Additionally, changes in market demand for our products,
combined with changes in product design resulted in excess inventory parts. On
a quarterly basis, we reviewed our inventory on hand and firm purchase
commitments versus our sales forecast to determine the adequacy of the existing
reserve for excess and obsolete inventory.

Included in cost of goods sold for the period from July 1, 2002 to May 5, 2003
and for the year ended June 30, 2002 is a charge of $475,000 and $564,000 for
excess and obsolete inventory, respectively. Additionally, for the year ended
June 30, 2002, we recognized a benefit of $268,000 of recoveries for previously
written-off inventory.

Selling Expenses

Selling expenses for the period from July 1, 2002 to May 5, 2003 decreased
21.4% to $2.3 million, or 16.5% of net sales, compared with $2.9 million, or
13.7% of net sales, for the year ended June 30, 2002. The dollar decrease in
selling expenses was primarily attributable to a decrease of $267,000 in
commissions paid to manufacturers representatives as a result of reduced sales
volume. The sale of all of our operating assets on May 5, 2003 also contributed
to the decline in selling expenses.

General and Administrative Expenses

General and administrative expenses for the period from July 1, 2002 to May 5,
2003 decreased 21.2% to $5.0 million, or 36.2% of net sales, compared with $6.4
million, or 30.0% of net sales, for the year ended June 30, 2002. The dollar
decrease was primarily attributable to a decrease of $1.4 million in salaries
paid and independent contractors utilized for accounting and information
technology services. The sale of all of our operating assets on May 5, 2003
also contributed to the decline in general and administrative expenses.

Research and Development Expenses

Research and development expenses for the period from July 1, 2002 to May 5,
2003 decreased 7.9% to $2.4 million, or 17.6% of net sales, compared with $2.7
million or 12.4% of net sales, for the year ended June 30, 2002.

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Expenses Related to Workforce Reductions and the Asset Sale to Sirenza

As a result of the continuing weakness in the wireless industry and the impact
it had upon our revenues, we reduced our workforce and incurred severance
expenses. Additionally, we incurred costs in connection with the asset sale to
Sirenza. Expenses related to workforce reductions and the asset sale to Sirenza
were as follows (in thousands of dollars):

|                                   |  |                 |       |               |  |  |     | 
|---------------------------------- |  | --------------- | ----- | ------------- |  |  | --- | 
|                                   |  | Period from     |       |               |  | 
|                                   |  | July 1, 2002 to |       | Year ended   
|                                   |  | May 5, 2003     |       | June 30, 2002
|                                   |  |                 |       |              
|Severance and post-closing bonuses |  | $               | 1,031 |               |  |  | 101 | 
|                                   |  |                 |       |               |  |  |     | 
|Legal fees                         |  |                 | 665   |               |  |  |    | 
|Investment bankers fees           |  |                 | 502   |               |  |  |    | 
|Lease termination penalties        |  |                 | 825   |               |  |  |    | 
|Asset impairment                   |  |                 | 451   |               |  |  |    | 
|Other related costs                |  |                 | 162   |               |  |  |    | 
|                                   |  |                 |       |               |  |  |     | 
|Total                              |  | $               | 3,636 |               |  |  | 101 | 
|                                   |  |                 |       |               |  |  |     | 

Expenses Relating to Accounting Restatements and Related Legal Matters, Net of
Recoveries

In early 2000, management of the Company commenced efforts to restate its
previously issued financial statements after being notified by the Securities
and Exchange Commission (the Commission) that the Commission was
investigating its accounting and reporting practices. Certain costs incurred
in conjunction with these efforts have been separately classified in the
Companys Statements of Operations as Expenses relating to accounting
restatements and related legal matters, net of recoveries. Expenses included
in this classification include the cost of external counsel for services
provided in connection with shareholder lawsuits, the Commissions
investigation of the Company, legal fees and expenses of the Special Litigation
Committee of the Board of Directors, the costs incurred to settle the private
securities action and the Company action against former officers (net of
recoveries), the cost of certain consultants and temporary labor hired to
assist in the accounting restatements, and reimbursements to current and former
employees of the Company for their legal fees and expenses.

The accounting restatements were completed in February 2001. Additionally,
during October 2002 and December 2002, the Company, the individual defendants
in the private securities class action, the Agricultural Excess and Surplus
Insurance Company, and the individual defendants in the action against former
officers attended global settlement conferences. All parties involved reached
an agreement in principle for the global settlement of all litigation as
further described in Part II, Item I, Legal Proceedings. On January 22, 2003,
the Company, the class action representatives and the individual defendants in
the private securities class action executed and filed a Stipulation of
Settlement (the Stipulation) with the United States District Court for the
District of Colorado (the Court). On January 29, 2003, the Court issued its
order preliminarily approving the settlement of the private securities class
action, certification of the class, and the provision of notice to members of
the class (the Preliminary Approval). On March 28, 2003, the Court held a
fairness hearing regarding the settlement of the private securities class
action. At the hearing, the court approved the settlement of the private
securities class action as fair and reasonable to the members of the class.
Following the hearing, the Court entered its final judgment and order of
dismissal of the actions with prejudice. See Part I, Item 3 Legal Proceedings
for additional information.

Expenses relating to accounting restatements and related legal matters, net of
recoveries, were as follows (in thousands of dollars):

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|                                                                                                                                                                                                                                                                                  |  |                 |     |               |  |  |       |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | --- | ------------- |  |  | ----- | -
|                                                                                                                                                                                                                                                                                  |  | Period from     |     |               |  | 
|                                                                                                                                                                                                                                                                                  |  | July 1, 2002 to |     | Year ended   
|                                                                                                                                                                                                                                                                                  |  | May 5, 2003     |     | June 30, 2002
|                                                                                                                                                                                                                                                                                  |  |                 |     |              
|Legal fees incurred in connection with the shareholder
lawsuits, Special Litigation Committee and the global
settlement                                                                                                                                                           |  | $               | 199 |               |  |  | 472   |  
|Adjustment of previously recorded estimates of $286,000
(representing legal fees incurred by former officers, the
present value of post-employment health care obligations and
a one time separation bonus payable to Mr. Kiser) to $245,000
reflecting the settlement agreements |  |                 | (41 | )             |  |  |      |  
|Adjustment of previously recorded estimates of $117,000
(representing net employment obligations payable to Mr. Sherman) to $0 reflecting termination of an agreement due to
misappropriation of funds                                                                            |  |                 |    |               |  |  | (117  | )
|Mr. Shermans transfer of 100,813 shares of common stock to
the Company. The shares were valued at the closing market
price on the date in which Mr. Sherman and the Company
executed a mutual general release                                                                    |  |                 | (76 | )             |  |  |      |  
|Approximate cost to settle the Private Securities Class Action                                                                                                                                                                                                                    |  |                 |    |               |  |  | 1,450 |  
|                                                                                                                                                                                                                                                                                  |  |                 |     |               |  |  |       |  
|Total                                                                                                                                                                                                                                                                             |  | $               | 82  |               |  |  | 1,805 |  
|                                                                                                                                                                                                                                                                                  |  |                 |     |               |  |  |       |  

Other Income (Expense)

Interest expense increased 335.2% to $848,000 for the period from July 1, 2002
to May 5, 2003, compared with expense of $199,000 for the year ended June 30,
2002. The increase was primarily attributable to an increase in interest
expense of $649,000 due to a larger balance of debt outstanding during the
period from July 1, 2002 to May 5, 2003 as compared to the year ended June 30,
2002 at significantly higher interest rates as a result of our Loan Facility
with Sirenza.

The sale of all of our operating assets on May 5, 2003 contributed to the net
gain of $6.3 million. Other income, net, primarily represents a gain of
$375,000 on the sale of various term and whole life insurance policies.

Net Loss and Loss per Share

Due to the factors described above, our net loss decreased $2.6 million to $3.9
million, or $0.54 per share, for the period from July 1, 2002 to May 5, 2003,
compared with a net loss of $6.3 million, or $0.87 per share, for the year
ended June 30, 2002.

Results of Operations for the Year Ended June 30, 2002 compared with the Year
Ended June 30, 2001

Net Sales

Net sales for the year ended June 30, 2002 decreased 48.4% to $21.3 million
compared with $41.4 million for the year ended June 30, 2001. This decline is
primarily due to a decrease in demand for the quantity of commercial signal
source products consistent with an overall slowdown in the wireless
communications industry.

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Revenue from commercial signal source products was $15.6 million for the year
ended June 30, 2002, a 55.3% decrease from the $34.9 million for the year ended
June 30, 2001. Revenue from commercial signal source products for the year
ended June 30, 2001 included fees earned from a contract modification of
$295,000. Revenue from all other products was $5.7 million for the year ended
June 30, 2002, a 12.3% decrease from the $6.5 million for the year ended June
30, 2001. Revenue from all other products for the year ended June 30, 2001
included a significant end-of-life production run generating net sales of
$809,000.

Gross Profit

Gross profit for the year ended June 30, 2002 decreased 60.6% to $7.7 million,
or 36.1% of net sales, compared with $19.6 million, or 47.4% of net sales, for
the year ended June 30, 2001. The gross profit percent in any period is
affected significantly by volume and unusual items.

Fixed manufacturing overhead adversely affects gross profit at lower sales
volumes. Accordingly, the reduced sales level for the year ended June 30, 2002
had the effect of lowering gross profit as a percentage of sales. Additionally,
changes in market demand for our products, combined with changes in product
design can result in excess inventory parts, such as printed circuit boards. On
a quarterly basis, we review our inventory on hand and firm purchase
commitments versus our sales forecast to determine the adequacy of the existing
reserve for excess and obsolete inventory.

Included in cost of goods sold for the years ended June 30, 2002 and 2001 are
charges of $564,000 and $1.4 million, respectively, for excess and obsolete
inventory. Additionally, for the year ended June 30, 2002, we charged $65,000
to cost of goods sold for severance costs related to a reduction in our work
force. These charges were offset by $268,000 of recoveries for previously
written-off inventory.

During the quarter ended June 30, 2002, we sold inventories with a net book
value of approximately $250,000 for $75,000. As a result, we recorded a charge
to cost of goods sold for $175,000. Additionally, due to the continuing decline
in the industry and weak demand of our commercial signal source products, we
offered certain of our preferred customers price decreases which resulted in a
$152,000 decrement in gross margin for the quarter ended June 30, 2002.

Operating Expenses

Included in operating expenses are charges for non-cash stock compensation of
$44,000 and $487,000 for the years ended June 30, 2002 and 2001, respectively.
The charges for stock compensation principally relate to amortization of
deferred stock compensation attributable to stock options granted at less than
the market price of the common stock on the date of the grant. Of the $487,000
total amount of stock compensation expense recorded for the year ended June 30,
2001, $409,000 relates to options granted in December 1999. In December 2000,
these options were re-priced at $34.50 per share, the market price of the
common stock at the date of the original grant. As a result, the remaining
unamortized stock compensation associated with these option grants was reversed
in December 2000.

In April 2002, we filed a Tender Offer (the Offer) with the SEC which offered
employees the right to exchange all outstanding options to purchase shares of
the Companys common stock with an exercise price equal to $34.50 per share for
replacement options to be granted no earlier than six months and one day from
the expiration of the Offer at an exercise price equal to no less than the fair
market value of the common stock on the grant date. Under the terms and subject
to the conditions set forth in the Offer, 180,579 options were surrendered by
eligible employees and cancelled on May 23, 2002. We issued replacement options
to purchase an aggregate of up to 180,579 shares of common stock in exchange
for the options surrendered pursuant to the Offer on November 25, 2002.

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Selling Expenses

Selling expenses for the year ended June 30, 2002 decreased 31.5% to $2.9
million, or 13.7% of net sales, compared with $4.3 million, or 10.3% of net
sales, for the year ended June 30, 2001. The dollar decrease in selling
expenses was primarily attributable to lower commissions paid to manufacturers
representatives as a result of reduced sales volume and a decrease in charges
for non-cash stock compensation.

General and Administrative Expenses

General and administrative expenses for the year ended June 30, 2002 decreased
33.6% to $6.4 million, or 30.1% of net sales, compared with $9.7 million, or
23.4% of net sales, for the year ended June 30, 2001. The dollar decrease was
primarily attributable to reduced spending on independent contractors for
interim management and accounting services, the timing of audit fees paid in
connection with the audit of our financial statements for the years ended June
30, 2001 and 2000 and a decrease in charges for non-cash stock compensation,
partially offset by an increase in salaries and wages for the permanent
transfer of personnel to assist in business development efforts, as well as new
employees hired in 2002. Additionally, we recognized a $125,000 benefit from
the recovery of a disputed amount that was written off in a previous period and
a $145,000 benefit from an insurance recovery for undocumented travel advances
to a former officer, offset by $20,000 for severance costs related to a
reduction in our work force.

Research and Development Expenses

Research and development expenses for the year ended June 30, 2002 decreased
33.6% to $2.7 million, or 12.5% of net sales, compared with $4.0 million or
9.7% of net sales, for the year ended June 30, 2001. The dollar decrease was
primarily attributable to lower salaries and benefits from the permanent
transfer of personnel to assist in business development efforts, fewer
employees engaged in research and development efforts, a reduction in stay
bonuses and production bonuses paid to employees and a decrease in charges for
non-cash stock compensation offset by $16,000 for severance costs related to a
reduction in our work force.

Expenses Relating to Accounting Restatements and Related Legal Matters, Net of
Recoveries

Expenses relating to the accounting restatements and related legal matters, net
of recoveries for the year ended June 30, 2002 and 2001 were $1.8 million and
$2.4 million, respectively.

Included in these expenses for the year ended June 30, 2002, is $1.45 million
representing the approximate cost to settle the Private Securities Class Action
as described in Item 3, Legal Proceedings offset by a benefit of $117,000
resulting from an adjustment of an estimated liability recorded in a previous
period. These expenses included the cost of external counsel for services
provided in connection with shareholder lawsuits and the SEC investigation, the
cost of certain consultants and temporary labor hired to assist in the
accounting restatements, and reimbursements to current and former employees for
their legal fees and expenses. The accounting restatements were completed in
February 2001, however we continued to incur costs related to implementing the
settlement of the shareholder litigation.

In December 1999, we learned that the SEC was conducting an investigation to
determine whether there were any violations of the federal securities laws. In
September 2001, we agreed to a settlement with the SEC. In December 2001, we
formed the SLC. The SLC retained independent counsel to advise the Committee
in its investigation of allegations of wrong doing during prior periods by
former employees, as well as current and former members of our Board of
Directors. For the year ended June 30, 2002, approximately $226,000 of these
expenses related to fees charged by the independent counsel to the SLC.

Other Income (Expense)

Interest income decreased 88.5% to $48,000 for the year ended June 30, 2002
compared with $416,000 for the year ended June 30, 2001. The decrease was
attributable to lower average cash balances available during

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the year for investing, along with lower interest rates on invested balances.
Interest expense and other, net, decreased 83.1% to $187,000 for the year ended
June 30, 2002 compared with $1.1 million for the year ended June 30, 2001. The
decrease was primarily attributable to less interest expense as a result of a
reduction in the outstanding debt and a decrease in the lenders prime rate.

Net Loss and Loss per Share

Due to the factors described above, our net loss increased $4.9 million to $6.3
million, or $0.87 per share, for the year ended June 30, 2002, compared with a
net loss of $1.4 million, or $0.20 per share, for the year ended June 30, 2001.

Liquidity and Capital Resources

At of June 30, 2003, we had $60,000 of unrestricted cash. During the period
from July 1, 2002 to May 5, 2003, operations consumed $4.4 million of cash
primarily due to losses incurred.

During the period from July 1, 2002 to May 5, 2003, investing activities
provided $4.0 million of cash due primarily to the sale of substantially all of
our operating assets to Sirenza. We received $3.8 million in cash and 3.3
million shares of Sirenzas common stock with a market value of $5.1 million at
May 5, 2003.

During the period from July 1, 2002 to May 5, 2003, financing activities
provided $3.8 million in cash primarily due to forgiveness and assumption of
$5.3 million in secured loans in connection with the closing of the asset sale.

Outstanding Liabilities and Investment in Common Stock of Sirenza

At June 30, 2003, we had $2.5 million in liabilities and an investment in the
common stock of Sirenza valued at $6.6 million. During August and September
2003, we sold 550,000 shares of the common stock of Sirenza at an average price
of $3.76. Proceeds from the sale are being used to pay our outstanding
liabilities and obligations, and to establish a reserve for future liabilities
and expenses. Any cash not used to satisfy liabilities and expenses will be
distributed to shareholders. It is our intention to settle our outstanding
obligations and sell our remaining assets as expeditiously as possible. Final
dissolution of the Company and related distributions to our shareholders will
occur upon obtaining final resolution of all liquidation issues and expiration
of the period during which Sirenza may make an indemnity claim. As of the date
of this filing, no distributions have been made to shareholders. We intend to
make an initial distribution of the Sirenza stock to our shareholders during
October 2003.

Factors Affecting Our Future Results

In addition to the factors discussed elsewhere in this Form 10-K, the following
are important factors which could cause actual results or events to differ
materially from those contained in any forward looking statements made by or on
behalf of us. If we are adversely affected by such risks, then the trading
price of our common stock could decline, and you could lose all or part of your
investment.

The proceeds from the sale of the Sirenza common stock received in the asset
sale are uncertain.

Sirenza issued 3,255,000 shares to us upon the closing of the asset purchase
agreement. Subsequent to that date, we have sold 550,000 shares of Sirenza
stock in the open market to provide liquidity to pay our obligations as they
become due. We and our shareholders bear the risk that we may not be able to
promptly resell the shares as a result of market conditions, securities law
restrictions, restrictions contained in the asset purchase agreement, or other
factors. Additionally, approximately 1.3 million shares of Sirenza stock bear a
restrictive stop legend subject to stop transfer restrictions imposed by
Sirenza and will remain restricted until the later of March 31, 2004 or the
date at which all indemnified

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parties are paid or otherwise resolved. Accordingly, we and our shareholders
will bear market risk with respect to a decline in the trading price of
Sirenzas stock until such shares are resold.

We may not be able to pay, or provide for the payment of, all our liabilities
and obligations.Even though the asset sale to Sirenza has been completed, the
proceeds we received may not be sufficient to pay or provide for the payment of
all our known and unknown liabilities and obligations. While we believe that we
have sufficient assets available to provide for all these obligations, the
market price of the Sirenza stock could decline to a point where it is
worthless.

Management is unable to develop reliable estimates of future operating results
or the ultimate realizable value of remaining assets due to the current
uncertainties surrounding the final dissolution of the Company. Accordingly,
management cannot determine the precise amount of distributions that will be
available after resolution of any unknown or contingent liabilities.

Pursuant to the amended plan of dissolution, which was approved by the
shareholders at the special meeting on May 5, 2003, we filed articles of
dissolution with the Secretary of State of the State of Colorado. Upon filing
of the articles of dissolution, our operations were limited to winding-up its
business and affairs, selling certain of our remaining assets, discharging our
known liabilities, establishing a contingency reserve for payment of expenses
and contingent liabilities, and distributing any remaining assets to our
shareholders, all in accordance with the amended plan of dissolution. As a
result, we changed our basis of accounting to the liquidation basis as of May
5, 2003. Upon changing to the liquidation basis of accounting, we recorded
$1.317 million of accrued costs of liquidation representing an estimate of the
costs to be incurred during dissolution. However, actual costs could differ
from those estimates. Distributions ultimately made to stockholders upon
liquidation will differ from the net assets in liquidation recorded in the
accompanying Statement of Net Assets in Liquidation as a result of future
operations, the sale proceeds ultimately received by the Company and
adjustments, if any, to estimated costs of liquidation.

It is our intention to settle our outstanding obligations and sell our
remaining assets as expeditiously as possible. Final dissolution of the Company
and related distributions to our shareholders will occur upon obtaining final
resolution of all liquidation issues and expiration of the period during which
Sirenza may make an indemnity claim. As of the date of this filing, no
distributions have been made to shareholders. We intend to make an initial
distribution of the Sirenza shares to our shareholders during October 2003.

Effect of Recently Issued Accounting Standards

In November 2002, the FASB issued Financial Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45 requires that a
liability be recorded in the guarantors balance sheet upon issuance of a
guarantee. In addition, FIN 45 requires disclosures about the guarantees that
an entity has issued, including a roll-forward of the entitys product warranty
liabilities. The disclosure provisions of FIN 45 are effective for financial
statements for fiscal year 2003. Adoption of this standard did not have a
material impact on its results of operations, financial condition or cash
flows.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation, Transition and Disclosure. SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. SFAS No. 148 also requires
that disclosures of the pro forma effect of using the fair value method of
accounting for stock-based employee compensation be displayed more prominently
and in a tabular format. The transition and annual disclosure requirements of
SFAS No. 148 are included in these Notes to the Financial Statements. The
financial statements comply with the disclosure requirements of this new
standard. All options were terminated concurrent with the asset sale to
Sirenza. Accordingly, SFAS No. 148 will not impact the Company.

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In April 2003, the FASB issued SFAS No. 149, Amendment of Statement No. 133 on
Derivative Instruments and Hedging Activities(SFAS No. 149). The statement is
effective for contracts entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003. This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. This statement amends Statement 133 for decisions made as
part of the Derivatives Implementation Group process that
effectively required amendments to Statement 133, in connection with other
Board projects dealing with financial instruments and in connection with
implementation issues raised in relation to the application of the definition
of a derivative. Management does not expect the adoption of SFAS No. 149 to
have a material impact on its financial condition, results of operations or
cash flows.

In May 2003 the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity(SFAS No. 150).
This statement establishes standards for how an entity classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. This statement applies specifically to a number of financial
instruments that companies have historically presented within their financial
statements either as equity or between the liabilities section and the equity
section, rather than as liabilities. This statement is effective for financial
instruments entered into or modified after May 31, 2003, and is otherwise
effective at the beginning of the first interim period beginning after June 15,
2003. Management does not expect the adoption of SFAS No. 150 to have a
material impact on its financial condition, results of operations or cash
flows.




Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to certain market risks, including the effects of adverse
changes in interest rates. Our exposure to such changes results from cash
deposits managed by Colorado Business Bank. At the present time, we have no
financial instruments in place to manage the impact of changes in interest
rates. We estimate that a 1% increase or decrease in interest rates would have
impacted our results of operations by less than $1,000 for the year ended June
30, 2003. Additionally we are exposed to the effects of adverse changes in the
fair value of marketable securities. We currently have an investment in the
common stock of Sirenza acquired in connection with the asset sale with no
financial instrument in place to manage the impact of a change in the fair
value. We estimate that a 10% increase or decrease in the fair value would have
impacted the change in net assets in liquidation by approximately $661,000 at
June 30, 2003.

