<PAGE>
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-K
                 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)

<TABLE>
<CAPTION>
<S>                                            <C>
For the Transition period from July 1, 1996    Commission File Number 0-11685
      to December 31, 1996
</TABLE>

                                  RADYNE CORP.
              (Exact name of Registrant as specified in its charter)

<TABLE>
<CAPTION>
<S>                                            <C>
           NEW YORK                                11-2569467
     (State or other jurisdiction               (I.R.S. Employer
          or incorporation or                  Identification No.)
              organization)
</TABLE>
            5225 S. 37th Street, Phoenix, Arizona      85040
                 --------------------------------------
         (Address of Principal Executive Offices)    (Zip Code)

    Registrant's telephone number including area code: (602) 437-9620
      Securities Registered Under Section 12 (b) of the Exchange Act:
                                None
                                ----

      Securities Registered Under Section 12(g) of the Exchange Act:
                       Common Stock, $.002 Par Value
                       -----------------------------

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No___

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

    The aggregate market value of the voting stock held by non-affiliates
(deemed by the registrant to be persons, along with members of their families,
known to the registrant to beneficially own, exclusive of shares subject to
options, less than 5% of the outstanding shares of the registrant's common
stock) of the registrant as of April 1, 1997 was approximately $1,618,000.

    Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a Court. Yes X   No
                         ---  ---

    As of April 10, 1997, there were 3,759,721 shares of the registrant's common
stock outstanding.


<PAGE>
                                    PART I

ITEM 1. BUSINESS

GENERAL

    Radyne was incorporated in the State of New York on November 25, 1980. The
Company's current address is 5225 South 37th Street, Phoenix, Arizona 85040 and
its telephone number is (602) 437-9620.

    Radyne has been involved in the advanced design and production of digital
data communications equipment and associated equipment for satellite
telecommunications systems for over sixteen years. Since the Company's inception
in 1980, Radyne has established itself as a supplier in the satellite ground
equipment business.

    Radyne designs, manufactures and sells satellite modems, frequency
converters, ancillary products and equipment racks containing integrated modems
and supporting equipment for data communications.

    Although the Company was forced to file for Chapter 11 bankruptcy protection
in April 1994, it successfully emerged from bankruptcy in December of that year
upon the acquisition of approximately 91% of its Common Stock by Engineering and
Technical Services, Inc. ("ETS"), then a major customer of Radyne. On August 12,
1996, ETS was acquired by Singapore Technologies Pte Ltd through its indirect
wholly owned subsidiary, Stetsys US, Inc. ("ST"). As a result, approximately 91%
of the Company's Common Stock is now held by ST. See "Bankruptcy Reorganization"
below.

    In 1995, ETS caused Radyne to install a new management team, which promptly
moved the Company's operations from New York to Phoenix, Arizona and commenced
the hiring of an almost all new staff of engineering, sales and support
personnel, with funding advanced by ETS and subsequently ST and its affiliates.
The new Radyne team has reinstituted Radyne's research, development and
marketing programs and reinvigorated its product line.

OPERATING STRATEGY

    Radyne's operating strategy is to (i) continue to build on the experience,
skills and customer access of its new management team, (ii) capitalize on its
development of smaller, less costly satellite modems, and (iii) expand into
market segments, such as rural telephone, private networks and compressed
television transmission. See "Target Markets" below.

    The Company's engineering staff and support facilities are dedicated to (I)
maintaining the state-of-the-art status of Radyne's traditional products for the
satellite ground equipment segment of the market, (ii) designing and enhancing
products for emerging markets, such as rural telephony for developing areas,
high-speed satellite communications, government data equipment and the growing
private network market, and (iii) providing special configurations to satisfy
customers' special needs. The Company has already shipped commercial volumes of
its products for rural telephony and private network applications and has
shipped product qualification units to one government data equipment customer.

    Radyne's modems cover data rates from 2.4 Kilobytes per second to 50
Megabytes per second. The Company's frequency converters handle all three
frequency bands used in satellite communications. Radyne believes that most of
its current line of modems and converters are smaller and lower priced than the
previous generation of products, enabling large system installation in
significantly less rack space than the products of the Company's competitors.
The Company also markets redundancy switches which operate in conjunction with
satellite modems and converters and provide automatic fault monitoring and
switch over to standby equipment in the event of modem or converter failure.

    Radyne's line of frequency converter products is usable in virtually all
earth stations for the conversion of intermediate frequencies to microwave
frequencies for satellite transmission. These converters are competitively
priced, small in size and offer either single, dual or all three bands used in
the satellite industry. In addition to being offered to commercial customers,
there is a military market for the three-band units.

    The Company's newer products include a low cost modem with expanded features
and super fast acquisition capabilities, making it attractive for use in both
private networks and rural telephone systems being offered in China, Indonesia
and India, and a line of satellite frequency translators presently used for
testing in satellite earth stations.

    The development of digital compression technology has allowed the
transmission of television in a small bandwidth, which has made TV transmission
by satellite more economical than ever before. Video compression allows many
times more channels on a satellite than was previously the case, thus producing
a new market of major interest. This compression technology is or is expected to
be used for transmission of TV to all network facilities, distribution of cable
TV to cable companies, high definition TV distribution and video
teleconferencing. Radyne has developed a modulator product to be


                                       2
<PAGE>


used in conjunction with compression equipment and has been shipping this 
product for the past seven months.

BANKRUPTCY REORGANIZATION

    In December 1994, Radyne emerged from protection under Chapter 11 of the
Bankruptcy Code. The Company believes that the reasons for Radyne having sought
bankruptcy protection have been neutralized by its new management team and
interim financing sources. When Radyne filed its bankruptcy petition in April
1994, it was suffering from severe cash flow problems due to shrinking sales.
Years of uninspired management and the failure to maintain the sort of research
and development program which is necessitated by the fast-moving data
communications industry had left Radyne with an aging product line and an
inability to access emerging markets.

    On April 28, 1994, Radyne filed a petition for relief under Chapter 11 of
the federal bankruptcy laws in the United States Bankruptcy Court for the
Eastern District of New York. Under Chapter 11, certain claims against the
Company in existence prior to the filing were stayed while the Company continued
business operations as debtor-in-possession. Claims secured against the
Company's assets were also stayed, although the holders of such claims had the
right to move the court for relief from the stay prior to the Company's
reorganization plan being confirmed. Secured claims were secured primarily by
liens on all of the Company's assets.

    The Company received approval from the Bankruptcy Court to pay certain of
its pre-petition obligations, employee wages and benefits. Tax claims were
rescheduled for payment in equal quarterly installments of $9,600, with interest
at 7%, over six years. A portion of these tax claims is the sole remaining
pre-petition liability of the Company.

    On December 16, 1994, the Bankruptcy Court confirmed the Company's Plan 
of Reorganization effective at the close of business on December 16, 1994. 
The Plan, which has been consummated, called for the establishment of an 
escrow account from which to pay claims and provided for the following: (1) 
Exchange of Debt for Common Stock--The Company issued 17,000,000 (pre-Reverse 
Split) shares of previously authorized but unissued Common Stock to Radyne 
Florida (a special purpose subsidiary of ETS), which had previously purchased 
the Company's secured bank debt and the position of certain holders of 
secured promissory notes. This issuance of stock gave Radyne Florida 
approximately 91% of the Company's outstanding Common Stock. In exchange for 
the stock, the Company was discharged of $2,350,000 of debt owed to Radyne 
Florida. In addition, the 1,750,000 warrants held by Radyne Florida 
(purchased with the secured promissory notes) were cancelled. (2) 
Cancellation of Debt--Unsecured claims and capitalized lease obligations were 
settled as follows:

<TABLE>
<CAPTION>
    TYPE OF CLAIM                         ORIGINAL
                                           AMOUNT     REDUCTIONS   COMPROMISED
---------------------------------------  ----------   ----------   -----------
<S>                                      <C>          <C>          <C>

Accounts payable, accrued expenses,
  and capitalized lease obligations....  $1,483,343   $1,111,872     $371,471
Convertible debentures and 
  bridge notes.........................     487,885      439,225       48,660
Taxes..................................     309,143       99,866      209,277
                                         -----------  -----------    --------

                                         $2,280,371   $1,650,963     $629,408
                                         -----------  -----------    --------
                                         -----------  -----------    --------
</TABLE>

(3) Other Claims--Priority Claims for wages of $53,786 were paid in full.

    Holders of the Company's Common Stock and options to purchase the Company's
Common Stock had their interests significantly diluted by the distribution of
Common Stock to Radyne Florida.

    Holders of warrants to purchase the Company's Common Stock exchanged the
warrants for an aggregate of 53,437 shares of Common Stock.

TARGET MARKETS

    Radyne has historically operated in an industry that has relatively few
customers. Today, fewer than 1,000 customers make up the market for satellite
data communication subsystems. Radyne's target markets include international
telecommunications, high speed satellite communications, rural telephony and
private network DAMA (demand assigned multiple access) users, as well as the
United States Government. Currently, Radyne has a presence in the international
telecommunications market and has just entered the DAMA products market with its
new DMD-2400 modem, but anticipates movement into the other markets in the near
future. Of course, there can be no assurance that Radyne will succeed in
capturing a significant share of these other markets.

    The international telecommunications market includes users of IDR
(intermediate data rate), IBS (international business service) and open network
satellite equipment. The IDR environment is primarily for voice traffic, while
IBS is specific to business data traffic. In addition, the market


                                       3
<PAGE>


includes customers for MUX (multiplexers), switches and peripheral equipment. 
The international telecommunications market should provide substantial 
business opportunities for Radyne in the near future. To illustrate the 
magnitude of the potential market for Radyne's satellite modems alone, the 
projected growth in transponders can be depicted as follows. A transponder is 
the part of the satellite that receives an uplink signal at one frequency, 
converts that signal's frequency, amplifies it and then retransmits the 
signal to the ground. Satellites have an average of 24 transponders each. For 
each transponder, an average of 50 modems are required (25 on the 
transmitting side and 25 on the receiving end). The growth in total C-Band 
and Ku-Band transponder capacity is projected to average more than 250 per 
year until the end of 1999, to a world total of more than 5,000 transponders 
(Source: VIA SATELLITE, January 1995). This transponder growth translates 
into a need for up to 50,000 or more additional satellite modems by the year 
2000.

    Rural telephony and private network DAMA products require special
communications equipment which is efficient for low traffic volume at many
different locations. DAMA products allow many users to access the same channel
on demand. Radyne has recently entered the DAMA products segment of the market
with its new DMD-2400 modem. The DMD-2400 can be utilized in both rural
telephony and private network systems. Rural telephony can be described as an
intra-country telecommunications network linking many small villages in a
country like Indonesia, for example, ultimately allowing the villages to
communicate with the world. A private network can be described as a network in
the commercial world. For example, banks and other financial institutions, 
airlines, and large and multi-unit corporations all have the need for 
satellite communications and may be linked via private networks.

    Demand for DAMA products for use in private and rural telephony networks is
growing rapidly. It has been estimated that 20,000 to 50,000 new installations
will occur in North America alone over the next two or three years, translating
into substantial demand for satellite ground equipment. (Source: SATELLITE
COMMUNICATIONS, August 1996). Radyne has entered this market and has a product
agreement for both low speed data equipment and the necessary radio frequency
(RF) products. The Company sells its DAMA/ VSAT compatible products to system
integrators (customers who make a business of supplying turnkey earth station
operations for their customers), domestically and abroad, as components to
systems that they have designed, as well as directly to end users. The Company
offers these products for sale on a global basis and believes their use to be
global.

    The high-speed satellite communications market is just beginning to emerge.
Communications equipment in this segment possesses higher data rate capabilities
of approximately 12-150 megabits per second, allowing much more data to be
transmitted. Tests are currently underway by AT&T to use ATM (asynchronous
transfer mode) to transfer large amounts of data. It is Radyne's intention to
enter the high-speed satellite communications market as its engineers develop
advanced equipment designed to the higher data rate specifications.

    Finally, the United States Government should provide a significant market
opportunity for Radyne as the defense budget shrinks and it becomes cost
prohibitive for the government to develop its own products. Because of the
expected growth in commercial off-the-shelf (COTS) and non-developmental item
(NDI) procurement, Radyne anticipates targeting the US Government as an
important revenue source.

PRINCIPAL PRODUCTS

    The following is a brief description of the Company's principal product
lines. Readers should be aware that inasmuch as these products are frequently
customized to suit the needs of particular end users, the price range data
provided below may not represent actual prices for many units sold.

RCS5000/DMD5000 MODEM AND REDUNDANCY CONTROL SYSTEM

    The model RCS5000 is a complete, self-contained satellite communication
modem system with all modems, terrestrial interfaces and redundancy switch
functions located in a single cabinet holding up to 27 modems. This compact
(17.5 inches high) and versatile common equipment package includes full support
for Intelsat's IDR/IBS services and may also be operated in closed networks.
Each built-in redundancy switch is a microcomputer controlled system which is
capable of controlling up to 9 modems, up to four of which may be designated as
back-ups. Thus, in the event of failure of an on-line modem, back-up operations
can be triggered either automatically or manually. The RCS5000 also has dual
redundant power supplies.

    As the RCS5000 represents some of the older modem technology remaining in
the Company's product line, sales of these systems decreased from $1,397,000
(36% of revenues) for the year ended June 30, 1996 to $439,000 (9% of revenues)
for the six months ended December 31, 1996.

RCS-10/DMD-10 MODEM AND REDUNDANCY CONTROL SYSTEM

    The RCS-10 represents the new generation system which is replacing the
RCS5000 family in Radyne's product line. It serves the same functions as the
RCS5000, but with a number of notable improvements. Up to 30 modems can be
combined in a single rack and each redundancy switch can control up to 10
modems. In addition to an expanded data rate range (9.6 Kbps to 8.448 Mbps
compared to the RCS5000's 64 Kbps to 8.448 Mbps), the RCS-10 offers an improved
display and menu structure and more options.


                                        4
<PAGE>


    The market acceptance of the RCS-10 is demonstrated by the $1,506,000 (31%
of revenues) in sales for the six- month period ended December 31, 1996, its
inaugural period.

DMD-4500 IBS/IDR SATELLITE MODEM

    This standard satellite modem provides selectable functions for Intelsat
IDR, IBS and closed network services and is easily programmable by earth station
personnel. Data rates may be selected in 8 Kbps steps between 48 Kbps and 8.448
Mbps. The DMD-4500 can be used with a variety of redundancy switches and other
options. As this modem is based on some of Radyne's older technology and is
accordingly yielding to newer Radyne products, sales have decreased from
$1,780,000 (46% of revenues) in the year ended June 30, 1996 to $628,000 (13% of
revenues) in the six months ended December 31, 1996.

DMD-2400 SATELLITE MODEM

    The DMD-2400 is a low cost, light weight (8 pounds), fast acquisition (under
1 second) modem. It is capable of data rates ranging from 2.4 Kbps to 1.6 Mbps
in steps of 1 Bps. Digital signal processing eliminates virtually all on-board
adjustments. This modem is designed to perform as both ends of a single channel
per carrier link or as a VSAT remote site modem in a hub system. Its other
applications include video conferencing, long distance learning, paging and news
gathering.

    Sales of the DMD-2400 have increased from $215,000 (6% of revenues) in the
year ended June 30, 1996 to $1,150,000 (23% of revenues) for the six-month
period ended December 31, 1996.

DVB-3000 DIGITAL BROADCAST MODULATOR

    The DVB-3000 is a flexible, programmable digital video satellite modulator
offering full compatibility with digital video standards. Its principal
applications are for digital video hub uplinks, mobile satellite news gathering,
video distribution and one-way data distribution. The DVB-3000 is high speed,
offering programmable data rates ranging from 1.0 to 30.0 Mbps and fixed data
rates of 30 to 50 Mbps. It is also frequency agile with a base range of 50 to 90
MHz and an optional range of 100 to 180 MHz in steps of 1.0 Hz.

