<PAGE>
                                       
                                UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION

                           Washington, DC 20549

                                 FORM 10-Q

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

For the quarterly period ended             JULY 31, 1998
                              -----------------------------------

Commission File Number                    0-27414
                       ------------------------------------------

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

               CALIFORNIA                                95-3814301
-------------------------------------------------------------------------------
      (State of other jurisdiction of                  I.R.S. Employer
       incorporation or organization)               Identification Number

     9404 CHESAPEAKE DRIVE  SAN DIEGO, CALIFORNIA           92123
-------------------------------------------------------------------------------
      (Address of principal executive offices)            (Zip Code)

                                 (619) 560-1301
-------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check 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 month (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 number of shares outstanding of each of the issuer's classes of common
stock, at the latest practicable date:

              Class                   Outstanding as of: JULY 31, 1998
           -----------                --------------------------------
         Common shares,
      $.01(cent)par value                        23,363,275


<PAGE>
<TABLE>

<CAPTION>

Index                                                                    Page No.
-----                                                                    --------
<S>                                                                      <C>
PART I  FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements:

             Condensed Consolidated Balance Sheets..........................   3
             Condensed Consolidated Statements of Income....................   4
             Condensed Consolidated Statement of Changes in
                Shareholder's Equity........................................   5
             Condensed Consolidated Statements of Cash Flows................   6
             Notes to Condensed Consolidated Financial Statements...........   7

Item 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations..............................   9

PART II OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders.................  13

Item 6. Exhibits and Reports on Form 8-K....................................  13

SIGNATURES..................................................................  14
</TABLE>


                                      - 2 -


<PAGE>




PART I - FINANCIAL INFORMATION

ITEM 1

                                   REMEC, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (unaudited)

<TABLE>
<CAPTION>

                                                         July 31, 1998          January 31, 1998
                                                         -------------          ----------------
<S>                                                      <C>                    <C>
ASSETS
Current assets:
Cash and cash equivalents                                  $80,466,162              $41,937,101
Accounts receivable, net                                    24,674,287               25,494,474
Inventories, net                                            32,652,819               30,380,941
Prepaid expenses and other current assets                    9,834,339                6,831,010
                                                          ------------             ------------
Total current assets                                       147,627,607              104,643,526

Property, plant and equipment, net                          40,309,269               31,988,934
Intangible and other assets, net                            16,632,639               17,232,241
                                                          ------------             ------------
                                                          $204,569,515             $153,864,701
                                                          ------------             ------------
                                                          ------------             ------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                                            $4,051,125               $8,531,756
Accrued expenses                                             8,972,870               11,616,242
                                                          ------------             ------------
Total current liabilities                                   13,023,995               20,147,998

Deferred income taxes and other long-term liabilities        4,912,307                5,222,169

Shareholders' equity                                       186,633,213              128,494,534
                                                          ------------             ------------
                                                          $204,569,515             $153,864,701
                                                          ------------             ------------
                                                          ------------             ------------
</TABLE>


See accompanying notes.

                                      - 3 -


<PAGE>


                                   REMEC, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (unaudited)

<TABLE>
<CAPTION>

                                                               Three months ended                       Six months ended
                                                       ---------------------------------      ---------------------------------
                                                       July 31, 1998      August 1, 1997      July 31, 1998      August 1, 1997
                                                       -------------      --------------      -------------      --------------
<S>                                                    <C>                <C>                 <C>                <C>
Net sales                                               $39,634,681          $39,427,649       $85,386,065           $73,289,357
Cost of sales                                            30,349,218           27,387,817        60,746,362            51,072,534
                                                        -----------          -----------       -----------           -----------
Gross profit                                              9,285,463           12,039,832        24,639,703            22,216,823

Operating expenses:

Selling, general and administrative                       7,730,597            6,189,215        14,990,752            11,567,235
Research and development                                  1,827,497            1,322,918         3,491,358             2,645,193
                                                        -----------          -----------       -----------           -----------
Total operating expenses                                  9,558,094            7,512,133        18,482,110            14,212,428
                                                        -----------          -----------       -----------           -----------
Income (loss) from operations                              (272,631)           4,527,699         6,157,593             8,004,395

Interest income                                             783,070              580,215         1,467,980             1,226,187
                                                        -----------          -----------       -----------           -----------
Income before provision (credit) for income taxes           510,439            5,107,914         7,625,573             9,230,582