As of June 30, 2002, we were exposed to certain market risks resulting from
borrowings with floating interest rates for which we had no financial
instruments in place to manage the impact of changes in interest rates. At June
30, 2002, we had notes payable outstanding of $1.5 million under our term loan
with Wells Fargo at an interest rate of 10.25%. Additionally, in connection
with the acquisition of certain assets of Asvan Technology, LLC, we had
$139,000 outstanding on a two-year promissory note at an interest rate of
10.00%. We estimated that a 10% upward movement in interest rates would have
impacted our results of operations by less than $200,000 for the year ended
June 30, 2002. Due to the repayment of our obligations under these notes, we
are no longer exposed to such market risks with respect to the notes.




Item 8. Financial Statements

The financial statements and related financial information required to be filed
hereunder begins on page F-1.




Item 9. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure

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None




Item 9A. Controls and Procedures

As of May 5, 2003, VL Dissolution Corp. (the Company) sold substantially all
of its assets and began the orderly dissolution and liquidation of its assets.
As the Company currently has no ongoing operations, chief executive officer,
principal financial officers, principal accounting officer or employees, it is
unable to perform the evaluation of the effectiveness of the design and
operation of the Companys disclosure controls and procedures pursuant to
Exchange Act Rule 13a-15(e).

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PART III




Item 10. Directors of the Registrant

Board of Directors

David A. Lisowski  Director. Mr. Lisowski, age 50, was elected a Director
on June 26, 1996. Mr. Lisowski is the President and a Director of the Denver
Wholesale Florist Company, a national wholesale florist, for which he has been
the President and Chief Executive Officer since 1993. He was employed by
Central Bank of Denver, N.A., a commercial bank in Colorado, and various
affiliated banks from 1972 to 1992. His employment with Central Bank included
serving as Senior Vice President of Commercial Lending in Southern Colorado as
well as various other positions. Mr. Lisowski attended Metropolitan State
College where he received a BS degree in Finance in 1988.

Anthony B. Petrelli  Acting Chairman of the Board and Director. Mr.
Petrelli, age 50, was elected a Director on October 17, 1997 and became Acting
Chairman of the Board of Directors on July 3, 2001. Mr. Petrelli has served as
Senior Vice President of Investment Banking Services at Neidiger, Tucker,
Bruner, Inc., an investment banking firm and registered broker-dealer in
Denver, Colorado, since May of 1987. He formerly served as a Director of
Guardian Acceptance Corp., a consumer finance company in Denver, Colorado, for
which he served as President from September 1996 until December 1997. Mr.
Petrelli received a BS degree in Business in 1974 and an MBA in 1979 from the
University of Colorado.

David M. Risley  Director. Mr. Risley, age 59, was elected a Director on
November 27, 2001. He currently serves as Senior Vice President and Chief
Financial Officer of La-Z-Boy Inc., a $2.2 billion furniture manufacturer.
Prior to joining La-Z-Boy, he was Vice President of Finance and Chief Financial
Officer with Aeroquip Vickers, Inc., a manufacturing firm serving the
industrial, aerospace and automotive markets with power and motion control
devices, fluid connectors and composite components. He also had served as Vice
President and Controller of Heizer Corporation, a venture capital and business
development firm and in various positions with TransUnion Corporation, a
diversified conglomerate. He began his career as a Certified Public Accountant
with Arthur Young & Company (now Ernest & Young LLP). He holds a BBA in
Accounting from the University of Iowa and an MBA in Finance from Loyola
University of Chicago.

Gil J. Van Lunsen  Director. Mr. Van Lunsen, age 61, was elected a
Director on June 1, 2001. He retired from KPMG in June 2000 following 32 years
of service. Nine years after joining KPMG in 1968 as an assistant accountant,
he became partner and subsequently was promoted to partner in charge of
national accounting and audit training. In 1994, he was appointed managing
partner of the Tulsa, Oklahoma office, a position he held until his retirement
in 2000. Mr. Van Lunsen is the Chairman of the Audit Committee of Hillcrest
Healthcare Systems, a Tulsa, Oklahoma based hospital system and Array
BioPharma, a Boulder, Colorado based drug discovery company. He was a member
of the Ethics Compliance Committee of Tyson Foods from March 1998 to December
2002. He received his BSBA in Accounting and Finance from the University of
Denver in 1968 and is a Certified Public Accountant.

Concurrent with the closing of the asset sale on May 5, 2003, Mr. Charles R.
Bland, Ms. Sarah Booher and Mr. Robert C. Dixon resigned from their positions
on the Board of Directors.

The Company currently does not have any employees or executive officers. All
persons providing services to the Company, including Cloyses, are doing so in
their capacity as independent contractors.

Section 16(a) Beneficial Ownership Reporting Compliance

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

To our knowledge, based solely on a review of the copies of such reports
furnished to us and written representations that no other reports were
required, during the fiscal year ended June 30, 2003, all Section 16(a) filing
requirements applicable to our officers, directors and greater than ten percent
beneficial owners were complied with. It has come to our attention, however,
that with respect to the fiscal year ended June 30, 2002, Daniel Wilmot, our
former Vice President of Advanced Technology, failed to timely file a Section
16(a) form in connection with an option exchange. On May 23, 2002, Mr. Wilmot
tendered to the Company an option granted to him on December 27, 1999 in
connection with an option exchange. No Section 16(a) filing was made in
connection with this disposition due to a misunderstanding as to the
applicability of Section 16(a) reporting requirements with respect to the
option exchange. The replacement option was subsequently issued on November
24, 2002, in connection with which a Section 16(a) form was timely filed which
reported both the disposition of the original option and the issuance of the
replacement option.




Item 11. Executive Compensation

The following table summarizes the compensation for the period from July 1,
2002 to May 5, 2003 and for the years ended June 30, 2002 and 2001 of our Chief
Executive Officer and our two most highly compensated Executive Officers whose
salary and bonus exceeded $100,000:

|                       |  |      |      |     |  |                     |         |                     |  |        |        |          |  |         |        |            |  |            |     |            |  |  |        |  |  |  |         |     
|---------------------- |  | ---- | ---- | --- |  | ------------------- | ------- | ------------------- |  | ------ | ------ | -------- |  | ------- | ------ | ---------- |  | ---------- | --- | ---------- |  |  | ------ |  |  |  | ------- | ----
|                       |  |      |      |     |  |                     |         | Long-Term           |  |        |        |         
|                       |  |      |      |     |  | Annual Compensation |         | Compensation Awards |  |        |        |         
|                       |  |      |      |     |  |                     |         |                     |  |        |        |         
|                       |  |      |      |     |  |                     |         |                     |  |        |        |          |  | Other   |        |            |  |            |     | Securities |  |  |        | 
|Name                   |  |      |      |     |  |                     |         |                     |  |        |        |          |  | Annual  |        | Restricted |  | Underlying |     | All       
|and                    |  |      |      |     |  |                     |         |                     |  |        |        |          |  | Compen- |        | Stock      |  | Options/   |     | Other     
|Principal              |  |      |      |     |  | Salary              |         | Bonus               |  | sation |        | Award(s) |  | SARs    |        | Compen-   
|Position               |  | Year |      | ($) |  | ($)                 |         | ($)                 |  | ($)    |        | (#)      |  | sation 
|                       |  |      |      |     |  |                     |         |                     |  |        |        |          |  |        
|Charles R. Bland       |  |      | 2003 |     |  |                     | 210,959 |                     |  |        | -0-    |          |  |         | 8,438  | (1)        |  |            | -0- |            |  |  | -0-    |  |  |  | 153,750 | (2) 
|President and          |  |      | 2002 |     |  |                     | 238,462 |                     |  |        | 20,100 |          |  |         | 10,000 | (3)        |  |            | -0- |            |  |  | 51,000 |  |  |  | -0-     |     
|CEO                    |  |      | 2001 |     |  |                     | 31,250  |                     |  |        | -0-    |          |  |         | 1,538  | (4)        |  |            | -0- |            |  |  | 85,000 |  |  |  | -0-     |     
|Richard P. Dutkiewicz  |  |      | 2003 |     |  |                     | 134,592 |                     |  |        | 60,000 |          |  |         | 8,438  | (5)        |  |            | -0- |            |  |  | -0-    |  |  |  | 60,469  | (6) 
|Vice President of      |  |      | 2002 |     |  |                     | 152,192 |                     |  |        | 28,500 |          |  |         | 10,000 | (7)        |  |            | -0- |            |  |  | 40,000 |  |  |  |         |     
|Finance and CFO        |  |      | 2001 |     |  |                     | 63,462  |                     |  |        | 10,000 | (8)      |  |         | 2,692  | (9)        |  |            | -0- |            |  |  | 20,000 |  |  |  |         |     
|Timothy G. Schamberger |  |      | 2003 |     |  |                     | 139,233 |                     |  |        | -0-    |          |  |         | 91,938 | (10)       |  |            | -0- |            |  |  | -0-    |  |  |  | 62,188  | (11)
|Vice President of      |  |      | 2002 |     |  |                     | 19,038  |                     |  |        | -0-    |          |  |         | 1,154  | (12)       |  |            | -0- |            |  |  | 25,000 |  |  |  |         |     
|Sales and Marketing    |  |      | 2001 |     |  |                     | -0-     |                     |  |        | -0-    |          |  |         | -0-    |            |  |            | -0- |            |  |  | -0-    |  |  |  |         |     



|(1)  |  | Includes an automobile benefit of $8,438.                                    
|---- |  | -----------------------------------------------------------------------------
|    
|(2)  |  | Includes a post-closing termination payment of $153,750                      
|    
|(3)  |  | Includes automobile benefit of $10,000.                                      
|    
|(4)  |  | Includes automobile benefit of $1,538.                                       
|    
|(5)  |  | Includes an automobile benefit of $8,438.                                    
|    
|(6)  |  | Includes a post-closing termination payment of $60,469                       
|    
|(7)  |  | Includes automobile benefit of $10,000.                                      
|    
|(8)  |  | Includes sign-on bonus of $10,000.                                           
|    
|(9)  |  | Includes automobile benefit of $2,692.                                       
|    
|(10) |  | Includes an automobile benefit of $8,438 and sign-on/moving bonus of
$83,500.

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|(11) |  | Includes a post-closing termination payment of $62,188
|---- |  | ------------------------------------------------------
|    
|(12) |  | Includes automobile benefit of $1,154.                

None of the named Executive Officers received additional perquisites or other
personal benefits the aggregate amount of which was the lesser of either
$50,000 or 10% of the total of annual salary and bonus reported for such
persons.

Option/SAR Grants in Last Fiscal Year

There were no grants of stock options and appreciation rights during the last
fiscal year to any of the named Executive Officers.

Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year End Option/SAR Values

The following table sets forth information concerning each exercise of stock
options during the last fiscal year by each of our Executive Officers and the
fiscal year end value of unexercised options:

|                       |  |             |     |                |  |               |     |               |  |                 |     |                 |  |  |       | 
|---------------------- |  | ----------- | --- | -------------- |  | ------------- | --- | ------------- |  | --------------- | --- | --------------- |  |  | ----- | 
|                       |  |             |     |                |  |               |     |               |  | Number of       |     |                 |  | 
|                       |  |             |     |                |  |               |     |               |  | Securities      |     | Value of       
|                       |  |             |     |                |  |               |     |               |  | Underlying      |     | Unexercised    
|                       |  |             |     |                |  |               |     |               |  | Unexercised     |     | In-the-Money   
|                       |  |             |     |                |  |               |     |               |  | Options/SARs at |     | Options/SARs at
|                       |  |             |     |                |  |               |     |               |  | Fiscal Year-    |     | Fiscal Year-   
|                       |  |             |     |                |  |               |     | End(#)(1)     |  | End($)(1)      
|                       |  | Shares      |     |                |  |               |     |               |  |                
|                       |  | Acquired on |     | Value Realized |  | Exercisable/  |     | Exercisable/ 
|Name                   |  | Exercise(#) |     | ($)            |  | Unexercisable |     | Unexercisable
|                       |  |             |     |                |  |               |     |              
|Charles R. Bland       |  |             | -0- |                |  |               | N/A |               |  |                 | 0/0 |                 |  |  | $0/$0 | 
|Richard P. Dutkiewicz  |  |             | -0- |                |  |               | N/A |               |  |                 | 0/0 |                 |  |  | $0/$0 | 
|Timothy G. Schamberger |  |             | -0- |                |  |               | N/A |               |  |                 | 0/0 |                 |  |  | $0/$0 | 

(1)  Upon termination or resignation of the named executive officers, all
outstanding options were canceled.

Directors Compensation

We currently have an arrangement whereby each outside Director receives $3,000
per financial quarter. Additionally, the Chairman of the Audit Committee
receives an additional $1,000 per financial quarter. We reimburse outside
Directors for their expenses in attending meetings of the Board of Directors
and its committees.

Employment Agreements with Officers

Concurrent with the signing of the asset purchase agreement, each of Messrs.
Bland, Dutkiewicz, Schamberger, Wilmot and Mr. Larry Romero amended their then
existing employment agreements with the Company by signing termination letters
that were effective upon the closing of the asset sale.

Under the terms of their termination letters, each of Messrs. Dutkiewicz,
Schamberger, Wilmot and Romero are entitled to receive (i) a payment equal to
approximately four months worth of such officers salary (determined at the
time such officer executed the termination letter) to be paid following the
closing of the asset sale, (ii) a payment equal to approximately four months
worth of such officers salary (determined at the time such officer executed
the termination letter) to be paid

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one year after the closing of the asset sale provided such officer remains
employed by Sirenza and (iii) if the officer is terminated by Sirenza other
than for cause prior to the one year anniversary of the closing of the asset
sale, a payment equal to the difference between what such officer would have
received under such original employment agreement and the payment described in
(i) above. The Company anticipates that the cost of the payments to Messrs.
Dutkiewicz, Schamberger, Wilmot and Romero in connection with their termination
letters could be as large as $120,938, $124,375, $116,000 and $96,375,
respectively.

Under the terms of Mr. Blands termination letter, he is entitled to receive
(i) a payment equal to approximately seven and one-half months worth of his
salary (determined at the time Mr. Bland executed the termination letter) to be
paid following the closing of the asset sale, (ii) a payment equal to
approximately seven and one-half months worth of his salary (determined at the
time Mr. Bland executed the termination letter) to be paid one year after the
closing of the asset sale provided Mr. Bland remains employed by Sirenza and
(iii) in the event Mr. Bland is terminated by Sirenza other than for cause
prior to the one year anniversary of the closing of the asset sale, a payment
equal to the difference between what Mr. Bland would have received under his
original employment agreement and the payment described in (i) above. The
Company anticipates that the cost of the payments to Mr. Bland in connection
with his termination letter could be as large as $307,500.

Concurrently with the signing of the asset purchase agreement, each of Messrs.
Bland, Dutkiewicz, Schamberger and Wilmot entered into offer letters with
Sirenza that were effective with the closing of the asset sale. Such offer
letters provide for at-will employment of each officer.

In addition to the compensation contemplated by Mr. Dutkiewiczs termination
letter, upon closing of the asset sale, Mr. Dutkiewicz received a bonus payment
of $60,000.

Compensation Committee Interlocks

We had a Compensation Committee which, in fiscal 2003, was comprised of David
A. Lisowski (Chairman), Sarah L. Booher and Anthony B. Petrelli. Upon closing
of the asset sale, the Compensation Committee was disbanded.

None of the directors is or was in the past one of our officers or employees.
No interlocking relationship exists between the Board of Directors or the
Compensation Committee and the board of directors or compensation committee of
any other company, nor has such an interlocking relationship existed in the
past.




Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

Equity Compensation Plan Information

As of June 30, 2003, the Company had no securities to be issued upon exercise
of outstanding options, warrants or rights. All equity compensation plans have
been terminated in connection with the asset sale and dissolution of the
Company.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth the number and percentage of shares of our
Common Stock owned beneficially, as of August 30, 2003, by any person who is
known to us to be the beneficial owner of five percent or more of such Common
Stock, and, in addition, by each of our Directors and Executive Officers, and
by all of our Directors and Executive Officers as a group. Information as to
beneficial

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ownership is based upon statements furnished to us by such persons. For
purposes of this disclosure, the amount of our Common Stock beneficially owned
is the aggregate number of shares of the Common Stock outstanding on such date
plus an amount equal to the aggregate amount of Common Stock which could be
issued upon the exercise of stock options within 60 days of such date by each
individual, irrespective of exercise price. In connection with the asset sale
and dissolution of the Company, all outstanding options were canceled effective
May 5, 2003.

|                                                      |  |                   |         |          |  |  |     |  
|----------------------------------------------------- |  | ----------------- | ------- | -------- |  |  | --- | -
|                                                      |  | Amount and Nature |         |          |  | 
|                                                      |  | of Beneficial     |         | Percent 
|Name of Beneficial Owner                              |  | Ownership         |         | of Class
|                                                      |  |                   |         |         
|Joseph H. Kiser                                       |  |                   | 411,538 |          |  |  | 5.6 | %
|6160 South Olathe Street
Aurora, Colorado 80016       |  |                   |         |          |  |  |     |  
|David A. Lisowski                                     |  |                   | 4,200   |          |  |  | <1  | %
|4800 Dahlia
Denver, Colorado 80216                    |  |                   |         |          |  |  |     |  
|Anthony B. Petrelli                                   |  |                   | 3,000   |          |  |  | <1  | %
|1675 Larimer St., #300
Denver, Colorado 80202         |  |                   |         |          |  |  |     |  
|Gil J. Van Lunsen                                     |  |                   | 1,250   |          |  |  | <1  | %
|171 Crazy Horse Drive
Durango, Colorado 81301         |  |                   |         |          |  |  |     |  
|David M. Risley                                       |  |                   | 900     |          |  |  | <1  | %
|1284 North Telegraph Road
Monroe, Michigan 48162-3390 |  |                   |         |          |  |  |     |  
|Charles R. Bland                                      |  |                   | 38,669  |          |  |  | <1  | %
|4895 Peoria Street
Denver, Colorado 80239             |  |                   |         |          |  |  |     |  
|Richard P. Dutkiewicz                                 |  |                   | 17,962  |          |  |  | <1  | %
|4895 Peoria Street
Denver, Colorado 80239             |  |                   |         |          |  |  |     |  
|Timothy G. Schamberger                                |  |                   |        |          |  |  |    |  
|6936 Chestnut Court
Parker, Colorado 80134            |  |                   |         |          |  |  |     |  
|All Directors and Executive                           |  |                   | 65,981  |          |  |  | <1  | %
|Officers as a Group
(7 Persons)                       |  |                   |         |          |  |  |     |  

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Item 13. Certain Relationships and Related Transactions

In the past, the Company has entered into various transactions with its
officers and major shareholders. Transactions with such individuals which
subject the Company to continuing obligations are described below.

Lease

We currently lease one building, a 13,500 square foot building in Denver,
Colorado that was our main commercial products manufacturing facility. We lease
this facility from a partnership that includes our Mr. Joseph H. Kiser as the
general partner. The lease expires in 2005 and contains provisions which would
permit us to extend the terms of the lease. Total rent expense associated with
this lease for the period from July 1, 2002 to May 5, 2003 was $110,000. There
was no rent expense incurred for the period May 6, 2003 to June 30, 2003 due to
a sublease agreement in place between us and Sirenza at substantially identical
terms to the lease agreement. The sublease agreement expired on June 30, 2003.
We believe that the lease rate for this facility is in excess of the current
fair market value lease rates for comparable facilities within the area. We are
in the process of attempting to sublease this facility since we no longer need
office or manufacturing space. We have listed this property for sublease with a
broker; however there can be no assurance that we will be successful in
subleasing this property prior to the expiration of the existing lease
agreement. Even if we are successful in subleasing this property, there can be
no assurance that the sublease agreement will be at prevailing market rates.

Settlement Agreement with Shareholder

During the latter half of 2002, the Company executed a settlement and release
agreement with Mr. Kiser related to an employment agreement between the Company
and Mr. Kiser. Under the terms of the settlement agreement with Mr. Kiser and
J.C. Enterprises, a Colorado general partnership of which Mr. Kiser is a
general partner, the Company paid $245,000 in total consideration consisting of
$230,000 to Mr. Kiser as well as $15,000 to his former attorneys to cover
certain legal expenses. In return, Mr. Kiser agreed to a mutual general release
with the Company. Under the terms of this settlement agreement, the Company
agreed to pay the current required rental amount under the existing lease with
J.C. Enterprises, but the Company has the option to terminate the lease, after
sufficient notice, in the event J.C. Enterprises contracts to sell the property
during the remaining lease term.

Indemnification and Expense Advancement

Under our Articles of Incorporation, Bylaws and applicable Colorado corporate
law, we have certain obligations to indemnify our officers and directors for
expenses they incur in connection with the defense of litigation brought
against them on account of actions taken by them in those capacities if such
officers or directors are wholly successful, on the merits or otherwise, in
their defense in such proceedings.

The Company has entered into an Amended and Restated Indemnity Agreement with
each of Gil J. Van Lunsen, Sarah I. Booher, David A. Lisowski, Anthony B.
Petrelli, David M. Risley, Robert C. Dixon, Charles R. Bland and Richard P.
Dutkiewicz, each dated as of March 11, 2003 (the Indemnity Agreements). The
Indemnity Agreements provide that the Company shall indemnify each indemnitee
to the fullest extent permitted by law, including against any and all
reasonable expenses, witness fees, damages, judgments, fines and amounts paid
because of any claim made against or by the indemnitee in connection with any
threatened, pending or completed action, suit or other proceeding of any sort
to which the indemnitee is, was or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that the indemnitee is,
was or at any time becomes a director, officer, employee or other agent of the
Company. The Companys obligation to indemnify does not apply

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where a
determination has been made that the indemnitee is not entitled to
indemnification under applicable law,
in which case the indemnitee agrees to reimburse the Company for any amounts
previously paid or advanced to the indemnitee. Additionally, the Company shall
not be required to indemnify an indemnity for any claims for which
indemnification is not lawful, on account of the indemnitees conduct that is
established by a final judgment as knowingly fraudulent or deliberately
dishonest or that constituted willful misconduct, for claims initiated by the
indemnitee and not by way of defense (except in certain limited circumstances),
to the extent which payment is actually made to the indemnity under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
by law or agreement, or for claims under Section 16 of the Securities Exchange
Act of 1934.