    Sales of the DVB-3000 have increased from $16,000 (less than 1% of revenues)
in the year ended June 30, 1996 to $601,000 (12% of revenues) for the six months
ended December 31, 1996.

CONVERTERS, TRANSLATORS AND OTHER MICROWAVE PRODUCTS

    Radyne has a complete line of synthesized frequency up converters and down
converters. The SFC6400 C-Band Up Converter converts data or video signals in
the IF range of 50-180 MHz to uplink frequencies between 5.845 and 6.420 Ghz.
The SFC4200 C-Band Down Converter converts microwave carriers in the 3.62 to
4.20 GHz range to the IF range of 50-180 MHz. The Company believes that its
SFC1450 Ku-Band Upconverter and the SFC1275G Ku-Band Global Downconverter offer
low phase noise, superior standard transmit output compression and the only
downconverter to receive data and detect carrier power simultaneously. The
SFC1468 Tri-Band Synthesized Up Converter is capable of converting signals in
the IF range of 50-180 MHz to C, X and Ku band microwave uplink carriers. The
SFC1274G Tri-Band Synthesized Down Converter does the reverse.

    The Company also offers a full line of Loop Test Translators, including
C-Band, Ku-Band, X-Band and Tri-Band models. These are self contained frequency
converters which perform transmit to receive loopback testing of earth station
equipment.

    The Company's sales of microwave products increased from $203,000 in the
year ended June 30, 1996 to $451,000 for the six months ended December 31, 1996.

MANUFACTURING

    The Company's products are to a certain extent assembled and tested at its
Phoenix, Arizona facilities using subsystems and circuit boards supplied by
subcontractors. Although the Company believes that it maintains adequate stock
to reduce the procurement lead time for certain components, the Company's
products use a number of specialized chips and customized components or
subassemblies produced by a limited number of suppliers. In light of previous
financial difficulties, Radyne has experienced some inflexibility on the part of
certain suppliers in regard to credit terms for delivered components. In the
event that such suppliers were to be unable or unwilling to fulfill the
Company's requirements, the Company could experience an interruption in
production until an alternative source of supply was developed. The Company
maintains an inventory of certain chips and components and subassemblies to
limit the potential for such an interruption. The Company believes that there
are a number of companies capable of providing replacements for the types of
unique chips and customized components and subassemblies used in its products.


                                       5
<PAGE>


SALES AND MARKETING

    The Company sells its products through international representatives,
distributors and systems integrators which are supported by the Company's sales
and marketing personnel. In-house direct sales by the Company are targeted
toward large accounts, new accounts and the establishment of distributors in new
markets. The Company has recently established new distribution or representation
arrangements in the Middle East, South America, Asia and the Pacific Rim.

    The Company has an informal marketing arrangement with Agilis Communication
Technologies Pte Ltd, an affiliate of ST and the General Manager of which is a
director of the Company. Under this arrangement, Agilis acts as Radyne's sales
agent for several countries in Asia. During the first seven months of this
arrangement, which was entered into prior to the Company's affiliation with ST,
Agilis produced over $650,000 of orders for Radyne products.

    The Company's direct sales force is comprised of 5 individuals in the
marketing department, supported by systems and applications engineers. Direct
sales activities are focused on expanding the Company's international sales by
identifying emerging markets and establishing new distributor accounts.
Additionally, the Company directly targets certain major accounts which may
provide entry into new markets or lead to subsequent distribution arrangements.
Such major accounts tend to be telecommunications agencies and major
corporations in new international markets. The Company has a customer service
and support group, which primarily supports distributors and is responsible for
after-sale support and installation supervision. In certain instances the
Company uses third party companies for installation and maintenance.

    Significant customers for the periods ended as indicated were as follows:

<TABLE>
<CAPTION>
                              DECEMBER 31,   JUNE 30,   JUNE 30,   DECEMBER 16,
                                  1996         1996       1995         1994
                              ------------   --------   --------   ------------
<S>                           <C>            <C>        <C>        <C>

Bonn Elektronik............        1.6%         6.4%      22.0%          5.8%
Voice of America...........        -0-          -0-       15.3          12.2
ETS........................        6.3          8.1       14.2          16.4
Comsat.....................       15.6         12.7       11.7          14.0
Embratel...................       18.3          -0-        -0-           -0-
</TABLE>

    No other customers represented more than 10% of the Company's sales.

    The Company's sales in its principal foreign markets for the six-month
period ended December 31, 1996 and the year ended June 30, 1996 consisted of the
following percentages of total sales:

<TABLE>
<CAPTION>
                                  DECEMBER 31, 1996     JUNE 30, 1996
                                  -----------------     -------------
<S>                               <C>                   <C>

Asia.........................             31%                 24%
Latin America................             25                   6
Europe.......................              9                  20
</TABLE>

    Export sales, as a percentage of total net sales, were about 45% for the ten
and one-half month period ended December 16, 1994, approximately 46% in the six
and one half month period ended June 30, 1995, about 50% in the fiscal year
ended June 30, 1996, and approximately 66% for the six month period ended
December 31, 1996. The Company believes that this figure may rise in subsequent
periods. The Company considers its ability to continue to make sales in
developing markets to be important to its growth potential. However, there can
be no assurance that the Company will succeed in its efforts to cultivate such
markets.


                                       6
<PAGE>


COMPETITION

    The Company has a number of major competitors in the satellite
communications field. These include large companies, such as Hughes Network
Systems, NEC, the EFData division of California Microwave and Spar Aerospace,
which have significantly larger and more diversified operations and greater
financial, marketing, human and other resources than Radyne. The Company
estimates that the major competitors in the main markets in which it operates
have the following market shares as compared to the Company's share:

<TABLE>
<CAPTION>
                                                          VSAT     GOV'T DATA
COMPETITOR                 INTELSAT    DIGITAL VIDEO    NETWORKS    EQUIPMENT
----------------------     --------    -------------    --------   ----------
<S>                        <C>         <C>              <C>        <C>

EFData.................       35%            5%           25%           35%
Comstream/Spar.........       10            30            20              0
Hughes Network.........       10             0             0              0
NEC....................       10            10             0              0
SSE/Fairchild..........       10             0            15              0
Comquest...............        0             0             0             20
Radyne.................        5            25            15              1
</TABLE>

    The Company does not believe that any other single competitor has a greater
than 10% market share for any of these product classes. However, the foregoing
market share figures represent estimates based on the limited information
available to the Company, and there can be no assurance of precision.

    The Company believes that it has been able to compete by concentrating 
its sales efforts in the international market, utilizing the resources of 
local distributors, and by emphasizing product features. However, most of the 
Company's competitors offer products which have one or more features or 
functions similar to those offered by the Company. The Company believes that 
the quality, performance and capabilities of its products, its ability to 
customize certain network functions and the relatively lower overall cost of 
its products, as compared to the costs generally offered by the Company's 
major competitors, have contributed to Radyne's ability to compete 
successfully. However, the Company's major competitors have the resources 
available to develop products with features and functions competitive with or 
superior to those offered by the Company. There can be no assurance that such 
competitors will not successfully develop such products or that the Company 
will be able to maintain a lower cost advantage for its products. Moreover, 
there can be no assurance that the Company will not experience increased 
competition in the future from these or other competitors currently unknown.

EMPLOYEES

    As of March 12, 1997, the Company had 60 full time employees, including two
executive officers, 43 in engineering, manufacturing and marketing operations,
and 5 in administration. None of the Company's employees are represented by a
union or governed by a collective bargaining agreement, and the Company believes
that its relations with its employees are satisfactory.

TECHNOLOGY

    The Company believes that improvement of existing products, reliance upon
trade secrets, copyrights and unpatented proprietary know-how and the
development of new products are generally as important as patent protection in
establishing and maintaining a competitive advantage. Because patents often
provide only narrow protection which may not provide a competitive advantage in
areas of rapid technological change and because patent applications require
public disclosure of information which may otherwise be subject to trade secret
protection, Radyne has not obtained, and has no present intention to obtain,
patents on existing products. However, there can be no assurance that the
Company's technology will not be found to infringe upon the intellectual
property of others. If the Company's technology should be found to impermissibly
utilize the intellectual property of others, the Company's ability to utilize
the technology could be materially restricted or prohibited. In such event, the
Company might be required to obtain licenses from third parties to utilize the
patents or proprietary rights of others. No assurance can be given that any
licenses required could be obtained on terms acceptable to the Company or at
all. In addition, in such event, the Company could incur substantial costs in
defending itself against infringement claims made by third parties or in
enforcing its own intellectual property rights.

ITEM 2. PROPERTIES

    The Company's sole office and production facility consists of a 16,337
square foot facility in Phoenix, Arizona. This facility is leased at an annual
cost of approximately $88,000. The lease expires on March 30, 1998, subject to a
two-year renewal option. The Company believes this facility is adequate for its
present needs and that alternative space should be available as required.


                                       7
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

    The Company is not a party to any material pending legal proceedings.

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

    No matters were submitted to a vote of security holders during the three
months ended December 31, 1996. At a "Special Meeting of Shareholders" held on
January 8, 1997, the Company's shareholders voted: i) For an amendment to the
Company's Certificate of Incorporation to eliminate the preemptive rights
accorded shareholders under Section 622 of the New York Business Corporation Law
with respect to the purchase of securities of the Company, ii) For a 1-for-5
reverse split of the Company's currently outstanding common stock, iii) For all
of the nominated members of the Board of Directors (See "DIRECTORS, EXECUTIVE
OFFICERS AND KEY EMPLOYEES"), and iv) For the ratification of the selection of
DELOITTE AND TOUCHE, LLP as the independant auditors of the Company.

                                    PART II

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

    The Company's Common Stock is traded in the over-the-counter market under
the OTC Bulletin Board symbol "RADN" (prior to the Reverse Split, the symbol was
"RDYN"). However, there is no established trading market as actual transactions
are infrequent. The following table sets forth the range of high and low trading
prices as reported by the National Quotation Bureau, Inc. for the periods
indicated. It should be noted that these quotations relate almost entirely to
periods prior to the Reverse Split. All pre-split quotations have accordingly
been multiplied by 5. At December 9, 1996, the Company had approximately 550
shareholders of record. The Company believes that the number of beneficial
owners is actually in excess of 1,600, due to the fact that a large number of
shares are held in street name.

<TABLE>
<CAPTION>
                                                                  HIGH    LOW
                                                                 ------  ------
<S>                                                              <C>     <C>

1995:
   First Quarter (December 16, 1994* through March 31, 1995)....  8 1/8     5/8
   Second Quarter...............................................  6 7/8   3 1/8
   Third Quarter................................................  8 1/8   3 1/8
   Fourth Quarter...............................................  7 1/2   3 3/4
1996:
   First Quarter................................................  5 5/8   2 1/2
   Second Quarter...............................................  6 7/8   3 3/4
   Third Quarter................................................  9 7/32  4 1/16
   Fourth Quarter............................................... 10       5
</TABLE>

* The first day of trading of the Common Stock following Radyne's emergence from
bankruptcy.

    The number of record holders of the Company's Common Stock as of March 31,
1997 was 464. The Company believes that a substantially larger number of
beneficial owners hold such shares of Common Stock in depository or nominee
form.

    The Company has not paid dividends on the Common Stock since inception and
does not intend to pay any dividends to its stockholders in the foreseeable
future. The Company currently intends to reinvest earnings, if any, in the
development and expansion of its business. The declaration of dividends in the
future will be at the election of the Board of Directors and will depend upon
the earnings, capital requirements and financial position of the Company,
general economic conditions and other pertinent factors.


                                       8
<PAGE>


ITEM 6. SELECTED FINANCIAL DATA

    The following selected statement of operations data for the six month 
period ended December 31, 1996, the year ended June 30, 1996, the six and 
one-half month period ended June 30, 1995 and the ten and one-half month 
period ended December 16, 1994, and the selected balance sheet data at those 
dates, are derived from the Financial Statements of the Company and notes 
thereto audited by Deloitte & Touche LLP, independent certified public 
accountants for the Company, which appear elsewhere in this Report. The 
selected statement of operations data for the years ended January 31, 1994 
and January 31, 1993 and the selected balance sheet data at January 31, 1994 
and January 31, 1993, are derived from the unaudited financial statements of 
the Company. These unaudited financial statements have been prepared on the 
same basis as the audited financial statements and, in the opinion of 
management, contain all adjustments, consisting only of normal recurring 
accruals, necessary for a fair presentation of the financial position and 
results of operations for the periods presented. Per share data and shares 
outstanding reflect an adustment for the effects of the 1-for-5 reverse split 
of the Company's common stock, which became effective on January 9, 1997. The 
following data should be read in conjunction with "Management's Discussion 
and Analysis of Financial Condition and Results of Operations" and the 
Financial Statements of the Company and notes thereto included elsewhere in 
this 10-K Annual Report.

STATEMENT OF OPERATIONS DATA

<TABLE>
<CAPTION>
                                                                                      PREDECESSOR(1)
                                                          ----------------------------------------------------------------------
                           SIX MONTHS                        SIX AND        TEN AND ONE-HALF
                              ENDED         YEAR ENDED       ONE-HALF         MONTHS ENDED         YEAR ENDED       YEAR ENDED
                          DECEMBER 31,       JUNE 30,      MONTHS ENDED       DECEMBER 16,         JANUARY 31       JANUARY 31
                            1996(2)            1996       JUNE 30, 1995           1994                1994             1993
                          ------------      ----------    -------------     -----------------      ----------       -------------
<S>                       <C>               <C>           <C>               <C>                    <C>              <C>

Net sales..............   $ 4,905,059       $3,829,523      $1,861,262          $2,569,396         $4,966,617         $7,016,427
Cost of sales..........     4,052,433        2,559,350       1,228,747           2,229,329          5,620,108          4,128,567
Gross profit (loss)....       852,626        1,270,173         632,515             340,067           (653,491)         2,887,860
Selling, general, 
  and administrative 
  expense..............     1,437,971        1,843,576         961,162           1,658,388          3,363,893          1,403,438
Asset impairment
  charge(3)............       421,000
Research and 
  development..........       808,025        1,794,823                                                785,679            619,758
Operating income
  (loss)...............    (1,814,370)      (2,368,226)       (328,647)         (1,918,519)        (4,803,063)           864,664
Interest expense.......       255,604          256,871          36,209             118,235            634,061            106,546
Professional fees 
  related to
  reorganization.......                                                            600,198
Income (loss) before
  fresh start
  adjustments and
  extraordinary
  items................   $(2,069,974)     $(2,625,097)      $(364,856)        $(2,036,754)       $(5,437,124)           758,118
Fresh start
  adjustments..........                                                          1,598,841
Income (loss) before
  extraordinary items
  and taxes on income..   $(2,069,974)     $(2,625,097)      $(364,856)     $  (437,913)       $(5,437,124)              758,118
Extraordinary 
  items(4).............                                                          2,699,156
Income (loss)
  before taxes.........   $(2,069,974)     $(2,625,097)      $(364,856)     $ 2,261,243        $(5,437,124)           758,118
Taxes on income........                                                                                                46,291
Net income (loss)......   $(2,069,974)     $(2,625,097)      $(364,856)     $ 2,261,243        $(5,437,124)           711,827
Net loss per share
  before extraordinary
  items................   $      (.55)     $      (.70)      $     (.10)     $   (1.33)            (21.30)             3.40
Net income (loss)
  per share............   $       (.55)    $      (.70)      $     (.10)     $     6.87        $    (21.30)         $   3.40
Weighted average number
  of outstanding
  shares.........            3,750,699       3,742,227        3,729,721         329,020             255,169           208,306
</TABLE>


                                       9
<PAGE>


BALANCE SHEET DATA

<TABLE>
<CAPTION>
                                                                                              PREDECESSOR
                                                                                  ------------------------------------

<S>                                        <C>          <C>          <C>          <C>          <C>          <C>
                                           AT 12/31/96  AT 6/30/96   AT 6/30/95   AT 12/16/94  AT 1/31/94   AT 1/31/93
                                           -----------  -----------  -----------  -----------  -----------  ----------

Cash and cash equivalents................  $   186,488  $       971  $     2,109   $ 256,398   $    84,467  $   35,936
Working capital (deficit)................   (5,851,527)  (4,082,987)  (1,343,018)   (977,678)   (2,284,575)    794,530
Total assets.............................    6,572,917    3,272,686    3,452,999   3,084,394     1,354,933   3,127,276
Long-term liabilities....................      161,968      130,414      168,304     192,603       188,123     248,269
Total liabilities........................   11,019,543    5,669,338    3,264,554   2,531,093     3,612,875   2,202,969
Stockholder equity (deficit).............   (4,446,626)  (2,396,652)     188,445     553,301    (2,257,942)    924,307
</TABLE>

(1) The Company petitioned for bankruptcy protection in April 1994 and operated
    as a debtor-in-possession until December 16, 1994.
 