Provision (credit) for income taxes                      (2,014,413)           1,681,715           692,587             3,372,785
                                                        -----------          -----------       -----------           -----------
Net income                                               $2,524,852           $3,426,199        $6,932,986            $5,857,797
                                                        -----------          -----------       -----------           -----------
                                                        -----------          -----------       -----------           -----------

Earnings per share:

Basic                                                         $0.11                $0.17             $0.30                 $0.28
                                                        -----------          -----------       -----------           -----------
                                                        -----------          -----------       -----------           -----------
Diluted                                                       $0.11                $0.16             $0.30                 $0.27
                                                        -----------          -----------       -----------           -----------
                                                        -----------          -----------       -----------           -----------

Shares used in computing earnings per share:

Basic                                                    23,261,000           20,733,000        22,900,000            20,666,000
                                                        -----------          -----------       -----------           -----------
                                                        -----------          -----------       -----------           -----------
Diluted                                                  23,605,000           21,490,000        23,457,000            21,312,000
                                                        -----------          -----------       -----------           -----------
                                                        -----------          -----------       -----------           -----------
</TABLE>

See accompanying notes.

                                     - 4 -


<PAGE>




                                   REMEC, INC.
       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (unaudited)

<TABLE>
<CAPTION>
                                                      Common stock
                                                -------------------------
                                                  Shares        Amount         Paid-in capital   Retained earnings      Total
                                                ----------    -----------      ---------------    ----------------    ------------
<S>                                             <C>           <C>              <C>                <C>                 <C>
Balance at January 31, 1998                     21,182,663      $211,828          $95,838,167         $32,444,539    $128,494,534
Issuance of common shares in stock offering      1,990,000        19,900           49,543,600                  --      49,563,500
Issuance of common shares upon exercise of
  stock options                                     67,635           676             373,439                   --         374,115
Issuance of common shares under employee
  stock purchase plan                              122,977         1,229           1,266,849                    --      1,268,078
Net income                                              --            --                  --             6,932,986      6,932,986
                                              ------------     ---------        ------------            ----------   ------------
Balance at July 31, 1998                        23,363,275      $233,633         147,022,055            39,377,525   $186,633,213
                                              ------------     ---------        ------------            ----------   ------------
                                              ------------     ---------        ------------            ----------   ------------

</TABLE>



See accompanying notes.

                                      - 5 -


<PAGE>





                                   REMEC, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                  Six months ended
                                                                         ----------------------------------
                                                                          July 31, 1998      August 1, 1997
                                                                          -------------      --------------
<S>                                                                       <C>                <C> 
OPERATING ACTIVITIES

Net income                                                                  $6,932,986           $5,857,797
Adjustments to reconcile net income to net cash
  used by operating activities:

Depreciation and amortization                                                4,708,604            2,337,622
Changes in operating assets and liabilities:
Accounts receivable                                                            820,187           (2,489,143)
Inventories                                                                 (2,271,878)          (3,801,639)
Prepaid expenses and other current assets                                   (3,003,329)          (1,199,547)
Accounts payable                                                            (4,480,631)          (1,096,300)
Accrued expenses, deferred income taxes and
  other long-term liabilities                                               (2,953,234)          (1,479,028)
                                                                           -----------          ------------
Net cash used by operating activities                                         (247,295)          (1,870,238)

INVESTING ACTIVITIES

Additions to property, plant and equipment                                 (12,230,344)          (6,587,986)
Payment for acquisitions, net of cash acquired                                      --           (1,018,286)
Other assets                                                                  (198,993)              41,137
                                                                           -----------          ------------
Net cash used by investing activities                                      (12,429,337)          (7,565,135)

FINANCING ACTIVITIES

Borrowings under credit facilities and long-term debt                               --            9,349,408
Repayments on credit facilities and long-term debt                                  --          (11,270,131)
Proceeds from sale of common stock                                          51,205,693            1,129,350
                                                                           -----------         ------------
Net cash provided (used) by financing activities                            51,205,693             (791,373)
                                                                           -----------          ------------

Increase (decrease) in cash and cash equivalents                            38,529,061          (10,226,746)
Cash and cash equivalents at beginning of period                            41,937,101           63,172,362


Adjustment for net cash activity of pooled companies                                --             (326,504)
                                                                           -----------         ------------
Cash and cash equivalents at end of period                                 $80,466,162          $52,619,112
                                                                           -----------         ------------
                                                                           -----------         ------------

</TABLE>

See accompanying notes.