The indemnification obligation of the Company under the Indemnity Agreements
extends throughout an indemnitees term of service to the Company and for so
long thereafter as an indemnitee shall be subject to any possible claim or
action of any sort by reason of the fact that the indemnitee was serving the
Company. The Company is also obligated to advance reasonable expenses incurred
by an indemnitee in connection with a covered claim or action if it receives
any affirmation by the indemnitee required by the Companys Bylaws or the
Colorado Business Corporation Act and an undertaking by the indemnitee to repay
any amounts advanced if it shall be determined ultimately that the indemnitee
is not entitled to be indemnified under the Indemnity Agreements.

The assets and equity of the Company will be subject to risk if any of the
indemnitees incur liability for which they are entitled to indemnification
under the agreements.




Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

|            |  |                                                                                                                                                                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                
|2.1         |  | Amended Plan of Dissolution of Vari-L Company, Inc. as approved
by the shareholders at the special meeting held on May 5, 2003 filed
as Exhibit 2.1 to the Form 10-Q for the quarter ended March 31, 2003
and incorporated herein by reference.
|            |  |                                                                                                                                                                                                                                                
|3.1a        |  | Restated Articles of Incorporation, as Amended, filed as Exhibit
4.1 to the Form S-8 Registration Statement (No. 33-88666) and
incorporated herein by reference.                                                                               
|            |  |                                                                                                                                                                                                                                                
|3.1b        |  | Articles of Amendment to the Articles of Incorporation filed as
Exhibit 3.1b to the Form 10-KSB for the year ended December 31, 1996
and incorporated herein by reference.                                                                     
|            |  |                                                                                                                                                                                                                                                
|3.2         |  | Amended and Restated Bylaws adopted September 26, 2002 filed as
Exhibit 3.2 to the Form 10-K for the fiscal year ended June 30, 2002
and incorporated herein by reference.                                                                     
|            |  |                                                                                                                                                                                                                                                
|4.1         |  | Specimen Certificate for $.01 par value Common Stock filed as
Exhibit 4.3 to the Form SB-2 Registration Statement (No. 33-74704-D)
and incorporated herein by reference.                                                                       
|            |  |                                                                                                                                                                                                                                                
|4.2         |  | Rights Agreement with American Securities Transfer, Inc. dated
March 15, 1996 filed as Exhibit 4.2 to the Form 8-A/A Registration
Statement (No. 0-23866) and incorporated herein by reference.                                                
|            |  |                                                                                                                                                                                                                                                
|4.3         |  | Specimen Certificate for Right to Purchase $.01 par value Common
Stock filed as Exhibit 4.3 to the Form 8-A/A Registration Statement
(No. 0-23866) and incorporated herein by reference.                                                       

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|            |  |                                                                                                                                                                                                                                                                                                                                           
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                               
|            |  |                                                                                                                                                                                                                                                                                                                                           
|4.4         |  | Securities Purchase Agreement with the Purchasers dated March 4,
1997 filed as Exhibit 4.5 to the Form S-3 Registration Statement (No.
333-25173) and incorporated herein by reference.                                                                                                                                                   
|           
|4.6         |  | Form of Warrant to Purchase Common Stock issued to the Purchasers
under the Securities Purchase Agreement dated March 4, 1997 filed as
Exhibit 4.7 to the Form S-3 Registration Statement (No. 333-25173) and
incorporated herein by reference.                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                           
|4.7         |  | Amendment No. 1 to Rights Agreement with American Securities
Transfer, Inc. dated October 7, 2002 filed as Exhibit 4.7 to the
Form 10-K for the fiscal year ended June 30, 2002 and incorporated
herein by reference.                                                                                                                     
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.1        |  | Executive Employment Agreement with Joseph H. Kiser, dated
effective June 1, 1997, filed as Exhibit 10.1 to the Form 10-QSB for
the quarter ended September 30, 1998 and incorporated herein by
reference.                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.2        |  | Lease Agreement dated January 1, 1987 with J.C. Enterprises for the
facility located at 5165 Peoria Street, Denver, Colorado, as amended on
December 6, 1990 and March 23, 1993, filed as Exhibit 10.15 to the Form
SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by
reference.                                    
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.3        |  | Settlement Agreement with Joseph H. Kiser, David G. Sherman, Alwin
E. Branson and Carolyn Y. Kiser dated January 31, 1992, as amended
March 23, 1993, filed as Exhibit 10.18 to the Form SB-2 Registration
Statement (No. 33-74704-D) and incorporated herein by reference.                                                               
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.4        |  | Profit Sharing Plan and Trust Agreement, as amended and restated
effective April 19, 1994 filed as Exhibit 10.16 to the Form 10-KSB for
the year ended December 31, 1994 and incorporated herein by reference.                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.5        |  | Lease Agreement dated March 12, 1997 with Five K Investments for
the facility located at 4895 Peoria Street, Denver, Colorado filed as
Exhibit 10 to the Form 10-QSB for the quarter ended September 30, 1997
and incorporated herein by reference.                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.6        |  | Third Amendment to Lease Agreement dated January 1, 1987 with J.C.
Enterprises for the facility located at 5165 Peoria Street, Denver,
Colorado, as amended December 6, 1990, March 23, 1993, and October 30,
1998 filed as Exhibit 10.6 to the Form 10-QSB for the quarter ended
September 30, 1998 and incorporated herein by reference.
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.7        |  | Termination and Consulting Agreement with David G. Sherman dated
August 1, 2000 filed as Exhibit 10.1 to the Form 8-K dated August 1,
2000 and incorporated herein by reference.                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.8        |  | Employment Agreement with Timothy M. Micun dated March 2, 2001
filed as Exhibit 10.26 to the Form 10-K for the fiscal year ended June
30, 2001 and incorporated herein by reference.                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.9        |  | Credit and Security Agreement with Wells Fargo Business Credit,
Inc. dated June 28, 2001 filed as Exhibit 99.2 to the Form 8-K dated
June 28, 2001 and incorporated herein by reference.                                                                                                                                                  

36



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.10       |  | Patent and Trademark Security Agreement with Wells Fargo Business
Credit, Inc. dated June 28, 2001 filed as Exhibit 99.3 to the Form 8-K
dated June 28, 2001 and incorporated herein by reference.                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.11       |  | First Amendment to Credit and Security Agreement dated September
17, 2001 filed as Exhibit 10.1 to the Form 10-Q dated September 30,
2001 and incorporated herein by reference.                                                                                                                                                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.12       |  | Employee Stock Purchase Plan effective as of November 30, 2001
filed as Exhibit 10.1 to the Form 10-Q for the quarter ended December
31, 2001 and incorporated herein by reference.                                                                                                                                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.13       |  | Amended and Restated Tandem Stock Option and Stock Appreciation
Rights Plan, effective as of January 1, 2002 filed as Exhibit 10.1 to
the Form 10-Q for the quarter ended March 31, 2002 and incorporated by
reference herein.                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.14       |  | Stock Grant Plan effective as of January 1, 2002 filed as Exhibit
10.2 to the Form 10-Q for the quarter ended March 31, 2002 and
incorporated herein by reference.                                                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.15       |  | Agreement between Vari-L Company, Inc. and Asvan Technology, LLC
dated January 25, 2002 filed as Exhibit 10.15 to the Form 10-K for the
fiscal year ended June 30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                         
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.16       |  | Second Amendment to Credit and Security Agreement with Wells Fargo
Business Credit, Inc. dated February 8, 2002 filed as Exhibit 10.16 to
the Form 10-K for the fiscal year ended June 30, 2002 and incorporated
herein by reference.                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.17       |  | Form of Indemnity Agreement by and among Vari-L Company, Inc. and
each of Gil J. Van Lunsen (dated June 1, 2001), Sarah L. Booher (dated
July 5, 2001), David A. Lisowski (dated July 5, 2001), Anthony B.
Petrelli (dated July 5, 2001), David M. Risley (dated November 21,
2001) and Robert C. Dixon (dated January 11, 2002) filed as Exhibit
10.17 to the Form 10-K for the fiscal year ended June 30, 2002 and
incorporated herein by reference.
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.18       |  | Employment Agreement with Charles R. Bland dated August 1, 2002
filed as Exhibit 10.18 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.19       |  | Employment Agreement with Russell M. Crouch dated August 1, 2002
filed as Exhibit 10.19 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.20       |  | Employment Agreement with Richard P. Dutkiewicz dated August 1,
2002 filed as Exhibit 10.20 to the Form 10-K for the fiscal year ended
June 30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.21       |  | Employment Agreement with Ernest C. Hafersat dated August 1, 2002
filed as Exhibit 10.21 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                               
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.22       |  | Employment Agreement with Janice E. Hyland dated August 1, 2002
filed as Exhibit 10.22 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                 

37



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.23       |  | Employment Agreement with Matthew D. Pope dated August 1, 2002
filed as Exhibit 10.23 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|           
|10.24       |  | Employment Agreement with Larry M. Romero dated August 1, 2002
filed as Exhibit 10.24 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.25       |  | Employment Agreement with Timothy G. Schamberger dated August 1,
2002 filed as Exhibit 10.25 to the Form 10-K for the fiscal year ended
June 30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.26       |  | Employment Agreement with Daniel J. Wilmot dated August 1, 2002
filed as Exhibit 10.26 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.27       |  | Engagement letter with Green, Manning & Bunch, Ltd. dated
September 9, 2002 filed as Exhibit 10.27 to the Form 10-K for the
fiscal year ended June 30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.28       |  | Forbearance Agreement and Third Amendment to Credit and Security
Agreement with Wells Fargo Business Credit, Inc. dated September 26,
2002 filed as Exhibit 99.1 to the Form 8-K dated October 1, 2002 and
incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                         
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.29       |  | Indemnity Agreement, dated October 2, 2002, by and among Vari-L
Company with Charles R. Bland filed as Exhibit 10.29 to the Form 10-K
for the fiscal year ended June 30, 2002 and incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.30       |  | Indemnity Agreement, dated October 2, 2002, by and among Vari-L
Company, Inc. with Richard P. Dutkiewicz filed as Exhibit 10.30 to the
Form 10-K for the fiscal year ended June 30, 2002 and incorporated
herein by reference.                                                                                                                                                                                                                                                                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.31       |  | Memorandum of Understanding dated October 3, 2002 between Vari-L
Company, Inc. and the plaintiffs in Civil Action No. 00-S-1198 between
plaintiffs Michael Rasner, et al., on behalf of themselves and other
similarly situated and defendants Vari-L Company, Inc., Derek Bailey,
Joseph Kiser, David G. Sherman and Jon Clark in the United States
District Court, District of Colorado, by and through their respective
attorneys, for settlement of litigation against Vari-L Company, Inc.
filed as Exhibit 10.31 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.32       |  | Loan Agreement with Sirenza Microdevices, Inc. dated October 7,
2002 filed as Exhibit 10.32 to the Form 10-K for the fiscal year ended
June 30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.33       |  | Security Agreement with Sirenza Microdevices, Inc. dated October
7, 2002 filed as Exhibit 10.33 to the Form 10-K for the fiscal year
ended June 30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.34       |  | Exclusivity and Right of First Refusal Agreement with Sirenza
Microdevices, Inc. dated October 7, 2002 filed as Exhibit 10.34 to the
Form 10-K for the fiscal year ended June 30, 2002 and incorporated
herein by reference.                                                                                                                                                                                                                                                                                                                                                                                         

38



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.35       |  | Resale Registration Rights Agreement with Sirenza Microdevices,
Inc. dated October 7, 2002 filed as Exhibit 10.35 to the Form 10-K for
the fiscal year ended June 30, 2002 and incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.36       |  | Letter Agreement dated November 12, 2002 between Vari-L
Corporation, Inc. and Five K Investments amending that certain lease
agreement dated as of March 12,1997 by and between Vari-L Corporation,
Inc. and Five K Investments filed as Exhibit 10.1 to the Form 10-Q for
the quarter ended September 30, 2002 and incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.37       |  | Stipulation of Settlement dated January 22, 2003 between Vari-L
Company, Inc., Derek L. Bailey, Joseph H. Kiser, David G. Sherman, Jon
L. Clark and the plaintiffs in Civil No. 00-S-1198 between plaintiffs
Michael Rasner, et al., on behalf of themselves and other similarly
situated and defendants Vari-L Company, Inc., Derek L. Bailey, Joseph
H. Kiser, David G. Sherman and Jon L. Clark in the United State
District Court, District of Colorado, by and through their respective
attorneys, for settlement of litigation against Vari-L Company, Inc.
filed as Exhibit 10.1 to the Form 10-Q for the quarter ended December
31, 2002 and incorporated herein by reference.
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.38       |  | Form of Amended and Restated Indemnity Agreement by and among
Vari-L Company, Inc. and each of Gil J. Van Lunsen, Sarah L. Booher,
David A. Lisowski, Anthony B. Petrelli, David M. Risley, Robert C.
Dixon, Charles A. Bland and Richard P. Dutkiewicz each dated as of
March 11, 2003 filed as Exhibit 10.1 to the Form 10-Q for the quarter
ended March 31, 2003 and incorporated herein by reference.                                                                                                                                                                                                                                                                             
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.39       |  | Sublease Agreement dated March 31, 2003, by and among Vari-L
Company, Inc. and Olin Acquisition Corporation for the facility located
at 11101 East 51st Street, Denver, Colorado filed as Exhibit 10.2 to
the Form 10-Q for the quarter ended March 31, 2003 and incorporated
herein by reference.                                                                                                                                                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.40       |  | Sublease Agreement dated March 31, 2003, by and among Vari-L
Company, Inc. and Olin Acquisition Corporation for the facility located
at 5165 Peoria Street, Denver, Colorado filed as Exhibit 10.3 to the
Form 10-Q for the quarter ended March 31, 2003 and incorporated herein
by reference.                                                                                                                                                                                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.41       |  | Sublease Agreement dated March 31, 2003, by and among Vari-L
Company, Inc. and Olin Acquisition Corporation for the facility located
at 4895 Peoria Street, Denver, Colorado filed as Exhibit 10.4 to the
Form 10-Q for the quarter ended March 31, 2003 and incorporated herein
by reference.                                                                                                                                                                                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.42       |  | Sublease Agreement dated March 31, 2003, by and among Vari-L
Company, Inc. and Olin Acquisition Corporation for the facility located
at 4955 Peoria Street, Denver, Colorado filed as Exhibit 10.5 to the
Form 10-Q for the quarter ended March 31, 2003 and incorporated herein
by reference.                                                                                                                                                                                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.43       |  | Letter Agreement dated May 6, 2003 between Vari-L Corporation,
Inc. and Cloyses Partners, LLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|23          |  | Consent of KPMG LLP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

39



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##### Table of Contents



Financial Statement Schedule

Schedule II, Valuation and Qualifying Accounts, for the period from July 1,
2002 to May 5, 2003 and for the years ended June 30, 2002 and 2001 (Unaudited)

Reports on Form 8-K

A report on Form 8-K dated May 5, 2003 under Items 2 and 7 was filed with the
Commission on May 6, 2003.

40



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##### Table of Contents






SIGNATURES

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.

|                              |  |                         
|----------------------------- |  | ------------------------
|/s/ David A. Lisowski         |  | Date: September 23, 2003
|                              |  |                         
|David A. Lisowski, Director   |  |                         
|                              |  |                         
|/s/ Anthony B. Petrelli       |  | Date: September 23, 2003
|                              |  |                         
|Anthony B. Petrelli, Director |  |                         
|                              |  |                         
|/s/ David M. Risley           |  | Date: September 23, 2003
|                              |  |                         
|David M. Risley, Director     |  |                         
|                              |  |                         
|/s/ Gil J. Van Lunsen         |  | Date: September 23, 2003
|                              |  |                         
|Gil J. Van Lunsen, Director   |  |                         

41



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##### Table of Contents






CERTIFICATIONS

As of May 5, 2003, VL Dissolution Corp. (the Company) sold substantially all
of its assets and began the orderly dissolution and liquidation of its
remaining assets. As the Company currently has no ongoing operations, chief
executive officer, principal financial officers, principal accounting officer
or employees, it is unable to make the certifications required under Sections
302 and 906 of the Sarbanes-Oxley Act.

42



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##### Table of Contents



VL DISSOLUTION CORPORATION

Financial Statements

June 30, 2003

(With Independent Auditors Report Thereon)





---



##### Table of Contents



VL DISSOLUTION CORPORATION

Financial Statements

June 30, 2003

Index

|                                                                                                |                                                                                                                          |  |      |     | 
|----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------ |  | ---- | --- | 
|Financial Statements:                                                                           |                                                                                                                          |  |      |    
|                                                                                                | Independent Auditors Report                                                                                             |  |      | F-1 | 
|                                                                                                | Statement of Net Assets in Liquidation, June 30, 2003                                                                    |  |      | F-2 | 
|                                                                                                | Statement of Changes in Net Assets in Liquidation, for the period from May 6, 2003
to June 30, 2003                      |  |      | F-3 | 
|                                                                                                | Balance Sheet, June 30, 2002                                                                                             |  |      | F-4 | 
|                                                                                                | Statements of Operations, for the period from July 1, 2002 to May 5, 2003 and for the
years ended June 30, 2002 and 2001 |  |      | F-5 | 
|                                                                                                | Statements of Stockholders Equity, for the years ended June 30, 2003, 2003 and 2001                                     |  |      | F-6 | 
|                                                                                                | Statements of Cash Flows, for the period from July 1, 2002 to May 5, 2003 and for the
years ended June 30, 2002 and 2001 |  |      | F-7 | 
|                                                                                                | Notes to Financial Statements                                                                                            |  |      | F-8 | 
|Schedule:                                                                                       |                                                                                                                          |  |      |    
|Schedule II  Valuation and Qualifying Accounts for the years ended June 30, 2003
2002 and 2001 |                                                                                                                          |  | F-37 |    





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##### Table of Contents



Independent Auditors Report

The Board of Directors

VL Dissolution Corporation:

We have audited the accompanying statement of net assets in liquidation of VL
Dissolution Corporation as of June 30, 2003, and the related statement of
changes in net assets in liquidation and stockholders equity for the period
from May 6, 2003 to June 30, 2003. We have also audited the balance sheet as of
June 30, 2002, and the related statements of operations, stockholders equity,
and cash flows for each of the years in the two-year period then ended, and for
the period from July 1, 2002 to May 5, 2003. These financial statements are
the responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

As described in Note 1 to the financial statements, the stockholders of Vari-L
Company, Inc. approved a plan of liquidation on May 5, 2003, and the Company
commenced liquidation shortly thereafter. As a result, the Company has changed
its basis of accounting for periods subsequent to May 5, 2003, from the
going-concern basis to a liquidation basis. Also on May 5, 2003, Vari-L
Company, Inc. changed its name to VL Dissolution Corporation.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of VL Dissolution
Corporation as of June 30, 2003, the changes in its net assets in liquidation
for the period from May 6, 3003 to June 30, 2003, its financial position as of
June 30, 2002, and the results of its operations and its cash flows for the
period from July 1, 2002 to May 5, 2003, and for each of the years in the
two-year period ended June 30, 2002, in conformity with accounting principles
generally accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included
in Schedule IIValuation and Qualifying Accounts as of May 5, 2003 and for the
period from July 1, 2002 to May 5, 2003, and for the years ended June 30, 2002
and 2001 is presented for purposes of additional analysis and is not a required
part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.

/s/ KPMG LLP

Denver, Colorado
August 1, 2003

F-1



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##### Table of Contents



VL DISSOLUTION CORPORATION

Statement of Net Assets in Liquidation

(in thousands of dollars)

|                                                                          |                           |   |        |          |  | 
|------------------------------------------------------------------------- | ------------------------- | - | ------ | -------- |  | 
|                                                                          |                           |   |        | June 30,
|                                                                          |                           |   |        | 2003    
|                                                                          |                           |   |        |         
|Assets                                                                    |                           |   |        |         
|Cash and cash equivalents                                                 |                           | $ | 60     |         
|Restricted cash (note 2)                                                  |                           |   | 1,475  |         
|Prepaid expenses and other assets                                         |                           |   | 96     |         
|Investments (note 2)                                                      |                           |   | 4,065  |         
|Restricted investments (note 2)                                           |                           |   | 2,542  |         
|                                                                          |                           |   |        |         
|                                                                          |                           | $ | 8,238  |         
|                                                                          |                           |   |        |         
|Liabilities                                                               |                           |   |        |         
|Accounts payable and accrued expenses                                     |                           | $ | (1,213 | )       
|Accrued costs of liquidation (note 1)                                     |                           |   | (1,317 | )       
|                                                                          |                           |   |        |         
|                                                                          |                           |   | (2,530 | )       
|                                                                          |                           |   |        |         
|Settlement obligation to issue 2,000,000 shares
of common stock (note 14) |                           |   | (1,200 | )       
|                                                                          |                           |   |        |         
|Commitments and contingencies (notes 1 and 14)                            |                           |   |        |         
|                                                                          | Net assets in liquidation |   | $      | 4,508    | 
|                                                                          |                           |   |        |         

See accompanying notes to financial statements.

F-2



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##### Table of Contents



VL DISSOLUTION CORPORATION

Statement of Changes in Net Assets in Liquidation

(in thousands of dollars)

|                                           |                                                                    |                                           |   |               |       | 
|------------------------------------------ | ------------------------------------------------------------------ | ----------------------------------------- | - | ------------- | ----- | 
|                                           |                                                                    |                                           |   | Period from  
|                                           |                                                                    |                                           |   | May 6, 2003  
|                                           |                                                                    |                                           |   | to           
|                                           |                                                                    |                                           |   | June 30, 2003
|                                           |                                                                    |                                           |   |              
|Net increase in net assets in liquidation: |                                                                    |                                           |   |              
|                                           | Mark-to-market adjustment on investment in common stock of Sirenza |                                           | $ | 1,920         |      
|                                           |                                                                    |                                           |   |              
|                                           |                                                                    | Net increase in net assets in liquidation |   |               | 1,920 | 
|                                           |                                                                    |                                           |   |              
|                                           | Net assets in liquidation, May 6, 2003                             |                                           |   | 2,588         |      
|                                           |                                                                    |                                           |   |              
|                                           | Net assets in liquidation, June 30, 2003                           |                                           | $ | 4,508         |      
|                                           |                                                                    |                                           |   |              

See accompanying notes to financial statements.