(2) The Company has changed its fiscal year to the calendar year.

(3) Consists of the writedown of designs and drawings in light of the
    introduction of replacement products.
 
(4) Consists of $1,062,667 gain on exchange of debt for common stock and
    $1,636,489 gain on debt forgiveness.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

GENERAL

    In reviewing the following material, the reader should take note of the fact
that the respective periods being compared are of various durations. This is due
to several changes in the Company's fiscal year. Prior to bankruptcy, the
predecessor company's fiscal year was from February 1 to January 31. Upon
emergence from bankruptcy on December 16, 1994, the predecessor company's fiscal
year ended on that date, thus creating a ten and one-half month fiscal period
from February 1 through December 16, 1994. The adoption of the fiscal year of
the Company's new parent (ETS) at that time created a fiscal period from
December 17, 1994 through June 30, 1995, followed by a full year ended June 30,
1996. Upon becoming a subsidiary of ST in August of 1996, the Company adopted
ST's fiscal year (the calendar year), creating a stub fiscal period from July 1
through December 31, 1996.

RESULTS OF OPERATIONS

SIX MONTH PERIOD ENDED DECEMBER 31, 1996 COMPARED TO FISCAL YEAR ENDED 
JUNE 30, 1996.

    The Company's net sales increased 28% to $4,905,000 during the six month
period ended December 31, 1996 from $3,830,000 during the twelve months ended
June 30, 1996. This increase is primarily attributable to the introduction of
the Company's new product lines which have experienced exceptional market
acceptance. Volume in terms of units sold has increased with sales of products
introduced since July 1, 1995 increasing from $434,000 for the period ended June
30, 1996 to $3,477,000 for the period ended December 31, 1996.

    The Company's cost of sales as a percentage of net sales increased to 83%
during the six months ended December 31, 1996 from 67% for the fiscal year ended
June 30, 1996. Adjustments to inventory of approximately $475,000 (10% of sales)
for obsolescence, of which $350,000 was related to the introduction of new
products (which essentially rendered one entire older product line obsolete),
and $340,000 (7% of sales) for start-up costs related to the introduction of new
products are included in the cost of sales. These products include a new
generation modem sub-system which makes use of the Company's proprietary
technology from older products while adding features and reducing future
manufacturing costs. Also, the Company has introduced and shipped the new
"Digital Video Broadcast" modem which has experienced exceptional acceptance in
the marketplace. Also contributing to the increase in cost of sales as a
percentage of sales were freight charges related to international sales (2% of
sales) and higher than anticipated warranty expense on some of the Company's
older products (1% of sales).
 
    The Company is obligated to pay royalties to Merit Microwave, Inc. ("Merit")
on sales of certain translator products developed by Merit. The royalty rate
ranges from five to ten percent of the selling price. During the period ended
December 31, 1996, the Company paid $2,200 for royalty expenses, which were
included in direct cost of goods sold.
 
    Selling, general and administrative costs decreased to $1,438,000 or 29% of
sales during the six months ended December 31, 1996 from $1,844,000 or 48% of
sales for the fiscal year ended June 30, 1996. The decrease in expenses was
primarily attributable to the decreased time frame of the current period over
the prior period and partially offset by increased costs related to the higher
level of business that the Company experienced during the current period.
 
    The Company recorded an "asset impairment charge" of $421,000 during the
period to reflect a valuation adjustment to Designs and Drawings which were
partially impaired due to the introduction of new product lines. The valuation
of designs and drawings is the result of adjustments made by the Company to
adopt Fresh Start reporting in accordance with AICPA Statement of Position
("SOP") 90-7, FINANCIAL REPORTING BY ENTITIES IN REORGANIZATION UNDER THE
BANKRUPTCY CODE, and represents the excess reorganization value that has been
applied to the acquired technology supporting the Company's products (Note 3 to
the Financial Statements). Amortization of designs and drawings is computed
using the straight-line method over an estimated useful life of four to seven
years. The remaining asset


                                      10


<PAGE>

carries a net book value of $702,000 and will be amortized using the straight-
line method over the remaining estimated useful life of two to five years.
 
    Research and development expenditures decreased to $808,000 (16% of sales)
during the six months ended December 31, 1996 from $1,795,000 (47% of sales) for
the twelve months ended June 30, 1996. The decrease in expenses was primarily
attributable to the decreased time frame of the current period relative to the
prior period. Additionally, the Company had embarked on a major development
program during the fiscal year ended June 30, 1996, in order to regain a
competitive posture after two fiscal periods during which the Company had made
no development effort.
 
    Interest expense net of interest income decreased to $256,000 (5% of sales)
during the six months ended December 31, 1996 from $257,000 (7% of sales) for
the fiscal year ended June 30, 1996. The small decrease in expense was primarily
attributable to the decreased time frame of the current period as compared to
the prior period, offset by additional interest from the Company's increased
debt level.
 
    For the period ended December 31, 1996, the Company did not provide for
income taxes, due to the net loss. The Company also did not provide for income
taxes for the twelve month period ended June 30, 1996, due to net operating
losses.
 
    For the six month period ended December 31, 1996, the Company had a net loss
of ($2,070,000) as compared with a net loss of ($2,625,000) in the twelve month
period ended June 30, 1996. The decrease was primarily attributable to the
decreased time frame of the current period relative to the prior period as
partially offset by the increase in cost of sales as a percentage of sales and
the expenses of increased business activity, as discussed above.
 
    "New Orders Booked" (firm, fixed orders from customers) for the six months
ended December 31, 1996 were $5,939,000 as compared to $4,184,000 for the year
ended June 30, 1996. The Company's "Backlog" of orders to be shipped (orders
from the prior period which had not yet been shipped plus New Orders Booked less
orders shipped during the period) was $2,473,000 as of December 31, 1996, an
increase of 72% over the $1,439,000 in Backlog as of June 30, 1996. The
Company's Backlog consists of firm orders as evidenced by written contracts
and/or purchase orders from customers.

SIX MONTH PERIOD ENDED DECEMBER 31, 1996 COMPARED TO SIX MONTH PERIOD ENDED
DECEMBER 31, 1995

    The following table sets forth, for the periods indicated, certain financial
items used in the discussion below:
 
<TABLE>
<CAPTION>
                                                      SIX MONTHS ENDED      SIX MONTHS ENDED
                                                     DECEMBER 31, 1996     DECEMBER 31, 1995
                                                    --------------------  --------------------
<S>                                                 <C>                   <C>
 
Net Sales.........................................      $  4,905,059          $  2,397,235
Cost of Sales.....................................         4,052,433             1,475,284
Selling G&A.......................................         1,437,971               846,113
R&D...............................................           808,025               588,451
Net Interest Expense..............................           255,604                71,274
Net Loss..........................................        (2,069,974)             (583,887)
</TABLE>

    The Company's net sales increased 105% to $4,905,000 during the six month
period ended December 31, 1996 from $2,397,000 during the six month period ended
December 31, 1995. This increase is primarily attributable to the introduction
of the Company's new product lines. Volume in terms of units sold has increased
with sales of products introduced since July 1, 1995 increasing from $183,000
for the period ended December 31, 1995 to $3,477,000 for the period ended
December 31, 1996.
 
    The Company's cost of sales as a percentage of net sales increased to 83%
during the six months ended December 31, 1996 from 62% for the six months ended
December 31, 1995. Adjustments to inventory of approximately $475,000 (10% of
sales) for obsolescence, of which $350,000 was related to the introduction of
new products (which essentially rendered one entire older product line
obsolete), and $340,000 (7% of sales) for start-up costs related to the
introduction of new products are included in the cost of sales for the current
period as described above. Also contributing to the increase in cost of sales as
a percentage of sales were freight charges related to international sales (2% of
sales) and higher than anticipated warranty expenses on some of the Company's
older products (1% of sales).
 
    Selling, general and administrative costs increased to $1,438,000 or 29% of
sales during the six months ended December 31, 1996 from $846,000 or 35% of
sales for the six months ended December 31, 1995. The increase in expenses was
primarily attributable to the higher level of business that the Company
experienced during the current period.
 
    The Company recorded an "asset impairment charge" of $421,000 during the
period, as described above.
 
    Research and development expenditures increased to $808,000 (16% of sales)
during the six months ended December 31, 1996 from $588,000 (25% of sales) for
the six months ended December 31, 1995, as the Company's development program,
which commenced in the earlier period, continued at an even stronger pace.
 
    Interest expense net of interest income increased to $256,000 (5% of sales)
during the six months ended December 31, 1996 from $71,000 (3% of sales) for the
six months ended December 31, 1995. The increase was due to the Company's
increased debt level.


                                      11


<PAGE>

    For the period ended December 31, 1996, the Company did not provide for
income taxes, due to the net loss. The Company also did not provide for income
taxes for the six month period ended December 31, 1995, due to net operating
losses.

    For the six month period ended December 31, 1996, the Company had a net loss
of ($2,070,000) as compared with a net loss of ($584,000) in the six month
period ended December 31, 1995. The increase was primarily attributable to the
increase in cost of sales as a percentage of sales and the expenses of increased
business activity, as discussed above.
 
    New Orders Booked for the six months ended December 31, 1996 were $5,939,000
as compared to $1,525,000 for the six months ended December 31, 1995. The
Company's Backlog of orders to be shipped was $2,473,000 as of December 31,
1996, a more than sixfold increase over the $213,000 in Backlog as of December
31, 1995.
 
FISCAL YEAR ENDED JUNE 30, 1996 COMPARED TO SIX AND ONE-HALF MONTH PERIOD
ENDED JUNE 30, 1995
 
    The Company's net sales increased 206% to $3,830,000 during the period ended
June 30, 1996 from $1,861,000 during the six and one-half months ended June 30,
1995 primarily due to the increased time frame of the period being reported upon
herein over the prior period.
 
    The Company's cost of sales as a percentage of net sales increased to 67%
during the fiscal year ended June 30, 1996 from 66% for the six and one-half
months ended June 30, 1995.
 
    Selling, general and administrative costs increased to $1,844,000 or 48% of
sales during the fiscal year ended June 30, 1996 from $961,000 or 52% of sales
for the six and one-half months ended June 30, 1995. The increase in expenses
was primarily attributable to the increased time frame of the current period
over the prior period.
 
    Research and development expenditures increased to $1,795,000 during the
fiscal year ended June 30, 1996 from $-0- for the six and one-half months ended
June 30, 1995. The Company embarked on a major development program during the
fiscal year ended June 30, 1996, in order to regain a competitive posture after
two fiscal periods during which the Company had made no development effort.
 
    Interest expense net of interest income increased to $257,000 (7% of sales)
during the fiscal year ended June 30, 1996 from $36,000 (2% of sales) for the
six and one-half months ended June 30, 1995, due primarily to increased
borrowings.
 
    For the period ended June 30, 1996, the Company did not provide for income
taxes, due to the net loss. The Company also did not provide for income taxes
for the six and one-half month period ended June 30, 1995, due to net operating
losses.
 
    For the twelve month period ended June 30, 1996, the Company had a net loss
of ($2,625,000) as compared with a net loss of ($365,000) in the period ended
June 30, 1995. The increase was primarily attributable to the increased level of
research and development expenditures and interest expense along with the
increased time frame of the period being reported upon over the prior period.
 
SIX AND ONE-HALF MONTH PERIOD ENDED JUNE 30, 1995 COMPARED TO TEN AND ONE-
HALF MONTH PERIOD ENDED DECEMBER 16, 1994 (PREDECESSOR COMPANY)
 
    In March, 1995, the Company's Board of Directors resolved to end the
predecessor company's fiscal year that began February 1, 1994 on December 16,
1994, the date on which the Company's Second Amended Plan of Reorganization was
confirmed by the Bankruptcy Court. In addition, the Board of Directors resolved
to end the Company's fiscal year on June 30 for all ensuing periods.

      The Company's net sales decreased 28% to $1,861,000 during the six and 
one-half month period ended June 30, 1995 from $2,569,000 during the period 
ended December 16, 1994. The decrease in sales was partially attributable to 
the filing of bankruptcy in April 1994 and the lack of credit from vendors to 
supply product to the Company. Additionally, there were customer delays in 
placing orders in anticipation of the Company's next generation of satellite 
modems, which were expected to be introduced in the first quarter of 1994, 
but because of the bankruptcy filing, were introduced in the first quarter of 
1995.
 
    The Company's cost of sales as a percentage of net sales decreased to 66% 
during the six and one-half month period ended June 30, 1995 from 87% during 
the ten and one-half month period ended December 16, 1994. The concomitant 
increase in gross margin resulted, in part, from the Company's emergence from 
bankruptcy.
 
    Selling, general and administrative costs decreased to $961,000 during 
the six and one-half month period ended June 30, 1995 from $1,658,000 during 
the ten and one-half month period ended December 16, 1994. The reduction was 
mainly attributable to the difference in time of the periods being compared.
 
    Research and development expenditures were $-0- during the six and 
one-half month period ended June 30, 1995, and $-0- during the ten and 
one-half month period ended December 16, 1994.

    Interest expense net of interest income decreased to $36,000 during the 
six and one-half month period ended June 30, 1995 from $118,000 during the 
ten and one-half month period ended December 16, 1994.


                                      12


<PAGE>

    For the ten and one-half month period ended December 16, 1994, the
predecessor company incurred $600,000 in professional fees related to its
reorganization, had a fresh start adjustment of $1,599,000, had a gain of
$1,063,000 on the exchange of debt for common stock and had a gain of $1,636,000
on debt forgiveness.
 
    For the six and one-half month period ended June 30, 1995, the Company did
not provide for income taxes, due to the net losses for the year. The
predecessor company also did not provide for income taxes for the prior period
ended December 16, 1994, due to net operating loss carry forwards from prior
years.
 
    For the six and one-half month period ended June 30, 1995, the Company had a
net loss before extraordinary items of ($365,000) as compared with a net loss of
($438,000) in the period ended December 16, 1994. This improvement was due in
part to the reduction in work force and the reduction of debt associated with
the bankruptcy proceeding.