                                      - 6 -


<PAGE>





              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.  QUARTERLY FINANCIAL STATEMENTS

    The interim condensed consolidated financial statements included herein
    have been prepared by REMEC, Inc. (the "Company") without audit,
    pursuant to the rules and regulations of the Securities and Exchange
    Commission (the "SEC"). Certain information and footnote disclosures,
    normally included in annual financial statements, have been condensed
    or omitted pursuant to such SEC rules and regulations; nevertheless,
    management of the Company believes that the disclosures herein are
    adequate to make the information presented not misleading. These
    condensed consolidated financial statements should be read in
    conjunction with the consolidated financial statements and notes
    thereto for the year ended January 31, 1998 included in the Company's
    Annual Report on Form 10-K. In the opinion of management, the condensed
    consolidated financial statements included herein reflect all
    adjustments, consisting only of normal recurring adjustments, necessary
    to present fairly the consolidated financial position of the Company as
    of July 31, 1998 and the results of its operations for the three and
    six month periods ended July 31, 1998 and August 1, 1997. The results
    of operations for the interim periods ended July 31, 1998 are not
    necessarily indicative of the results which may be reported for any
    other interim period or for the entire fiscal year.

    In June 1997, the Financial Accounting Standards Board issued FAS No.
    130, "Reporting Comprehensive Income" and FAS No. 131, "Segment
    Information". Both of these standards are effective for fiscal years
    beginning after December 15, 1997. FAS No. 130 requires that all
    components of comprehensive income, including net income, be reported
    in the financial statements in the period in which they are recognized.
    Comprehensive income is defined as the change in equity during a period
    from transactions and other events and circumstances from non-owner
    sources. Net income and other comprehensive income, including foreign
    currency translation adjustments, and unrealized gains and losses on
    investments, shall be reported, net of their related tax effect, to
    arrive at comprehensive income. Comprehensive income is not materially
    different than reported net income for the three and six month periods
    ended July 31, 1998 and August 1, 1997. FAS No. 131 amends the
    requirements for public enterprises to report financial and descriptive
    information about its reportable operating segments. Operating
    segments, as defined in FAS No. 131, are components of an enterprise
    for which separate financial information is required to be reported on
    the basis that is used internally for evaluating the segment
    performance. The Company believes it operates in one business and 
    operating segment and that adoption of these standards will not have 
    a material impact on the Company's financial statements.

    The statements in this report on Form 10-Q that relate to future plans,
    events or performance are forward- looking statements. Actual results
    could differ materially due to a variety of factors, including the
    Company's success in penetrating the commercial wireless market, risks
    associated with the cancellation or reduction of orders by significant
    commercial or defense customers, trends in the commercial wireless and
    defense markets, risks of cost overruns and product nonperformance and
    other factors and considerations described in the Company's Annual
    Report on Form 10-K, and the other documents the company files from
    time to time with the SEC. Readers are cautioned not to place undue
    reliance on these forward- looking statements, which speak only as of
    the date hereof. Other than as required by applicable law, the Company
    undertakes no obligation to publicly release the result of any
    revisions to these forward-looking statements to reflect events or
    circumstances after the date hereof or to reflect the occurrence of
    unanticipated events.

                                      - 7 -


<PAGE>




2.  NET INCOME PER SHARE

    The Company presents its earnings per share information in accordance
    with FAS No. 128, "Earnings per Share". Statement 128 replaced the
    previously reported primary and fully diluted earnings per share with
    basic and diluted earnings per share. Unlike primary earnings per
    share, basic earnings per share excludes any dilutive effects of
    options, warrants and convertible securities. Diluted earnings per
    share, which includes the dilutive effects of options, warrants and
    convertible securities, is very similar to the previously reported
    fully diluted earning per share. All earnings per share amounts for all
    periods have been presented, and where necessary, restated to conform
    to the Statement 128 requirements.