F-3



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##### Table of Contents



VL DISSOLUTION CORPORATION

Balance Sheet

(in thousands of dollars)

|                                                                          |                                                                                                     |  |        |                                            |   |          |        | 
|------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- |  | ------ | ------------------------------------------ | - | -------- | ------ | 
|                                                                          |                                                                                                     |  |        |                                            |   | June 30,
|                                                                          |                                                                                                     |  |        |                                            |   | 2002    
|                                                                          |                                                                                                     |  |        |                                            |   |         
|Assets                                                                    |                                                                                                     |  |        |                                           
|Current assets:                                                           |                                                                                                     |  |        |                                           
|                                                                          | Cash and cash equivalents                                                                           |  | $      | 553                                        |  
|                                                                          | Trade accounts receivable, less allowance for doubtful
accounts of $132 (note 4)                    |  |        | 2,589                                      |  
|                                                                          | Inventories (notes 3 and 4)                                                                         |  |        | 2,491                                      |  
|                                                                          | Prepaid expenses and other current assets                                                           |  |        | 617                                        |  
|                                                                          |                                                                                                     |  |        |                                           
|                                                                          |                                                                                                     |  |        | Total current assets                       |   |          | 6,250  | 
|                                                                          |                                                                                                     |  |        |                                           
|Property and equipment (note 4):                                          |                                                                                                     |  |        |                                           
|                                                                          | Machinery and equipment                                                                             |  |        | 12,263                                     |  
|                                                                          | Furniture and fixtures                                                                              |  |        | 839                                        |  
|                                                                          | Leasehold improvements                                                                              |  |        | 1,509                                      |  
|                                                                          |                                                                                                     |  |        |                                           
|                                                                          |                                                                                                     |  | 14,611 |                                           
|                                                                          | Less accumulated depreciation and amortization                                                      |  |        | 8,211                                      |  
|                                                                          |                                                                                                     |  |        |                                           
|                                                                          |                                                                                                     |  |        | Net property and equipment                 |   |          | 6,400  | 
|Intangible and other assets, net of accumulated amortization              |                                                                                                     |  | 744    |                                           
|                                                                          |                                                                                                     |  |        |                                           
|                                                                          |                                                                                                     |  |        | Total assets                               |   | $        | 13,394 | 
|                                                                          |                                                                                                     |  |        |                                           
|Liabilities and Stockholders Equity                                      |                                                                                                     |  |        |                                           
|Current liabilities:                                                      |                                                                                                     |  |        |                                           
|                                                                          | Trade accounts payable                                                                              |  | $      | 1,392                                      |  
|                                                                          | Accrued compensation                                                                                |  |        | 756                                        |  
|                                                                          | Other accrued expenses                                                                              |  |        | 642                                        |  
|                                                                          | Notes payable and current installments of long-term
obligations (note 4)                            |  |        | 1,611                                      |  
|                                                                          |                                                                                                     |  |        |                                           
|                                                                          |                                                                                                     |  |        | Total current liabilities                  |   |          | 4,401  | 
|Long-term obligations (note 4)                                            |                                                                                                     |  | 55     |                                           
|Other liabilities (note 9)                                                |                                                                                                     |  | 149    |                                           
|                                                                          |                                                                                                     |  |        |                                           
|                                                                          |                                                                                                     |  |        | Total liabilities                          |   |          | 4,605  | 
|                                                                          |                                                                                                     |  |        |                                           
|Settlement obligation to issue 2,000,000 shares
of common stock (note 14) |                                                                                                     |  | 1,200  |                                           
|Stockholders equity (note 7):                                            |                                                                                                     |  |        |                                           
|                                                                          | Common stock, $.01 par value, 50,000,000 shares authorized;
7,179,832 shares issued and outstanding |  |        | 72                                         |  
|                                                                          | Additional paid-in capital                                                                          |  |        | 36,945                                     |  
|                                                                          | Unamortized stock compensation cost                                                                 |  |        | (31                                        | )
|                                                                          | Accumulated deficit                                                                                 |  |        | (29,247                                    | )
|                                                                          |                                                                                                     |  |        |                                           
|                                                                          |                                                                                                     |  |        | Total stockholders equity                 |   |          | 7,739  | 
|                                                                          |                                                                                                     |  |        |                                           
|Commitments and contingencies (notes 4, 9, 10 and 14)                     |                                                                                                     |  |        |                                           
|                                                                          |                                                                                                     |  |        | Total liabilities and stockholders equity |   | $        | 13,544 | 
|                                                                          |                                                                                                     |  |        |                                           

See accompanying notes to financial statements.

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##### Table of Contents



VL DISSOLUTION CORPORATION

Statements of Operations

(in thousands of dollars, except share and per share data)

|                                                       |                                                                                                     |                              |           |              |        |            |           |            |        |   |           |        |        |  
|------------------------------------------------------ | --------------------------------------------------------------------------------------------------- | ---------------------------- | --------- | ------------ | ------ | ---------- | --------- | ---------- | ------ | - | --------- | ------ | ------ | -
|                                                       |                                                                                                     |                              |           | Period from  |        |            |           |            |        |   |           |       
|                                                       |                                                                                                     |                              |           | July 1, 2002 |        | Year ended |           | Year ended
|                                                       |                                                                                                     |                              |           | to           |        | June 30,   |           | June 30,  
|                                                       |                                                                                                     |                              |           | May 5, 2003  |        | 2002       |           | 2001      
|                                                       |                                                                                                     |                              |           |              |        |            |           |           
|Net sales                                              |                                                                                                     | $                            | 13,911    |              |        |            | 21,348    |            |        |   | 41,377    |       
|Cost of goods sold                                     |                                                                                                     |                              | 10,148    |              |        |            | 13,582    |            |        |   | 21,747    |       
|                                                       |                                                                                                     |                              |           |              |        |            |           |            |        |   |           |       
|                                                       |                                                                                                     | Gross profit                 |           |              | 3,763  |            |           |            | 7,766  |   |           |        | 19,630 |  
|                                                       |                                                                                                     |                              |           |              |        |            |           |            |        |   |           |       
|Operating expenses:                                    |                                                                                                     |                              |           |              |        |            |           |            |        |   |           |       
|                                                       | Selling                                                                                             |                              |           | 2,299        |        |            |           | 2,925      |        |   |           | 4,268  |       
|                                                       | General and administrative                                                                          |                              |           | 5,040        |        |            |           | 6,398      |        |   |           | 9,664  |       
|                                                       | Research and development                                                                            |                              |           | 2,444        |        |            |           | 2,653      |        |   |           | 4,021  |       
|                                                       | Expenses related to workforce reductions and
the asset sale to Sirenza (note 12)                    |                              |           | 3,636        |        |            |           | 101        |        |   |           |       |       
|                                                       | Expenses relating to accounting restatements and
related legal matters, net of recoveries (note 13) |                              |           | 82           |        |            |           | 1,805      |        |   |           | 2,387  |       
|                                                       |                                                                                                     |                              |           |              |        |            |           |            |        |   |           |       
|                                                       |                                                                                                     | Total operating expenses     |           |              | 13,501 |            |           |            | 13,882 |   |           |        | 20,340 |  
|                                                       |                                                                                                     |                              |           |              |        |            |           |            |        |   |           |       
|                                                       |                                                                                                     | Operating loss               |           |              | (9,738 | )          |           |            | (6,116 | ) |           |        | (710   | )
|Other income (expense):                                |                                                                                                     |                              |           |              |        |            |           |            |        |   |           |       
|                                                       | Interest income                                                                                     |                              |           | 18           |        |            |           | 48         |        |   |           | 416    |       
|                                                       | Interest expense                                                                                    |                              |           | (866         | )      |            |           | (199       | )      |   |           | (1,062 | )     
|                                                       | Gain on sale/disposal of assets, net                                                                |                              |           | 6,284        |        |            |           |           |        |   |           |       |       
|                                                       | Other, net                                                                                          |                              |           | 375          |        |            |           | 12         |        |   |           | (43    | )     
|                                                       |                                                                                                     |                              |           |              |        |            |           |            |        |   |           |       
|                                                       |                                                                                                     | Total other income (expense) |           |              | 5,811  |            |           |            | (139   | ) |           |        | (689   | )
|                                                       |                                                                                                     |                              |           |              |        |            |           |            |        |   |           |       
|                                                       |                                                                                                     | Net loss                     |           | $            | (3,927 | )          |           |            | (6,255 | ) |           |        | (1,399 | )
|                                                       |                                                                                                     |                              |           |              |        |            |           |            |        |   |           |       
|Loss per share, basic and diluted                      |                                                                                                     | $                            | (0.54     | )            |        |            | (0.87     | )          |        |   | (0.20     | )     
|                                                       |                                                                                                     |                              |           |              |        |            |           |            |        |   |           |       
|Weighted average shares outstanding, basic and diluted |                                                                                                     |                              | 7,258,853 |              |        |            | 7,152,342 |            |        |   | 7,083,866 |       
|                                                       |                                                                                                     |                              |           |              |        |            |           |            |        |   |           |       

See accompanying notes to financial statements.

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##### Table of Contents



VL DISSOLUTION CORPORATION

Statements of Stockholders Equity

Period from May 6 to June 30, 2003, period from July 1, 2002 to May 5, 2003 and years ended June 30, 2002 and 2001

(in thousands of dollars, except share data)

|                                                           |  |              |           |            |  |              |    |             |  |               |        |        |  |             |        |   |  |  |         |   |  |  |        |  
|---------------------------------------------------------- |  | ------------ | --------- | ---------- |  | ------------ | -- | ----------- |  | ------------- | ------ | ------ |  | ----------- | ------ | - |  |  | ------- | - |  |  | ------ | -
|                                                           |  |              |           |            |  |              |    |             |  |               |        |        |  | Unamortized |        |   |  |  |         |   |  | 
|                                                           |  | Common stock |           | Additional |  | stock        |    |             |  |               |        | Total 
|                                                           |  |              |           | paid-in    |  | compensation |    | Accumulated |  | stockholders
|                                                           |  | Shares       |           | Amount     |  | capital      |    | cost        |  | deficit       |        | equity
|                                                           |  |              |           |            |  |              |    |             |  |               |        |       
|Balance, June 30, 2000                                     |  |              | 7,070,423 |            |  |              | 71 |             |  |               | 40,525 |        |  |             | (4,318 | ) |  |  | (21,593 | ) |  |  | 14,685 |  
|Common stock issued under employee stock
purchase plan     |  |              | 35,388    |            |  |              |   |             |  |               | 45     |        |  |             |       |   |  |  |        |   |  |  | 45     |  
|Common stock issued under stock award plan                 |  |              | 1,350     |            |  |              |   |             |  |               | 11     |        |  |             |       |   |  |  |        |   |  |  | 11     |  
|Stock options forfeited                                    |  |              |          |            |  |              |   |             |  |               | (219   | )      |  |             | 219    |   |  |  |        |   |  |  |       |  
|Amortization of stock compensation cost                    |  |              |          |            |  |              |   |             |  |               |       |        |  |             | 487    |   |  |  |        |   |  |  | 487    |  
|Reversal of stock compensation due to
reformation (note 7) |  |              |          |            |  |              |   |             |  |               | (3,533 | )      |  |             | 3,533  |   |  |  |        |   |  |  |       |  
|Net loss                                                   |  |              |          |            |  |              |   |             |  |               |       |        |  |             |       |   |  |  | (1,399  | ) |  |  | (1,399 | )
|                                                           |  |              |           |            |  |              |    |             |  |               |        |        |  |             |        |   |  |  |         |   |  |  |        |  
|Balance June 30, 2001                                      |  |              | 7,107,161 |            |  |              | 71 |             |  |               | 36,829 |        |  |             | (79    | ) |  |  | (22,992 | ) |  |  | 13,829 |  
|Common stock issued under employee stock
purchase plan     |  |              | 76,011    |            |  |              | 1  |             |  |               | 123    |        |  |             |       |   |  |  |        |   |  |  | 124    |  
|Common stock issued under stock award plan                 |  |              | 2,900     |            |  |              |   |             |  |               | 4      |        |  |             |       |   |  |  |        |   |  |  | 4      |  
|Common stock repurchased and retired                       |  |              | (6,240    | )          |  |              |   |             |  |               | (7     | )      |  |             |       |   |  |  |        |   |  |  | (7     | )
|Stock options forfeited                                    |  |              |          |            |  |              |   |             |  |               | (4     | )      |  |             | 4      |   |  |  |        |   |  |  |       |  
|Amortization of stock compensation cost                    |  |              |          |            |  |              |   |             |  |               |       |        |  |             | 44     |   |  |  |        |   |  |  | 44     |  
|Net loss                                                   |  |              |          |            |  |              |   |             |  |               |       |        |  |             |       |   |  |  | (6,255  | ) |  |  | (6,255 | )
|                                                           |  |              |           |            |  |              |    |             |  |               |        |        |  |             |        |   |  |  |         |   |  |  |        |  
|Balance June 30, 2002                                      |  |              | 7,179,832 |            |  | $            | 72 |             |  |               | 36,945 |        |  |             | (31    | ) |  |  | (29,247 | ) |  |  | 7,739  |  
|Common stock issued under employee stock
purchase plan     |  |              | 169,874   |            |  |              | 2  |             |  |               | 115    |        |  |             |       |   |  |  |        |   |  |  | 117    |  
|Common stock issued under stock award plan                 |  |              | 3,600     |            |  |              |   |             |  |               | 1      |        |  |             |       |   |  |  |        |   |  |  | 1      |  
|Common stock surrendered and retired (note 14)             |  |              | (100,813  | )          |  |              | (1 | )           |  |               | (75    | )      |  |             |       |   |  |  |        |   |  |  | (76    | )
|Common stock exercised under stock option plan             |  |              | 96,079    |            |  |              |   |             |  |               | 23     |        |  |             |       |   |  |  |        |   |  |  | 23     |  
|Stock options forfeited                                    |  |              |          |            |  |              |   |             |  |               | (3     | )      |  |             | 3      |   |  |  |        |   |  |  |       |  
|Amortization of stock compensation cost                    |  |              |          |            |  |              |   |             |  |               |       |        |  |             | 28     |   |  |  |        |   |  |  | 28     |  
|Net loss                                                   |  |              |          |            |  |              |   |             |  |               |       |        |  |             |       |   |  |  | (3,927  | ) |  |  | (3,927 | )
|                                                           |  |              |           |            |  |              |    |             |  |               |        |        |  |             |        |   |  |  |         |   |  |  |        |  
|Balance May 5, 2003                                        |  |              | 7,348,572 |            |  | $            | 73 |             |  |               | 37,006 |        |  |             |       |   |  |  | (33,174 | ) |  |  | 3,905  |  
|Effects of change to liquidation basis (note 1)            |  |              |          |            |  |              |   |             |  |               |       |        |  |             |       |   |  |  | (1,317  | ) |  |  | (1,317 | )
|                                                           |  |              |           |            |  |              |    |             |  |               |        |        |  |             |        |   |  |  |         |   |  |  |        |  
|Balance May 5, 2003                                        |  |              | 7,348,572 |            |  | $            | 73 |             |  |               | 37,006 |        |  |             |       |   |  |  | (34,491 | ) |  |  | 2,588  |  
|Net increase in net assets in liquidation                  |  |              |          |            |  |              |   |             |  |               |       |        |  |             |       |   |  |  | 1,920   |   |  |  | 1,920  |  
|                                                           |  |              |           |            |  |              |    |             |  |               |        |        |  |             |        |   |  |  |         |   |  |  |        |  
|Balance June 30, 2003                                      |  |              | 7,348,572 |            |  | $            | 73 |             |  |               | 37,006 |        |  |             |       |   |  |  | (32,571 | ) |  |  | 4,508  |  
|                                                           |  |              |           |            |  |              |    |             |  |               |        |        |  |             |        |   |  |  |         |   |  |  |        |  

See accompanying notes to financial statements.

F-6



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##### Table of Contents



VL DISSOLUTION CORPORATION

Statements of Cash Flows
(in thousands of dollars)

|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |         |        |        |  
|------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------------------------------------------- | ------------------------------------------------ | ------ | ------------ | ------ | ---------- | ------ | ---------- | ------ | ------ | ------- | ------ | ------ | -
|                                                                                      |                                                                             |                                                                     |                                                  |        | Period from  |        |            |        |            |        |        |         |       
|                                                                                      |                                                                             |                                                                     |                                                  |        | July 1, 2002 |        | Year ended |        | Year ended
|                                                                                      |                                                                             |                                                                     |                                                  |        | to           |        | June 30,   |        | June 30,  
|                                                                                      |                                                                             |                                                                     |                                                  |        | May 5, 2003  |        | 2002       |        | 2001      
|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |           
|Net income (loss)                                                                     |                                                                             | $                                                                   | (3,927                                           | )      |              |        | (6,255     | )      |            |        | (1,399 | )      
|Adjustments to reconcile net loss to cash provided by (used in)
operating activities: |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|                                                                                      | Depreciation and amortization                                               |                                                                     |                                                  | 1,679  |              |        |            | 2,095  |            |        |        | 1,756   |       
|                                                                                      | Gain on sale/disposal of assets                                             |                                                                     |                                                  | (6,284 | )            |        |            |       |            |        |        |        |       
|                                                                                      | Loss on disposal of other assets                                            |                                                                     |                                                  | 59     |              |        |            | 30     |            |        |        | 47      |       
|                                                                                      | Common stock issued under profit sharing and stock award plans              |                                                                     |                                                  | 1      |              |        |            | 4      |            |        |        | 11      |       
|                                                                                      | Common stock surrendered and retired                                        |                                                                     |                                                  | (76    | )            |        |            |        |            |        |        |         |       
|                                                                                      | Amortization of stock compensation                                          |                                                                     |                                                  | 28     |              |        |            | 44     |            |        |        | 487     |       
|                                                                                      | Write-off of debt issue costs                                               |                                                                     |                                                  | 59     |              |        |            |       |            |        |        |        |       
|                                                                                      | Forfeiture and write-off of deposits                                        |                                                                     |                                                  | 131    |              |        |            |        |            |        |        |         |       
|                                                                                      | Settlement obligation to issue 2,000,000 shares of common stock             |                                                                     |                                                  |       |              |        |            | 1,200  |            |        |        |        |       
|                                                                                      | Changes in:                                                                 |                                                                     |                                                  |        |              |        |            |        |            |        |        |         |       
|                                                                                      |                                                                             | Accounts receivable, inventories, prepaid expenses and other assets |                                                  |        | 2,025        |        |            |        | 4,457      |        |        |         | 3,328  |       
|                                                                                      |                                                                             | Accounts payable, accrued expenses and other liabilities            |                                                  |        | 1,905        |        |            |        | (751       | )      |        |         | (2,367 | )     
|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|                                                                                      |                                                                             |                                                                     | Total adjustments                                |        |              | (473   | )          |        |            | 7,079  |        |         |        | 3,262  |  
|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|                                                                                      |                                                                             |                                                                     | Cash provided by (used in) operating activities  |        |              | (4,400 | )          |        |            | 824    |        |         |        | 1,863  |  
|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|Cash flows from investing activities:                                                 |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|                                                                                      | Purchases of property and equipment                                         |                                                                     |                                                  | (156   | )            |        |            | (953   | )          |        |        | (2,034  | )     
|                                                                                      | Proceeds from sale of other assets                                          |                                                                     |                                                  | 23     |              |        |            | 59     |            |        |        | 25      |       
|                                                                                      | Consideration from sale of assets to Sirenza                                |                                                                     |                                                  | 3,835  |              |        |            |       |            |        |        |        |       
|                                                                                      | Net proceeds (investment) from cash surrender value of whole life insurance |                                                                     |                                                  | 269    |              |        |            | (29    | )          |        |        | (21     | )     
|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|                                                                                      |                                                                             |                                                                     | Cash provided by (used in) investing activities  |        |              | 3,971  |            |        |            | (923   | )      |         |        | (2,030 | )
|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|Cash flows from financing activities:                                                 |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|                                                                                      | Decrease in bank overdraft                                                  |                                                                     |                                                  |       |              |        |            |       |            |        |        | (321    | )     
|                                                                                      | Proceeds from notes payable                                                 |                                                                     |                                                  | 5,751  |              |        |            | 7,257  |            |        |        | 1,480   |       
|                                                                                      | Payments of notes payable                                                   |                                                                     |                                                  | (578   | )            |        |            | (8,738 | )          |        |        | (11,500 | )     
|                                                                                      | Proceeds from long-term obligations                                         |                                                                     |                                                  |       |              |        |            | 484    |            |        |        | 1,500   |       
|                                                                                      | Payments of long-term obligations                                           |                                                                     |                                                  | (1,527 | )            |        |            | (422   | )          |        |        | (54     | )     
|                                                                                      | Payment of debt issue costs                                                 |                                                                     |                                                  |       |              |        |            | (59    | )          |        |        |        |       
|                                                                                      | Proceeds from common stock issued under stock option plan                   |                                                                     |                                                  | 23     |              |        |            |       |            |        |        |        |       
|                                                                                      | Proceeds from common stock issued under stock purchase plan                 |                                                                     |                                                  | 117    |              |        |            | 124    |            |        |        | 45      |       
|                                                                                      | Common stock repurchased and retired                                        |                                                                     |                                                  |       |              |        |            | (7     | )          |        |        |        |       
|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|                                                                                      |                                                                             |                                                                     | Cash provided by (used) in financing activities  |        |              | 3,786  |            |        |            | (1,361 | )      |         |        | (8,850 | )
|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|                                                                                      |                                                                             |                                                                     | Increase (decrease) in cash and cash equivalents |        |              | 3,357  |            |        |            | (1,460 | )      |         |        | (9,017 | )
|Cash and cash equivalents at beginning of period                                      |                                                                             |                                                                     | 553                                              |        |              |        | 2,013      |        |            |        | 11,030 |        
|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|Cash and cash equivalents at end of period                                            |                                                                             | $                                                                   | 3,910                                            |        |              |        | 553        |        |            |        | 2,013  |        
|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|Supplemental disclosure of cash flow information:                                     |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|                                                                                      | Cash paid for interest                                                      |                                                                     | $                                                | 819    |              |        |            | 159    |            |        |        | 1,217   |       
|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        
|                                                                                      | Cash paid for income taxes                                                  |                                                                     | $                                                |       |              |        |            |       |            |        |        |        |       
|                                                                                      |                                                                             |                                                                     |                                                  |        |              |        |            |        |            |        |        |        

See accompanying notes to financial statements.