                                       13


<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

    The Company's working capital deficit was ($5,852,000) at December 31, 1996;
an increase of $1,769,000 from ($4,083,000) at June 30, 1996 and $4,015,000 from
($1,837,000) at December 31, 1995. The increase in the deficit from June 30,
1996 was due primarily to $1,994,000 of new bank borrowings, a net increase in
borrowings from affiliates of $2,005,000 and an approximately $1,298,000
increase in accounts payable and accrued liabilities, partially offset by
increases of approximately $186,000 in cash and cash equivalents, $2,450,000 in
accounts receivable and $841,000 in inventories. The increase in the deficit
from December 31, 1995 was due primarily to $1,994,000 of new bank borrowings, a
net increase in borrowings from affiliates of $3,582,000 and an approximately
$1,411,000 increase in accounts payable and accrued liabilities, partially
offset by increases of approximately $140,000 in cash and cash equivalents,
$2,002,000 in accounts receivable and $926,000 in inventories.
 
    Net cash used in operating activities was $3,546,000 for the six months
ended December 31, 1996, as compared to $2,581,000 used in the year ended June
30, 1996 and $1,120,904 used in the six months ended December 31, 1995. The
principal causes for the difference were the net loss for the period of
$2,070,000 and increases in inventories, prepaid expenses and accounts
receivable, partially offset by increases in accounts payable and accrued
liabilities. Management considers these differences to be consistent with the
introduction of new products and the increase in New Orders Booked and Backlog
as discussed above.
 
    Cash used in investing activities, consisting of additions to equipment,
amounted to $255,000 for the period ended December 31, 1996, or approximately
$134,000 less than the amount expended during the period ended June 30, 1996 for
this purpose and $243,000 more than the amount so expended during the six month
period ended December 31, 1995. The Company has no material commitments to make
capital expenditures in 1997 or thereafter.
 
    The Company derived net cash from financing activities of $3,986,000,
$2,969,000 and $1,295,000, respectively, during the six month period ended
December 31, 1996, the one year period ended June 30, 1996 and the six month
period ended December 31, 1995, with the difference resulting from greater net
borrowings during the current period.
 
    As a result of the foregoing, the Company increased its cash balance by
$186,000 for the six months ended December 31, 1996, decreased its cash balance
by $1,000 for the year ended June 30, 1996 and increased its cash balance by
$44,000 for the six months ended December 31, 1995.
 
    A bank line of credit, in the amount of $2,000,000, was established for the
Company with Bank of America NT&SA, Asian Banking Unit, by Stetsys US, Inc., the
new beneficial owner of 90.67% of the Company's outstanding stock. As of
December 31, 1996, the Company had drawn down $1,994,000 of the available funds
in the form of demand loans which were originally guaranteed by an affiliate of
Stetsys US, Inc. (Note 8 to the Financial Statements). Subsequent to the end of
the current period, this facility was expanded to $5,000,000, a nonbinding
letter of awareness from that affiliate replaced the guarantee, and the amount
drawn down was increased to $3,000,000 as of March 24, 1997. The interest rates
on these loans range from 6.2125% to 7.25% per annum. The Company also has a
$5,500,000 credit facility with Citibank NA with respect to which the same
affiliate of ST has also issued a nonbinding letter of awareness. Subsequent to
the end of the current period, the Company borrowed $400,000, due July 22, 1997
with interest at 6.875%, $2,600,000, due September 30, 1997 with interest at
6.625% per annum, $400,000, due September 30, 1997 with interest at 6.75% per
annum and $400,000, due October 6, 1997, with interest at 6.96875%, under the
Citibank facility.
 
    The Company borrowed $4,500,000 (plus $141,000 in accrued interest) from 
Singapore Technologies Electronics Pte Ltd, a related company, the proceeds 
from which were used to pay down the loan payable to ETS. An additional 
$504,000 of the Company's cash was used to pay the balance of the ETS loan. 
This $4,500,000 loan was repaid on February 10, 1997 with the proceeds of the 
above described $2,600,000 Citibank loan and the proceeds of a $2,000,000 
loan from ST, due April 30, 1997 with interest at 6.625% per annum.
 
    In order to meet its capital needs in the period reported on herein, the
Company obtained additional financing from ST. At December 31, 1996, the Company
had borrowed $2,127,000 (including accrued interest) from ST. The interest on
these short-term loans was paid at maturity and the $2,100,000 in principal
amount was rolled over until April 30, 1997 with interest at 6.625% per annum.
The interest rate on all of the ST loans may be increased by 1% to 7.625% per
annum for any period following a default in payment.
 
    The purpose of all of the above described loans has been to finance or
refinance the capital needs associated with the Company's recent rapid sales and
Backlog growth and the cost of research and development. To date, the Company's
capital resources (as supplemented by loans from ST and its affiliates) have
been sufficient to fund its operations and increased level of business. The
Company believes that the net proceeds from the Rights Offering, along with its
bank credit lines and cash from operations, should be sufficient to fund its
future operations and capital requirements for continued growth through the end
of 1998.


                                      14


<PAGE>

IMPACT OF INFLATION

    The Company does not believe that inflation has had a material impact on
revenues or expenses during the last four fiscal periods reported on herein.
 
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
 
    In March 1995, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS TO BE DISPOSED OF. SFAS No. 121 addresses issues
surrounding the measurement and recognition of losses when the value of certain
assets has been deemed to be permanently impaired. As a result of SFAS No. 121,
the Company recorded an "Asset Impairment Charge" of $421,000 during the period
to reflect a valuation adjustment to Designs and Drawings which were partially
impaired due to the introduction of new product lines. The valuation of designs
and drawings is the result of adjustments made by the Company to adopt Fresh
Start reporting in accordance with AICPA statement of Position ("SOP") 90-7,
FINANCIAL REPORTING BY ENTITIES IN REORGANIZATION UNDER THE BANKRUPTCY CODE, and
represents the excess reorganization value that has been applied to the acquired
technology supporting the Company's products (Note 3 to the Financial
Statements). Amortization of designs and drawings is computed using the
straight-line method over an estimated useful life of four to seven years. The
remaining asset carries a net book value of $702,000 and will be amortized using
the straight-line method over the remaining estimated useful life of two to five
years.
 
    In October 1995, the FASB issued statement No. 123, "ACCOUNTING FOR
STOCK-BASED COMPENSATION", which encourages, but does not require, a fair value
based method of accounting for employee stock options. As permitted under the
new standard, the Company will continue to account for employee stock options
under APB No. 25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES." The pro forma
disclosures required by this standard have been adopted as of July 1, 1996.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    The Company's financials statements as of December 31, 1996 and June 30,
1996 and June 30, 1995 and December 16, 1994 are included in this report as
listed in the Index to Financial Statements in Item 14.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

    None reportable.
 
                                    PART III
 
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
 
    The directors and executive officers of the Company, their positions held
with the Company, and their ages are as follows:
 
<TABLE>
<CAPTION>
NAME                                      AGE             POSITION
----------------------------------     -----  -------------------------------
<S>                                    <C>    <C>
Lim Ming Seong....................       49   Director, Chairman of the Board
Chan Wee Piak.....................       41   Director
Lee Yip Loi.......................       53   Director
Robert A. Grimes..................       44   Director
Robert C. Fitting.................       61   Director and President
Steven W. Eymann..................       44   Vice President
</TABLE>
 
    Each director is elected for a period of one year at the Company's annual
meeting of stockholders and serves until the next meeting and until his
successor is duly elected and qualified. Officers are elected by, and serve at
the discretion of, the Board of Directors.


                                      15

<PAGE>

    The following is a brief summary of the background of each director,
executive officer and certain key employees of the Company:
 
DIRECTORS AND EXECUTIVE OFFICERS:
 
    LIM MING SEONG has a been a Director and Chairman of the Board of the
Company since August 13, 1996 and is chairman of its Compensation Committee. He
is the Chairman of ST and of Vertex Management, Inc., a member of the ST group,
and he has been Group Director of Singapore Technologies Pte Ltd, an indirect
parent of ST since February of 1995. From March 1992 until February 1995, he was
Executive Director of Singapore Technologies Ventures Pte Ltd and from February
1990 to March 1992, he was Group President of Singapore Technologies Holdings
Pte Ltd. Prior to that time he held various corporate and government positions,
including Deputy Secretary in the Singapore Ministry of Defense from 1979 to
1986.
 
    LEE YIP LOI has been a Director of the Company since August 13, 1996 and is
chairman of the Audit Committee and a member of the Compensation Committee of
the Board. Mr. Lee is also a director of ST. He has been Regional Director
(America) of Singapore Technologies Pte Ltd since March 1994. Prior to that 
time he held a number of managerial positions with such corporations as Morgan 
Guaranty Trust and Singapore Technologies Pte Ltd and government positions with 
the Singapore Ministries of Education, Defense, Culture and Home Affairs.
 
    CHAN WEE PIAK has been a Director since August 13, 1996 and is a member of
the Compensation Committee of the Board. He is a director of ST and has been
General Manager of Agilis Communication Technologies Pte Ltd, also a member of
the Singapore Technologies group, since January 1992. From November 1989 to
February 1992, he was General Manager of Chartered Microwave Pte Ltd. Prior to
that time, he held various managerial positions in the Singapore Ministry of
Defense and with Singapore Electronic and Engineering.
 
    ROBERT A. GRIMES, who is a member of the Audit and Compensation 
Committees of the Board, has served as a member of the Board of Directors 
since December, 1994. For the past seven years Mr. Grimes has also served as 
the President and a member of the Board of Engineering and Technical 
Services, Inc. He is also the President of ST.  

    ROBERT C. FITTING has been President of the Company since February, 1995, 
became a Director of the Company in March, 1995 and is a member of the Audit 
Committee of the Board. Mr. Fitting has a Master of Electrical Engineering 
degree from New York University and a Bachelors with distinction from Penn 
State University. His professional career began at Bell Laboratories in 1962 
where he spent six years developing innovative communication technologies. 
Mr. Fitting then joined the Motorola Government Electronics Division where he 
was an engineering manager. He published more than a dozen technical papers 
and was awarded a number of patents. He left Motorola in 1978 to build a new 
company under an agreement with Comtech Telecommunications. The new company 
was named Comtech Data Corporation, currently known as Fairchild Data 
Corporation. Mr. Fitting was the General Manager and President of Comtech 
Data Corporation from 1978 to 1984. He left Comtech to start a new company 
called EFData Corporation. As co-founder, CEO and President of EFData 
Corporation, Mr. Fitting built the company into a worldwide market leader in 
satellite communications equipment. While at EFData, Mr. Fitting won the 
"Arizona Entrepreneur of the Year" award in 1993 in the manufacturing/high 
technology category.
 
    STEVEN EYMANN has been Executive Vice President of the Company since 
February, 1995. Mr. Eymann graduated with honors and a Bachelor of Science in 
Electrical Engineering from the University of Nebraska. His professional 
career began at the Motorola Government Electronics Division where he was a 
design engineer, task leader and finally a project leader for the DSU-23/29B 
fuse development program. As project leader, he was responsible for project 
management, budgets, schedules, design and testing of the fuse. He designed 
the computer-controlled automatic test set for factory testing based on an HP 
9825 computer. The DSU-23/29B is an L-Band PN radar for accurate, low-cost 
altitude direction. In June of 1981, Mr. Eymann joined Comtech Data 
Corporation where he was Director of Product Development. He was responsible 
for budget, schedule and technical aspects of all new product development 
within Comtech. Prior to becoming the Director of Product Development, he 
served as a senior engineer with program and technical design responsibility. 
He left Comtech in 1984 to begin a new company called EFData Corporation. As 
co-founder and Vice President of EFData, Mr. Eymann was responsible for new 
product development and engineering management in the design and manufacture 
of high technology, military and commercial communications equipment.


                                      16

<PAGE>

CERTAIN KEY EMPLOYEES:
 
    GARRY KLINE, Secretary, Controller and Acting CFO, joined the Company in
September of 1995. From 1987 through 1995, Mr. Kline served as CFO and
Controller of EFData Corporation. Prior to 1987, Mr. Kline served in various
positions, including Vice President of Finance for Megatronics Inc., a publicly
held printed circuit board manufacturer, Vice President of Operations for Vernal
Lodging Associates, a hospitality management company, and General Partner of Tax
and Accounting Computer Service, an accounting firm.
 
    PETER WEISSKOPF has been the President of the Microwave Products Division at
Radyne since June, 1995. At Radyne, he is responsible for the operation of the
microwave products division. His duties include marketing, design and
manufacture of existing and new microwave products as well as the administration
of the division. Mr. Weisskopf has a Bachelor of Science in Computer and
Electrical Engineering from George Mason University. He has worked as an
engineer for several companies during his professional career, including
Magnavox Data Systems, M/A-COM Linkabit and M/A-COM Active Assemblies Division.
From 1990 to 1992, Mr. Weisskopf was an engineer at EFData Corporation, where he
designed synthesized frequency converters for use in satellite communications.
In 1992, Mr. Weisskopf founded Merit Microwave, Inc. As founder and President of
this start-up firm, Mr. Weisskopf designed and marketed various microwave
components and systems, including a complete line of satellite loopback test
translators.

    ROBERT NOBIS has been the Director of Sales for the Company since April
1995. Mr. Nobis has a Master of Science degree in Electronics Engineering from
North Dakota State University. Prior to joining the Company he spent most of his
professional career working for Motorola, Inc. beginning in 1971 as a
communications project engineer. He joined the Motorola Integrated Circuits
Division in 1973 where he was a microcomputer systems engineer and was a member
of the original development team for the MC6806 MPU family. From 1976 through
1989, Mr. Nobis held several international marketing positions for Motorola
including Strategic Marketing Manager for Asia-Pacific Director of Market
Development in Tokyo, Japan, Strategic Marketing Manager, Technology Marketing
Manager and Technology Sales Manager in Phoenix, Arizona. In 1989, Mr. Nobis
formed and organized Data Integrity Services International to provide
international marketing consulting services to small businesses in Arizona. In
1991, he joined Fairchild Data Corporation, as Regional Marketing Director for
Asia-Pacific. At Fairchild, he was responsible for the marketing and sales of
satellite communications products in the Asia-Pacific Region.
 
    ALAN POTTER has been the Vice President of Marketing for the Company since
December 1995. His duties at Radyne include market research, neoteric product
concepts, new corporate alliances and distribution systems in Europe and the
Middle East. He joined Radyne after ten years with EFData as Sales Manager. Mr.
Potter graduated from the University of Houston with honors, holding a Bachelor
of Arts in Communications. After post graduate studies at the University of
Massachusetts, Amherst, he began his professional career as an Associate
Professor of Communications at the University of Texas at Houston. While there,
in 1973, he developed and operated the first practical bi-directional coaxial
cable network to simultaneously carry voice, data and video communications. He
then designed, developed and managed a series of broadband cable television and
data networks for Columbia Cable Television, Michelson Media and Cox Cable
Communications. Mr. Potter joined Comtech Data in 1984 and, two years later, he
followed Messrs. Fitting and Eymann to initiate the Sales and Marketing
Department at EFData. He is currently an MBA candidate at the University of
Phoenix.
 
    DAVE KOBLINSKI has been the Vice President of Operations for the Company
since March, 1995. Mr. Koblinski has a Bachelor of Science in Business
Administration from Arizona State University. He also holds a degree in
Electronics Technology from Mesa Community College. His professional career
began in 1982 at Comtech Data Corporation where he held the position of Customer
Service Representative. He was responsible for repairs, field and telephone
support of satellite data modems. From 1985 to 1995, Mr. Koblinski was the
Senior Product Manager for EFData Corporation. His general responsibilities at
EFData included relating customer requests and concerns to the factory. His
direct responsibilities included the customer service, technical publication and
order entry departments.
 
    Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to the registrant during the period from July 1, 1996 to December 31,
1996, none of the officers or directors of the registrant or the beneficial
owners of its equity securities failed to file reports on Forms 3, 4 or 5
required to be filed during such period or prior thereto, except that Form 3
Reports were filed late by Stetsys US, Inc., Temasek Holdings (Private) Limited,
Lim Ming Seong, Chan Wee Piak, Lee Yip Loi and Garry D. Kline.


                                      17

<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee consists of Messrs. Lim, Chan, Lee and Grimes.
As the Committee was organized in January of 1997, the Company did not have a
Compensation Committee during the year ended December 31, 1996. Mr. Fitting,
President of the Company during the last fiscal year, participated in
deliberations of the Company's Board of Directors concerning executive officer
compensation. There were no interlocking relationships between the Company and
other entities that might affect the determination of the compensation of the
executive officers of the Company.
 
ITEM 11. DIRECTOR AND EXECUTIVE COMPENSATION
 
    The Company's policy is to pay no compensation to directors for acting as
such. Non-employee directors will receive the following ST Rights: Lee Yip
Loi--10,000; Chan Wee Piak--10,000; and Robert A. Grimes--40,000.
 
    The following table sets forth the compensation for services in all
capacities to the Company for the period from the commencement of his employment
on March 1, 1995 through December 31, 1996 of the Company's President. No other
executive officer or employee received total annual salary and bonus of more
than $100,000.
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                 NAME AND PRINCIPAL                       YEAR                                      ALL OTHER
                      POSITION                          ENDED(1)     SALARY     OPTIONS (#)      COMPENSATION(2)
-----------------------------------------------------  -----------  ---------  -------------  ---------------------
<S>                                                    <C>          <C>        <C>            <C>
Robert C. Fitting....................................    12/31/96   $  40,000      279,085          $     435
President............................................    06/30/96   $  80,000
                                                         06/30/95     $29,231          0 0          $   738 0
</TABLE>
 
------------------------
 
(1) Mr. Fitting's employment with the Company commenced on March 1, 1995, so the
    figures shown for the fiscal year ended June 30, 1995 reflect a four-month
    period. The Company's fiscal year has been changed to the calendar year, so
    the figures shown for the year ended December 31, 1996 reflect a period of
    six months.
 
(2) Matching 401(k) plan contributions.
 
STOCK OPTIONS
 
    The following table provides information with respect to stock option grants
to Robert C. Fitting during the fiscal year ended December 31, 1996 under the
Company's 1996 Incentive Stock Option Plan. These options were granted subject
to, and were in no event exercisable prior to, shareholder approval of the Plan.
The Plan was approved by the shareholders of the Company on January 8, 1997. The
Company does not have a stock appreciation rights plan.
 
                       OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
                                       PERCENT OF TOTAL
                                        OPTIONS GRANTED
                            OPTIONS       TO EMPLOYEES    EXERCISE   EXPIRATION     GRANT DATE
NAME                        GRANTED      IN FISCAL YEAR     PRICE       DATE      PRESENT VALUE
------------------------    -------    ----------------   --------   ----------   -------------
<S>                         <C>        <C>                <C>        <C>          <C>
Robert C. Fitting.......    215,085(1)       22.3%         $  2.50    Nov 2006     $ 168,483(2)
                             64,000           6.6%         $  2.50    May 1997     $       0(3)
</TABLE>

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

(1) One-third of these options will become exercisable if the Company's earnings
    before interest and taxes, calculated without regard to any compensation
    under the Plan, for any period of four calendar quarters ("EBIT") exceeds
    $1,000,000. An additional one-third will become exercisable if EBIT exceeds
    $2,500,000. The final one-third will become exercisable if EBIT exceeds
    $6,000,000. A cash bonus of approximately $1.72 per purchased share will be
    payable at the time of exercise. If the Company sells additional shares of
    its Common Stock (other than pursuant to the Rights Offering or employee
    stock options), the grantee will be granted the option to maintain the fully
    diluted equity percentage represented by the then outstanding portion of
    this grant, at the price then offered. When these options become exercisable
    (or, if later, December 31, 1998), if ST and its affiliates continue to own
    more than 80% of the Company's Common Stock, the grantee will have the right
    to sell shares acquired on exercise back to the Company at an appraised 
    value. If Mr. Fitting were to voluntarily leave the Company before the 
    earlier of August 16, 2001 or EBIT having exceeded $6,000,000, he would 
    forfeit 25% of these options.
 
(2) Based on the Black-Scholes option pricing model, assuming that one-third of
    the options will become exercisable for a five year period, no dividend
    yield, expected volatility of 132%, a risk-free interest rate of 6.035%, and
    a vesting period of two years.
 
(3) Based on the maximum exercisability period of 45 days.
 

                                      18

<PAGE>

AGGREGATE OPTION EXERCISES IN 1996 AND HOLDINGS AT YEAR END
 
    The following table sets forth information concerning option exercises and
option holdings for the fiscal year ended December 31, 1996 with respect to
Robert C. Fitting, the President of the Company.
 
                       AGGREGATE OPTIONS EXERCISED IN THE
               LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUE
 
<TABLE>
<CAPTION>
                                                                                                    VALUE OF UNEXERCISED,
                                                                   NUMBER OF UNEXERCISED                 IN-THE-MONEY
                                                                      OPTIONS HELD AT                     OPTIONS AT
                           NUMBER OF                                 DECEMBER 31, 1996              DECEMBER 31, 1996(2)
                        SHARES ACQUIRED         VALUE          ----------------------------  ----------------------------
NAME                     ON EXERCISE         REALIZED($)(1)    EXERCISABLE    UNEXERCISABLE  EXERCISABLE    UNEXERCISABLE
---------------------   ---------------      --------------    -----------    -------------  -----------    -------------
<S>                     <C>                  <C>               <C>            <C>
Robert C. Fitting....         0.00             $    0.00           0.00          279,085       $  0.00         $  0.00
</TABLE>

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

(1) Based on the fair market value of the Common Stock on the exercise date,
    less the per share exercise price.
 
(2) Based on the fair market value of the Common Stock of $2.50 per share, as
    determined by the Company's Board of Directors, less the per share exercise
    price.
 
EMPLOYMENT AGREEMENTS
 
    UNDER THE EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND MR.  Fitting, he will
serve as President of the Company until the earlier of June 30, 2000 or such
time as the stock options described in the above table become fully exercisable.
Pursuant to the agreement, the Company presently pays Mr. Fitting an annual
salary of $80,000 and has granted him the 10-year stock options described in the
above table. Mr. Fitting has also agreed that if he exercises any of the 10-year
stock options, he will not engage in any business which competes with the
Company until after the second anniversary of his termination of employment with
the Company, except in the case of involuntary termination without cause.


                                      19

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    The following table sets forth, as of the date hereof, the ownership of the
Common Stock by (i) each person who is known by the Company to own of record or
beneficially more than 5% of the outstanding Common Stock, (ii) each of the
Company's directors and its President, and (iii) all directors and executive
officers of the Company as a group. Except as otherwise indicated, the
stockholders listed in the table have sole voting and investment powers with
respect to the shares indicated.

<TABLE>
<CAPTION>
                                                    NUMBER
                                                       OF          PERCENTAGE
NAME AND ADDRESS                                    SHARES(1)       OF CLASS
----------------------------------------------      ---------      ----------
<S>                                                <C>               <C>
Stetsys US, Inc...............................      3,400,000         90.4%
  c/o Singapore Technologies Pte Ltd
  83 Science Park Drive
  #01-01/02 The Curie Singapore Science Park
   Singapore 118258
Stetsys Pte Ltd...............................       5,366,000(2)     93.7%
  c/o Singapore Technologies Pte Ltd
  83 Science Park Drive
  #01-01/02 The Curie Singapore Science Park
  Singapore 118258
Robert C. Fitting.............................          64,000(3)      1.7%
  5225 S. 37th Street
  Phoenix, Arizona 85040
Robert A. Grimes..............................          40,000(3)      1.1%
  5225 S. 37th Street
  Phoenix, Arizona 85040
Lee Yip Loi...................................          10,000(3)         *
  c/o Singapore Technologies Pte Ltd
  83 Science Park Drive
  #01-01/02 The Curie Singapore Science Park
  Singapore 118258
Chan Wee Piak.................................          10,000(3)         *
  c/o Singapore Technologies Pte Ltd
  83 Science Park Drive
  #01-01/02 The Curie Singapore Science Park
  Singapore 118258
Lim Ming Seong................................              --           --
  c/o Singapore Technologies Pte Ltd
  83 Science Park Drive
  #01-01/02 The Curie Singapore Science Park
  Singapore 118258
All directors and executive officers of the 
  Company as a group (6 persons)..............         182,000(3)      4.6%
</TABLE>

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

*   Less than one percent.
 
(1) Adjusted for the Reverse Split.
 
(2) Includes 1,966,000 shares underlying stock purchase rights to be received
    pursuant to an offering authorized by the Board of Directors in November,
    1996. The shares reported as owned by Stetsys Pte Ltd include the shares
    reported as beneficially owned by Stetsys US, Inc., of which Stetsys Pte Ltd
    is sole shareholder. No adjustment has been made for the possibility that as
    many as 280,000 of such stock purchase rights will not become exercisable or
    the effect of the exercise of stock purchase rights and options held by
    others. 100% of the stock of Stetsys US, Inc. and Stetsys Pte Ltd is
    ultimately owned by the Minister for Finance (Incorporated) of Singapore.
 
(3) Consists entirely of shares underlying stock purchase rights to be received
    pursuant to an offering authorized by the Board of Directors in November,
    1996, and/or shares underlying options.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    In 1995, the Company acquired certain assets of Merit Microwave, Inc.
("Merit"), as well as the manufacturing rights to the Merit line of microwave
products, which include translators and frequency converters. The purchase price
was allocated to inventory, machinery and equipment, and designs and drawings,
and was paid by the issuance of 30,000 shares of the Company's Common Stock
(after adjustment by the Reverse Split), cash of $60,000, and the assumption of
a trade payable of $20,000. Under the terms of the agreement, Peter Weisskopf,
the principal shareholder and chief operating officer of Merit entered into a
one-year agreement with the Company to serve as president of the newly created
Radyne Microwave Products Division for annual compensation of $75,000. As long
as he remains in this position, the Company is committed to pay royalties to
Merit of 5-10% of sales of Merit products. Through December 31, 1996, the
Company has paid approximately $4,600 in royalties pursuant to this arrangement.
 
    In July of 1995, the Company's manufacturing operations were transferred to
ETS, then the beneficial owner of 90.67% of the Company's common stock, pending
the Company's relocation to Phoenix.


                                      20

<PAGE>

At that time, $115,155 of machinery and equipment and $726,345 of inventory 
was exchanged for a reduction in the Company's indebtedness to ETS. During 
the quarter ended September 30, 1996, in recognition of the completion of the 
move to Phoenix and increase in staffing, the Board determined that the 
Company should resume direct manufacturing. To this end, the Company 
repurchased $22,100 of machinery and equipment from ETS during the quarter 
and purchased $348,000 of inventory from ETS, which ETS had acquired and/or 
processed primarily in the ordinary course of fulfilling purchase orders from 
the Company. However, as the Company's product line was undergoing constant 
improvement, the Company considered it necessary to treat $70,000 of such 
inventory as obsolete and another $20,000 thereof as slow-moving during this 
quarter. Ongoing product development rendered another $90,000 of this 
inventory obsolete during the subsequent quarter.
 
    Additional inventory of $457,000 and $2,461,500 was purchased from ETS
during the six month period ended December 31, 1996 and the year ended June 30,
1996, respectively. Sales to ETS for the six month period ended December 31,
1996, the year ended June 30, 1996, the six and one-half period ended June 30,
1995 and the ten and one-half month period ended December 16, 1994 were
$307,300, $311,600, $159,700 and $421,100, respectively.
 
    Prior to January 1, 1997, ETS provided management services to Radyne, for
which ETS charged Radyne $60,000, $120,000 and $65,000 for the six month period
ended December 31, 1996, the year ended June 30, 1996 and the six and
one-half-month period ended June 30, 1995, respectively.
 
    One of the Company's Directors, Robert A. Grimes, is President and a
Director of ETS. ETS is a wholly owned subsidiary of ST.
 
    The Company has an informal marketing arrangement with Agilis Communication
Technologies Pte Ltd, an affiliate of ST. Agilis acts as a sales agent for
Radyne products in a number of Asian countries. Sales generated as a result of
this arrangement amounted to $375,000 and $118,900 for the six month period
ended December 31, 1996 and the year ended June 30, 1996, respectively. The
General Manager of Agilis, Chan Wee Piak, is a Director of the Company.
 
    On August 12, 1996, Stetsys US, Inc. ("ST"), a member of the Singapore
Technologies Pte Ltd ("STPL") group, acquired 100% of the outstanding common
stock of ETS. (ST is a wholly owned Delaware subsidiary of Stetsys Pte Ltd,
which is a wholly owned subsidiary of STPL. STPL is an indirect wholly owned
subsidiary of Temasek Holdings (Private) Limited, which is in turn wholly owned
by the Minister for Finance (Incorporated) of Singapore). Messrs. Lim Ming
Seong, Lee Yip Loi, Chan Wee Piak and Robert A. Grimes are all both Directors of
the Company and officers of other corporations in the STPL group. On October 22,
1996, Radyne Florida was merged into ETS and the shares of the Company that had
been owned by Radyne Florida were received by ETS and subsequently distributed
by ETS to ST.
 
    On August 12, 1996, Singapore Technologies Electronics Pte Ltd ("STE"),
another member of the STPL group, made an unsecured loan of $4,500,000 to the
Company, the proceeds from which were used to pay down the loan payable to ETS.
This loan, which bore interest at 8%, was repaid on February 10, 1997 from the
proceeds of loans provided by Citibank NA and ST. Between November 8 and
December 18, 1996, ST made loans to the Company in the aggregate principal
amount of $2,100,000, with interest at 8% per annum and maturing in March, 1997.
At or about maturity, the accrued interest on these loans was paid by the
Company and the principal amounts were repaid with the proceeds of new loans
maturing on April 30, 1997. As a result, there are the following outstanding
loans by ST to the Company, totaling $4,100,000, which are planned to be repaid
with proceeds of the Rights Offering:
 
<TABLE>
<CAPTION>
LOAN DATE      PRINCIPAL       INTEREST RATE      MATURITY
------------  ------------  -------------------  -----------
<S>           <C>           <C>                  <C>
02/10/97...   $  2,000,000           6.625%        04/30/97
03/02/97...   $    400,000           6.625%        04/30/97
03/31/97...   $  1,700,000           6.625%        04/30/97
</TABLE>
 
    The purpose of these advances by STE and ST was to provide Radyne with
working capital pending the arrangement of suitable commercial credit lines and
completion of the Rights Offering. A $2,000,000 line of credit from Bank of
America NT & SA, which had been guaranteed by STPL, has recently been expanded
to $5,000,000 (of which $3,000,000 had been drawn down as of March 24, 1997);
the guarantee has been replaced by a nonbinding letter of awareness from STPL.
The Company also has a $5,500,000 line of credit from Citibank NA (of which
$3,800,000 had been drawn down as of April 9, 1997) with respect to which STPL
has issued a nonbinding letter of awareness.