    The following table reconciles the shares used in computing basic and
    diluted earnings per share for the periods indicated:

<TABLE>
<CAPTION>
                                                         Three Months Ended                    Six Months Ended
                                                 ---------------------------------     --------------------------------
                                                 July 31, 1998      August 1, 1997     July 31, 1998     August 1, 1997
                                                 -------------      --------------     -------------     --------------
<S>                                              <C>                <C>                <C>               <C>
    Weighted average common shares
    outstanding used in basic earnings per
      share calculation                             23,261,000          20,733,000        22,900,000          20,666,000
    Effect of dilutive stock options                   344,000             757,000           557,000             646,000
                                                    ----------          ----------        ----------          ----------
    Shares used in diluted earnings per share
      calculation                                   23,605,000          21,490,000        23,457,000          21,312,000
                                                    ----------          ----------        ----------          ----------
                                                    ----------          ----------        ----------          ----------
</TABLE>

3.   INVENTORIES

     Inventories consist of the following:
<TABLE>
<CAPTION>
                                                            July 31, 1998         January 31, 1998
                                                            -------------         ----------------
<S>                                                         <C>                   <C>

          Raw materials                                       $17,637,948              $16,087,158
          Work in progress                                     15,652,356               14,968,767
                                                              -----------              -----------
                                                               33,290,304               31,055,925
          Less unliquidated progress payments                    (637,485)                (674,984)
                                                              -----------              -----------
                                                              $32,652,819              $30,380,941
                                                              -----------              -----------
                                                              -----------              -----------

</TABLE>

    Inventories related to contracts with prime contractors to the U.S.
    Government included capitalized general and administrative expenses of
    $2,144,000 and $2,076,000 at July 31, 1998 and January 31, 1998,
    respectively.

4.  EQUITY OFFERING

    In March 1998, the Company sold in an underwritten public offering an
    additional 1,990,000 shares of common stock. The net proceeds received
    by the Company from this offering totaled approximately $49.6 million.
    Certain shareholders of the Company also sold 1,000,000 shares as part
    of this offering.

                                      - 8 -


<PAGE>




ITEM 2

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    REMEC commenced operations in 1983 and has become a leader in the design 
and manufacture of microwave multifunction modules ("MFM's") for microwave 
transmission systems used in defense applications and the commercial wireless 
telecommunications industry.  REMEC's consolidated results of operations 
include the operations of REMEC Microwave, Inc. ("Microwave"), REMEC 
Wireless, Inc. ("Wireless"), Humphrey, Inc. ("Humphrey"), Magnum Microwave 
Corporation ("Magnum"), Radian Technology, Inc. ("Radian"), Verified 
Technical Corporation ("Veritek"), C&S  Hybrid, Inc. ("C&S"), Q-bit 
Corporation ("Q-bit") and Nanowave Technologies, Inc. ("Nanowave").  The 
Company's consolidated results of operations for the three and six months 
ended August 1, 1997 include the operations of RF Microsystems, Inc. ("RFM"). 
 RFM, which was acquired by REMEC on April 30 ,1996, was sold on August 26, 
1997.

    During fiscal 1998, the Company acquired all of the outstanding shares of 
Q-bit, Radian and C&S Hybrid in a series of transactions accounted for as 
poolings of interests. Accordingly, the consolidated financial statements for 
the three and six months ended August 1, 1997 have been restated to include 
Radian's, C&S Hybrid's and Q-bit's operations, assets and liabilities.

    In March 1997, the Company acquired Veritek in a transaction accounted 
for as a purchase. The condensed consolidated statements of income and cash 
flows for the three and six months ended August 1, 1997 include Veritek's 
results of operations from March 31, 1997. In October 1997, the Company 
acquired Nanowave in a transaction also accounted for as a purchase. REMEC's 
January 31, 1998 balance sheet includes Veritek's and Nanowave's assets and 
liabilities.

    REMEC's research and development efforts in the defense industry are 
conducted in direct response to the unique requirements of a customer's order 
and, accordingly, expenditures related to such efforts are included in cost 
of sales and the related funding is included in net sales. As a result, 
historical REMEC funded research and development expenses related to defense 
programs have been minimal. As REMEC's commercial business has expanded, 
research and development expenses have generally increased in amount and as a 
percentage of sales. REMEC expects this trend to continue, although research 
and development expenses may fluctuate on a quarterly basis both in amount 
and as a percentage of sales.