F-7



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##### Table of Contents



VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



|(1) |  | Liquidation Basis of Accounting and Sale of Substantially All Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Vari-L Company, Inc. (the Company) was founded in 1953 and, prior to May 6,
2003, was a manufacturer of electronic components. The Company designed,
manufactured, and marketed radio frequency and microwave signal source and
processing components and other electronic devices used in the
communications industry. The Company operated as a single business
segment, and its products were sold to original equipment manufacturers of
communication equipment who marketed their products in both commercial and
military markets in the United States and internationally.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | On December 2, 2002, the Company entered into a definitive asset purchase
agreement (the Asset Purchase Agreement) to sell substantially all of its
assets to a wholly owned subsidiary of Sirenza Microdevices, Inc.
(Sirenza).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | On May 5, 2003, the asset sale contemplated by the Asset Purchase Agreement
was consummated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | Effective with the closing, the Company received $3.835 million in cash,
3.255 million shares of Sirenzas common stock with a market value of
$5.143 million as of May 5, 2003, forgiveness of $1.354 million and
assumption of $4.594 million of secured loans and accrued interest payable
to Sirenza. The Asset Purchase Agreement requires the Company to set aside
$1.475 million in cash and 1.252 million shares of Sirenzas common stock
to satisfy any indemnification claims from Sirenza that may arise prior to
March 31, 2004. Accordingly, these amounts have been designated as
restricted at June 30, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | The closing of the asset sale caused the Company to incur liabilities
aggregating approximately $1.9 million. These amounts were paid out of net
proceeds from the sale. The amounts due consisted of post-closing bonuses
payable to key officers, investment banking fees and contract and lease
termination penalties. The amounts have been reflected in expenses related
to workforce reductions and the asset sale to Sirenza in the Statement of
Operations for the period from July 1, 2002 to May 5, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | The Companys remaining assets consist primarily of the cash surrender
value of life insurance policies, Sirenza common stock, prepaid insurance
and security deposits on its leased properties. Concurrent with the closing
of the asset sale, employees of the Company resigned and accepted
employment with Sirenza.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | Pursuant to the amended plan of dissolution, which was approved by the
stockholders at the special stockholders meeting on May 5, 2003, the
Company filed articles of dissolution with the Secretary of State of the
State of Colorado. Upon filing of the articles of dissolution, the
Companys operations
were limited to winding-up its business and affairs, selling certain of its
remaining assets, discharging its known liabilities, establishing a contingency
reserve for payment of expenses and contingent liabilities, and distributing
any remaining assets to its stockholders, all in accordance with the amended
plan of dissolution. As a result, the Company changed its basis of accounting
to the liquidation basis as of May 5, 2003. The statements of operations,
stockholders equity and cash flows for the period from July 1, 2002 to May 5,
2003 and for each of the years in the two year period ended June 30, 2002 have
been presented on a going concern basis comparable to prior periods, which
assumes the realization of assets and the liquidation of liabilities in the
normal course

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



|    |  | of business. Upon changing to the liquidation basis of accounting, which
assumes that assets and liabilities are reflected at the estimated amounts
to be paid or received, the Company recorded a charge to equity of $1.317
million representing an estimate of the costs to be incurred during
dissolution of the Company as further described in Note 14; however actual
costs could differ from those estimates. Distributions ultimately made to
stockholders upon liquidation will differ from the net assets in
liquidation recorded in the accompanying statement of net assets in
liquidation as a result of future operations, the sale proceeds ultimately
received by the Company and adjustments, if any, to estimated costs of
liquidation.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | It is the Companys intention to settle its outstanding obligations and
sell its remaining assets as expeditiously as possible. Final dissolution
of the Company and related distributions to its stockholders will occur
upon obtaining final resolution of all liquidation issues and expiration of
the period during which Sirenza may make an indemnity claim. For the period
from May 6, 2003 to June 30, 2003, there were no distributions made to
stockholders. The Company intends to make an initial distribution of the
Sirenza shares to its shareholders during October 2003.                                                                                                                                                                 
|   
|    |  | In connection with the asset sale and subsequent dissolution of the
Company, the Company filed articles of amendment to change its name from
Vari-L Company, Inc. to VL Dissolution Corporation, effective May 5, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(2) |  | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



| | (a) |  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with accounting principles
generally accepted in the United States of America. Significant
assumptions inherent in the preparation of the accompanying financial
statements include, but are not limited to, revenue recognition and
allowances for doubtful accounts, the provision for excess and
obsolete inventories, and commitments and contingencies. Actual
results could differ from those estimates.
|
| | (b) |  | Reclassifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |     |  | Certain reclassifications have been made to prior year amounts to
conform to the current years presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (c) |  | Restricted Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |     |  | At June 30, 2003, $1.475 million of cash is restricted as to
withdrawal and is retained in a separate bank account designated for
such purpose. This cash will remain restricted until the later of
March 31, 2004 or the date at which all indemnification claims against
the Company made by Sirenza and its indemnified parties are paid or
otherwise resolved.                                                                                                                                                                                                                                                                                     

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| | (d) |  | Marketable Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Marketable securities, consisting of an investment in Sirenzas common
stock, are classified as held for trading and are recorded at fair
value. As described in note 1, approximately 1.3 million shares, with
a fair market value of $2.5 million as of June 30, 2003, are
restricted as to withdrawal. Restricted investments are held in the
Companys name and bear a restrictive legend subject to stop transfer
restrictions imposed by Sirenza. The shares will remain restricted
until the later of March 31, 2004 or the date at which all
indemnification claims against the Company made by Sirenza and its
indemnified parties are paid or otherwise resolved.
|
| |     |  | Unrealized gains and losses are reported as other income (expense) in
the Statement of Changes in Net Assets in Liquidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (e) |  | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     |  | Inventories were stated at the lower of cost or market. Cost was
determined using the first-in, first-out method. A provision was
recorded to reduce excess and obsolete inventories to their estimated
net realizable value. The provision for excess and obsolete inventory
included in cost of goods sold was $475,000, $564,000 and $1,362,000
for the period from July 1, 2002 to May 5, 2003 and for the years
ended June 30, 2002 and 2001, respectively.                                                                                                                                                                                                           
|
| |     |  | This asset was acquired by Sirenza on May 5, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (f) |  | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |     |  | Property and equipment were stated at cost. Plant and equipment under
capital leases were recorded initially at the present value of the
minimum lease payments. Depreciation and amortization of property and
equipment was computed using the straight-line method over estimated
useful lives of the respective assets, which ranged from 3 to 10
years.                                                                                                                                                                                                                                                                                                                
|
| |     |  | Included in property and equipment were assets under capital leases of
$165,000 at June 30, 2002. Accumulated amortization of assets under
capital leases was $137,000 at June 30, 2002. Amortization of assets
under capital leases is included in depreciation expense.                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |     |  | Upon closing of the asset sale, Sirenzas subsidiary acquired
substantially all of the Companys property and equipment. During the
period from July 1, 2002 to May 5, 2003, the Company recorded an
impairment loss of $451,000 on the disposal of property and equipment
not acquired by Sirenza and not used by the Company.                                                                                                                                                                                                                                                                                                                                            
|
| | (g) |  | Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     |  | In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets. Under SFAS No. 142, goodwill and intangible assets with indefinite
useful lives will no longer be amortized, but will instead be tested
periodically for impairment. SFAS No. 142 also requires that intangible assets
with definite lives be amortized over their respective estimated useful lives
to                                                                                                                                                                                                  

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |     |  | their estimated residual values, and reviewed for impairment upon the
occurrence of certain events.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | During the year ended June 30, 2002, goodwill of $112,000 resulting
from the acquisition of certain assets of Asvan Technologies, LLC, was
recorded at cost and was included in other assets. In accordance with
SFAS No. 142, the Company did not amortize goodwill.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | Intangible assets, consisting of patents and trademarks, were recorded
at cost and were included in other assets. Intangible assets of
$338,000, net of accumulated amortization of $141,000 at June 30,
2002, were being amortized on a straight-line basis over an estimated
useful life of 10 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | The Company reviewed goodwill and intangible assets for impairment at
least annually. For the year ended June 30, 2002, the Company
evaluated the recoverability of goodwill and intangible assets and
recorded impairment charges of $30,000 related to patents no longer in
use.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |     |  | These assets were acquired by Sirenza on May 5, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (h) |  | Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | The Company reviewed long-lived assets and identifiable intangibles
for impairment whenever events or changes in circumstances indicated
that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used was measured by a
comparison of the carrying amount of an asset to the undiscounted
future net cash flows expected to be generated by the asset. If such
assets were considered to be impaired, the impairment to be recognized
was measured by the amount by which the carrying amount of the asset
exceeded the fair value of the asset. Assets to be disposed of were
reported at the lower of the carrying amount or fair value less costs
to sell.                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (i) |  | Stock Compensation Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |     |  | The Company had three stock based compensation plans as described in
Note 7. Concurrent with the closing of the asset sale and
resignation/termination of the employees of the Company on May 5,
2003, the stock based compensation plans terminated. The Company
applied the intrinsic value-based method of accounting prescribed by
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees, and related interpretations, in accounting for
its fixed award stock options. As such, compensation expense was
recorded only if the current market price of the underlying common
stock exceeded the exercise price of
the option on the date of grant. SFAS No. 123, Accounting for
Stock-Based Compensation, established accounting and disclosure
requirements using a fair value-based method of accounting for
stock-based employee compensation plans. As allowed by SFAS No. 123,
the Company elected to continue to apply the intrinsic value-based
method of accounting described above, and adopted the disclosure
requirements of SFAS No. 123.

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  |  | Had compensation cost been determined on the basis of fair value as
computed using the assumptions herein, net loss and loss per share
would have been increased to the following pro forma amounts (in
thousands of dollars, except per share amounts):
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                        |  |              |        |               |  |               |        |   |  |  |        |  
|----------------------------------------------------------------------- |  | ------------ | ------ | ------------- |  | ------------- | ------ | - |  |  | ------ | -
|                                                                        |  | Period from  |        |               |  |               |        |   |  | 
|                                                                        |  | July 1, 2002 |        |               |  |               |        |   |  | 
|                                                                        |  | to           |        | Year ended    |  | Year ended   
|                                                                        |  | May 5, 2003  |        | June 30, 2002 |  | June 30, 2001
|                                                                        |  |              |        |               |  |              
|Net income (loss) as reported                                           |  | $            | (3,927 | )             |  |               | (6,255 | ) |  |  | (1,399 | )
|Add: stock based compensation
expense included in net loss              |  |              | 29     |               |  |               | 48     |   |  |  | 498    |  
|Deduct: stock based compensation
determined under the fair value
method |  |              | (4,440 | )             |  |               | (2,263 | ) |  |  | (2,970 | )
|                                                                        |  |              |        |               |  |               |        |   |  |  |        |  
|Pro forma net loss                                                      |  | $            | (8,338 | )             |  |               | (8,470 | ) |  |  | (3,871 | )
|                                                                        |  |              |        |               |  |               |        |   |  |  |        |  
|Basic and diluted loss per share:                                       |  |              |        |               |  |               |        |   |  |  |        |  
|As reported                                                             |  | $            | (0.54  | )             |  |               | (0.87  | ) |  |  | (0.20  | )
|                                                                        |  |              |        |               |  |               |        |   |  |  |        |  
|Pro forma                                                               |  | $            | (1.13  | )             |  |               | (1.18  | ) |  |  | (0.55  | )
|                                                                        |  |              |        |               |  |               |        |   |  |  |        |  



| |  |  | Compensation cost of options granted for the SFAS No. 123 pro forma
amounts disclosed above was estimated using the Black-Scholes
option-pricing model with the following assumptions:
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            |  |              |       |           |  |           |       |   |  |  |       |  
|------------------------------------------- |  | ------------ | ----- | --------- |  | --------- | ----- | - |  |  | ----- | -
|                                            |  | Period from  |       | Year      |  | Year     
|                                            |  | July 1, 2002 |       | ended     |  | ended    
|                                            |  | to           |       | June 30,  |  | June 30, 
|                                            |  | May 5, 2003  |       | 2002      |  | 2001     
|                                            |  |              |       |           |  |          
|Expected life of
options from date of
grant |  | 0.5 years    |       | 5.9 years |  | 6.3 years
|Risk-free interest rate                     |  |              | 2.0   | %         |  |           | 3.4   | % |  |  | 5.7   | %
|Volatility                                  |  |              | 238.5 | %         |  |           | 145.0 | % |  |  | 212.0 | %
|Assumed dividend yield                      |  |              | 0.0   | %         |  |           | 0.0   | % |  |  | 0.0   | %

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##### Table of Contents



VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  |  | The Employee Stock Purchase Plan is considered compensatory under SFAS
No. 123, and therefore, compensation cost for the SFAS No. 123 pro
forma amounts disclosed above was estimated using the Black-Scholes
option-pricing model with the following assumptions:
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            |  |              |       |            |  |            |       |   |  |  |       |  
|------------------------------------------- |  | ------------ | ----- | ---------- |  | ---------- | ----- | - |  |  | ----- | -
|                                            |  | Period from  |       |            |  |            |       |   |  | 
|                                            |  | July 1, 2002 |       | Year ended |  | Year ended
|                                            |  | to           |       | June 30,   |  | June 30,  
|                                            |  | May 5, 2003  |       | 2002       |  | 2001      
|                                            |  |              |       |            |  |           
|Expected life of
options from date of
grant |  | 0.4 years    |       | 1.0 years  |  | 1.0 years 
|Risk-free interest rate                     |  |              | 2.0   | %          |  |            | 3.4   | % |  |  | 5.7   | %
|Volatility                                  |  |              | 238.5 | %          |  |            | 145.0 | % |  |  | 212.0 | %
|Assumed dividend yield                      |  |              | 0.0   | %          |  |            | 0.0   | % |  |  | 0.0   | %



| | (j) |  | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Income taxes for periods prior to liquidation are accounted for under
the asset and liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and net
operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
|
| |     |  | Deferred tax assets are reduced by a valuation allowance for the
portion of such assets for which it is more likely than not the amount
will not be realized. Deferred tax assets and liabilities are
classified as current or noncurrent based on the classification of the
underlying asset or liability giving rise to the temporary difference
or the expected date of utilization of the carryforwards.                                                                                                                                                                                                                                                                                                                                           
|
| | (k) |  | Earnings Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |     |  | The Company computes net loss per share by dividing the net loss for
the period by the weighted average number of shares of common stock
outstanding during the period. Diluted net loss per share is computed
by dividing the net loss for the period by the weighted average number
of shares of common stock increased for potentially dilutive common
shares outstanding. The effects of potential common stock equivalents
have not been included in the computation of diluted net loss per
share as their effect is anti-dilutive.                                                                                                                                                                                                              

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  |  | The following table sets forth the computation of basic and diluted
net loss per share for the periods indicated (in thousands, except
share and per share data):
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                              |  |              |           |            |  |            |           |   |  |  |           |  
|--------------------------------------------- |  | ------------ | --------- | ---------- |  | ---------- | --------- | - |  |  | --------- | -
|                                              |  | Period from  |           |            |  |            |           |   |  | 
|                                              |  | July 1, 2002 |           | Year ended |  | Year ended
|                                              |  | to           |           | June 30,   |  | June 30,  
|                                              |  | May 5, 2003  |           | 2002       |  | 2001      
|                                              |  |              |           |            |  |           
|Net income (loss)                             |  | $            | (3,927    | )          |  |            | (6,255    | ) |  |  | (1,399    | )
|                                              |  |              |           |            |  |            |           |   |  |  |           |  
|Weighted average shares outstanding           |  |              | 7,258,853 |            |  |            | 7,152,342 |   |  |  | 7,083,866 |  
|                                              |  |              |           |            |  |            |           |   |  |  |           |  
|Basic and diluted net income
(loss) per share |  | $            | (0.54     | )          |  |            | (0.87     | ) |  |  | (0.20     | )
|                                              |  |              |           |            |  |            |           |   |  |  |           |  



| | (l) |  | Research and Development and Advertising Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Research and development and advertising costs were expensed when
incurred. Research and development expense for the period from July
1, 2002 to May 5, 2003 and for the years ended June 30, 2002 and 2001
totaled $2.4 million, $2.7 million and $4.0 million, respectively.
This amount was comprised of product development expenses of $1.7
million, $1.9 million and $2.3 million, respectively, which
represented the design costs associated with customized products for
customers. Additionally this amount was comprised of research expenses
of $729,000, $813,000, and $1.7 million, respectively, which were
costs associated with the development of new product lines.
Advertising costs were $141,000 $220,000 and $230,000 for the period
from July 1, 2002 to May 5, 2003 and for the years ended June 30, 2002
and 2001, respectively.
|
| | (m) |  | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | Revenues were recognized at the time of shipment. Provisions were
made for sales discounts and allowances at the time product sales were
recognized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (n) |  | Product Warranties and Returns                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |     |  | Product warranties and returns were provided for in the period the
products were sold. The Company provided a one-year warranty on most
of its products. As the majority of its products were built to
customer specifications, the Company generally did not accept product
returns. Historically, warranty expense and product returns were
insignificant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |     |  | This liability was assumed by Sirenza on May 5, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (o) |  | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |     |  | The carrying amounts of cash and cash equivalents, accounts receivable
and accounts payable approximate fair value because of the short
maturities of these instruments. The carrying amounts of the
Companys notes payable and long-term obligations at June 30, 2002
approximated their fair values since the instruments carried a
variable rate of interest or a rate that approximated current rates.                                                                                                                                                                                                                                                                                                                                                                                                                                               

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



|(3) |  | Inventories                                                      
|--- |  | -----------------------------------------------------------------
|   
|    |  | Inventories consisted of the following (in thousands of dollars):

|                                              |  |   |          |   | 
|--------------------------------------------- |  | - | -------- | - | 
|                                              |  |   | June 30,
|                                              |  |   | 2002    
|                                              |  |   |         
|Finished goods                                |  | $ | 1,083    |  
|Work-in-process                               |  |   | 394      |  
|Raw materials                                 |  |   | 3,536    |  
|                                              |  |   |          |  
|                                              |  |   | 5,013    |  
|Less allowances for excess and obsolete items |  |   | (2,522   | )
|                                              |  |   |          |  
|Net inventories                               |  | $ | 2,491    |  
|                                              |  |   |          |  



|(4) |  | Notes Payable and Long-term Obligations                                                      
|--- |  | ---------------------------------------------------------------------------------------------
|   
|    |  | Notes payable and long-term obligations consisted of the following (in
thousands of dollars):

|                                                     |                |                       |       |          |    | 
|---------------------------------------------------- | -------------- | --------------------- | ----- | -------- | -- | 
|                                                     |                |                       |       | June 30,
|                                                     |                |                       |       | 2002    
|                                                     |                |                       |       |         
|Notes payable under Wells Fargo Credit Facility (a): |                |                       |       |         
|                                                     | Revolving loan |                       | $     |         |   
|                                                     | Term loan      |                       |       | 1,498    |   
|Promissory notes (b)                                 |                |                       | 139   |         
|Capital lease obligations (c)                        |                |                       | 29    |         
|                                                     |                |                       |       |          |   
|                                                     |                |                       | 1,666 |         
|Less current installments                            |                |                       | 1,611 |         
|                                                     |                |                       |       |          |   
|                                                     |                | Long-term obligations |       | $        | 55 | 
|                                                     |                |                       |       |          |   



| | (a) |  | Credit Facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | On June 28, 2001, the Company entered into a credit agreement with
Wells Fargo Business Credit, Inc. (Wells Fargo) (the Credit
Facility), consisting of, among other things, a
revolving loan (Revolving Loan) and a term loan (Term Loan). During fiscal
2002, the Company was required to negotiate amendments to avoid potential
default under the Credit Facility due to the continuing softness of demand for
the Companys products and within the wireless industry. In late May 2002, the
Company determined that it was not in compliance with the minimum tangible net
worth of the loan agreement with Wells Fargo, which constituted an event of
default. In early July 2002, the Company received notice from Wells Fargo
confirming that an event of default had occurred. A default interest rate of 3%
over the floating rate was charged against amounts outstanding under the loan
agreement. No other

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |     |  | default remedies were sought by the lender. At June 30, 2002, the
interest rates on the Revolving Loan and the Term Loan were 8.75% and
10.25%, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | On October 7, 2002, the Company entered into a loan agreement with
Sirenza which provided for a $5.3 million senior secured loan facility
(the Loan Facility). As a condition to the Loan Facility, the
Company entered into an Exclusivity and Right of First Refusal
Agreement (the Exclusivity Agreement) with Sirenza to evaluate a
potential acquisition of all or substantially all of the Companys
assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |     |  | The Loan Facility was secured by substantially all of the Companys
assets and had an annual interest rate of 25% on outstanding amounts.
Additionally, the Loan Facility was subject to covenants that among
other things, imposed limitations on capital expenditures and
investments, restricted certain payments and distributions and
required the Company to maintain certain financial ratios based on a
rolling three-month calculation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |     |  | Under the terms of the Loan Facility, Sirenza provided for funding in
two tranches. The first tranche (Tranche A) consisted of an initial
term loan of approximately $1.4 million and was used to repay amounts
then outstanding under the credit facility at Wells Fargo. The second
tranche (Tranche B) consisted of additional term loans which were
drawn down in accordance with an agreed upon schedule. The Company
used advances under Tranche B to fund its working capital
requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |     |  | The Companys ability to draw down amounts under Tranche B was
conditioned upon, among other things, the absence of an event of
default and its representations and warranties being true and correct
at the time of such draw down request. For the three month period
ended December 31, 2002, the Company was in default of the Net
Operating Loss covenant of the Loan Facility. For the three month
period ended February 28, 2003, the Company also was in default of the
Cash Used in Operations covenant. For the three month period ended
March 31, 2003, the Company met the minimum requirements of the
financial covenants, however the Loan Facility did not provide for the
cure of an existing breach of its covenants. Under the terms of the
Loan Facility, the default interest rate increased 5 percentage points
from 25% to 30% effective January 1, 2003. Furthermore, Sirenza had
the right to declare all amounts due on the loan immediately due and
payable. Sirenza did not take any action to accelerate the loan, but
reserved the right to do so. Upon closing of the asset sale, Sirenzas
subsidiary forgave $1.4 million and assumed the remaining outstanding
indebtedness under the Loan Facility, including accrued interest.
|
| | (b) |  | Promissory Notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |     |  | The Company had a two year promissory note payable to Asvan
Technologies, LLC., a related party, in the amount of $175,000 secured
by a letter of credit. The note was due to mature on January 30, 2004
and had principal and interest payable in equal monthly installments
of $7,300 at an annual interest rate of 10%. During October 2002, the
note was paid in full from advances under the Tranche B note.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| | (c) |  | Leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company was obligated under various capital leases for certain
machinery and equipment that expire at various dates during the next
two years. Upon closing of the asset sale, Sirenzas subsidiary
assumed these liabilities on May 5, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |  | The Company also has noncancelable operating leases primarily for its
principal executive office and its manufacturing facilities. Rent
expense was $746,000, $802,000 and $835,000 for the period from July
1, 2002 to May 5, 2003 and for the years ended June 30, 2002 and 2001,
respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |  | On November 12, 2002, the Company negotiated the right to terminate
the lease for its principal executive office located in Denver,
Colorado effective June 30, 2003 (the Termination Date) for a
payment of $594,000 and forfeiture of an existing security deposit of
$81,000. The original termination date of the lease was August 31,
2013. In consideration of the option to terminate the lease early, the
Company paid an additional security deposit of $50,000 to cover any
damages associated with vacating the premises. In the event that the
Company closed a sale of all or substantially all of its assets to
Sirenza prior to the Termination Date, the Company would exercise its
right to terminate the lease and pay the early termination fee within
two business days of closing. On May 5, 2003, in connection with the
closing of the asset sale, the Company exercised its right to
terminate the lease, paid the early termination fee and accrued
additional related costs of $150,000. The total cost to terminate the
lease approximated $825,000. This amount has been reflected in
expenses related to workforce reductions and the asset sale to Sirenza
in the Statement of Operations for the period from July 1, 2002 to May
5, 2003.                                                                                                           
|
| |     |  | The Company currently leases a facility under a long-term operating
lease from a partnership in which Mr. Joseph Kiser, the Companys
former Chairman and Chief Scientific Officer, is a partner. As
described in Note 15, the Company was engaged in litigation with Mr.
Kiser. The lease expires October 31, 2005 and contains options to
extend the terms of the lease. Total rent expense associated with this
lease was $108,000, $130,000 and $130,000 for the period from July 1,
2002 to May 5, 2003 and for the years ended June 30, 2002 and 2001,
respectively. There was no rent expense incurred for the period May 6,
2003 to June 30, 2003 due to a sublease agreement in place between the
Company and Sirenza at substantially identical terms to the lease
agreement. The sublease agreement expired on June 30, 2003. Currently,
the Company does not have any other sublease agreements in place. The
Company is in the process of attempting to sublease this facility
since it no longer needs office or manufacturing space. The Company
has accrued approximately $363,000 representing estimated remaining
costs, including utilities, insurance and taxes, associated with
abandonment of this lease. This amount has been reflected in general
and administrative expenses in the Statement of Operations for the
period from July 1, 2002 to May 5, 2003.