                                       21

<PAGE>

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
    a) The following is an index of financial statementsa of Radyne Corp.,
financial stetement schedules and exhibits included in Part IV, Item 14:
 
FINANCIAL STATEMENTS
 
<TABLE>
<S>                                                                         <C>
Report of Independent Auditors...........................................   F-1
Balance Sheets as at December 31, 1996 and June 30,1996..................   F-2
Statements of Operations for the Six Month Period Ended December 31, 
  1996, the Year Ended June 30, 1996, the Six and One-Half Month Period 
  Ended June 30, 1995 and the Ten and One-Half Month Period Ended 
  December 16,1994.......................................................   F-3
Statements of Stockholders' Capital Deficiency for the Six Month Period
  Ended December 31, 1996, the Year Ended June 30, 1996 and the Six and 
  One-Half Month Period Ended June 30, 1995 and the Ten and One-Half 
  Month Period Ended December 16, 1994...................................   F-4
Statements of Cash Flows for the Six Month Period Ended December 31, 1996,
  the Year Ended June 30, 1996 and the Six and One-Half Month Period Ended 
  June 30, 1995 and the Ten and One-Half Month Period Ended
  December 16, 1994......................................................   F-5
Notes to Financial Statements............................................   F-6
</TABLE>
 
FINANCIAL SCHEDULES
 
    None
 
<TABLE>
<C>      <S>
 3.1*    Restated Certificate of Incorporation
 3.2*    Bylaws, as amended and restated
10.1**   1996 Incentive Stock Option Plan
10.2     Employment Agreement with Robert C. Fitting (Radyne Termsheet)
10.3     Agreement with Merit Microwave, Inc. and Peter A. Weisskopf
</TABLE>
 
    (b) Registrant filed a current report on Form 8-K, dated December 27, 1996,
regarding Item 1, Change in Control of Registrant. 

*  Incorporated by reference from Registrant's report on Form 10-Q, filed 
   March 11, 1997. 

** Incorporated by reference from Registrant's Registration Statement on Form
   S-8, dated and declared effective on March 12, 1997.

                                      22

<PAGE>

                       INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Radyne Corp.
Phoenix, Arizona

    We have audited the accompanying balance sheets of Radyne Corp. (the
"Company" or "Radyne") as of December 31, 1996 and June 30, 1996, and the
related statements of operations, stockholders' capital deficiency and cash
flows for the six month period ended December 31, 1996, the year ended June 30,
1996, the six and one-half month period ended June 30, 1995 and the ten and
one-half month period ended December 16, 1994 (Predecessor Company). These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

    We conducted our audits in accordance with generally accepted auditing
standards. 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 discussed in Notes 1, 2 and 3 to the accompanying financial statements,
on December 16, 1994, the United States Bankruptcy Court for the Eastern
District of New York entered an order confirming the plan of reorganization
which became effective at the close of business on December 16, 1994.
Accordingly, the accompanying financial statements for the six and one-half
month period ended June 30, 1995, are the initial financial statements of the
post-bankruptcy Company, and have been prepared in conformity with AICPA
Statement of Position 90-7, FINANCIAL REPORTING FOR ENTITIES IN REORGANIZATION
UNDER THE BANKRUPTCY CODE.
 
    In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1996 and June
30, 1996, and the results of its operations and its cash flows for the six month
period ended December 31, 1996, the year ended June 30, 1996, the six and one-
half month period ended June 30, 1995 and the ten and one-half month period
ended December 16, 1994 (Predecessor Company) in conformity with generally
accepted accounting principles.



DELOITTE & TOUCHE LLP
Phoenix, Arizona
February 7, 1997, except as to certain information in Note 7, the date of which
is March 2, 1997.


                                      F-1


<PAGE>

                                  RADYNE CORP.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,      JUNE 30,
                                                                      1996            1996
                                                                 ---------------  ------------
<S>                                                              <C>              <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................................   $     186,488   $        971
Accounts receivable--trade, net of allowance for doubtful
  accounts of $13,000..........................................       2,733,902        283,871
Inventories (Note 4)...........................................       1,991,360      1,150,669
Prepaid expenses...............................................          19,280         20,426
Deferred offering costs........................................          75,018
                                                                 ---------------  ------------
Total current assets...........................................       5,006,048      1,455,937
                                                                 ---------------  ------------
PROPERTY AND EQUIPMENT--Net (Notes 5 and9).....................         849,564        571,927
                                                                 ---------------  ------------
OTHER ASSETS:
Designs and drawings--net of accumulated amortization of
  $475,696 (December 31) and $361,529 (June 30)................         701,643      1,236,810
Deposits.......................................................          15,662          8,012
                                                                 ---------------  ------------
Total other assets.............................................         717,305      1,244,822
                                                                 ---------------  ------------
TOTAL..........................................................   $   6,572,917   $  3,272,686
                                                                 ---------------  ------------
                                                                 ---------------  ------------
LIABILITIES AND STOCKHOLDERS' CAPITAL DEFICIENCY
CURRENT LIABILITIES:
Note payable under line of credit (Note 8).....................   $   1,993,820
Notes payable to affiliates (Note 7)...........................       6,600,000   $  4,594,696
Obligations under capital leases (Note 9)......................          53,042         26,820
Accounts payable--trade........................................         805,279        465,431
Accounts payable--affiliate....................................         436,362
Accrued expenses (Note 6)......................................         926,956        400,966
Taxes payable (Note 2).........................................          42,116         51,011
                                                                 ---------------  ------------
Total current liabilities......................................      10,857,575      5,538,924
OBLIGATIONS UNDER CAPITAL LEASES (Note 9)......................          81,016         34,304
TAXES PAYABLE (Note 2).........................................          80,952         96,110
                                                                 ---------------  ------------
Total liabilities..............................................      11,019,543      5,669,338
                                                                 ---------------  ------------
COMMITMENTS AND CONTINGENT LIABILITIES (Notes 8, 9, 10 and 13)
STOCKHOLDERS' CAPITAL DEFICIENCY (Notes 2, 3 and 14):
  Common stock, $.002 par value-- authorized, 20,000,000 shares;
  issued and outstanding, 3,759,721 shares (December 31) and
  3,749,721 shares (June 30)...................................           7,519          7,499
  Additional paid-in capital...................................         605,782        585,802
Accumulated deficit............................................      (5,059,927)    (2,989,953)
                                                                 ---------------  ------------
Total stockholders' capital deficiency.........................      (4,446,626)    (2,396,652)
                                                                 ---------------  ------------
TOTAL..........................................................   $   6,572,917   $  3,272,686
                                                                 ---------------  ------------
                                                                 ---------------  ------------
</TABLE>

                   See notes to financial statements.

                                      F-2

<PAGE>

                                  RADYNE CORP.
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                 SUCCESSOR COMPANY                           PREDECESSOR COMPANY
                        ------------------------------------  --------------------------------------------------
<S>                     <C>                    <C>            <C>                       <C>
                          SIX MONTH PERIOD                        SIX AND ONE-HALF          TEN AND ONE-HALF
                           ENDED DECEMBER       YEAR ENDED       MONTH PERIOD ENDED        MONTH PERIOD ENDED
                              31, 1996         JUNE 30,1996        JUNE 30, 1995           DECEMBER 16, 1994
                        ---------------------  -------------  ------------------------  ------------------------
NET SALES (Notes 7 and
  12).................      $   4,905,059       $ 3,829,523         $  1,861,262              $  2,569,396
COST OF SALES (Note
  7)..................          4,052,433         2,559,350            1,228,747                 2,229,329
                              -----------      -------------         -----------               -----------
Gross profit..........            852,626         1,270,173              632,515                   340,067
                              -----------      -------------         -----------               -----------
OPERATING EXPENSES:
Selling, general and
  administrative (Note
  7)..................          1,437,971         1,843,576              961,162                 1,658,388
Asset impairment
  charge (Note 1).....            421,000
Professional fees
  related to
  reorganization......                                                                             600,198
Research and
  development.........            808,025         1,794,823
                              -----------      -------------         -----------               -----------
TOTAL OPERATING
  EXPENSES............          2,666,996         3,638,399              961,162                 2,258,586
                              -----------      -------------         -----------               -----------
LOSS FROM OPERATIONS
  BEFORE FRESH START
  ADJUSTMENTS,
  INTEREST EXPENSE AND
  EXTRAORDINARY
  ITEMS...............         (1,814,370)       (2,368,226)            (328,647)               (1,918,519)
FRESH START
  ADJUSTMENTS (Note
  3)..................                                                                           1,598,841
INTEREST
  EXPENSE--Net........            255,604           256,871               36,209                   118,235
LOSS BEFORE
  EXTRAORDINARY
  ITEMS...............         (2,069,974)       (2,625,097)            (364,856)                 (437,913)
EXTRAORDINARY ITEMS
  (Note 2):
Gain on exchange of
  debt for common
  stock...............                                                                           1,062,667
Gain on debt
  forgiveness.........                                                                           1,636,489
                              -----------      -------------         -----------               -----------
TOTAL EXTRAORDINARY
  ITEMS...............                                                                           2,699,156
                              -----------      -------------         -----------               -----------
NET (LOSS) INCOME
  BEFORE INCOME
  TAXES...............         (2,069,974)       (2,625,097)            (364,856)                2,261,243
                              -----------      -------------         -----------               -----------
INCOME TAXES (Note 11)
NET (LOSS) INCOME.....      $  (2,069,974)      $(2,625,097)        $   (364,856)             $  2,261,243
                              -----------      -------------         -----------               -----------
                              -----------      -------------         -----------               -----------
PER COMMON SHARE DATA
  (Note 1):
Loss before extra
  ordinary items......      $        (.55)      $      (.70)        $       (.10)             $      (1.33)
                              -----------      -------------         -----------               -----------
Extraordinary items...                                                                                8.20
                              -----------      -------------         -----------               -----------
NET (LOSS) INCOME PER
  COMMON SHARE........      $        (.55)      $      (.70)        $       (.10)             $       6.87
                              -----------      -------------         -----------               -----------
WEIGHTED AVERAGE
  NUMBER OF COMMON AND
  COMMON EQUIVALENT
  SHARES OUTSTANDING..          3,750,699         3,742,227            3,729,721                   329,020
                              -----------      -------------         -----------               -----------
                              -----------      -------------         -----------               -----------
</TABLE>
 
                     See notes to financial statements.


                                      F-3

<PAGE>

 
                                  RADYNE CORP.
 
                 STATEMENTS OF STOCKHOLDERS' CAPITAL DEFICIENCY
                   SIX MONTH PERIOD ENDED DECEMBER 31, 1996,
                YEAR ENDED JUNE 30, 1996, SIX AND ONE-HALF MONTH
             PERIOD ENDED JUNE 30, 1995 AND TEN AND ONE-HALF MONTH
                         PERIOD ENDED DECEMBER 16, 1994
 
<TABLE>
<CAPTION>
                                                                       ADDITIONAL
                                                  COMMON STOCK           PAID-IN
                                             -----------------------     CAPITAL
                                               SHARES      AMOUNT       (DEFICIT)       DEFICIT         TOTAL
                                             ----------  -----------  -------------  -------------  -------------
<S>                                          <C>         <C>          <C>            <C>            <C>
BALANCE, JANUARY 31, 1994
(Predecessor Company)......................     319,034   $     638    $ 7,227,539   $  (9,486,119) $  (2,257,942)
Shares issued pursuant to plan of
  reorganization (Note 2)..................   3,410,687       6,821        543,179         550,000
Loss before extraordinary items............                                               (437,913)      (437,913)
Exchange of debt for common stock (Note
  2).......................................                                              1,062,667      1,062,667
Gain on debt forgiveness (Note 2)..........                                              1,636,489      1,636,489
Elimination of Predecessor Company interest
  and deficit (Note 2).....................                             (7,224,876)      7,224,876
                                             ----------  -----------  -------------  -------------  -------------
BALANCE, DECEMBER 16, 1994.................   3,729,721       7,459        545,842         553,301
Net loss...................................                                               (364,856)      (364,856)
                                             ----------  -----------  -------------  -------------  -------------
BALANCE, JUNE 30, 1995.....................   3,729,721       7,459        545,842        (364,856)       188,445
Shares issued to Merit Microwave (Note
  7).......................................      20,000          40         39,960          40,000
Net loss...................................                                             (2,625,097)    (2,625,097)
                                             ----------  -----------  -------------  -------------  -------------
BALANCE, JUNE 30, 1996.....................   3,749,721       7,499        585,802      (2,989,953)    (2,396,652)
  Additional shares issued to Merit 
  Microwave (Note 7).......................      10,000          20         19,980          20,000
Net loss...................................                                             (2,069,974)    (2,069,974)
                                             ----------  -----------  -------------  -------------  -------------
BALANCE, DECEMBER 31, 1996.................   3,759,721   $   7,519    $   605,782   $  (5,059,927) $  (4,446,626)
                                             ----------  -----------  -------------  -------------  -------------
                                             ----------  -----------  -------------  -------------  -------------
</TABLE>

                       See notes to financial statements.

                                      F-4

<PAGE>

                                  RADYNE CORP.
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                                   PREDECESSOR
                                                  SUCCESSOR COMPANY               SIX AND            COMPANY
                                           --------------------------------      ONE-HALF            TEN AND
                                              SIX MONTH                        MONTH PERIOD         ONE-HALF
                                             PERIOD ENDED      YEAR ENDED          ENDED          MONTH PERIOD
                                             DECEMBER 31,       JUNE 30,         JUNE 30,         DECEMBER 16,
                                                 1996             1996             1995               1994
                                           ----------------  --------------  -----------------  -----------------
<S>                                        <C>               <C>             <C>                <C>
OPERATING ACTIVITIES:
Net (loss) income........................   $   (2,069,974)   $ (2,625,097)    $    (364,856)     $   2,261,243
Adjustments to reconcile net (loss)
  income to net cash used in operating
  activities:
Depreciation and amortization............          177,535         276,913           147,523             25,850
Asset impairment charge..................          421,000
Reorganization items:
Fresh start adjustments..................       (1,598,841)
Gain on exchange of debt for common
  stock..................................       (1,062,667)
Gain on debt forgiveness.................       (1,636,489)
Changes in operating assets and
  liabilities:
Accounts receivable......................       (2,450,031)        251,806          (202,687)           133,929
Bankruptcy claims escrow.................          106,613        (106,613)
Prepaids and other current assets........          (73,872)         73,581            99,534             (9,586)
Employee relocation incentives and
  advances...............................          112,353        (109,353)            4,890
Inventories..............................         (840,691)       (247,843)         (353,686)           (80,910)
Deposits.................................           (7,650)       (191,796)
Accounts payable--trade..................          339,848        (113,243)          284,495            557,817
Accounts payable--affiliate..............          436,362
Accrued expenses.........................          545,990        (253,337)         (348,004)           599,990
Taxes payable............................          (24,053)        (56,063)           (6,093)           213,143
                                           ----------------  --------------  -----------------  -----------------
Net cash used in operating activities....       (3,545,536)     (2,580,930)         (938,310)          (698,244)
                                           ----------------  --------------  -----------------  -----------------
INVESTING ACTIVITIES--Capital
  expenditures...........................         (255,118)       (388,770)         (119,042)
                                           ----------------  --------------  -----------------  -----------------
FINANCING ACTIVITIES:
Borrowings from note payable under line
  of credit..............................        1,993,820
Proceeds from notes payable to
  affiliates.............................        6,600,000       3,052,912           853,206            870,175
Payments on note payable to affiliate....       (4,594,696)
Principal payments on capital lease
  obligations............................          (12,953)        (84,350)          (50,143)
                                           ----------------  --------------  -----------------  -----------------
Net cash provided by financing
  activities.............................        3,986,171       2,968,562           803,063            870,175
                                           ----------------  --------------  -----------------  -----------------
NET INCREASE (DECREASE) IN CASH..........          185,517          (1,138)         (254,289)           171,931
CASH AND CASH EQUIVALENTS, BEGINNING OF
  PERIOD.................................              971           2,109           256,398             84,467
                                           ----------------  --------------  -----------------  -----------------
CASH AND CASH EQUIVALENTS, END OF
  PERIOD.................................   $      186,488    $        971     $       2,109      $     256,398
                                           ----------------  --------------  -----------------  -----------------
                                           ----------------  --------------  -----------------  -----------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION--Cash paid for interest....   $       72,258    $      3,996     $       7,059      $    --
                                           ----------------  --------------  -----------------  -----------------
                                           ----------------  --------------  -----------------  -----------------
</TABLE>
 
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
 
    The Company incurred capital lease obligations of $85,887 for new machinery
and equipment for the six month period ended December 31, 1996 In December 1996,
the Company issued an additional 10,000 shares of common stock in conjunction
with the asset purchase from Merit Microwave, Inc. (Note 7)
 
                      See notes to financial statements.