    Currently, the Company derives significant revenues from a limited group 
of customers and expects that it will continue to do so in the immediate 
future. A substantial amount of the Company's backlog with these customers 
can be canceled at any time generally without substantial penalties. As a 
result, any cancellation, reduction or delay in orders by or shipments to any 
significant customer may have a material adverse effect on the Company's 
business, financial condition and results of operations. The Company's 
results of operations for the second quarter of fiscal 1999 were adversely 
affected by the significant decline in commercial revenues from their level 
for the first quarter of fiscal 1999. The decline in commercial revenues was 
primarily attributable to requests by certain customers to delay deliveries 
of previously announced requirements. Some of the customer delays are 
attributable to the economic difficulties in the Asian markets or other 
international markets in which REMEC's customers operate, and to the 
increased competition among the participants in those markets. There can be 
no assurance whether, or to what extent, these delays will result in future 
cancellations or reductions in customer orders, or whether the delays may 
reflect the transfer of revenues to future quarters. The Company has also 
experienced continued pricing pressure on follow-on orders for existing 
defense programs on which the Company participates, and the Company 
anticipates that there will be fewer available defense programs to which it 
can market its products in the future. Failure of the Company to replace 
sales attributable to a significant defense program or contract at the end of 
that program or contract, whether due to cancellation, spending cuts, 
budgetary constraints or otherwise, may have a material adverse effect on the 
Company's business, financial condition or results of operations.

                                     - 9 -



<PAGE>




RESULTS OF OPERATIONS

         The following table sets forth, as a percentage of total net sales,
certain consolidated statement of income data for the periods indicated.

<TABLE>
<CAPTION>
                                                      Three Months Ended             Six Months Ended
                                                  --------------------------    --------------------------
                                                    July 31,       August 1,       July 31,      August 1,
                                                       1998         1997             1998          1997
                                                   ----------    ------------     -----------   ----------
<S>                                                <C>            <C>             <C>           <C>
Net sales......................................         100%            100%           100%           100%
Cost of goods sold.............................          77              69             71             70
                                                        ---             ---            ---            ---
Gross profit...................................          23              31             29             30

Operating expenses:
Selling, general & administrative..............          19              16             18             16
Research and development.......................           5               3              4              3
                                                        ---             ---            ---            ---
Total operating expenses.......................          24              19             22             19
                                                        ---             ---            ---            ---
Income (loss) from operations..................          (1)             12              7             11
Interest income ...............................           2               1              2              2
                                                        ---             ---            ---            ---
Income before income taxes.....................           1              13              9             13
Provision (credit) for income taxes............          (5)              4              1              5
                                                        ---             ---            ---            ---
Net income.....................................           6%              9%             8%             8%
                                                        ---             ---            ---            ---
                                                        ---             ---            ---            ---
</TABLE>

         NET SALES. Net sales were $39.6 million and $85.4 million for the 
three and six month periods ended July 31, 1998, representing increases of 
$.2 million or 1% and $12.1 million or 17%, respectively, over the comparable 
prior year periods. Defense sales were $17.8 million and $34.6 million for 
the three and six month periods ended July 31, 1998, representing decreases 
of $1.2 million or 6% and $1.8 million or 5%, respectively, over the 
comparable prior year periods. Commercial wireless sales were $21.9 million 
and $50.8 million for the three and six month periods ended July 31, 1998, 
representing increases of $1.4 million or 7% and $13.9 million or 38%, 
respectively, over the comparable prior year periods. The decrease in defense 
sales during the three and six months ended July 31, 1998 is primarily 
attributable to the sale of RF Microsystems in August 1997; the fiscal 1999 
period includes no defense contract revenues from RFM as opposed to $3.1 
million in the fiscal 1998 period. Approximately $3.5 million of the increase 
in commercial sales during fiscal 1999 is attributable to revenue generated 
by the Company's Nanowave subsidiary which was acquired in October 1997; the 
fiscal 1998 period includes no revenue for Nanowave. The remaining increase 
in commercial sales during fiscal 1999 is primarily attributable to increased 
customer demand for the Company's products over the comparable prior year 
period.