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##### Table of Contents



VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  |  | Future minimum lease payments under noncancelable operating leases
(with initial or remaining lease terms in excess of one year) as of
June 30, 2003 are as follows (in thousands of dollars):
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     |      |                              |   |     |     | 
|-------------------- | ---- | ---------------------------- | - | --- | --- | 
|Year ending June 30, |      |                              |   |    
|                     | 2004 |                              | $ | 130 |    
|                     | 2005 |                              |   | 130 |    
|                     | 2006 |                              |   | 43  |    
|                     |      |                              |   |     |    
|                     |      | Total minimum lease payments |   |     | 303 | 
|                     |      |                              |   |     |    



|(5) |  | Acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On January 25, 2002, the Company acquired certain assets of Asvan
Technologies, LLC (Asvan) for approximately $313,000. The purchase price
included $100,000 in cash, a two year promissory note in the amount of
$175,000 secured by a letter of credit and approximately $38,000 in direct
costs of acquisition. The note had principal and interest payable in equal
monthly installments of $7,300 at an annual interest rate of 10%. The fair
value of net tangible assets acquired was approximately $201,000, resulting
in goodwill of approximately $112,000. Upon closing of the asset sale,
Sirenzas subsidiary acquired this asset on May 5, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | The purchase agreement with Asvan Technology, LLC also provided Asvan with
commissions to be paid based upon the sale of YIG based products. The
agreement stipulates a minimum commission amount of $100,000 that is due to
Asvan for the period from January 1, 2002 to June 30, 2003 irrespective of
actual commissions due based upon actual sales of YIG based products. To
date, the Company has not developed YIG based products for sale to the
market. Since the Company is in the process of liquidating its remaining
assets, it does not intend to develop YIG based products. The failure to
meet a minimum level of sales of YIG based products gives Asvan the right,
but not the obligation, to declare an exclusivity event if commissions on
the sale of YIG based products did not reach the minimum level. On August
18, 2003, Asvan declared that an exclusivity event had occurred due to the
lack of sales of YIG based products. Under the terms of the Asvan
agreement, a payment of $100,000 is due to Asvan by August 29, 2004 and
accordingly has been recorded in the statement of operations for the period
from July 1, 2002 to May 5, 2003.

F-18



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##### Table of Contents



VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



|(6) |  | Income Taxes                                                                                                                                                                                                                                                                                       
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | For the period from July 1, 2002 to May 5, 2003, and for the years ended
June 30, 2002 and 2001, the Company recorded no provision for federal or
state income taxes since a valuation allowance was provided for the income
tax benefit of the net operating losses incurred during those periods.
|   
|    |  | Income tax benefit attributable to net loss differed from the amounts
computed by applying the U.S. federal income tax rate of 35% to pretax loss
as a result of the following (in thousands of dollars):                                                                                          

|                                                                                                                 |  |              |        |            |  |            |        |   |  |  |      |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------ | ------ | ---------- |  | ---------- | ------ | - |  |  | ---- | -
|                                                                                                                 |  | Period from  |        |            |  |            |        |   |  | 
|                                                                                                                 |  | July 1, 2002 |        | Year ended |  | Year ended
|                                                                                                                 |  | to           |        | June 30,   |  | June 30,  
|                                                                                                                 |  | May 5, 2003  |        | 2002       |  | 2001      
|                                                                                                                 |  |              |        |            |  |           
|Income tax benefit at federal statutory tax rate                                                                 |  | $            | (1,374 | )          |  |            | (2,189 | ) |  |  | (490 | )
|State income taxes, net of federal tax effect                                                                    |  |              | 113    |            |  |            | (188   | ) |  |  | (43  | )
|Change in the beginning of year balance of the
valuation for deferred tax assets allocated to
income tax expense |  |              |        |            |  |            | (225   | ) |  |  |     |  
|Officers life insurance                                                                                         |  |              |       |            |  |            | 46     |   |  |  | 53   |  
|Non-deductible meals and entertainment expenses                                                                  |  |              | 12     |            |  |            | 8      |   |  |  | 11   |  
|Other                                                                                                            |  |              |       |            |  |            |       |   |  |  | 5    |  
|Increase in valuation allowance for net
deferred tax assets                                                      |  |              | 1,249  |            |  |            | 2,548  |   |  |  | 464  |  
|                                                                                                                 |  |              |        |            |  |            |        |   |  |  |      |  
|Actual income tax expense (benefit)                                                                              |  | $            |       |            |  |            |       |   |  |  |     |  
|                                                                                                                 |  |              |        |            |  |            |        |   |  |  |      |  

F-19



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##### Table of Contents



VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  | Significant components of deferred tax balances were as follows:
| |  | ----------------------------------------------------------------

|                          |                                                                             |                                       |        |          |      |  
|------------------------- | --------------------------------------------------------------------------- | ------------------------------------- | ------ | -------- | ---- | -
|                          |                                                                             |                                       |        | June 30,
|                          |                                                                             |                                       |        | 2002    
|                          |                                                                             |                                       |        |         
|Deferred tax assets:      |                                                                             |                                       |        |         
|                          | Allowance for doubtful accounts recognized for financial reporting purposes |                                       | $      | 50       |     
|                          | Inventory reserve recognized for financial reporting purposes               |                                       |        | 959      |     
|                          | Intangible assets, due to differences in amortization methods               |                                       |        | 21       |     
|                          | Other accounts and reserves accrued for financial reporting purposes        |                                       |        | 435      |     
|                          | Stock compensation expense recognized for financial reporting purposes      |                                       |        | 361      |     
|                          | Accrual for stockholder lawsuit                                             |                                       |        | 551      |     
|                          | Net operating loss carryforwards                                            |                                       |        | 13,010   |     
|                          |                                                                             |                                       |        |          |     
|                          |                                                                             |                                       | 15,387 |         
|                          | Less valuation allowance                                                    |                                       |        | (15,082  | )   
|                          |                                                                             |                                       |        |          |     
|                          |                                                                             | Total deferred tax assets             |        | $        | 305  |  
|                          |                                                                             |                                       |        |          |     
|Deferred tax liabilities: |                                                                             |                                       |        |         
|                          | Property and equipment, due to differences in depreciation methods          |                                       | $      | (305     | )   
|                          |                                                                             |                                       |        |          |     
|                          |                                                                             | Total deferred tax liabilities        |        |          | (305 | )
|                          |                                                                             |                                       |        |          |     
|                          |                                                                             | Net deferred tax assets (liabilities) |        | $        |     |  
|                          |                                                                             |                                       |        |          |     



| |  | In assessing the realizability of deferred tax assets, management
considered whether it was more likely than not that some portion or all of
the deferred tax assets would not be realized. The ultimate realization of
deferred tax assets was dependent upon the generation of future taxable
income during periods in which those temporary differences become
deductible. Management considered projected future taxable income and tax
planning strategies in making this assessment. Based upon managements
projections of future taxable income and future taxable income generated
from the reversal of deferred tax liabilities over the periods in which the
deferred tax assets are deductible, management does not believe that it is
more likely than not that the Company will realize the benefits of these
deductible differences. Accordingly, a valuation allowance equal to the
balance of net deferred tax assets has been recognized as of May 5, 2003
and June 30, 2002. The increase in the valuation allowance for net
deferred tax assets was $1,197,000 and $2,548,000 for the period ended May
5, 2003 and year ended June 30, 2002, respectively.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company has net operating loss carryforwards for federal income tax
purposes of approximately $43,421,000 at June 30, 2003, expiring through
2023. A portion of the net operating loss carryforwards relate to excess
stock option deductions for tax purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

F-20



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##### Table of Contents



VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



|(7) |  | Stockholders Equity
|--- |  | --------------------



| | (a) |  | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company had a stock option plan which provided for the grant of
incentive stock options, nonqualified stock options and stock
appreciation rights to officers, directors and employees of, as well
as advisers and consultants to, the Company. Concurrent with the
closing of the asset sale and resignation/termination of the employees
of the Company, the stock option plan terminated and all outstanding
options were canceled.                                                                                                                                                                                                        
|
| |     |  | The Company had reserved 3,624,000 shares of its common stock for
issuance upon exercise of options and rights granted under the plan.
Typically, rights and options were granted with vesting over three to
five years, becoming fully vested upon a change in control of the
Company, and expiring 10 years from the date of issuance. Certain
options granted to former senior management were vested upon issuance
or over a shorter vesting period. The exercise price was equal to the
market value of the Companys common stock on the grant date or the
average of the market value over a stated period of time prior to the
grant date.
|
| |     |  | For stock options granted at an exercise price less than the market
value of the common stock at the date of grant, stock compensation
cost was recorded based on the difference between the market value of
the common stock at the date of grant and the exercise price of the
option. For options that were vested on the date of grant, the
related stock compensation cost was expensed immediately. Unamortized
employee stock compensation cost was recorded as a separate component
of stockholders equity and amortized to expense over the vesting
period of the related options.                                                      
|
| |     |  | The plan provided that each non-executive member of the Board of
Directors receive options to purchase 500 shares of common stock for
attending each meeting of the Board of Directors, a committee of the
Board, or a meeting with management of the Company or other directors
for Company business or affairs.                                                                                                                                                                                                                                                                                                                                 

F-21



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##### Table of Contents



VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  |  | Following is a summary of stock option activity during the period from
July 1, 2002 to May 5, 2003 and for the years ended June 30, 2002 and
2001:
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------

|                                     |                         |  |           |            |                |   |          |       | 
|------------------------------------ | ----------------------- |  | --------- | ---------- | -------------- | - | -------- | ----- | 
|                                     |                         |  |           |            |                |   | Weighted
|                                     |                         |  | Number of |            | average       
|                                     |                         |  | options   |            | exercise price
|                                     |                         |  |           |            |               
|Outstanding at June 30, 2000         |                         |  | 1,327,585 |            |                | $ | 10.84    |      
|                                     | Granted at market price |  |           | 224,500    |                |   |          | 2.68  | 
|                                     | Exercised               |  |           |           |                |   |          |      | 
|                                     | Canceled                |  |           | (32,535    | )              |   |          | 19.62 | 
|                                     |                         |  |           |            |                |   |          |      
|Outstanding at June 30, 2001         |                         |  | 1,519,550 |            |                |   | 12.30    |      
|                                     | Granted at market price |  |           | 848,700    |                |   |          | 1.92  | 
|                                     | Exercised               |  |           |           |                |   |          |      | 
|                                     | Canceled                |  |           | 630,416    |                |   |          | 16.87 | 
|                                     |                         |  |           |            |                |   |          |      
|Outstanding at June 30, 2002         |                         |  | 1,737,834 |            |                |   | 5.58     |      
|                                     | Granted at market price |  |           | 206,069    |                |   |          | 0.28  | 
|                                     | Exercised               |  |           | (96,079    | )              |   |          | 0.24  | 
|                                     | Canceled                |  |           | (1,847,824 | )              |   |          | 5.26  | 
|                                     |                         |  |           |            |                |   |          |      
|Outstanding at May 5, 2003           |                         |  |          |            |                |   |         |      
|                                     |                         |  |           |            |                |   |          |      
|Options exercisable at June 30, 2001 |                         |  | 956,569   |            |                |   | 9.95     |      
|                                     |                         |  |           |            |                |   |          |      
|Options exercisable at June 30, 2002 |                         |  | 764,653   |            |                |   | 8.43     |      
|                                     |                         |  |           |            |                |   |          |      
|Options exercisable at May 5, 2003   |                         |  |          |            |                |   |         |      
|                                     |                         |  |           |            |                |   |          |      



| |  |  | The weighted average fair value of options granted at market price
during the period from July 1, 2002 to May 5, 2003 and during the
years ended June 30, 2002 and 2001 was $0.27, $1.79 and $2.66,
respectively. No options were granted at less than or greater than
market during the period from July 1, 2002 to May 5, 2003 and during
the years ended June 30, 2002 and 2001.                                                                                                                                                                                                                                                                                                                                
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In December 2000, the Companys Compensation Committee reformed the
terms of stock options to purchase 350,397 shares which had been
granted by the Committee on December 27, 1999 to change the option
exercise price from a 60-day average price of $18.76 to $34.50, the
market price of the Companys common stock on the date of grant.
After the reformation, the Company informed the holders of the
affected options of the change. All of the option holders expressly
acknowledged and accepted the change in the option exercise price. As
a result of the change, the Company recorded an adjustment in December
2000 of $3,533,000 to reverse unamortized compensation cost relating
to these options.
|
| |  |  | On April 25, 2002, the Company filed a Tender Offer (the Offer) with
the Securities and Exchange Commission which offered employees the
right to exchange all outstanding options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-22



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##### Table of Contents



VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |     |  | to purchase shares of Company common stock with an exercise price
equal to $34.50 per share for replacement options to be granted no
earlier than six months and one day from the expiration of the Offer
at an exercise price equal to no less than the fair market value of
the common stock on that date. Under the terms and subject to the
conditions set forth in the Offer, 180,579 options were surrendered by
eligible employees and cancelled on May 23, 2002. On November 25,
2002, the Company issued replacement options to purchase an aggregate
of up to 160,079 shares of common stock at an exercise price of $0.25
per share in exchange for the options surrendered pursuant to the
Offer.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Included in options outstanding as of June 30, 2002 are 265,000
options granted to Mr. Joseph Kiser, the Companys former Chairman of
the Board and Chief Scientific Officer. As described in Note 15, the
Company was engaged in litigation against this former officer. During
fiscal 2003, the Company executed a settlement agreement with Mr.
Kiser and cancelled his outstanding options.                                                                                                                                                                                                                                                                                                              
|
| |     |  | As a result of the signing of the Asset Purchase Agreement with
Sirenza and in accordance with the stock option plan, all options
outstanding under the Plan became immediately exercisable on December
2, 2002. Pursuant to the stock option plan and prior to the closing of
the asset sale, the Company had several employees exercise their right
to purchase 96,079 shares of the Companys common stock at an exercise
price of $0.25 per share. Concurrent with the closing of the asset
sale and resignation/termination of the employees of the Company, all
outstanding options were canceled.                                                                                                     
|
| | (b) |  | Employee Stock Purchase Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |     |  | In 1995, the Company adopted an employee stock purchase plan.
Eligible employees could designate up to ten percent of their
earnings, through payroll deductions, to purchase shares of the
Companys common stock. The purchase price was equal to 85 percent of
the fair market value of the common stock on specified dates. A total
of 800,000 common shares were reserved for issuance under the plan.
The plan was considered non-compensatory under APB No. 25, and
therefore no expense was reported in the Companys statements of
operations.                                                                                                                                                      
|
| |     |  | The weighted-average fair value of stock purchase rights granted
during the period from July 1, 2002 to May 5, 2003 and for the years
ended June 30, 2002 and 2001 was $0.69, $1.64 and $1.11, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |     |  | In connection with the signing of the Asset Purchase Agreement, the
Employee Stock Purchase Plan completed it final offering and issued
its final shares during January 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (c) |  | Stock Award Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | In 1996, the Company adopted a stock award plan under which shares of
common stock could be awarded to the Companys officers, directors,
employees, consultants, and advisors. The Company reserved 100,000
shares of its common stock for issuance under the stock award plan.
Stock compensation cost was recognized based on the market value of
the common stock on the date of the award. For the period from July
1, 2002 to May 5, 2003 and for the years                                                                                                                                                                                                                                            

F-23



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##### Table of Contents



VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  |  | ended June 30, 2002 and 2001, no shares of common stock were issued to
officers, employees, consultants or advisors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The plan included a provision for automatic awards of 50 shares per
month to non-management members of the Companys Board of Directors
who serve on the Companys audit and compensation committees. In July
2002, the plan was amended to provide for an automatic award of 150
shares per quarter rather than 50 shares per month. During the period
from July 1, 2002 to May 5, 2003 and for the years ended June 30, 2002
and 2001, 3,600, 2,900 and 1,350 shares with a fair market value of
$1,000, $4,000 and $11,000, respectively were issued under this
provision of the plan.
|
| |  |  | Effective with the closing of the asset sale and
resignation/termination of the employees of the Company, the Board of
Directors terminated the stock award plan.                                                                                                                                                                                                                                                                                                                                                                                                                        



|(8) |  | Profit Sharing and Retirement Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | During 1990, the Company adopted a qualified profit sharing plan for its
employees. Annual contributions to the plan, which could be in the form of
cash or shares of the Companys common stock, were determined by the Board
of Directors in its sole discretion. During the years ended June 30, 2002
and 2001, the Company made no contributions to the Plan. Effective December
31, 2001, the Companys Board of Directors terminated the Vari-L Company,
Inc. Profit Sharing Plan and Trust (the Plan). Under termination of the
Plan, participants became fully vested in their accounts. The assets of the
Plan, which were primarily comprised of shares of the Companys common
stock, were distributed on March 15, 2002.                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | During 1998, the Company adopted a 401(k) plan to which employees could
contribute up to 15 percent of their pay. The Company could make
discretionary matching contributions to the plan. No matching
contributions were made during the period from July 1, 2002 to May 5, 2003
and during the years ended June 30, 2002 and 2001. Effective May 5, 2003,
concurrent with the closing of the asset sale, the Companys Board of
Directors terminated the Vari-L Company, Inc. 401(k) Plan (the 401(k)
Plan). Upon termination of the 401(k) Plan, participants became fully
vested in their accounts. The assets of the 401(k) Plan are currently being
distributed to participants in accordance with participant elections.                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(9) |  | Employment Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | Concurrent with the signing of the asset purchase agreement, each of
Messrs. Charles R. Bland, Richard P. Dutkiewicz, Timothy G. Schamberger,
Daniel J. Wilmot and Larry M. Romero amended their then existing employment
agreements with the Company by signing termination letters that were
effective upon the closing of the asset sale. Under the terms of their
termination letters, each of Messrs. Dutkiewicz, Schamberger, Wilmot and
Romero are entitled to receive (i) a payment equal to approximately four
months worth of such officers salary (determined at the time such officer
executed the termination letter) to be paid following the closing of the
asset sale, (ii) a payment equal to approximately four months worth of
such officers salary (determined at the time such officer executed the
termination letter) to be paid one year after the closing of the asset sale
provided such officer remains employed by Sirenza; and (iii) if the officer
is terminated by Sirenza other than for cause prior to the one year
anniversary of the closing of the asset sale, a payment equal to the