                                      F-5


<PAGE>

                               RADYNE CORP.
                      NOTES TO FINANCIAL STATEMENTS
                SIX MONTH PERIOD ENDED DECEMBER 31, 1996,
             YEAR ENDED JUNE 30, 1996, SIX AND ONE-HALF MONTH
           PERIOD ENDED JUNE 30, 1995 AND TEN AND ONE-HALF MONTH
                     PERIOD ENDED DECEMBER 16, 1994

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    DESCRIPTION OF BUSINESS--Radyne Corp. (the "Company" or "Radyne") is 
located in Phoenix, Arizona and designs, manufactures, and sells products, 
systems, and software used for the transmission and reception of data over 
satellite and cable communication networks. A wholly-owned subsidiary, 
Satellite Digital Systems Corp. ("SDSC"), which was inactive and had no 
material assets and liabilities, filed a petition for liquidation under 
Chapter 7 of the United States Bankruptcy Code with the United States 
Bankruptcy Court for the Eastern District of New York on May 17, 1995. This 
did not have any significant impact on the financial position or results of 
operations of the Company since SDSC had terminated all operations. SDSC 
received its Final Decree of Bankruptcy on August 5, 1995, which effectively 
dissolved SDSC.

    Upon emergence from bankruptcy proceedings on December 16, 1994, (Note 2) 
the Company became a majority-owned subsidiary of Radyne, Inc., which was a 
wholly-owned subsidiary of Engineering and Technical Services, Inc. ("ETS"). 
On August 12, 1996, Singapore Technologies Pte Ltd ("STPL") acquired 100% of 
the outstanding common stock of ETS through its indirect wholly-owned 
subsidiary, Stetsys US, Inc. ("ST"). The purchase price for the ETS stock was 
$5,756,425. Subsequent to the acquisition of ETS by ST, Radyne, Inc. was 
merged into ETS which in turn distributed all of its Radyne shares to ST. ETS 
did not push down any related purchase accounting adjustments since its 
ownership in the Company was less than 95%. As a result, the accompanying 
financial statements continue to reflect the historical accounts of the 
Company. The Company changed its fiscal year-end to December 31 to conform to 
the year-end of ST.

    Change in Fiscal Year-Effective August 12, 1996, the Company changed its 
fiscal year-end from June 30 to December 31 to conform to the year-end of ST. 
Summarized unaudited financial information for the six months ended December 
31, 1995 is as follows:

Net sales....................................................... $2,397,235
Gross profit....................................................    921,951
Net loss before income taxes....................................   (583,887)
Income taxes....................................................        -0-
Net loss........................................................   (583,887)
Net loss per common share.......................................       (.16)

    RIGHTS OFFERING--In November 1996, the Board of Directors approved the 
distribution to stock-holders (other than ST), subject to the approval of the 
1-for-5 reverse stock split of common shares which was effective on January 
9, 1997, of subscription rights to purchase up to 215,833 shares of the 
Company's common stock at a price of $2.50 per share. The Board of Directors 
further approved the distribution of subscription rights to an affiliate of 
ST to purchase up to 2,040,000 shares of the Company's common stock at a 
price of $2.50 per share. The subscription rights are proposed to expire May 
15, 1997. At December 31, 1996, the Company has recorded $75,018 of deferred 
offering costs relating to the registration of these rights. All per share 
information in these financial statements has been adjusted to give effect to 
the 1-for-5 reverse split of common shares.

    CASH EQUIVALENTS--The Company considers all money market accounts with a 
maturity of 90 days or less to be cash equivalents.

    REVENUE RECOGNITION--The Company recognizes revenue upon shipment of 
product.

    INVENTORIES, consisting of satellite modems and related products, are 
valued at the lower of cost (first-in, first-out) or market, including 
material, direct labor, and overhead costs.

    PROPERTY AND EQUIPMENT is stated at cost.  Expenditures for repairs and 
maintenance are charged to operations as incurred, and improvements which 
extend the useful lives of the assets are capitalized. Depreciation and 
amortization of machinery and equipment are computed using the straight-line 
method over an estimated useful life of five to seven years.

                                     F-6

<PAGE>
                               RADYNE CORP.
                      NOTES TO FINANCIAL STATEMENTS
                SIX MONTH PERIOD ENDED DECEMBER 31, 1996,
             YEAR ENDED JUNE 30, 1996, SIX AND ONE-HALF MONTH
           PERIOD ENDED JUNE 30, 1995 AND TEN AND ONE-HALF MONTH
                     PERIOD ENDED DECEMBER 16, 1994 (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    DESIGNS AND DRAWINGS--The valuation of designs and drawings is the result 
of adjustments made by the Company to adopt Fresh Start reporting in 
accordance with AICPA Statement of Position ("SOP") 90-7, FINANCIAL REPORTING 
BY ENTITIES IN REORGANIZATION UNDER THE BANKRUPTCY CODE, and represents the 
excess reorganization value that has been applied to the acquired technology 
supporting the Company's products (Note 3). Amortization of designs and 
drawings is computed using the straight-line method over an estimated useful 
life of four to seven years.

    At December 31, 1996, the Company recognized a design and drawing 
impairment charge of $421,000, with no associated tax benefit. With the 
introduction of new products in October 1996, management determined that a 
portion of the technology related to the original designs and drawings would 
be phased out or modified with technology used in new products. Impairment 
was determined by comparing the amount of undiscounted projected future cash 
flows attributable to each product using the related technology to the 
carrying value of the asset. Projected future cash flows were estimated for a 
period approximating the estimated remaining lives of the long lived assets, 
based on products' earnings history, market conditions and assumptions 
reflected in internal operating plans and strategies.

    RESEARCH AND DEVELOPMENT--The cost of research and development is charged 
to expense as incurred.

    INCOME TAXES--Radyne files a consolidated federal income tax return with 
ETS and ST. Income taxes have been computed as if the Company filed separate 
income tax returns for each year.

    The Company accounts for income taxes under the asset and liability 
method. Deferred tax assets and liabilities are recognized for the future 
consequences attributed to differences between the consolidated financial 
statement carrying amounts of existing assets and liabilities and their 
respective tax bases. Differences between income for financial and tax 
reporting purposes arise primarily from amortization of certain designs and 
drawings and accruals for warranty reserves and compensated absences. 
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.

    CONCENTRATION OF CREDIT RISK--The Company maintains ongoing credit 
evaluations of its customers and generally does not require collateral. The 
Company provides reserves for potential credit losses and such losses have 
not exceeded management's expectations.

    NET INCOME (LOSS) PER COMMON SHARE is computed by dividing net income 
(loss) by the weighted average number of shares of common stock outstanding 
during each of the periods presented. Such amounts have been adjusted to 
reflect the 1-for-5 reverse stock split that occurred on January 9, 1997.

     FAIR VALUE OF FINANCIAL INSTRUMENTS--The fair value of accounts 
receivable, accounts payable, and accrued expenses approximates the carrying 
value due to the short-term nature of these instruments. Management has 
estimated that the fair values of the loan payable to affiliates, the demand 
obligation, capital lease obligations, and taxes payable approximate the 
current balances outstanding, based on currently available rates for debt 
with similar terms.
                                     F-7


<PAGE>
                               RADYNE CORP.
                      NOTES TO FINANCIAL STATEMENTS
                SIX MONTH PERIOD ENDED DECEMBER 31, 1996,
             YEAR ENDED JUNE 30, 1996, SIX AND ONE-HALF MONTH
           PERIOD ENDED JUNE 30, 1995 AND TEN AND ONE-HALF MONTH
                     PERIOD ENDED DECEMBER 16, 1994 (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    USE OF ESTIMATES--The preparation of financial statements in conformity 
with generally accepted accounting principles requires management to make 
estimates and assumptions that affect the reported amounts of assets and 
liabilities and disclosure of contingent assets and liabilities as of the 
financial statement date and the reported amounts of revenues and expenses 
during the reporting period. Actual results could differ from those estimates.

2. REORGANIZATION

    On April 28, 1994, Radyne Corp. (the "Predecessor Company") filed a 
petition for relief under Chapter 11 of the federal bankruptcy laws in the 
United States Bankruptcy Court for the Eastern District of New York. Under 
Chapter 11, certain claims against the Predecessor Company in existence prior 
to the filing were stayed while the Predecessor Company continued business 
operations as debtor-in-possession. Claims secured against the Predecessor 
Company's assets were also stayed, although the holders of such claims had 
the right to move the Court for relief from the stay prior to the plan being 
confirmed. Secured claims were secured primarily by liens on all of the 
Predecessor Company's assets.

    The Predecessor Company received approval from the Bankruptcy Court to 
pay certain of its prepetition obligations, employee wages and benefits. Tax 
claims were rescheduled for payment in equal quarterly installments of 
$9,600, with interest at 7% through September 2000.

    On December 16, 1994, the Bankruptcy Court confirmed the Predecessor 
Company's Plan of Reorganization effective at the close of business on 
December 16, 1994 (Note 3).

3. FRESH START REPORTING

    Under the provision of SOP 90-7, the Successor Company was required to 
adopt Fresh Start reporting as of the close of business on December 16, 1994, 
because the reorganization value of the Predecessor Company was less than the 
total of all post-petition liabilities and prepetition allowed claims, and 
the preconfirmation stockholders retained less than 50% of the Successor 
Company's common stock. Accordingly, the financial statements for the six and 
one-half month period ended June 30, 1995 are the initial financial 
statements of Radyne Corp., the Successor Company.

                                        F-8

<PAGE>
                               RADYNE CORP.
                      NOTES TO FINANCIAL STATEMENTS
                SIX MONTH PERIOD ENDED DECEMBER 31, 1996,
             YEAR ENDED JUNE 30, 1996, SIX AND ONE-HALF MONTH
           PERIOD ENDED JUNE 30, 1995 AND TEN AND ONE-HALF MONTH
                     PERIOD ENDED DECEMBER 16, 1994 (CONTINUED)

4. INVENTORIES

INVENTORIES CONSIST OF THE FOLLOWING:

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,      JUNE 30,
                                                                      1996            1996
                                                                 ---------------  ------------
<S>                                                              <C>              <C>
Raw materials and components...................................   $   1,108,019   $    626,525
Work-in-process................................................         792,119        307,391
Finished goods.................................................         577,222        293,660
Valuation allowance............................................        (486,000)       (76,907)
                                                                 ---------------  ------------
Total..........................................................   $   1,991,360   $  1,150,669
                                                                 ---------------  ------------
                                                                 ---------------  ------------
</TABLE>

5. PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT CONSIST OF THE FOLLOWING:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,     JUNE 30,
                                                                       1996           1996
                                                                  ---------------  ----------
<S>                                                               <C>              <C>
Machinery and equipment.........................................    $   731,778    $  434,050
Furniture and fixtures..........................................        243,559       200,282
                                                                  ---------------  ----------
Total...........................................................        975,337       634,332
Less accumulated depreciation...................................        125,773        62,405
                                                                  ---------------  ----------
Property and equipment--net.....................................    $   849,564    $  571,927
                                                                  ---------------  ----------
                                                                  ---------------  ----------
</TABLE>

6. ACCRUED EXPENSES

ACCRUED EXPENSES CONSIST OF THE FOLLOWING:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,     JUNE 30,
                                                                       1996           1996
                                                                  ---------------  ----------
<S>                                                               <C>              <C>
Wages and related payroll taxes.................................    $   356,624    $  173,820
Interest........................................................        194,492        11,146
Professional fees...............................................        171,000        77,125
Warranty reserve................................................        139,775       109,775
Other...........................................................         65,065        29,100
                                                                  ---------------  ----------
Total accrued expenses..........................................    $   926,956    $  400,966
                                                                  ---------------  ----------
                                                                  ---------------  ----------
</TABLE>

                                        F-9
<PAGE>
                               RADYNE CORP.
                      NOTES TO FINANCIAL STATEMENTS
                SIX MONTH PERIOD ENDED DECEMBER 31, 1996,
             YEAR ENDED JUNE 30, 1996, SIX AND ONE-HALF MONTH
           PERIOD ENDED JUNE 30, 1995 AND TEN AND ONE-HALF MONTH
                     PERIOD ENDED DECEMBER 16, 1994 (CONTINUED)

7. RELATED PARTY TRANSACTIONS

    In June 1995, the Company acquired certain assets of Merit Microwave, 
Inc., as well as the manufacturing rights to the Merit line of microwave 
products, which include translators and frequency converters. The purchase 
price of approximately $120,000 was allocated to inventory and machinery and 
equipment, and was paid by the issuance of 30,000 shares of the Company's 
stock ($40,000), cash of $60,000, and the assumption of a payable of $20,000. 
Under the terms of the agreement, the principal stockholder and chief 
operating officer of Merit entered into a one-year agreement with the Company 
to serve as president of the newly created Radyne Microwave Products Division 
for annual compensation of $75,000. In addition, the Company is required to 
pay royalties to Merit of 5-10% on certain sales of microwave products. From 
June 1995 to December 31, 1996, the Company paid royalties of $4,600.

    In July 1995, the Company's manufacturing operations were moved to ETS 
pending the Company's relocation to Phoenix. As a result, the Company 
transferred $726,345 of inventory and $115,155 of machinery and equipment to 
ETS in exchange for an equal reduction in the loan payable to ETS, to 
facilitate the commencement of subcontract manufacturing by ETS. During 
September 1996, in recognition of the completion of the move to Phoenix and 
increase in staffing, the Board of Directors determined that the Company 
should resume direct manufacturing. To this end, the Company repurchased 
$22,100 of machinery and equipment from ETS and was obligated to purchase 
$348,000 of inventory from ETS, which ETS had acquired and or processed in 
the ordinary course of fulfilling purchase orders from the Company. However, 
as the Company's products were undergoing constant improvement, in September 
1996, the Company considered it necessary to treat $70,000 of such inventory 
as obsolete and another $20,000 thereof as slow-moving. Ongoing product 
development rendered another $90,000 of this inventory obsolete shortly 
thereafter. Additional inventory of $457,000 and $2,461,500 was purchased 
from ETS during the six month period ended December 31, 1996 and the year 
ended June 30, 1996, respectively. Sales to ETS for the six month period 
ended December 31, 1996, the year ended June 30, 1996, the six and one-half 
month period ended June 30, 1995 and the ten and one-half month period ended 
December 16, 1994 were $307,300, $311,600, $159,700 and $421,100, 
respectively.

    The Company has an informal marketing arrangement with Agilis 
Communication Technologies Pte Ltd, an affiliate of ST, whereby Agilis acts 
as a sales agent for Radyne products in a number of Asian countries. Sales 
generated as a result of this agreement amounted to $375,000 and $118,900 for 
the six month period ended December 31, 1996 and the year ended June 30, 
1996, respectively.

    ETS provided management services to Radyne, for which ETS charged Radyne 
$60,000, $120,000 and $65,000 for the six month period ended December 31, 
1996, the year ended June 30, 1996 and the six and one-half month period 
ended June 30, 1995, respectively.