         GROSS PROFIT. Gross profit was $9.3 million and $24.6 million for 
the three and six month periods ended July 31, 1998, representing a decrease 
of $2.8 million or 23% and an increase of $2.4 million or 11%, respectively, 
over the comparable prior year periods. Gross margins for defense were 27 % 
and 30% for the three and six month periods ended July 31, 1998, compared 
with 30% and 31%, respectively, for the comparable prior year periods. 
Commercial gross margins were 21% and 28% for the three and six month periods 
ended July 31, 1998 compared with 31% and 29%, respectively, for the 
comparable prior year periods. The decrease in both defense and commercial 
gross margins is primarily attributable to changes in the Company's defense 
and commercial sales mixes.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and 
administrative expenses ("SG & A") were $7.7 million and $15.0 million for 
the three and six month periods ended July 31, 1998, representing increases 
of $1.5 million or 25% and $3.4 million or 30%, respectively, over the 
comparable prior year periods. These expenses as a percentage of sales 
increased to 19% and 18% for the three and six month periods ended July 31, 
1998 from 16% for both comparable prior year periods. The increased expenses 
are primarily attributable to costs of approximately $1.5 million arising at 
subsidiaries acquired during fiscal 1998 whose operations were not fully 
included in operating results for the three and six months ended August 1, 
1997, approximately $600,000 of accounting and legal expenses associated with 
the income tax credit study completed during the second quarter of
fiscal 1999, and increased personnel, legal and other administrative costs
resulting from the Company's growth.

                                - 10 -


<PAGE>



         RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses 
were $1.8 million and $3.5 million for the three and six month periods ended 
July 31, 1998, representing increases of $ .5 million or 38% and $ .8 million 
or 32%, respectively, over the comparable prior year periods. The 
expenditures are almost entirely attributable to the Company's commercial 
wireless business. Research and development expenditures fluctuate on a 
quarterly basis both in amount and as a percentage of sales.

         INTEREST INCOME. Interest income was $783,000 and $ 1,468,000 for 
the three and six month periods ended July 31, 1998, representing increases 
of $203,000 and $242,000 over the comparable prior year periods. The increase 
in interest income during the current year reflects the increased level of 
cash on hand as a result of the funds generated from REMEC's follow-on public 
offering which was completed in March 1998.

         PROVISION FOR INCOME TAXES. REMEC's effective income tax rate 
declined from 37% during the six month period ended August 1, 1997 to 9% 
during the six month period ended July 31, 1998. The decrease in the 
effective income tax rate reflects the tax benefit of $1,900,000 related to 
the recognition of research and experimentation tax credits pertaining to 
previously filed tax returns. The reduction in the effective tax rate during 
fiscal 1999 also reflects the benefit of tax credits for certain capital 
expenditures. The Company expects its future effective tax rate to be 
approximately 34%.

         LIQUIDITY AND CAPITAL RESOURCES

         At July 31, 1998, REMEC had $134.6 million of working capital which
included cash and cash equivalents totaling $80.5 million. REMEC also has $17.0
million in available credit facilities consisting of a $9.0 million revolving
working capital line of credit and a $8.0 million revolving term loan. The
borrowing rate under both credit facilities is based on a fixed spread over the
London Interbank Offered Rate (LIBOR). The revolving working capital line of
credit terminates July 3, 2000. The revolving period under the term loan expires
July 1, 2000, at which time any loan amount outstanding converts to a term loan
to be fully amortized and paid in full by January 2, 2004. As of July 31, 1998,
there were no borrowings outstanding under REMEC's credit facilities.

         During the six month period ended July 31, 1998, net cash used by 
operations totaled $.2 million as the cash flow from earnings and non-cash 
expenses (primarily depreciation and amortization) was offset by the increase 
in inventories and the repayment of trade accounts payables and other accrued 
expenses. Inventories increased during this period due to requests by certain 
customers to delay delivery of previously announced requirements. Investing 
activities utilized $12.4 million during the six months ended July 31, 1998, 
primarily as a result of $12.2 million in capital expenditures. The bulk of 
the capital expenditures were associated with the expansion of REMEC's 
commercial wireless telecommunications business. The above expenditures were 
financed primarily by cash on hand. REMEC's future capital expenditures may 
continue to be substantially higher than historical levels as a result of 
commercial wireless telecommunications expansion requirements. Financing 
activities generated approximately $51.2 million during the first six months 
of fiscal 1999, principally as a result of the net proceeds of $49.6 million 
from the follow-on offering and the proceeds generated by the issuance of 
shares in connection with the Company's Employee Stock Purchase Plan and from 
exercises of stock options.