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



|     |  | difference between what such officer would have received under such
original employment agreement and the payment described in (i) above. The
Company anticipates that the cost of the payments to Messrs. Dutkiewicz,
Schamberger, Wilmot and Romero in connection with their termination letters
could be as large as $120,938, $124,375, $116,000 and $96,375,
respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Under the terms of Mr. Blands termination letter, he is entitled to
receive (i) a payment equal to approximately seven and one-half months
worth of his salary (determined at the time Mr. Bland executed the
termination letter) to be paid following the closing of the asset sale,
(ii) a payment equal to approximately seven and one-half months worth of
his salary (determined at the time Mr. Bland executed the termination
letter) to be paid one year after the closing of the asset sale provided
Mr. Bland remains employed by Sirenza; and (iii) in the event Mr. Bland is
terminated by Sirenza other than for cause prior to the one year
anniversary of the closing of the asset sale, a payment equal to the
difference between what Mr. Bland would have received under his original
employment agreement and the payment described in (i) above. The Company
anticipates that the cost of the payments to Mr. Bland in connection with
his termination letter could be as large as $307,500.
|    
|     |  | Concurrently with the signing of the asset purchase agreement, each of
Messrs. Bland, Dutkiewicz, Schamberger and Wilmot entered into offer
letters with Sirenza that were effective with the closing of the asset
sale. Such offer letters provide for at-will employment of each officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    
|     |  | In addition to the compensation contemplated by Mr. Dutkiewiczs
termination letter, upon closing of the asset sale, Mr. Dutkiewicz received
a bonus payment of $60,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|     |  | The Company has accrued approximately $456,000 related to the officers
payments to be paid following the closing of the asset sale (post-closing
bonuses). This amount has been reflected in expenses related to workforce
reductions and the asset sale to Sirenza in the Companys Statements of
Operations for the period from July 1, 2002 to May 5, 2003 as further
described in note 12. Additionally the Company has accrued approximately
$383,000 related to the officers payments to be paid one year after
closing of the asset sale (officer stay payments). This amount has been
reflected in the estimated costs of liquidation in the Companys Statements
of Stockholders Equity as further described in note 14.                                                                                                                                                                                                                                                                               
|    
|(10) |  | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|     |  | As described in note 4, the Company leases one of its manufacturing
facilities from a partnership in which Mr. Joseph Kiser, the Companys
former Chief Scientific Officer, is a partner.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|     |  | The Company has an investment in the common stock of Sirenza which
represents approximately 10% of the total outstanding common shares of
Sirenza as of June 30, 2003. Additionally, as of June 30, 2003, the Company
had approximately $25,000 payable to Sirenza for payments made on trade
receivables purchased by Sirenza and inadvertently remitted to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|     |  | Concurrent with the closing of the asset sale, the Company and Sirenza
entered into sublease agreements for all facilities occupied by the Company
on May 5, 2003. The sublease agreements are similar in terms to the
existing lease agreements and expired on June 30, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



|(11) |  | Certain Risks and Concentrations                                                                                                                                                                                                                                                                                                                            
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | The Companys products were sold to original equipment manufacturers of
communications equipment, either in commercial or military markets. The
following table shows the percentage of total revenues contributed by
significant customers for the periods presented. A significant customer was
defined as one contributing 10% or more of total revenues:

|                                    |  |              |       |            |  |            |       |   |  |  |      |  
|----------------------------------- |  | ------------ | ----- | ---------- |  | ---------- | ----- | - |  |  | ---- | -
|                                    |  | Period from  |       |            |  |            |       |   |  | 
|                                    |  | July 1, 2002 |       | Year ended |  | Year ended
|                                    |  | to           |       | June 30,   |  | June 30,  
|                                    |  | May 5, 2003  |       | 2002       |  | 2001      
|                                    |  |              |       |            |  |           
|Nokia                               |  |              | 22.73 | %          |  |            | 17.49 | % |  |  | 25.0 | %
|Motorola                            |  |              | 12.98 | %          |  |            | 16.71 | % |  |  | 14.6 | %
|ACAL Electronics (includes Siemens) |  |              | 10.66 | %          |  |            | 12.99 | % |  |  | 12.7 | %



| |  | The following table shows the accounts receivable balance of the three most
significant customers for the periods presented (in thousands of dollars):
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

|                                    |  |          |     |          |  |  |       | 
|----------------------------------- |  | -------- | --- | -------- |  |  | ----- | 
|                                    |  | June 30, |     | June 30,
|                                    |  | 2002     |     | 2001    
|                                    |  |          |     |         
|Nokia                               |  | $        | 546 |          |  |  | 1,803 | 
|Motorola                            |  |          | 255 |          |  |  | 225   | 
|ACAL Electronics (includes Siemens) |  |          | 564 |          |  |  | 1,060 | 



| |  | The Company performed credit evaluations of its customers but generally did
not require collateral. Receivables due from foreign customers were
generally insured by a private indemnity company; otherwise, letters of
credit were required of foreign customers.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Upon closing of the asset sale, Sirenzas subsidiary acquired the accounts
receivable balances on May 5, 2003.                                                                                                                                                    
|
| |  | The Company produced and sold electronic components in four product lines.
Net sales for each of the product lines for the period from July 1, 2002 to
May 5, 2003 and for the years ended June 30, 2002 and 2001 were as follows
(in thousands of dollars):      

|                                      |  |              |        |            |  |            |        |  |  |  |        | 
|------------------------------------- |  | ------------ | ------ | ---------- |  | ---------- | ------ |  |  |  | ------ | 
|                                      |  | Period from  |        |            |  |            |        |  |  | 
|                                      |  | July 1, 2002 |        | Year ended |  | Year ended
|                                      |  | to           |        | June 30,   |  | June 30,  
|                                      |  | May 5, 2003  |        | 2002       |  | 2001      
|                                      |  |              |        |            |  |           
|Commercial Signal Source
Components   |  | $            | 10,541 |            |  |            | 15,615 |  |  |  | 34,898 | 
|Hi-Rel Signal Source Components       |  |              | 2,684  |            |  |            | 3,651  |  |  |  | 2,809  | 
|Military Signal Processing
Components |  |              | 630    |            |  |            | 1,848  |  |  |  | 1,318  | 
|Other products                        |  |              | 56     |            |  |            | 234    |  |  |  | 2,352  | 
|                                      |  |              |        |            |  |            |        |  |  |  |        | 
|Net sales                             |  | $            | 13,911 |            |  |            | 21,348 |  |  |  | 41,377 | 
|                                      |  |              |        |            |  |            |        |  |  |  |        | 

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  | The Company attributed sales to customers based on the country to which the
products were shipped. Net sales by country were as follows (in thousands
of dollars):
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|              |  |              |        |            |  |            |        |  |  |  |        | 
|------------- |  | ------------ | ------ | ---------- |  | ---------- | ------ |  |  |  | ------ | 
|              |  | Period from  |        |            |  |            |        |  |  | 
|              |  | July 1, 2002 |        | Year ended |  | Year ended
|              |  | to           |        | June 30,   |  | June 30,  
|              |  | May 5, 2003  |        | 2002       |  | 2001      
|              |  |              |        |            |  |           
|United States |  | $            | 5,954  |            |  |            | 8,985  |  |  |  | 15,596 | 
|China         |  |              | 2,506  |            |  |            | 3,800  |  |  |  | 1,532  | 
|Finland       |  |              | 2,217  |            |  |            | 2,995  |  |  |  | 4,110  | 
|Germany       |  |              | 647    |            |  |            | 1,147  |  |  |  | 4,731  | 
|Sweden        |  |              | 623    |            |  |            | 1,321  |  |  |  | 1,527  | 
|Italy         |  |              | 404    |            |  |            | 462    |  |  |  | 4,788  | 
|England       |  |              | 232    |            |  |            | 1,349  |  |  |  | 5,393  | 
|Canada        |  |              | 201    |            |  |            | 109    |  |  |  | 1,540  | 
|Other         |  |              | 1,127  |            |  |            | 1,180  |  |  |  | 2,160  | 
|              |  |              |        |            |  |            |        |  |  |  |        | 
|Net sales     |  | $            | 13,911 |            |  |            | 21,348 |  |  |  | 41,377 | 
|              |  |              |        |            |  |            |        |  |  |  |        | 



|(12) |  | Expenses Related to Workforce Reductions and the Asset Sale to Sirenza                                                                                                                                                                                                                                                                                                                        
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | As a result of the continuing weakness in the wireless industry and the
impact it had upon the Companys revenues, the Company reduced its
workforce and incurred severance expenses. Additionally, the Company
incurred costs in connection with the asset sale to Sirenza. Expenses
related to workforce reductions and the asset sale to Sirenza were as
follows (in thousands of dollars):

|                                   |       |   |                 |       |            |  |     |     | 
|---------------------------------- | ----- | - | --------------- | ----- | ---------- |  | --- | --- | 
|                                   |       |   | Period from     |       | Year ended
|                                   |       |   | July 1, 2002 to |       | June 30,  
|                                   |       |   | May 5, 2003     |       | 2002      
|                                   |       |   |                 |       |           
|Severance and post-closing bonuses |       | $ | 1,031           |       |            |  | 101 |    
|Legal fees                         |       |   | 665             |       |            |  |    |    
|Investment bankers fees           |       |   | 502             |       |            |  |    |    
|Lease termination penalties        |       |   | 825             |       |            |  |    |    
|Asset impairment                   |       |   | 451             |       |            |  |    |    
|Other related costs                |       |   | 162             |       |            |  |    |    
|                                   |       |   |                 |       |            |  |     |    
|                                   | Total |   | $               | 3,636 |            |  |     | 101 | 
|                                   |       |   |                 |       |            |  |     |    



|(13) |  | Expenses of Accounting Restatements, Stockholder Litigation and Related
Matters                                                                                                                                                                                                       
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | In early 2000, management of the Company commenced efforts to restate its
previously issued financial statements after being notified by the
Securities and Exchange Commission (the Commission) that the Commission was
investigating its accounting and reporting practices. Certain

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  | costs incurred in conjunction with these efforts have been separately
classified in the Companys Statements of Operations as Expenses relating
to accounting restatements and related legal matters, net of recoveries.
Expenses included in this classification include the cost of external
counsel for services provided in connection with stockholder lawsuits, the
Commissions investigation of the Company, legal fees and expenses of the
Special Litigation Committee of the Board of Directors (the SLC), the
costs incurred to settle the private securities action and the Company
action against former officers (net of recoveries), the cost of certain
consultants and temporary labor hired to assist in the accounting
restatements, and reimbursements to current and former employees of the
Company for their legal fees and expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The accounting restatements were completed in February 2001. Additionally,
during October 2002 and December 2002, the Company, the individual
defendants in the private securities class action, the Agricultural Excess
and Surplus Insurance Company, and the individual defendants in the action
against former officers attended global settlement conferences. All parties
involved reached an agreement in principle for the global settlement of all
litigation. On January 22, 2003, the Company, the class action
representatives and the individual defendants in the private securities
class action executed and filed a Stipulation of Settlement (the
Stipulation) with the United States District Court for the District of
Colorado (the Court). On January 29, 2003, the Court issued its order
preliminarily approving the settlement of the private securities class
action, certification of the class, and the provision of notice to members
of the class (the Preliminary Approval). On March 28, 2003, the Court
held a fairness hearing regarding the settlement of the private securities
class action. At the hearing, the Court approved the settlement of the
private securities class action as fair and reasonable to the members of
the class. Following the hearing, the Court entered its final judgment and
order of dismissal of the actions with prejudice. See Note 15 for
additional information.

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  | Expenses relating to accounting restatements and related legal matters, net
of recoveries, were as follows (in thousands of dollars):
| |  | -------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                          |       |   |                 |    |            |  |            |       |  |  |       |       | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- | - | --------------- | -- | ---------- |  | ---------- | ----- |  |  | ----- | ----- | 
|                                                                                                                                                                                                                                                                          |       |   | Period from     |    | Year ended |  | Year ended
|                                                                                                                                                                                                                                                                          |       |   | July 1, 2002 to |    | June 30,   |  | June 30,  
|                                                                                                                                                                                                                                                                          |       |   | May 5, 2003     |    | 2002       |  | 2001      
|                                                                                                                                                                                                                                                                          |       |   |                 |    |            |  |           
|Legal fees incurred
in connection with
the stockholder
lawsuits, Special
Litigation Committee
and the global
settlement                                                                                                                                                   |       | $ | 199             |    |            |  | 472        |       |  |  | 1,239 |      
|Consulting fees and
temporary labor
hired to assist
with the restatement
of the financial
statements                                                                                                                                                                      |       |   |                |    |            |  |           |       |  |  | 1,031 |      
|Adjustment of
previously recorded
estimates of $286
(representing legal
fees incurred by
former officers, the
present value of
post-employment
health care
obligations and a
one time separation
bonus payable to Mr.
Kiser) to $245
reflecting the
settlement
agreements |       |   | (41             | )  |            |  |           |       |  |  |      |      
|Adjustment of
previously recorded
estimates of $117
(representing net
employment
obligations payable
to Mr. Sherman) to
$0 reflecting
termination of an
agreement due to
misappropriation of
funds                                                                        |       |   |                |    |            |  | (117       | )     |  |  | 117   |      
|Mr. Shermans
transfer of 100,813
shares of common
stock to the
Company. The shares
were valued at the
closing market price
on the date in which
Mr. Sherman and the
Company executed a
mutual general
release                                                            |       |   | (76             | )  |            |  |           |       |  |  |      |      
|Approximate cost to
settle the Private
Securities Class
Action                                                                                                                                                                                                            |       |   |                |    |            |  | 1,450      |       |  |  |      |      
|                                                                                                                                                                                                                                                                          |       |   |                 |    |            |  |            |       |  |  |       |      
|                                                                                                                                                                                                                                                                          | Total |   | $               | 82 |            |  |            | 1,805 |  |  |       | 2,387 | 
|                                                                                                                                                                                                                                                                          |       |   |                 |    |            |  |            |       |  |  |       |      



|(14) |  | Estimated Costs of Liquidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | The Companys operations have been limited to winding-up its business and
affairs, selling certain of its remaining assets, discharging its known
liabilities, establishing a contingency reserve for payment of expenses and

contingent liabilities, and distributing any remaining assets to its
stockholders, all in accordance with the amended plan of dissolution. As a
result, the Company changed its basis of accounting to the liquidation
basis as of May 5, 2003. Upon changing to the liquidation basis of
accounting, which assumes that assets and liabilities are reflected at the
estimated amounts to be paid or received, the Company recorded a charge to
equity of $1.317 million representing an estimate of the costs to be
incurred during dissolution of the Company; however actual costs could
differ from those estimates.

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  | At June 30, 2003, the following represents the estimated costs of
liquidation (in thousands of dollars):
| |  | --------------------------------------------------------------------------------------------------------

|                                     |       |   |     |       | 
|------------------------------------ | ----- | - | --- | ----- | 
|Insurance premiums                   |       | $ | 407 |      
|Officer stay payments                |       |   | 383 |      
|Legal, audit and tax services        |       |   | 349 |      
|Other estimated costs of liquidation |       |   | 178 |      
|                                     |       |   |     |      
|                                     | Total |   | $   | 1,317 | 
|                                     |       |   |     |      



|(15) |  | Litigation, Commitments and Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Securities and Exchange Commission Investigation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|     |  | In December 1999, the Company learned that the SEC was conducting an
investigation to determine whether there were violations of the federal
securities laws by the Company or any of its officers, directors or
employees. The SECs investigation was focused primarily on the Companys
financial reporting and accounting practices and procedures during the
fiscal years 1996 through 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|     |  | In September 2001, the Company agreed to a settlement with the SEC under
which the Company, without admitting or denying that it violated any laws,
consented to the entry of an injunction prohibiting future violations by
the Company of certain periodic reporting, record keeping, internal
controls, proxy solicitation and antifraud provisions of the Exchange Act.
On November 9, 2001, the Companys settlement with the SEC was approved by
the United States District Court for the District of Colorado pursuant to
its judgment order Final Judgment as to Vari-L, Civil Action No.
01-WM-1903, Securities and Exchange Commission v. Vari-L, David G. Sherman,
Jon L. Clark and Sarah E. Hume, United States District Court, District of
Colorado.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|     |  | Private Securities Class Action                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|     |  | A number of private shareholder class actions alleging violations of
federal securities laws were filed against the Company and certain of its
former officers in the United States District Court for the District of
Colorado beginning in June 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    
|     |  | On January 22, 2003, the Company, the class action representatives and the
individual defendants executed and filed a stipulation of settlement (the
Stipulation) with the United States District Court for the District of
Colorado (the Court). The terms under the Stipulation provided that the
Company pay $250,000 in cash and issue 2.0 million shares of its common
stock to settle that action. On March 28, 2003, the Court approved the
settlement of the private securities class action as fair and reasonable to
the members of the class. Following the hearing, the Court entered its
final judgment and order of dismissal of the actions with prejudice. On May
7, 2003, the Company paid $250,000 in cash to the class. Subsequent to June
30, 2003, the Company received from the class action representatives
claims administrator the names of the shareholders in the plaintiff class
and the amount of shares to be issued to each shareholder pursuant to the
settlement. Subsequent to June 30, 2003, the Companys Board of Directors
approved the issuance of the 2.0 million settlement shares to the class
members, which issuance is anticipated to be completed by Computershare,
the

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  | transfer agent for the Companys capital stock, within 10 to 14 days from
the approval of the issuance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Shareholder Derivative Suit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | On August 21, 2002, the District Court, City and County of Denver dismissed
the shareholder derivative action filed, purportedly on behalf of the
Company against Joseph Kiser, David Sherman, Jon Clark, Derek Bailey, Sarah
Booher, David Lisowski, Anthony Petrelli, Jae Shim and the Company. The
derivative plaintiff appealed the Courts ruling to the Colorado Court of
Appeals. On November 12, 2002, the parties filed a stipulated voluntary
dismissal of the appeal. On November 14, 2002, the Colorado Court of
Appeals granted the stipulated dismissal and issued its mandate ordering
that the appeal be dismissed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Declaratory Judgment Action by Excess Insurer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | On June 5, 2001, Agricultural Excess and Surplus Insurance Company
(AESIC), which had issued to the Company a $2.5 million excess directors
and officers liability insurance policy for the period of time covered by
the shareholder and class action litigation referenced above, filed suit in
United States District Court for the District of Colorado asking the court
to find that it is not obligated to provide coverage, or in the
alternative, seeking permission to rescind its policy. In connection with
the execution of the Stipulation, the Company executed a settlement
agreement with AESIC in which the Company and AESIC executed mutual
releases. On April 21, 2003, AESIC filed a Motion to Dismiss its action
with prejudice. On August 24, 2003, the Court dismissed the action with
prejudice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Company Action against Former Officers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | On March 19, 2002, the Company filed a lawsuit in the District Court, City
and County of Denver, against Mr. David Sherman, Mr. Joseph Kiser,
individuals, and J.C. Enterprises, a Colorado general partnership. Mr.
Sherman is the former President of the Company and Mr. Kiser is the former
Chairman of the Companys Board of Directors and Chief Scientific Officer.
Additionally, Mr. Kiser is the General Partner of J.C. Enterprises. The
Company subsequently amended the complaint to add Ms. Joan Sherman and the
Kaythern Sherman Trust as defendants. In its lawsuit, the Company sought to
rescind certain employment and consulting agreements between the Company
and Messrs. Kiser and Sherman, and to rescind certain stock and stock
option grants made to them, on the basis that such agreements were entered
into, and such stock option grants were made, based upon mistaken or
misrepresented information regarding the Companys true financial
performance. The Company also sought to recover the compensation and
bonuses paid to them as a result of such mistaken or misrepresented
information. In addition, the Company sought to recover excessive rent it
paid pursuant to a lease agreement between the Company and J.C. Enterprises
in reliance on misrepresented information provided by Messrs. Kiser and
Sherman. The Company added Ms. Sherman and the Kaythern Sherman Trust to
this action because they may have received assets from Mr. Sherman that the
Company may have been entitled to recover.