                                        F-10
<PAGE>
                               RADYNE CORP.
                      NOTES TO FINANCIAL STATEMENTS
                SIX MONTH PERIOD ENDED DECEMBER 31, 1996,
             YEAR ENDED JUNE 30, 1996, SIX AND ONE-HALF MONTH
           PERIOD ENDED JUNE 30, 1995 AND TEN AND ONE-HALF MONTH
                     PERIOD ENDED DECEMBER 16, 1994 (CONTINUED)

7. RELATED PARTY TRANSACTIONS (CONTINUED)

    At December 31, 1996, notes payable to ST and affiliates were as follows:

<TABLE>
<S>                                                               <C>
Note payable plus interest at 8% per annum, principal due
  February 10, 1997.............................................  $4,500,000
Note payable plus interest at 8% per annum, principal due March
  2, 1997.......................................................     400,000
Notes payable, interest at 8% per annum, principal due March 31,
  1997..........................................................   1,700,000
                                                                   ---------
Total...........................................................  $6,600,000
                                                                   ---------
                                                                   ---------
</TABLE>

    Interest expense on notes payable to affiliates was $205,900 and $248,400 
for the six month period ended December 31, 1996 and the year ended June 30, 
1996, respectively, of which $152,400 was included in accrued expenses in the 
accompanying balance sheet as of December 31, 1996.

    During August 1996, an ST affiliate made an unsecured loan of $4,500,000 
to the Company, the proceeds from which were used to pay down the note 
payable to ETS which was outstanding as of June 30, 1996. Subsequent to 
December 31, 1996, the Company repaid the $4,500,000 note payable with the 
proceeds from a $2,000,000 note payable to ST. The note bears interest at 
6.625% per annum with the principal due on April 30, 1997. The interest rate 
increases to 7.625% if the principal is not paid on the required due date. 
The remaining $2,500,000 was borrowed from the new $5,500,000 credit 
agreement as discussed in Note 8. In addition, the maturities on the $400,000 
and the $1,700,000 notes payable were extended to April 30, 1997. In 
connection with the extension of the maturity date, the interest rate was 
adjusted to 6.625% per annum. The interest rate on this note increases to 
7.625% if the principal is not paid on the required due date. The Company 
expects to repay the notes payable to ST with the proceeds from the Rights 
Offering (Note 1).

8. NOTES PAYABLE

    The Company has a note payable under a line of credit agreement with a 
bank that permits outstanding borrowings of $2,000,000 with interest payable 
at LIBOR (6.275%--6.4% at December 31, 1996). The line of credit agreement 
expires in April 1997. Subsequent to December 31, 1996, available borrowings 
on the line of credit were increased to $5,000,000.

    Subsequent to December 31, 1996, the Company entered into a new 
$5,500,000 credit agreement with a bank that includes $5,000,000 available 
under an uncommitted line of credit facility and facilities for bank 
guarantees and/or standby letters of credit up to $500,000. STPL has issued a 
nonbinding letter of awareness in connection with this credit agreement. 
Borrowings under the line of credit bear interest at a fluctuating rate equal 
to LIBOR or alternative Citibanks Quoted Rate plus 1% per annum. The credit 
agreement requires the Company to capitalize at least $4,100,000 of its notes 
payable to affiliates not later than March 31, 1997 and also requires that 
the Company maintains certain financial leverage ratios. The availability of 
additional borrowings under the credit agreement expires June 30, 1997.


                                        F-11
<PAGE>                                     
                               RADYNE CORP.
                      NOTES TO FINANCIAL STATEMENTS
                SIX MONTH PERIOD ENDED DECEMBER 31, 1996,
             YEAR ENDED JUNE 30, 1996, SIX AND ONE-HALF MONTH
           PERIOD ENDED JUNE 30, 1995 AND TEN AND ONE-HALF MONTH
                     PERIOD ENDED DECEMBER 16, 1994 (CONTINUED)

9. OBLIGATIONS UNDER CAPITAL LEASES

    The Company leases machinery and equipment under capital leases.  The net 
book value of the equipment, $146,958 at December 31, 1996 and $75,000 at 
June 30, 1996, is included in property and equipment in the accompanying 
balance sheets and is being depreciated over the estimated useful lives of 
the machinery and equipment.

    Payments on capital lease obligations at December 31 are due as follows:

1997......................................................  $  66,731
1998......................................................     62,638
1999......................................................     26,463
                                                            ---------
Total minimum lease payments..............................    155,832
Less amount representing interest.........................     21,774
                                                            ---------
Present value of minimum lease payments...................    134,058
Less current portion......................................     53,042
                                                            ---------
Capital lease obligations due after one year..............  $  81,016
                                                            ---------
                                                            ---------

10. COMMITMENTS

    Rent expense was $44,112, $95,000, $57,000 and $62,000 for the six month 
period ended December 31, 1996, the year ended June 30, 1996, the six and 
one-half month period ended June 30, 1995 and the ten and one-half month 
period ended December 16, 1994, respectively. Future minimum rentals under 
the ease at December 31 are as follows:

1997.....................................................  $  88,224
1998.....................................................     22,056
                                                           ---------
Total....................................................  $ 110,280
                                                           ---------
                                                           ---------

                                        F-12
<PAGE>
                               RADYNE CORP.
                      NOTES TO FINANCIAL STATEMENTS
                SIX MONTH PERIOD ENDED DECEMBER 31, 1996,
             YEAR ENDED JUNE 30, 1996, SIX AND ONE-HALF MONTH
           PERIOD ENDED JUNE 30, 1995 AND TEN AND ONE-HALF MONTH
                     PERIOD ENDED DECEMBER 16, 1994 (CONTINUED)

11. INCOME TAXES

    The following summary reconciles taxes (recovery) from operations at the 
federal statutory rate with the actual provision (recovery):

<TABLE>
<CAPTION>
                                                        SIX                     SIX AND       TEN AND
                                                       MONTH                   ONE-HALF      ONE-HALF
                                                       PERIOD       YEAR     MONTH PERIOD  MONTH PERIOD
                                                       ENDED        ENDED        ENDED         ENDED
                                                    DECEMBER 31,   JUNE 30,     JUNE 30,    DECEMBER 16,
                                                        1996         1996        1995          1994
                                                    ------------  ---------  ------------  -------------
<S>                                                 <C>             <C>          <C>        <C>
Income taxes (recovery) at statutory rate.........  $(704,000)   $(893,000)   $(124,000)      $ 768,800
Increase (decrease) in income taxes (recovery)
  resulting from:
  State income tax benefit........................    (75,000)     (95,000)
  Change in valuation allowance...................    775,000      988,000      117,600        (738,000)
  Other adjustments...............................      4,000           --        6,400         (30,800)
                                                    ---------    ---------    ---------       ---------
     Total........................................  $      --    $      --    $      --       $      --
                                                    ---------    ---------    ---------       ---------
                                                    ---------    ---------    ---------       ---------
</TABLE>

    Deferred tax assets consisted of the following at December 31, 1996 and 
June 30, 1996:

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,    JUNE 30,
                                                                        1996          1996
                                                                    ------------  ------------
<S>                                                                 <C>           <C>
Gross deferred tax assets:
  Cumulative tax effect of net operating loss carryforwards.......  $  3,930,000  $ 3,517,000
  Tax credits.....................................................       210,000      210,000
  Temporary differences...........................................       (30,000)    (365,000)
  Valuation allowance.............................................    (4,110,000)  (3,362,000)
                                                                    ------------  -----------
     Total........................................................  $         --  $        --
                                                                    ------------  -----------
                                                                    ------------  -----------
</TABLE>

    At December 31, 1996, the Company has net operating loss carryforwards of 
approximately $10,443,000 expiring in various years through 2012 and general 
business credit carryforwards of $210,000 expiring in various years through 
2004 for utilization against taxable income/taxes payable of future periods, 
if any. Approximately $6,200,000 of the Company's net operating loss and tax 
credit carryforwards are subject to an annual limitation under Internal 
Revenue Code Section 382, in future years, as a result of changes in 
ownership of the Company's stock. The annual limitation is generally equal to 
the value of the corporation's equity immediately prior to the change in 
ownership, times the federal long-term tax exempt rate published by the 
federal government. Management believes that the inability to utilize net 
operating loss and tax credit carryforwards to offset future taxable income 
within the carryforward periods under existing tax laws and regulations is 
more likely than not. Accordingly, a 100% valuation allowance has been 
recorded against the net deferred tax asset as of December 31, 1996 and June 
30, 1996.

                                        F-13
<PAGE>
                               RADYNE CORP.
                      NOTES TO FINANCIAL STATEMENTS
                SIX MONTH PERIOD ENDED DECEMBER 31, 1996,
             YEAR ENDED JUNE 30, 1996, SIX AND ONE-HALF MONTH
           PERIOD ENDED JUNE 30, 1995 AND TEN AND ONE-HALF MONTH
                     PERIOD ENDED DECEMBER 16, 1994 (CONTINUED)

12. SIGNIFICANT CUSTOMERS AND EXPORT SALES

SALES TO SIGNIFICANT CUSTOMERS AS A PERCENTAGE OF NET SALES ARE AS FOLLOWS:

<TABLE>
<CAPTION>

                                                        SIX                       SIX AND        TEN AND
                                                       MONTH                     ONE-HALF       ONE-HALF
                                                      PERIOD          YEAR      MONTH PERIOD   MONTH PERIOD
                                                       ENDED          ENDED        ENDED          ENDED
                                                    DECEMBER 31,     JUNE 30,     JUNE 30,     DECEMBER 16,
                                                       1996           1996         1995           1994
                                                    ------------    --------    -----------    ------------
<S>                                                    <C>          <C>         <C>            <C>
Customer A........................................      1.6%          6.4%         22.0%          5.8%
Customer B........................................      -0-           -0-          15.3%         12.2%
Customer C........................................      6.3%          8.1%         14.2%         16.4%
Customer D........................................     15.6%         12.7%         11.7%         14.0%
Customer E........................................     18.3%          -0-           -0-           -0-
</TABLE>

    No other customers represented greater than 10% of net sales during the 
six month period ended December 31, 1996, the year ended June 30, 1996, the 
six and one-half month period ended June 30, 1995 and the ten and one-half 
month period ended December 16, 1994.

    Export sales were 66%, 50%, 46% and 45% of net sales for the six month 
period ended December 31, 1996, the year ended June 30, 1996, the six and 
one-half month period ended June 30, 1995 and the ten and one-half month 
period ended December 16, 1994, respectively. Net sales to Asia and Latin 
America were 46% and 37%, respectively, of total export sales for the six 
month period ended December 31, 1996. Net sales to Asia and Europe were 46% 
and 38%, respectively, of total export sales for the year ended June 30, 1996.

                                        F-14
<PAGE>
                               RADYNE CORP.
                      NOTES TO FINANCIAL STATEMENTS
                SIX MONTH PERIOD ENDED DECEMBER 31, 1996,
             YEAR ENDED JUNE 30, 1996, SIX AND ONE-HALF MONTH
           PERIOD ENDED JUNE 30, 1995 AND TEN AND ONE-HALF MONTH
                     PERIOD ENDED DECEMBER 16, 1994 (CONTINUED)


13. EMPLOYEE BENEFIT PLAN

    The Company has a qualified contributory 401(k) plan that covers all
employees who have attained the age of 18 and are employed at the enrollment
date. Matching contributions were $8,576, $11,606 and $1,159 for the six month
period ended December 31, 1996, the year ended June 30, 1996 and the six and
one-half month period ended June 30, 1995, respectively. There was no matching
contribution for the ten and one-half month period ended December 16, 1994.
Each participant may elect to contribute up to 15% of his or her gross
compensation up to the maximum amount allowed by the Internal Revenue Service.
The Company matches up to 1% of the employee's salary.

14. STOCK OPTIONS

    In November 1996, the Board of Directors adopted the 1996 Incentive Stock
Option Plan (the "Plan"), which was approved by the stockholders on January 8,
1997. The Plan provides for the grant of options to employees of the Company
to purchase up to 1,282,042 shares of common stock. The option price per share
under the Plan may not be less than the fair market value of the stock (110%
of the fair market value for an optionee who is a 10% stockholder) on the day
the option is granted.

    At December 31, 1996, the Company had 964,395 options outstanding at an 
exercise price of $2.50 per share. 280,000 of these options are Rights 
Options granted to employees of the Company in conjunction with the Rights 
Offering and will be exercisable during the Rights Offering but no later than 
May 30, 1997. Another 16,000 options are exercisable at the rate of 25% on 
each of the first four anniversaries of the grant date and expire on the 
tenth anniversary of the grant date. The remaining 668,395 options have been 
allocated among a group of 30 key employees. These options carry the right to 
a cash bonus of $1.72 per purchased share, payable upon exercise. One third 
of these options will become exercisable, if and when the Company's earnings 
before interest and taxes (calculated without regard to any charge for 
compensation paid or payable under the Plan) for a period of four calendar 
quarters ("EBIT") exceeds $1,000,000. Another one-third of these options will 
become exercisable if and when EBIT exceeds $2,500,000 with the remaining 
one-third becoming exercisable if and when EBIT exceeds $6,000,000. The 
options become exercisable if EBIT exceeds the aforementioned prior to June 
30, 2001. All options which become exercisable expire in November 2006.

    The Company applies Accounting Principles Board ("APB") Opinion No. 25 
and related interpretations in accounting for its Plan. The 668,395 options 
are considered variable options, as defined by the provisions of APB No. 25 
and related interpretations. The Company should start recognizing 
compensation cost on variable arrangements when the future events become 
probable of occurring. The accrual of compensation cost under the variable 
arrangement has not commenced as it is unlikely that the award will be earned 
in the near future due to significant historical losses incurred by the 
Company. Accordingly, no compensation cost has been recognized for the fixed 
or variable portions of the Plan. Had compensation cost for the Plan been 
determined consistent with Statement of Financial Accounting Standards No. 
123, Accounting for Stock-Based Compensation, the Company's pro forma net 
loss and loss per common share would have been $2,115,074 and $.56, 
respectively. The fair value of options granted under the Plan was estimated 
on the date of grant with vesting periods ranging from two to four years 
using the Black-Scholes option-pricing model with the following weighted 
average assumptions used: no dividend yield, expected volatility of 132%, 
risk free interest rate of 6.035%, and expected lives of five years.


                                        F-15
<PAGE>

                                   SIGNATURES

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

                                RADYNE CORP. (REGISTRANT)

                                BY:   /s/    ROBERT C. FITTING
                                   ----------------------------------
                                   Robert C. Fitting, President
Dated: April 21, 1997

    Pursuant to the requirements of the Securities Exchange Act of 1934, this 
Report has been signed below by the following persons on behalf by the 
Registrant and in the capacities and on the dates indicated.

             NAME                          TITLE                    DATE
------------------------------  ---------------------------  ------------------

      /s/ LIM MING SEONG        Chairman of the
------------------------------    Board of Directors           April 21, 1997
        Lim Ming Seong

    /s/ ROBERT C. FITTING       President, Director
------------------------------                                 April 21, 1997
      Robert C. Fitting

      /s/ GARRY D. KLINE        Secretary, Controller
------------------------------    (Principal Financial         April 21, 1997
        Garry D. Kline            Officer)

     /s/ ROBERT A. GRIMES       Director
------------------------------                                 April 21, 1997
       Robert A. Grimes

       /s/ LEE YIP LOI          Director
------------------------------                                 April 21, 1997
         Lee Yip Loi

      /s/ CHAN WEE PIAK         Director
------------------------------                                 April 21, 1997
        Chan Wee Piak

                                       23