         REMEC's future capital requirements will depend upon many factors,
including the nature and timing of orders by OEM customers, the progress of
REMEC's research and development efforts, expansion of REMEC's marketing and
sales efforts, and the status of competitive products.

         IMPACT OF YEAR 2000

         Many currently installed computer systems and software products are 
coded to accept only two digit entries to represent years. For example, the 
year "1998" would be represented by "98". These systems and products will 
need to be able to accept four digit entries to distinguish years beginning 
with 2000 from prior years. As a result, systems and products that do not 
accept four digit year entries will need to be upgraded or replaced to comply 
with such "Year 2000" requirements. The Company believes that its internal 
systems are Year 2000 compliant or will be upgraded or replaced in connection 
with previously planned changes to information systems prior to the need to 
comply with Year 2000 requirements without material cost or expense. The 
anticipated costs of any Year 2000 modifications are based on 


                                     - 11 -


<PAGE>

management's best estimates, which were derived utilizing numerous 
assumptions of future events, including the continued availability of certain 
resources and other factors. However, there can be no guarantee that these 
estimates will be achieved and actual results could differ materially from 
these anticipated. Specific factors that might cause such material 
differences include, but are not limited to, the availability and cost of 
personnel trained in this area, the ability to locate and correct all 
relevant computer codes, and similar uncertainties. In addition, there can be 
no assurance that Year 2000 compliance problems will not be revealed in the 
future which could have a material adverse affect on the Company's business, 
financial condition and results of operations. Many of the Company's 
customers and suppliers may be effected by Year 2000 issues that may require 
them to expend significant resources to modify or replace their existing 
systems, which may result in those customers having reduced funds to purchase 
the Company's products or those suppliers experiencing difficulties in 
producing or shipping key components to the Company on a timely basis or at 
all.

                                     - 12 -


<PAGE>



PART II - OTHER INFORMATION

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

The Annual Meeting of Shareholders of the Company was held on June 12, 1998. 
The following items were voted upon by the shareholders with all items being 
approved.

         1. To elect nine directors to serve for the ensuing year and until
their successors are elected.

<TABLE>
<CAPTION>

                             Votes for     Votes against or withheld        Votes abstained           Broker non-votes
                             ----------    -------------------------        ----------------          ----------------
<S>                          <C>           <C>                              <C>                       <C>
Ronald E. Ragland            19,817,472               245,464                      -                          -
Errol Ekaireb                19,823,575               239,361                      -                          -
Jack A. Giles                19,823,828               239,108                      -                          -
Joe Lee                      19,823,828               239,108                      -                          -
Denny E. Morgan              19,823,875               239,061                      -                          -
Andre R. Horn                19,823,775               239,161                      -                          -
Jeffrey M. Nash              19,823,875               239,061                      -                          -
Thomas A. Corcoran           19,823,875               239,061                      -                          -
William H. Gibbs             19,823,875               239,061                      -                          -

</TABLE>

         2.       To approve an amendment to the Company's Restated Articled of
                  Incorporation to increase the number of the Company's
                  authorized shares of common stock.

<TABLE>
<CAPTION>

   Votes for      Votes against or withheld        Votes abstained           Broker non-votes
   ----------     --------------------------       ----------------          -----------------
<S>               <C>                              <C>                       <C>
   19,391,077              554,075                      94,364                    23,420

</TABLE>


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

         (a)      The following exhibits are filed herewith:

                  -  Exhibit 27    -  Financial Data Schedule

         (b) There were no reports on Form 8-K filed during the quarter ended
July 31, 1998.

                                     - 13 -


<PAGE>


SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, as 
amended, the registrant duly caused this report to be signed on its behalf by 
the undersigned thereunto duly authorized.

REMEC, Inc.
(Registrant)

By:    /s/ Ronald E. Ragland
    -------------------------------------------
         Ronald E. Ragland
         Chairman and Chief Executive Officer

By:   /s/ Michael D. McDonald
    ------------------------------------------
         Michael D. McDonald
         Chief Financial Officer and Secretary

Date:  September 14, 1998

                                     - 14 -


<PAGE>


EXHIBIT INDEX

 Exhibit
 Number

  27      Financial Data Schedule