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  | On May 30, 2002, David Sherman filed a counter-claim against the Company
alleging that the Company breached its obligation to him by suspending
payment of consulting fees under the termination and consulting agreement
between him and the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | On July 8, 2002, Joseph Kiser filed counter-claims against the Company,
Charles R. Bland, Richard P. Dutkiewicz, Gil J. Van Lunsen and David M.
Risley alleging a variety of claims. Mr. Bland is the Companys President
and Chief Executive Officer. Mr. Dutkiewicz is the Companys Vice
President of Finance and Chief Financial Officer. Messrs. Risley and Van
Lunsen are on the Companys Board of Directors and are members of the
Special Litigation Committee of the Board of Directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | During the latter half of calendar 2002, the Company executed settlement
agreements and/or mutual releases with all parties to the Company action
against the former officers. Under the terms of the settlement agreement
with Mr. Kiser and J.C. Enterprises, the Company paid $245,000 in total
consideration; $230,000 to Mr. Kiser as well as $15,000 to his former
attorneys to cover certain legal expenses. In return, Mr. Kiser agreed to a
mutual general release including, but not limited to, releasing the
Company, Messrs. Bland, Dutkiewicz, Risley and Van Lunsen from all claims
related to his employment agreement and the advancement or indemnification
of attorneys fees and other costs of defense, subject to the settlement of
the private securities class action. Under the terms of this settlement
agreement, the Company agreed to pay the current required rental amount
under the existing lease with J.C. Enterprises, but the Company has the
option to terminate the lease, after sufficient notice, in the event J.C.
Enterprises contracts to sell the property during the remaining lease term.
|
| |  | Additionally, the Company signed a mutual general release with Mr. Sherman,
which, among other things, released the Company from all claims related to
his employment and separation agreements and any rights he may have had
regarding advancement or indemnification of attorneys fees and other costs
of defense. In consideration of the mutual release with Mr. Sherman, Mr.
Sherman transferred 100,813 shares of the Companys common stock to the
Company and the Company repaid Mr. Shermans promissory note to Carolyn
Kiser in the principal amount of $55,030. The Company also executed mutual
releases relating to litigation with Joan Sherman and the Kaythern Sherman
Trust on December 17, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | The Company also signed mutual general releases with Messrs. Bailey and
Clark, which, among other things, release the Company from all claims
related to their employment and separation agreements and any rights they
may have had regarding advancement or indemnification of attorneys fees
and other costs of defense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | The parties to the Company action against former officers executed a
stipulation of dismissal. On May 5, 2003, the Court dismissed the action
and all counterclaims with prejudice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Patent Litigation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | On August 8, 2002, Anaren Microwave, Inc. (Anaren) filed suit against the
Company for infringement of U.S. Patent No. 4,821,007. On November 19,
2002, the Company was served with the complaint. Anaren has requested
damages in an unspecified amount and attorneys fees, costs and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-32



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##### Table of Contents



VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



| |  | expenses. The Company and its counsel are investigating Anarens
allegations. The complaint does not specify which of the Companys products
is alleged to infringe the intellectual property of Anaren, nor the exact
nature of the alleged infringement. However, the Company believes that
Anarens claim is directed at its coupler product line. The coupler line is
a recently introduced product line which accounted for less than $10,000 of
gross sales from its inception through May 5, 2003. The Company has sold
substantially all of its assets to Sirenza, including the products to which
the Company believes that Anarens claim is directed. Under the Companys
agreement with Sirenza, Sirenza has assumed responsibility for this claim.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-33



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##### Table of Contents



VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002



|(16)                                                                                                                             |  | Quarterly Financial Information (Unaudited)
|-------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------
|                                                                                                                                
|The following is a summary of the unaudited quarterly financial information (in
thousands of dollars, except per share amounts):

|                                            |  |                |        |              |  |           |        |        |  |  |        |   |  |  |        |  
|------------------------------------------- |  | -------------- | ------ | ------------ |  | --------- | ------ | ------ |  |  | ------ | - |  |  | ------ | -
|                                            |  | Quarters Ended
|                                            |  |               
|                                            |  | September 30,  |        | December 31, |  | March 31, |        | May 5,
|                                            |  | 2002           |        | 2002         |  | 2003      |        | 2003* 
|                                            |  |                |        |              |  |           |        |       
|Net sales                                   |  | $              | 3,982  |              |  |           | 4,309  |        |  |  | 4,024  |   |  |  | 1,596  |  
|                                            |  |                |        |              |  |           |        |        |  |  |        |   |  |  |        |  
|Gross profit                                |  |                | 922    |              |  |           | 1,241  |        |  |  | 1,315  |   |  |  | 285    |  
|                                            |  |                |        |              |  |           |        |        |  |  |        |   |  |  |        |  
|Operating loss                              |  |                | (2,159 | )            |  |           | (2,485 | )      |  |  | (1,489 | ) |  |  | (3,605 | )
|                                            |  |                |        |              |  |           |        |        |  |  |        |   |  |  |        |  
|Net income (loss)                           |  |                | (2,321 | )            |  |           | (2,751 | )      |  |  | (1,816 | ) |  |  | 2,961  |  
|                                            |  |                |        |              |  |           |        |        |  |  |        |   |  |  |        |  
|Basic and diluted
earnings (loss) per
share |  |                | (0.32  | )            |  |           | (0.38  | )      |  |  | (0.25  | ) |  |  | 0.41   |  
|                                            |  |                |        |              |  |           |        |        |  |  |        |   |  |  |        |  



|*On May 5, 2003, the Company completed the sale of all of its operating
assets to Sirenza and ceased preparing its financial statements on a going
concern basis under generally accepted accounting principles. Accordingly,
results of operations for the period ended May 5, 2003 are not comparable to
prior quarters.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                 |  |                |        |              |  |           |       |          |  |  |        |   |  |  |        |  
|-------------------------------- |  | -------------- | ------ | ------------ |  | --------- | ----- | -------- |  |  | ------ | - |  |  | ------ | -
|                                 |  | Quarters Ended
|                                 |  |               
|                                 |  | September 30,  |        | December 31, |  | March 31, |       | June 30,
|                                 |  | 2001           |        | 2001         |  | 2002      |       | 2002    
|                                 |  |                |        |              |  |           |       |         
|Net sales                        |  | $              | 5,676  |              |  |           | 5,607 |          |  |  | 5,163  |   |  |  | 4,902  |  
|                                 |  |                |        |              |  |           |       |          |  |  |        |   |  |  |        |  
|Gross profit                     |  |                | 2,146  |              |  |           | 2,322 |          |  |  | 1,928  |   |  |  | 1,305  |  
|                                 |  |                |        |              |  |           |       |          |  |  |        |   |  |  |        |  
|Operating loss                   |  |                | (1,079 | )            |  |           | (493  | )        |  |  | (1,160 | ) |  |  | (5,542 | )
|                                 |  |                |        |              |  |           |       |          |  |  |        |   |  |  |        |  
|Net loss                         |  |                | (1,120 | )            |  |           | (528  | )        |  |  | (1,211 | ) |  |  | (3,396 | )
|                                 |  |                |        |              |  |           |       |          |  |  |        |   |  |  |        |  
|Basic and diluted loss per share |  |                | (0.16  | )            |  |           | (0.07 | )        |  |  | (0.17  | ) |  |  | (0.47  | )
|                                 |  |                |        |              |  |           |       |          |  |  |        |   |  |  |        |  

F-34



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##### Table of Contents



VL DISSOLUTION CORPORATION

Schedule II - Valuation and Qualifying Accounts(in thousands of dollars)

|                          |                                               |           |   |               |       |                |  |                |       |           |  |        |        |   |  |        |        |            |  |       |       | 
|------------------------- | --------------------------------------------- | --------- | - | ------------- | ----- | -------------- |  | -------------- | ----- | --------- |  | ------ | ------ | - |  | ------ | ------ | ---------- |  | ----- | ----- | 
|                          |                                               |           |   | Balance at    |       |                |  |                |       |           |  |        |        |   |  |        |        | Balance at
|                          |                                               |           |   | beginning     |       |                |  |                |       |           |  |        |        |   |  |        |        | end       
|Description               |                                               | of period |   | Additions (a) |       | Deductions (b) |  | Asset Sale (c) |       | of period
|                          |                                               |           |   |               |       |                |  |                |       |          
|Period ended May 5, 2003: |                                               |           |   |               |       |                |  |                |       |           |  |        |        |   |  |        |        |            |  |      
|                          | Allowance for doubtful accounts               |           | $ | 132           |       |                |  | 25             |       |           |  | (107   | )      |   |  | (50    | )      |            |  |      |      
|                          | Allowance for excess and obsolete
inventories |           |   | 2,522         |       |                |  | 475            |       |           |  | (1,291 | )      |   |  | (1,706 | )      |            |  |      |      
|                          | Reserve for product warranties
and returns    |           |   | 20            |       |                |  |               |       |           |  |       |        |   |  | (20    | )      |            |  |      |      
|                          |                                               |           |   |               |       |                |  |                |       |           |  |        |        |   |  |        |        |            |  |      
|                          |                                               | Total     |   | $             | 2,674 |                |  |                | 500   |           |  |        | (1,398 | ) |  |        | (1,776 | )          |  |       |      | 
|                          |                                               |           |   |               |       |                |  |                |       |           |  |        |        |   |  |        |        |            |  |      
|Year ended June 30, 2002: |                                               |           |   |               |       |                |  |                |       |           |  |        |        |   |  |        |        |            |  |      
|                          | Allowance for doubtful accounts               |           | $ | 279           |       |                |  | 104            |       |           |  | (251   | )      |   |  |       |        |            |  | 132   |      
|                          | Allowance for excess and obsolete
inventories |           |   | 2,423         |       |                |  | 564            |       |           |  | (465   | )      |   |  |       |        |            |  | 2,522 |      
|                          | Reserve for product warranties
and returns    |           |   | 31            |       |                |  | 10             |       |           |  | (21    | )      |   |  |       |        |            |  | 20    |      
|                          |                                               |           |   |               |       |                |  |                |       |           |  |        |        |   |  |        |        |            |  |      
|                          |                                               | Total     |   | $             | 2,733 |                |  |                | 678   |           |  |        | (737   | ) |  |        |       |            |  |       | 2,674 | 
|                          |                                               |           |   |               |       |                |  |                |       |           |  |        |        |   |  |        |        |            |  |      
|Year ended June 30, 2001: |                                               |           |   |               |       |                |  |                |       |           |  |        |        |   |  |        |        |            |  |      
|                          | Allowance for doubtful accounts               |           | $ | 175           |       |                |  | 155            |       |           |  | (51    | )      |   |  |       |        |            |  | 279   |      
|                          | Allowance for excess and obsolete
inventories |           |   | 2,659         |       |                |  | 1,362          |       |           |  | (1,598 | )      |   |  |       |        |            |  | 2,423 |      
|                          | Reserve for product warranties
and returns    |           |   | 42            |       |                |  | 12             |       |           |  | (23    | )      |   |  |       |        |            |  | 31    |      
|                          |                                               |           |   |               |       |                |  |                |       |           |  |        |        |   |  |        |        |            |  |      
|                          |                                               | Total     |   | $             | 2,876 |                |  |                | 1,529 |           |  |        | (1,672 | ) |  |        |       |            |  |       | 2,733 | 
|                          |                                               |           |   |               |       |                |  |                |       |           |  |        |        |   |  |        |        |            |  |      

Notes:



|(a) |  | Amounts charged to costs and expenses.                            
|--- |  | ------------------------------------------------------------------
|   
|(b) |  | Bad debt write-offs and charges to reserves.                      
|   
|(c) |  | Reserves deducted against proceeds from sale of assets to Sirenza.

See accompanying independent auditors report

F-35



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##### Table of Contents



EXHIBIT INDEX

|            |  |                                                                                                                                                                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                
|2.1         |  | Amended Plan of Dissolution of Vari-L Company, Inc. as approved
by the shareholders at the special meeting held on May 5, 2003 filed
as Exhibit 2.1 to the Form 10-Q for the quarter ended March 31, 2003
and incorporated herein by reference.
|            |  |                                                                                                                                                                                                                                                
|3.1a        |  | Restated Articles of Incorporation, as Amended, filed as Exhibit
4.1 to the Form S-8 Registration Statement (No. 33-88666) and
incorporated herein by reference.                                                                               
|            |  |                                                                                                                                                                                                                                                
|3.1b        |  | Articles of Amendment to the Articles of Incorporation filed as
Exhibit 3.1b to the Form 10-KSB for the year ended December 31, 1996
and incorporated herein by reference.                                                                     
|            |  |                                                                                                                                                                                                                                                
|3.2         |  | Amended and Restated Bylaws adopted September 26, 2002 filed as
Exhibit 3.2 to the Form 10-K for the fiscal year ended June 30, 2002
and incorporated herein by reference.                                                                     
|            |  |                                                                                                                                                                                                                                                
|4.1         |  | Specimen Certificate for $.01 par value Common Stock filed as
Exhibit 4.3 to the Form SB-2 Registration Statement (No. 33-74704-D)
and incorporated herein by reference.                                                                       
|            |  |                                                                                                                                                                                                                                                
|4.2         |  | Rights Agreement with American Securities Transfer, Inc. dated
March 15, 1996 filed as Exhibit 4.2 to the Form 8-A/A Registration
Statement (No. 0-23866) and incorporated herein by reference.                                                
|            |  |                                                                                                                                                                                                                                                
|4.3         |  | Specimen Certificate for Right to Purchase $.01 par value Common
Stock filed as Exhibit 4.3 to the Form 8-A/A Registration Statement
(No. 0-23866) and incorporated herein by reference.                                                       





---



##### Table of Contents



|            |  |                                                                                                                                                                                                                                                                                                                                           
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                               
|            |  |                                                                                                                                                                                                                                                                                                                                           
|4.4         |  | Securities Purchase Agreement with the Purchasers dated March 4,
1997 filed as Exhibit 4.5 to the Form S-3 Registration Statement (No.
333-25173) and incorporated herein by reference.                                                                                                                                                   
|           
|4.6         |  | Form of Warrant to Purchase Common Stock issued to the Purchasers
under the Securities Purchase Agreement dated March 4, 1997 filed as
Exhibit 4.7 to the Form S-3 Registration Statement (No. 333-25173) and
incorporated herein by reference.                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                           
|4.7         |  | Amendment No. 1 to Rights Agreement with American Securities
Transfer, Inc. dated October 7, 2002 filed as Exhibit 4.7 to the
Form 10-K for the fiscal year ended June 30, 2002 and incorporated
herein by reference.                                                                                                                     
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.1        |  | Executive Employment Agreement with Joseph H. Kiser, dated
effective June 1, 1997, filed as Exhibit 10.1 to the Form 10-QSB for
the quarter ended September 30, 1998 and incorporated herein by
reference.                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.2        |  | Lease Agreement dated January 1, 1987 with J.C. Enterprises for the
facility located at 5165 Peoria Street, Denver, Colorado, as amended on
December 6, 1990 and March 23, 1993, filed as Exhibit 10.15 to the Form
SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by
reference.                                    
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.3        |  | Settlement Agreement with Joseph H. Kiser, David G. Sherman, Alwin
E. Branson and Carolyn Y. Kiser dated January 31, 1992, as amended
March 23, 1993, filed as Exhibit 10.18 to the Form SB-2 Registration
Statement (No. 33-74704-D) and incorporated herein by reference.                                                               
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.4        |  | Profit Sharing Plan and Trust Agreement, as amended and restated
effective April 19, 1994 filed as Exhibit 10.16 to the Form 10-KSB for
the year ended December 31, 1994 and incorporated herein by reference.                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.5        |  | Lease Agreement dated March 12, 1997 with Five K Investments for
the facility located at 4895 Peoria Street, Denver, Colorado filed as
Exhibit 10 to the Form 10-QSB for the quarter ended September 30, 1997
and incorporated herein by reference.                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.6        |  | Third Amendment to Lease Agreement dated January 1, 1987 with J.C.
Enterprises for the facility located at 5165 Peoria Street, Denver,
Colorado, as amended December 6, 1990, March 23, 1993, and October 30,
1998 filed as Exhibit 10.6 to the Form 10-QSB for the quarter ended
September 30, 1998 and incorporated herein by reference.
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.7        |  | Termination and Consulting Agreement with David G. Sherman dated
August 1, 2000 filed as Exhibit 10.1 to the Form 8-K dated August 1,
2000 and incorporated herein by reference.                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.8        |  | Employment Agreement with Timothy M. Micun dated March 2, 2001
filed as Exhibit 10.26 to the Form 10-K for the fiscal year ended June
30, 2001 and incorporated herein by reference.                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                                                           
|10.9        |  | Credit and Security Agreement with Wells Fargo Business Credit,
Inc. dated June 28, 2001 filed as Exhibit 99.2 to the Form 8-K dated
June 28, 2001 and incorporated herein by reference.                                                                                                                                                  





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##### Table of Contents



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.10       |  | Patent and Trademark Security Agreement with Wells Fargo Business
Credit, Inc. dated June 28, 2001 filed as Exhibit 99.3 to the Form 8-K
dated June 28, 2001 and incorporated herein by reference.                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.11       |  | First Amendment to Credit and Security Agreement dated September
17, 2001 filed as Exhibit 10.1 to the Form 10-Q dated September 30,
2001 and incorporated herein by reference.                                                                                                                                                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.12       |  | Employee Stock Purchase Plan effective as of November 30, 2001
filed as Exhibit 10.1 to the Form 10-Q for the quarter ended December
31, 2001 and incorporated herein by reference.                                                                                                                                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.13       |  | Amended and Restated Tandem Stock Option and Stock Appreciation
Rights Plan, effective as of January 1, 2002 filed as Exhibit 10.1 to
the Form 10-Q for the quarter ended March 31, 2002 and incorporated by
reference herein.                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.14       |  | Stock Grant Plan effective as of January 1, 2002 filed as Exhibit
10.2 to the Form 10-Q for the quarter ended March 31, 2002 and
incorporated herein by reference.                                                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.15       |  | Agreement between Vari-L Company, Inc. and Asvan Technology, LLC
dated January 25, 2002 filed as Exhibit 10.15 to the Form 10-K for the
fiscal year ended June 30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                         
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.16       |  | Second Amendment to Credit and Security Agreement with Wells Fargo
Business Credit, Inc. dated February 8, 2002 filed as Exhibit 10.16 to
the Form 10-K for the fiscal year ended June 30, 2002 and incorporated
herein by reference.                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.17       |  | Form of Indemnity Agreement by and among Vari-L Company, Inc. and
each of Gil J. Van Lunsen (dated June 1, 2001), Sarah L. Booher (dated
July 5, 2001), David A. Lisowski (dated July 5, 2001), Anthony B.
Petrelli (dated July 5, 2001), David M. Risley (dated November 21,
2001) and Robert C. Dixon (dated January 11, 2002) filed as Exhibit
10.17 to the Form 10-K for the fiscal year ended June 30, 2002 and
incorporated herein by reference.
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.18       |  | Employment Agreement with Charles R. Bland dated August 1, 2002
filed as Exhibit 10.18 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.19       |  | Employment Agreement with Russell M. Crouch dated August 1, 2002
filed as Exhibit 10.19 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.20       |  | Employment Agreement with Richard P. Dutkiewicz dated August 1,
2002 filed as Exhibit 10.20 to the Form 10-K for the fiscal year ended
June 30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.21       |  | Employment Agreement with Ernest C. Hafersat dated August 1, 2002
filed as Exhibit 10.21 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                               
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.22       |  | Employment Agreement with Janice E. Hyland dated August 1, 2002
filed as Exhibit 10.22 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                 





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##### Table of Contents



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.23       |  | Employment Agreement with Matthew D. Pope dated August 1, 2002
filed as Exhibit 10.23 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|           
|10.24       |  | Employment Agreement with Larry M. Romero dated August 1, 2002
filed as Exhibit 10.24 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.25       |  | Employment Agreement with Timothy G. Schamberger dated August 1,
2002 filed as Exhibit 10.25 to the Form 10-K for the fiscal year ended
June 30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.26       |  | Employment Agreement with Daniel J. Wilmot dated August 1, 2002
filed as Exhibit 10.26 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.27       |  | Engagement letter with Green, Manning & Bunch, Ltd. dated
September 9, 2002 filed as Exhibit 10.27 to the Form 10-K for the
fiscal year ended June 30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.28       |  | Forbearance Agreement and Third Amendment to Credit and Security
Agreement with Wells Fargo Business Credit, Inc. dated September 26,
2002 filed as Exhibit 99.1 to the Form 8-K dated October 1, 2002 and
incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                         
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.29       |  | Indemnity Agreement, dated October 2, 2002, by and among Vari-L
Company with Charles R. Bland filed as Exhibit 10.29 to the Form 10-K
for the fiscal year ended June 30, 2002 and incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.30       |  | Indemnity Agreement, dated October 2, 2002, by and among Vari-L
Company, Inc. with Richard P. Dutkiewicz filed as Exhibit 10.30 to the
Form 10-K for the fiscal year ended June 30, 2002 and incorporated
herein by reference.                                                                                                                                                                                                                                                                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.31       |  | Memorandum of Understanding dated October 3, 2002 between Vari-L
Company, Inc. and the plaintiffs in Civil Action No. 00-S-1198 between
plaintiffs Michael Rasner, et al., on behalf of themselves and other
similarly situated and defendants Vari-L Company, Inc., Derek Bailey,
Joseph Kiser, David G. Sherman and Jon Clark in the United States
District Court, District of Colorado, by and through their respective
attorneys, for settlement of litigation against Vari-L Company, Inc.
filed as Exhibit 10.31 to the Form 10-K for the fiscal year ended June
30, 2002 and incorporated herein by reference.
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.32       |  | Loan Agreement with Sirenza Microdevices, Inc. dated October 7,
2002 filed as Exhibit 10.32 to the Form 10-K for the fiscal year ended
June 30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.33       |  | Security Agreement with Sirenza Microdevices, Inc. dated October
7, 2002 filed as Exhibit 10.33 to the Form 10-K for the fiscal year
ended June 30, 2002 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.34       |  | Exclusivity and Right of First Refusal Agreement with Sirenza
Microdevices, Inc. dated October 7, 2002 filed as Exhibit 10.34 to the
Form 10-K for the fiscal year ended June 30, 2002 and incorporated
herein by reference.                                                                                                                                                                                                                                                                                                                                                                                         





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##### Table of Contents



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.35       |  | Resale Registration Rights Agreement with Sirenza Microdevices,
Inc. dated October 7, 2002 filed as Exhibit 10.35 to the Form 10-K for
the fiscal year ended June 30, 2002 and incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.36       |  | Letter Agreement dated November 12, 2002 between Vari-L
Corporation, Inc. and Five K Investments amending that certain lease
agreement dated as of March 12,1997 by and between Vari-L Corporation,
Inc. and Five K Investments filed as Exhibit 10.1 to the Form 10-Q for
the quarter ended September 30, 2002 and incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.37       |  | Stipulation of Settlement dated January 22, 2003 between Vari-L
Company, Inc., Derek L. Bailey, Joseph H. Kiser, David G. Sherman, Jon
L. Clark and the plaintiffs in Civil No. 00-S-1198 between plaintiffs
Michael Rasner, et al., on behalf of themselves and other similarly
situated and defendants Vari-L Company, Inc., Derek L. Bailey, Joseph
H. Kiser, David G. Sherman and Jon L. Clark in the United State
District Court, District of Colorado, by and through their respective
attorneys, for settlement of litigation against Vari-L Company, Inc.
filed as Exhibit 10.1 to the Form 10-Q for the quarter ended December
31, 2002 and incorporated herein by reference.
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.38       |  | Form of Amended and Restated Indemnity Agreement by and among
Vari-L Company, Inc. and each of Gil J. Van Lunsen, Sarah L. Booher,
David A. Lisowski, Anthony B. Petrelli, David M. Risley, Robert C.
Dixon, Charles A. Bland and Richard P. Dutkiewicz each dated as of
March 11, 2003 filed as Exhibit 10.1 to the Form 10-Q for the quarter
ended March 31, 2003 and incorporated herein by reference.                                                                                                                                                                                                                                                                             
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.39       |  | Sublease Agreement dated March 31, 2003, by and among Vari-L
Company, Inc. and Olin Acquisition Corporation for the facility located
at 11101 East 51st Street, Denver, Colorado filed as Exhibit 10.2 to
the Form 10-Q for the quarter ended March 31, 2003 and incorporated
herein by reference.                                                                                                                                                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.40       |  | Sublease Agreement dated March 31, 2003, by and among Vari-L
Company, Inc. and Olin Acquisition Corporation for the facility located
at 5165 Peoria Street, Denver, Colorado filed as Exhibit 10.3 to the
Form 10-Q for the quarter ended March 31, 2003 and incorporated herein
by reference.                                                                                                                                                                                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.41       |  | Sublease Agreement dated March 31, 2003, by and among Vari-L
Company, Inc. and Olin Acquisition Corporation for the facility located
at 4895 Peoria Street, Denver, Colorado filed as Exhibit 10.4 to the
Form 10-Q for the quarter ended March 31, 2003 and incorporated herein
by reference.                                                                                                                                                                                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.42       |  | Sublease Agreement dated March 31, 2003, by and among Vari-L
Company, Inc. and Olin Acquisition Corporation for the facility located
at 4955 Peoria Street, Denver, Colorado filed as Exhibit 10.5 to the
Form 10-Q for the quarter ended March 31, 2003 and incorporated herein
by reference.                                                                                                                                                                                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.43       |  | Letter Agreement dated May 6, 2003 between Vari-L Corporation,
Inc. and Cloyses Partners, LLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|23          |  | Consent of KPMG LLP